Latest News
See the latest news and get GPT analysis of articles
Southwest Airlines CEO says he won’t resign. A hedge fund is trying to get him fired 2024-06-12 16:11:45+00:00 - DALLAS (AP) — The CEO of Southwest Airlines said Wednesday he will not resign in the face of pressure from a hedge fund that wants him fired and that his leadership team will produce its own plan to boost the airline’s financial performance. CEO Robert Jordan said Southwest will present its plan in September. He declined to give specifics, but again hinted that it could include changes in the airline’s longstanding boarding and seating policies. Elliott Investment Management notified Southwest’s board Monday that it bought a $1.9 billion stake in the Dallas-based company and is seeking to replace Jordan and Gary Kelly, the airline’s chairman and former CEO, with executives from outside the company. Elliott accused Southwest leadership of failing to change with evolving customer tastes, causing it to lag behind rivals. The hedge fund noted that Southwest’s share price has fallen more than 50% over the past three years. Another investment manager, Artisan Partners, said Wednesday that it has raised the same issues with Southwest, and it urged the airline’s board of directors to “upgrade the company’s leadership.” Speaking to reporters after a Politico event in Washington, Jordan said, “I have no plans to resign” and that Southwest will treat Elliott “like any other investor.” “Elliott can provide us ideas. They can talk to other shareholders, but Elliott is not directing the company,” he said. Jordan said Southwest is investing in better technology — critics blamed outdated systems for contributing to massive flight cancellations in December 2022. He said the airline is also improving the customer experience with better WiFi, larger bins for carry-on bags, and more power outlets. Southwest is also considering changes to its cabin and seating, such as whether to sell some seats with extra legroom, Jordan said. “We’ve got an investor day in September, and I’m eager to lay out a very broad plan for how we improve the company both from a customer perspective but from a financial perspective,” Jordan said. He added that an Elliott presentation aimed at Southwest shareholders was “fairly light” on ideas. Elliott, whose stake in Southwest is estimated by analysts to be around 11%, declined to comment on the CEO’s remarks. Artisan Partners, which holds 1.8% of Southwest stock, according to FactSet, said Wednesday that it has made the same points as Elliott about the need for “dramatic change” to Kelly, the airline’s chairman, in the past several months. Two Artisan executives said in a letter to Southwest’s board that they were writing “to urge the board to reconstitute itself and upgrade the company’s leadership. ... We believe this process needs to commence immediately.”
Tesla Investors to Decide if Musk Deserves $45 Billion Payday 2024-06-12 16:00:06+00:00 - Under Elon Musk’s leadership, Tesla popularized electric vehicles and became the most valuable auto company in the world. Mr. Musk became a billionaire many times over while generating huge profits for investors. Even so, Tesla’s shareholders may decide this week that Mr. Musk has been paid too much. In a vote whose results will be announced on Thursday, the investors could strike down a compensation package — paid in stock options and currently worth $45 billion — that makes up a substantial portion of Mr. Musk’s wealth. With it, he is probably the richest person in the world, worth well over $200 billion. Without it, he could rank behind other billionaires like Jeff Bezos of Amazon. Shareholders approved the pay formula in 2018 but are voting on it for a second time because a judge in Delaware voided the package in January. She ruled that Mr. Musk had largely dictated the terms to a board of directors stacked with close friends, people he made rich and his brother.
Denmark recalls 3 spicy instant noodle soup brands from South Korea used in online food challenges 2024-06-12 15:43:57+00:00 - COPENHAGEN, Denmark (AP) — Food authorities in Denmark have recalled three types of spicy instant noodle products imported from South Korea over possible risks for “acute poisoning.” Consumers are asked to discard them or return the noodles to the retailer. The noodles are made by Seoul-based Samyang Foods, one of South Korea’s largest companies, and sold across the globe. The recalled noodles include Buldak Samyang 3 x Spicy & Hot Chicken, Buldak Samyang 2 x Spicy & Hot Chicken and Buldak Samyang Hot Chicken Stew. The Danish Veterinary and Food Administration said the products contain an overly high dose of capsaicin, an active ingredient in chile peppers but also a chemical that can be a neurotoxin and a health hazard. Children and teenagers in Denmark have been daring each other on social media to eat “a strong bowl of noodle soup,” referring to the three South Korean products, the agency said. “The noodle dishes marketed as extremely strong must no longer be sold because consumers and especially children risk acute poisoning,” it said late Tuesday. “The capsaicin content is so high that it can pose a health hazard.” Children and frail adults and the elderly are at risk, said Henrik Dammand Nielsen of the Danish Food and Drug Administration. Possibly symptoms include burning and discomfort, nausea, vomiting and high blood pressure, he said. “That is why we are now demanding shops remove the products from their shelves,” the agency said. Samyang Foods said they understood the recall came because of the spiciness of the noodles and not because of the product quality, according to a Samyang Foods company statement provided to the media in South Korea. Spicy food challenges have been around for years. From local chile pepper eating contests to restaurant walls of fame for those who finished extra hot dishes, people around the world have been daring each other to eat especially fiery foods. In September, a Massachusetts teen with a congenital heart defect who participated in a spicy tortilla chip challenge on social media died from eating a large quantity of chile pepper extract. An autopsy report obtained by The Associated Press showed that the 10th grader died on Sept. 1, 2023, after eating the Paqui chip as part of the manufacturer’s “One Chip Challenge.” In Denmark, a puzzled consumer reached out to the Danish Veterinary and Food Administration and asked how the instant noodles could be legal, the agency said, after which it had a lab assessing the products and determined the three noodle brands can be harmful to health, instigating the recall. “It is important that parents are aware of the extreme noodle varieties and avoid them, Dammand Nielsen said.
How Fed Rates Influence Mortgages, Credit Cards and More 2024-06-12 15:38:04.802000+00:00 - American households who are hoping interest rates will soon decline will have to wait a bit longer. The Federal Reserve is expected to keep its benchmark interest rate unchanged on Wednesday, at least until there are clearer signs that inflation is growing more slowly. But forecasters will be listening to Jerome H. Powell, the Fed chair, for any clues about how much longer they expect to keep rates at relatively high levels. The central bank has raised its key interest rate to 5.33 percent from near zero in a series of increases between March 2022 and last summer, and they’ve remained unchanged since then. The goal was to tamp down inflation, which has cooled considerably, but it is still higher than the Fed would like, suggesting that interest rates could remain high for longer than economists had previously expected. For people with money stashed away in higher-yielding savings accounts, a continuation of elevated rates translates into more interest earnings. But for people saddled with high cost credit card debt, or aspiring homeowners who have been sidelined by higher interest rates, a lower-rate environment can’t come soon enough. “Shopping around, whether you’re looking for an auto loan, a credit card, a personal loan or any other type of loan, can make a huge difference,” said Matt Schulz, an analyst at LendingTree, an online loan marketplace.
Homeowners insurance costs are going through the roof. Here's why, and what you can do about it. 2024-06-12 14:56:00+00:00 - When Joy Sharp built a new home in the small coastal community of Wilmington, North Carolina, about eight years ago, her homeowners insurance cost was a relatively modest $1,400. That was then. Now, and after a series of violent storms slammed the Atlantic coast in recent years, her annual premiums have more than quadrupled. "Now I've been given renewal rates of $6,000," Sharp, 39, herself an insurance agent, told CBS News. "So, it's just every year, it goes up and up and up, and it's not coming down." Florida resident Sam Weitzner and his wife, have been similarly socked since buying their Orlando home in Orlando in 2017. Their homeowners coverage has surged from $1,500 to nearly $6,000 a year, affecting their finances and forcing them to change insurers. "Ultimately we decided to switch because, of course, obviously, the cost was too high," he told CBS News. "It was affecting our mortgage payment and we just weren't able to make ends meet with that. And so, it just became a priority because we knew that in order to be insured and continue owning our home, it was the only course of action." Sharp and Weitzner are hardly alone. Millions of Americans face rising homeowners insurance rates as natural disasters linked to climate change increase costs for insurers. Home insurance rates around the nation jumped an average of 11.3% in 2023, with owners in Arizona, Texas and Utah seeing spikes of more than 20%, according to S&P Global Market Intelligence. Homeowners in Delaware, Hawaii, Mississippi and Vermont saw the lowest insurance rates increases, ranging between 2% and 4% last year. "This is crazy" Still, even more modest increases add up to hundreds of extra dollars every year for coverage, enough to frustrate Americans who are still coping with persistent inflation. Sharp recalls being shocked to learn she would have to pay nearly $6,000 under her revised home insurance policy without a commensurate increase in coverage. "I kind of thought it was a joke," she told CBS News. "I kind of thought, OK, where are my discounts? This has got to be like the three-year policy or else this is crazy. The rates went up, but the coverage on my home did not increase very much. I mean, that's a budget buster that just destroys all the economics." The housing industry, already grappling with the impact of the highest mortgage rates in years, has taken notice. More than 20 housing organizations, including the powerful National Association of Home Builders and the National Multifamily Housing Council, urged the Biden administration and Congress in a letter this week to address the causes of rising insurance premiums. Affordable housing providers, in particular, are facing sharply higher premiums — nearly 1 in 3 policies experienced rate increases of at least 25% in the most recent coverage renewal period, the groups said. They also underlined the impact of natural disasters in driving up costs. "Starting around 2017, the property insurance market began to destabilize as more frequent natural catastrophes occurred," the letter states. "Insured losses arising from natural disasters were calculated at $121 billion and almost $125 billion in 2021 and 2022, respectively, which are both well above the 10-year average of $81 billion." Among other potential remedies, the housing coalition is calling for the creation of federally backed homeowners insurance. Insurers have either exited or stopped renewing policies in disaster-prone states like California, Florida, North Carolina, Oklahoma and Texas. Insurers say writing policies in those areas is too risky because of the increased likelihood of wildfires, tornadoes, hurricanes or earthquakes. The increasing frequency and severity of extreme weather — which scientists link to climate change — means bigger payouts by insurers, leading to higher premiums for millions of Americans. Weather is the main reason insurance rates are climbing, but inflation is also playing a role, said Daryl Fairweather, chief economist at Redfin. "When inflation is on the rise, it basically means that the cost of everything is going up," Fairweather told CBS News. "And that includes the cost of maintenance for homes, the cost of remodeling homes. And that goes into the equation for home insurance." What homeowners can do So what can homeowners can do about runaway insurance costs? Experts point to a few options: Bundling your home and auto insurance can yield lower rates Call around for additional quotes Invest in weatherproofing your home, including storm-resistant windows, landscaping and drains "Instead of sending the money to the insurer, you can use it to harden your home, and potentially get a lower premium in exchange for that," Fairweather said. Sharp haggled with her insurer, which agreed to drop her premium to $2,400 per year.
