Finance

Goldman Sachs named Denis Coleman the bank’s new chief financial officer beginning next year.
Coleman, the current co-head of the firm’s Global Financing Group, will take over for Stephen Scherr, who is stepping down as CFO at year-end, Goldman said Tuesday in a release.

Stephen Scherr, chief strategy officer and head of GS Bank USA at Goldman Sachs & Co.
Jon Halty | Bloomberg | Getty Images

Goldman Sachs named Denis Coleman the bank’s new chief financial officer beginning next year.
Coleman, the current co-head of the firm’s Global Financing Group, will take over for Stephen Scherr, who is stepping down as CFO at year-end and retiring in January 2022, Goldman said Tuesday in a release.

“Denis has consistently proven himself through his strong judgment and operational capability across roles of increasing responsibility and we look forward to his contributions to the firm as Chief Financial Officer,” Goldman CEO David Solomon said in the release.
The move is the first instance of turnover within Solomon’s inner circle, the top executives he named as deputies shortly before taking over Goldman in October 2018.
Before being promoted to CFO, Scherr, 57, led the firm’s efforts to develop its retail banking business, Goldman’s first foray into the consumer realm. He joined Goldman in 1993 as an investment banking associate and was steadily promoted to roles including head of the financing group, head of the firm’s Latin American business and chief strategy officer.
This is a developing story. Check back for updates.

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Take a look at some of the biggest movers in the premarket:
Oracle (ORCL) – Oracle reported quarterly earnings of $1.03 per share, 6 cents a share above consensus estimates. The business software giant’s revenue fell short of forecasts, however, amid increasing cloud computing competition. Oracle fell 2.5% in the premarket.

Angi (ANGI) – Angi rose 3.3% in premarket trading after the digital marketplace for home services reported its August metrics, which included a 21% jump in revenue from a year earlier.
Herbalife Nutrition (HLF) – Herbalife shares tumbled 9.7% in the premarket after the maker of nutrition products cut its outlook. Herbalife cited lower than expected levels of activity by its independent distributors, likely due to pandemic-related uncertainty.
Apple (AAPL) – Apple issued a patch to its iOS system to fix a vulnerability related to the iPhone’s iMessage function. An Israeli firm had been exploiting the vulnerability since February to infect iPhones, according to research group Citizen Lab.
Intuit (INTU) – Intuit announced a deal to buy digital marketing firm Mailchimp for about $12 billion in cash and stock. That follows the TurboTax maker’s acquisition of Credit Karma last year for more than $7 billion. It had been reported earlier this month that Intuit and Mailchimp were in acquisition talks.
Coinbase (COIN) – The cryptocurrency exchange operator’s shares rose 1.2% in premarket trading after Piper Sandler reiterated an “overweight” rating on the stock.

Cameco (CCJ) – The Canada-based uranium producer continued its recent rally, up 2.1% in the premarket after rising in 10 of the past 11 sessions. It’s among uranium-related stocks that have caught the attention of investors on social media.
Fox Corp. (FOXA) – Fox finalized a deal to buy celebrity news platform TMZ from AT&T’s (T) WarnerMedia unit. Terms were not disclosed, but The Wall Street Journal reported that TMZ was valued at less than $50 million after earlier indications that the two sides were talking about a price between $100 million and $125 million. Fox rose 1.1% in premarket trading.
Southwest Airlines (LUV) – Southwest President Tom Nealon is retiring from the carrier effective immediately. His departure comes three months after CEO Gary Kelly announced he would retire in January and named longtime Southwest executive Bob Jordan as his successor. Nealon had been seen as a possible candidate to succeed Kelly.
SeaChange International (SEAC) – SeaChange reported a quarterly loss of 3 cents per share, smaller than the 9 cents a share loss anticipated by analysts. The video management solutions company saw revenue exceed Street forecasts. The company said it has a “robust pipeline” of sales opportunities and significant momentum. The stock rallied 3.7% in premarket trading.
Monmouth Real Estate (MNR) – The real estate investment trust added 1% in premarket action after saying it was re-exploring strategic alternatives, following investor feedback and prior expressions of takeover interest in the company.

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SoftBank is committing $3 billion to kickstart a second fund focused on investing in technology companies in Latin America, the company announced Tuesday.
Venture capital has poured into Latin America, where start-ups raised $9.3 billion in the first six months of 2021, according to CBInsights.
SoftBank has reemerged as a major tech investor, participating in big recent rounds for digital fitness tracker Whoop and sports e-retailer Fanatics.

