Finance

The Federal Reserve could begin slowing down its bond purchases as early as October under a scenario central bank Governor Christopher Waller set out to CNBC in a Monday interview.Should the August and September jobs report show growth in the 800,000 range, that would get the U.S. economy near its pre-pandemic level and, Waller said, meet the Fed’s benchmark for when it starts tightening policy.”In my opinion, that’s substantial progress and I think you could be ready to do an announcement in September,” he told CNBC’s Sara Eisen on “Closing Bell.””That depends on what the next two job reports do,” he added. “If they come in as strong as the last one, then I think you’ve made the progress you need. If they don’t, then you’re probably going to have to push things back a couple months.”Nonfarm payrolls added 850,000 in July and are on track to grow by 788,000 in August, according to the latest Dow Jones estimate. The U.S. economy has recovered 15.6 million jobs since May 2020 after losing 22.4 million in the first two months of the pandemic.Despite the rapid pace of recovery, the Fed has kept its ultra-loose crisis-era policy tools in place, including holding benchmark interest rates near zero.However, Waller said the time is nearing for the Fed to start easing its foot off the accelerator, and he said the pace of tightening could be faster than the Fed has done before.”In my view, with tapering we should go early and go fast in order to make sure we’re in position to rate rates in 2022 if we have to,” he said. “I’m not saying we would, but if we wanted to, we need to have some policy space by the end of the year.”The Fed is currently buying at least $120 billion of bond each month, split between $80 billion in Treasurys and $40 billion in mortgage-backed securities. While the Fed reduced its purchases by $10 billion a month during its last round of tapering, Waller said he sees a faster pace this time, with the asset purchase program halted in five or six months after the process begins.”You want to get it done and get it over with,” he said.While Fed officials mostly say they still have more ground to make up on the employment side of their mandate, inflation is well above the central bank’s 2% target.Like his fellow central bankers, Waller said the most likely path for inflation is a return to normal once pandemic-specific effects wear off. However, he remains concerned over some things he sees.”My concern is just anecdotal evidence I’m hearing from business contacts, who are saying they’re able to pass prices through. They fully intend to. They’ve got pricing power for the first time in a decade,” he said. “Those are the sorts of issues that make you concerned that this may not be transitory.”Become a smarter investor with CNBC Pro.Get stock picks, analyst calls, exclusive interviews and access to CNBC TV.Sign up to start a free trial today. More

In this articleTSLAPeople walk by Ralph Lauren’s Fifth Avenue Polo store in New York City.Getty ImagesCheck out the companies making headlines in midday trading.Square — Jack Dorsey’s payments company saw its shares surge 10% after the firm announced plans to buy Australian fintech company Afterpay in a $29 billion, all-stock deal as it looks to expand further into the booming installment loan market. The price tag marks a roughly 30% premium to Afterpay’s last closing price. Square also reported second-quarter earnings of 40 cents per share, up from a loss of 3 cents per share over the same period last year. The company’s gross profit increased 91% from a year ago, which marked a record quarterly growth rate.Payments stocks — Stocks of payment tech firms that provide card issuer processing and network services to banks are sinking in response to the news of Square’s buy-now-pay-later acquisition of Afterpay. Global Payments shares sank 11% despite reporting second quarter earnings of $2.04 that beat analysts’ expectations $1.90. FIS shares fell 6.6% and Fiserv shares are down 4.6%.Robinhood — Shares of the newly public stock trading app rose 7% following its Nasdaq debut last week. ARK Invest’s Cathie Wood purchased about $65 million worth of Robinhood shares on Friday in three ARK funds, a major vote of confidence from the innovation investor.Moderna, Pfizer, BioNTech — Pfizer shares rose 2.6% and its partner BioNTech’s shares jumped 6% after it raised prices for its Covid-19 vaccines in Europe. However, shares of Moderna, which also raised prices in Europe, lost 1.9%. The Food and Drug Administration is under pressure to give both vaccines full approval, which could happen within the next month for Pfizer