U.S. Expands Sanctions on Russia as G7 Leaders Gather 2024-06-12 14:38:41+00:00 - The Biden administration on Wednesday announced a series of new financial sanctions aimed at interrupting the fast-growing technological links between China and Russia that American officials believe are a broad effort to rebuild and modernize Russia’s military during its war with Ukraine. The actions were announced just as President Biden was leaving the country for a meeting in Italy of the Group of 7 industrialized economies, where a renewed push to degrade the Russian economy will be at the top of his agenda. The measures were coordinated by the Treasury, State and Commerce Departments and aimed to further isolate Russia from the global financial system and cut off its ability to gain access to the technology that powers its military arsenal. The effort has grown far more complicated in the past six or eight months after China, which had previously sat largely on the sidelines, stepped up its shipments of microchips, machine tools, optical systems for drones and components for advanced weaponry, U.S. officials said. But so far Beijing appears to have heeded Mr. Biden’s warning against shipping weapons to Russia, even as the United States and NATO continue to arm Ukraine.
Autodesk's Quarterly Results Could Drive It Back to Recent Highs 2024-06-12 13:32:00+00:00 - After reporting the year's first quarter results, Autodesk Inc. shares NASDAQ: ADSK are trading lower by over 3% to end the day. However, the company's financial results are far from those that would warrant such price action, and Wall Street analysts have noticed this fact. Autodesk Today ADSK Autodesk $223.02 +11.52 (+5.45%) 52-Week Range $192.01 ▼ $279.53 P/E Ratio 52.97 Price Target $269.05 Add to Watchlist Outside of the post-earnings reaction in the stock price, shares of Autodesk are trading at a compressed 76% of their 52-week high prices, opening the way for a potential discount play to be considered by investors today. With the world of technology stocks claiming the lion’s share of market attention, it seems inevitable that Autodesk may join the party soon enough. Get Autodesk alerts: Sign Up While not as popular as other peers in the space, stocks like Nvidia Co. NASDAQ: NVDA and even Dell Technologies Inc. NYSE: DELL, Autodesk still merits some of the excitement – and capital – that the rest of the artificial intelligence group is getting today. Here are some reasons behind Autodesk’s potential return to recent highs. Autodesk's Financials Lay the Foundation for a Stock Rally With an over 15% return on invested capital (ROIC) rate, Autodesk’s financials lay the foundation for what could become the easy choice in today’s stock-picking endeavors. Within the company’s quarterly press release, investors will find that revenues increased over 12% in the past 12 months, which is far above the minimum requirements for a potentially good investment in today’s lackluster economy, as judged by the lower revised GDP growth rate of only 1.3% in the past quarter. Autodesk, Inc. (ADSK) Price Chart for Wednesday, June, 12, 2024 Apart from double-digit revenue growth, the company’s operating margin grew to 35%, or 3% higher than the previous year. Of course, keeping more money from each dollar in sales allows management to reinvest more capital efficiently and deliver these types of ROIC rates for investors to enjoy. More importantly, there is an excellent reason why markets are willing to pay a price-to-book (P/B) ratio of 23.8x for Autodesk stock, which is 260% over the computer industry’s average 6.6x P/B valuation. One of these reasons may be the subscription revenues, which grew by 11% to reach $1.3 billion. Because subscription revenue makes for more steady and predictable cash flows, markets could value it over other stocks that aren’t that stable in today’s market. More than that, revenue retention rates at Autodesk remained at 100%, meaning that no customer dared to look elsewhere to replace the service and products received by the company. As these are all factors that Wall Street likes, it would be wise for investors to check what analysts are thinking about Autodesk stock. Wall Street's Perspective on the Future of Autodesk Stock According to the Royal Bank of Canada, the stock could go as high as $320 a share, a valuation that was set—and has not changed—since April 2024. To prove these analysts right, the stock would need to rally by as much as 51.3% from its current level. Autodesk MarketRank™ Stock Analysis Overall MarketRank™ 4.59 out of 5 Analyst Rating Hold Upside/Downside 17.7% Upside Short Interest Healthy Dividend Strength N/A Sustainability -1.45 News Sentiment 0.25 Insider Trading Selling Shares Projected Earnings Growth 17.93% See Full Details To back these valuations into reality, Wall Street is now projecting up to 17.9% earnings per share (EPS) growth for the stock this year. Compared to peers like Adobe Inc. NASDAQ: ADBE, a 12.8% EPS growth projection falls behind Autodesk, explaining why that stock’s P/B valuation is only 12.9x compared to Autodesk’s 23.8x. With one last check, investors can take so-called ‘smart money’ as an indicator of future interest. The Vanguard Group, Autodesk’s largest shareholder, decided to boost its stake in the stock by up to 1.9% in the past quarter, bringing its net investment to $5 billion. Considering that the computer software industry now trades at an average of 88.7% of its 52-week high, and Autodesk at only 76%, it comes as a surprise for investors to see Autodesk outperform the Financial Select SPDR Fund NYSEARCA: XLF by over 22% in the past 12 months. With over $1.1 billion in billings, Autodesk is poised to continue delivering impressive financials in the future, another reason the market is bidding the stock higher and why it is willing to pay such a rich premium over its peers. Autodesk's Upside Potential Linked to Rising Home Listings As a final catalyst for investors to consider, rising U.S. home listings and heating activity in the real estate sector may increase demand for Autodesk’s 3D rendering capabilities. Utilizing artificial intelligence to aid builders and architects in their need to design new construction, whether it is commercial or residential. Backed by solid quarterly financial results, high valuation cases from analysts, and EPS growth, it looks like the Vanguard Group may have made the right choice in boosting its Autodesk positions. Before you consider Autodesk, you'll want to hear this. MarketBeat keeps track of Wall Street's top-rated and best performing research analysts and the stocks they recommend to their clients on a daily basis. MarketBeat has identified the five stocks that top analysts are quietly whispering to their clients to buy now before the broader market catches on... and Autodesk wasn't on the list. While Autodesk currently has a "Hold" rating among analysts, top-rated analysts believe these five stocks are better buys. View The Five Stocks Here
A Bubble is Brewing in Oracle Stock, and it’s Only Getting Bigger 2024-06-12 13:25:00+00:00 - An AI-driven bubble is forming in Oracle’s NYSE: ORCL shares, which is only getting bigger. The FQ4 release highlights a supply-demand situation in which demand outpaces supply, and Oracle invests to meet the need. Demand and budding partnerships with major cloud providers such as Microsoft NASDAQ: MSFT and Google NASDAQ: GOOG are elevating this company into the pantheon of AI powerhouses, the few companies able to capitalize and monetize AI. Fiscal 2024 was a game-changing year, and 2025 will only be better. Guidance from CEO Safra Catz is an expectation for revenue growth to accelerate sequentially throughout the year and result in double-digit annual growth. A robust increase in RPO supports guidance. The remaining performance obligation increased by 44% and suggests the business acceleration in 2025 will also be robust. Get Oracle alerts: Sign Up Oracle Rises on Weak Results Oracle Today ORCL Oracle $140.38 +16.50 (+13.32%) 52-Week Range $99.26 ▼ $140.96 Dividend Yield 1.14% P/E Ratio 37.04 Price Target $139.86 Add to Watchlist Oracle’s Q4 results were weaker than expected, but two mitigating factors are at play. The first is that analysts set a high bar, so the 200 basis points of top-line underperformance aren’t as bad as they look. The second is the outlook. The company inked major deals with Google and Microsoft to link their clouds. Now, MSFT Azure and Google Cloud users will have access to Oracle’s many products and services to turbocharge (in their words) cloud revenue growth. Among those users is OpenAI, which also signed a contract to use Oracle's cloud to train its ChatGPT LLM. Oracle’s $14.29 billion in revenue is up 3.3% compared to last year, driven entirely by cloud services and support, which grew by 9%. Cloud License and On-Premise License fell by 14%. Within Cloud Services and Support, the total cloud grew by 20% on a 42% increase in IaaS and a 10% gain in SaaS. Fusion Cloud ERP grew by 14%, and Netsuite Cloud ERP by 19%. The margin news is mixed but ultimately favorable to investors. The operating margin improved but was offset by increased tax provisions that resulted in a 5% decline in net income. The takeaway is that $1.63 in adjusted earnings is down slightly from last year and missed the consensus but is sufficient to sustain the dividend outlook, balance sheet health, and business reinvestment. Investors Expect Robust Dividend Growth From Oracle Oracle Dividend Payments Dividend Yield 1.15% Annual Dividend $1.60 Annualized 3-Year Dividend Growth 16.55% Dividend Payout Ratio 42.22% Next Dividend Payment Jul. 25 See Full Details Oracle is a solid dividend-paying stock with a yield aligned with the broad market average. The difference is that Oracle has been increasing the payout at an above-average pace for years and is expected to continue because the payout ratio is very low at 28%, and earnings are expected to grow. The analysts' consensus for F2025 was strong at 13% before the Q4 report was released, and estimates are now rising, so the company should easily sustain its 15% distribution CAGR. Balance sheet highlights support the outlook for robust dividend growth. The Q4 highlights include increased cash, receivables and assets compounded by debt reduction. The net result is a 6X increase in shareholder equity and improved corporate leverage. Analysts Raise Targets for Oracle and Forecast 15% to 30% Upside Analysts are raising their targets for Oracle stock following the Q4 release, leading it to a new high. MarketBeat.com tracks over a dozen revisions, all upward, and most are above the consensus forecast. The consensus forecast assumes about a 10% upside, while the range of new targets implies a 15% to 30% upside and has lifted the ceiling. Guggenheim set a new high target of $175, which will likely be exceeded over time. Trading at only 20X this year’s and 18X next year’s earnings estimates, it is a value compared to leading blue-chip AI/cloud players. The technical action is promising. The market is up nearly 8% in premarket trading, setting a new high. If the market follows through on this signal, it should continue to advance. Because the stochastic and MACD indicators show a strong buy signal, the move could gain momentum over the next few days to several weeks, resulting in a melt-up for this stock. Before you consider Oracle, you'll want to hear this. MarketBeat keeps track of Wall Street's top-rated and best performing research analysts and the stocks they recommend to their clients on a daily basis. MarketBeat has identified the five stocks that top analysts are quietly whispering to their clients to buy now before the broader market catches on... and Oracle wasn't on the list. While Oracle currently has a "Moderate Buy" rating among analysts, top-rated analysts believe these five stocks are better buys. View The Five Stocks Here
