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Microsoft Analysis: Trends, Predictions & Investment Insight 2024-04-29 14:25:00+00:00 - Key Points Microsoft is the largest company in the world, with a market cap of over $3 trillion. Microsoft rose to prominence thanks to operating systems like MS-DOS and Windows. The stock spent 17 years in a bear market following the Dot Com Bubble but has been one of the market's best performers since 2017. 5 stocks we like better than Activision Blizzard Upgrade Now This premium article is available to MarketBeat All Access subscribers only. Log in to your account or sign up below. Upgrade Now See Benefits Already have an account? Log in here. Before you consider Activision Blizzard, 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 Activision Blizzard wasn't on the list. While Activision Blizzard currently has a "Hold" rating among analysts, top-rated analysts believe these five stocks are better buys. View The Five Stocks Here
onsemi: The Rebound is ON for This Chip Stock 2024-04-29 14:18:00+00:00 - Key Points onsemi had a tepid quarter, but it was better than expected, and it may experience a solid rebound in its share price. The technicals favor a rebound; the question is if this is a relief rally or sustainable. Analysts see about a 40% upside for this stock. 5 stocks we like better than Onsemi onsemi’s NASDAQ: ON stock price corrected significantly over the last year, setting up today's opportunity. Today's opportunity is a rebound in an oversold name with a solid outlook for long-term growth. The chart action confirms support; the analysts are leading the market, and the Q1 results are better than expected, so this rebound could have legs. The company faces headwinds in 2024, but Q1 results indicate that conditions are better than feared, and a pivot back to growth is expected at the end of the year. onsemi’s end-markets are normalizing, and AI is driving the long-term outlook: onsemi isn’t an AI juggernaut but well-positioned to benefit from the demands higher-computing power will put on the entire tech ecosystem. Its power-control, analog, and intelligent sensing devices are well-suited for the demands of industrial, automotive, and IoT end markets. Get Onsemi alerts: Sign Up onsemi Q1 is Better-Than-Expected Onsemi Today ON Onsemi $70.82 +2.76 (+4.06%) 52-Week Range $59.34 ▼ $111.35 P/E Ratio 14.48 Price Target $95.28 Add to Watchlist onsemi didn’t have a robust Q1 , with a revenue contraction of 5.1%, but the $1.86 billion is 50 bps better than the analysts' consensus reported by Marketbeat.com, and guidance is the same. Strength was seen in the core PSG or power control segment, up 2%, offset by a 6% decline in AMG (analog) and an 18% contraction in ISG or intelligent sensing. PSG is the largest segment by far, and 47% of the revenue. The margin news is another better-than-expected result. The GAAP and adjusted GAAP and operating margins contracted compared to last year but were less than expected. The outperformance helped to leverage the top-line strength and delivered $1.08 in adjusted earnings. The adjusted earnings are down 9.25% YOY but 285 bps ahead of expectations, with similar strength in the guidance. The guidance isn’t robust, forecasting a 17% contraction, but it is ahead of consensus and opens the door to improving sentiment. The long-term outlook is hazy, but analysts expect growth to resume in Q1 2025. onsemi is a Buy for Capital returns It doesn’t matter that onsemi doesn’t pay dividends because it repurchases shares. The company used 100% of free cash flow to repurchase shares on a trailing twelve-month basis and will likely continue to do so in 2024 and beyond. Repurchases reduced the count by 2.6% diluted compared to last year, significantly improving shareholder value. Shareholder value and repurchasing power are also seen in the balance sheet, which includes a steady cash position, increased current and total assets, decreased liabilities, and a 25% increase in shareholder equity at the end of the quarter. There is some leverage, but it is low at 0.3% of equity, so no red flags are present. The trend in analyst sentiment ahead of the report suggests a bottom in the market. Analysts trimmed their targets slightly since the last report but the consensus figure remains up compared to last year, about 1000 basis points, and forecasts a 38% upside for the stock. A move up to the consensus target would confirm a complete reversal in the market and may lead to a new all-time high. The Technical Outlook for onsemi is Favorable The technical outlook for onsemi is favorable because the market shows a bottom coincident with better-than-expected news, and the indicators are highly divergent. Divergence in MACD suggests a growing strength in the market despite the latest lows. This situation will likely lead to a relief rally if not a sustained rebound. The critical resistance targets are near $76 and $85. A move above $85 is the trigger point for a complete reversal that may lead to a sustained rally and a new all-time high. Before you consider Onsemi, 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 Onsemi wasn't on the list. While Onsemi currently has a "Moderate Buy" rating among analysts, top-rated analysts believe these five stocks are better buys. View The Five Stocks Here
The Meteoric Rise of Chipotle Mexican Grill Stock is Not Over 2024-04-29 13:00:00+00:00 - Key Points Chipotle Mexican Grill had a robust quarter with positive comps, increased leverage, and positive guidance. The store count is forecast to grow more than 8% this year. The international expansion will equal the North American segment over time, doubling a business on track to grow by 100% in the next decade. 5 stocks we like better than Chipotle Mexican Grill The price action in Chipotle Mexican Grill NYSE: CMG has been smoking hot, and it is not over yet. The 1100% gain posted since 2017 is the tip of the iceberg for this fast-growing, fast-casual restaurant that is gaining leverage and on the brink of an international expansion. You might say that the ballistic rise in share prices and high 58X earnings price multiple are reasons to fear a correction, and you would be right, but there is a caveat. The company’s growth plans include doubling the North American business and expanding into international markets: international markets could outpace the North American segment over time, doubling the business again. In this light, corrections may come, but they will be met by eager buyers who drive the stock to new highs because of revenue and earnings growth. Get Chipotle Mexican Grill alerts: Sign Up Analysts' sentiment aligns with an outlook for higher prices. The Q1 results and guidance led to 19 favorable revisions from analysts tracked by Marketbeat. The few reiterated ratings peg the stock with above-consensus ratings and price targets; the remainder include upward price target revisions that lifted the consensus by 22% compared to 30 days prior. The analysts' consensus price assumes fair value with the stock trading at new highs, but the fresh targets include the new high target of $3,600, which implies a 15% upside. Because the company outperforms, builds leverage, and guides for business strength, investors can assume that analysts' sentiment trends will continue to lead the market higher. Chipotle Mexican Grill Had A Robust Quarter in Q1 Chipotle Mexican Grill Today CMG Chipotle Mexican Grill $3,209.47 +22.50 (+0.71%) 52-Week Range $1,768.64 ▼ $3,241.42 P/E Ratio 68.49 Price Target $3,137.12 Add to Watchlist Chipotle Mexican Grill proved the effectiveness of CEO Brian Niccol’s strategy again in Q1 . The company brought in $2.7 billion in net revenue for a gain of 14.1% over last year to beat consensus by 110 basis points. Strength was driven by a 7% comp, a 5% transaction gain, and a 1.6% increase in check count. New stores are also in the mix; the company opened forty-seven stores during the quarter, increasing the count by 8% YOY. Chipotlanes and digital also aided growth and margin, accounting for 36.5% of the mix. Margin news is fantastic. The restaurant level operating margin improved by 190 basis points to 27.5% and was only partially offset by increased operating expenses. Operating margin improved by 80 bps to 16.3%, driving significant gains in GAAP and adjusted earnings. The adjusted earnings grew by 27.3% to $13.37, outpacing analysts' median forecasts by $1.70 or 1500 basis points, and strength is expected to continue. Guidance for the year is favorable. The company expects comps to run in the mid to high single-digits, compounded by the 8% increase in store count and plans to open more stores this year. The plan is for 285 to 315 stores in 2024, good for a rise of 8.6%. Chipotle's Stock Split Target is June 18th Chipotle is planning a 50-for-1 stock split pending shareholder approval. The issue will be voted on in early June; if approved, it will be effective on June 18th. The move will significantly increase the number of shares, likely leading to volatility and a possible pullback to more attractive price points. The move will also reduce the cost of single-share ownership, increasing market participation over time. Chipotle’s share repurchases are unaffected other than the normal lock-up period, which has expired. The company repurchased only $25 million of shares in Q1 but plans to resume at a more normal pace now. The share count is down -0.6% compared to last year, and shareholders can expect repurchases to continue offsetting share-based compensation. Chipotle’s Technical Outlook is Robust The technical outlook for CMG shares is robust. The rally from $262 to $1900 was strong and led to consolidation, break out, and continuation, bringing basic technical targets into play. The simple target is adding the magnitude of the rally to the breakout point, which gives a target of $3,500. That target aligns with the high-end of the analysts' range and is likely to be reached soon. A pivot above that level will bring the bull-case scenario into play: the percentage gain from $262 to $1900 or over 1100%. In that scenario, shares of this discretionary stock will double in value more than once over the next decade. Before you consider Chipotle Mexican Grill, 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 Chipotle Mexican Grill wasn't on the list. While Chipotle Mexican Grill currently has a "Moderate Buy" rating among analysts, top-rated analysts believe these five stocks are better buys. View The Five Stocks Here
