Finance

IN A WORLD in which transparency has become a fetish, it is refreshing to try to get a read on the People’s Bank of China (PBOC). Its various nods and winks give market analysts something to interpret—or over-interpret. On May 31st it announced that it would increase the proportion of foreign-currency deposits that commercial banks must keep on reserve at the central bank, from 5% to 7%. After some chin-scratching, PBOC watchers came to a conclusion: China was sending a signal that the yuan had been rising a bit too quickly.Listen to this storyYour browser does not support the element.Enjoy more audio and podcasts on More

INVESTORS IN COMPANIES issuing high-yield or “junk” debt have had a relatively benign pandemic. Usually such highly leveraged borrowers are stung by economic hardship. During the global financial crisis over a decade ago around a seventh of such firms in America defaulted on their debt in one year. Yet according to Moody’s, a rating agency, less than 9% of them went into default in the year to August 2020, and the rate has continued to drop since. By the end of 2021, a booming recovery should put it back below its long-term average of 4.7%Listen to this storyYour browser does not support the element.Enjoy more audio and podcasts on More

A FAVOURED PASTIME for city dwellers on holiday to quainter towns and villages is to peruse the windows of local property firms and dream of swapping their cramped two-bedroom flat for an entire house and garden. Your correspondent is not immune to the appeal: she gazed wistfully at a pretty house near the Deschutes river in Bend, Oregon, situated among the lakes and peaks of the Cascade mountains (pictured). She dutifully checked the listing price on Zillow, a real-estate platform, only to face grim reality: the three-bedroom house was worth $1.25m, a 44% increase from a year earlier, yielding a price per square foot higher than Queens and most of Washington, DC.Listen to this storyYour browser does not support the element.Enjoy more audio and podcasts on More

Traders working at the New York Stock Exchange (NYSE), on May 19, 2021.NYSEU.S. stock futures inched up slightly on Thursday night, following a two-day sell-off for the Dow in the wake of the Federal Reserve’s policy update.Futures for the Dow Jones Industrial Average were up 0.08%. Futures for the S&P 500 ticked up 0.13%, while futures for the Nasdaq-100 climbed 0.21%.During the regular session, the Dow Jones Industrial Average fell 210 points, or 0.62%, to 33,823.45. The S&P 500 fell 0.04% to 4,221.86. The Nasdaq Composite rose 0.87% to 14,161.35.The blue-chip Dow has lost 1.9% week to date and the S&P 500 has fallen 0.6%. The Nasdaq has gained 0.65% on the week.Commodities prices declined sharply as China attempts to cool rising prices and the U.S. dollar strengthens. Futures prices for copper, palladium and platinum fell, while U.S. oil prices tumbled more than 1%.The highly anticipated decision from the Federal Reserve Wednesday caused a sell-off in equities. The central bank announced it’s keeping interest rates unchanged, raised its 2021 inflation expectation to 3.4% and moved planned interest rate hikes forward.”Investors may be interpreting the Fed’s hawkish tilt Wednesday as a sign that an extended US post-pandemic economic expansion may be a bit harder to achieve in a potentially emerging environment of less accommodative monetary policy,” said Goldman Sachs’ Chris Hussey.On Thursday, the Labor Department reported initial jobless claims rose unexpectedly last week, totaling 412,000, an increase of 37,000 from the previous week and higher than the 360,000 estimate. More

