Finance

The “unretirement” rate, which measures those who switch from retirement to employment, has been accelerating, according to an analysis by Nick Bunker, an economist at Indeed.
This is good news for the labor market, and speaks to improving public health and job-related factors like higher wages, according to economists.
Early retirements had increased during the pandemic. It remains an open question how many will be permanent or temporary.

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Retirees are coming out of retirement, and that’s a good sign for the labor market.
Early retirements among older Americans were among the many labor distortions related to the Covid-19 pandemic, according to economists, as health risks and other factors led many to leave their jobs.

But there’s an open question: Are these retirements permanent, or will these workers rejoin the labor force?
The answer could have big implications for the U.S. economy and even the finances of everyday Americans, at a time when overall labor force participation has remained stubbornly low.

The number of retirees re-entering the job market is picking up, according to Nick Bunker, economic research director for North America at job site Indeed.
That’s largely a positive thing — most pandemic-era retirements seem to have been for “bad” reasons (forced retirements amid a health crisis) rather than “good” ones (like inflated nest eggs), he said.
“[The trend] suggests there’s a group of people out there who want work and are increasingly finding it,” Bunker said.  

Bunker analyzed data from the Current Population Survey (a household survey from the U.S. Census Bureau and U.S. Bureau of Labor Statistics used to piece together part of the monthly jobs report) to determine the so-called unretirement rate.
(Of the people who’d reported being retired in 2020, this rate measures the percentage who said they were employed 12 months later.)
In October 2021, the unretirement rate was 2.6%, above the 2.5% rate for September and 2.4% in August, Bunker found.
This is a noticeable pickup in “unretirement” relative to other periods during the pandemic, he said. The rate had cratered to 2.1% by June 2020.
The current rate is still a bit below its pre-pandemic trend around 2.5%-3%, Bunker said. (These rates don’t apply to a specific age group, but it’s safe to assume most retirees are older, he said.)

‘Bouncing back’

But even seemingly small upward shifts in that rate can have a meaningful impact since it applies across a huge swath of people, according to Aaron Sojourner, a labor economist and associate professor at the University of Minnesota.
“We can see there’s some reversal occurring now,” Sojourner said. “We seem to be bouncing back a little bit.”
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About 3.6 million more Americans were out of the labor force and didn’t want a job in October 2021 relative to October 2019; of those, 3.3 million, or 91%, were older Americans age 55 and older, according to an analysis Sojourner conducted of federal data. That hints at the magnitude of early retirements, he said.
Whether these retirements are durable or temporary is largely a function of how people want to use their time, Sojourner said.
Covid vaccination rates are climbing; restraints on childcare seem to be easing, relieving grandparents of care responsibilities they may have shouldered for working parents; job prospects are improving and wages are rising.

Amid that backdrop, would people in their 50s, 60s and beyond rather spend their time in or out of the labor force?
“If they’re enticed back into the labor market — by improving public health and jobs — that’s good,” Sojourner said. “It means they have better options.
“The inside-the-labor-market option got better than the outside-the-labor-market option.”
Of course, finances may also be a concern for those who feel they need to draw a paycheck to make ends meet.

Sidelined workers

Whether workers are enticed back to the labor market or not is an important consideration for the U.S. economy.
While overall job growth has been accelerating, millions of workers remain on the sidelines. Employers have raised wages (especially in certain sectors like restaurants) to attract job interest and have also somewhat raised prices, Sojourner said.
Bringing more workers into the job market and boosting labor supply may help ease any wage and price pressures, he said, and lessen the likelihood of the Federal Reserve stepping in to slow down the economy and rein in consumer demand.
Of course, early retirements aren’t the only factor that may be contributing to a lower-than-anticipated labor supply.
Perhaps largest among them: The pandemic is ongoing. There were 84,000 average new Covid cases a day as of Monday, an increase from the recent 64,000 low on Oct. 24. And Covid-related deaths, while on the decline and which occur overwhelmingly among the unvaccinated, still average more than 1,000 a day.