Danaos Benefits from Increasing Demand in Container Shipping 2024-06-12 11:40:00+00:00 - Danaos Corp. NYSE: DAC is a leader in the global container shipping industry. The company specializes in operating dry bulk and container vessels. Danaos owns and operates its fleet of container vessels but also maintains a smaller fleet of dry bulk vessels to transport bulk commodities like coal, iron ore, and grain. The dry bulk division has Capesize vessels, which are enormous ships that are too large to pass through the Panama Canal, so they need to go around the Cape of Good Hope and Cape Horn, thus the name Capesize. Danaos Today DAC Danaos $91.90 -0.06 (-0.07%) 52-Week Range $62.37 ▼ $98.25 Dividend Yield 3.48% P/E Ratio 3.12 Price Target $105.00 Add to Watchlist Danaos is diligent about maintaining a modern fleet of fuel-efficient ships, which helps reduce operating costs as well as impact the environment. The company is a major benefactor of skyrocketing freight rates as a result of the Red Sea conflict. The Shanghai Container Freight Index recently surged even higher to 3,3184.87, rising from 993 in November of 2023. Get Danaos alerts: Sign Up Danaos operates in the transportation sector and competes with other container and dry bulk shippers, including Zim Integrated Shipping Service Ltd. NYSE: ZIM, Genco Shipping & Trading Ltd NYSE: GNK, and Star Bulks Carriers Co. NASDAQ: SBLK. Danaos: A Hidden Value in Plain Sight Danaos has impressive fundamentals when it comes to valuations. Shares trade at just 3.23x forward earnings compared to 10.39x for Zim, 9.29x for Genco, and 6.88x for Star Bulk Carriers. The company is profitable, with a price-to-sales ratio of 1.88. The price to book is 0.84 as it generates $34.04 cash per share. The float is rather tiny at just 11.45 million shares, giving it a market capitalization of just $1.83 billion. DAC Forms a Daily Pennant Pattern The daily candlestick chart on DAC depicts a pennant pattern. The flagpole formed on the parabolic run-up from $71.32 on April 16, 2024, to peak at $98.25 on June 3, 2024. The pennant formed following the flagpole top comprised of converging trendlines. The pennant pattern is usually a continuation pattern. However, it may be starting to break down. The daily relative strength index (RSI) peaked at the overbought 92-band and has been slipping to the 65-band. The RSI has formed a divergence top. Pullback support levels are at $88.00, $82.65, $76.44, and $6953. Danaos Reports Mixed Results for Q1 2024 Danaos reported Q1 2024 adjusted EPS of $7.15, which missed consensus estimates of $7.74 by 59 cents. Operating revenue rose 4.1% YoY to $253.45 million, bearing a $248 million single analyst estimate. Danaos generates revenues from the container vessel and dry bulk vessel segments. The company bought back 1,671,059 shares of common stock for $104.4 million. Danaos MarketRank™ Stock Analysis Overall MarketRank™ 2.76 out of 5 Analyst Rating Buy Upside/Downside 14.4% Upside Short Interest Bearish Dividend Strength Moderate Sustainability N/A News Sentiment 1.12 Insider Trading N/A Projected Earnings Growth -8.57% See Full Details Danaos Plans to Expand Its Capacity In February 2024, Danaos entered agreements to acquire three more Capesize dry bulk vessels aggregating 529,704 dead weight tonnage (DWT). The ships are expected to be delivered in Q2 and Q3 2024. This will bring the total Capesize fleet to 10 vessels with a total capacity of 1,760,861 DWT. In February and March 2024, Danaos added four additional 8,258 twenty-foot equivalent unit (TEU) newbuildings to the order book, which are expected to be delivered in 2026 and 2027. A TEU refers to a 20-foot-long container. As of March 2024, the company had 14 container vessels under construction with a total capacity of 107,936 TEU. Danaos Newbuildings: Delivery Schedule and Plans for Sustainability Newbuildings are vessels under construction. In April and May 2024, Danaos received two newbuildings. Four more are expected in 2024, two in 2025, three in 2026, and three in 2027. All the newbuildings are outfitted with the latest eco characteristics. These ships are methane fuel ready, with alternative maritime power units, and built in accordance with the International Maritime Organization's more current requirements regarding Tier III emission standards and the Energy Efficient Design Index (EEDI) Phase III. Optimistic Comments from Danaos CEO Danaos CEO John Coustas noted that the container shipping market strengthened in Q1 2024, and the trend continues into Q2. Charter and box rates continue to accelerate. This renewed optimism in the market extends to charterers' long-term view as they make charter commitments for newbuildings scheduled for delivery in 2025 to 2027. Coustas added, “More importantly, we have now secured multi-year chartering agreements for all our vessels on order, while we have also extended charters of certain existing vessels. As a result of this chartering activity, over the past three months, we have added $423 million to our contracted revenue backlog that today stands at $2.5 billion with an average charter duration of 2.9 years.” Danaos analyst ratings and price targets are on MarketBeat. Before you consider Danaos, you'll want to hear this. MarketBeat keeps track of Wall Street's top-rated and best performing research analysts and the stocks they recommend to their clients on a daily basis. MarketBeat has identified the five stocks that top analysts are quietly whispering to their clients to buy now before the broader market catches on... and Danaos wasn't on the list. While Danaos currently has a "Buy" rating among analysts, top-rated analysts believe these five stocks are better buys. View The Five Stocks Here
Beyond GME: Top 3 WallStreetBets Stocks Better Than GameStop 2024-06-12 11:35:00+00:00 - The Reddit community WallStreetBets is synonymous with the meme stock movement. A distinguishing feature of this online community is its members' preference for stocks that have a high short-selling risk. The community's founder, Jaime Rogozinski, has said his goal was to build a community "for people to talk about high-risk trades in an unapologetic way for people to make some short-term money with disposable income." This strategy achieved national prominence in 2021 with the explosive short squeezes on stocks like GameStop Corp. NYSE: GME and AMC Entertainment Holdings Inc. NYSE: AMC. However, this strategy does not suit every investor. Get C3.ai alerts: Sign Up That said, not all WallStreetBets stocks are high-risk stocks. In fact, Tesla Inc. NASDAQ: TSLA and Nvidia Corp. NASDAQ: NVDA are two of the most popular stocks in the community based on the number of member posts in the past few months. The bottom line is that even if you never watch a live stream from someone with the handle “Roaring Kitty,” you may want to keep an eye on the stocks this community is watching. Here are three that look like solid stocks to own. C3.ai May Be Turning into Less of a Heavy Lift C3.ai NYSE: AI helps organizations develop and deploy AI software solutions. The company's strength lies in leveraging an organization’s data to perform predictive analysis using pre-built AI models for industry-specific solutions. While that may be a tantalizing premise, it hasn’t been reflected in the AI stock price. Like many smaller artificial intelligence stocks, it fell victim to not being Nvidia. When investors soured on the idea of an imminent interest rate cut, small, unprofitable companies quickly got sold off. That was particularly true of companies without strong institutional backing. For example, the AI stock price was cut by nearly 50%. But in the last three months, retail investors have jumped in, boosted by a strong earnings report confirming the company’s profitability. As of June 11, 2024, institutions own just 38.9% of the stock’s float, but its strong movement suggests that it may be heading higher. If so, AI stock will start to look very attractive. CrowdStrike Will Soon Be Part of the S&P 500 Every three months or so, the S&P 500 rebalances the stocks that make up its underlying index. On June 7, 2024, the cybersecurity company CrowdStrike Holdings Inc. NASDAQ: CRWD was named one of the newest additions to the S&P 500 index. It will begin trading as part of the index on June 24, 2024. CrowdStrike Today CRWD CrowdStrike $387.37 +2.74 (+0.71%) 52-Week Range $139.37 ▼ $390.71 P/E Ratio 730.90 Price Target $375.61 Add to Watchlist For some companies, inclusion in the index generates institutional interest from fund managers whose funds track stocks included in the index. That may not be as significant for CrowdStrike, which already has 71% institutional ownership. However, in a competitive sector like cybersecurity, receiving this distinction can separate CRWD stock from a crowded field. It’s also significant to note that CrowdStrike will enter the index in the first quarter it was eligible. This recognition may confirm that investors need to keep bidding up a stock that’s up 150% in the past 12 months and 46.7% in 2024. Lululemon Is Giving Investors a Profitable Pullback So far, in 2024, Lululemon Athletica Inc. NASDAQ: LULU has delivered two earnings reports. In both cases, it not only beat analysts’ estimates for revenue and earnings but also posted numbers that were higher than the prior year. Lululemon Athletica Today LULU Lululemon Athletica $309.81 -8.23 (-2.59%) 52-Week Range $293.03 ▼ $516.39 P/E Ratio 24.84 Price Target $437.74 Add to Watchlist You wouldn’t know that by looking at LULU stock, which is down 37.9% in 2024. That’s taken away all of the stock's 12-month gains and has it trading near its 52-week low. In the company’s fourth quarter 2023 earnings report in March, management warned of lower earnings as its consumer base fell under pressure. That wasn’t the case in the first quarter of 2024, and it’s not reflected in the company’s guidance. The culprit for the moment is short interest, which spiked higher in the fourth quarter of 2023. While it’s down significantly, it’s still at elevated levels. But with analysts forecasting a 10% earnings upside, it would seem this growth stock could be a good buy for value-hunting investors. Before you consider C3.ai, you'll want to hear this. MarketBeat keeps track of Wall Street's top-rated and best performing research analysts and the stocks they recommend to their clients on a daily basis. MarketBeat has identified the five stocks that top analysts are quietly whispering to their clients to buy now before the broader market catches on... and C3.ai wasn't on the list. While C3.ai currently has a "Hold" rating among analysts, top-rated analysts believe these five stocks are better buys. View The Five Stocks Here
