Finance

Futures on the Nasdaq 100 dipped in overnight trading Thursday after disappointing earnings reports from technology companies.
Nasdaq 100 futures fell 0.5%. Dow Jones Industrial Average futures shed 26 points. S&P 500 futures ticked down 0.3%.

Shares of Intel retreated more than 8% after hours following a weaker-than-expected sales report. The semiconductor company blamed an industry-wide chip shortage for its revenue miss.
Social media stocks also dropped in extended trading after Snap said its advertising business declined due to Apple’s privacy changes. Snap shares sunk more than 21% while Facebook and Twitter each pulled back more than 4% after hours.
In Thursday’s regular session, the S&P 500 notched both a fresh intraday high and new record close. The broad index rose 0.3% for its seventh consecutive positive session. The Nasdaq Composite rose 0.6%, while the Dow shed 6.26 points, or 0.02%.
Investors digested a slew of corporate earnings reports. Tesla shares closed 3% higher Thursday, providing support to the S&P 500 and Nadaq Composite.
Companies are posting strong profits so far this third-quarter reporting season despite supply chain and inflation headwinds. Out of 101 S&P 500 members that have reported financial results, 82.6% have topped earnings expectations, according to FactSet as of Thursday after the bell.

“In a quarter where we thought things would slow down and there was concern about what profit margins were going to look like, these companies are still doing well,” said Victoria Fernandez, chief market strategist at Crossmark Global Investments.
Strong jobs data also added to the positive market sentiment. Initial jobless claims fell to a new pandemic low of 290,000 last week, the Labor Department reported Thursday — down 6,000 from the previous week and lower than the 300,000 expected from economists surveyed by Dow Jones.
All three major averages are on track to close the week higher for three-straight weeks of gains. On the month, all three indexes are up at least 5%.
Investors await earnings reports Friday from companies including American Express, Honeywell, Schlumberger and Cleveland-Cliffs.

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Carbon offsets are a reality of decarbonization goals set by companies, organizations, and governments in the near term, said Karen Fang, the Head of Global Sustainable Finance at Bank of America.
Using carbon offsets in a organization decarbonization pledge is not a sign of being lazy, it’s a reality, Fang said.
The market for carbon offset accounting and verification needs to be increased massively and quickly and standardized, she said.

Bruce Forster | Stone | Getty Images

Companies and governments are racing to release pledges and commitments to decarbonize. Those goals mean the markets for carbon offsets need to get massively bigger and more standardized very quickly.
So says Karen Fang, who leads sustainable finance for Bank of America.

Right now, organizations are making best-faith estimates in their decarbonization plans — but they are only estimates, Fang told CNBC.
“I think the skepticism is always justified, because if anybody tells you today they know exactly every single technology, at what pace they’re going to develop, how much and how fast will it take green hydrogen to break even with fossil — I think that’s not credible,” Fang said. “Anybody who says they know the answer is not credible.”
Fang knows what organizations are dealing with because she is steering the decarbonization plans for Bank of America and all of the organizations, institutions, and municipalities it lends money to, invests in, or otherwise finances.
Bank of America’s goal is to achieve net zero greenhouse gas emissions in its financing activities, operations, and supply chain before 2050. 
“Every single client that gets money from, financing, or investment from Bank of America, their emissions matter to me,” Fang told CNBC. “We spend so much time talking to the C-suite or top management at every client, institution, organization, corporation, because their plan affects our plan.”

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The carbon offset market is in its infancy

