SmileDirectClub slides 28% after stock market debut

Online dentistry company SmileDirectClub shares slid 28% on Thursday, the worst market debut for a unicorn start-up so far this year. SmileDirectClub ranks as the fifth worst debut of the 109 companies to go public this year. The company priced its initial public offering at $23 per share on Wednesday, above the expected range of $19 to $22. SmileDirectClub sold 58.5 million shares, raising $1.3 billion and valuing the online dentistry company at $8.9 billion. “You know, we’re here to build long


Online dentistry company SmileDirectClub shares slid 28% on Thursday, the worst market debut for a unicorn start-up so far this year. SmileDirectClub ranks as the fifth worst debut of the 109 companies to go public this year. The company priced its initial public offering at $23 per share on Wednesday, above the expected range of $19 to $22. SmileDirectClub sold 58.5 million shares, raising $1.3 billion and valuing the online dentistry company at $8.9 billion. “You know, we’re here to build long
SmileDirectClub slides 28% after stock market debut Cached Page below :
Company: cnbc, Activity: cnbc, Date: 2019-09-12  Authors: angelica lavito
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SmileDirectClub slides 28% after stock market debut

Online dentistry company SmileDirectClub shares slid 28% on Thursday, the worst market debut for a unicorn start-up so far this year.

The company’s shares closed at $16.67 after opening at $20.55. SmileDirectClub ranks as the fifth worst debut of the 109 companies to go public this year. Shares of Uber, another unicorn — or start-ups valued at $1 billion or more — slid 7.6% on that stock’s first day on the public markets.

The company priced its initial public offering at $23 per share on Wednesday, above the expected range of $19 to $22. SmileDirectClub sold 58.5 million shares, raising $1.3 billion and valuing the online dentistry company at $8.9 billion. Thursday’s move values the company at roughly $6.4 billion.

The stock trades on the Nasdaq under the ticker symbol SDC.

“You know, we’re here to build long-term value with the stock,” SmileDirectClub co-founder Alex Fenkell said Thursday in an interview with CNBC’s Leslie Picker. “How [the stock] priced today I don’t think is going to dictate what we’re doing here.”

The start-up, founded in 2014, sells teeth aligners directly to consumers on its website and in its “SmileShops” starting at $1,895 for a two-year plan. Founders Fenkell and Jordan Katzman want to disrupt the orthodontics industry with less expensive teeth-straightening treatments, convenience, and splashy television and social media advertisements.

The company reported $423.2 million in sales last year, a 190% increase from the $146 million it reported in 2017, according to its prospectus filed last month. It posted a net loss of $74.8 million last year, more than double the net loss of $32.78 million in 2017.

Acquiring new customers is expensive. SmileDirectClub spent $289.3 million on marketing and general expenses last year.

Jordan Katzman’s father, David Katzman, funded SmileDirectClub’s seed round through his venture fund, Camelot Venture Group, and is the company’s CEO. Camelot invests in direct-to-consumer brands, such as 1-800-Contacts and Quicken Loans.

David Katzman’s brother, Steven Katzman, is chief operating officer. The Katzman family, combined, will retain more than 65% of the voting power between the three men after the offering. CEO David Katzman alone will hold nearly 30% of the vote with 87 million Class B shares, which control 10 votes for every 1 vote offered to a Class A share.

SmileDirectClub operates more than 300 locations, according to its initial prospectus filing. It has also signed partnerships with Walgreens and CVS to open “SmileShops” inside their drugstores.

Customers can visit a SmileShop to have someone scan their teeth and create a 3D image, which SmileDirectClub then uses to build a custom aligner. They can also order a kit online and send back an impression.

The Nashville, Tennessee-based company plans to use the proceeds from its IPO to fund international expansion and research and development, according to the filing. SmileDirectClub’s aligners are currently available in the U.S., Canada, Australia and the U.K.

— CNBC’s Elijah Shama contributed to this report.


