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Citing higher costs and difficulty making ends meet, 3 in 5 Americans falsely believe that the U.S. is currently in a recession, according to a recent report.
Economists have wrestled with the growing disconnect between how well the economy is doing and how people feel about their financial standing.
Some say we’re in a “vibecession.”

We are not in a recession

“Right now we have a ‘Goldilocks’ economy,” said Gene Goldman, chief investment officer at Cetera Financial Group in El Segundo, California.
The country has continued to expand since the Covid-19 pandemic, sidestepping earlier recessionary forecasts.
Officially, the National Bureau of Economic Research defines a recession as “a significant decline in economic activity that is spread across the economy and lasts more than a few months.” The last time that happened was early in 2020, when the economy came to an abrupt halt.

In the last century, there have been more than a dozen recessions, some lasting as long as a year and a half.

Still, regardless of the country’s economic standing, many Americans are struggling in the face of sky-high prices for everyday items, and most have exhausted their savings and are now leaning on credit cards to make ends meet.
“Money is top of mind,” said Vishal Kapoor, senior vice president of product at Affirm. “Consumers are resilient but they’re feeling the pinch of higher prices.”
Economists have wrestled with the growing disconnect between how the economy is doing and how people feel about their financial standing.

We’re in a ‘vibecession’

We’re in a “vibecession,” Joyce Chang, JPMorgan’s chair of global research, said at the CNBC Financial Advisor Summit in May.
“The wealth creation was concentrated amongst homeowners and upper-income brackets, but you probably have about one-third of the population that’s been left out of that — that’s why there’s such a disconnect,” Chang said of the last few years.
Rising rents coupled with high borrowing costs and low wage growth have hit others especially hard. “Lower income households are not keeping up,” Goldman said. “Everything looks great but when you look beneath the surface, the disparity between the wealthy and nonwealthy is widening dramatically.”

To be sure, it’s not just a “vibe.”
As more consumers stretch to cover increased prices and higher interest rates, there are new indications of financial strain.
A growing number of borrowers are falling behind on their monthly credit card payments. Over the last year, roughly 9.1% of credit card balances transitioned into delinquency, the New York Fed reported for the second quarter of 2024. And more middle-income households anticipate struggling with debt payments in the coming months.  
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After an early 2000s lawsuit, the insurance industry largely began limiting and excluding mold in policies across the U.S.
Experts say water and mold claims could become more prevalent as severe weather events, especially windstorms and flooding, become more common or more powerful.
Consumer advocates say policyholders expect mold coverage and are often surprised to discover exclusions and limitations.

Brandi Schmitt and her family pose for a 2018 Christmas card in front of their Maryland home wearing protective gear, alluding to the water and mold damage in their home. Each year, Schmitt said they try to capture the family’s situation through their Christmas card.
Courtesy: Brandi Schmitt

When a nor’easter struck in 2018, intense winds blew shingles, gutters and siding off Brandi Schmitt’s home in Lothian, Maryland.
Her family was without electricity for three days, during which time all of their food in the refrigerator spoiled and water continued to leak into the home, Schmitt said.

As soon as the power came back on, Schmitt said she called her insurance company, USAA, to report the damage.
An adjuster visited the home a week later, and determined the 5,000-square-foot roof needed a total replacement. While she and the insurer debated points of the claim, Schmitt said, the unrepaired damage allowed snow and water from subsequent storms that spring to seep through into her home.
What started as wind and water damage evolved into something much worse: mold.

Courtesy: Brandi Schmitt

An independent specialist found no mold in the home on May 2018, according to a “review for fungal activity” investigation documents USAA provided to Schmitt that CNBC reviewed. Then in October, a follow-up investigation found and “observed visible moisture and an increased moldy odor.”
In the intervening months, Schmitt and her family had developed health issues, including rashes and coughs. Their yellow Labrador and four guinea pigs all died within months of each other.

An immunoglobulins test result from November 2018 provided to CNBC by Schmitt shows high levels of antibodies in her blood from exposure to aspergillus niger, a common mold.
“I called [USAA] and said, ‘Are you going to wait for it to kill us?'” Schmitt said.
The family moved out of the house for good that same month.
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Despite paying for extra “fungus, wet or dry rot” coverage of up to $15,000 in her policy, Schmitt said USAA did not remove wet insulation from the attic where she believes the mold is growing. Air samples in the home taken in January 2020 found “problem mold concentrations,” according to fungal activity review documents USAA provided to Schmitt.
Schmitt and her husband, Joseph, sued the insurer in 2019. A unanimous jury on March 7, 2023, determined USAA materially breached the terms of their homeowner policy and awarded Schmitt $41,480 for interior repairs and $7,200 for additional living expenses. She is currently appealing the damages because of estimates that repairs will cost much more.
A spokesperson from USAA said the company is unable to address specifics due to that ongoing litigation, but said “USAA disagrees with the facts as characterized by Ms. Schmitt.” In a response to the suit filed in a Maryland court in March 2020, an attorney for USAA said the insurer did not breach its contractual obligations and the Schmitt family failed to mitigate damages.
Schmitt’s example may be extreme, but mold damage is not unusual. In 2022, water damage, including mold, represented 27.6% of homeowners insurance losses, according to data from Insurance Services Office, an industry group. And experts say these kinds of damages could become more prevalent as severe weather events, especially windstorms and flooding, become more common or more powerful.
Repairing mold damage is expensive and often left out or limited in homeowners policies, which can leave consumers without much help to cover a pricey problem.

