Finance

Check out the companies making headlines before the bell:
Uber (UBER) – Uber fell 1% in premarket trading after it reported a quarterly loss and revenue that beat estimates. Uber saw ride volumes increase during the quarter while food deliveries also continued to grow.

Brinker International (EAT) – The parent of Chili’s and other restaurant chains fell 10 cents shy of estimates with adjusted quarterly earnings of 92 cents per share, and issued a weaker-than-expected earnings outlook. Brinker pointed to challenging commodity and labor costs, and shares tumbled 10.3% in the premarket.
Generac (GNRC) – The maker of backup generators and other power equipment jumped 5.3% in the premarket after beating top and bottom-line estimates for its latest quarter. Generac earned an adjusted $2.09 per share, beating the $1.94 consensus estimate.
Moderna (MRNA) – Moderna shares rallied 8.1% in premarket trading, as the vaccine maker’s quarterly results came in well above estimates. Moderna earned $8.58 per share for the quarter, compared with a consensus estimate of $5.21.
Tupperware (TUP) – The storage products maker saw shares slump 19.9% in the premarket after it missed top and bottom-line estimates for its latest quarter and withdrew its full-year forecast. the company cited uncertainty related to the Russia/Ukraine conflict as well as fundamental changes being made to its business.
Lyft (LYFT) – Lyft plummeted 25.4% in premarket trading after the ride-hailing company said it would increase spending to attract more drivers, leading to an earnings forecast that fell short of Wall Street predictions.

Starbucks (SBUX) – Starbucks matched estimates with an adjusted quarterly profit of 59 cents per share, and revenue slightly above estimates. CEO Howard Schultz detailed improved wages and benefits for the coffee chain’s employees, although he added that unionized locations would need to negotiate their own deals. Starbucks jumped 6.4% in the premarket.
Advanced Micro Devices (AMD) – AMD shares surged 6.1% in the premarket after the chipmaker reported a top and bottom-line beat for its latest quarter. AMD earned an adjusted $1.13 per share, compared with a consensus estimate of 91 cents. It also issued a stronger-than-expected outlook amid increased demand from data centers for its chips.
Airbnb (ABNB) – Airbnb posted a quarterly loss of 3 cents per share, narrower than the 29-cent loss analysts were anticipating. Revenue also beat forecasts, as travelers continued to book rentals even in the face of rising prices by hosts. Airbnb jumped 5.2% in premarket action.
Match Group (MTCH) – Match Group shares slid 6.1% in premarket trading, following the news that the dating service’s CEO Shar Dubey will resign at the end of May. She’ll be replaced by Zynga (ZNGA) president Bernard Kim. Separately, Match Group reported better-than-expected profit and revenue for its latest quarter.
Livent (LTHM) – The lithium producer’s shares soared 19.8% in premarket action after it posted better-than-expected quarterly earnings and raised its 2022 revenue forecast. Livent is benefiting from strong demand for lithium used in electric vehicle batteries.
Akamai Technologies (AKAM) – The cybersecurity company’s shares plunged 13.9% in the premarket after Akamai missed bottom-line estimates for its latest quarter, although revenue was in line. CEO Tom Leighton noted the company faced a challenging global environment as well as headwinds related to a strong U.S. dollar.

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Reading the fine print or understanding available offers means you could be saving money or taking advantage of refunds or freebies that you might not have otherwise known about, like a brand-new pair of Nike sneakers.
That’s the kind of attention to detail that can lead to some surprising upsides, according to Erika Kullberg, lawyer and founder of Plug and Law, a legal tech start-up for small businesses and entrepreneurs.

Kullberg has found that you could be eligible for compensation for everything from getting bumped from your flight to having a package arrive after its guaranteed delivery date or money off an Apple purchase under its educational pricing.
Airlines are already anticipating a busy summer, which makes it particularly important for passengers to understand the rules in the event of an unexpected change. And agreements like Delta’s contract of carriage can be long. That’s why it can pay off in a big way to take the time to read and fully understand the fine print.
“Almost every transaction in your life involves a contract whether you’re flying with an airline or buying a pair of shoes,” Kullberg said.
Kullberg doles out this consumer wealth of knowledge on social media and has amassed more than 11 million followers across TikTok, Instagram and YouTube.
Check out this video to learn more about how to save money by reading the fine print.

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Starting June 1, Klarna will share data on whether Brits paid off a buy now, pay later loan in time to the credit bureaus TransUnion and Experian.
Customers’ credit scores are expected to be impacted by the change in the next 12 to 18 months, Klarna said.
It comes as the U.K. government is looking to bring in regulation for the BNPL industry by 2023.