Company: cnbc, Activity: cnbc, Date: 2019-09-12  Authors: angelica lavito
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Ford sells monthly vehicle subscription service to Fair

Anton Novoderezhkin/TASS (Photo by Anton NovoderezhkinTASS via Getty Images) Anton Novoderezhkin | TASS | Getty ImagesSanta Monica, Calif., start-up company Fair has agreed to acquire Ford’s monthly vehicle subscription service, Canvas, for an undisclosed amount, the companies said Thursday. Vehicle subscription services are marketed as an alternative to owning a car. Ford acquired San Francisco-based Canvas, then known as Breeze, through its consumer financing arm Ford Credit in September 2016


Anton Novoderezhkin/TASS (Photo by Anton NovoderezhkinTASS via Getty Images) Anton Novoderezhkin | TASS | Getty ImagesSanta Monica, Calif., start-up company Fair has agreed to acquire Ford’s monthly vehicle subscription service, Canvas, for an undisclosed amount, the companies said Thursday. Vehicle subscription services are marketed as an alternative to owning a car. Ford acquired San Francisco-based Canvas, then known as Breeze, through its consumer financing arm Ford Credit in September 2016
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Ford sells monthly vehicle subscription service to Fair

A customer views cars on display in a showroom of the Avilon dealership owned by the Ford Motor Company in Moscow. Anton Novoderezhkin/TASS (Photo by Anton NovoderezhkinTASS via Getty Images) Anton Novoderezhkin | TASS | Getty Images

Santa Monica, Calif., start-up company Fair has agreed to acquire Ford’s monthly vehicle subscription service, Canvas, for an undisclosed amount, the companies said Thursday. The purchase marks healthy growth for Fair, but another retreat from an emerging mobility business for Ford as it cuts costs under an $11 billion restructuring plan through 2022. Ford’s shares were relatively unchanged after in midday trading Thursday at just under $10 a share. Vehicle subscription services are marketed as an alternative to owning a car. For under $200 a month for a 2017 Nissan Versa, subscribers get the car, insurance and maintenance without having to lock into a long-term lease. The appeal is in the simplicity of rolling all of those costs into one monthly payment. Luxury cars, of course, cost more. A 2018 Lexus LX 570 SUV starts at $1,175 a month, according to the company’s website.

Fair gained notoriety for attracting investments from high-profile companies such as SoftBank and partnering with Uber to provide vehicles for their drivers starting at $130 a week. Scott Painter, CEO and founder of Fair, said the acquisition will nearly double the company’s engineering capabilities and provide rapid expansion for operation in San Francisco and its overall customer base. “We just became a much bigger, more dominant platform,” Painter, an automotive retail veteran and former founder and CEO of TrueCar, told CNBC. “This is really a reflection of the scale of where we’re operating.” Canvas CEO Ned Ryan called the sale “a natural fit” for both companies. Ford acquired San Francisco-based Canvas, then known as Breeze, through its consumer financing arm Ford Credit in September 2016. It began operating as Canvas in May 2017, offering variable-term leases with flexible payment options to San Francisco-area residents before expanding to Los Angeles. Sam Smith, executive vice president of strategy and future products at Ford Credit, said the company “learned a lot about subscription services, fleet management and the technology” from Canvas. Fair will acquire all of Canvas’ assets, including nearly 100 employees. About 20% or less of Canvas’ staff was let go or decided not to join Fair ahead of the announcement, according to Painter. Canvas’ thousands of subscribers will have the opportunity to join Fair at the end of their current vehicle subscription.

Scott Painter Scott Mlyn | CNBC

Canvas is the second notable mobility unit Ford has shed this year. In March, it ended operations of Chariot, a shuttle-based ride-sharing service. The company reportedly paid roughly $65 million to acquire the San Francisco-based startup in September 2016. Ford expanded Chariot from San Francisco to seven cities before ending operations in March – seven months after Streetsblog NYC reported the service was “a big, expensive failure.”

Going public?

Since launching in August 2017, Fair reports it had more than 45,000 users in more than 30 U.S. markets in about 20 states. Users, using the Fair app, can subscribe to the subscription program and switch vehicles through the term of their “lease.” Fair, according to Painter, is just “starting really to hit a scaling moment,” as it is growing at a pace of 200-400 subscribers per day. He said the privately-held company plans to go public “sooner rather than later.” “We’re not building the company with the focus of taking it public but there’s just simply too many dollars involved not to be a public company sooner rather than later and we’re definitely building with that in mind,” he said. Fair, he said, is not under “immediate pressure” to go public but the public sector is better suited for the company as it continues to grow over the long-term. Fair, in the coming years, plans to grow nationally as well as internationally, according to Painter. “We view all of the innovation that’s going on as a really strong signal that mobility is changing and we that need to be out and constantly innovating to keep up with it,” he said.