Top 4 Fastest Growing S&P 500 Dividends: Buy, Sell, or Hold? 2024-06-12 11:30:00+00:00 - Dividends are a leading reason to buy a stock because the stock pays you to own it. Growing dividend distributions are more valuable than those that aren’t; by extension, distributions growing faster than average are even more valuable. Or so goes the theory. This is a look at the four S&P 500 stocks with the hottest three-year distribution growth and whether they are a buy, sell, or hold. Get Oracle alerts: Sign Up Morgan Stanley Tops the List With 32% Dividend Growth in 3 Years: Hold Morgan Stanley Today MS Morgan Stanley $95.65 +0.22 (+0.23%) 52-Week Range $69.42 ▼ $103.25 Dividend Yield 3.55% P/E Ratio 17.42 Price Target $98.30 Add to Watchlist Morgan Stanley NYSE: MS is the fastest-growing dividend on Wall Street. The company kicked its dividend into high gear in 2021 and is sustaining a solid growth pace today. The payout has increased by more than 30% in the last three years because of the accelerated growth in 2021, but the growth pace has slowed. The last two increases are strong, nearly 11%, but not 30%. Investors can expect increases to continue at this pace because of earnings quality and the growth outlook. Revenue growth has also slowed, but it is still sound. The consensus for this year is for a low-to-mid-single-digit advance and for the margin to widen. Analysts rate this stock a Hold and see it advancing less than 5% at the midpoint. The consensus target is up compared to last year, but the trend has flattened for the last quarter and provides no tailwind for the market. Goldman Sachs Stock Is the 2nd Fastest Growing Dividend on Wall Street: Hold The Goldman Sachs Group Today GS The Goldman Sachs Group $448.70 +4.43 (+1.00%) 52-Week Range $289.36 ▼ $471.48 Dividend Yield 2.45% P/E Ratio 17.52 Price Target $440.57 Add to Watchlist Goldman Sachs's NYSE: GS dividend is similar to Morgan Stanley's. Dividend growth accelerated in the wake of the pandemic but has slowed since. The payout has increased more than 30% in the last three years, but the last two increases were in the 10%-12% range, where the next will likely fall. The differences are the payout ratio and the yield, which are lower. Goldman only pays about 30% of its earnings, and the yield is correspondingly lower, about 2.45%, with shares near record highs. Another difference is the analysts' sentiment. The analysts rate this stock as a Moderate Buy but view it as valued fairly. The latest updates are leading to the high end of the target range, but the market may have difficulty getting there without another catalyst. That could be the FOMC decision or earnings due in July. Thermo Fisher Science Is Strategically Increasing Distributions: Hold Thermo Fisher Scientific Today TMO Thermo Fisher Scientific $575.69 -0.20 (-0.03%) 52-Week Range $415.60 ▼ $603.82 Dividend Yield 0.27% P/E Ratio 36.93 Price Target $607.94 Add to Watchlist Thermo Fisher NYSE: TMO is the 3rd fastest-growing company on a three-year basis, increasing its distribution by nearly 18% annually. Among the differences with this payout are that the pace of increase can vary from year to year, either faster or slower, and that the pace of growth tends to run hotter, above 12%, over the long term, and it is sustainable. The company is paying less than 10% of its earnings, but there is a catch: the yield is very low. The yield is so low that it is little more than a token gesture that allows dividend-only investment funds to buy in. Income investors looking to buy this stock for its distribution growth will be disappointed by the yield of about 0.25%. Analysts are another headwind for this market. The 18 tracked by MarketBeat rate the stock at Moderate Buy but see it advancing only 5% at consensus, and the consensus target has been trimmed since last year. Oracle Accelerates Dividend Growth: AI Is in the House: Buy Oracle Today ORCL Oracle $140.38 +16.50 (+13.32%) 52-Week Range $99.26 ▼ $140.96 Dividend Yield 1.14% P/E Ratio 37.04 Price Target $139.86 Add to Watchlist From the dividend growth perspective, Oracle NYSE: ORCL is the most attractive S&P 500 stock. The company pays an average of 1.35% in yield but is growing the distribution at a 15% CAGR and growth is accelerating. The pace of growth hit 25% last quarter and may sustain at a high level for the next few years due to the low 30% payout ratio, an expectation for earnings growth, and the tailwind provided by AI. Oracle is among the leading players in generative AI due to its position in the cloud and AI infrastructure. This position should drive growth over the next five to ten years as the industry matures and its business completes the shift to cloud-based services. Analysts rate Oracle a Moderate Buy and see it advancing 5% at the consensus midpoint, enough to set a fresh all-time high. Before you consider Oracle, you'll want to hear this. MarketBeat keeps track of Wall Street's top-rated and best performing research analysts and the stocks they recommend to their clients on a daily basis. MarketBeat has identified the five stocks that top analysts are quietly whispering to their clients to buy now before the broader market catches on... and Oracle wasn't on the list. While Oracle currently has a "Moderate Buy" rating among analysts, top-rated analysts believe these five stocks are better buys. View The Five Stocks Here
Samsara Gains on IoT Trends Despite Stock Dip 2024-06-12 11:15:00+00:00 - Samsara Today IOT Samsara $29.41 -0.24 (-0.81%) 52-Week Range $21.48 ▼ $42.28 Price Target $35.64 Add to Watchlist Samsara Inc. NYSE: IOT is a leading industrial Internet of Things (IoT) provider offering hardware, software, and cloud platforms complete with data analysis tools as a one-stop shop. Samsara caters to a number of industries ranging from construction, logistics, utilities, field services, education, transportation fleet management, and government agencies. Samsara utilizes artificial intelligence (AI)-powered tools to improve product performance, automate tasks, generate insights, and boost customer satisfaction. Despite a solid fiscal Q1 2025 earnings report, shares still plummeted 12%, possibly providing an entry opportunity for interested investors. Samsara operates in the computer and technology sector, competing with IoT providers like Impinj Inc. NASDAQ: PI, Trimble Inc. NASDAQ: TRMB, Alphabet Inc. NASDAQ: GOOGL Google Cloud IoT, and Microsoft Co. NASDAQ: MSFT Azure IoT. Get Samsara alerts: Sign Up What is the Internet of Things (IoT)? The IoT is a network of connected devices that exchange real-time data with each other over the Internet without human intervention. IoT devices usually have sensors and a unique identifier (UID). The connected devices can range from industrial tools, cameras, smart appliances, vehicles, and smart beds to lights, robots, accessories, wearables, and thermostats. Massive amounts of data can be collected and analyzed to spot trends and patterns and derive valuable, actionable insights optimized with AI. Samsara provides asset tracking systems used in the transportation industry and fleet management. IoT is Caught in a Descending Triangle Pattern The daily candlestick chart on IOT illustrates a descending triangle pattern. The descending trendline commenced at $42.28 on May 15, 2024. IOT continued to make lower highs on bounce attempts, falling to the flat-bottom support lower trendline at $29.70 on its fiscal Q1 2025 earnings release. The daily relative strength index (RSI) has fallen below the oversold 30-band level. Pullback support levels are at $29.70, $27.65, $25.42, and $21.89. Samsara reported fiscal Q1 2025 EPS of 3 cents, beating consensus estimates by 2 cents. Revenues surged 37.4% YoY to $280.7 million, beating $272.42 million consensus estimates as well. Annual recurring revenues (ARR) popped 37% to $1.18 billion. Customers generating over $100,000 in ARR surged 43% YoY to 1,964. Comparing Samsara's Guidance with Consensus Estimates Samsara provided conservative fiscal Q2 2025 EPS guidance of flat to a penny versus consensus estimates of a penny. Revenues are expected to be between $288 million and $290 million versus $287.25 million. For fiscal full year 2025, Samara expects EPS of 13 cents to 15 cents versus consensus estimates of 12 cents. Full-year 2025 revenues are expected to be between $1.205 billion and $1.213 billion versus the consensus estimates of $1.2 billion. Samsara CEO Sanjit Biswas on Large Customer Momentum Samsara CEO Sanjit Biswas noted that large customer momentum is fueling its growth. In the last quarter, the company closed deals with the Department of Transportation for Kansas and Iowa. Fortune 500 company VINCI is a new construction company client with over 275,000 employees. Biswas visited many of the company's largest customers in the United States, Canada, Mexico, and Europe to gain firsthand insights into their operations. He noticed these customers were operating at a scale in asset-heavy and labor-intensive industries. These customers are using legacy point solutions that have trapped data in silos. These customers faced common challenges, including workplace accidents, maintenance, insurance, and fuel savings. Customers across the board are investing in technology to achieve safer, sustainable, and more efficient operations. Samsara's Impact on Company-Wide Savings Around 130 of Samsara's customers were surveyed to assess the value of their platform. The results were published in a white paper titled "The Business Value of Samsara." One of its customers was quoted saying, "Every minute of efficiency gained is significant. Samsara is our most utilized company-wide business system and is responsible for millions in savings in our bottom line." $2 Million of Savings Per Customer and Over 8x ROI Biswas commented, “Looking more specifically at the findings, IDC estimated that Samsara customers realized more than an 8x ROI on average, representing $2 million of savings per customer per year. Samsara customers achieved these savings by reducing vehicle-related crashes and insurance costs, spending less on fuel, lowering maintenance costs and extending vehicle life spans, minimizing lost revenue associated with vehicle availability, and increasing driver productivity.” Samsara analyst ratings and price targets are on MarketBeat. Before you consider Samsara, you'll want to hear this. MarketBeat keeps track of Wall Street's top-rated and best performing research analysts and the stocks they recommend to their clients on a daily basis. MarketBeat has identified the five stocks that top analysts are quietly whispering to their clients to buy now before the broader market catches on... and Samsara wasn't on the list. While Samsara currently has a "Moderate Buy" rating among analysts, top-rated analysts believe these five stocks are better buys. View The Five Stocks Here