There are three levels of emissions that organizations track, called scope 1, 2 and 3.
Scope 1 emissions are the direct emissions that come from operations that are owned or controlled by the organization in question. Scope 2 emissions are the indirect emissions resulting from the generation of electricity, steam, heating, or cooling consumed by the organization.
Scope 3 emissions include all indirect emissions that come from the value chain or supply chain of the organization in question.
Tracking scope 3 emissions requires an organization to question everything: “Where is this piece of paper coming from? Where is the vendor? How is the vendor producing the product you’re using, like your pen?” Fang said.
To get to carbon neutrality, organizations will have to use carbon offsets, especially to compensate for scope 3 emissions.
That should be seen as the honest route, not a cop out, Fang said. But carbon accounting and offsets must be standardized.
“What is the most defendable, credible way of using offsets in your business in your scope, one, two and three reduction process, but without being seen as just taking the lazy way out? Fang said. “We’ve done everything we could — you still have that last bit. And we we’re not being laissez faire, we’re not being lazy. We’re actually saying, ‘We have everything we could, there was this residual bit, we want to basically offset'” that last bit.
Not only does the carbon offset market need clearer and more enforceable standards, it also needs to get a whole lot bigger very quickly.
Last month, Bank of America said in a research note that carbon offsets issued in 2020 were equivalent to 210 million metric tons of carbon dioxide emissions either removed or avoided. That’s equivalent to only 0.4% of total global emissions.
Achieving net-zero emissions by 2050 will demand approximately 7.6 gigatons of carbon dioxide offsets or removal, BofA said. That could require as much as a fifty-fold increase in the offset market. At the very low-end, the market for offsets will quadruple, the bank said.
Today, there are four primary registries for carbon offsets: Verified Carbon Standard, or Verra; The Gold Standard, the American Carbon Registry and the Climate Action Reserve. All are non-profit, non-governmental organizations.
“I almost hope, maybe this is naïve, that they could all come together with a unified form of standard recommendation,” Fang said.
“Because the world needs it and needs a lot of it and needs a lot of it really, really, fast,” she said.
While the carbon offset industry gets a bad reputation, Fang said, that’s largely due to a small number of nefarious cases of abuse. They’re not all bad.
“Planting a tree is better than not planting a tree. I don’t think anyone can argue with that, from a carbon perspective,” Fang said.
The upcoming collection of world leaders at COP26, the 26th United Nations Climate Change Conference in Glasgow, is an opportunity for supporting a carbon offsets standardization. The Group of Seven (G7) and the Group of Twenty (G20) or the United Nations are all the kind of governing bodies that could put forth accepted guidance for the industry, Fang said.
“We don’t have a choice,” Fang said. “We have to be very pragmatic and don’t let perfect be the enemy of the good.”

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People walk past Snap Inc. Snapchat signage displayed in downtown Los Angeles, California on October 2, 2021.
Patrick T. Fallon | AFP | Getty Images

Check out the companies making headlines after the bell: 
Snap — Snap shares sunk roughly 23% in extended trading after the company missed revenue expectations in the third quarter. The social media platform posted revenue of $1.07 billion versus $1.1 billion expected, according to Refinitiv. Snap saw its advertising business decline after Apple introduced privacy changes earlier this year. The company also issued lower-than-expected fourth-quarter revenue guidance. Other social media and digital advertising stocks also fell after hours following Snap’s report, including Facebook, Twitter and The Trade Desk.

Intel — Shares of Intel retreated 8.8% in after hour trading following the semiconductor company’s quarterly financial results report. Intel posted revenue of $18.1 billion, compared with the Refinitiv consensus estimate of $18.2 billion. The company blamed the weaker-than-expected sales on an industry-wide component shortage. Intel also issued lower-than-expected fourth-quarter earnings-per-share guidance.
Chipotle Mexican Grill — Chipotle shares added 1% after hours following an earnings beat. The fast-casual chain crushed analyst expectations, posting adjusted earnings of $7.02 per share versus $6.32 per share expected, according to Refinitiv. Price hikes helped the company offset higher beef and freight costs.
Mattel — Shares of Mattel gained 5.5% in extended trading after the toy maker’s quarter earnings report crushed Wall Street expectations. Mattel posted earnings of 84 cents per share on revenue of $1.76 billion, while analysts surveyed by Refinitiv expected earnings of 72 cents per share on revenue of $1.69 billion.
Whirlpool — Whirlpool shares fell 4.3% after hours following a weaker-than-expected quarterly report. The home appliance company posted revenue of $5.49 billion versus $5.74 billion expected, according to Refinitiv. Whirlpool also issued lower-than-expected full-year earnings-per-share and revenue guidance.
Boston Beer — Shares of Boston Beer fell 3.3% in extended trading despite the brewery’s better-than-expected third-quarter sales report. Boston Beer posted revenue of $561.6 million, topping the consensus analyst estimate of $531.5 billion, according to StreetAccount.

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Shares of WeWork closed up more than 13% Thursday after the company went public through a special purpose acquisition company more than two years after its failed IPO.
The office startup halted initial plans for an IPO in 2019 after investors raised concerns over its business model and its founder and then-CEO Adam Neumann.
The company was valued at $9 billion earlier this year, a sharp drop from the $47 billion valuation from SoftBank Group in 2019.