‘We called it at the time a mold stampede’

Mold limitations and exclusions in policies became the industry norm after rulings in several high-profile lawsuits. One Texas case, Ballard v. Farmers Insurance Group, in 2001 initially resulted in a $32 million jury verdict, sending shock waves through the insurance industry. Despite the award for the owner of the mold-damaged home later being reduced to $4 million, companies still pulled back on mold coverage.
“We called it at the time a mold stampede,” said Amy Bach, executive director of United Policyholders, a San Francisco-based nonprofit that advocates on behalf of consumers. Schmitt shared her experience with the group as she sought help with her claim.
“One carrier after another said, ‘We’re capping it, we’re limiting it,'” Bach said.

We called it at the time a mold stampede. One carrier after another said, ‘We’re capping it, we’re limiting it.’

Executive director of United Policyholders

Along with high-profile lawsuits, the high cost of repairs, uncertainty around health outcomes and memories of hefty asbestos payouts drove insurers to exclude and limit mold coverage, experts say.
“That unknown risk of the development of losses over long periods of time, that’s the risk that the consumer is transferring to the company, and that’s why it’s so regulated,” said KPMG U.S. insurance sector leader Scott Shapiro.
Will Melofchik, general counsel for the National Council of Insurance Legislators, said the organization’s members haven’t come across an increase in mold claims specifically.
“As long as customers can get the coverage they need somewhere in the market, carriers should have the ability to exclude things as long as the exclusion is clear and customers are aware of it,” Melofchik said.

How insurance does — and doesn’t — cover mold

Today, standard homeowners policies typically do not cover mold, fungus, wet or dry rot, unless that damage is the result of a covered peril, according to Insurance.com. (In policies, you’re likely to see it referenced as “fungus, or wet or dry rot” coverage. Mold is a type of fungus.)
Homeowners may need to add a rider to their policy to cover removal of mold stemming from other circumstances, like water backup or hidden water damage.
Many of those changes took hold swiftly after the 2001 Ballard verdict. A 2003 whitepaper from the Insurance Information Institute, an industry group, notes that “seeking to avoid becoming the next Texas, some 40 state insurance departments have now approved mold exclusions and/or limitations on homeowners insurance policies.”
Still, mold exclusions and limitations can come as a surprise to policyholders, according to Bach.
“Consumers reasonably expect coverage when there is property damage to their home,” she said. “And mold can clearly cause physical damage to the property that it comes in contact with.”
Unless the mold damage is a result of a sudden, covered peril — such as a bursting pipe or water heater flooding your basement — homeowners insurance typically won’t cover it, said Scott Holeman, media relations director for the III.
“In cases where mold has been around for a while, say several weeks or longer, it likely won’t be covered by your policy,” Holeman said. “Mold claims won’t be covered if it’s a result of neglect, such as pipe leaking for months resulting in water damage and mold.”

Peter Kochenburger, a visiting professor at the Southern University Law Center and professor at the University of Connecticut’s Insurance Law Center, says the policy language can be “convoluted.”
“You should always read your insurance policy and understand what you have, but no one’s going to do that,” Kochenburger said. “I do this for a living, look at insurance policies, and this is not easy.”
Insurance is regulated at the state level, which can cause additional confusion if some states have specific limitations and others don’t, he said. For example, in South Carolina, where hurricanes and flooding are common, there are no homeowner policies that cover all instances of mold, according to South Carolina Independent Agents. Instead, it’s determined by the peril.
Each company’s coverage is also different.
For example, USAA includes limited coverage — $2,500 for cleanup and $2,000 for additional living expenses — for mold resulting from a covered loss for no additional premium in most states, the company said in a statement. USAA also offers optional coverage beyond the standard policy in some states.
Nationwide covers up to $10,000 of mold damage caused by covered incidents, but that limit cannot be increased, according to a company spokesperson.

