Finance

One of Wall Street’s biggest bulls isn’t jumping on the growth stock bandwagon.Despite the tech-heavy Nasdaq’s run to record highs, Credit Suisse’s Jonathan Golub prefers value trades right now.”The second quarter of this year will be the fastest GDP quarter that we had since 1952. So basically since the Marshall Plan and the rebuilding of Europe after World War II,”  the firm’s chief U.S. equity strategist and head of quantitative research told CNBC’s “Trading Nation” on Wednesday. “The economy is on fire.”Yet growth, which includes technology, has been catching a bid with the benchmark 10-year Treasury Note yield tumbling to February lows this week. On Wednesday, the yield dipped below 1.30% at one point.”If you believe things are slowing more aggressively, then you want to be a growth investor,” said Golub. “You want to be rotating back towards tech, and that’s what’s been happening more recently with the falling interest rates.”‘Just screaming to the upside’Golub, a long-term tech bull, predicts value will outperform the group over the next six to 18 months.”There is so much economic demand right now. People going out with money in their pocket that we’re seeing shortages everywhere you can find and that’s actually what’s pushing inflation up,” said Golub. “This is a backdrop that is just screaming to the upside.”His top three picks are financials, energy and consumer discretionary stocks.”You want to play this in value. That’s where I stand,” he noted. “We still have a little bit more juice left in this lemon.”His year-end S&P 500 target is 4,600 — which implies a 6% gain from the all-time high hit on Wednesday. Meanwhile, the Dow is off one percent from its record high.”If you look at individuals, they are sitting flushed with cash,” he noted. “This is a very, very supportive backdrop.”Golub acknowledges the market could have a “hiccup” between now and the year-end. However, it wouldn’t derail his bull case for stocks.”We know that in a year from now we’re not going to be experiencing this level of economic growth. It’s not sustainable,” Golub said. “We also know the inflation is transitory and this also won’t be here forever.”Disclaimer More

In this articleIVZWBTMEBABADIDIChina’s most powerful companies — including Didi, Alibaba and Tencent — are suddenly under immense scrutiny as country vows to crack down on domestic companies that list on U.S. exchanges. That move could upend a $2 trillion market loved by some of the biggest American investors.Beijing is stepping up its oversight on the flood of Chinese listings in the U.S., which are overwhelmingly tech companies. The State Council said in a statement Tuesday that the rules of “the overseas listing system for domestic enterprises” will be updated, while it will also tighten restrictions on cross-border data flows and security.The crackdown on tech is not a new trend. But because the nation has the ability to move quickly, any action could wreak havoc in major areas on Wall Street. Market analysts say it could not only threaten the IPOs in the pipeline, but it could also pressure the popular Chinese ADR market.Chinese President Xi Jinping attends the World Economic Forum WEF Virtual Event of the Davos Agenda and delivers a special address via video link in Beijing, capital of China, Jan. 25, 2021.Li Xueren | Xinhua News Agency | Getty ImagesWeigh the risks of owning ADRsThere were at least 248 Chinese companies listed on three major U.S. exchanges with a total market capitalization of $2.1 trillion, according to the U.S.-China Economic and Security Review Commission. There are eight national-level Chinese state-owned enterprises listed in the U.S.The Invesco Golden Dragon China ETF (PGJ), which tracks U.S.-listed Chinese shares consisting of ADRs of companies that are headquartered and incorporated in mainland China, has lost a third of its value from its February peak amid the increased regulatory pressure. ADR stands for American depositary receipt and they are effectively a way for U.S. investors to buy stakes in foreign companies.Zoom In IconArrows pointing outwards”U.S. investors will have to weigh the risks of owning ADRs at a time when tensions between Beijing and Washington remain elevated while all global investors will have to balance the allure of China’s vast addressable market with the possibility that officials may reshape company prospects at the stroke of a pen via the imposition of regulatory strictures,” BCA Research chief global strategist Peter Berezin said in a note Wednesday.Ride-hailing app Didi became the latest victim of Chinese authorities’ clampdown. The stock tumbled nearly 20% on Tuesday after Beijing announced a cybersecurity investigation, suspending new user registrations. Republican Sen. Marco Rubio told The Financial Times in a statement Wednesday that it was “reckless and irresponsible” to allow Didi, an “unaccountable Chinese company,” to sell shares on the New York Stock