Stagflation Is Real, Mastercard Stock Now a Sudden Must Have 2024-04-29 12:55:00+00:00 - Key Points As the U.S. economy falls into stagflation, the Mastercard has become a sudden must-have in every investor portfolio. Seeing growth rates above peers and the rest of the industry, Mastercard stock is set to keep beating a slowing GDP. With rising price targets and EPS projections, institutions plowed $347 billion into Mastercard this year. 5 stocks we like better than JPMorgan Chase & Co. One of the most feared outcomes for the U.S. economy just became a reality. While economists argued over whether the U.S. would see a ‘soft’ landing or a ‘hard’ landing, few focused on the potential outcome of stagflation. Defined as high inflation environments coupled with slowing gross domestic product (GDP) growth, it makes for a tricky investing landscape. U.S. GDP grew by only 1.6% over the past quarter, while inflation readings stood above the Federal Reserve’s (the Fed’s) target of 2%, with the latest index showing inflation of 3.5%. This time, the economy has been divided into two sectors: Manufacturing stocks and business services stocks, one driving GDP lower and the other driving inflation higher. Get JPMorgan Chase & Co. alerts: Sign Up Before investors get into the weeds of how to best navigate this environment, one thing remains abundantly clear, shares of Mastercard Inc. NYSE: MA could be a must-have commodity in every portfolio, as the U.S. consumer sentiment index reached a 3-year high recently despite seeing an inflation-choked consumer. Big Picture Strategy Mastercard Today MA Mastercard $457.10 -5.32 (-1.15%) 52-Week Range $357.85 ▼ $490.00 Dividend Yield 0.58% P/E Ratio 38.64 Price Target $490.23 Add to Watchlist After contracting for over a year, the ISM manufacturing PMI index drew U.S. GDP lower, as this sector is responsible for most corporate profits and employment in the nation. On the other hand, services like food, accommodation, and even real estate services such as renting and leasing drove inflation this year. The services PMI index has been slowing its expansion rate lately, leading markets to believe the inflation narrative would be over. However, in their recent earnings report, financial stocks like Bank of America Co. NYSE: BAC show that consumers rely more and more on credit. With credit card delinquencies and write-offs on the rise, alongside deteriorating average FICO scores, more consumers may look to Mastercard to keep up with today’s stagnant – yet expensive – economy. Stocks like Meta Platforms Inc. NASDAQ: META, which heavily depend on the services business cycle to collect ad revenue and other such services, recently sold off on disappointing quarterly results. At the same time, manufacturing stocks like Crane NYSE: CR rallied by as much as 15% on quarterly reports of better business ahead. Because the manufacturing sector needs the right conditions to make a comeback, the Fed may look to cut interest rates this year after all. A weaker dollar could cause the services sector to rotate out of inflation due to lower consumption. However, Mastercard is as safe as ever. It’s a Resilient Buy, Despite Recent Legal Changes Both Mastercard and Visa Inc. NYSE: V were forced to lower their interchange fees, which typically amount to 2% of each transaction, to help today’s consumers keep up with inflation. Indeed, these changes now mean lower revenue per transaction for the credit card companies and the banks that issue them; however, as investors now know, the U.S. consumer is dependent on these cards to survive a stagnant GDP with stubbornly high inflation. All these lower fees really do for the stock is increase potential volume, as relief may cause users to ramp up transaction volumes. However, according to Mastercard’s fourth quarter 2023 earnings report, these trends had already started. Gross dollar volume increased by 10% over the quarter, with purchase volume up 11%. Because banks like J.P. Morgan Chase & Co. NYSE: JPM are typical Mastercard issuers, they get an inside look into what fees the credit card company may collect, which is why investors should pay attention to this. Having that inside look, analysts at J.P. Morgan expect to see Mastercard stock rally by as much as 13% from today’s prices, as they see a $520 price target as of April 2024. More than that, the stock saw up to $347.2 billion in institutional inflows over the past 12 months. Market’s Top Pick Versus Peers Investors could wonder why a Mastercard deserves more money than a Visa. Markets can answer that question in two ways: Earnings per share (EPS) expectations and how these projections are valued today through the forward P/E ratio. Analysts think Visa's EPS could grow by 10.8% this year, while Mastercard's is to beat at 15.5%. This divergence merits a forward P/E valuation of 28x for Mastercard, a premium of 13% over Visa's 25x multiple. More than that, in terms of price-to-book valuation, markets are still willing to overpay for Mastercard. Once again, trading at a 64.5x P/B multiple places Mastercard above Visa’s 13.5x valuation. The saying “It must be expensive for a reason” applies here, as growth does favor Mastercard in more ways than just EPS. According to their first quarter 2024 presentation, Visa’s total card count grew to 4.4 billion from 4.2 billion a year prior, a net increase of 200 million (or 4.7% growth). On the other hand, Mastercard’s presentation shows net card figures jumping from 3 billion to 3.3 billion, a 10% growth to double Visa’s rate. Driven by fundamentals and growing macro trends, Mastercard’s sudden ‘must-have’ status makes it an undeniable watchlist addition during this new cycle. → Healthcare Takes A Big Step Forward With The Help Of AI (From The Bull Report) (Ad) Before you consider JPMorgan Chase & Co., 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 JPMorgan Chase & Co. wasn't on the list. While JPMorgan Chase & Co. currently has a "Moderate Buy" rating among analysts, top-rated analysts believe these five stocks are better buys. View The Five Stocks Here
Here’s Why Institutions Had Been Buying Martin Marietta Stock 2024-04-29 12:45:00+00:00 - Key Points As the U.S. construction sector prepares for a potential boom, investors may be looking for opportunities beyond homebuilding stocks. Martin Marietta Materials became a prime suspect as Goldman boosted the stock's price targets. Above peers, and with high institutional ownership, it's a stock that could beat EPS expectations this year. 5 stocks we like better than The Goldman Sachs Group A U.S. construction boom may be in the works, as the current housing market has hit a stalemate between willing buyers and sellers. With only one alternative left to break this frozen property market, homebuilding stocks and their horizontal components could attract most of Wall Street’s attention this cycle. Among these horizontal players are building material stocks. Names like Eagle Materials Inc. NYSE: EXP and Mexican-based Cemex NYSE: CX come to mind as some of the most popular and often mentioned companies. However, those in charge of investing some of Wall Street’s biggest assets have chosen Martin Marietta Materials Inc. NYSE: MLM instead. Get GS alerts: Sign Up Riding on the tailwind of a sector breakout, the stock gives investors all the evidence they need to justify adding it to their watchlists. Other reasons will become apparent in a bit. Still, before investors enter the deal’s weeds, here’s why the sector’s momentum favors Martin stock. All Evidence Points to a Breakout According to the Intercontinental Exchange Inc. NYSE: ICE, most mortgage holders in the U.S. today carry an average interest rate of only 3.25%. These low rates compare to today’s 30-year fixed mortgage interest rate of 7.6%, more than double the average. At the same time, the average home price, according to the Federal Reserve (the Fed) data, is $492,300. This figure stands above the pre-pandemic home prices of $375,500 and reflects a 31% higher price in only a few years. Knowing this, it is easier for investors to see how current buyers aren’t willing to let go of their cheap mortgage and appreciation gains on their homes. New homebuyers aren’t particularly excited to get a more expensive mortgage at a premium home cost. To build up the way to fix this stalemate is to inject more housing inventory. Warren Buffett saw this coming in 2023, so he started buying names like D.R. Horton Inc. NYSE: DHI ahead of the trend. While it may be too late for investors to get into the leading homebuilding players, there’s still a chance to profit in Martin Marietta. Price Action Suggests Maritn Marietta is Next Martin Marietta Materials Today MLM Martin Marietta Materials $602.64 -2.35 (-0.39%) 52-Week Range $361.23 ▼ $626.67 Dividend Yield 0.49% P/E Ratio 32.00 Price Target $588.69 Add to Watchlist Over the past 6 months, thehas risen by only 10.5% , compared to Martin Marietta’s 51.5% performance. However,came in first at a 56% run, which makes sense as it is one of the first names to get paid in the construction boom. The value creation in the construction industry could now be shifting from the homebuilders (like Pulte) down to construction material providers like Martin Marietta. To check on this live transition, investors can lean on analyst price targets, suggesting a 2% downside for Pulte stock through its consensus $111.7 a share valuation. In the case of Martin Marietta, analysts at The Goldman Sachs Group Inc. NYSE: GS think the stock could go as high as $737 a share. The stock would need to rally by as much as 22% from today’s prices to prove these targets right. More than that, the market is now placing a premium valuation on Martin Marietta’s future earnings, even above its industry peers. A current 26.2x forward P/E would mean a premium of 65% over Eagle Materials’ 16x multiple today. There must be a good reason markets are willing to overpay for Martin Marietta’s earnings, but it doesn’t stop there. On a price-to-sales (P/S) ratio, a 5.6x multiple would mean a 54% premium to the industry’s 3.6x average valuation. The market is not the only player looking to bid the stock higher, as some Wall Street institutions also see more upside in Martin Marietta. Institutions now own up to 95% of the stock, giving investors the quality stamp they may seek in the following construction run. One Last Fundamental Check Despite the bears raising the short interest in Martin Marietta by 13.6% in the past month, the total percentage of short shares remained at only 1.6%, giving bulls the open field they need to potentially break this stock higher. A reason bears aren’t able – or willing – to short this stock could be found in the company’s financials. According to the fourth quarter 2023 results, earnings per share (EPS) advanced by 53.8% over the year, making current analyst predictions for 12% growth this year a somewhat conservative goal. Continuing the industry trend can give Martin Marietta’s 17% net income margin a chance to deliver better-than-expected EPS results for investors. Before you consider The Goldman Sachs Group, 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 The Goldman Sachs Group wasn't on the list. While The Goldman Sachs Group currently has a "Moderate Buy" rating among analysts, top-rated analysts believe these five stocks are better buys. View The Five Stocks Here