Mold claims can lead to nonrenewal of policies

Of a sample of anonymized home insurance-related complaints made about Allstate and Nationwide, 8% were mold related, according to data provided to CNBC by the Federal Trade Commission through the Freedom of Information Act. CNBC requested complaints about “home insurance” for a sampling of some of the largest property and casualty insurance companies, including Allstate, Nationwide and State Farm. State Farm had no mold-related complaints.
Most complaints focused on insurers limiting coverage on mold, but a few people mentioned seeing consequences when it came time to renew their policy. One policyholder in Lindsey, Ohio, said Allstate chose not to renew their policy in 2020 because they made a mold claim the year prior. 
“Any limitations in terms of non-renewal do vary by state and are part of the regulatory framework,” Shapiro said. “Generally speaking, insurance companies do have the right to not renew you for any number of reasons, including prior loss history, which is often a trigger event.”

A Nationwide spokesperson said the company does not comment on individual claims. An Allstate spokesperson did not respond directly to a request for comment about the complaints, but directed CNBC to the III. Mark Friedlander, director of corporate communications at the III, said the volume and frequency of claims activity can be one of the reasons insurers choose not to renew a policy.
Insurance experts and attorneys recommend carefully reviewing the details of your insurance policy and consulting a professional to make sure you understand what’s included in the coverage.
Shapiro said insurers assessing future risk aren’t homing in on mold specifically yet, but it falls under the macro-issue of how climate will impact insurance, which the industry is tracking closely.
“There will be a limit to what insurance companies can do where society needs to come and assist with either affordability, incentivizing behavior, changing behavior, and that, in our view, doesn’t fall exclusively on an insurance company,” he said.

Six years after the nor’easter struck, the Schmitt home still sits uninhabited.
Schmitt and her family return to stay at the home occasionally so it’s not considered vacant or abandoned — and she said she still gets sick during those brief visits.
“During all this process, we never got to enjoy this house,” Schmitt said. “My husband and I have been together for many years and working really, really hard to be able to afford a home like this.” More

Jakub Porzycki | Nurphoto | Getty Images

The U.S. stock market has been under pressure recently due to fears of an economic slowdown, but dividend-paying names can help smooth the ride for investors.
Investors can consider the recommendations of top Wall Street analysts as they search for stocks that are backed by strong financials and the ability to pay dividends consistently.   

Here are three attractive dividend stocks, according to Wall Street’s top pros on TipRanks, a platform that ranks analysts based on their past performance.
Pfizer
Health-care giant Pfizer (PFE) is this week’s first dividend stock. The company announced better-than-expected second-quarter results, driven by its cost-cutting initiatives and solid sales of non-Covid products. Pfizer raised its full-year guidance, reflecting strong demand for its non-Covid business, which is gaining from several acquired drugs and recently launched products.
In the first six months of 2024, Pfizer returned $4.8 billion to shareholders through dividends. The stock has a dividend yield of 5.9%.
In reaction to the upbeat Q2 results, Goldman Sachs analyst Chris Shibutani reiterated a buy rating on PFE stock and increased the price target to $34 from $31. The analyst said that while he anticipated that Pfizer will raise its outlook, the magnitude of the increase surpassed his expectations.
The analyst increased his revenue estimates to reflect the strength in PFE’s heart disease drug, Vyndaqel, and cancer treatment Padcev. He also raised his EPS estimates, thanks to improved top-line expectations and enhanced gross margin.