Exchange.Read more about China from CNBC ProHedge fund manager Dan Niles says he’s given up on Chinese stocks for now due to crackdownCramer questions why anyone would buy a Chinese IPO ever again after Didi debacleJPMorgan picks its favorite Chinese stocks on everything from hydrogen to EV batteriesMeanwhile, Nasdaq-listed Weibo is now planning to go private after its operator Tencent reportedly experienced regulatory probe particularly in its fintech business. Beijing has looked to rein in Chinese billionaire Jack Ma’s Alibaba by unleashing a series of investigations since last year.”You have to be able to understand the political and national security dynamics that go into an investment, a deal, your engagement with a Chinese company, your investment with the Chinese company, your interest in doing cross-border business,” Longview Global managing director and senior policy analyst Dewardric McNeal said. “This is not clean and neat and just the numbers.”Some of these major Chinese companies are darlings on Wall Street. For years, Alibaba has been among the five-most owned stocks by hedge funds, along with Facebook, Microsoft, Amazon, Alphabet, according to Goldman Sachs.Billionaire investor Leon Cooperman recently said Baidu and Alibaba were some of his biggest holdings as he touted stock-picking as a way to success for the second half of the year.IPOs in jeopardyChinese regulators are eyeing a rule change that would allow them to block a domestic company from listing in the U.S. even if the unit selling shares is incorporated outside China, Bloomberg news reported citing people familiar with the matter.The move could be a huge blow for Chinese companies which have clamored to list in New York in recent years. In 2020, 30 China-based IPOs in the U.S. raised the most capital since 2014, data from Renaissance Capital shows.There could be fewer and slower new listings in U.S. due to the government crackdown, said Donald Straszheim, senior managing director of China research at Evercore ISI Group.”Beijing [is] not trying to stop all U.S. listings. Still business ties between the U.S. and China are better than not, ” Straszheim said in a note. ” Beijing [Is] trying to add a layer of protection against corporate foreign compliance.”As of late April, about 60 Chinese companies were still planning to go public in the U.S. this year, according to the New York Stock Exchange.— CNBC’s Hannah Miao, Evelyn Cheng and Michael Bloom contributed reporting.Enjoyed this article?For exclusive stock picks, investment ideas and CNBC global livestreamSign up for CNBC ProStart your free trial now More

People walk by the New York Stock Exchange on April 15, 2021 in New York City.Spencer Platt | Getty ImagesFutures contracts tied to the major U.S. stock indexes inched higher at the start of overnight trading Wednesday after both the S&P 500 and Nasdaq Composite closed at records.Contracts tied to the S&P 500 and Nasdaq 100 both ticked north of their respective flatlines with gains of less than 0.1%. Dow futures rose 17 points.The moves in futures came after a positive regular session for U.S. markets.The S&P 500 rose 0.3% to an all-time high of 4,358.13, while the Dow Jones Industrial Average advanced 104.42 points to 34,681.79. The technology-heavy Nasdaq Composite closed just above its own flatline to eke out a record close.Popular internet and technology stocks again outperformed the broader market on Wednesday as investors bought equity in companies that prioritize growth instead of the reopening names in the energy and retail sectors that proved popular in the first half of the year.Apple, Microsoft and Amazon — up 1.8%, 0.8% and 0.5% on Wednesday — are each up by double-digits over the last month. While traders have cited several reasons for the shift back into Big Tech, most mention a marked decline in bond yields when discussing the move.The downshift in the benchmark 10-year Treasury note yield continued Wednesday, when the rate fell to 1.296%, its lowest level since February. Higher yields reduce the value of future earnings relative to current earnings, meaning that the appetite for growth stocks tends to rise when rates fall.”The 40 basis point decline in the yield on the benchmark 10-year Treasury note since late-March suggests that the global grab for yield remains a potent force, despite the Fed’s desire to let the economy run hot,” Steven Ricchiuto, U.S. chief economist at Mizuho Securities, wrote on Tuesday.”A stronger currency, increased virus concerns oversea, and the associated demand for long-term Treasury notes and bonds implies reduced inflation expectations and increased risk of importing global deflation,” he added.Looking ahead to Thursday’s session, investors will pore over the Labor Department’s latest jobless claims figures. The weekly update offers Wall Street regular insight into the pace of layoffs in the U.S. economy, which has been declining amid the Covid-19 vaccine rollout.Economists expect to see 350,000 first-time applicants for unemployment benefits for the week ended July 3, according to Dow Jones. More