Currently, most buy now, pay later services don’t impact a person’s credit score. That’s now set to change in the U.K.
Jakub Porzycki | NurPhoto | Getty Images

Buy now, pay later giant Klarna says it will start reporting data on customers’ usage of its products to credit bureaus in the U.K., gearing up for incoming regulations aimed at reining in the sector over fears it is putting young people into debt.
Starting June 1, the Swedish fintech firm will share information on whether Brits paid off an installment loan in time or are falling behind on their payments to TransUnion and Experian, meaning such data will now start to appear on their credit reports. Klarna has around 16 million users in the country.

The move will apply to the firm’s “pay in three” and “pay in 30” services, which allow customers to pay down their debt in three months or 30 days, respectively, without accruing interest. Klarna already reports data on longer-term lending agreements ranging from six to 36 months, which do incur interest.
Klarna said customers’ credit scores won’t immediately be impacted by the change — currently, most BNPL services do not impact a person’s credit score. However, after 12 to 18 months, a person’s usage of Klarna will appear for lenders when approving a loan or mortgage application. Purchases made before June 1 won’t be affected, Klarna said.
The development sets a major precedent for the nascent buy now, pay later, or “BNPL,” sector, which has flourished in no small part thanks to a smoother application process and lack of regulatory oversight. It could deter shoppers from using the company’s services, as it will now affect their credit history.
“Credit reporting is a double-edged sword in that it can be used to punish borrowers but also to incentivise and reward healthy financial habits,” Gwera Kiwana, product manager at U.K. fintech consultancy 11:FS, told CNBC.
“Klarna reporting to credit scoring agencies could be leveraged by thin file users such as immigrants and the underbanked as a tool for credit building. That would strengthen BNPL’s offering versus high-cost credit cards, if it could give customers the chance to improve their credit score through good repayment behavior.”

BNPL companies face a reckoning in the U.K. and other countries, as regulators look to crack down on such services amid worries they are encouraging consumers — Gen Z and millennials, in particular — to spend more than they can afford.
Last year, the British government announced it would regulate BNPL products after a review found one in 10 customers of a major bank using such services had already fallen into arrears. The rules are yet to be approved, but are expected to come into effect by 2023.
In the U.S., meanwhile, the Consumer Financial Protection Bureau is investigating Klarna, Affirm and other BNPL firms over concerns they are pushing people into debt.
Klarna said that, while U.K. regulation was relevant to its decision to report data to the big credit agencies, the company had been working on the change for two years. The firm says it hopes its competitors will follow suit.
“This will give other providers the ability to see whether someone has overextended themselves using Klarna; or, equally, as other providers come on board, we’ll be able to see whether consumers have overextended themselves using those providers,” a Klarna spokesperson told CNBC.
It’s not yet clear whether rival firms PayPal or Clearpay — which is now owned by Square parent company Block — plan to announce similar steps. The companies were not immediately available for comment when contacted by CNBC.
Klarna has often railed against the credit card industry for landing shoppers with burdensome interest and late payment fees.
“It is alarming that U.K. consumers are still being forced to take out high cost credit cards to demonstrate they can use credit responsibly and build their credit profile,” Alex Marsh, Klarna’s U.K. boss, said in a statement Wednesday.
“That will start to change on 1 June this year as the vast majority of the 16 million U.K. consumers who make Klarna BNPL payments in full and on time will be able to demonstrate their responsible use of credit to other lenders.”

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Annual U.K. inflation hit a 30-year high of 7% in March as food and energy prices continued to soar.
The Bank imposed its third hike in a row at its March meeting, taking the bank rate to 0.75%, and the market expects a 25 basis point increase to 1% when the MPC meets on Thursday.

LONDON, February 03: Governor of the Bank of England Andrew Bailey leaves after a press conference at Bank of England on February 3, 2022 in London, England. The Bank is expected to hike interest rates for a fourth consecutive meeting on Thursday, but faces a touch balancing act between supporting growth and curbing inflation.
Dan Kitwood | Getty Images News | Getty Images

LONDON — The Bank of England is expected to opt for a fourth consecutive interest rate hike on Thursday, but economists fear it is entering increasingly choppy waters.
Annual U.K. inflation hit a 30-year high of 7% in March as food and energy prices continued to soar. Meanwhile, consumer confidence has plunged amid fears of slowing economic growth following Russia’s unprovoked invasion of Ukraine.

The Bank imposed its third hike in a row at its March meeting, taking the bank rate to 0.75%, and the market expects a 25 basis point increase to 1% when the Monetary Policy Committee meets on Thursday.
Like many central banks around the world, the Bank faces a tough task in reining in inflation without stomping out growth.
Governor Andrew Bailey recently noted that the Bank is walking a “narrow path” between growth and inflation, and implied that the Bank may look to take a more incremental approach to tightening, rather than following the U.S. Federal Reserve with a 50 basis point hike.
The MPC in February forecast inflation to reach a peak of 7.25% in April, but economists now expect it to exceed this and remain higher for longer in light of Russia’s invasion of Ukraine and subsequent spike in commodity prices.