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Private equity is one of the few asset classes that’s been able to outperform even public equities during the bull market.

And the sector is reaping the benefits of that outperformance with 529 firms in the space raising an aggregate equity volume of $1.4 trillion over a 10-year period, according to the 2020 annual HEC-Dow Jones Private Equity Performance Ranking.
Dipanjan ‘DJ’ Deb is the co-founder and CEO of Francisco Partners, the top performing individual firm in that annual ranking. Deb sat down in an interview for the Delivering Alpha newsletter and revealed what keeps him up at night, despite the firm’s outperformance. The CEO also reviewed where the firm sees the most opportunity.
 (The below has been edited for length and clarity.)
Leslie Picker: I know you’re not able to discuss performance specifically, but what do you think was responsible for this outperformance? What’s the secret sauce here? 
DJ Deb: Of course, we’ve all benefited from a buoyant market and the tech markets where we spend a preponderance of our time. But I’d say we probably have done three things that hopefully has helped us differentiate us in the past and will continue to do so in the future. One is a focus within technology of sub-sectors. So we have 10 different vertical markets we pursue, whether it’s consumer internet, or healthcare IT, or network security, or cybersecurity, or FinTech, or education technology. So we have partners who specialize in each of those areas. And we believe that sub-specialization is the key to success. 

