—— Klarna to Offer Digital Wallet Service Ahead of IPO; US Retail Sales Rise by More Than Forecasts; US Initial Jobless Claims Continue to Drop; US Homebuilder Sentiment Drops Again; Sixth Street Buys Risk Asset From UBS; Starbuck New CEO Could Earn $113mn
1. Klarna to Offer Digital Wallet Service Ahead of IPO
Klarna Bank AB is expanding its services beyond its well-known buy-now, pay-later offering by introducing retail banking services in the U.S. and across much of Europe, as the fintech company gears up for an initial public offering.
According to a statement released on Thursday, customers in 12 countries will now have the option to transfer money from their bank accounts to a digital wallet, known as Klarna balance. This wallet will offer cash-back rewards for purchases made through the Klarna app and facilitate refunds for returned items.
In Europe, where Klarna already holds a banking license and is regulated by Swedish authorities, the company will offer savings accounts with interest rates of up to 3.58%. This expansion builds on Klarna’s existing services in Germany, where customers have had access to savings accounts and cash withdrawals since 2021. With these new offerings, Klarna aims to compete with major U.S. banks such as JPMorgan Chase & Co., Bank of America Corp., and Wells Fargo & Co.
In the U.S., where Klarna operates through a partner bank due to the lack of a banking license, the company will provide more limited services similar to a digital wallet, akin to those offered by PayPal’s Venmo or Starbucks. However, unlike U.S. bank accounts, the funds in Klarna accounts will not be protected by the Federal Deposit Insurance Corp. (FDIC).
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2. US Retail Sales Rise by More Than Forecasts
U.S. producer prices in July rose by less than expected, signaling a continued easing of inflationary pressures, with services costs experiencing their first decline of the year.
According to a Bureau of Labor Statistics report released on Tuesday, the producer price index (PPI) for final demand increased by 0.1% from the previous month, falling short of the 0.2% gain forecasted by economists in a Bloomberg survey. On a year-over-year basis, the PPI rose by 2.2%.
Excluding the volatile food and energy sectors, the core PPI remained unchanged in July compared to the previous month, marking the tamest reading in four months. The core PPI increased by 2.4% from a year earlier.
These wholesale inflation figures come ahead of the more closely monitored consumer price index (CPI) data, which is expected to show a modest increase when released on Wednesday. The cooling inflation pressures, combined with weak July jobs data, have led economists to anticipate a series of interest rate cuts by the Federal Reserve beginning next month.
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3. US Initial Jobless Claims Continue to Drop
Initial applications for U.S. unemployment benefits fell for the second consecutive week, reaching their lowest level since early July, even as hiring has recently slowed.
According to Labor Department data released on Thursday, initial claims decreased by 7,000 to 227,000 for the week ending August 10. This figure was lower than the 235,000 applications forecasted by economists in a Bloomberg survey.
Economists and investors are closely monitoring the labor market for signs of faster-than-expected weakening, particularly after the July employment report indicated that the jobless rate increased for the fourth consecutive month and hiring slowed. Although first-time applications for unemployment benefits have been trending upward this year, they remain relatively low, near 2019 levels.
Continuing claims, which serve as a proxy for the number of people receiving unemployment benefits, also fell to 1.86 million for the week ending August 3.
This moderation in the job market, coupled with recent improvements in inflation, strengthens the argument for the Federal Reserve to consider lowering interest rates during its September policy meeting. The July consumer price index report, released on Wednesday, showed that underlying U.S. inflation eased for the fourth consecutive month on an annual basis.
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4. US Homebuilder Sentiment Drops Again
Confidence among U.S. home builders declined for the fourth consecutive month in August, reaching its lowest level of the year, as high loan rates and home prices continue to impact both companies and potential buyers.
The National Association of Home Builders (NAHB)/Wells Fargo Housing Market Index dropped by 2 points to 39 this month, down from the revised level in July. This decline was below the median estimate of 43 expected by economists surveyed by Bloomberg.