and BioNTech.Under Armour — Shares of the apparel company rose 3.2% after investment firm Baird named the stock a fresh pick. Under Armour is well-positioned to beat expectations when it reports earnings on Tuesday and has upside due to its underperformance versus Nike, Baird said.Ralph Lauren — Shares of the apparel retailer gained 3.9% after Goldman Sachs initiated coverage of the stock with a buy rating. The bank highlighted Ralph Lauren’s strength from direct-to-consumer digital sales and said it’s “upbeat” about the company’s turnaround.First Solar — The solar power systems maker saw its shares rise 2.5% after Susquehanna Financial upgraded it to “positive” from “neutral,” citing upbeat management comments on solar module demand and pricing.Capri Holdings — Shares of Capri Holdings added 1.5% after MKM upgraded the stock to buy from hold. The Michael Kors and Versace parent company reported quarterly earnings Friday and raised its annual revenue forecast. “Following a string of quarters of better than expected sales and earnings (despite headwinds from wholesale and Europe), we have increased conviction that CPRI’s playbook is working in what has been a ‘show-me story’ of its execution on acquisitions,” MKM said.Tesla — Tesla shares rose 3% as Wall Street analysts continue to view the stock with optimism through earnings season and Fed uncertainty. On Monday Goldman Sachs included Tesla in companies with strong balance sheets it’s advising clients to buy. — CNBC’s Hannah Miao, Maggie Fitzgerald, Jesse Pound and Yun Li contributed reportingBecome a smarter investor with CNBC Pro. Get stock picks, analyst calls, exclusive interviews and access to CNBC TV. Sign up to start a free trial today More

In this articleRKTSignage for Rocket Mortgage by Quicken Loans is displayed on a laptop computer in an arranged photograph taken in the Brooklyn borough of New York, U.S., on Thursday, Aug. 6, 2020.Gabby Jones | Bloomberg | Getty ImagesShares of Rocket Companies jumped as much as 8% on Monday after the mortgage lender announced an unusual expansion into the solar industry.The Detroit-based company said the new offering will be tested starting in the fourth quarter, with plans to have the service available to the public in early 2022.The company, which is the largest mortgage lender in the U.S. through its Rocket Mortgage division, will utilize a tech-driven approach that it says will simply the process of installing a rooftop solar system.”We have the technology and expertise to provide the best experience possible for homeowners who want to go green,” Jay Farner, vice chairman and CEO of Rocket Companies, said in a statement. “This is a perfect synergy between our businesses as we develop a digital solution to ensure Americans can receive solar panels with the same certainty they have come to expect when working with our Rocket platforms.”The announcement comes amid a boom in residential solar. The last few years has seen a record number of customers turning to solar, but across the U.S. less than 5% of eligible homes currently have rooftop panels. A recent study from the Solar Energy Industries Association and energy consultancy Wood Mackenzie forecast the solar market quadrupling by 2030.Rocket Companies said a dedicated team known as Rocket Cloud Force will advise potential clients, connect them to the company’s digital financing application, and then facilitate the solar installation.During afternoon trading the stock retreated from its session high, and by 3:15 p.m. on Wall Street was up 5%.”As Rocket Companies’ first step into green energy, Rocket Mortgage…is immediately releasing a new rate-and-term refinance giving homeowners the ability to consolidate any solar panel loan with their mortgage for one low interest rate,” the company said in a statement.Become a smarter investor with CNBC Pro. Get stock picks, analyst calls, exclusive interviews and access to CNBC TV. Sign up to start a free trial today More