Second is we have an operating team of 35 people going to almost 50 to 60. These are people we can try to help with each company, both in terms of optimizing a company’s operations, but also getting best performance cost portfolio. And third is our culture, which is kind of a relentless focus on perfection. Of course, you never achieve that, but every day we wake up and say, “What are the 10 things we’re doing wrong?” We just had our annual meeting a couple weeks ago and the first slide we put up was, “Here’s the year-in-review.” The second slide was “Here’s the 10 things we’re doing wrong,” and I think you kind of need that focus to stay ahead. 
Picker: What do you think you are doing wrong? What is it that you need to improve on? 
Deb: As I reflect on the last decade, probably the biggest mistakes we’ve made is all the deals we didn’t do it. So it’s almost an anti-portfolio as it were. So we never thought that interest rates would go down and the stock market would come up the way it did. We also never thought leveraged markets would reach the levels they have today. I would say we were wrong in terms of software re-rating, software companies that used to trade at 8x or 10x EBITDA trade at 25x to 30x EBITDA. So we missed out on all those. 
Today I think one of the great things, as I said, is our focus on specialization. I think sometimes what that leads to is people get in their swim lanes and sometimes we need to take that more expansive view on things that don’t fit neatly into swim lanes but they still may be great investments. There are people in our firm who are better sources, and better portfolio managers. I think we need to constantly focus on putting people in positions to succeed. And so the same people may not be the best person to go soup to nuts. 
Picker: Right and and obviously, you know that’s the saying goes in finance, “Past performance is not always indicative of future performance,” so where do you think things go from here?
Deb: At a high level. I think we’re big believers in the long term dislocation of tech. I say to all of our investors is that tech is no longer a vertical, it’s a horizontal, it’s ubiquitous. It’s disrupting every sector, every part of society. So if you look at whether it’s within financial services, in healthcare, in consumer internet, it’s literally disrupting every part of society. I mean, you know, I have three teenage daughters. They don’t they don’t know what a physical check is. Everything is made through payments on their phone, whether it’s Venmo or Splitwise and things like that. So that’s just a small token. You know, when we’re watching TV in a hotel room, they’re like, “Where’s the DVR?” And like, when I was growing up, there was no DVR. 
So those are just things we see that we take for granted today that have only come to fruition over — streaming television, everyone, whether it’s Netflix, or Amazon Prime, or Hulu — that didn’t exist even five years ago. Technology literally is eating the world. So we’re big believers in long term tech. You have to be careful. The markets are reasonably frothy today, so you need to pick and choose. But long term, I think the trends are inexorable. There’s only been four down years in technology in the last 50. That’s grown at double the rate of GDP.
Picker: Can you extrapolate on that a bit more this idea that you believe the markets are frothy? Because I feel like I’ve heard that in the tech world, you know, at least pockets of the tech world, for the last 10 years or so and yet trajectory-wise, things continue to go up. And as you mentioned, tech just becomes increasingly pervasive. So how does this kind of look? Is there ever some sort of reckoning that that we see on a large scale?
Deb: It’s something we think a lot a lot about. But it doesn’t impact our day to day that much in the sense that we’re long term investors, we’re buying companies. Typically we’re control investors. Almost 80% of what we do is control investing and 20% is minority investing where we’re a large outside shareholder. We’ve been wrong for five years. We’ve thought that the markets would have a dislocation. We think there’s probably two areas of irrational exuberance, to use Chairman Greenspan’s terms from years ago. 
One is in late stage growth equity, where many of the unicorns today are actually disrupting the world and deserve their valuations. But probably 70-80% of them will have some sort of day of reckoning. They’re not all going to disrupt the world and people are conflating growth and quality in late stages of a bull market. And perhaps we’re in the late stages of a bull market – the growth and quality became conflated. And so I think that actually creates opportunities for us down the line when some of those companies have pullbacks in their valuation. 
Picker: You also mentioned a second pocket that you see frothiness right now?
Deb: Yeah the second pocket is just in software buyouts, particularly larger-scale software buyouts, where I think the wisdom now is, “You can’t lose money in software.” And by the way, software companies are amazing companies, they have great retention rates and I think software is eating the world, as many people in our industry have talked about. But that doesn’t mean that valuations don’t matter. If you buy something at 30x and lever it 11x, if terminal multiples compressed because interest rates rise, you could lose money. And so I think we’re being careful. 
We invest in what we call a barbell approach. On the right hand side of the barbell, we’re buying companies that are disrupting existing markets that we think could be optimized. So we just bought Boomi, from Dell Software, for instance. So that’s on the dislocating side. On the left hand side of the barbell, we’re buying companies that we think, again, under a different ownership, could be transformed. We just bought a division out of Raytheon called Force Point. So we’re pursuing it on both sides.
Picker: Where are the opportunities that you are most excited about right now?
Deb: I would say that, probably the two areas — and these are more or less industry-specific areas — which is mostly division carve-outs and founder-backed companies. So almost half of what we do is partnering with founders. And in many cases, the founder grows a company to a certain level and then they decide that for their own life reason, they want to monetize most of their business or 60%-70% of their business and they want us to try to help the company, take it to the next level.
So that tends to be still 50% of what we do. Another 25%-30% is division carve-outs like the Dell example I gave, the Raytheon example I gave. By the way, these are well run companies, but the division is kind of a tail on the tip of the dog and doesn’t meet the corporate profile. What we say to the parent is it’s addition by subtraction. If you get rid of this division that’s either growing slower or is more margin dilutive than your core business, your terminal multiple will increase if you divest out to us. And that’s a speech we make over and over to many, many corporates. I think it resonates. It particularly resonates in a market like today where people are more focused on revenue growth versus rule-of and most of the companies we’re running are rule-of. 
— Ritika Shah, producer at CNBC, contributed to this article. More

President Joe Biden is asking the Federal Trade Commission to look into behavior from energy companies as gas prices hover around a seven-year high.
There’s “mounting evidence of anti-consumer behavior by oil and gas companies,” the president said in a letter to the FTC.
In August the administration called on OPEC to boost production while also asking the FTC to monitor and address any illegal conduct at the pump.
The national average for a gallon of gas stood at $3.41 on Wednesday, according to data from AAA.

