Finance

New York Federal Reserve Bank President John Williams speaks to Economic Club of New York, in New York City, U.S., May 30, 2024. 
Andrew Kelly | Reuters

NEW YORK — New York Federal Reserve President John Williams on Thursday said inflation is still too high, but he is confident it will start decelerating later this year.
With markets on edge over the direction of monetary policy, Williams offered no clear indication of his position on possible interest rate cuts. Instead, he reiterated recent positions from the central bank that it has seen a “lack of further progress” toward its goals as inflation readings have been mostly higher than expected this year.

“The honest answer is, I just don’t know,” Williams said during a Q-and-A session with CNBC’s Sara Eisen before the Economic Club of New York. “I do think that monetary policy is restrictive and is bringing the economy a better balance. So I think at some point, interest rates within the US will, based on data analysis, eventually need to come down. But the timing will be driven by how well you achieve your goals.”
Williams called the policy “well-positioned” and “restrictive” and said it is helping the Fed achieve its goals. Regarding potential rate hikes, he said, “I don’t see that as the likely case.”
Earlier this year, markets had expected aggressive rate cuts from the Fed this year. But higher-than-expected inflation readings have altered that landscape dramatically, and current pricing is pointing to just one decrease, probably in November.
“With the economy coming into better balance over time and the disinflation taking place in other economies reducing global inflationary pressures, I expect inflation to resume moderating in the second half of this year,” Williams said. “But let me be clear: Inflation is still above our 2% longer-run target, and I am very focused on ensuring we achieve both of our dual mandate goals.”
For nearly a year, the Fed has been in a holding pattern, keeping its benchmark borrowing rate between 5.25% and 5.5%, the highest in more than 23 years.

The Fed is seeking to keep the labor market strong and bring inflation back to its 2% target. Most inflation indicators are near 3% now, and a key reading from the Commerce Department is due Friday.
Inflation as measured through the Fed’s preferred yardstick — the personal consumption expenditures price index — is expected to come in at 2.7% for April, according to the Dow Jones estimate. Williams said he expects PCE inflation to drift down to 2.5% this year on its way back to 2% in 2026.
“We have seen a great deal of progress toward our goals over the past two years. I am confident that we will restore price stability and set the stage for sustained economic prosperity. We are committed to getting the job done,” he said.

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Hiring has been resilient for workers in lower-paying jobs, according to a new Vanguard analysis.
Meanwhile, it has waned for higher earners.
The overall job market has cooled but remains strong. There are signs of a recent pickup, one economist said.

Pixelseffect | E+ | Getty Images

For lower-earning Americans, the pace of hiring remains strong, holding steady above its pre-pandemic baseline even as the demand for higher-income workers has waned slightly, according to new data from Vanguard.
The hire rate for the bottom one-third of workers by income, those who earn less than $55,000 a year, was 1.5% in March, the rate at which it’s largely hovered since September 2023, according to a new Vanguard analysis.

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The hires rate gauges the number of new hires against a share of existing employees.
By comparison, that rate for the lower third of workers by income was lower — hovering between 1.2% and 1.3% — in the months leading up to the Covid-19 pandemic, Vanguard found.
“This is partly a reflection of lower-paying service industries still trying to recover from the COVID shock — a challenge since many of those workers have transitioned to higher-paying opportunities,” Adam Schickling, a senior Vanguard economist, said in the analysis.
Vanguard is among the nation’s largest 401(k) plan administrators. Its analysis is based on new enrollments in its 401(k) plans.

High-paying industries take a ‘cautious approach’

Meanwhile, higher earners have seen hiring decline modestly.
Workers with incomes of $55,000 to $102,000 saw their hiring rate decline to 0.5% in March from 0.6% in September. And those earning over $102,000 saw a bigger fall, from 0.6% in September 2023 to 0.4% in March, Vanguard said.

Higher-paying industries are “taking a considerably more cautious approach to hiring relative to the hectic 2021 to 2022 hiring surge,” Schickling said.

Health-care and hospitality sectors are booming

Conversely, hiring has boomed in sectors like health care and hospitality, which tend to be lower-paying industries, said Julia Pollak, chief economist at ZipRecruiter.
For example, there’s been significant demand for home caregivers, certified nursing assistants, medical technicians, patient transporters and other hospital positions, Pollak said. The health-care field has added more than 750,000 total jobs over the last year, a “huge, huge number” and about triple its pre-pandemic growth, Pollak added.
She said the pandemic also created a “FOMO economy” that boosted travel spending and, therefore, increased demand for jobs in hotels and other accommodation gigs.
“And these jobs can’t be automated,” which might insulate such workers from attempts at thinning out staffing that can result from company experimentation with artificial intelligence, she said.