Samuel Corum | Getty Images News | Getty ImagesStates’ early withdrawals from federal unemployment programs in recent weeks are helping Senate lawmakers finance upgrades to the nation’s infrastructure, according to legislative text unveiled Sunday.Twenty-six states, largely Republican, have pulled out of pandemic-era programs since mid-June. The American Rescue Plan offered federal unemployment assistance — which expanded the pool of workers eligible for benefits and raised aid by $300 a week — through Labor Day.The state withdrawals and an improving U.S. economy will save the federal government $53 billion in 2021 and 2022, according to a Congressional Budget Office analysis published in July.More from Personal Finance:More than 7.5 million may fall off the looming unemployment cliffAffluent, ready to travel again, paying with vouchersRenters still protected from eviction in these statesThe Senate’s bipartisan legislation — the Infrastructure Investment and Jobs Act — cites the $53 billion as a source of funding. The bill, which costs $1 trillion, would allocate money toward roads, bridges, public transport, broadband, rail, water and airports.The unemployment savings stem from a Congressional Budget Office cost estimate in March, when it analyzed the effects of the American Rescue Plan.”CBO projected that all states would participate in the programs until September,” Phillip Swagel, director of the federal agency, said in a July 16 letter to Sen. Kyrsten Sinema, D-Ariz.”Second, because of the improving economy, the agency has lowered its forecast of the unemployment rate, resulting in fewer projected beneficiaries for the programs; that also reduced projected costs,” Swagel wrote.The federal government would save $50 billion in 2021 and $3 billion in 2022, according to the Congressional Budget Office.State exits from the unemployment programs have been the subject of controversy in recent months.State officials began announcing their intended withdrawal in early May, citing labor shortages exacerbated by the federal benefit programs.”Incentives matter, and the vast expansion of federal unemployment benefits is now doing more harm than good,” said Gov. Greg Gianforte of Montana, the first state to announce its withdrawal, on May 4.Twenty-five states have followed since. All but one – Louisiana – have a Republican governor.All of them ended a $300-a-week boost to jobless benefits. Most also ended support for the long-term unemployed and others like gig workers, the self-employed and freelancers, all of whom don’t typically qualify for state-level benefits.However, critics of the states’ decisions to end support early say other pandemic-era factors are likely playing a bigger role in hiring difficulties businesses may be facing.They point to examples like ongoing Covid health concerns, with a resurgent virus due to the highly contagious delta variant and only half of the U.S. population fully vaccinated; an inability to work due to inadequate child care; and workers having relocated away from jobs, or changed industries, during the pandemic.With the $300 supplement, almost half of jobless workers (48%) make as much or more money on unemployment benefits than their lost paychecks, according to a recent paper published by the JPMorgan Chase & Co. Institute.The extra funds had a small impact on job-finding among workers, but “were not holding back the labor market recovery in a very significant way,” according to economists Fiona Greig, Daniel Sullivan, Peter Ganong, Pascal Noel and Joseph Vavra, who authored the analysis. The paper examined data as of May 2021.Early evidence suggests the state policies haven’t immediately pushed people back into the workforce, though economists say more data is necessary to make judgments on long-term impact. More

In this articleGSDavid Solomon, Goldman Sachs & Co.Andrew Harrer | Bloomberg | Getty ImagesThere’s a new minimum wage on Wall Street.Goldman Sachs is giving its junior bankers a pay raise, the last major Wall Street firm to do so in a year where record deal-making activity has led to fierce competition for workers.First-year analysts — the most junior of investment bankers who are typically recent college graduates — will be paid a $110,000 annual base salary, up from $85,000, according to a person with knowledge of the changes. The person added that second-year analysts will earn $125,000, up from $95,000, and first-year associates will get a $25,000 pay bump to $150,000.The move establishes a new floor for compensation among major Wall Street investment banking programs. The industry was roiled in March when an internal survey done by Goldman analysts detailed long hours and burnout caused by the deals boom; rivals immediately seized on the controversy to announce perks including $20,000 special bonuses and Peloton bicycles.But Goldman, which has perhaps the top brand in investment banking, resisted following its rivals in raising pay.Instead, CEO David Solomon initially told employees the firm was hiring more bankers, automating menial tasks and recommitting to a “Saturday rule” to give workers a weekend respite. The bank had debated internally whether to boost salaries, which are fixed, instead of just making bonuses larger, the Financial Times reported last month.In the meantime, rival banks including Morgan Stanley, JPMorgan Chase, Citigroup and Barclays all boosted first-year analysts’ pay to $100,000 from around $85,000.  