Can Viking Holdings Extend Gains from Affluent Cruisers? 2024-06-12 11:10:00+00:00 - Viking Today VIK Viking $32.32 +0.61 (+1.92%) 52-Week Range $25.71 ▼ $32.63 Price Target $34.67 Add to Watchlist Destination-focused luxury cruise operator Viking Holdings Ltd. NYSE: VIK went public through a $1.8 billion initial public offering (IPO) on May 1, 2024. It was priced at $24 and hasn’t looked back since the IPO. Shares have continued to rise as the company reported its first earnings report as a publicly listed company. Its premium luxury cruises cater to the affluent class of cruisers, which provides it some protection from macroeconomic turbulence. The ships are adult-oriented, offering a more relaxing and sophisticated atmosphere than family-oriented or party cruise lines. Viking operates in the transportation sector and competes with cruise operators, including Royal Caribbean Cruises Ltd. NYSE: RCL, Norwegian Cruise Line Holdings Ltd. NYSE: NCLH, and Carnival Co. & plc NYSE: CCL. Get Viking alerts: Sign Up Viking Offers River, Expedition, and Ocean Destination Cruises Unlike the popular cruise operators, Viking doesn't solely offer ocean cruises. They also provide award-winning longships with all the amenities of a luxury hotel designed for river cruises. Viking doesn't try to be all things to all people. They list what Viking is not, which includes of list of things you won't find on their ships, including children under 18, casinos, umbrella drinks, photography sales, nickel and diming, art auctions, charging for Wi-Fi or beer & wine with lunch & dinner and no smoking. Viking World Cruises: A Whole Different Level Viking offers world cruises like its Viking World Cruise, which is a 138-day cruise exploring 29 countries and 59 tours starting at $59,995. Its Viking World Voyage I is a 180-day cruise comprised of 86 tours in 38 countries, starting at $79,995. All Viking cruises include a complimentary shore excursion in every port of call, along with 24-hour room service and alternative restaurant dining at no extra charge. Viking World Cruises include business class airfare, all onboard gratuities and service fees, and a Silver Spirits beverage package, including virtually all drinks on board. VIK Triggers a Parabolic Arc Pattern The daily candlestick chart on VIK formed a parabolic arc pattern. A parabolic arc is a trend reversal pattern formed on the parabolic price surge to $32.63 from the swing low of $27.60. VIK peaked at $32.63 and pulled back to $29.83 to form a higher swing low. The daily relative strength index (RSI) fell back under the 70-band and is coiling back up to the 66-band. Pullback support levels are at $29.46, $27.60, $26.79, and $25.71. Viking's Public Debut Performance: Q1 Earnings Viking reported a Q1 2024 EPS loss of $1.21 or a net loss of $494.9 million compared to a loss of $214.4 million in the year-ago period. The Q1 2024 net loss includes a loss of $330.5 million, and Q1 2023 includes a gain of $15.5 million related to the net impact of the private placement derivative gain and internet expense related to its series C preference shares. Adjusted EBITDA increase by $46.1 million. The Q1 2024 report reflects the seasonality of its business. Total revenues for Q1 2024 was $718.2 million, up 14.2% YoY. Gross margin was $160.1 million, up 63.2% YoY. Operating capacity is 5% higher for the 2024 season and 12% higher for the 2025 season compared to 2024. Primary Cruising Season's Impact on Viking Revenues and Profits Despite operating year-round, the primary cruising season is April to October. Its highest occupancy occurs during the northern hemisphere's summer months. Most revenues and profits are earned in the second and third quarters of the year. Viking closed the quarter with $1.7 billion in cash and cash equivalents, not including proceeds from the IPO. Viking received $245.5 million in net IPO proceeds, with approximately $1.4 billion to certain selling shareholders. Viking will take delivery of two river vessels and one ocean ship this year. Viking CEO and Chairman Torstein Hagen commented, “We are pleased with our performance in the first quarter, during which we reported a Net Yield of $508, and our strong Advanced Bookings for 2024 and 2025 are equally encouraging.” Hagen concluded, “At Viking, we remain committed to prioritizing our guests and treating our employees as integral members of our family. We embrace a contrarian approach and steadfastly maintain a long-term perspective when managing our business. Leveraging our momentum, we are dedicated to shaping Viking’s next era to deliver value for all of our stakeholders.” Viking Holdings analyst ratings and price targets are on MarketBeat. Before you consider Viking, you'll want to hear this. MarketBeat keeps track of Wall Street's top-rated and best performing research analysts and the stocks they recommend to their clients on a daily basis. MarketBeat has identified the five stocks that top analysts are quietly whispering to their clients to buy now before the broader market catches on... and Viking wasn't on the list. While Viking currently has a "Moderate Buy" rating among analysts, top-rated analysts believe these five stocks are better buys. View The Five Stocks Here
Legal & General to expand pensions and sell housebuilder Cala 2024-06-12 10:47:00+00:00 - The new boss of Legal & General has announced a shake-up of the company, including a sharper focus on its booming pensions arm and putting its housebuilding business up for sale. The insurance and asset management group’s new chief executive, António Simões, a banker who started in January and previously worked for Santander and HSBC, promised a “simpler and better-connected” business, focused on three divisions. In his first big strategy announcement, Simões said the £14bn FTSE 100 company would double down on the rapidly growing market for corporate pension deals, in which companies pay insurers to take on their retirement liabilities. L&G, the UK’s biggest provider of defined contribution pension schemes, is aiming to complete between £50bn and £65bn of deals in the UK by the end of 2028, up from a previous target of £40bn to £50bn. Last year, it agreed £13.7bn globally, including £12bn in the UK. Simões said it represented a significant opportunity, as only 10% of the £6.6tn of defined benefit pension assets in the UK, the US, Canada and the Netherlands have so far transferred to insurers. He said the transfers represented a “store of future profit”. “We need these reliable earnings after that for years to come – we’re talking about decades,” he added. As part of the shake-up, L&G will create one global asset management business, rolling Legal & General Capital, which invests in infrastructure and building projects, into its traditional asset manager, Legal & General Investment Management (LGIM), including a new private markets division. Michelle Scrimgeour will step down from her role as chief executive of LGIM. The company is looking globally for a chief executive to lead the new bigger division. The company is aiming to sell “non-strategic” assets, the biggest of which is the housebuilder Cala Homes, along with legacy land and real estate, such as a shopping centre in Bracknell, Berkshire. However, it will continue to invest in affordable homes, which Simões described as a “key strategic business”. Notably, the announcement did not feature the “inclusive capitalism” phrase used frequently by his predecessor, Nigel Wilson, who invested in “socially useful” assets such as science parks, student accommodation and retirement housing. Simões insisted that a “deep sense of purpose” remained central to the strategy. Despite the sweeping changes, which analysts viewed as positive, Simões said there would be no redundancies but that he planned to make “efficiencies” across the business, including using fewer cloud providers. “This is a growth plan, and we’re investing to grow the business, so this is not about redundancies,” he said. skip past newsletter promotion Sign up to Business Today Free daily newsletter Get set for the working day – we'll point you to all the business news and analysis you need every morning Enter your email address Sign up Privacy Notice: Newsletters may contain info about charities, online ads, and content funded by outside parties. For more information see our Newsletters may contain info about charities, online ads, and content funded by outside parties. For more information see our Privacy Policy . We use Google reCaptcha to protect our website and the Google Privacy Policy and Terms of Service apply. after newsletter promotion The company said the changes were intended to make the business sustainable in the long run, even when the pensions transfers dry up. L&G said it would return more to shareholders in the coming years than planned, with a first share buyback of £200m this year, along with a 5% rise in the dividend. This will be followed by 2% dividend growth a year until 2027 and further share buybacks. The company’s share price fell more than 5% on Wednesday.