In this articleCWHKEYWDFCGANA KeyBank sign with a market ticker is seen on the facade of the KeyBank Building in Columbus, Ohio.Jay Laprete | Bloomberg | Getty ImagesCheck out the stocks that are making the biggest moves after the bell on Wednesday:WD-40 Company — Shares of WD-40 popped more than 10% in extended trading after the company improved its full-year revenue forecast. It now expects sales between $475 million and $490 million for the fiscal year thanks to strong performance in its third quarter.GAN Limited — The online gambling company’s stock rose about 16% after the publishing preliminary results for its second quarter of 2021. GAN said it currently expects second-quarter sales somewhere between $34 million and $35 million as “higher-than-expected revenue more than offset strategic investments in talent and technology.”Camping World Holdings — The nation’s largest retailer of recreational vehicles said Wednesday afternoon that it has an investment in Los Angeles-based Happier Camper. Happier Camper developed a patented modular van conversion system, known as Adaptiv, for vans that allows customers to customize the location of appliances within the van. Camping World Holdings stock gained 0.7% in after-hours trading.KeyCorp — KeyCorp added 2.1% after it announced a cash dividend of 18.5 cents per share on the corporation’s outstanding common shares for the third quarter. The dividend will be paid out on Sept. 15 to those who held the company’s equity at the end of August.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

Federal Reserve officials talked tapering at their most recent meeting, but few seemed in a rush to get the process going, according to minutes released Wednesday.The Federal Open Market Committee’s June 15-16 meeting summary provided only a few new glimpses into talks about when the central bank should begin reducing the pace of its bond purchases.Some members indicated that the economic recovery was proceeding faster than expected and was being accompanied by an outsized rise in inflation, both making the case for taking the Fed’s foot off the policy pedal.However, the prevailing mindset was that there should be no rush and markets must be well prepared for any shifts. Most members agreed, according to the minutes, that the economy had yet to meet the “substantial further progress” benchmark the Fed has set out for any significant shifts in policy.”In coming meetings, participants agreed to continue assessing the economy’s progress toward the Committee’s goals and to begin to discuss their plans for adjusting the path and composition of asset purchases,” the minutes stated. “In addition, participants reiterated their intention to provide notice well in advance of an announcement to reduce the pace of purchases.”While the document noted that some officials saw tapering conditions “to be met somewhat earlier than they had anticipated,” others said the FOMC “should be patient in assessing progress toward its goals and in announcing changes to its plans for asset purchases.”Markets showed little reaction, with stocks nudging higher and government bond yields lower.”The minutes of the Fed’s mid-June FOMC meeting were not as hawkish as we suspected,” wrote Paul Ashworth, chief U.S. economist at Capital Economics. “In particular, there seems to be only limited support for beginning to taper the monthly asset purchases anytime soon.”At the meeting, the committee held short-term interest rates near zero but also indicated that it might be adjusting policy otherwise in the months ahead.The Federal Reserve’s policymaking group kept its benchmark rate anchored in a range between 0% and 0.25%. That was according to market expectations.But at his post-meeting news conference, Chairman Jerome Powell indicated that committee members had held their first discussions about reducing the pace of bond purchases the central bank makes each month. As things stand now, the Fed is buying at least $80 billion of Treasurys and $40 billion of mortgage-backed securities.In the weeks since the meeting, several officials have said they think it’s time to work up a process on how those purchases will be scaled back and eventually eliminated – “tapering,” in Fed parlance.The meeting summary was expected to provide further clues about committee members’ thinking on when the tapering might begin.However, the minutes added little to the public dialogue about the pace of asset purchases, essentially indicating that officials were “talking about talking about tapering,” echoing what has become a popular market idiom, but with little other progress. Some members did discuss the possibility of reducing mortgage purchases before Treasurys, but nothing was decided.Along with keeping rates in check and not announcing any significant moves on