That followed raises from Bank of America and other firms earlier in the year.The industry can afford to be generous: The business of advising on mergers and acquisitions has been red hot this year, with the volume of deals globally soaring past $2 trillion amid a record first half. Investment banks get paid lucrative fees at the close of deals, and larger deals result in more dollars for compensation pools.Banks often move in lockstep when it comes to pay and perks, hoping to lure enough talented workers to develop a pipeline of experienced dealmakers.In the end, Goldman not only met competitors’ pay, but also exceeded it. The move could ultimately force rivals to match the bank’s $110,000 salary for first-year bankers, according to a Wall Street recruiter who declined to be identified.Junior Goldman bankers also have more news coming: They will learn about the size of their bonuses later this month, according to the person. The percentage of pay a banker makes in so-called variable compensation grows as they climb the ranks.”We have always paid very competitively,” Solomon said last month during an earning conference call. “We have always been a pay-for-performance organization.”—CNBC’s Hannah Miao contributed to this report.Become a smarter investor with CNBC Pro. Get stock picks, analyst calls, exclusive interviews and access to CNBC TV. Sign up to start a free trial today. More

Take a look at some of the biggest movers in the premarket:Square (SQ) – The digital payments company agreed to buy Australia’s Afterpay for about $29 billion in stock, representing a roughly 30% premium for Afterpay shareholders. Square shares fell 4.8% in the premarket, but news of the deal boosted shares of U.S.-based payment company Affirm (AFRM) by 8.2%.Zoom Video (ZM) – The video conferencing company agreed to pay $85 million to settle a lawsuit accusing it violated the privacy rights of users. It also agreed to beef up its security practices to prevent so-called “Zoombombing,” where hackers disrupted Zoom meetings.General Electric (GE) – GE has completed its previously announced one-for-eight reverse stock split and will begin trading on a post-split basis today.Moderna (MRNA), Pfizer (PFE), BioNTech (BNTX) – Moderna and Pfizer both raised prices for their Covid-19 vaccines in their latest supply contracts, according to the Financial Times. Additionally, The Wall Street Journal reported that the Food and Drug Administration is under pressure to give both vaccines full approval and that this could happen within the next month for Pfizer and partner BioNTech. Moderna rose 2.5% in the premarket, Pfizer gained 1%, while BioNTech surged 5.1%.Foot Locker (FL) – The athletic footwear and apparel retailer announced a deal to buy California-based shoe store chain WSS for $750 million and Japan-based streetwear brand Atmos for $360 million.Uber Technologies (UBER) – Shares of Uber gained 1.1% in premarket trading after Gordon Haskett Research Advisors initiated coverage with a “buy” rating. Haskett called Uber a company that is continually engraining itself in the everyday lives of consumers through its ride-hailing and food delivery services.Capri Holdings (CPRI) – Capri rose 1.2% in the premarket following an upgrade to “buy” from “neutral” at MKM Partners, which noted a string of better than expected quarters for the company behind brands like Michael Kors and Versace. MKM also cited an overall improvement in the luxury goods sector.Discovery (DISCA) – Discovery is in informal talks about a potential bid for British state-owned broadcaster Channel 4, according to Britain’s Telegraph newspaper.Robinhood (HOOD) – More than 300,000 users of the stock trading app bought shares in Robinhood’s initial public offering last week, according to The Wall Street Journal. That represents about 1.3% of the company’s funded account base. Robinhood added 1.5% in premarket trading.Parker-Hannifin (PH) – The maker of motion control technology and other industrial products is buying British rival Meggitt for about $8.8 billion in cash. Parker-Hannifin shares fell 2.2% in premarket action.Li Auto (LI) – The China-based electric vehicle maker delivered 8,589 vehicles in July, an increase of 125% compared to July 2020. Li’s U.S.-based shares surged 4.3% in the premarket.First Solar (FSLR) – The solar power systems maker’s shares gained 2.9% in premarket trading after Susquehanna Financial upgraded the stock to “positive” from “neutral,” based on upbeat management comments on solar module demand and pricing. More