Shares of WeWork closed up 13.49% on Thursday after the company went public through a special purpose acquisition company more than two years after its failed IPO.
The office-leasing company scrapped plans for an IPO in 2019 after investors raised concerns over its business model and corporate governance and its founder and then-CEO Adam Neumann.

Plans for the merger with BowX Acquisition Corp. were first announced in March, in a deal that reportedly valued the company at roughly $9 billion.
The valuation is a sharp drop from 2019, when WeWork was initially valued at a steep $47 billion by SoftBank Group. Its valuation slowly lowered as news of the company’s finances unraveled and investor demand wained.
“You’ve said this is a story with drama,” WeWork Executive Chairman Marcelo Claure told CNBC’s “Squawk Box” on Thursday. “Sure, this is a story where a lot of people wrote documentaries that it was the end of WeWork. Well the resistance, the persistence of these people is incredible. This company is here, is stronger than ever, and no doubt that we’re going to be celebrating many more milestones.”
What went wrong
WeWork’s troubles began in August 2019, when the company’s IPO filing revealed it had lost $1.9 billion the previous year and was on track to run through remaining cash. A crippling report from The Wall Street Journal in September raised concerns over how Neumann managed the company, including possible illegal activities.
Neumann stepped down as CEO that month. CNBC reported in October that he would get a package worth up to $1.7 billion to walk away from WeWork and give up his voting rights. Real estate executive Sandeep Mathrani later assumed the CEO role.

“WeWork is an amazing brand and if someone gives you a super brand to turn around, you’re going to have to say yes,” Mathrani told CNBC’s “Squawk Box.”
After the failed IPO, WeWork’s troubles continued. That November, Reuters reported the New York State Attorney General was investigating the company, including whether Neumann engaged in self-dealing to enrich himself.
That included reports that Neumann purchased the trademark for the word “We,” and planned to charge WeWork $6 million to transfer it. Self-dealing is when someone acts in their own best interest rather than their clients.
Bloomberg also reported that month that WeWork was facing scrutiny from the U.S. Securities and Exchange Commission over its disclosures to investors in the run-up to its failed IPO.
The failed IPO and onslaught of the pandemic led to several rounds of layoffs at the company in late 2019 and 2020. WeWork also suffered massive losses as Covid-19 shuttered office spaces worldwide.
Claure told “Squawk Box” that everybody has “an important role to play” and that Neumann deserves credit as the visionary who came up with the idea.
Neumann congratulated the new leadership team during an interview with the media Thursday morning at the outdoor beer garden at The Standard, an expensive hotel in New York City’s meatpacking district. He and co-founder Miguel McKelvey “couldn’t be happier” to celebrate the IPO, Neumann said.
“This has always been about the team and about what we did together, and we’re just so proud today and for this day,” he said.
SoftBank takeover
SoftBank made its first multi-billion dollar investment in WeWork in 2017 through its $100 billion Vision Fund, which has also funded Silicon Valley startups like Uber. The Japanese technology giant invested a total $18.5 billion in WeWork in the lead-up to its failed IPO.
In October 2019, SoftBank agreed to spend $10 billion for an 80% stake in WeWork. As part of the deal, SoftBank also said it would buy $3 billion in shares from investors and employees, but it nixed those plans in April 2020, in part due to government investigation into the company.
SoftBank progressively dropped its valuation of WeWork to $7.3 billion at the end of Dec. 2019 and $2.9 billion in early 2020.
During an earnings presentation later that year, SoftBank CEO Masayoshi Son said he was “foolish” for his firm’s multibillion investment in WeWork.
“We made a failure on investing in WeWork and I’ve been admitting that several times I was foolish,” he said, according to a FactSet transcription of the call.
Claure told CNBC’s “Squawk Box” that Son is “excited” about the company going public.
“Two years ago, the value of WeWork was zero and the fact we’ve taken it from zero to $8 billion to $9 billion is great,” Claure said on “Squawk Box.”
WeWork’s comeback
The pandemic recovery has since accelerated the demand for flexible workspaces, as more workers shift toward hybrid or permanent remote work.
In March, WeWork agreed to the $9 billion SPAC merger with BowX Acquisition, a move that was finalized Oct. 20. As part of the deal, SoftBank retained a majority stake in the company but agreed to a one-year lock-up on their shares, according to a person familiar with the matter, Reuters previously reported.
SPACs, also known as blank-check companies, are set up for the sole purpose of raising money through an IPO and using that money to acquire an existing company. They have soared in recent months, as celebrities like Shaquille O’Neal hop on the trend. Companies like Virgin Galactic and Lucid Motors have used SPACs to go public, but their structure has also drawn scrutiny from the SEC.
BowX Acquisition raised $420 million when it went public in August 2020. WeWork is trading under the ticker WE.