Shibutani said that while management didn’t provide any significant updates related to the company’s obesity programs, he does see the “scope for further beat and raise quarters during the balance of the year.” He also noted that the company’s capital allocation priorities, mainly dividends and debt reduction, remain intact. 
Shibutani ranks No. 462 among more than 8,900 analysts tracked by TipRanks. His ratings have been profitable 46% of the time, delivering an average return of 13%. (See Pfizer Stock Charts on TipRanks)  
Civitas Resources
We move to oil and natural gas producer Civitas Resources (CIVI). On Aug. 1, the company announced its second-quarter results and declared a quarterly dividend of $1.52 per share, payable on Sept. 26.
The amount included a base dividend of 50 cents per share and a variable dividend of $1.02 per share.  
CIVI’s shareholder return policy involves the payment of at least 50% of its free cash flow (after the payment of its base dividend) as a variable component. Interestingly, the company has now revised its shareholder-return program to enhance the flexibility in the way it rewards shareholders with variable returns. Effective Q3 2024, CIVI’s variable component will include a combination of buybacks and dividends, with management and the board deciding the allocation. CIVI also announced a new share buyback plan of up to $500 million.
Following the Q2 results, Mizuho analyst William Janela reaffirmed a buy rating on CIVI stock with a price target of $98, calling the company a top pick. The analyst stated that Civitas delivered another quarter of solid execution across the Permian assets acquired in 2023. 
Commenting on the revised shareholder-return program, Janela said that it gives the company “flexibility to lean more heavily into buybacks, which should resonate with investors and sets up positively into the meaningful FCF [free cash flow] expansion ahead in 2H24.”
The analyst highlighted that Civitas lowered its capital expenditure budget for the year by about 3%, fueled by reductions in well costs as the company integrates its Permian acquisitions. Additional well-cost savings in the DJ Basin also helped the company lower its 2024 capex estimate. 
Janela ranks No. 406 among more than 8,900 analysts tracked by TipRanks. His ratings have been successful 52% of the time, delivering an average return of 25.6%. (See Civitas Resources Stock Buybacks on TipRanks)  
IBM
Finally, there is tech giant IBM (IBM), which recently impressed investors with better-than-expected results for the second quarter. The company, which is seeing solid generative artificial intelligence business, now expects full-year free cash flow to be more than $12 billion compared to its previous forecast of about $12 billion.
IBM returned $1.5 billion to shareholders in dividends in the second quarter. The stock offers a dividend yield of 3.5%. IBM’s dividends are supported by strong cash flows. The company is confident about its growth potential, bolstered by the strength of its diversified business model and the hybrid cloud and AI strategy. 
Following the print, Evercore analyst Amit Daryanani reiterated a buy rating on IBM stock with a price target of $215. He noted that the growth in the company’s software and infrastructure businesses was partially offset by the pressures in the consulting business due to weak discretionary spending by enterprise customers. The analyst added that the overall Q2 results were better than feared.
Commenting on shareholder returns, Daryanani noted the company did not make any share repurchases in the second quarter but remains “committed to a stable and growing dividend.” He expects IBM to allocate more capital to mergers and acquisitions compared to share repurchases.
Daryanani ranks No. 429 among more than 8,900 analysts tracked by TipRanks. His ratings have been profitable 54% of the time, delivering an average return of 10.4%. (See IBM Ownership Structure on TipRanks)  

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With less than 90 days until the presidential election, voters are focusing on economic policies of the candidates that could impact their wallets.
Vice President Kamala Harris this week unveiled her running mate, Minnesota Gov. Tim Walz, and former President Donald Trump in July selected Sen. JD Vance of Ohio.
Experts cover where the candidates stand on key issues like housing, the child tax credit and student loan forgiveness.

Democratic vice presidential candidate and Minnesota Governor Tim Walz (L), and Republican Vice Presidential candidate Sen. JD Vance (R-OH).
Getty Images

Housing

Affordable housing is an important topic for many Americans and both Walz and Vance have addressed the issue.

In May 2023, Walz signed housing legislation that included $200 million in down payment assistance. The bill also had $200 million for housing infrastructure and $40 million for workforce housing.
“We expect Walz to be an advocate for demand-side approaches to housing,” Jaret Seiberg, analyst at TD Cowen wrote in a July statement. “These are the type of housing ideas we would expect in a Harris administration,” she wrote.
Demand-side approaches to housing aim to help individual households by improving housing quality or reducing monthly housing costs.

Meanwhile, Vance, who is also a proponent of affordable housing, highlighted the issue in his Republican National Convention acceptance speech and along the campaign trail.
“Prior to running for Senate, Vance argued that one key to tackling poverty is to address affordable housing,” and he has opposed institutional ownership of rental homes and Chinese buyers for U.S. real estate, Seiberg wrote.

Child tax credit

Without action from Congress, trillions of tax breaks enacted by Trump are scheduled to expire after 2025, including the child tax credit, which will drop from $2,000 to $1,000 per child. 
Congress in 2021 approved a temporary expansion of the child tax credit, including upfront monthly payments, which reduced the child poverty rate to a historic low of 5.2% for 2021, according to a Columbia University analysis.
Following the federal policy, Minnesota enacted a refundable state-level child tax credit in 2023, which Walz described as “signature accomplishment.”    

Minnesota’s new child tax credit is unusual in its narrowness, but it is the most generous in the nation for low-income households.

Jared Walczak
Vice president of state projects at the Tax Foundation

“Minnesota’s new child tax credit is unusual in its narrowness,” said Jared Walczak, vice president of state projects at the Tax Foundation. “But it is the most generous in the nation for low-income households.” 
However, a permanent federal child tax credit expansion could be difficult, particularly amid a divided Congress and increasing concerns over the federal budget deficit.
Walz’s campaign did not respond to CNBC’s request for comment.
Senate Republicans blocked a federal child tax credit expansion last week, and Sen. Mike Crapo, R-Idaho, the ranking member of the Senate Finance Committee, described the vote as a “blatant attempt to score political points.”
Despite the failed procedural vote, Crapo voiced openness to negotiating a “child tax credit solution that a majority of Republicans can support.”
Democrats scheduled the vote partially in response to Vance, who has positioned himself as a pro-family candidate. Vance was not present for the Senate vote, but has expressed support for the child tax credit.
Vance’s campaign did not respond to CNBC’s request for comment. 