Billionaire investor David Einhorn shares an overlooked theory for why gold prices have spiked so much 2024-04-29 04:30:00+00:00 - The "Portuguese Gold" sardines cost $44. Kylie Kirschner The recent gold rally is counterintuitive, as high interest rates typically make bullion less attractive. But billionaire investor David Einhorn has a theory that he shared in his latest investor letter. Einhorn suggests that gold's rally is potentially due to countries in the East buying gold from Western nations. Gold has had a record-setting year so far in 2024. That being said, the commodity's sudden surge may come as a surprise. That's because the macro environment was supposed to create headwinds to gold's price appreciation, as the Federal Reserve's higher-for-longer interest rate stance typically makes other investments like bonds and saving accounts more appealing compared to the metal, as it's not a yield-bearing asset. To explain the strong run for gold, billionaire investor David Einhorn offered a potential theory in his latest letter to investors published this week. "While it's possible the advance was related to the market beginning to doubt the sustainability and wisdom of both monetary and fiscal policies, other indicia suggest that this was not the case," Einhorn said in the letter. Instead, the Greenlight Capital founder said there's been a "secular trend" of the countries in the East buying gold from Western nations. "Perhaps the West is running out of gold it is willing to sell, while Eastern demand has remained strong enough to force the price higher," he said in the statement. Indeed, global central banks have been racing to buy gold, snapping up over 1,000 tonnes for the past two years straight, according to data from World Gold Council — and one of the biggest buyers is China. The world's second-largest economy has been crippled by a sluggish economy for years, with an ailing property sector, a flailing stock market, and a persistently high unemployment rate. This has led its central bank and consumers to hoard precious metal as a stable store of value and as a way for the People's Bank of China to diversify reserves away from the dollar. For 17 months straight, the PBOC has been gobbling up gold, increasing its holdings by 16% in that time. The World Gold Council reveals India and Singapore have also been scooping up gold to hedge against global economic turbulence. Gold's soaring demand is turbocharging its prices, with economists predicting the rally to rocket even higher as geopolitical uncertainties and macro hurdles like inflation fuel more gains. Top economist David Rosenberg predicts another 15% upswing in the price of the yellow metal, with a potential 30% on the table as central banks consider rate cuts, but he emphasized that gold can rally no matter if the economy ends up having a soft landing or a deeper recession. Story continues Market guru Ed Yardeni, meanwhile, predicts gold could surge to $3,500 by next year, hinting at a potential 50% upside. He draws parallels to the 1970s Great Inflation era, suggesting current inflation trends could propel gold to new heights. Others, like billionaire investor Ray Dalio, say gold can hedge risks stemming from high government debt levels. In a recent post, he said he's owning gold because the risk of a debt or an inflation crisis is rising. Read the original article on Business Insider
The Fed will only cut rates when it's panicking over a recession and a market crash, Black Swan investor says 2024-04-29 04:16:00+00:00 - OsakaWayne Studios/Getty Images Investors should be wary of coming Fed rate cuts, Black Swan investor Mark Spitznagel warned. That's because the Fed is only cutting rates in response to a weakening economy, Spitznagel told Reuters last week. The US could see a recession and major stock crash before rates head lower, he predicted. Rate cuts by the Federal Reserve may not be the boon investors are hoping for. That's because the Fed is only likely to ease monetary policy when the economy is slammed with a recession and the market is flailing, according to famous "Black Swan" investor Mark Spitznagel. In a recent interview with Reuters, the Universa Investments CIO cast a stark warning about stocks and the economy. According to the CME FedWatch tool, investors are expecting one to two cuts to come in 2024, which are expected to be bullish for stocks. But the only way the Fed will cut rates is if central bankers see a significant weakening in the economy — meaning the US could see a downturn and a market plunge before interest rates come down, Spitznagel warned. "Be careful what you wish for," Spitznagel told Reuters. "People think it's a good thing the Federal Reserve is dovish, and they're going to cut interest rates … but they're going to cut interest rates when it's clear the economy is turning into a recession, and they will be cutting interest rates in a panicked fashion when this market is crashing." Most economists think the US is likely to avoid a recession this year, according to a survey conducted by the National Association of Business Economics. But high rates still threaten to spark a downturn by tightening financial conditions for businesses and households. The potential for an economic correction is especially stark when considering the huge amount of debt taken out over the last decade, when interest rates were ultra-low, Spitznagel said. "This economy is built on low interest rates," he said. "There are lag effects when you reset interest rates like we had." Spitznagel's hedge fund is known for its ultra-bearish takes on the market, counting "The Black Swan" author Nassim Taleb among its advisors. Both commentators have cast stark warnings for stocks and the economy over the past year, with Spitznagel in particular warning of one of the largest debt bubbles in history, which could spark the worst stock market collapse since 1929. Universa's investment strategy is poised to gain on seemingly unpredictable Black Swan events. Famously, the fund pulled a 4,144% return on its investments during the pandemic stock crash. Story continues Most forecasters on Wall Street share a cautiously optimistic view of both stocks and the economy for the rest of this year, assuming that inflation continues to trend lower while the economy continues to grow. 38% of investors said they were bullish on stocks over the next six months, according to the AAII's latest Investor Sentiment Survey. Read the original article on Business Insider
US Debt-Sale Plan Seen Benefiting From Fed That ‘Stops Hurting’ 2024-04-29 04:00:00+00:00 - (Bloomberg) -- The US Treasury is set to keep its sales of long-term debt steady in a new plan this week, with the government expected to get relief soon from the Federal Reserve’s rapid run-down in its securities holdings. Most Read from Bloomberg Dealers anticipate the Treasury on Wednesday will follow through on its January guidance of holding off on further increases in its so-called quarterly refunding auctions — which are now approaching the record sizes seen in the Covid crisis. That would mean $125 billion in auctions of longer-term securities next week. Borrowing requirements have escalated thanks to a gaping federal budget deficit and the Fed’s quantitative tightening program — which has seen up to $60 billion of Treasuries run off the central bank’s balance sheet, forcing the government to sell more to private-sector buyers. The Fed will offer an update on its plans Wednesday, after officials in March suggested they soon could slow the pace of QT. The Treasuries market could use the help. US government bonds were heading for their biggest monthly loss since 2022 as of Thursday’s close, hit by hot inflation data that sharply curtailed expectations for Fed interest-rate cuts and by bloated auction sizes. Sales of longer-dated securities surprised traders two weeks ago with weak demand despite higher yield levels. “I’m not so sure if all this helps Treasuries as much as it stops hurting them,” said Michael Pugliese, senior economist at Wells Fargo & Co., referring to Fed QT tapering and a stabilization in Treasury debt-sale plans. “Issuance is still really high and we are learning — a little in real time — how well these auctions will be digested.” Pugliese is among a number of Fed watchers who expect the central bank to announce that QT tapering will start in June. Chair Jerome Powell, who’ll hold a press conference after the Fed’s policy decision Wednesday, said in March the tapering process would start “fairly soon.” QT Focus Underscoring investors’ focus on supply, the Treasury Department’s quarterly financing estimates, due for release Monday afternoon in Washington, have received increasing attention. With solid jobs and economic growth, tax receipts lately have come in strong, improving the near-term deficit picture. In January, officials penciled in $202 billion in net borrowing for the three months through June. Story continues Debt managers have been keenly watching the Fed’s plans, and queried dealers on their own expectations for Fed QT in a survey ahead of the refunding statement — which comes several hours ahead of the Fed’s release. Tom Simons, a senior economist with Jefferies, predicts the Fed will slash in half its roll-off of Treasuries, beginning immediately after Wednesday — taking it to a pace of up to $30 billion a month. Simons said it’s unclear whether the Treasury’s debt managers will factor likely Fed QT changes into Monday’s quarterly financing estimates. Where relief is unlikely to come for now is on the interest-rate front. With the federal government’s debt-servicing costs on course to reach a record high as a share of GDP next year, high inflation readings mean Powell and his colleagues are unlikely to be signaling rate cuts for the coming months. Rate Debate Swaps traders are pricing in only about 33 basis points of Fed rate reductions for all of 2024, compared with more than six quarter-point cuts expected at the start of the year. The Fed is seen on Wednesday keeping its policy-rate range steady at 5.25% to 5.50% — where it’s been since last July. “The biggest language change is going to come from the messaging from Powell during the press conference,” said Lindsey Piegza, chief economist for Stifel Financial Corp. “This is where he’s really going to have the opportunity to backpedal some of that optimism for a near-term rate cut. Inflation data, while we’re not going to overreact to it, has been moving in the wrong direction.” That leaves investors contending with hefty auctions in a still-inflationary environment. Auction sizes for several tenors just reached new records. With yields right across the maturity spectrum not being far from 5%, investors have preferred shorter-dated Treasuries, as seen in sales last week that went off with little issue. But demand for 10-year notes earlier this month was viewed as abysmal, while that for 30-year bonds was lackluster. On tap for next week will be 3-, and 10-, and 30-year auctions, which make up the refunding group. A $125 billion plan this time around would mean the following upcoming refunding auction sizes: $58 billion of 3-year notes on May 7 $42 billion of 10-year notes on May 8 $25 billion of 30-year bonds on May 9 New three-year notes are auctioned monthly, and those were already lifted by the Treasury by a total of $4 billion in March and April. Dealers expected sizes of floating-rate debt to also be held stable over the coming three months. Treasury Inflation-Protected Securities, or TIPS, sales are the only type of debt forecast by dealers to see some increases. HSBC Holdings Plc expects the Treasury to lift only the June reopening auction of five-year TIPS, by $1 billion. At JPMorgan Chase & Co., their strategists see bumps to TIPS coming via a $1 billion increase to the July new-issue of the 10-year maturity. Dealers also see US debt managers starting a shift away from relying on bills, which mature in up to a year and don’t pay interest. As a share of total debt, bills exceeding the 15% to 20% range the Treasury Borrowing Advisory Committee, a panel of market participants, has advised. That’s also given that the Treasury has room to reduce its cash balance, which now sits at over $900 billion. Read more: Wall Street Sees Fewer T-Bills in April Amid Beefy Tax Season Dealers on Wednesday will also be on watch for the exact date for a long-awaited Treasury program to buy back existing debt. The initiative is designed in part to support market liquidity, and also to help with cash management — smoothing out some of the swings in bill issuance related to lumpy tax revenues. Most dealers expect the first buyback operations to be in May. The Treasury last conducted buybacks between March 2000 and April 2002. Bond investors will also have a heavy slate of economic data to contend with over the week. There will be reports related to housing, consumer confidence and manufacturing activity, but top of mind for investors will be more insights on the state of the US labor market. Job openings for March will be of interest, but most important will be Friday’s release of nonfarm payroll figures for April. As far as Fed speak, besides Powell on Wednesday, New York Fed President John Williams and Chicago Fed President Austan Goolsbee will speak Friday. Most Read from Bloomberg Businessweek ©2024 Bloomberg L.P.