In this articleFSRNVDAHNSTA Nvidia logo is seen on the company’s building at an industry park on February 7, 2019 in Tianjin, China.VCG | Visual China Group | Getty ImagesCureVac — Shares of the German biopharmaceutical company continued to fall after it released primary efficacy results Wednesday for its Covid-19 vaccine candidate, which demonstrated an interim efficacy of just 47%. The stock closed down 39% Thursday.Novavax — After CureVac reported disappointing results from a study of its Covid-19 vaccine, shares of Novavax added 2%. Novavax on Monday said its Covid vaccine is 90% effective.The Honest Company — The Honest Company’s stock dropped 7.37% following the baby and beauty store’s first earnings report. The company reported first-quarter revenue of $81.0 million compared with analysts’ estimate of $79.3 million, according to Refinitiv. Guggenheim downgraded the stock to neutral from buy. “Although we remain positive on the underlying fundamental outlook, we are downgrading the shares to neutral given the more balanced risk-reward and lack of an apparent catalyst, in our view, to materially increase our top-line expectations or valuation multiple,” Guggenheim said.Nvidia — Shares of Nvidia gained 4.7% after Jefferies raised its price target on the semiconductor stock to a Wall Street high of $854. “We see NVDA as a major beneficiary of the 4th Tectonic Shift in Computing, in which parallel processing captures share in the computing market,” Jefferies’ Mark Lipacis said. “We think NVDA’s decade-long investment in CUDA has resulted in a multi-year competitive advantage.”Lennar — Shares of the homebuilding company rose 3.6%. On Wednesday, Lennar reported earnings of $2.65 per share, topping estimates of $2.36 per share, according to Refinitiv. The company is dealing with higher input costs and a labor shortage, but the lack of homes for sale in the U.S. helped raise prices and expand Lennar’s profit margins significantly over a year earlier.Danaher — The medical equipment maker’s stock rose about 4.5% after announcing it will buy the privately held biotech company Aldevron for $9.6 billion in an all-cash deal. Aldevron produces plasmid DNA, mRNA and proteins to help biotechnology and pharmaceutical customers and has a deal with Moderna to supply plasmid DNA, a requirement for making vaccines.Kroger — The supermarket chain’s stock rose over 4.3% after it reported earnings, lifted its profit guidance and dialed up buybacks. Kroger reported earnings per share of $1.19, beating analyst estimates by 19%, and revenue of $41.3 billion.Fisker — Shares of the auto company rose more than 3% after finalizing a long-term manufacturing agreement with Magna International. Production of the Fisker Ocean SUV is set to begin November 2022 at Magna’s carbon-neutral facility in Graz, Austria. — CNBC’s Hannah Miao and Maggie Fitzgerald 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 articleCCLSWBIFOXAADBEAdobe Systems world headquarters in downtown San Jose, Calif.Lisa Werner | Moment Mobile | Getty ImagesAdobe — Shares of the digital cloud giant rose nearly 3% after it reported quarterly earnings of $3.03 per share. That figure beat analysts’ expectations by 22 cents, according to Refinitiv. The company also brought in $3.84 billion in revenue, topping estimates of $3.73 billion.Fox Corp — The media giant’s stock rose more than 1% following an announcement that the company is adding $2 billion to its stock repurchase plan. The increase brings the company’s total stock repurchase authorization to $4 billion. More than $1.56 billion of it has been completed to date, the company said in a release.Smith & Wesson Brands — The firearms manufacturer saw its shares rise 3% after releasing its quarterly earnings. The company beat analysts’ earnings estimates by 69 cents at $1.71 per share, according to Refinitiv. It also topped revenue estimates of $259.8 million with $322.9 million in the fourth quarter. The company also raised its dividend by 60% and authorized a $50 million stock buyback.Carnival Corp — The cruise company saw its stock tick up less than 1% shortly after its subsidiary, Princess Cruises, announced it would resume services from Los Angeles, San Francisco and Fort Lauderdale this fall. The Centers for Disease Control and Prevention eased its stance on travel safety for vaccinated passengers Wednesday.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

The Marriner S. Eccles Federal Reserve building in Washington.Stefani Reynolds/Bloomberg via Getty ImagesThe Federal Reserve’s new forecasts on interest rates and inflation don’t amount to much for investors and consumers, especially in the short term, according to financial advisors on CNBC’s FA Council.The Fed on Wednesday sped up its timeframe for raising interest rates from current rock-bottom levels. Rate hikes may start in 2023; the Fed said in March it didn’t expect an increase until at least 2024.It also sharply raised its inflation projections for the year, to 3.4% from its prior 2.4% estimate.”None of this really impacts what people are going to be doing the next six months,” said Lee Baker, a certified financial planner and owner of Apex Financial Services in Atlanta, of clients’ financial plans.”For most clients, candidly, it’s not that big a deal,” he said.Interest ratesThe Fed generally raises interest rates to cool an overheating economy. Officials continue to believe the current upward pressure on consumer prices is temporary.The central bank cut interest rates in the early days of the Covid pandemic to near zero.More from FA Playbook:Advisors pivot to cryptocurrencies as clients express interestPost-pandemic, advisors change how they interact with clientsCan financial advisors meet the growing demand for their services?Clients who’ve been thinking of buying a home or refinancing an existing mortgage may wish to do so while interest rates remain low, advisors said.”I think clients are somewhat shocked interest rates may increase so soon,” said Winnie Sun, co-founder and managing partner of Sun Group Wealth Partners in Irvine, California. “Certainly for mortgages, refinancing, that’s a concern.”InflationSome advisors disputed the Fed’s notion of inflation being a temporary feature of the economy.Even before the Fed’s Wednesday meeting, Ivory Johnson was positioning clients’ long-term portfolios with larger allocations to commodities, real estate investment trusts, basic materials and energy stocks, which generally fare well as consumer prices rise.”If we have inflation, I buy things that do well when there’s inflation,” said Johnson, CFP, founder of Delancey Wealth Management, based in Washington. “I’m not emotional about it.”[Just like] if it’s 80 degrees outside, I’ll put on flip flops and a t-shirt,” he added. “If inflation is indeed transitory the market will let us know and I’ll rotate.”Federal Reserve Chairman Jerome Powell during a House Financial Services Committee hearing on Dec. 2, 2020 in Washington.Pool | Getty Images News | Getty ImagesOther advisors agreed with the Fed’s notion of rising prices being short-lived rather than a mainstay, however.Cost pressures like supply-chain issues and pent-up demand from consumers who’ve spent much of the last 15 months indoors are likely to wane, Baker said.”There are things we’re paying significantly more for,” he said. “But broad-based lingering inflation, I just don’t see it.”Any inflation impact should be at least somewhat blunted for seniors collecting Social Security payments, Baker said. Rising consumer costs helped push the latest estimate for next year’s Social Security cost-of-living adjustment to over 5%.Of course, the Fed could pivot on interest rates, depending on the trajectory of the U.S. economy.Investors shouldn’t go all-in on inflation bets like commodities, REITs and Treasury inflation-protected securities given the uncertainty, according to Douglas Boneparth, CFP, president and founder of Bone Fide Wealth in New York.They’d be better suited with a more measured approach, he said.”Understand that if you get that trade wrong, it’ll have an impact on your portfolio,” Boneparth said.”It’s just so uncertain,” he added of the Fed forecasts. “I can’t wrap my head around one year from now, let alone two years from now.”Anything could happen.” More