Student loans

Vance has spoken out against student loan forgiveness policies.
“Forgiving student debt is a massive windfall to the rich, to the college educated, and most of all to the corrupt university administrators of America,” Vance, a Yale Law School graduate wrote on X in April 2022. “Republicans must fight this with every ounce of our energy and power.”
Outstanding education debt in the U.S. stands at around $1.6 trillion. Nearly 43 million people — or 1 in 6 adult Americans — carry student loans. Women and people of color are most burdened by the debt.

Vance does seem to approve of loan forgiveness in extreme cases. In May, he helped introduce legislation that would excuse parents from student loans they took on for a child who became permanently disabled.
Jane Fox, chapter chair of the Legal Aid Society Attorneys union, UAW local 2325, said it was hypocritical and incorrect of Vance to frame debt relief as a benefit to those who are well off.
“Student debt forgiveness is a working-class issue,” Fox said. “Those in the 1% who went to elite institutions and then worked in private equity as Senator Vance did rarely need debt relief.”
Vance’s campaign did not respond to CNBC’s request for comment.   
Meanwhile, Walz, a former school teacher, has supported programs to alleviate the burden of student debt on people, said higher education expert Mark Kantrowitz.
He signed a student loan forgiveness program for nurses into law in Minnesota, Kantrowitz said, as well as a free tuition initiative for low-income students.
“As my daughter prepares to head off to college next year, affordability and student loan debt are at the front of our minds,” Walz wrote on Facebook in 2018. “Every Minnesotan deserves a shot at a great education without being held back by soaring costs and student loan debt.” More

A man walks past Kobayashi Pharmaceutical’s headquarters building in Osaka on April 2, 2024.
Yuichi Yamazaki | AFP | Getty Images

Company: Kobayashi Pharmaceutical (4967.T)

Business: Kobayashi Pharmaceutical manufactures and sells pharmaceuticals and consumer products in Japan and internationally. The company operates in three segments: The Domestic Business and International Business segments offer health care, household, skin care and other products. The Company recently merged its mail-order segment into its domestic business segment, which is engaged in the mail-order sale of dietary supplements, skin care and other products. The Other segment is engaged in transportation, plastic container manufacturing, real estate management and advertising planning and production.
Stock Market Value: ~440 billion Japanese yen (5,635 yen per share)

Activist: Oasis Management Company

Percentage Ownership:  5.20%
Average Cost: n/a
Activist Commentary: Oasis Management is a global hedge fund management firm headquartered in Hong Kong with additional offices in Tokyo and Austin, Texas, as well as the Cayman Islands. Oasis was founded in 2002 by Seth Fischer, who leads the firm as its chief investment officer. Oasis is an authentic international activist investor, doing activism primarily in Asia (and occasionally Europe). The firm seeks to identify investment opportunities that are undervalued and have great potential for value creation. The firm has an impressive track record of prolific and successful international activism. Oasis has as many arrows in its quiver as any activist and has been successful in getting seats on boards, opposing strategic transactions, advocating for strategic actions, improving corporate governance and holding management accountable.

What’s happening

Oasis recently reported a 5.20% position in Kobayashi. Amid a scandal around Kobayashi’s red koji-related products, Oasis said that it could engage the company if there was no self-improvement and suggested three paths for value creation: (i) Kobayashi could improve operational performance on its own; (ii) go private via a management buyout; or (iii) work with Oasis to improve operational performance, corporate governance and the constitution of the board.

Behind the scenes

Kobayashi Pharmaceutical is a Japan-based pharmaceuticals and consumer products company. It owns a stable of over 150 brands in categories across pharmaceuticals, oral care, food, skin care, air fresheners, mail order and more. The company generated 173.45 billion yen of sales in 2023 with 75% coming from domestic sales, 24% from international sales, and less than 1% from its other businesses. While the business posted record revenue in 2023, it was coming off of a declining base and only narrowly exceeded its 2018 revenue of 167 million yen. Moreover, since 2019, return on assets declined from 12% to 10.4%, return on equity from 11.3% to 10.1% and operating margins from 16.2% to 14.9%. As a result, the company’s shares declined over 45% from its peak in December 2020 to the end of 2023.