Can Labour clean up England’s dangerously dirty water? 2024-06-12 10:44:00+00:00 - Since the UK’s general election was called, the Labour party has been seeking to capitalise on voters’ fury over the sewage filling England’s rivers and seas. The debt-ridden, leaking, polluting water industry, owned largely by foreign investment firms, private equity and pension funds, has overseen decades of underinvestment and the large-scale dumping of raw sewage into rivers. It has become one of the touchstone issues of this election, with voters across the political spectrum angry at the polluting of waterways treasured by local communities. Groups have sprung up to look after rivers and lakes; protests pop up most weekends along the coast. Labour is keen to present itself as having the answer – though the Liberal Democrats have also been making a splash on the issue – with the shadow environment secretary, Steve Reed, talking tough by threatening to put water bosses in prison, ban their bonuses and impose fines for sewage spills. But after vowing to end the “Tory sewage scandal”, Labour – predicted by multiple polls to win the election with an outright majority – will have to act quickly and ambitiously to clean up the mess, say experts. View image in fullscreen A sewage pollution protest in Falmouth, Cornwall, last month. Photograph: Jonny Weeks/The Observer With no rivers in good condition, water bills projected to skyrocket, crumbling infrastructure leaking sewage into groundwater, people getting sick from tap water, and water companies in dire financial straits, this is not an easy problem to fix. It will take focus, investment and potentially an entirely new regulatory and ownership system. Labour has identified the potential collapse of Thames Water, the country’s largest water company, as a key crisis issue that will have to be immediately tackled by the incoming government. The party leadership does not want to nationalise water, arguing that it would cost the taxpayer tens of billions of pounds. But some within Labour have been pushing hard for nationalisation – England is the only country in the world that has a fully privatised water system. Clive Lewis, who was the MP for Norwich South until the general election was called, recently tabled an early day motion asking for water companies to be brought into public ownership. He thinks this should start with Thames Water and gradually include all of England’s water companies. He has been supported by a group of Labour MPs, including the former shadow chancellor John McDonnell, and it is also a key policy of the Green party. Launching the motion, Lewis said: “Water companies in England have incurred debts of £64bn and paid out £78bn in dividends since they were privatised, debt-free, in 1989 … Water companies paid out £1.4bn in dividends in 2022 even as 11 of them were fined in the same year for missing performance targets.” Mathew Lawrence, the director of the Common Wealth thinktank, said the potential collapse of Thames Water could give a new Labour government an incentive to act boldly. “A crisis is also an opportunity: to show how they will govern differently and end financial extraction from essential services. If we want to see fairer bills, clean water and well-run services, our water system must be brought into public ownership, just as it is in Scotland, and most of Europe.” View image in fullscreen Labour has identified the potential collapse of Thames Water as a key crisis issue. Photograph: Geoffrey Swaine/Rex/Shutterstock Water companies have been trying to get on the front foot in anticipation of a Labour victory at the election. The industry fears a shake-up, and has been briefing heavily that if companies are fined too heavily and end up failing, it will dent investor confidence in the UK. Liv Garfield, the chief executive of Severn Trent, last year proposed to her fellow CEOs: “One idea we believe might be attractive to the Labour leadership is repurposing utilities and utility networks into a new breed of declared social purpose companies – companies that remain privately owned, who absolutely can (and should) make a profit, but ones that also have a special duty to take a long-term view.” Water UK, the trade association for the water industry, is working alongside the regulator, Ofwat, to avoid higher fines for water companies and potential jail time for chief executives. Water UK has recently appointed a number of people who are well-connected in Labour circles. David Henderson, the body’s new CEO, was a longtime adviser to Gordon Brown, and the former Labour cabinet minister Ruth Kelly was appointed as its chair last year. Its head of policy, Stuart Colville, used to work for Ed Miliband, the shadow energy security secretary. Colville then moved to the Department for Environment, Food and Rural Affairs (Defra), which is in charge of regulating the water sector, before joining Water UK. He has a public-facing role at the lobbying group, recently hitting the airwaves to tell people the water industry was “working really hard” to stop sewage spills. skip past newsletter promotion Sign up to Election Edition Free daily newsletter Make sense of the UK election campaign with Archie Bland's daily briefing, direct to your inbox at 5pm (BST). Jokes where available Enter your email address Sign up Privacy Notice: Newsletters may contain info about charities, online ads, and content funded by outside parties. For more information see our Newsletters may contain info about charities, online ads, and content funded by outside parties. For more information see our Privacy Policy . We use Google reCaptcha to protect our website and the Google Privacy Policy and Terms of Service apply. after newsletter promotion This has led to concern about a revolving door between the UK’s political and corporate classes, which risks preventing action to tackle the water crisis. James Wallace, the chief executive of River Action UK, said: “If the leaders of Water UK speak the same political language as a potential new government it could go one of two ways: collegiate and urgent transition of a failing sewage and water industry for the benefit of people and planet; or a cosy continuation of the scandalous degradation of waterways permitted by under-resourced regulators and profiteering corporations. “We will be pressuring for the former … History will judge harshly any more broken promises.” A Water UK spokesperson said: “We are focused on securing regulatory approval for £100bn in new investment. At almost twice the current rate, this investment is vital for ensuring the security of our water supply and reducing the amount of sewage entering rivers and seas as fast as possible. Regardless of which party is in government, the industry will remain focused on securing approval for this investment.” Also keeping Labour on the straight and narrow is its unofficial water adviser, Feargal Sharkey, former frontman of the Undertones and now one of the country’s most vocal water campaigners. Keir Starmer, the Labour leader, has been seen socialising with Sharkey and the campaigner has accompanied Reed on the campaign trail . Now touring the country to campaign for Labour candidates, Sharkey has been clear that any wavering on their part will cause them to lose his support – which would in turn tarnish the party’s credibility on the sewage issue. Sharkey, who also chairs Sera, an environmental campaign group affiliated to the Labour party, told the Guardian: “The simple truth is they are going to have to conduct a complete root and branch review and potential restructuring of the ownership and funding not only of the water companies, but the whole system of regulation that oversees their activities.” He said he did not know yet if nationalisation was the answer, but the current system had to change: “For example, in the case of Thames Water, there is not a single year since privatisation the Thames Water shareholders put in more money than they took out. It’s always been a cash-sum game to them. They’ve always abstracted more money out of that company than they ever invested in it.” View image in fullscreen Keir Starmer (left) and Feargal Sharkey canvassing voters for the Wellingborough and Kingswood byelections in February. Photograph: Stefan Rousseau/PA There are rumours that Labour is planning a review of the regulators, and to potentially scrap Ofwat and replace it with a new, stronger body. The investment for the new reservoirs that are needed – London is projected to run out of water in coming years if there are any more droughts like that of 2022 – and for sewers to stop human effluent being poured into waterways, also has to come from somewhere. How much of this will a Labour government allow billpayers and taxpayers, rather than shareholders, to shoulder? Sharkey thinks it can force shareholders to pay for the bulk of it. But most think bills will have to rise. Labour has pledged not to raise taxes for working people and is sticking to stringent fiscal rules, so any large-scale investment would be unlikely to come from central government. An equally pressing issue Labour needs to tackle, experts say, is farming pollution, caused largely by the spread of animal manure on fields that then leaches into waterways, causing harmful plant and algae blooms. Shaun Spiers, the executive director of the Green Alliance thinktank, said: “Farming must be properly regulated and particular problem areas tackled.” He said an action plan must be put in place for the Wye, one of the most polluted rivers in the UK due to the muck from the intensive chicken farms surrounding it. Farming unions will be lobbying hard against this, and it will be much easier to blame water company CEOs than farmers, who have more public sympathy. It remains to be seen whether Labour will stick to its guns and clean up the UK’s waters, or if, as has happened for the past 14 years, the tough decisions are deemed just too difficult to make. The harsh truth, however, is that many of England’s rivers and chalk streams do not have 14 more years to wait before ecological collapse.