Data points to ‘a pretty hot 2024’

The job market has broadly cooled from its scorching pace since 2022 after the U.S. economy reopened.
The U.S. Federal Reserve raised interest rates to their highest level in two decades to pump the economic brakes and rein in inflation. It’s unclear when the Fed might reduce borrowing costs.
However, the labor market remains strong and resilient by many metrics — and may be strengthening, Pollak said.
“I think a lot of the data points to a pretty hot 2024,” Pollak said. “The slowdown we saw in 2023 has not continued. Things have either stabilized or ticked up.”

Certain tailwinds seem to be propelling the labor market forward. For one, the “much-anticipated recession” didn’t materialize, and companies that took a wait-and-see approach regarding hiring and business investment now feel more confident about growing again, Pollak said.   
Additionally, 2024 is the start of “peak retirement,” she said. The largest cohort of baby boomers is poised to reach age 65 between now and 2030.
This means companies must recruit a big wave of next-generation talent to replace departing workers, Pollak said.
However, risks remain in the near term.
Job openings have declined substantially from their pandemic-era peak, though they remain elevated from historic levels. Such a sharp decline in job openings without a corresponding jump in unemployment “is unprecedented, singular, and exceptional” in the post-war era, Nick Bunker, North American economic research director at job site Indeed, wrote earlier this month.
“But it’s not clear how much longer this miraculous trend can continue,” he wrote.

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Kohl’s posted a quarterly loss and missed Wall Street’s revenue expectations for the first quarter.
The retailer also also lowered its forecast for the full year.
The company noted strength in its Sephora shop-in-shop partnership. In March, Kohl’s struck a similar partnership with Babies R Us.

Shoppers walk in front of a Kohl’s store in Mount Kisco, New York.
Scott Mlyn | CNBC

Kohl’s shares plummeted more than 20% in premarket trading Thursday after the company posted a surprise loss per share, coming in well below Wall Street’s expectations for a slight profit.
Here’s how Kohl’s did in its fiscal first quarter compared with what Wall Street was expecting, according to a survey of analysts by LSEG:

Loss per share: 24 cents vs. a profit of 4 cents expected
Revenue: $3.18 billion vs. $3.34 billion expected

Kohl’s reported a net loss of $27 million, or a loss of 24 cents per share, compared with a year-ago profit of $14 million, or 13 cents per share.
Net sales decreased 5.3% to $3.18 billion compared with the year prior, with comparable sales down 4.4%.
The company also lowered its 2024 guidance. It now expects full-year net sales to decline between 2% and 4%. Wall Street analysts polled by LSEG had been expecting its 2024 sales guidance to reflect a 0.2% gain.
Kohl’s expects full-year diluted earnings per share in the range of $1.25 to $1.85 — far lower than the $2.34 per share expected, according to LSEG.
“We recognize we have more work to do in areas of our business,” CEO Tom Kingsbury said in a release. “We are approaching our financial outlook for the year more conservatively given the first quarter underperformance and the ongoing uncertainty in the consumer environment.”

Kingsbury noted positive trends in the women’s category and continued strong growth in the retailer’s Sephora shop-in-shop partnership. Kohl’s announced in March that it would add similar in-store outposts of Babies R Us to about 200 locations.
“We continue to have high conviction in our strategy and believe that our key growth initiatives, including Sephora, home decor, gifting, impulse, and our upcoming partnership with Babies ‘R’ Us, will contribute more meaningfully going forward,” he said.
This story is developing. Please check back for updates. More

About 37% of Americans have been charged a late fee on some kind of bill in the last 12 months, according to a new report by NerdWallet.
“Late fees are just one consequence of making late payments,” said Sara Rathner, a travel and credit cards expert at NerdWallet.

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Many consumers are finding it hard to keep up with their bills.
To that point, 37% of Americans have been charged a late fee on some kind of bill in the last 12 months, according to a new report by NerdWallet.

Credit card late fees were the most common, with 21% of survey respondents incurring at least one. Others had been charged late fees on utility bills, 10%, and rent, 8%. NerdWallet polled 2,061 U.S. adults in early April.
“Late fees are just one consequence of making late payments,” said Sara Rathner, a travel and credit cards expert at NerdWallet.
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While you can be assessed with a late fee as soon as you miss the payment deadline on a credit card or loan, it typically doesn’t show up as a black mark on your credit report until you are 30 days late, said Matt Schulz, chief credit analyst at LendingTree.
And if you’re late by 30 days or more, that’s when it starts to get more serious, experts say. Falling behind on payments can also come with more severe consequences, like having utility service shut off. Some consequences can be immediate, too, like car repossession.

“If you know that you’re going through a financial rough time, it’s definitely better to tackle it head on and not wait,” Schulz said.
Here’s how to limit the impact of late fees, and work with creditors if certain life events, like a layoff or financial hardship, are impacting your ability to pay.