Matters went from bad to worse in early 2024 amid reports of health issues that appeared to be linked to Kobayashi’s red koji-related products. In March, the company recalled three products. Subsequently, Kobayashi began an investigation into the matter and formed a fact-finding committee to assess the situation and the board’s response. Last month, the company released the results of the investigation. While the committee concluded that the company did not engage in any malicious actions to conceal the matter, it also found that Kobayashi lacked awareness of the safety of health foods and failed to make timely reports and consultation to the board, auditors, government and consumers. The committee also found that the company lacked preparation for health damages and failed to invest sufficient resources into quality control. The scandal around the red koji supplement has sent the stock down nearly 20% since the end of 2023.
In May, Oasis Management highlighted the opportunity at Kobayashi. At that time, Oasis highlighted that this was not a case of an extraordinary or unimaginable crisis. At the time, Oasis said that they could step in if there was no “self-improvement” and that the company would stand to gain if it implemented improved crisis management protocols and improved corporate governance to better hold management accountable and root out nepotism. Oasis suggested three paths for value creation: (i) improve operational performance on its own; (ii) go private via a management buyout; or (iii) work with Oasis to improve operational performance, corporate governance, and the constitution of the board.
In July, president and CEO Akihiro Kobayashi and Chairman Kazumasa Kobayashi resigned from their roles. However, Akihiro Kobayashi remained on the board to continue handling compensation for victims, and Kazumasa Kobayashi was made a special advisor to the company. Both individuals announced they would return approximately half of their compensation from the past six months. Executive officer and head of sustainability management Satoshi Yamane took over as president and CEO.
Now, Oasis reported a 5.20% stake in the company, likely a sign that the activist is ready to begin engaging management more aggressively. It is clear to us that Kobayashi needs a reset and that Oasis is a willing and able partner to do so, but it is yet to be seen if the newly appointed CEO and shaken board will play ball. The company’s annual meeting passed in March 2024 before the results of the fact-finding committee were released, so we will have to wait nearly a year before Oasis could submit any shareholder proposals barring the requisition of an Extraordinary Meeting. This is a board which has overseen several product recalls and has been found to be ineffective in its oversight role of quality assurance and crisis management. While accepting the resignations of Akihiro and Kazumasa Kobayashi is a step in the right direction, keeping them involved with the company is more telling as to how this board weighs shareholder concerns versus management interests.
Kobayashi would be wise to overhaul much of its board and auditors, and at minimum invite a representative of Oasis onto the board. It would imbue the company with a sense of urgency to improve operational performance, corporate governance and shareholder value maximization. Moreover, Oasis has an extensive history of working to improve corporate governance at its Japanese portfolio companies, delivering an average 31.7% return on its Japanese campaigns with a corporate governance thesis versus 1.9% for the MSCI EAFE index. Despite this, a board invitation to an activist is something that rarely happens in Japanese companies today. If Oasis wants to create value for shareholders from a board level, it is something that would probably have to happen through a proxy fight. But that is also a long shot, even at a company with corporate governance issues as we have here. Oasis has encountered difficulties recently in campaigns which have centered around poor corporate governance, being delivered losses at the 2024 annual general meetings of Hokuetsu and Ain Holdings. The recent loss at Ain was especially disconcerting, as the pharmacy company had displayed problematic corporate governance, yet Oasis was unable to achieve enough shareholder support to gain board representation.
This is not a criticism of Oasis. The firm is a top-tier Japan shareholder activist and if anyone can get board seats in Japan, it is Oasis. Rather, it is more of a reality of Japanese corporate governance, which has come a long way over the past several years but has much further to go. Oasis is not the type of activist to be deterred from one or two losses: Japanese activists are used to losing proxy fights. We would hope the firm pursues this for the sake of Kobayashi shareholders and to continue the upward momentum toward better corporate governance in Japan.
If the firm receives a board seat, Oasis could assist in assessing strategic alternatives, including a management buyout at Kobayashi’s currently depressed share price or an acquisition by a strategic acquirer who could improve quality assurance and integrate it into a more well-governed structure. Oasis has been very active in Japanese pharmaceuticals and drug store companies in recent years. The firm has cited consolidation as a major structural theme, campaigning for change at Tsuruha Holdings, Kao Corp, Ain Holdings and management buyout opposition at Taisho Pharmaceutical Holdings.
Ken Squire is the founder and president of 13D Monitor, an institutional research service on shareholder activism, and the founder and portfolio manager of the 13D Activist Fund, a mutual fund that invests in a portfolio of activist 13D investments. More

Power companies such as Constellation Energy and Vistra are in talks with customers interested in directly connecting data centers to nuclear plants.
Constellation and Vistra shares have soared as investors see a chance for their nuclear plants to power the tech sector.
But connecting data centers directly to nuclear plants already faces controversy.
Some utilities have challenged an agreement between Amazon and Talen Energy.

A cooling tower at the Constellation Nine Mile Point Nuclear Station in Scriba, New York, US, on Tuesday, May 9, 2023. 
Lauren Petracca | Bloomberg | Getty Images

Tech companies are increasingly looking to directly connect data centers to nuclear plants as they race to secure clean energy to power artificial intelligence, sparking resistance from some utilities over the potential impact on the electric grid.
Data centers, the computer warehouses that run the Internet, in some cases now require a gigawatt or more of power, comparable to the average capacity of a nuclear reactor in the U.S.