The data reflect pessimism regarding current market conditions, with measures of prospective-buyer traffic and present sales both hitting new lows for 2024. However, there was a slight uptick in the outlook for the future, as the gauge of sales expectations for the next six months increased by 1 point to 49. This may indicate optimism that mortgage rates will decrease, according to NAHB Chief Economist Robert Dietz.
Dietz noted in a statement that with recent inflation data suggesting potential interest rate cuts by the Federal Reserve and a notable drop in mortgage rates in the second week of August, both buyer interest and builder sentiment are expected to improve in the coming months.
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5. Sixth Street Buys Risk Asset From UBS
A group of investors led by Sixth Street Partners has reached an agreement to purchase Credit Suisse’s U.S. mortgage servicing business from UBS Group AG, according to sources familiar with the matter.
Sixth Street, in collaboration with co-investor Davidson Kempner Capital Management, is set to acquire UBS’s Select Portfolio Servicing unit. The deal, which has not been publicly detailed, is anticipated to close in the first quarter of 2025.
UBS disclosed in its second-quarter report that it had agreed to sell the business, though it did not name the buyer. The sale is expected to reduce UBS’s risk-weighted assets by approximately $1.3 billion, marking progress in its efforts to wind down or divest businesses inherited from Credit Suisse.
Additionally, UBS announced on Thursday that it was liquidating a $2.2 billion real estate fund, another legacy asset from Credit Suisse, due to pressure from redemption requests. These steps have contributed to UBS reporting better-than-expected profits for the second quarter.
UBS also stated that it does not anticipate a significant profit or loss from the transaction involving Select Portfolio Servicing.
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6. Bill Ackman Discloses 3 million Nike Shares
Nike Inc. shares surged in late trading after Pershing Square Capital Management LP, led by Bill Ackman, revealed a new stake in the company.
In a regulatory filing on Wednesday, the investment firm disclosed that it holds approximately 3 million shares in Nike, valued at around $229 million. This comes at a time when Nike is working to recover from a sales slump.
The news has sparked speculation on Wall Street about whether activist investors might take a more active role in Nike, especially after the company experienced its worst trading day in June, when management projected a decline in revenue for the current fiscal year. Although Ackman previously stated in 2022 that he would adopt a “quieter approach” with management rather than being a vocal corporate agitator, the filing did not indicate whether Pershing Square intends to push for changes at Nike.
Nike’s board is primarily controlled by co-founder Phil Knight and his son Travis, who own nearly all of the voting shares. Pershing Square has had dealings with Nike before, making a $100 million profit from a passive stake in 2018.
Following the news of Pershing Square’s investment, Nike’s stock jumped as much as 5.5% in late trading on Wednesday. Prior to this, the stock had declined nearly 28% for the year.
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7. Starbuck New CEO Could Earn $113mn
Starbucks has awarded its incoming CEO, Brian Niccol, a compensation package potentially exceeding $100 million, making it one of the largest hiring deals in U.S. corporate history. This package is four times larger than the sign-on deal offered to his predecessor, Laxman Narasimhan, who was recently ousted.
If Niccol meets the targets set by Starbucks, his total compensation could reach $113 million, positioning him among the highest-paid CEOs in the U.S. Niccol, who was appointed as Starbucks’ fourth CEO in less than three years, will take on his new role next month after leading a successful turnaround at Chipotle Mexican Grill, where he significantly boosted the company’s stock by nearly 800% since 2018.
Niccol’s compensation package includes an upfront $10 million cash bonus and $75 million in equity grants, designed to compensate him for the bonuses and unvested stock he forfeited at Chipotle.
In addition to an annual salary of $1.6 million, he will also be eligible for a target cash bonus of about $3.6 million, depending on Starbucks’ performance, along with a long-term equity grant with an annual target value of $23 million, to be paid out over multiple years.
Source: Financial Times – Starbucks’ new chief awarded $113mn pay deal and remote office in Newport Beach
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本文内容来自《Financial Times》、《Bloomberg》，以及《The Real Deal》等多家财经新闻媒体。