‘Speak directly to you creditors’

If you are beginning to fall behind on usual monthly payments, or anticipate you might, it’s best to “speak directly to your creditors before you run into trouble,” said Greg McBride, chief financial analyst at Bankrate.com.
“That’s when you have the most options. The further behind you get, the fewer options exist,” he said.

Communicating your issue as early as possible can help. If your bill is due on the last day of the month, don’t wait to contact your servicer the day before, Schulz said.
If you contact them well in advance, you have more flexibility to explain your situation and negotiate a resolution, he said.
“Whenever you can go into one of these situations and offer up a solution … that can go a long way to making the conversation go a lot more smoothly,” Schulz said.

1. Ask to waive a late fee

Cardholders can ask their card company to waive a late fee the first time they miss a payment, Schulz wrote in his book, “Ask Questions, Save Money, Make More: How to Take Control of Your Financial Life.”
But keep in mind, “the more often that happens, the less likely,” the lender will offer a waiver, McBride said.
If you paid late once and there’s a high chance you will pay late again in the near future because of a financial issue, let the lender know, said Schulz.
“It’s one thing to go to the lender every other month and say, ‘Hey, I was late with this, can you waive that?’ It’s something else entirely to say, ‘Hey, I was late because I have this medical emergency or I lost my job,'” he said.

2. Enroll in hardship programs

If you realize that your payments are becoming harder to meet because of an unexpected life event such as a layoff, most lenders offer hardship programs. Those can help consumers by temporarily reducing interest rates and waiving fees, wrote Schulz in his book.
While the particular details can vary, “the key is to partake” of those opportunities, as they are “designed to help you get back on your feet,” McBride explained.
“If you run from the problem and just fall further and further behind, it just further limits your options,” he said.

3. Ask about cleaning up your credit report

Even one late payment can make a significant dent in your credit score; it could drop your score by up to 100 points, depending on other elements of your credit history.
If you made a one-time mistake, you can reach out to your lender and ask to have that late payment scrubbed from your credit report, experts say. While it’s possible under certain circumstances, lenders are generally not a fan of the tactic because it renders the data unreliable for future credit transactions. 
“Your credit report is just a collection of a bunch of data points representing how good you are paying debts back,” Schulz said. If lenders begin to “cherry pick” what goes on in the report, the data becomes unreliable, and it doesn’t help lenders make decisions. 

“The primary customers for credit reports are not consumers; it’s businesses,” said Schulz, as the reports are devised to help businesses make lending decisions.
Even though it is rare to occur, if you’re in an unusual situation and otherwise have a “spotless history,” you can go to the lender and explain what happened. For example: if you paid late because of a natural disaster, it doesn’t hurt to ask. 
“Weird life circumstances happen to everybody,” he said. More

Swedish climate fintech startup Doconomy told CNBC it’s raised 34 million euros ($36.9 million) in a Series B round co-led by the venture arms of UBS and CommerzBank.
Founded in Sweden in 2018, Doconomy works with more than 100 financial institutions around the world to help their clients measure the CO2 footprint of their transactions.
Doconomy plans to use the fresh cash to drive expansion into North America and roll out new products, CEO and co-founder Mathias Wikstrom told CNBC exclusively.

From left to right: Johan Pihl, Doconomy’s chief creative officer and co-founder, and Mathias Wikstrom, chief executive officer and co-founder.

Swedish climate-focused financial technology startup Doconomy told CNBC on Thursday that it’s raised 34 million euros ($36.9 million) from leading European banks, including UBS and Commerzbank.
Doconomy, which offers tools to help bank customers measure the carbon footprint of their everyday spending, raised the cash in a Series B financing round co-led by UBS Next and CommerzVentures, the venture arms of UBS and Commerzbank, respectively.

Credit ratings agency S&P Global came on board as a new investor, while existing shareholders Motive Ventures, PostFinance and Tenity also participated.
Founded in Sweden in 2018, Doconomy works with the likes of Boston Consulting Group, Mastercard, S&P Global, and the United Nations Framework Convention on Climate Change to calculate the climate cost associated with financial transactions.
Among the firm’s tools is the AIand Index, a cloud-based service for banks that helps their customers convert every transaction into its corresponding CO2 footprint. The index is used by more than 100 financial institutions in more than 40 countries.

Doconomy plans to use the fresh cash to drive expansion into North America and roll out new products, CEO and co-founder Mathias Wikstrom told CNBC in an interview.
“Going forward, we want to enable every bank in every corner of the world to engage their clients in the ESG [environmental, social, and governance] work of the bank,” Wikstrom said. “We see a connection between the E and S, the environmental and the social. We can’t isolate those two different streams.”