The data centers are essential to U.S. economic competitiveness and national security as the country competes with adversaries such as China for supremacy in the race to develop AI, said Joe Dominguez, the CEO of Constellation Energy, which operates the largest nuclear fleet in the U.S.
“When you’re talking about large [demand] load that also wants to use zero-emission energy, you’re going to bring it very close to nuclear power plants,” Dominguez said on Constellation’s second-quarter earnings call Tuesday. Constellation, headquartered in Baltimore, operates 21 of the 93 reactors in the U.S.
Constellation’s shares have surged 58% this year, the sixth-best stock in the S&P 500, as investors attach a higher value to the company’s nuclear power capacity to meet the growth in data centers. Shares of Vistra Corp., based outside Dallas and owner of six reactors, have doubled this year, the second-best performing stock in the S&P after AI chipmaker Nvidia.
Tech companies are building out data centers just as power supply is increasingly constrained due to the retirement of coal plants and as demand is climbing from the expansion of domestic manufacturing and the electrification of vehicles.
The largest grid operator in the U.S., PJM Interconnection, warned in late July that power supply and demand is tightening as construction of new generation lags demand. PJM covers 13 states primarily in the Mid-Atlantic region, including the world’s largest data center hub in northern Virginia.

Constellation’s Dominguez argued that connecting data centers directly to nuclear plants, called co-location by the industry, is the fastest and most cost-effective way to support the buildout of data centers, without burdening consumers with the costs of building new transmission lines.
“The notion that you could accumulate enough power somewhere on the grid to power a gigawatt data center is frankly laughable to me — that you could do that in anywhere that doesn’t start with decades of time,” Dominguez said. “This is an enormous amount of power to go out and try to concentrate.”

Amazon’s nuclear agreement

But co-locating data centers next to nuclear plants already faces controversy.
In March, Amazon Web Services bought a data center powered by the 41-year-old Susquehanna nuclear plant in Pennsylvania from Talen Energy for $650 million . But the agreement to directly sell power to the AWS data center from the nuclear plant already faces opposition from utilities American Electric Power and Exelon, who have filed complaints at the Federal Energy Regulatory Commission (FERC).
AEP and Exelon argue that the deal between Amazon and Talen sets a precedent that will result in less available power in the PJM grid area as resources “flee to serve load that uses and benefits from — but does not pay for — the transmission system”
“This will harm existing customers,” the utilities told FERC in a filing in June. Talen Energy has dismissed the objections as “demonstrably false,” accusing the utilities of stifling innovation.
“The rapid emergence of artificial intelligence and data centers has fundamentally changed the demand for power and leads to an inflection point for the power industry,” Talen said in a June statement. “Talen’s co-location arrangement with AWS brings one solution to this new demand, on a timeline that serves the customer quickly.”
FERC has requested more information on the service agreement between Talen and AWS. The regulator is holding a conference in the fall to discuss issues associated with connecting large electricity loads directly to power plants.
“It really is a great opportunity for there to be interaction between stakeholders and the commissioners in an informal setting like a conference, as opposed to doing so in litigation,” Kathleen Barrón, chief strategy officer at Constellation, said on the power company’s recent earnings call, referring to the fall FERC meeting.

Shopping for nuclear power

Constellation and Vistra have backed the AWS-Talen agreement in filings to FERC, with each of their CEOs saying on their earnings calls this week that co-location and traditional grid connection will be needed to meet demand.
Barrón told CNBC that Constellation has “seen interest from many” tech companies in potentially co-locating a data center at one of its sites.
Vistra is having numerous conversations with customers about co-location and is “in due diligence for a number of sites,” CEO Jim Burke said Thursday. With the dispute in the PJM region over co-location, data center developers may take a closer look at Texas, which operates its own grid called ERCOT, Burke said.
“We’re seeing some interest in Comanche Peak,” Burke told analysts on the company’s second-quarter earnings call, referring to one of Vistra’s nuclear plants. Comanche Peak, about 50 miles outside Fort Worth, Texas, has two reactors with 2.4 gigawatts of capacity, enough to power 1.2 million homes in typical conditions and 480,000 homes in peak periods, according to Vistra.
And Dominion Energy has indicated it is open to connecting a data center to the Millstone nuclear plant in Connecticut. The Dominion service region includes northern Virginia, the epicenter of the data center boom.
“We continue to explore that option,” CEO Robert Blue said on Dominion’s second-quarter earnings call. “We do clearly realize any co-location option is going to have to make sense for us, our potential counterparty and stakeholders in Connecticut.”
Kelly Trice, president of Holtec International, a privately held nuclear company headquartered in Florida, said the U.S. needs to start thinking more about balancing the power needs of data centers with those of all consumers. Holtec is working to restart the Palisades nuclear plant in Michigan and has also had conversations with tech companies about nuclear energy.
“Essentially, the hyperscalers and the data centers can take all the power and the consumer not get any of that if we’re not careful,” Trice told CNBC. “So the balance there, where the consumers actually get what is rightfully theirs too, is a factor.”
“The United States hasn’t really started wrestling [with] that yet,” Trice said. “But I think we’re getting close.” More

Former President Donald Trump repeated his plan to eliminate taxes on Social Security benefits for seniors.
But the plan could accelerate insolvency for the Social Security and Medicare trust funds, experts say.
Roughly 40% of Americans who receive Social Security benefits pay federal income tax, according to the Social Security Administration. 