tapering, the Fed members adjusted their projections for economic growth and inflation higher.The prevailing sentiment, though, was that inflation pressures in place now would ease in coming months, but not before seeing a 3.4% surge this year.Those upward projections helped Fed officials pull forward their first expectation for rate hikes into 2023, though market pricing now indicates at least one increase in 2022.Members also discussed the recent moves in short-term financing markets, specifically repo operations where banks go to exchange high-quality collateral like Treasurys for reserves. In recent weeks, the operations have seen record demand, and Fed officials generally expressed support for a standing repo facility as a backstop to ensure the market operations proceed smoothly.The FOMC at the meeting approved a 5 basis point increase for the interest banks pay on excess reserves as well as for overnight repo operations.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 articleDIDIPDDNIOFANGSAMA navigation map on the app of Chinese ride-hailing giant Didi is seen on a mobile phone in front of the app logo displayed in this illustration picture taken July 1, 2021.Florence Lo | ReutersCheck out the companies making headlines in midday trading.Didi — The sell-off in the Chinese ride-hailing company continued with shares falling 4.6%. On Tuesday, Didi shares sank nearly 20% after Chinese regulators announced a cybersecurity review of the company, less than a week after Didi’s public debut on the New York Stock Exchange.Nio, Pinduoduo, Baidu and Alibaba — The U.S.-traded shares of several other Chinese companies also continued to retreat on Wednesday. The electric vehicle company Nio dropped more than 8%, online agriculture marketplace Pinduoduo fell about 2.5%, search giant Baidu dipped 2.3% and Alibaba slipped 1.7%.Diamondback Energy – Shares of the exploration and production company slid 3.5% amid continued weakness in oil prices. West Texas Intermediate crude futures dipped more than 2% during volatile trading on Wednesday, weighing on the energy sector broadly. Valero and Occidental also shed more than 3% while Halliburton dipped 2.7%.Whirlpool – Shares of the home products company rose 2.3% on Wednesday after JPMorgan named Whirlpool a top pick. The firm said in a note to clients that Whirlpool was a “hated” stock on Wall Street but was primed to beat expectations in the quarters ahead, creating upside potential for investors.Beyond Meat — Shares of the plant-based meat-substitute maker fell 3.6% after CRFA downgraded the equity to a hold rating from a buy rating. CFRA said in its downgrade of the stock that it sees a more “balanced” risk/reward in the current market environment.Boston Beer — Shares of Boston Beer added 3.4% after Credit Suisse upgraded the stock to outperform from neutral. The firm noted that the Truly hard seltzer brand could boost the stock’s performance. Credit Suisse also hiked its price target to $1,490 , roughly 61% higher than the stock’s Tuesday close.— CNBC’s Jesse Pound, Pippa Stevens, Yun Li, Tanaya Macheel and Tom Franck 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

FREDERIC J. BROWN | AFP | Getty ImagesThe U.S. added 850,000 jobs in June, the most since summer 2020 — which may have some wondering if recent state cuts to unemployment benefits are getting people back to work.The short answer: It’s too soon to tell, according to labor economists.However, available evidence suggests it’s unlikely the benefit cuts played a big role, they said. Covid-related factors, such as looser restrictions on businesses, likely drove most of the job growth last month, economists said.More from Personal Finance:Starting college in the fall? How to decide the right amount to borrowConsider these tax moves before paying for collegeWhy experts say Social Security won’t run out of money”The data … does not suggest that [unemployment insurance] is a big factor right now,” according to Nick Bunker, an economist at job site Indeed. “There is no smoking gun.”Twenty-five states have pulled out of federal unemployment programs in recent weeks, months earlier than their official cutoff on Labor Day.Those pandemic-era programs included an extra $300 a week on top of typical benefits, as well as aid for self-employed and gig workers and the long-term unemployed.Zoom In IconArrows pointing outwardsAbout 4 in 10 jobless workers would get more money from benefits than a paycheck when factoring in the $300 a week, according to an estimate from University of Chicago economist Peter Ganong.The governors, all Republicans, of the states in question said the federal aid was keeping people home instead of looking for work.Too earlyBut it’s too early to judge whether their policies pushed workers to take jobs in June, according to economists.For one, there’s a timing issue. The June jobs report, published Friday, wouldn’t reflect the actual financial loss of benefits — only workers’ fear of losing the aid.The Bureau of Labor Statistics, which publishes the jobs report, based its analysis on employer data through June 12. The first tranche of states — Alaska, Iowa, Mississippi and Missouri — stopped paying federal benefits that same day.In other words, none of the 850,000 people who got jobs in June had yet felt a financial impact from benefit cuts.AnticipationIt’s unlikely that the anticipation of losing benefits would have caused a rush for jobs, economists said. The first state to announce its intent to end federal benefits (Montana) did so on May 4.”Generally, anticipatory effects are quite small,” according to Daniel Zhao, a senior economist at Glassdoor, a job and recruiting site.”It requires people to be paying very close attention to state policy announcements, and planning their job search and financial decisions around that,” Zhao added. “The fact of the matter is, people aren’t closely watching press releases coming from their state departments of labor.”Further, low-wage workers — who get the biggest relative financial benefit from an extra $300 a week — are unlikely to be motivated by anticipatory fear given the high demand for their labor right now in industries like leisure and hospitality, said Susan Houseman, research director at the W.E. Upjohn Institute for Employment Research.They should be able to find a job relatively easily, she said.”I’m not saying there’s no anticipatory effect at all,” Houseman said. “But most [people who are] staying out because of the $300 a week won’t go back in until that’s cut off.”Other evidenceThe U.S. jobs report is released once a month, making it difficult to draw conclusions about benefit cuts’ impact on job-finding from available data.Other datasets updated more frequently suggest the cuts aren’t having a big impact on job searches, economists said.For example, Aaron Sojourner, an associate professor at the University of Minnesota, has studied weekly data around claims for unemployment benefits. He hasn’t found differences in benefit claims between states that announced or implemented benefit cuts versus those that didn’t.However, it’s too early to make any definitive judgments, Sojourner said.Data from Indeed also hasn’t pointed to a big or sustained uptick in job searches, according to Bunker.Instead, the June jobs figure, which exceeded economists’ 706,000 estimate, was likely driven most by pandemic-related factors.For one, declining Covid infection numbers and increasing vaccination rates have led many states to further ease restrictions like capacity limits on businesses, driving up demand for workers, according to economists.”In some sense, it’s not a surprise that the recovery is accelerating as the public health situation continues to improve,” Zhao said. “The pandemic is the thing that’s been holding back the economy thus far.” More

In this articleWISE-GBWise founders Taavet Hinrikus, left, and Kristo Käärmann.WiseLONDON — The founders of money transfer service Wise are now billionaires — on paper, at least.The British fintech company formerly known as TransferWise went public on the London Stock Exchange Wednesday, in a direct listing valuing the company at $11 billion.Wise was founded in 2010 by Estonian friends Kristo Käärmann and Taavet Hinrikus. Frustrated with opaque bank charges on international money transfers, they figured out a new way to make cross-border transactions at the real exchange rate.The pair would informally transfer money between one another, by looking at the mid-market rate of a certain day each month. They say this allowed them to achieve a fair exchange rate without paying additional bank charges.Billionaire statusJust over a decade after Wise was formed, the fintech firm’s founders have risen to billionaire status.At an $11 billion market cap, Käärmann’s stake in the business is worth approximately $2.1 billion, while Hinrikus’ is worth $1.2 billion, according to CNBC calculations based on a breakdown of ownership provided in Wise’s prospectus.Wise declined to comment when contacted by CNBC.Here’s who else won big from Wise’s direct listing:Peter Thiel’s Valar Ventures is Wise’s largest external shareholder. Valar’s 10.2% stake is now worth about $1.1 billion.IA Ventures, which holds a 9.6% stake in Wise, is sitting on over $1 billion of shares.Andreessen Horowitz’s 9.3% Wise stake is now worth $1 billion.Baillie Gifford holds a 4.9% stake worth $536 million.Since it is a direct listing, Wise’s private backers are selling shares directly to the public. This is different from an IPO, where a company issues new shares to raise capital in a public offering.Wise is a four-time CNBC Disruptor 50 company that most recently ranked No. 23 on the 2019 list.Sign up for our weekly, original newsletter that goes beyond the list, offering a closer look at CNBC Disruptor 50 companies, and the founders who continue to innovate across every sector of the economy. More