US President Joe Biden speaks during an event to commemorate Veterans Day at The Tomb of the Unknown Soldier at Arlington National Cemetary in Arlington, Virginia on November 11, 2021.
Nicholas Kamm | AFP | Getty Images

President Joe Biden is asking the Federal Trade Commission to look into behavior from energy companies as prices at the pump hover around a seven-year high.
In a letter to Chair Lina Khan Wednesday, Biden said there’s “mounting evidence of anti-consumer behavior by oil and gas companies.” The letter noted that prices at the pump have remained high despite a decline in the price of unfinished gasoline. “This unexplained large gap between the price of unfinished gasoline and the average price at the pump is well above the pre-pandemic average,” the letter said.

The letter added that the “two largest oil and gas companies in the United States” — which are Exxon and Chevron based on market capitalization — are on track to almost double their net income compared with 2019 levels, while the two companies have also announced stock buybacks and dividend hikes.
Biden’s latest request comes as the administration tries to quell the surge in gas prices and its contribution to inflation across the economy. In August the administration called on OPEC and its oil-producing allies to boost output and also asked the FTC to investigate price-gouging at the pump.
The administration has repeatedly said that it’s examining the tools at its disposal to alleviate some of the burden on consumers, which could include tapping the Strategic Petroleum Reserve.
The national average for a gallon of gas stood at $3.41 on Wednesday, according to data from AAA. That’s up from $3.31 one month ago, and $2.12 one year ago.
The jump in gas prices comes as West Texas Intermediate crude futures, the U.S. oil benchmark, hit a seven year high above $85 in October. The blistering rally comes after the contract dipped into negative territory in April 2020 for the first time on record as the pandemic sapped demand for petroleum products.

OPEC+ made the unprecedented decision in April 2020 to remove nearly 10 million barrels per day from the market in an effort to support prices, while U.S. producers also scaled back production.
These supply cuts, coupled with a demand recovery, have pushed oil prices to levels last seen well before the pandemic took hold.
The American Petroleum Institute called Wednesday’s letter to the FTC a “distraction from the fundamental market shift” that’s ongoing as economics emerge from the pandemic. The industry group said in a statement that “ill-advised government decisions” are “exacerbating this challenging situation.”
“Rather than launching investigations on markets that are regulated and closely monitored on a daily basis or pleading with OPEC to increase supply, we should be encouraging the safe and responsible development of American-made oil and natural gas,” said Frank Macchiarola, API’s senior vice president of policy, economics and regulatory affairs.

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A Rivian R1T electric pickup truck during the company’s IPO outside the Nasdaq MarketSite in New York, on Wednesday, Nov. 10, 2021.
Bing Guan | Bloomberg | Getty Images

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Rivian’s blockbuster initial public offering last week pushed the total exit value for U.S. public-market listings this year beyond an unprecedented $1 trillion marker, a record that more than doubles 2020 levels, according to data compiled by PitchBook.

The PitchBook data includes traditional IPOs as well as direct listings and special purpose acquisition vehicles, noting that 17% of this year’s collated valuation figure came from SPACs. 
The $1 trillion figure helps quantify just how hospitable the public markets have been to new entrants and builds a greater opportunity set of equities for investors to trade. However, it’s also a data point that may help bolster the case for those who are concerned that some of the recent IPOs epitomize a dislocation between valuation and fundamentals.
Late-stage growth — both among private companies and newly public ones — represents a pocket of froth, according to Dipanjan “DJ” Deb, the CEO of Francisco Partners, a tech-oriented buyout firm. 
“Many of the unicorns today are actually disrupting the world and deserve their valuations,” Deb said in an interview for CNBC’s Delivering Alpha Newsletter. “But probably 70-80% of them will have some sort of day of reckoning. They’re not all going to disrupt the world, and people are conflating growth and quality in late stages of a bull market.” 

Arrows pointing outwards

Rivian’s upsized initial public offering last week added about $67 billion to the total, and since then, it has more than doubled, trading around $150 billion. (Though the volatile shares were off by 14% in morning trading Wednesday.)