WeWork Executive Chairman Marcelo Claure during an interview with Andrew Ross Sorkin at WeWork headquarters in New York City on February 10, 2020.
David A. Grogan | CNBC

SoftBank Group is committing $3 billion to kickstart a second fund focused on investing in start-ups in Latin America, the Japanese tech conglomerate announced Tuesday.
After a dismal stretch in 2019 that culminated in the scrapped IPO of WeWork, SoftBank has reemerged as a major tech investor across the globe, and is now bolstering its bet on a region that’s seeding a growing number of valuable companies.

Venture investors poured $9.3 billion into Latin America in the first six months of 2021, compared to $5.3 billion all of last year, according to a report from CBInsights. Brazil’s Nubank was recently valued at $30 billion, putting it among the most valuable venture-backed companies in the world. The company is expected to go public soon.
In a blog post in July titled “The Latin American Startup Opportunity,” partners at venture firm Sequoia wrote, “the market opportunity is there, and the ecosystem is ready and galvanized.” Sequoia is an investor in Nubank.
SoftBank’s Latin America Fund II will focus on investing in companies utilizing technologies like artificial intelligence and scout deals in e-commerce and digital financial services as well as blockchain projects. SoftBank has already committed $3 billion to the fund, which will operate out of Miami, São Paulo and Mexico City.
“There is so much innovation and disruption taking place in Latin America, and I believe the business opportunities there have never been stronger,” SoftBank CEO Masayoshi Son said in the release.
SoftBank operating chief and former Sprint CEO Marcelo Claure leads investments in the region. The Bolivia native, who also serves as executive chairman for WeWork, currently heads the initial $5 billion SoftBank Latin America Fund, which launched in 2019.

In recent months, Softbank has led a string of large investments as it aims to leave behind its role in the WeWork crisis. Last month, the company led a $200 million investment in digital fitness tracker Whoop and a $650 million round in Indian ed-tech company Eruditus. It also participated in a $325 million financing for sports e-retailer Fanatics.
WATCH: Uala CEO on fintech use in Latin America

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IT IS HARD to overstate the time that goes into calculating a consumer-price index. In America statisticians survey nearly 10,000 people every quarter, construct a sample of some 80,000 things they buy, and then monitor their prices by ringing up thousands of shops, restaurants and offices. So the hard-working boffins might be miffed to learn that the Federal Reserve thinks a better way of tracking inflation is simply to lop off the things with the biggest price swings. The result that emerges is known as “trimmed mean” inflation. As America goes through its most sustained bout of price pressure since 1990, this narrower measure is more than an academic exercise.In August the headline consumer-price index was 5.3% higher than a year ago, according to data published on September 14th. It was the third consecutive month of inflation at roughly that pace. By contrast the trimmed-mean rate—using the Fed’s preferred measure, the personal consumption expenditures (PCE) price index—has remained at just about 2%, in line with the central bank’s inflation target.The gap between the headline scare and the far more subdued alternative gets to the heart of the debate about whether the current burst of inflation is transitory or persistent. Those taking the former view argue that a small number of goods and services have driven the jump in inflation, almost all traceable to pandemic-related disruptions. The price of flights, for example, soared as air travel roared back, but in August ticket prices slumped as the Delta variant of covid-19 dampened enthusiasm for travel. The trimmed index is appealing because it strips out such outliers. Jerome Powell, the Fed’s chairman, has pointed to the measure as evidence that price pressures are not yet broad-based.There are two possible objections to using the trimmed measure. The first is that the Fed is cherry-picking, emphasising whatever inflation gauge looks most flattering. Central bankers often highlighted narrower “core” inflation in order to better capture underlying trends. In the past the Fed would point to the PCE index excluding food and energy prices. But this measure is less well-behaved this time, rising to 3.6% year-on-year in July, a three-decade high. Hence the suspicion that the trimmed mean is a handy substitute.That, though, is unfair to the Fed. Central bankers have been tracking the trimmed measure since well before the pandemic. The Dallas Federal Reserve has published a version since 2005. A research note by Fed economists released in 2019 found that trimmed-mean gauges are less volatile than headline indices and better predictors of future price changes.By focusing on the middle of the price pack, the trimmed mean gauge also helps reveal just how widespread price pressures truly are. (The Dallas Fed orders all items from highest price increase to the lowest, and lops off the top 31% and the lowest 24%, as judged by expenditure weights.) Trimming the mean also answers one of the standard complaints about core-inflation gauges that exclude food or energy prices—namely, that people spend so much money filling their bellies and their petrol tanks that it makes little sense to ignore these costs systematically. Food and energy are included in trimmed indices, so long as their price swings are not unusually wild.The second objection is more damaging: that the trimmed mean is more worrying than Mr Powell would have it. Economists at the Dallas Fed say that, as a rough guide, when headline inflation exceeds the trimmed mean by one percentage point, it feeds through to about 0.25 percentage points of additional trimmed-mean inflation in a year’s time. On this basis the trimmed-mean rate is likely to hit 2.5% by the end of next year. A different trimmed mean calculated by the Cleveland Fed, which is less eager in its snipping, has already jumped, climbing to 3% from 2% at the start of the year.However you trim, the conclusion seems clear enough. Inflation is not as bad as the headlines suggest. But price pressures are steadily spreading. More