Amid the Tories’ fiscal disasters, one change has quietly warped how we see public spending for ever | Jonathan Portes 2024-06-12 10:01:00+00:00 - The Treasury traces its origins back to the early 12th century. The Bank of England was established in 1694. But when Liz Truss blamed her downfall on the “leftwing economic establishment”, she singled out the Office for Budget Responsibility (OBR), set up by George Osborne in 2010, as a particular target. And she’s far from wrong about the OBR’s influence on the policy debate. The way the political conversation about tax and spending is framed during this election owes more to the OBR and its interaction with the government’s “fiscal rules” than to either the Bank or the Treasury. So the creation of the OBR is indeed one of the most consequential economic policy decisions since 2010. The OBR was ostensibly created to “provide independent and authoritative analysis of the UK’s public finances”, and to judge whether the government was meeting its own, self-imposed targets for debt and deficits. Some on both the left and right have argued it was actually meant to enshrine a narrow view of fiscal orthodoxy, stopping future governments from both cutting taxes and increasing spending. It’s certainly true that part of Osborne’s motivation was to justify austerity, not just publicly but to the rest of the cabinet. Getting the OBR to validate his numbers made it much harder for anyone to argue that he, or the Treasury, was exaggerating the scale of the fiscal gap. But if short-term political expediency and the need to reinforce the case for immediate fiscal consolidation were the trigger, we might have expected the impact of the OBR to have faded over the years as the austerity debate has receded. Instead the opposite has happened. The OBR is now far more powerful than it was in 2010. Truss’s view of the OBR as part of a deep state leftwing conspiracy against free market economics is paranoid fantasy. But she’s not wrong that the OBR’s remit and methodology bake in a specific approach to the public finances that militates against any radical policy changes – whether those are tax cuts or big public spending commitments. This is because the costs of such changes are reasonably easy to quantify, especially in the short term, whereas the benefits aren’t. When you combine this with a “fiscal rule” that targets the debt or the deficit at a particular point in the future, that can certainly distort policy, and not in a good way. Take Sure Start. It was explicitly predicated on the idea that while improving the quantity and quality of childcare provision would cost money in the short term, it would have substantial long-term benefits, economic as well as social. This was always a plausible argument, with a reasonable amount of research evidence to support it – but certainly not enough to put numbers on it in the sense of the ability to say clearly that a billion now in extra spending would yield a few billion extra in tax revenues in a decade or two. So when Osborne cut Sure Start provision to the bone, the OBR scored those cuts as a budget “saving” – but it made no attempt to quantify the long-term costs. Thirteen years later, the Institute for Fiscal Studies (IFS) tells us that Sure Start delivered benefits, in terms of improved outcomes for education and health, that more than paid for itself. So the “savings” were entirely illusory – in fact, the ultimate result has been a higher deficit and debt. By contrast, however, take immigration. At the moment the parties are falling over each other to tell us that immigration is too high and must come down. But changes to immigration policy impact the public finances. Without the OBR, the government could ignore that. But now it can’t – the OBR’s projections for migration feed directly into tax revenues, and the most recent OBR report observed that a “low-migration” scenario would widen the fiscal gap by £14bn or more. Here, the OBR’s approach will force government to recognise the economic costs, as well as the political benefits, of cutting migration. It’s hard to argue that this is a bad thing. But there’s a bigger issue. The OBR forecasts growth, productivity, migration and tax revenues using its own independent models and judgment. Not so when it comes to public spending, where it is obliged to accept the Treasury’s own numbers – realistic or otherwise. Paradoxically, the fact that the OBR’s own forecasts are, if not necessarily accurate, transparent and objective means that politicians have an even greater incentive to fiddle the figures that they still control. Hence the absurdity of the current election campaign, where both parties are promising to improve public services, with no further major tax rises, while still observing the fiscal rules – despite the fact that nobody, least of all the OBR itself, thinks the numbers will add up in the real world after the election. So where does that leave us? Very few economists or policy wonks would now abolish the OBR. Yet equally few would argue that the current regime leans in favour of good policymaking. Meanwhile, the Truss implosion means no chancellor in the foreseeable future will want to be seen to be attacking it, and indeed the shadow chancellor, Rachel Reeves, has promised to further enshrine its centrality to tax and spending decisions. Ideally, the next government will build on the OBR’s independence and credibility while at the same time reversing some of the perverse incentives of the present system. Without this, it will be impossible to tackle the debilitating legacy of underinvestment in the UK’s physical and social infrastructure.
Co-op Bank customers voice anger as business payments taken twice 2024-06-12 09:54:00+00:00 - Co-operative Bank customers have hit out at the lender after a glitch led to payments being taken twice from some business accounts. Customers said they had been pushed into their overdrafts because of the problem, which has resulted in previous payments, sometimes made several weeks before, being duplicated. One business owner said on social media that they had been left “almost £5,000 down”, while another claimed they had only realised that money had been taken when they could not buy petrol. Others have complained that the incident has meant they have been unable to buy supplies and run their businesses. The bank said: “We are aware there are a small number of SME account holders who have duplicated payments showing in their balances and are in the process of correcting this issue. “We apologise for any inconvenience caused and are supporting customers during this period.” The Guardian understands that if any customers have suffered financial detriment as a result of the problem, the Co-op Bank is looking to remediate accordingly. The Co-op Bank has almost 5 million customers, including 95,000 accounts for small and medium-sized businesses. The Guardian has contacted the Co-op to ask how many customers have been affected. After the incident, other customers complained on social media that they had been stuck on hold on the bank’s support line for long periods. One customer posted on X: “You’ve destroyed my working day due to this, I’ve ended up stranded at a van hire office for two hours, having been stuck on hold on the phone to you for over an hour, with no pick up.” Another business tweeted on Tuesday night: “A full 24 hours in and account still in debit, not a single update, business not able to pay suppliers, I’m using my personal account to get by, this is very poor service indeed.” skip past newsletter promotion Sign up to Business Today Free daily newsletter Get set for the working day – we'll point you to all the business news and analysis you need every morning Enter your email address Sign up Privacy Notice: Newsletters may contain info about charities, online ads, and content funded by outside parties. For more information see our Newsletters may contain info about charities, online ads, and content funded by outside parties. For more information see our Privacy Policy . We use Google reCaptcha to protect our website and the Google Privacy Policy and Terms of Service apply. after newsletter promotion Despite apologising on its X account, the company’s website did not have any details about the problem. Coventry Building Society said in April it would buy the bank from its hedge fund owners in a deal worth £780m. Coventry said this could result in the Co-op Bank brand disappearing within several years. In March, Co-op announced it would look to cut 400 jobs in a bid to cut costs and restructure the business.
UK economy flatlines in blow to Rishi Sunak’s hopes of recovery 2024-06-12 09:19:00+00:00 - The UK economy flatlined in April, held back by wet weather, as the signs of a recovery from last year’s recession began to fade. In a blow to Rishi Sunak’s hopes of signalling a strong bounceback before the general election on 4 July, the Office for National Statistics (ONS) said monthly growth stalled after a 0.4% increase in March. The economy was unable to maintain its momentum after being weighed down by the struggling retail sector, a downturn in manufacturing and a drop in construction output. The 0.0% growth figure matched the forecast by City economists, who blamed the month’s heavy rains for difficulties faced by workers on building sites and the lack of shoppers on the high street. The shadow chancellor, Rachel Reeves, said the underlying weakness of the economy was revealed by figures that showed growth so far in 2024 had only recovered lost ground from the recession last year. “Rishi Sunak claims we have turned a corner, but the economy has stalled and there is no growth,” she said. Sunak said in March that the economy was “bouncing back” from a downturn in 2023. Responding to Wednesday’s figures, a spokesperson for the Conservative party said: “There is more to do, but the economy is turning a corner and inflation is back down to normal.” Manufacturing output fell by 1.4% month on month in April, while construction activity was 1.4% lower and retailers lost 2% of their trade. These declines were balanced out by a 2% rise across the whole services sector, boosted by rises in IT and communication services, professional businesses (1.2%), and arts and entertainment (2.6%). The general secretary of the Trades Union Congress, Paul Nowak, said the economy’s stagnation was causing long-term harm to households’ incomes. “Our economy is slowing yet again,” the TUC leader said. “This has been the worst government for growth in modern times – and working people have paid the price.” He said analysis of official figures showed that annual growth had averaged 1.5% since 2010, the worst performance for a government since the great depression. Wages, after taking inflation into account, were worth less than 2008, Nowak added, and unemployment had risen at the fastest rate in the G7 this year. “The Conservatives can spin all they like. But the last 14 years have been dismal for growth and living standards.” Paul Dales, the chief UK economist at the consultancy Capital Economics, said the economy could begin to grow again during the summer. “Despite the stalling of the recovery in April, the dual drags on economic growth from higher interest rates and higher inflation will continue to fade throughout the year. That will generate a bit of an economic tailwind for the next government,” he said. skip past newsletter promotion Sign up to Business Today Free daily newsletter Get set for the working day – we'll point you to all the business news and analysis you need every morning Enter your email address Sign up Privacy Notice: Newsletters may contain info about charities, online ads, and content funded by outside parties. For more information see our Newsletters may contain info about charities, online ads, and content funded by outside parties. For more information see our Privacy Policy . We use Google reCaptcha to protect our website and the Google Privacy Policy and Terms of Service apply. after newsletter promotion Separate surveys of private sector businesses show most areas of the economy have expanded month on month since the beginning of the year. Figures released last month showed the economy grew by 0.6% in the three months to the end of March – the strongest rate of quarterly growth since the end of 2021 – confirming the UK had officially exited recession after the economy contracted in the second half of last year. In the three months to the end of April growth was 0.7%, the same level forecast for the whole year by the International Monetary Fund in its biannual outlook in spring. The Organisation for Economic Co-operation and Development (OECD) recently downgraded its prediction for UK growth this year from 0.7% to 0.4%. The Paris-based organisation said longer-term issues faced by the UK, including a major skills shortage, high prices in the shops and elevated interest rates, accounted for the gloomy outlook. Suren Thiru, the economics director at the Institute of Chartered Accountants in England and Wales, said April’s zero growth rate in national income, or gross domestic product (GDP), was unlikely to encourage the Bank of England to cut interest rates at its meeting later this month. “Despite these disappointing GDP figures, a June interest rate cut looks improbable, with the Bank of England likely to be a little wary of shifting policy in the middle of a general election campaign,” he said.