Still, the electric-vehicle maker notched the second-highest valuation for a listing this year, after Coinbase debuted with an $85 billion valuation in April. The crypto exchange has added roughly $5 billion in market cap since that time. 
In addition to combined valuation, U.S. equity issuance has also notched a record. So far this year, $490 billion has been raised across IPOs, follow-ons, convertible bonds and SPACs, a 9% jump from 2020 levels, according to Goldman Sachs. 
“With equity valuations at elevated levels, we expect the environment will remain favorable for equity issuance in 2022,” the firm said in a recent note. More

Check out the companies making headlines before the bell:
Lowe’s (LOW) – Lowe’s rose 2.5% in the premarket after beating estimates on the top and bottom lines and raising its annual revenue forecast. The home improvement retailer earned an adjusted $2.73 per share for the third quarter, 37 cents above estimates, with comparable store sales up 2.2%. Analysts had expected comp sales to decline by 1.5%.

Target (TGT) – Target reported an adjusted quarterly profit of $3.03 per share, beating consensus estimates by 20 cents, with revenue also above Street projections. Comparable store sales rose 12.7% compared with forecasts of an 8.2% increase. Despite the beats, the retailer’s shares slid 2% in premarket action.
GlaxoSmithKline (GSK), Vir Biotechnology (VIR) – The drug makers signed contracts to sell about $1 billion worth of their Covid-19 treatment to the U.S. government. The government also has an option to buy additional doses that last through March 2022. Glaxo was down 0.4% in premarket trading, but Vir’s stock soared 8.6%.
Tesla (TSLA) – Tesla CEO Elon Musk sold another $973 million in Tesla stock to cover a tax bill generated by the exercise of options covering 2.1 million shares. Tesla rose 2.1% in premarket action.
Rivian (RIVN) – Rivian added 1.6% in the premarket and has yet to experience a losing session since the electric vehicle maker went public last Wednesday. Rivian has been up about 15% in each of the past two trading days and closed Tuesday at $172.01 compared with its IPO price of $78.
Lucid Group (LCID) – The electric vehicle maker rose another 10.3% in the premarket following a nearly 24% surge Tuesday. Yesterday’s rally came amid Lucid’s statement that it was seeing “significant demand” for its Lucid Air model.

La-Z-Boy (LZB) – La-Z-Boy jumped 5.6% in premarket trading after the furniture maker beat estimates by 8 cents with a quarterly profit of 85 cents per share. Revenue also beat forecasts, and the company said it continues to see strong consumer demand although it has been impacted by supply chain disruptions.
Baidu (BIDU) – Baidu beat estimates on the top and bottom lines for its latest quarter, with the China-based e-commerce company benefiting from stronger ad sales as well as strength in cloud and artificial intelligence products. Baidu added 1.2% in the premarket.
Deere (DE) – Deere workers will vote on a tentative contract offer today, after rejecting two previous tentative pacts. Those workers have been on strike since October 14.
Pfizer (PFE), BioNTech (BNTX) – The FDA has promised a quick review of the application to approve the Pfizer/BioNTech Covid-19 booster dose for all adults. The New York Times reports that a decision could come as soon as Thursday. BioNTech rose 1.3% in the premarket, while Pfizer gained 0.7%.
Roku (ROKU) – The stock was downgraded to “sell” from “neutral” at Moffett Nathanson, which said signs of slowing revenue growth for the video streaming device maker have become more obvious and forced the firm to rethink its long-term assumptions. Roku shares fell 3.1% in premarket trading.

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Amazon has told some customers that, from Jan. 19 onward, the company will no longer accept Visa credit cards issued in Britain.
The e-commerce giant cited high fees charged by the payment processor.
Visa said it was “very disappointed that Amazon is threatening to restrict consumer choice in the future.”

Leon Neal | Getty Images News | Getty Images

LONDON — Amazon plans to stop accepting payments made via Visa credit cards issued in the U.K. starting next year.
The e-commerce giant has told some customers that, from Jan. 19 onward, the company will no longer accept Visa credit cards issued in Britain “ due to the high fees Visa charges for processing credit card transactions.”