U.S. stock index futures were modestly higher during overnight trading on Monday, after the S&P 500 finished in the green, snapping a five-day losing streak.
Futures contracts tied to the Dow Jones Industrial Average rose 75 points. S&P 500 futures gained 0.2%, while Nasdaq 100 futures were up 0.13%.

The Dow and S&P both advanced during regular trading for the first time in six sessions as investors bet that some recent selling looked overdone. The Dow gained about 260 points, or 0.76%, after at one point during the session rising nearly 1%. The S&P advanced 0.23%.
The Nasdaq Composite, however, bucked the trend and slid 0.07% for its fourth straight negative session. The tech-heavy index is on its longest daily losing streak since mid-July.
Eight out of 11 sectors finished in the green, led higher by energy stocks, which jumped on the back of rising oil prices.
Stocks linked to the economic reopening – including airlines and cruise line operators — also gained after the seven-day daily U.S. Covid case average declined to around 144,300, down from roughly 167,600 cases per day at the beginning of the month.

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“In the near-term, we expect increased stock market volatility, although long-term investors should use pullbacks to add to stock exposure,” noted Richard Saperstein, chief investment officer at Treasury Partners. “The next six weeks tend to be seasonally weak for stocks, which is an additional worry for a stock market that is already facing elevated valuations and a lack of near-term upside catalysts,” he added.

Closely-watched inflation data will be released on Tuesday when August’s consumer price index reading is released. Economists are expecting consumer prices to have risen 0.4% month over month during August, and 5.4% year over year, according to estimates from Dow Jones. The print comes after producer prices jumped 8.3% year over year during August, marking the largest annual increase since records were first kept in November 2010.
The National Federation of Independent Business will also release its latest survey on Tuesday, which will provide investors with a pulse on how small businesses are faring.
In Washington, House Democrats proposed new tax hikes to pay for the $3.5 trillion spending package. A summary from the Ways and Means Committee showed that the plan calls for top corporate and individual tax rates of 26.5% and 39.6%, respectively.
The major averages are all down at least 1% for September, and RBC doesn’t see the S&P 500 surging into the end of the year. The firm raised its year-end target for the benchmark index to 4,500 on Monday, up from a prior target of 4,325. The new target is less than 1% above where the index closed on Monday. The firm also introduced a 2022 year-end target of 4,900.
“We continue to think the S&P 500 will experience a bout of volatility/meaningful pullback before the year is up, a call that we’ve been making for the past several months due to elevated equity market sentiment and positioning,” the firm wrote in a note to clients.
“While we take the reasons for a pullback seriously, we also see economic recession risks as low, reducing the likelihood of a full growth scare, and intend to treat it as a buying opportunity,” RBC added.
The Federal Reserve begins a two-day policy meeting on September 21.

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Twitter CEO and co-founder Jack Dorsey gestures while interacting with students at the Indian Institute of Technology (IIT) in New Delhi on November 12, 2018.
Prakash Singh | AFP | Getty Images

Check out the companies making headlines in midday trading.
Marathon Oil — Shares of the exploration and production company jumped roughly 7% amid an advance in oil prices. APA and Occidental gained 7.8% and 6.6%, respectively, and every component in the energy sector traded in the green around noon on Wall Street. West Texas Intermediate crude futures, the U.S. oil benchmark, broke above $70 on Monday.