In this articleJPMSign for J.P. Morgan on 7th March 2020 in London, United Kingdom. JPMorgan Chase & Co. is an American multinational investment bank and financial services holding company headquartered in New York.Mike Kemp | Getty ImagesLONDON — JPMorgan Chase said Thursday it has agreed to buy British online investment management platform Nutmeg for an undisclosed sum.The U.S. banking giant said the deal, which is still subject to regulatory approval, would complement its plans to launch a standalone digital bank brand in the U.K. later this year.With more than £3.5 billion ($4.9 billion) in assets under management, Nutmeg is one of the U.K.’s largest robo-advisors. The company offers a range of investment accounts, including ISAs, pensions and general investment accounts. Rivals include the likes of Wealthsimple, Moneyfarm and Moneybox.JPMorgan CEO Jamie Dimon said last year that he would be “much more aggressive” in searching for acquisitions to help the biggest U.S. bank by assets add capabilities. He may have been motivated by the deals that rival Morgan Stanley has made in recent years – spending $20 billion to snap up E-Trade and Eaton Vance.Dimon has also talked about girding JPMorgan against both fintech players like PayPal and Big Tech firms including Alphabet.By striking out a digital-first effort in the U.K., the bank can expand outside the U.S., where it has an extensive network of physical branches and leading positions across retail and institutional businesses. Those efforts could eventually be applied beyond the U.K., the bank has said previously.”We are building Chase in the U.K. from scratch using the very latest technology and putting the customer’s experience at the heart of our offering, principles that Nutmeg shares with us,” Sanoke Viswanathan, CEO of international consumer at JPMorgan, said in the statement.”We look forward to positioning their award winning products alongside our own, and continuing to support their innovative work in retail wealth management.”The deal comes months after the two companies announced a partnership that allowed the fintech firm to offer ETFs created with help from JPMorgan, the biggest U.S. bank by assets.This isn’t the first time JPMorgan has bought a fintech firm after initially partnering with it. In December, JPMorgan said it was acquiring 55ip, a Boston-based start-up that helps financial advisors automate the construction of tax-efficient portfolios.Nutmeg CEO Neil Alexander said customers should “expect the same level of transparency, convenience and service that helped make us a leading digital wealth manager in the U.K.”Britain is home to an increasingly crowded retail banking market, with challengers like Revolut, Monzo and Starling gaining a following thanks to their digital-only checking accounts. The U.K.’s fintech market is thought to be one of the world’s largest, attracting $4.1 billion in venture capital funding last year, according to industry body Innovate Finance.Instead of using investment technology already developed in the U.S., the bank opted instead to purchase the 10-year old start-up. That’s because the U.K. and Europe have different regulatory requirements, the companies said. JPMorgan’s U.S.-based automated investing service You Invest has garnered about $50 billion in assets, Dimon revealed this week.JPMorgan Securities acted as JPMorgan’s financial advisor for the transaction, while Freshfields Bruckhaus Deringer served as legal counsel. Nutmeg was advised by Arma Partners as financial advisor and Taylor Wessing as legal counsel.Prior to the takeover agreement, Nutmeg had raised a total of more than $150 million from investors including Goldman Sachs and British venture capital firm Balderton Capital. More