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The Federal Reserve announced sweeping new rules for its top officials Thursday, banning trading in individual stocks and bonds.
Those new rules come on the heels of a swelling ethics controversy over whether central bank officials should be able to trade while their policies can, and often do, move markets.
Officials will be restricted primarily to owning mutual funds, which they will have to hold for a year and will need permission to buy or sell.

Responding to a growing controversy over investing practices, the Federal Reserve announced Thursday a wide-ranging ban on officials owning individual stocks and bonds and limits on other activities as well.
The ban includes top policymakers such as those who sit on the Federal Open Market Committee, along with senior staff. Future investments will have to be confined to diversified assets such as mutual funds.

Fed officials can no longer have holdings in shares of particular companies, nor can they invest in individual bonds, hold agency securities or derivative contracts. The new rules replace existing regulations that, while somewhat restrictive, still allowed officials such as regional presidents to buy and sell stocks.
“These tough new rules raise the bar high in order to assure the public we serve that all of our senior officials maintain a single-minded focus on the public mission of the Federal Reserve,” Fed Chairman Jerome Powell said in a statement.
Under the new rules, the officials will have to provide 45 days’ notice in advance of buying or selling any securities that are still allowed. They also will be required to hold the securities for at least a year, and they cannot buy or sell funds during “heightened financial market stress,” a news release announcing the moves said.
“I’m hopeful that swift action will allow us to put this behind us and get us back focused on the job ahead,” Atlanta Fed President Raphael Bostic told CNBC during a “Closing Bell” interview.
The rules come on the heels of disclosures that multiple Fed officials had been buying and selling stocks at a time when the central bank’s policies were designed to improve market functioning, particularly during the Covid-19 crisis.

Since the early days of the pandemic, the Fed has purchased more than $4 trillion worth of bonds to bolster the economy through liquidity and low interest rates. It also bought billions in corporate bonds of some of the biggest names on Wall Street in an effort to ensure market functioning.

Regional presidents Robert Kaplan of Dallas and Eric Rosengren of Boston resigned shortly after disclosures that they had engaged in trading of individual securities in 2020. In Kaplan’s case, the moves occurred in large-dollar allotments.
Vice Chairman Richard Clarida also had been featured in the reports. Powell also sold securities last year, though they were exchange-traded funds that tracked market indexes. The chair also owns municipal bonds, which the Fed bought as part of its relief measures.
“It’s probably a wise move, because the fact is that distinguishing between genuine insider trading and just ordinary trades that look like they might be taking advantage of insider information is fraught with problems,” said George Selgin, director emeritus of the Center for Monetary and Financial Alternatives at the Cato Institute.
The announcement stated that regional presidents will have to disclose transactions within 30 days, a requirement already in place for FOMC members and senior staff. The new rules will be incorporated formally “over the month months,” the release said. Current holdings will have to be divested, though no timetable has been announced.
“The optics are bad,” Selgin said of the previous Fed rules. “They needed a rule like this. I don’t think we need to feel sorry for them. They’ll do well enough with this restraint in place.”
Those new rules come following a fresh disclosure from the New York Times that the Fed’s ethics office had sent an email in March 2020 to officials cautioning about trading as the pandemic was worsening and central bank officials were rolling out a series of emergency measures.
Sen. Elizabeth Warren, D-Mass., a Fed critic who has said she will not support Powell should he be renominated for a second term, called Thursday for public release of the email, the Times reported.

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Atlanta Federal Reserve President Raphael Bostic sees an interest rate hike coming later in 2022 as inflation persists.
Bostic also welcomed a change announced Thursday which bars Fed officials from buying and selling individual stocks and bonds.
“The market has changed and we need to change our approach to make sure the public trust is kept,” he told CNBC.