Where Will Tesla Stock Be in Five Years? 2024-04-29 03:22:00+00:00 - Down 35% year to date, Tesla's (NASDAQ: TSLA) stock has been in a tailspin as challenges like high interest rates and softening electric vehicle (EV) demand weigh on its business performance. That said, investor sentiment seems to be improving following the company's first-quarter earnings call, when CEO Elon Musk outlined his vision for the future. Will the controversial billionaire over-promise and under-deliver, or is this the start of another sustainable bull run? Let's dig deeper to find out what the next five years could have in store for Tesla's stock. First-quarter earnings weren't impressive With Tesla's stock price up by almost 20% since earnings were released on April 23, casual observers can be forgiven for assuming its operational results were good. They weren't. In fact, they were the opposite. Sales slumped by 9% year over year to $21.3 billion, while earnings per share (EPS) of 45 cents missed the analyst consensus of 51 cents. Image source: Getty Images. On the whole, Tesla is selling fewer cars for less money. And this has a lot to do with macroeconomic challenges like high interest rates, which erode demand for new vehicles by making financing less affordable. Management has attempted to address this challenge with price cuts across the company's lineup. But while these efforts have probably limited the sales decline, they are also eroding Tesla's once-high operating margins, which fell from 11.4% to just 5.5% year over year. CEO Elon Musk suggests that Tesla is not just a car company. However, automotive sales represented around 86% of its first-quarter sales. And while verticals like energy storage and services posted modest growth rates (7% and 25%, respectively), it wasn't enough to move the needle. Tesla isn't a car company -- or is it? With operational results in a tailspin, Tesla's recent stock price surge can only be explained by investor confidence in Elon Musk's ability to navigate the storm. In the first-quarter earnings call, the controversial billionaire highlighted Tesla's long-term strategy, which will include the accelerated rollout of more affordable options as soon as early 2025. More importantly, Musk claims the new vehicles will use Tesla's existing Model 3 production lines, meaning less supply chain complexity than novel platforms like the Cybertruck, which had to overcome substantial production delays and cost overruns. Musk is also emphasizing Tesla's potential in autonomous driving with a robotaxi, which he plans to unveil in August. Analysts at UBS predict the autonomous taxi market could be worth a whopping $2 trillion by 2030. And this would certainly be enough of an opportunity to make Tesla's traditional EV business a distant afterthought. But it is still unclear when (or even if) the technology will be ready for widespread adoption. Story continues What will the next five years have in store for Tesla? Tesla's history gives us a very clear lesson: Don't bet against Elon Musk over the long term. The company has returned over 900% under his visionary leadership over the previous half-decade, and he shows no signs of dropping the ball anytime soon. That said, Musk also has a track record of overpromising and underdelivering. The executive has frequently pushed back his timelines for full-self-driving cars, and produced vehicles (such as the Cybertruck) with dramatically higher selling prices than expected. With this in mind, I think investors are placing too much faith in his most recent remarks. And with a forward price-to-earnings (P/E) multiple of 63, Tesla's valuation is beginning to look elevated considering its deteriorating fundamentals. Tesla remains a great way to bet on Musk's leadership and potential to transition from automotive dependence. And it looks likely to outperform the market over the next five years. However, the present looks grim, and investors may want to wait for a lower price before buying the stock. Where to invest $1,000 right now When our analyst team has a stock tip, it can pay to listen. After all, the newsletter they have run for two decades, Motley Fool Stock Advisor, has more than tripled the market.* They just revealed what they believe are the 10 best stocks for investors to buy right now… and Tesla made the list -- but there are 9 other stocks you may be overlooking. See the 10 stocks *Stock Advisor returns as of April 22, 2024 Will Ebiefung has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Tesla. The Motley Fool has a disclosure policy. Where Will Tesla Stock Be in Five Years? was originally published by The Motley Fool
PayPal: Buy, Sell, or Hold? 2024-04-29 01:25:00+00:00 - Once a darling of the digital payments boom, PayPal (NASDAQ: PYPL) has fallen drastically over the past several years after slashing its lofty growth forecasts and changing its approach to growth. Investors went from treating PayPal as a fast-growing tech company to a dull value stock. PayPal's valuation is appealing, but is it enough to earn a spot in your portfolio? Let's dig into its valuation and the company's plans to find out. PayPal's transition from growth to a value stock Three years ago, PayPal stock was flying high, and investors couldn't get enough. The payments company came off stellar growth amid the worst of the pandemic, which accelerated an already strong trend into digital payments. Over two years, it added 122 million accounts and surpassed $1 trillion in payments volume. At one point, investors priced the stock at 109 times earnings, 18 times book value, and 17 times sales. But as the pandemic eased, it was clear that PayPal's staggering growth was unsustainable. The company shifted its strategy from rapid growth to being more engaged with its existing customers. Investors weren't thrilled with this shift, and the stock has taken a beating ever since. Today, it's priced at 17 times earnings, 3.2 times book value, and 2.4 times sales, and has never been cheaper. PYPL PE Ratio Chart Reasons to sell PayPal If stocks are cheap, they tend to be cheap for a reason. For PayPal, criticisms include its falling take rate, the decline in active accounts, and increasing competition from others in the digital payments space. Braintree has been a bright spot for the company and is one of the fastest-growing parts of the business today. Last year, PayPal's total payment volume grew 7%, with Braintree being a key driver of that growth. However, this unbranded checkout option is less profitable for the company, and its growing importance to PayPal's business is lowering its take rate (the percentage of each transaction it retains after splitting its fees with others), thus hurting its profit margins. Also, PayPal is undergoing a transition year under new CEO Alex Chriss, an industry veteran who previously worked as an executive for Intuit's small-business and self-employed group and has been tasked with leading PayPal in a new direction. If you don't want to wait around to see the outcome of PayPal's transition year and are uneasy with its slowing growth, you might want to sell the stock today. Image source: Getty Images. Reasons to buy or hold PayPal In January, Chriss laid out his plan for the company. One part will be to improve its offerings for small and medium-size businesses with PayPal Complete Payments. Under Chriss' leadership in the small-business segment at Intuit, revenue grew by 23% compounded annually. If he can succeed at scaling up PayPal Complete Payments, the company could eventually expand its services and reverse the trend of its declining transaction margin. Story continues PayPal also said it would work to improve its checkout process by enabling one-click checkouts, called Fastlane, which can reduce checkout times by 40%. According to BigCommerce, one of its customers that implemented Fastlane, conversion rates have been as high as 70%. Not only that, but Chriss also discussed how the company planned to leverage AI to create personal recommendations and cash-back rewards to "turn one-time shoppers into repeat shoppers." If PayPal's transformation is successful, it has a highly appealing risk-reward profile at its current valuation. Buy, sell, or hold PayPal stock? Despite the negative sentiment around the stock, PayPal continues to grow at a nice clip. Last year, the company raked in $29.7 billion in revenue and $4.2 billion in net income. Its earnings per share (EPS) grew 84% from 2022 and increased 9% compared with 2021. PayPal is undergoing a transition year, so investors should expect some bumps along the way. Its current valuation presents an attractive entry point for long-term shareholders today. Where to invest $1,000 right now When our analyst team has a stock tip, it can pay to listen. After all, the newsletter they have run for two decades, Motley Fool Stock Advisor, has more than tripled the market.* They just revealed what they believe are the 10 best stocks for investors to buy right now… and PayPal made the list -- but there are 9 other stocks you may be overlooking. See the 10 stocks *Stock Advisor returns as of April 22, 2024 Courtney Carlsen has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends PayPal. The Motley Fool recommends the following options: short June 2024 $67.50 calls on PayPal. The Motley Fool has a disclosure policy. PayPal: Buy, Sell, or Hold? was originally published by The Motley Fool
Should You Buy Bitcoin Before It Hits $100,000? 2024-04-29 01:11:00+00:00 - After the Bitcoin (CRYPTO: BTC) halving on April 19, crypto investors celebrated. As they see it, Bitcoin is now on a trajectory to rally from its current price of $65,000 to hit a $100,000 price level some time within the next 12 months. But the decision of whether or not to buy Bitcoin now might not be as easy as you think. Notably, several prominent Bitcoin bears have weighed in, claiming that the fourth halving may over-promise and under-deliver. Are they right? Let's take a closer look at what to expect from Bitcoin in the post-halving period. Bitcoin's historical track record There have been three previous Bitcoin halving events (in 2012, 2016, and 2020), and each one has led to a spectacular rally for Bitcoin. So there is plenty of precedent for Bitcoin to go on another breakout rally in 2024. In the third halving cycle, Bitcoin exploded in price from $10,000 to $69,000, so many investors are expecting the same type of performance this time around also. But just how much faith can we put in Bitcoin's historical track record? After all, past performance is no guarantee of future performance. Moreover, it could be the case that previous Bitcoin rallies were correlated with other macroeconomic events, and not with the halving itself. For example, the much-vaunted 2020 halving rally lined up nicely with the response to the COVID-19 pandemic and the massive amount of stimulus money coursing through the economy. What's different with the 2024 halving? However, several key factors in Bitcoin's favor lead me to think that we can trust the historical evidence again. For one, there are the new spot Bitcoin ETFs, which just launched in January. These have created a new demand for Bitcoin that never existed before. If investors decide to allocate at least 1% of their portfolios to Bitcoin, with the help of easy-to-use exchange-traded