Wikstrom said he was “very happy” to see partnerships emerging with the likes of UBS and Commerzbank, describing it as an “alliance of the winning both money and intellect into getting this issue under control.

Politicization of climate

News of Doconomy’s latest funding follows the firm’s February 2023 deal to acquire Dreams Technology, a platform that uses behavioral science to boosts customers’ digital engagement and financial wellbeing.
Wikstrom said that Doconomy’s valuation in its Series B round is unchanged from the price at which it raised funds in its Series A, which saw the firm raise cash from the likes of Citi Ventures, Mastercard, and Ikea parent company Ingka.
Doconomy’s growth story hasn’t come without its challenges. More recently, the firm faced attacks from right-wing online commentator Jordan Peterson and his followers.

It’s not really hurricane season anymore, it’s fear season.

Mathias Wikstrom
CEO, Doconomy

Last week, Peterson targeted the company in a post on social media platform X, labelling it the “soft positive planet-saving voice of the worst imaginable corporate/fascist/green tyranny.”
The Canadian psychologist, who gained internet fame critiquing so-called political correctness, is a noted skeptic who described climate change as “the idiot socialist get-out-of-jail-free card.” He once framed rising greenhouse gas emissions as a positive for making the planet “green in the driest areas.”
Climate scientists say this is misleading, as it doesn’t take into account the negative effects intensified droughts, wildfires and heatwaves caused by global warming have on plants and ecosystems.
Wikstrom told CNBC that the situation concerning Peterson’s attacks on his firm “illustrates that we need to educate a lot of people.”
“Fear will lead to frustration and frustration will potentially lead to protests, and protests will lead to violence and violence will lead to damage done,” he told CNBC.
Wikstrom said that he hopes that the more the likes of Peterson and other climate skeptics keep “banging the drum,” the likelier that their sentiments will eventually sound “hollow.”
“Looking at what’s happening in Hawaii, in Canada, in France, in Spain, in Greece — we have the floods, we have the fires, we have so many concerns now,” he said. “It’s not really hurricane season anymore, it’s fear season.”
Climate fintech is a niche area of financial technology that has attracted heightened interest from investors, as world governments push corporates to hit ESG targets and reduce carbon emissions associated with their operations.
Michael Baldinger, chief sustainability officer of UBS, said the bank’s venture investment into Doconomy “underscores our focus on fostering innovation to provide the data and actionable insights our clients need to make informed choices about their investments and effect the change they want to see.”  More

Watch professionals play poker, and one of the first things to strike you is how often they fold when the game has barely begun. Rounds of Texas Hold’em, a popular variant, start with each player being dealt two cards and then deciding whether to bet on them. Amateurs are more likely to proceed than not, while pros fold immediately up to 85% of the time. Naturally this does not mean that high-stakes casinos are frequented by the timid. It is simply that most hands are too likely to lose to be worth betting on, and the pros are better at judging when this is the case.Investors usually dislike gambling comparisons. Yet at a recent conference held by Norges Bank Investment Management, which oversees Norway’s oil fund of $1.6trn, a packed hall sought to learn from a former poker pro. Annie Duke was there to talk about quitting decisions, a topic on which she wrote the book (“Quit: The Power of Knowing When to Walk Away”). Ms Duke argued that many factors stack the deck against people considering quitting, pushing push them to act irrationally. That applies to poker players wondering whether or not to fold—and also to investors considering whether to exit a position. More

Buying art can be a nerve-racking experience. But investors have long been able to console themselves with the thought that, if their purchase plummets in value, they will at least have something nice on their wall. Now they can also console themselves that they will have something to borrow against.That is because there has been a boom in “art-secured lending”. Until recently this was only available to the wealthiest clients of private banks. In the past five years, though, auction houses and boutique lenders have become more involved. Deloitte, a consultancy, reckons that such outfits increased their lending by 119% over the period, compared with a 31% rise at banks. Last year non-banks doled out as much as $8bn against art and collectibles, or 23% of all such loans, up from 15% in 2019. More

Zhou Qiren is an unusual economist. A professor at Peking University, he spent ten years toiling in the countryside during China’s cultural revolution. “The same farmer”, he observed, “worked like two totally different persons on his private plots versus on collective land.” Unlike most economists, Mr Zhou still studies incentives and constraints from the ground up, starting not with abstract principles, but with concrete cases, often drawn from his travels around China and beyond.After a visit to a rice-noodle bar in Qinzhen, he wondered why it offered one-week courses showing others how to replicate its prized dish. On trips to China’s sprawling new city districts, he notes that it takes 70 steps to cross the road compared with 15 or so for many streets in Manhattan. He is sceptical of state-owned enterprises, which he once compared to public passages crowded with private “sundries”. He also has doubts about the feasibility of national self-reliance. Prosperity, he has pointed out, is built on “coming and going” across borders. More