Republican presidential nominee and former U.S. President Donald Trump holds a campaign rally in Harrisburg, Pennsylvania, U.S., July 31, 2024.
Elizabeth Frantz | Reuters

Trump’s plan could move insolvency for Social Security, including the disability program, up two years, from 2035 to 2033, according to the Tax Foundation. Insolvency for Medicare could move up six years, from 2036 to 2030.

“President Trump delivered on his promise to protect Social Security and Medicare in his first term” and will “continue to strongly protect Social Security and Medicare in his second term,” Trump campaign national press secretary Karoline Leavitt said in a statement.
She said Trump will boost the U.S. economy and strengthen Social Security, “all the while eliminating taxes on Social Security for America’s well-deserving seniors.”

Cutting tax primarily benefits higher earners

“In the short run, [Trump’s plan] will provide a fairly modest benefit, on average, to Social Security beneficiaries,” said Howard Gleckman, senior fellow at the Urban-Brookings Tax Policy Center. “But nearly all of that benefit goes to high-income retirees who really don’t need it.”
For 2025, the tax break could save U.S. households an average of $550, according to a Tax Policy Center analysis released Aug. 1. But households could see an average tax break of $90 with income between $32,000 and $60,000 or no benefit with earnings of $32,000 or less.

Roughly 40% of Americans who receive Social Security benefits pay federal income tax, and several states collect taxes on Social Security.
The federal income tax formula uses “combined income,” including your adjusted gross income, non-taxable interest and one-half of Social Security benefits.
With combined income between $25,000 and $34,000 — or $32,000 and $44,000 for married couples filing jointly — up to 50% of Social Security benefits may be taxable. Once combined income exceeds those levels, up to 85% of your Social Security benefits could be subject to tax.
The thresholds don’t adjust for inflation, so “it’s hitting middle-income people who have Social Security benefits and probably a pension or 401(k),” Gleckman said. More

The Biden administration’s new affordable repayment plan, known as SAVE, may be on hold for months or longer due to legal challenges.
Here’s what borrowers should know in the meantime.

Alistair Berg | Digitalvision | Getty Images

Why the SAVE plan is on hold

The SAVE plan has been a magnet for controversy ever since the Biden administration rolled out the program in the summer of 2023, describing it as “the most affordable student loan plan ever.”
Indeed, the terms of the new income-driven repayment plan are the most generous to date.
SAVE comes with two key provisions that legal challenges have targeted: It has lower monthly payments more than any other federal student loan repayment plan, and it leads to quicker debt erasure for those with small balances.

Republican-led states that have sued the U.S. Department of Education over SAVE argue that the agency overstepped its authority and essentially is trying to find a roundabout way to forgive student debt after the Supreme Court blocked its sweeping plan in June 2023.

Before the legal challenges, the Education Department had already forgiven $5.5 billion in student debt for 414,000 borrowers through the SAVE plan.
Those who have already received the relief are not impacted by any pause to the plan, experts say.

Payments are not due for now

No credit toward forgiveness

Unlike during other payment pauses on student loans, months during this forbearance will not count toward borrowers’ timeline to loan forgiveness.
That means those enrolled in SAVE who are hoping to eventually get their debt cleared under either the income-driven repayment plan’s terms or Public Service Loan Forgiveness are not getting credit for this period in which they’re not making payments.
However, borrowers pursuing student loan forgiveness should still explore their options, said Elaine Rubin, director of corporate communications at Edvisors, which helps students navigate college costs and borrowing.

For example, the Education Department offers a so-called buyback option for borrowers working toward PSLF who might have missed payments. That opportunity lets borrowers close to debt forgiveness get credit for previous months by retroactively making payments, Rubin said.
Alternatively, borrowers who don’t want to lose credit for the months they spend in this forbearance might consider switching to another income-driven repayment plan, Rubin said.
“However, transitioning between repayment plans may take several months,” she said. “Some borrowers have reported that their servicers informed them it could take up to 90 days.”
Also, even if they’re not moving closer toward debt forgiveness for the time being, SAVE enrollees are benefiting from a $0 monthly payment, Kantrowitz pointed out.
“Borrowers do not lose anything because of the pause, other than time,” he added. More