funds (ETFs), then this could be a source of stable, long-term demand for years to come. In fact, all of this new demand might actually lead to a "supply squeeze," in which there simply is not enough Bitcoin available for everyone who wants it. The total circulating supply of Bitcoin is capped at 21 million coins, and there are already 19.7 million coins in circulation. The halving will put even more pressure on this supply, since it will result in the rate of new Bitcoin issuance being cut in half. So the supply of new Bitcoin is slowing to a trickle at exactly the time when demand is at its highest. According to the supply and demand calculations of basic Economics 101, the price of Bitcoin should increase. Story continues The Bitcoin naysayers If you've been following Bitcoin for any period of time, you're probably aware that there have always been prominent crypto bears who have delighted in poking holes in the Bitcoin narrative. And all of them seem to have awakened from a long hibernation right around the time of the halving. Image source: Getty Images. In a recent Bloomberg interview, Jamie Dimon, CEO of JPMorgan Chase (NYSE: JPM), called Bitcoin a "public decentralized Ponzi scheme." As Dimon sees it, there is no inherent value in Bitcoin itself, and people are only buying Bitcoin because it is going up in price. In fact, he even calls Bitcoin a "fraud," and says there is no hope for it as a currency. Moreover, financial commentator and investment advisor Peter Schiff argues that Bitcoin is, well, broken. Transaction costs are still too high, and transaction processing time is too long. Bitcoin is still not widely accepted as a form of payment. When was the last time you used Bitcoin to pay for anything? As a result, Schiff argues that you should be buying gold, not Bitcoin. Can Bitcoin hit $100,000? Forget the naysayers, though. They have been making similar arguments about Bitcoin for more than a decade. Right now seems like a unique buying opportunity for Bitcoin. Don't be fooled by the $65,000 price tag. Bitcoin is, if anything, undervalued, not overvalued. After all, we're just now seeing Bitcoin tip into the popular mainstream. We're just now seeing Wall Street firms roll out new investment products specifically targeted at Bitcoin buyers. And we're seeing the start of a paradigm shift in how people think about Bitcoin as a stand-alone asset class that needs to be added to a portfolio for diversification purposes. Long-term, I'm bullish on Bitcoin and am looking forward to it hitting another all-time high in 2024. So no, Bitcoin is not likely to collapse in value after the halving, as JPMorgan Chase recently warned. It's probably going to $100,000 fairly soon, much to the consternation of Bitcoin bears everywhere. Should you invest $1,000 in Bitcoin right now? Before you buy stock in Bitcoin, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Bitcoin wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $537,557!* Stock Advisor provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month. The Stock Advisor service has more than quadrupled the return of S&P 500 since 2002*. See the 10 stocks » *Stock Advisor returns as of April 22, 2024 JPMorgan Chase is an advertising partner of The Ascent, a Motley Fool company. Dominic Basulto has positions in Bitcoin. The Motley Fool has positions in and recommends Bitcoin and JPMorgan Chase. The Motley Fool has a disclosure policy. Should You Buy Bitcoin Before It Hits $100,000? was originally published by The Motley Fool
Could Jerome Powell be fired? It's an open legal question Trump could test. 2024-04-28 23:00:00+00:00 - The president of the United States would probably have a hard time firing a Federal Reserve chair over interest rates. But nobody is totally sure what would happen if he tried. As a legal matter, it has been debated for decades but never tested. And it's a question that would become more than academic if Donald Trump wins this November and then moves to curtail Jerome Powell's independence or even tries to fire him outright. The former president has previously claimed he can fire Powell, but legal experts aren't quite so sure. For the moment, Trump appears more focused on his legal problems as some in his orbit remain keenly focused on the Federal Reserve issue. Trump himself has found time to discuss possible Powell replacements for 2025 or 2026, when Powell's term ends. Federal Reserve Board Chairman Jerome Powell before House Financial Services Committee in 2020 as a photo of then-President Donald Trump is shown on a screen. (Alex Wong/Getty Images) (Alex Wong via Getty Images) The latest development came this week with the revelation in the Wall Street Journal that a group of Trump allies outside of his formal campaign are drafting proposals that would severely undermine the Fed's independence if enacted. In addition to an argument that Trump could fire Powell, there is also a debate among the former president's allies about how far to go. One "long shot" proposal reportedly under consideration even explosively argues that the president should have a direct say in the setting of interest rates. Federal Reserve chairs have zealously guarded their independence for decades, with Powell often underlining that point. In a recent speech, he said, "We are going to do what we are going to do, and we will do it for economic reasons, and that’s it." The political debate around Powell comes as the central bank weighs a complicated (and politically fraught) decision about when to begin cutting interest rates. Read more: What the Fed rate decision means for bank accounts, CDs, loans, and credit cards It's not yet clear when that easing of monetary policy could begin; another hot inflation reading Friday reinforced the unlikelihood of any near-term cuts. What is clear, however, is that Powell could be under unprecedented pressure if Trump prevails in November. The (somewhat unsettled) legal question For his part, Trump believes he has the authority. He reiterated the idea publicly in a 2020 news conference during the early stages of the coronavirus pandemic when he bluntly said, "I have the right to remove" Powell. He added that he could also demote Powell from his position as chair, "put him in a regular position, and put somebody else in charge." But Trump ended up declining to test either power with the courts. Story continues At issue is Section 10 of the Federal Reserve Act. The law states that each member of the board shall hold office 14 years "unless sooner removed for cause by the President." The statute doesn't have any language that specifically addresses the chairman of the Board of Governors. Then-President Donald Trump and his nominee for the chairman of the Federal Reserve, Jerome Powell, following a press event at the White House in 2017. (Drew Angerer/Getty Images) (Drew Angerer via Getty Images) The question is what exactly constitutes "for cause"? The language in the law is plainly more restrictive than cabinet officials and other members of a presidential administration, who are often described as working "at the pleasure" of the president. Legal experts have tended to say that a simple policy disagreement wouldn't rise to the level of cause, but it's a standard that hasn't been tested with a judge. The issue was a topic of keen debate in 2018 and 2019 following reports that year that then-President Trump had floated the idea of firing Powell behind closed doors. In a 2019 report on what might happen if he tries, Peter Conti-Brown of the Brookings Institution wrote that any president trying to simply fire a chair without charging malfeasance or neglect of duty would likely end up at the Supreme Court. If the justices upheld such a firing, he wrote, "that would represent one of the biggest changes in administrative law in the United States in 80 years." Conti-Brown also laid out a variety of market-rattling scenarios that could follow any presidential attempt to fire Powell from either his position as Federal Reserve chair or as a member of the Board of Governors. One particularly striking scenario is one where Powell sues in response and is allowed to stay in his position as the case is considered in court. In a recent exchange with Yahoo Finance, Conti-Brown said that the legal landscape remains the same as in 2019 and that the paper still represents his views. Another look at the subject in 2019 from Robert Eisenbeis, Cumberland Advisors' chief monetary economist, was a bit more blunt. On the question of whether Powell could be fired, he wrote that it's a matter of some debate, but "the short answer appears to be no." Would Trump try? This week's news of the effort among Trump allies is just the latest example of officials in Trump's orbit debating whether to rein in Federal Reserve independence. A book described as a "comprehensive policy guide for the next conservative US president" was published in 2023 by the influential Heritage Foundation as part of its own effort at planning if Trump wins, called Project 2025. The book includes a chapter that looks at reducing the power of the Federal Reserve but stops short of advocating the removal of Powell. Trump aides have long tried to downplay connections between the campaign and these groups. They maintain that the proposals shouldn't be taken as Trump's views, but the work is likely to be influential if there is a second Trump administration. John McEntee worked in the Trump White House and is now involved in Project 2025. He said recently that when it comes to his efforts and the formal Trump campaign, they will "integrate a lot of our work with them" over the coming summer. It was a fact the Biden campaign was more than happy to highlight. "The Project 2025 agenda is the Trump agenda," charged Biden-Harris 2024 spokesperson James Singer in a statement. Whether or not Trump ultimately decides to listen to the more aggressive ideas among his allies, one thing that is clear is he will not give Powell a third term as chair when his current term expires in 2026. "I would not reappoint him. I thought he was always late, whether it was good or bad, but he was always late," Trump has said. Ben Werschkul is Washington correspondent for Yahoo Finance. Click here for politics news related to business and money Read the latest financial and business news from Yahoo Finance