Atlanta Federal Reserve President Raphael Bostic said Thursday that he sees an interest rate hike coming later in 2022 as he forecasts a growing economy and lasting inflation pressures.
The central bank official told CNBC that he has “penciled in” a rate increase in “late third, maybe early fourth” quarter of 2022. The expectation puts him on the more hawkish side of Fed officials who are now about even on whether policy will tighten next year.

“Our experience from the pandemic has really frankly surprised to the upside,” he said in a live “Closing Bell” interview. “I’ve really adjusted my expectations moving forward.”
Bostic’s outlook comes as some recent economic data slows and the Atlanta Fed’s own GDP tracker estimates GDP growth of just 0.5% in the third quarter.
He said he thinks that some of the barriers in place due to the Covid-19 pandemic will fade and clear the way for stronger growth. One challenge he doesn’t see going away soon, though, is inflation.
Other Fed officials have called the current spate of inflation, which is running at a 30-year high, transitory. Bostic rejects that notion. He said price pressures are showing up across the economy and will influence growth and policy.
“The disruptions are going to last longer than we expected,” Bostic said. “The labor markets are not going to get to equilibrium as quick as we hoped, but demand was also going to stay high and that combination was going to mean we’re going to have inflationary pressures. The more I talk to folks, it’s becoming clearer and clearer this is going to last into 2022.”

The Fed has been keeping its benchmark short-term interest rate anchored near zero since the start of the pandemic. In recent weeks, officials have indicated they are ready to start tapering the monthly asset purchases, possibly starting in November. Bostic has favored that move.
He also said he will watch inflation developments closely. If the Fed needs to put on the brakes to control prices, Bostic said he “will really encourage my colleagues and I to take some definitive steps to try to prevent that damage from getting very deep.”
Bostic also addressed a major announcement the Fed made Thursday, in which it said it will bar top officials from buying and selling individual stocks and bonds and playing the derivatives market. The move follows disclosures of trading that led to the resignation of two Fed regional presidents.
Bostic said he welcomed the change.
“I think this is a step to reflect and acknowledge that conditions have changed our position. The market has changed and we need to change our approach to make sure the public trust is kept,” he said.

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Goldman Sachs just closed its second billion-dollar blank-check deal as a sponsor, with the Wall Street firm aiming to change the struggling SPAC market.
The deal fully defers the so-called sponsor promote, and sponsors will only start getting paid when shares rise more than 20%.
“At the firm, we are trying to build a franchise doing this. In order to do that, we want to have strong relative performance over time,” said Tom Knott, head of the SPAC business at Goldman.

A trader works on the floor of the New York Stock Exchange (NYSE) in New York, Sept. 20, 2021.
Michael Nagle | Bloomberg | Getty Images

Goldman Sachs just closed its second billion-dollar blank-check deal ever as the Wall Street firm seeks to change the struggling SPAC market by building a sustainable franchise that aligns investor interests with insiders.
Nuclear measurement and analytics company Mirion Technologies started trading Thursday on New York Stock Exchange after merging with GS Acquisition Holdings Corp. II, which values the combined company at about $2.6 billion including debt.

Unlike most of the SPACs on the market where sponsors are entitled to 20% of the total shares outstanding following the IPO for free, or at a big discount, Goldman’s Mirion deal fully defers this so-called sponsor promote and sponsors will only start getting paid when shares rise more than 20%.
“If you earn the promote upfront, there is always a bias towards stretching a little bit more on price and a little bit more on projections because you are incented to get the deal done,” said Tom Knott, head of Goldman’s emerging SPAC business. This division falls under the asset management arm of the Wall Street bank.
Special purpose acquisition companies raise money on the public markets sometimes without a vision of which companies they will eventually take public within two years. They have come under scrutiny for disproportionate insider benefits and lucrative incentives, oftentimes at the expense of retail investors.
Elizabeth Warren and other Democratic senators recently sent open letters to a few high-profile SPAC leaders to question how they are compensated. SEC Chairman Gary Gensler has repeatedly warned of the misaligned interests between sponsors and shareholders and said greater disclosure is needed.
Goldman is seeking to bridge the gap between the returns that insiders get versus average shareholders. The bank also invested $200 million in the Mirion deal, which makes it the biggest private investment in public equity, or PIPE, investor.