Virgin Galactic — Virgin Galactic fell 3.5% after the company said it would delay its first commercial research space mission, due to a third-party supplier that warned about a potential manufacturing defect in a part used in the flight control system. The flight was scheduled for late September or early October.
Airbnb, Twitter — Airbnb and Twitter fell about 3% after Goldman Sachs initiated coverage of both stocks with sell ratings. Goldman said that Twitter will struggle to reach its revenue goals while Airbnb’s stock was still at risk from uncertainty around the travel industry’s recovery.
Tencent Music Entertainment — Tencent Music fell 4.6% after Loop downgraded the stock from buy to hold. The firm said it expects there will be a “slow path to sentiment recovery for the sector,” that it sees greater regulatory headwinds for online media assets and that it would rather be positioned in online retail assets.
Dell — Shares of Dell gained 3.8% after Goldman Sachs added the computer maker to its conviction buy list. The firm’s price target of $137 on the stock implies 44% upside to the Dell’s Friday closing price. “We believe strong cash flow generation and a clear road map for a debt paydown continue to argue for a multiple on Standalone Dell closer to comps,” Goldman said.Vaccine makers – Pfizer and its partner BioNTech saw shares fall more than 2% and 6%, respectively, despite a Reuters report on Friday that said their Covid-19 vaccine could be authorized for use in children between 5 and 11 years old as soon as October. Meanwhile, Moderna shares fell more than 6% after a report that Covid booster shots are “not appropriate” at this time, according to data by U.S. and international scientists conclude.
Carlyle Group – Shares of the private equity firm rose 1% after it said it’s considering a $6 billion sale or initial public offering for packaging company Novolex, according to Bloomberg. The private-equity firm bought Novolex for an undisclosed amount in November 2016.

 — CNBC’s Jesse Pound, Pippa Stevens and Hannah Miao contributed reporting

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The New Road to Retirement

House Democrats proposed several changes to retirement accounts as part of a push to make the tax code more equitable and raise money for their $3.5 trillion budget plan.
Among them, the reforms would end “backdoor” and “mega-backdoor” Roth strategies for the wealthy and add new rules for individuals with retirement savings over $10 million.
The legislation would also disallow IRA investments that require owners to be accredited investors.

Mandel Ngan | AFP | Getty Images

House Democrats proposed a slew of changes to retirement accounts for the rich on Monday, part of a restructuring of the tax code tied to a $3.5 trillion budget plan.
Taken together, Democrats’ reforms aim to erode the use of retirement accounts as a perceived tax shelter for the wealthy and instead promote them as a way for low- and middle-income Americans to build a nest egg.

Most of the changes would start in 2022.
Wealthy individuals with retirement accounts exceeding $10 million would be prohibited from contributing extra savings and would have a new required minimum distribution each year, according to an outline of tax legislation unveiled Monday by the House Ways and Means Committee.

The bill would also repeal so-called Roth conversions in individual retirement accounts and 401(k)-type plans for those making more than $400,000 a year. It would also prevent savers from using the “mega-backdoor Roth” strategy, regardless of income level.
Further, the legislation would prohibit individual retirement accounts from holding investments that require buyers to be accredited investors, a status generally reserved for wealthy investors.
The proposals are part of a broader theme of raising taxes on those who earn more than $400,000 a year to help pay for education, climate, paid-leave, child-care and other measures while also making the tax code more equitable.

More from The New Road to Retirement:

Here’s a look at more retirement news.

They also follow Democrats’ outcry following a recent ProPublica report that Peter Thiel, a PayPal co-founder, owns a Roth IRA that had grown to $5 billion in 2019, up from less than $2,000 in 1999.
“IRAs were designed to provide retirement security to middle-class families, not allow the super wealthy to avoid paying taxes,” Sen. Ron Wyden, D-Ore., chair of the Senate Finance Committee, said in July after a data release showing growth of “mega” IRAs.
Democrats have narrow margins within which to pass a bill, which they aim to do with a simple majority via a budget reconciliation maneuver.
Republicans remain staunchly opposed. Rep. Kevin Brady, R-Texas, ranking member of the Ways and Means Committee, framed the spending as the “greatest expansion of the welfare state in our lifetimes” during a Thursday hearing, saying that it “wastes hard-earned tax dollars.”

Contribution limits

Current law lets taxpayers make IRA contributions regardless of account size.
However, the legislation would prohibit individuals from making more contributions to a Roth IRA or traditional IRA if the total value of their combined IRA and defined-contribution plan exceeds $10 million. A defined-contribution plan is a 401(k) plan or other similar workplace savings plan.
The policy’s purpose would be “to avoid subsidizing retirement savings once account balances reach very high levels,” according to a proposal outline.
That limit would apply to single taxpayers with more than $400,000 of taxable income. The threshold would be $450,000 for married taxpayers filing jointly and $425,000 for heads of household.