Upstart Holdings: Buy, Sell, or Hold? 2024-04-28 22:18:00+00:00 - Upstart (NASDAQ: UPST) has taken shareholders for a roller coaster ride since going public in 2020. The company started with a bang, and the stock climbed to $355 per share at one point. However, high interest rates and low demand for its loans weighed on the company. Last year, things showed signs of turning around, but it continued to see slower demand for its loans compared to pandemic levels. Upstart's artificial intelligence (AI) lending models have the potential to upend consumer finance as we know it, but there are several things to consider before investing in this stock. Upstart's mission to change consumer finance Upstart's founders believe that traditional credit scoring systems, like Fair Isaac's FICO® scoring system, fail to accurately identify risk and therefore prevent otherwise worthy people from borrowing. Its mission is to upend this legacy scoring system and make lending accessible to more individuals through its AI-powered lending models. Upstart's lending models rely on 1,600 variables over 58 million repayment events to measure and assess risk. These models approve more loans at lower interest rates for its borrowers. Because of its models, most of Upstart's business is highly automated. Last year, 87% of the lender's loans were fully automated from end to end. If Upstart can crack the code to make finance available to more borrowers, achieve lower default rates, and automate most of the process, its upside potential is tremendous. However, the business faces big question marks. Reasons to sell Upstart In 2021, the consumer lender made 1.3 million loans worth $11.8 billion. However, rising rates have been a drag on the lender, which has seen loan volume plummet over the past two years. After a strong start in 2022, loans originations really began to drop off. Last year, Upstart made 437,000 loans worth $4.7 billion. Chart by author. Lackluster demand for Upstart's loans has weighed heavily on the business. For one, the high interest rate environment has meant less customer demand for loans. On top of that, institutional demand to buy up its loans dipped a couple of years back, and the company was forced to hold more loans on its books, which was not well-received by investors. Last year, Upstart forged multiple partnerships with alternative asset managers and banks to buy its loans, which boosted the stock. However, it still has problems with tepid demand -- which means falling revenue and net income. In addition, people are struggling as credit card debt piles up. Consumer credit card debt is $1.13 trillion, and delinquencies on credit card loans continue to rise. This could be a sign that people are feeling the pinch. Upstart's lending models will face their first big test if consumers continue to weaken enough to tip the economy into recession. While its models have performed well thus far, the company's models still need to withstand the test of time across various economic cycles, which will take time to play out. Story continues Investors unwilling to deal with that uncertainty will likely want to sell the stock and invest in something with less risk. Reasons to buy or hold Upstart Upstart's lending models continue to perform well. The company presented its annualized default rates and showed that its models outperform the traditional FICO scoring model. The chart can be interpreted in many ways, but one important takeaway is that Upstart's models seem to assess risk better than the traditional scoring system. Image source: Upstart. As long as Upstart's models continue to perform across various points in the credit cycle, it should continue to garner interest from partners looking to buy its loans. Not only that, but its highly automated lending business also provides it with an opportunity to generate healthy margins and scale up as demand increases. Patient investors willing to withstand some uncertainty about Upstart's future may find the stock appealing. The stock is reasonably priced relative to its recent history, at 3.9 times its sales and 3.5 times this year's projected sales. Buy, sell, or hold Upstart? Upstart stock has taken shareholders on a wild ride, and the stock is down 68% from its 52-week high. Although the broader market has rallied in 2024, Upstart has failed to keep pace, perhaps due to concerns about slowing loan demand, consumer health, and how its models perform going forward. Despite this, I think Upstart is an intriguing stock to own at today's prices, as long as you have a long time horizon and are willing to tolerate the risks along the way as its growth story plays out. Should you invest $1,000 in Upstart right now? Before you buy stock in Upstart, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Upstart wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $537,557!* Stock Advisor provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month. The Stock Advisor service has more than quadrupled the return of S&P 500 since 2002*. See the 10 stocks » *Stock Advisor returns as of April 22, 2024 Courtney Carlsen has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Upstart. The Motley Fool has a disclosure policy. Upstart Holdings: Buy, Sell, or Hold? was originally published by The Motley Fool
A longevity researcher is facing backlash for claiming to 'reverse aging.' Scientists say there's no consensus on what it means. 2024-04-28 21:43:37+00:00 - By clicking “Sign Up”, you accept our Terms of Service and Privacy Policy . You can opt-out at any time. Access your favorite topics in a personalized feed while you're on the go. download the app Sign up to get the inside scoop on today’s biggest stories in markets, tech, and business — delivered daily. Read preview Harvard researcher Dr. David Sinclair has found himself at the center of controversy within the longevity community. Sinclair has been a poster child of the longevity movement for years. He's built several biotechnology companies focused on reversing the effects of aging, won acclaim for his research, and cultivated a loyal base of fans who swear by his lifestyle tips. This story is available exclusively to Business Insider subscribers. Become an Insider and start reading now. He's also earned his share of critics who say his research isn't always backed up by sufficient evidence. But over the past months, The Wall Street Journal reported that Sinclair has been battling a new level of backlash from colleagues and researchers who say his claims on curing aging have gone too far. A matter of semantics? The controversy began on February 29, when Sinclair's dog-supplement company, Animal Biosciences, issued a press release. Advertisement "I am very proud of the teams at NCSU and Animal Biosciences, who, after years of collaborative research and a clinical trial, have developed the first supplement proven to reverse aging in dogs," Sinclair said in the release, according to Newsweek. Sinclair contends that he was misquoted. "The actual quote that I had approved was 'proven to reverse the effects of aging in dogs,'" he told the Journal, adding, "I felt this was a reasonable statement." Related stories Scientists rushed to contest the claim. "The data is not good, you're calling it the wrong thing, and then you're selling it," Dr. Nir Barzilai told the Journal. "The selling is a step too far." Dozens of scientists resigned from The Academy for Health and Lifespan Research — a nonprofit organization of longevity researchers that Sinclair cofounded and headed as president. Dr. Matt Kaeberlein — a biologist who was among the throng of resignees — described Sinclair on X as the definition of a "snake oil salesman." Advertisement After careful consideration, I have renounced my membership in the Academy for Health and Lifespan Research (@ahlresearch). I find it deeply distressing that we’ve gotten to a point where dishonesty in science is normalized to an extent that nobody is shocked when a tenured… — Matt Kaeberlein (@mkaeberlein) March 3, 2024 Sinclair resigned from the Academy in March, the Journal reported based on an email circulated by the Academy. Barzilai has since taken over as president. Dr. Sinclair did not respond to a request for comment from Business Insider. Animal Biosciences reissued a press release walking back the "reverse aging" claim. But scientists in the field say the issue is even more fundamental: There's no way to reverse aging, much less measure it. The concept of biological age — the true age that our cells, tissues, and organ systems appear to be, based on biochemistry, according to the National Institute on Aging — is gaining traction in longevity circles. Yet, it's still a fuzzy and controversial concept because there's no standard for normal aging . The way we age varies a lot from person to person. Advertisement Experts working to standardize longevity medicine say it could take years before it'll be recognized as an official field like cardiology or neurology, according to the MIT Technology Review . "This is a new field," Andrea Maier of the National University of Singapore and cofounder of the private "high-end" Chi Longevity clinic told MIT Technology Review. "We have to organize ourselves; we have to set standards." Still, billions of dollars are being funneled into research. Longevity startups drew a global investment of more than $5.2 billion in 2022, according to PitchBook. And those backed by the world's wealthiest executives like Jeff Bezos and Peter Thiel are dedicated to studying cellular aging — and its cures. That means debates about the semantics of aging will only become more relevant to our daily lives.
Trump VP contender Kristi Noem stands by killing her dog Cricket amid bipartisan ridicule 2024-04-28 21:18:00+00:00 - South Dakota Governor Kristi Noem greets former U.S. President and Republican presidential candidate Donald Trump before he speaks at a South Dakota Republican party rally in Rapid City, South Dakota, U.S. September 8, 2023. Republican South Dakota Governor Kristi Noem on Sunday attempted to spin a controversial anecdote about killing her puppy, revealed in her upcoming memoir, into a case for her political deftness as she vies to become Donald Trump's vice presidential pick. A Friday report from The Guardian described snippets of her memoir about her decisions to kill various family farm animals, including a 14-month-old puppy named Cricket and an unnamed goat. "I can understand why some people are upset about a 20-year-old story of Cricket, one of the working dogs at our ranch," Noem wrote in an X post on Sunday. "Whether running the ranch or in politics, I have never passed on my responsibilities to anyone else to handle. Even if it's hard and painful. I followed the law and was being a responsible parent, dog owner, and neighbor." Noem has spent the weekend dealing with ridicule from both Democrats and Republicans since those anecdotes became public. In both instances, she has stood by her decision to put down the animals, saying that Cricket had an "aggressive personality" and that the goat was "nasty and mean," according to The Guardian report. Noem's Sunday defense comes as a last-ditch effort to quell the flurry of doubts that the situation has stirred as she competes for Trump's VP nomination against contenders like North Dakota Governor Doug Burgum, Senator Tim Scott, R-S.C. and Rep. Elise Stefanik, R-N.Y. Over the past several days, people across the political spectrum have taken to social media to comment on the controversy. Right-wing media personality Laura Loomer said this anecdote would be a death knell for Noem's vice-presidential aspirations. "She can't be VP now," Loomer said in a Friday post. "You can't shoot your dog and then be VP." President Joe Biden's reelection campaign quickly seized the opportunity to issue a subtle dig on Friday, posting pictures of Biden and Vice President Kamala Harris smiling with dogs. Florida Governor and former GOP presidential candidate Ron DeSantis posted a call to action for people to adopt rescue dogs. Noem's animal killing is not the first time she has raised eyebrows in Washington. In March, the South Dakota governor posted an infomercial-style video for a Texas dentist appearing to act as a commercial testimony for the business, despite holding public office.