Visa shares fell 2.5% in U.S. premarket trading.
Visa earlier this year hiked the interchange fees it charges merchants for processing digital transactions between the U.K. and the European Union.
After Brexit, an EU cap on interchange fees no longer applies in the U.K., allowing card networks to raise their charges.
Mastercard has also increased its U.K.-EU interchange fees.
Amazon customers were told they will still be able to use debit cards — including those issued by Visa — and non-Visa credit cards like Mastercard and American Express. Users are being encouraged to update their default payment method ahead of the changes. The news was first reported by Bloomberg.

Visa said it was “very disappointed that Amazon is threatening to restrict consumer choice in the future.”
“U.K. shoppers can use their Visa debit and credit cards at Amazon U.K. today and throughout the holiday season,” a Visa spokesperson told CNBC.
“We have a long-standing relationship with Amazon, and we continue to work toward a resolution, so our cardholders can use their preferred Visa credit cards at Amazon U.K. without Amazon-imposed restrictions come January 2022.”
Amazon blasted Visa for its high card charges. “The cost of accepting card payments continues to be an obstacle for businesses striving to provide the best prices for customers,” a spokesperson for the company told CNBC.
“These costs should be going down over time with technological advancements, but instead they continue to stay high or even rise.”
The move could be viewed as a way for Amazon to get some bargaining power over Visa to lower its fees. The payments firm also charges businesses scheme fees to become part of its network.
While smaller retailers aren’t in a position to negotiate, Amazon — given its size — may have better luck.

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Ray Dalio is launching a new China fund through a local subsidiary, according to a report Tuesday in China’s Securities Times, citing sources.
The fund aims to raise more than 3 billion yuan ($468.8 million), the report said, citing sources.
Bridgewater China did not immediately respond to a CNBC request for comment.

Bridgewater Associates Chairman Ray Dalio attends the China Development Forum in Beijing, China March 23, 2019.
Thomas Peter | Reuters

BEIJING — American hedge fund manager Ray Dalio is launching a new China fund through a local subsidiary, according to a report in China’s Securities Times, citing sources.
The fund aims to raise more than 3 billion yuan ($468.8 million), according to the report on Tuesday.

Dalio’s Bridgewater Associates is the largest hedge fund in the world, with $223 billion in assets under management as of a July 9 filing with the U.S. Securities and Exchange Commission. Over half, or nearly 59%, of those assets belonged to non-U.S. clients, according to the document.
In 2018, the firm’s Shanghai-based wholly-owned subsidiary, Bridgewater (China) Investment Management, launched its first onshore China product for investors in the mainland.

Read more about China from CNBC Pro

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Stock futures were mostly flat in overnight trading Tuesday ahead of earnings reports from big-box retailers Target and Lowe’s.
Futures on the Dow Jones Industrial Average added about 35 points. S&P 500 futures were little changed and Nasdaq 100 futures traded near the flatline.

The moves in futures trading come after fresh economic data and corporate earnings signaled U.S. consumers are ramping up spending despite rising prices.
The Dow added 54.77 points, or 0.15%. The S&P 500 gained 0.39% and the Nasdaq Composite rose 0.76%.
Retail sales rose 1.7% in October, the Commerce Department reported Tuesday, faster than economists expected. The figure measures how much consumers spend on goods across a number of categories.
Strong quarterly results from Home Depot also boosted investor sentiment Tuesday. The home improvement retailer led gainers on the Dow after earnings topped analyst estimates. Walmart also reported better-than-expected results, though its shares declined.
“US stocks rallied after an impressive retail sales report, solid industrial production data, and retail earnings showed the consumer is handling the current pricing increases. All signs are pointing to a very strong holiday season for retailers and that should help keep sending stocks higher,” Edward Moya, senior market analyst at Oanda, said in a Tuesday note. 
Investors await more retail earnings Wednesday from Target, Lowe’s, TJX, Bath & Body Works and Victoria’s Secret. Other major companies reporting results Wednesday include Cisco Systems and Nvidia.

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