“At the firm we are trying to build a franchise doing this. In order to do that, we want to have strong relative performance over time,” Knott said. “Sponsors who structure their transaction responsibly and bring really good businesses to market will always have a place to play.”

Arrows pointing outwards

After a blockbuster 2020 and the first quarter of 2021, now a record amount of SPAC capital — more than $135 billion — is seeking target companies to take public, according to Barclays Research.
The first deal Goldman Asset Management did was Vertiv Holdings at the end of 2019, which valued the data center equipment company at more than $5 billion. The shares have since more than doubled.
Goldman has registered additional SPACs with the SEC, including GS Acquisition Holdings Corp. VIII and IX.
“I sit down with 1,000 companies with each deal we buy, and I tell everyone of them the statistical probability of us doing a deal with pretty low, but our hope is at the very least, the next SPAC that comes through your door, I hope the first thing you ask them is why are you not willing to fully defer your promote because Goldman Sachs is,” Knott said.
“We are really focused on changing the market,” he added. More

Life Changes

Nineteen percent of all gig drivers (for online ride-hailing and food-delivery services) were collecting unemployment benefits in July 2020, according to a JPMorgan Chase Institute report.
By comparison, receipt among other gig workers peaked between 13% and 15%, and at roughly 9% for non-gig workers, according to the report.
The report suggests lawmakers should consider gig drivers when designing the U.S. safety net.

hxyume | E+ | Getty Images

About 1 out of every 5 drivers in the gig economy was collecting unemployment benefits at the pandemic’s peak, according to a new analysis published by the JPMorgan Chase Institute.
These drivers worked for “online platforms” offering services like ride hailing (Uber and Lyft, for example) and food delivery (like Instacart and DoorDash).

Nineteen percent of all gig drivers were receiving jobless benefits in July 2020, according to the report, published Tuesday. That’s the highest monthly share among drivers during the Covid pandemic. (The report analyzed anonymized personal checking accounts for 30 million Chase customers.)
It’s also a higher share than other categories of gig workers and more than twice that of non-gig workers.

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Here’s a look at other stories offering a financial angle on important lifetime milestones.

The data suggests lawmakers should consider gig workers — especially drivers — when designing the U.S. safety net, according to Fiona Greig, co-president of the JPMorgan Chase Institute.
Drivers tend to live in low-income households and account for the biggest share of gig workers, according to the report.
“Of all platform workers, drivers appear to be the group of biggest concern for policymakers from a welfare perspective, the report said. “They are the most numerous group, have the lowest family incomes and were the most likely to have received unemployment insurance during 2020.”

Unemployment benefits

Gig workers, generally treated as independent contractors, are typically ineligible for state unemployment benefits.
Congress authorized them (and others like freelancers and part-timers) to collect benefits via a new federal program, Pandemic Unemployment Assistance, during the Covid crisis. (The program ended on Labor Day.)
“There was no one to drive to the airport because no one was traveling,” Greig said of work conditions for drivers during the pandemic. “There was a demand shock and income shock.”
Worker advocates have called for aspects of the PUA program — which supported millions of people — to be a permanent fixture of the unemployment safety net.

Benefit receipt peaked at between 13% and 15% for non-driver gig workers (services like house repair, dog walking, online selling and short-term leasing of housing or cars) during the pandemic, according to the JPMorgan report.
The share peaked at 9% for non-gig workers (like W-2 employees), even when accounting for differences in factors like age and income.
In 2019, the typical take-home pay for drivers was $49,000 — the lowest among all categories of gig workers, the report found. (By comparison, people who offer short-term leases — like an AirBnb owner, for example — made $102,000 that year.)

Low earners throughout the U.S. economy were unemployed at much higher rates than other workers during the pandemic. Jobs in the service sector, which tend to be in-person and pay lower wages, were hit particularly hard by the health crisis.
In mid-August, employment for the bottom third of wage earners (who make less than $27,000 year) was still down 26% from pre-pandemic levels, according to Opportunity Insights, a joint economic project of Harvard University and Brown University. Meanwhile, jobs were up 10% for the highest third of earners, who make over $60,000 a year.
The report doesn’t specify how the rate of unemployment receipt among gig drivers compares with other low-paid groups outside the gig economy, such as those in leisure and hospitality.   More