3 things Costco shoppers should know before buying gold bars 2024-04-28 20:35:32+00:00 - Costco sells an estimated $200 million worth of gold and silver bars per month. Gold expert Taylor Huff says with the popularity, some buyers might not know what to expect. Huff recommended three things Costco shoppers should keep in mind when buying gold. NEW LOOK Sign up to get the inside scoop on today’s biggest stories in markets, tech, and business — delivered daily. Read preview Thanks for signing up! Access your favorite topics in a personalized feed while you're on the go. download the app Email address Sign up By clicking “Sign Up”, you accept our Terms of Service and Privacy Policy . You can opt-out at any time. Advertisement Gold and silver bars are some of Costco's hottest items this year, with the warehouse club selling through its supplies to the tune of $200 million a month. Each new batch of gold bars sells out "within a few hours" of being released for a small mark-up over its spot price. The Wall Street Journal reported that some buyers have been getting a crash course in commodity trading as they try to make a quick profit on their gold stash. This story is available exclusively to Business Insider subscribers. Become an Insider and start reading now. Have an account? Log in .
Hundreds of pro-Palestinian protesters arrested at campuses as colleges crack down on encampments 2024-04-28 20:21:00+00:00 - Students at dozens of universities in the U.S. and Canada are continuing to protest for Palestinian human rights after months of war in Gaza. Most student organizations participating in protests and encampments on campuses have similar demands of their administrations, including divestment from companies that could be profiting from the war and transparency regarding where they’re investing their money. Many universities have said they support freedom of speech and will allow protests on campus, but that encampments violate school policy. On Saturday, dozens of people were arrested at colleges that cracked down on encampments, including Northeastern University, where about 100 people were detained. Here are the most recent updates on what is happening on campuses across the country. University of Southern California Joel Curran, the University of Southern California’s senior vice president of communications, said campus property, including the Tommy Trojan statue, was vandalized Saturday by individuals who are part of the group that has continued "to illegally camp on our campus." A USC Department of Public Safety vehicle sits Sunday beside the Tommy Trojan statue, which was tagged in Los Angeles on Saturday. Jason Goode / AFP via Getty Images "Despite repeated warnings, this group has also continued to disrupt our campus operations and harass students and others, in violation of numerous university policies," Curran said. "While the university fully supports freedom of expression, these acts of vandalism and harassment are absolutely unacceptable and will not be tolerated." Curran did not specify what the acts of harassment allegedly perpetrated by the group were. He said protesters have refused "numerous attempts" made by President Carol Folt to meet with them. "We are hoping for a more reasonable response Sunday before we are forced to take further action. This area is needed for commencement setup early this week," he said. Police detain a person during protests at the University of Southern California in Los Angeles on Wednesday. Grace Hie Yoon / Anadolu via Getty Images The Los Angeles Police Department said no one was arrested during a protest on campus Saturday night. USC students started protesting after Muslim student Asna Tabassum’s valedictorian speech was canceled because of unspecified security threats. Massachusetts Institute of Technology President Sally Kornbluth released a statement Sunday saying negotiations between student protesters and administrators came to a stalemate when "students made clear on social media that they will not accept anything less than their original demands." "What’s more, despite the fact that the students were engaged with us in what we thought were good-faith discussions, a group of students disrupted another official MIT event this morning," Kornbluth said. "I have long believed that dialogue and mutual understanding are the best way to resolve conflicts. But it is clear that this approach has not allowed the progress we were hoping for." NBC News has reached out to MIT for comment on what the administration plans on doing next. In a video statement published Saturday, Kornbluth acknowledged that the pro-Palestinian protests on campus have been peaceful so far but said the encampment "has been a clear violation of our procedures for registering and reserving space for campus demonstrations." "We are open to further discussion about the means of ending the encampment," Kornbluth said. "But this particular form of expression needs to end soon." Pro-Palestinian demonstrators rally at an encampment in support of Gaza at the University of Southern California in Los Angeles on Wednesday. Mario Tama / Getty Images Emerson College Video from this past week showed officers in protective gear moving in on Boylston Place Alley on Emerson's campus, where an encampment was set up. A total of 118 protesters were arrested as a result, according to a statement from President Jay Bernhardt. Bernhardt said the college "advocated with the City and Boston Police Department for several days to delay the removal of the encampment," and when it became clear that was imminent, it encouraged protesters to remove tents from the alley. "We know that the events of that night were, and are, emotionally overwhelming for our entire community, especially for the students present at the protest and the staff and faculty who were on site to provide support," he said. Bernhardt said the college will not bring campus disciplinary charges against the protesters and plans to encourage the district attorney not to pursue charges against those involved in the encampment. University of Mary Washington A total of 12 people, including nine students, were arrested for trespassing Saturday after the University of Mary Washington in Virginia prohibited an encampment on campus because it invited outsiders in, according to a statement from President Troy Paino. "We remain committed to working with our campus community members to facilitate peaceful expression, and we welcome individuals and families to our campus for public events, including demonstrations when those activities abide by policies and regulations," Paino said. "Events that do not follow instructions, attempt to disrupt classes or activities, or endanger the health, safety, and security of our campus community will not be allowed." Northeastern University About 100 people were detained at a pro-Palestinian protest at Northeastern University’s Boston campus Saturday morning, according to university officials. “What began as a student demonstration two days ago, was infiltrated by professional organizers with no affiliation to Northeastern,” the university said in its statement on X. “Last night, the use of virulent anti-Semitic slurs, including ‘Kill the Jews,’ crossed the line. We cannot tolerate this kind of hate on our campus.” Video circulating online appears to show the statement being made by a counterprotester holding an Israeli flag, who was met with boos from other protesters on campus. It’s not clear if the person who said the antisemitic phrase was among those detained or disciplined. The leading student organization behind the protest, Huskies for a Free Palestine, or HFP, called the administration’s statement “false narratives,” and accused the administration of implying the phrase was said by pro-Palestinian protesters and using it “as justification to arrest over 100 Northeastern faculty, workers, and students.” Columbia University Columbia’s pro-Palestinian encampment stretched into its second weekend after talks between protesting students and the administration remained at a stalemate. The NYPD said there were no reports of arrests of students at Columbia University on Friday or Saturday regarding the encampment. The Reach Education Fund, a U.S. nonprofit that helps Palestinian students achieve their academic dreams, shared a video of children supporting protesters at Columbia University. Pro-Palestinian protesters camp out in tents at Columbia University in New York on Saturday. AP "Thank you, the students of Columbia University," one student said. "We respect you," another student said. The Palestinian students also showed support for students protesting at Harvard and Yale universities. "We hear you.. students of Yale University," read one sign held by a student. Portland State University On Friday, Portland State University President Ann Cudd announced that the institution will put a pause on receiving “any further gifts or grants” from Boeing, after receiving a letter signed by members of the community. The university’s Students United for Palestinian Equal Rights has accused Boeing of being “complicit in the occupation and genocide in Palestine,” according to a post on its Instagram account. A spokesperson for Boeing said the company has no comment. Arizona State University At Arizona State University, 72 people were arrested Friday and accused of trespassing related to setting up an encampment, according to a university spokesperson. The school said the encampment was established mostly by people who were not university students, faculty or staff, and that they refused instructions to disperse. Of the 72 people arrested, only 15 were students, according to the university. Indiana University Police arrested 23 people at Indiana University on Saturday after protesters were warned to remove tents or other structures that violated university policy. Those who didn’t were “detained and removed,” the university said. The people arrested face charges ranging from criminal trespass to resisting law enforcement. It’s unclear whether they are affiliated with the university. Indiana State Police riot officers arrest dozens of people during a pro-Palestinian protest on Indiana University's campus in Bloomington on Thursday. Jeremy Hogan / Sipa via AP Washington University At Washington University in St. Louis, more than 80 arrests were made Saturday after a group of students, employees and others not affiliated with the campus refused to leave after pitching tents and calling on others to join their protest, the university said in a statement. "All will face charges of trespassing and some may also be charged with resisting arrest and assault, including for injuries to police officers," the school said.