RMDs for ‘mega’ IRAs

Individuals whose combined traditional IRA, Roth IRA and defined-contribution retirement accounts exceed $10 million at year’s end would have to withdraw at least 50% of the excess the following year.
Those with account totals exceeding $20 million must pull from Roth IRAs and 401(k) plans first.
These new required minimum distributions for mega IRAs would only be required for savers whose taxable income exceeds the same thresholds identified above for the contribution limits.

Backdoor Roth

There are income limits to contribute to Roth IRAs. In 2021, single taxpayers can’t add money to such accounts if their income exceeds $140,000.
But current law allows for “backdoor” contributions to Roth IRAs. That can be achieved by converting a traditional IRA or Roth 401(k) account, which don’t carry income limits. There are income limits that determine whether contributions to traditional IRAs are tax-deductible or not.
Savers pay tax on the conversions, but their future investment growth and retirement distributions are tax-free.
The legislation would end the backdoor Roth IRA strategy by eliminating Roth conversions for both IRAs and workplace plans such as 401(k) plans.
The policy would apply at the same income thresholds listed above. It would count for distributions, transfers and contributions made in taxable years beginning after Dec. 31, 2031.

Mega backdoor Roth

The so-called “mega-backdoor Roth” strategy uses a principle similar to that of the backdoor Roth.
The strategy lets high earners save up to $58,000 in a 401(k) plan — more than the traditional $19,500 contribution limit — using a type of after-tax 401(k) bucket. Savers then convert that savings to a Roth account, once again yielding the benefit of tax-free investment growth.
Democrats’ legislation would end the mega-backdoor Roth by prohibiting all after-tax contributions in workplace plans and prohibiting after-tax IRA contributions from being converted to a Roth account.
This policy would apply for everyone, regardless of income level.

Accredited investors

Democrats’ legislation would disallow IRA investments that require the owner to have a minimum level of assets or income, or to have completed a minimum level of education or obtained a specific license or credential.
This would apply, for example, to accredited investors seeking to buy a private investment.
IRAs with these investments would lose their IRA status — meaning they’d lose their tax benefits.
These rules would apply starting in 2022, but there’d be a two-year transition period for IRAs already holding these investments. More

The SEC is “going to arrive at the conclusion that payment for order flow is undoubtedly an amazingly good thing for retail investors and they’re not going to ban it,” said Robinhoo’d chief legal officer, Dan Gallagher.
Payment for order flow is the back-end payment brokerages receive for directing clients’ trades to market makers.
Gallagher told CNBC that if he still worked for the SEC, he would be investigating the people and institutions that he claims lied surrounding the GameStop short squeeze.

Baiju Bhatt and Vlad Tenev attend Robinhood Markets IPO Listing Day on July 29, 2021 in New York City.
Cindy Ord | Getty Images

Robinhood’s chief legal officer, who used to work at the SEC, said the back-end payment brokerages receive for directing clients’ trades to market makers is ultimately a benefit to retail investors.
The SEC is “going to arrive at the conclusion that payment for order flow is undoubtedly an amazingly good thing for retail investors and they’re not going to ban it,” Robinhood’s Dan Gallagher told CNBC’s “Squawk Box” on Monday.

Payment for order flow is one of Robinhood’s largest revenue sources and the way the millennial-favored stock trading app is able to provide zero-commission trading. Payment for order flow is a controversial practice that has garnered attention from regulators and Main Street.
Banning payment for order flow “is on the table,” said Gallagher. “I think they’re going to take a deep look at this issue. I think, by law, they have to go through a very arduous process.”
SEC chair Gary Gensler told Barron’s last month that payment for order flow has “an inherent conflict of interest.” Gensler said banning the practice is not off the table.
“At Robinhood, [payment for order flow] is the life blood of a no commission, no minimum balance brokerage. This is what has brought in a whole new generation of investors,” added Gallagher. “I think that the overwhelming evidence is that the current market structure works well for retail investors.”
Following an epic short squeeze in GameStop’s stock in January that forced Robinhood to limit trading on certain securities, Robinhood CEO Vlad Tenev was forced to testify to the U.S. House Financial Services Committee in February. Legislators criticized payment for order flow for the conflict it has with market makers like Citadel Securities.

“The notion that are customers are stupid, that they need protection, that they need the government and the Nanny state to come out and save them for making bad decisions, I think they’re insulted,” said Gallagher.
Gallagher told CNBC that if he still worked for the SEC, he would be investigating the people and institutions that he claims lied surrounding the GameStop short squeeze.
Shares of Robinhood were unchanged in premarket trading, after closing at $41.17 on Friday.

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