Stock market today: Wall Street climbs on hopes for coming cuts to interest rates 2024-06-12 07:57:50+00:00 - NEW YORK (AP) — U.S. stocks climbed Wednesday following a surprisingly encouraging update on inflation and a reassurance that the Federal Reserve still sees a cut to interest rates as likely this year. The S&P 500 added 0.9% to its all-time high set a day earlier. The Nasdaq composite also built on its own record and jumped 1.5%, while the Dow Jones Industrial Average lagged the market with a dip of 35 points, or 0.1%. The action was even stronger in the bond market, where Treasury yields dropped after the inflation report showed U.S. consumers paid prices that were 3.3% higher for food, insurance and everything else last month from a year earlier. Economists had been expecting to see the inflation rate stuck at 3.4%. For Wall Street, a slowdown in inflation not only helps U.S. households struggling to keep up with fast-rising prices, it also opens the door for the Federal Reserve to cut its main interest rate. Such a move would ease pressure on the economy and give a boost to investment prices. Everything from bitcoin to gold to copper rallied after the inflation data raised expectations for coming cuts to interest rates. A measure of nervousness among investors in U.S. stocks also eased. For its part, the Federal Reserve kept its main interest rate steady on Wednesday following its latest policy meeting. Policymakers welcomed the latest update on inflation, but “we’ll need to see more good data to bolster our confidence,” Fed Chair Jerome Powell said. He repeated the Fed’s mantra that it needs an accumulation of data showing inflation is sustainably heading toward its 2% target before it lowers the federal funds rate, which is at the highest level in more than two decades. “We’ll have to see where the data lights the way,” he said, reiterating the Fed’s commitment to moving based on where incoming reports steer it. The Fed is in a tight spot with a lot on the line. Cutting interest rates too soon or by too much could allow inflation to reaccelerate, while waiting too long would put unnecessary pain on the economy. “It’s a consequential decision for the economy, and you want to get it right,” Powell said. The Fed indicated Wednesday that most of its policymakers are forecasting one or two cuts to interest rates at some point this year. They also raised their forecasts for the number of cuts in 2025. Fed officials trimmed their forecast for the number of cuts in 2024 down from a median of three after progress seemed to stall early this year on bringing inflation lower. Such a fall-off was widely expected, and traders are still largely betting on the first of potentially two cuts to rates in 2024 coming in September, according to data from CME Group. That had areas of the stock market that tend to benefit most from lower interest rates doing the best. Smaller companies that need to borrow to grow and can therefore feel the pinch of higher interest rates more than larger rivals led the market. The smaller stocks in the Russell 2000 index jumped 1.6%. Lower interest rates could also mean easier mortgage rates and inject energy into the housing market. Homebuilder D.R. Horton climbed 3%. Builders FirstSource, which sells vinyl windows, custom millwork and other building materials, jumped 5.3%. Oracle helped lead Wall Street higher with a leap of 13.3% even though it reported weaker profit for the latest quarter than analysts expected. Financial analysts pointed to strong bookings, including contracts related to artificial-intelligence training. A furor around AI has helped send stocks to records despite worries about high interest rates and the slowdown in the economy that they induce. Nvidia again was the strongest force pushing the S&P 500 higher, with a gain of 3.5%. The chip company has become the poster child of the AI rush, and its total market value has topped $3 trillion. Apple was nearly as strong a force pushing up on the S&P 500 as Nvidia after rising 2.9%. Its stock has been jumping the last two days after getting a cool initial reception to the announcement of several AI-related offerings coming to its operating systems. All told, the S&P 500 rose 45.71 points to 5,421.03. The Nasdaq gained 264.89 to 17,608.44, and the Dow dipped 35.21 to 38,712.21. In the bond market, the yield on the 10-year Treasury fell to 4.32% from 4.40% late Tuesday and from 4.60% a couple weeks ago. The two-year Treasury yield, which more closely tracks expectations for the Fed, slumped to 4.75% from 4.83% late Tuesday. Yields had been down even more earlier in the day. In stock markets abroad, European indexes rallied following the release of the encouraging U.S. inflation data. In Asia, where markets closed before the data came out, indexes were mixed. Japan’s Nikkei 225 index lost 0.7% as investors wait for the Bank of Japan’s latest announcement on interest rates due Friday. ___ AP Business Writers Matt Ott and Elaine Kurtenbach contributed.
Most Adults Fail This Simple 5-Question Retirement Knowledge Quiz — Can You Pass? 2024-06-12 05:00:00+00:00 - A recent survey by the TIAA Institute and the Stanford-based Global Financial Literacy Excellence Center (GFLEC) reveals significant gaps in Americans’ knowledge about retirement essentials like Medicare, Social Security, and workplace savings plans. The survey, which polled nearly 3,900 people aged 18 and over in January 2024, showed disappointing results. Fewer than 40 percent answered at least three of the five retirement-related questions correctly. Don't Miss: The average American couple has saved this much money for retirement — How do you compare ? Can you guess how many Americans successfully retire with $1,000,000 saved? The percentage may shock you. The average participant answered just two questions correctly, with a troubling one in five unable to provide any correct answers. This lack of retirement fluency could seriously affect financial security in later years. Senior economist at the TIAA Institute, Paul Yakoboski, pointed out the direct effects of this knowledge gap. "How long retirement tends to last has a direct impact on how you manage assets and draw them down," he noted. Knowledge of Social Security and its workings, for example, can help determine the optimal time to start benefit claims, which can significantly increase retirement income. Despite these challenges, the survey showed some positives. Older generations like the Silent Generation and Baby Boomers performed better on the retirement questions, likely due to their closer proximity to or current experience with retirement. They scored around 50 percent correct answers on average. Thasunda Brown Duckett, CEO of TIAA, stressed the importance of financial literacy, saying, "This report shows that if we're going to improve retirement outcomes, we have to start by improving our understanding of how to save and how long our retirements will be." She explained that while there is no quick fix or instant solution, enhancing access to educational resources and acting purposefully will set Americans on the path to financial health and resilience. Trending: Warren Buffett once said, "If you don't find a way to make money while you sleep, you will work until you die." These high-yield real estate notes that pay 7.5% – 9% make earning passive income easier than ever. Test Your Retirement Knowledge Curious about how well you understand retirement planning? Here are the five key questions from the 2024 TIAA Institute/GFLEC survey. See how your answers stack up: Social Security Accuracy: Which statement about Social Security is false? A. Social Security benefits depend on earnings in the last two years of employment. B. Social Security provides benefits if you become disabled before retiring. C. Social Security payments continue for life, regardless of longevity. D. Don’t know. Medicare Coverage: What percentage of a retiree’s health care expenses does Medicare typically cover? A. Over 90%. B. About two-thirds. C. About half. D. Don’t know. Maximizing Retirement Savings: If Latisha contributes $2,000 to a 401(k) plan and her employer matches up to $5,000, how much will she have by year’s end if the fund grows by 5%? A. $2,100 in a 401(k). B. $2,100 in an IRA. C. The same amount either way. D. Don’t know. Planning for Longevity: What's the best way for Susan to ensure she doesn't outlive her savings? A. Buy an annuity. B. Buy life insurance. C. Nothing can be done. D. Don’t know. Life Expectancy: How long is a 65-year-old man expected to live, on average, in the U. S.? A. 14 more years (age 79). B. 19 more years (age 84). C. 24 more years (age 89). D. Don’t know. Story continues For women, how long is a 65-year-old woman expected to live? A. 17 more years (age 82). B. 22 more years (age 87). C. 27 more years (age 92). D. Don’t know. Answers: 1. A; 2. B; 3. A; 4. A; 5. B (for both men and women). Whether you’re a retirement planning pro or just starting to learn the ropes, consulting with a financial advisor is a smart move. A professional can offer tailored advice that fits your personal financial situation and retirement goals. Remember, it’s never too early or late to start planning for your future. Expert guidance can go a long way in ensuring you make the most of your retirement years. Read Next: How much are people earning in yearly salary to afford a $40,000 boat comfortably? The number is less than you think! Warren Buffett flipped his neighbor's $67,000 life savings into a $50 million fortune — How much is that worth today? "ACTIVE INVESTORS' SECRET WEAPON" Supercharge Your Stock Market Game with the #1 "news & everything else" trading tool: Benzinga Pro - Click here to start Your 14-Day Trial Now! Get the latest stock analysis from Benzinga? This article Most Adults Fail This Simple 5-Question Retirement Knowledge Quiz — Can You Pass? originally appeared on Benzinga.com © 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.