Williams-Sonoma to pay $3.1 million after FTC sued it, saying it falsely labeled products as 'Made in USA' 2024-04-28 20:19:27+00:00 - Williams-Sonoma must pay $3.1 million after the FTC sued it over a violation. The FTC requires retailers to be truthful about whether their products are made in the United States. FTC Chair Lina M. Khan said Williams-Sonoma used "deception." NEW LOOK Sign up to get the inside scoop on today’s biggest stories in markets, tech, and business — delivered daily. Read preview Thanks for signing up! Access your favorite topics in a personalized feed while you're on the go. download the app Email address Sign up By clicking “Sign Up”, you accept our Terms of Service and Privacy Policy . You can opt-out at any time. Advertisement Williams-Sonoma will pay $3.1 million after settling with the US government over accusations of falsely labeling products manufactured in foreign countries as "Made in USA." The Federal Trade Commission and the US Department of Justice announced the home essentials company's civil penalty in press releases shared on Friday. According to the FTC and DOJ, Williams-Sonoma violated a 2020 order requiring retailers to be transparent about whether products they sell are made in the US. A July 2021 FTC press release notes that the order was implemented to discourage fraud. The DOJ filed a complaint against Williams-Sonoma on April 24 following a referral from the FTC. "The FTC sued Williams-Sonoma in 2020, charging that the company advertised multiple product lines under its Goldtouch, Rejuvenation, Pottery Barn Teen, and Pottery Barn Kids brands as being all or virtually all made in the USA when they were not," the press release said. Advertisement Court documents attached to the press release showed that Williams-Sonoma admitted the allegations brought forward in the complaint were true. Williams-Sonoma agreed to a settlement, which the FTC said is the largest in a "Made in USA" case so far. The FTC filed a laws Sean Zanni/Getty Images The press release said the FTC learned Williams-Sonoma was advertising mattress pads at Pottery Barn Teens as "Crafted in America from domestic and imported materials" despite being made in China. "In numerous instances, those mattress pads were wholly imported from China," the court document reads. Related stories The FTC investigated and found six other products being falsely advertised as American-made. Advertisement Williams-Sonoma has also agreed to stop using "deceptive claims and follow Made in USA requirements," the press release said. FTC Chair Lina M. Khan said Williams-Sonoma's business practices had a negative impact on consumers. "Williams-Sonoma claimed its products were made in the United States even though they were made in China," she said in a statement. "Williams-Sonoma's deception misled consumers and harmed honest American businesses. Today's record-setting civil penalty makes clear that firms committing Made-in-USA fraud will not get a free pass." Shoppers in Williams-Sonoma. Scott Olson/Getty Images The company will be required to submit annual compliance certifications. Advertisement Representatives for Williams-Sonoma did not immediately respond to a request for comment from Business Insider. Williams-Sonoma is on the upswing despite this latest setback. In Williams-Sonoma's Q4 and 2023 fiscal year results report, the company's president and chief executive reflected on their growth. "We outperformed in 2023 despite the slowest housing market in several decades and geopolitical unrest. Although this pressured our top-line trend, we stayed focused on full-price selling, supply chain efficiencies, and best-in-class customer service," she wrote. "We have transformed our business model and as a result, we delivered an operating margin well ahead of our pre-pandemic profitability." Advertisement MarketBeat reported in March that the company's stock rose because of "persistent outperformance and quality business."
World Central Kitchen will resume operations in Gaza after killing of 7 aid workers 2024-04-28 20:19:00+00:00 - World Central Kitchen announced that it will resume operations in Gaza on Monday, almost one month after seven of its aid workers were killed in an Israeli airstrike in the enclave. The U.S.-based nonprofit group, founded by celebrity chef José Andrés, suspended operations in Gaza for four weeks after the workers were killed on April 1, according to a statement. The organization identified the aid workers as Saifeddin Issam Ayad Abutaha, a 25-year-old Palestinian; Lalzawmi (Zomi) Frankcom, a 43-year-old Australian; Damian Soból, a 35-year-old from Poland; Jacob Flickinger, a 33-year-old dual citizen of the U.S. and Canada; and security team members John Chapman, 57, James (Jim) Henderson, 33, and James Kirby, 47, all from the United Kingdom. Following the attack, Israeli Prime Minister Benjamin Netanyahu said his country’s forces had “unintentionally hit innocent people” in the Gaza Strip. The IDF took full responsibility for killing the aid workers, saying it was the result of soldiers mistaking them for Hamas gunmen. A car used by World Central Kitchen that was hit by an Israeli strike the previous day is pictured in Deir al-Balah, Gaza, on April 2. AFP - Getty Images file Before halting operations, the organization had distributed more than 43 million meals in Gaza “and accounted for 62% of all international NGO aid,” WCK said in a statement. “The humanitarian situation in Gaza remains dire,” said Erin Gore, the nonprofit’s chief executive officer. “We are restarting our operation with the same energy, dignity, and focus on feeding as many people as possible.” WCK has 276 trucks carrying almost 8 million meals that are ready to cross into Gaza via Rafah, and will send trucks into the enclave via Jordan too, it said in a statement. The organization is also continuing to explore delivering food with the help of Open Arms, a Spanish humanitarian organization, and the United Arab Emirates. WCK is also opening a third “high production kitchen,” named Damian's Kitchen after Damian Soból, a kitchen builder who was killed in the April 1 attack. “Damian’s Kitchen is in Mawasi and adds to WCK’s 68 other community kitchens in Gaza, including two other high production kitchens in Rafah and Deir al Balah,” the organization said. A hole is blasted through the roof of a World Central Kitchen vehicle, pictured on April 2, the day after an Israeli strike in Deir al-Balah, Gaza. Ali Jadallah / Anadolu via Getty Images file The organization is continuing to call for “an impartial and international investigation” into the Israeli attack that killed the aid workers, who were hit as their vehicle was leaving a warehouse in the Deir al-Balah area of central Gaza. The charity said its team had coordinated its movements with the Israeli military and that it was traveling in a “deconflicted zone” in two armored cars branded with the World Central Kitchen logo and a soft-skin vehicle. “While the IDF has taken responsibility for the attack and publicly stated they changed their rules of operations, WCK is seeking answers and advocating for change to better protect all NGO workers bravely serving in Gaza,” the organization said. Gore, the charity's chief executive officer, says WCK was “forced to make a decision: Stop feeding altogether during one of the worst hunger crises ever” or “keep feeding knowing that aid, aid workers and civilians are being intimidated and killed.” “These are the hardest conversations, and we have considered all perspectives when deliberating,” Gore said. “Ultimately, we decided we must keep feeding, continuing our mission of showing up to provide food to people during the toughest of times.”
I'm a federal prison consultant. Here's how I went from being in prison to helping clients get ready to go behind bars. 2024-04-28 20:06:06+00:00 - Sam Mangel, a former convict, now works as a federal prison consultant. He uses his personal experience to help defendants navigate the system and reduce their sentences. After spending time in custody, Mangel learned that knowledge is power in prison. NEW LOOK Sign up to get the inside scoop on today’s biggest stories in markets, tech, and business — delivered daily. Read preview Thanks for signing up! Access your favorite topics in a personalized feed while you're on the go. download the app Email address Sign up By clicking “Sign Up”, you accept our Terms of Service and Privacy Policy . You can opt-out at any time. Advertisement This as-told-to essay is based on a conversation with Sam Mangel, a federal prison consultant with his own firm. Mangel went into the field after pleading guilty to wire fraud in an insurance fraud scheme and being sentenced to time in prison. In 2016, I had been retired from my work in insurance for four years. I got a knock on the door of my house in Florida at 7 o'clock in the morning, and it was 17 men and women wearing blue FBI windbreakers and holding guns. I thought for sure they were there asking directions for a neighbor or something. Once I identified myself, they handcuffed me and put me in the back of the car. I had no idea what was happening. I hadn't been in any business during that time period. An FBI agent told me in the car that I was being charged out of Philadelphia with wire fraud and insurance fraud. I retained an attorney and spent half a million dollars for a big firm. I handed over my check, and I remember him giving me seven phone numbers he could be reached at 24/7. I called him on Monday, and I didn't hear back from him until Thursday. That's when I realized that to a criminal defense attorney, you're just a number. It's a very transactional business. Six months later, my attorney told me I had to take a plea, but he said he could negotiate for one year non-custodial. I went in for the pre-sentencing interview, and it was contentious. I didn't understand the nuances of it. When it came time for sentencing, the judge looked down at me and said, "Mr. Mangel, you clearly have no remorse." He deviated upward from sentencing recommendations, gave me 60 months, and remanded me to custody. Advertisement The only thing that went through my mind was that on a 60-month sentence under the federal statute at the time, I have to serve 85% of that. So, I was going to be away from my family for four years and a few months. Once I was in custody, I made a sarcastic joke about how I drink like a fish. Because I made that statement to a staffer, out of pure dumb luck, I got into RDAP, which is the 9-month drug and alcohol program. That immediately took 12 months off my sentence. That's how I learned that in prison, knowledge is king. Knowledge is power. Related stories About a year later, I got my initial release, and I ended up with 12 months in a halfway house and home confinement. Then COVID came, and with the CARES Act, Congress was looking to release eligible inmates. Previously, I had helped out a warden with some questions about his bicycle, and he promised me a favor. I called it in, and he made me the test case for the CARES Act. He told me I was the first person in the southeast region to be released under the CARES Act. I got out in March of 2020 and then got off supervised release early. I convinced a judge in Florida that I was non-risk and compliant, so instead of serving 36 months of supervised release, it was dropped down to about 23 months. Advertisement I got into this business because when I was in custody, I met other white-collar offenders who had much lower sentences for worse charges than mine. They worked with consultants. I thought, "I can do that. I understand the system and the mentality of people dealing with it." I think being available to a defendant and their family is the most important thing and part of being a consultant. Yes, I can help somebody get designated to the right place or into the right programs. Ultimately, especially before surrender, it's about bringing down the temperature. There's nothing scarier than dealing with the 800-pound gorilla that is the government, an unresponsive attorney, and the unknown. Prison is a black hole, and attorneys don't know about prison because it's not their job to know about it. They've never been there. I ask myself how can I help clients in a non-legal manner get the best outcome at sentencing? In my case, I was my own worst enemy because I had no humility. How do I help people prepare for that pre-sentence interview? How do we use the number of months the judge reads out as a starting point? I try to get clients out of prison as quickly as possible and back to their families. Advertisement I explain to people, mainly spouses, "You'll be OK. You'll make it through it." I'm a firm believer in working with clients and their families on a personal level and actually being available seven days a week. Because your fear doesn't stop on a Friday afternoon when you can't reach your attorney on the weekend. I'm available for loved ones when you're in prison. Because I got to tell you, you're in prison, you're going to get three meals a day, you're going to get your clothes cleaned, you're going to have a place to sleep. You are not going to be under stress. It's the loved ones you leave behind that have the most stress. My clients want a confidant, they want a therapist, they want somebody that is available to them, and mainly their family when they're not home, to bring down the stress. That's what I do.