Given the nature of the inflationary pressure, Berenberg Senior Economist Kallum Pickering said in a note entitled “BOE preview: A risky hike” on Tuesday that the Bank’s widely anticipated hike is “not without risk.”

“On a policy relevant horizon – of say two years from now – the Putin shock will probably depress demand growth, which may also affect inflation dynamics over time. If we are unlucky, the U.K. is already in the early stage of a recession,” Pickering said.
“Amid unusual uncertainty, policymakers – who should aim to minimize output losses over the business cycle – would better keep policy unchanged for now until incoming data dictate the appropriate policy response.”
Even prior to the war in Ukraine, the MPC was projecting persistently high inflation and a darkening growth outlook, and ING Developed Markets Economist James Smith said new forecasts issued Thursday are likely to show that the growth-inflation trade-off has only magnified since.
“The net result is likely to be an inflation forecast that peaks around 9% in April and stays not far below that throughout 2022, and an economic outlook that features at least one-quarter of negative growth this year,” he added.
Emerging division
With this uniquely uncertain terrain comes expectation of greater divergence among policymakers. The MPC voted 8-1 in favor of March’s 25 basis point rise, with Deputy Governor John Cunliffe citing the two-sided risks to the inflation outlook as the reason for his vote to keep the bank rate unchanged.
Smith also suggested that any sign of widening dissent would offer a hint to markets that the rate hike cycle could be nearing a pause.

“The question for this week is whether the rising risks to demand will motivate other policymakers to side with Cunliffe – who will likely continue to support a wait and see approach,” Berenberg’s Pickering said.
“Judging by OIS (overnight index swaps) markets, which predict that the BoE will hike six more times in 2022 to take the bank rate to 2.25% by year-end, more dissents in favor of remaining on hold would be taken as a dovish surprise.”
No start to bond sales yet
The Bank began unwinding its balance sheet in February, passively reducing the record £875 billion of U.K. gilts held at the start of the year, by not reinvesting maturing assets and actively selling its much smaller £20 billion of corporate bonds.
Pickering noted that while the central bank’s guidance suggests that it could begin active gilt sales when the bank rate reaches 1%, the heightened risk of market volatility and tightening financial conditions renders it unlikely to start active gilt sales on Thursday.
“In case the BoE does begin active gilt sales, it is likely to start very gradually – probably at a pace of no more than £1bn per week – so that the policymakers have scope to assess the market impact and adjust the pace thereafter if necessary,” he said.

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The government is selling a 3.5% stake in Life Insurance Corporation for an estimated $2.74 billion.
LIC commands about two-thirds of the life insurance market in India.
The IPO will be a proxy for foreign investor interest in India.

The LIC logo looms above a couple of passersby in Mumbai in India last week. The IPO of the biggest payer in life insurance in the country is expected to fetch $2.7 billion in the country’s biggest IPO so far.
Punit Paranjpe | Afp | Getty Images

The dominant player in India’s life insurance market, Life Insurance Corporation, opens its initial public offering for subscription Wednesday in the country’s largest-ever IPO.
The government is selling a 3.5% stake in state-owned insurance behemoth LIC for an estimated $2.74 billion. The corporation will offer about 22.13 million shares for between 902 and 949 Indian rupees, or the equivalent of $11.78 to $12.39 a share at Tuesday’s exchange rates.

Trusted by millions and with enormous reach across the country, LIC is second only to bank deposits as a haven of savings in India. Between 2019 and 2021, LIC’s share of household financial savings grew 3.4 percentage points to 19.4%. That’s ahead of pension funds’ 16.7% share, while bank deposits dropped 7.1 percentage points to 29.4% during the same period.
LIC had a monopoly in India’s insurance market until 2000 and is still the dominant player, commanding about two-thirds of the life insurance market. In the fiscal year ending March 2021, LIC’s market share stood at 64.14%, down marginally from 66.22% in the previous year.

IPO timing

The IPO, initially planned for February, was postponed because of the Ukraine war and the outflow of institutional funds from the stock market. Since January, about $16 billion of foreign capital has left Indian markets. The size of LIC’s offering, which was initially pegged at 5%, was scaled down to 3.5%.

There is no perfect time for an IPO. Given the high liquidity in international markets it’s as good a time as any.

Arvind Virmani
Former chief economic advisor to the government of India

The company’s current implied valuation of $80 billion is roughly half of what it was in February, falling at least in part due to market conditions. It had previously planned to offer a 5% stake for about $8 billion.
Speaking to CNBC, former chief economic advisor to the government of India, Arvind Virmani, dismissed talk of the IPO being badly timed.

“There is no perfect time for an IPO. Given the high liquidity in international markets it’s as good a time as any,” he said.