The Li One electric car from Li Auto is displayed at the Moonstar Global Harbor shopping mall in Shanghai, China, May 10, 2021.Costfoto | Barcroft Media | Getty ImagesBEIJING — Chinese electric car start-up Nio, which has led its competitors Li Auto and Xpeng by monthly deliveries, fell behind both rivals in July.U.S.-listed Nio said it delivered 7,931 vehicles in July, bringing the year-to-date total to 49,887 — more cars than all of last year. But the July figure fell from a monthly record of 8,083 vehicle deliveries in June.Instead, deliveries of what is essentially a hybrid electric car from U.S.-listed Li Auto surpassed those of Nio in July, and exceeded those of rival start-up Xpeng for a second straight month.Li Auto said Sunday it delivered 8,589 Li One vehicles in July, a monthly record. The Li One SUV is the company’s only model on the market. The car comes with a fuel tank for charging the battery, extending the 180-kilometer driving range by about 620 km (385.35 miles).Xpeng said Monday it also delivered a monthly record of 8,040 vehicles — of which 75% were its P7 sedan, rather than its other model, the G3 SUV.That meant Li Auto delivered 549 more cars than Xpeng last month, after delivering over 1,000 more cars than Xpeng in June.On a year-to-date basis through July, Xpeng delivered slightly more cars, at 38,778 versus Li Auto’s 38,743.For the year so far, Nio has delivered over 10,000 more cars than each of the two start-ups have respectively. The company is set to release second-quarter results on Aug. 11.Among the three U.S.-listed Chinese electric car start-ups, Li Auto’s shares have performed the best this year with gains of 15.8%.Nio’s shares have fallen 8.3% during the same period, while Xpeng’s are down nearly 5.4%.Read more about electric vehicles from CNBC ProHere’s what every major Tesla analyst says about its second-quarter earningsCramer says ‘Elon Musk ended the magic,’ making Tesla sound like a regular car companyTesla and more: Goldman Sachs names 10 electric vehicle stocks to buy right nowChinese and U.S. regulators have increased their scrutiny on Chinese companies listed in the U.S. in the last month.Some companies like Xpeng have also listed shares in Hong Kong, partly as a hedge against risks in the New York market. The start-up’s Hong Kong-listed shares have fallen more than 4% since an offering that raised about the equivalent of $1.8 billion in early July.Just over a week later, Xpeng announced its third model and second sedan, the P5, would sell for as low as 160,000 yuan ($25,000). That’s less than the starting price for Tesla’s Model 3 in China at 250,900 yuan. Deliveries of the P5, which comes in six versions, are set to begin in the fourth quarter.— CNBC’s Arjun Kharpal contributed to this report. More

In this articleHSBA-GBPedestrians wearing protective masks walk past a logo displayed at a HSBC bank branch in the central district of Hong Kong.Roy Liu| Bloomberg | Getty ImagesHSBC beat expectations in its 2021 first-half earnings, and announced its second dividend payout since the Covid-19 pandemic as the global economy bounces back.The bank’s reported pre-tax profit more than doubled from a year ago to $10.84 billion in the January-to-June period this year. Analysts’ estimates compiled by the bank had pointed to a $9.45 billion in reported pre-tax profit during that period.Meanwhile, revenue fell 4.5% from a year ago to $25.55 billion in the first six months of 2021 — broadly in line with the $25.52 billion that analysts had projected.HSBC shares in Hong Kong jumped more than 3% following earnings release.HSBC’s Group Chief Executive Noel Quinn said a brighter economic outlook has allowed the bank to start releasing provisions that were set aside for potential loan losses. That was the “main driver” of the bank’s improved profitability.”We were profitable in every region in the first half of the year,” Quinn said in a statement accompanying the earnings release. “This performance enables us to pay an interim dividend for the first six months of 2021,” he added.The bank announced an interim dividend of $0.07 per ordinary share.Here are the other highlights from HSBC’s earnings report:The bank released a net $719 million in reported expected credit loss, thanks to a better economic outlook.Net interest margin, a measure of lending profitability, was 1.21% in the first half of 2021. That’s 22 basis points lower than the same period last year.The bank said it targets a dividend payout ratio of 40% to 55% of reported earnings per ordinary share for 2021. More