Foreign investors

Of the shares being offered, 20% is open to foreign investors and 10% is earmarked for policyholders.
LIC, which has an estimated base of 250 million policyholders, is an asset-rich organization. As of March 2021, LIC’s asset base had surpassed $520 billion, with investments of $503 billion and a life fund of $470.70 billion.

The complexity and scale of the LIC IPO signals the government’s intent to go one step further than previous governments.

Suyash Rai
Deputy director and fellow, Carnegie India

Speaking to CNBC, deputy director at Carnegie India, Suyash Rai, said the LIC IPO gives domestic and foreign investors an opportunity to invest in a firm that controls about two-thirds of the life insurance market in India. He said while the listing is a “continuation of a decades old policy of listing public sector financial firms,” LIC still stands out. 
“The complexity and scale of the LIC IPO does signal the government’s intent to go one step further than previous governments,” Rai said.
In an indication of its commitment to reforms in the financial sector, the government last year raised foreign equity in insurance to 74% from 49%.

Stock picks and investing trends from CNBC Pro:

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While Wall Street braces for a half point interest rate hike on Wednesday, Canaccord Genuity’s Tony Dwyer sees the ingredients for a sharp market bounce.
However, it’s unrelated to a fundamental change in economic and market risks. So, investors may want to resist going all in.

“We are going to get an oversold bounce. Sentiment and my tactical indicators are about as bad as they get,” the firm’s chief market strategist told CNBC’s “Fast Money” on Tuesday.
According to Dwyer, the rally should materialize this summer. He expects the S&P 500 to jump at least 5%. Right now, the index is 13% below its all-time high hit on Jan. 4.

‘What’s done the worst could bounce’

In preparation for a summer boost, Dwyer believes investors could start nibbling on the year’s laggards. He speculates technology, financials and consumer discretionary are positioned to grab the biggest upside.
“What’s done the worst could bounce,” he noted.
But Dwyer warns the gains will be temporary.

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Even though he’s not in the recession camp right now, he predicts aggressive Federal Reserve tightening paired with a decelerating economy this fall will contribute to fresh market swings.
On “Fast Money” in late March, Dwyer warned investors the “Fed is in a box.” He still calls it a problem, especially as money availability dwindles and inflation persists.
“How we go into the end of the year is going to depend on what the Fed does,” Dwyer said.
Disclaimer

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Stock futures inched higher in overnight trading as investors braced for the Federal Reserve’s big interest rate decision on Wednesday, where the central bank is widely expected to hike rates by half a percentage point.
Futures on the Dow Jones Industrial Average were flat. S&P 500 futures inched 0.11% higher, and Nasdaq 100 futures rose 0.19%.

Markets are preparing for a hawkish Fed, and the central bank is also expected to announce a plan to cut its roughly $9 trillion balance sheet by $95 billion a month, beginning in June.
Respondents to the May CNBC Fed Survey indicated they expect the central bank to announce the long-anticipated 50 basis point hike on Wednesday, followed by a second one in June as it looks to cut its balance sheet. The majority of respondents also expect a recession at the end of the tightening cycle, the survey found.
“We’re at a place right now where the market’s pricing in that inflation is going to be back near pre-pandemic levels within two years with only modest Fed tightening,” said Rebecca Patterson, Bridgewater’s chief investment strategist, on CNBC’s “Closing Bell” on Tuesday. “We think that either the Fed is going to have to tighten more than expected to get inflation to their target or inflation is going to be higher than expected.
Meanwhile, Lyft plummeted 25% in extended trading on Tuesday after the ridesharing company shared weak guidance for the current quarter as it expects to invest in driver supply. Airbnb rose 3.6% as the company expects a continued travel rebound, and Starbucks added 2.4% after topping revenue estimates.
In Tuesday’s regular trading session the Dow Jones Industrial Average added 0.20%, and the S&P 500 gained 0.48%. The tech-heavy Nasdaq Composite rose 0.22%.

The moves came as the markets attempt to recover from a brutal tech-led April sell-off that saw the Nasdaq hit its worst month since 2008. The Dow and S&P 500 also finished their worst month since March 2020.
“If our ‘no recessions soon’ call is right, then the pattern we have seen so far this year will probably continue: with equities punching lower and then recovering at least partially as long as recession fails to materialize, and the rates and commodity curves continuing to move higher over time,” wrote Jan Hatzius, Goldman Sachs’ chief economist on Tuesday.
The S&P 500 is currently trading in correction territory, down about 12.4% year to date. LPL Financial’s Ryan Detrick pointed out Tuesday the current correction parallels the size and length of previous corrections after World War II.
Along with the Fed decision, investors are looking ahead to earnings from CVS Health, Uber and Yum Brands on Wednesday.

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The Lyft Driver Hub is seen in Los Angeles, California, U.S., March 20, 2019.
Lucy Nicholson | Reuters

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