Challenging business


Company: cnbc, Activity: cnbc, Date: 2019-09-12  Authors: michael wayland
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Denied from public service loan forgiveness? What to do next

The student loan forgiveness program for public servants was not going well. Ninety-nine percent of loan forgiveness applications under that new Temporary Expanded Public Service Loan Forgiveness program were rejected between May 2018 and May 2019, according to a new report by the Government Accountability Office. These are the basic requirements for public service loan forgiveness: Your loans must be federal direct loans. By the end, you need to have made 120 qualifying, on-time payments in an


The student loan forgiveness program for public servants was not going well. Ninety-nine percent of loan forgiveness applications under that new Temporary Expanded Public Service Loan Forgiveness program were rejected between May 2018 and May 2019, according to a new report by the Government Accountability Office. These are the basic requirements for public service loan forgiveness: Your loans must be federal direct loans. By the end, you need to have made 120 qualifying, on-time payments in an
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Denied from public service loan forgiveness? What to do next

The student loan forgiveness program for public servants was not going well. Few borrowers saw debt relief. They blamed the companies that administer the federal loan programs for providing misleading information. And so last year, Congress created a fund to try to help some of the teachers, nurses and other public servants steeped in debt and derailed by the program. That remedy, it turns out, is just as troubled as the original program. Ninety-nine percent of loan forgiveness applications under that new Temporary Expanded Public Service Loan Forgiveness program were rejected between May 2018 and May 2019, according to a new report by the Government Accountability Office. During that time, more than 50,000 requests came into the U.S. Department of Education and just 661 were approved. And while Congress has allocated $700 million for the fix-it fund, only $27 million has been spent.

Still, if borrowers believe they qualify for the relief they should not give up on trying to get it. The Public Service Loan Forgiveness Program, established by President George W. Bush in 2007, allows borrowers who pursue government or non-profit work to get their student debt cancelled after a decade of payments. In 2013, the Consumer Financial Protection Bureau estimated that 1 in 4 American workers could be eligible for forgiveness. But the Bureau later found that a range of student loan industry practices “delay, defer or deny access” to the financial relief.

The federal student loan system is famously complicated. There are some 14 ways to repay your student loans, a web of forgiveness options and a soup of wonky terms like “forbearance” and “deferment.” These are the basic requirements for public service loan forgiveness: Your loans must be federal direct loans. Your employer must be a government organization at any level, a 501(c)(3) not-for-profit organization or some other type of not-for-profit organization that provides public service. By the end, you need to have made 120 qualifying, on-time payments in an income-driven repayment plan or the standard repayment plan. Most public servants learn too late that their loan type or repayment plan make them ineligible. Congress’s expanded program sought to give a second chance at debt forgiveness to borrowers who were in the wrong repayment plan. Specifically, if they had been deemed ineligible because they were enrolled in a graduated or extended loan repayment plan instead of an income-driven one, they could reapply. Still, there’s a catch: The borrower’s most recent payment on whatever plan they were in, as well as their payment made 12 months ago, must have been as much or more than they would have paid on the income-driven repayment plan. If you were denied from the expanded program because of your repayment plan, you should switch immediately into an income-driven repayment plan and apply again in a year, said Mark Kantrowitz, the publisher of SavingForCollege.com. More from Personal Finance:

Strong economy could be your ticket to a new job

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Retire in paradise: 5 countries where you can live the dream Other technical reasons that commonly lead to disqualification remain. You still need to have a loan from the federal direct program — not a Federal Family Education Loan, Perkins loan or any kind of private loan. You still, of course, need to employed by the government or a 501(c)(3) organization. If you’re unsure whether your employer qualifies, you can fill out the Department of Education’s employer certification form to find out. The Government Accountability Report found the majority of borrowers rejected from the new program had failed to first apply for Public Service Loan Forgiveness and show that they’d been rejected— one of the requirements for relief from the fix-it fund. “The process seems confusing for applicants,” Kantrowitz said. “They don’t understand why they must first apply for Public Service Loan Forgiveness and be rejected when they already know that they are ineligible.”


Company: cnbc, Activity: cnbc, Date: 2019-09-12  Authors: annie nova
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Regular investors are cut out of a major financial market and the SEC chief wants to change that

Clayton addressed what he called the “two segments” in capital markets: the public markets, and private ones, including private equity and venture capital investments. “Twenty-five years ago, the public markets dominated the private markets in virtually every measure,” he said. “Today, in many measures, the private markets outpace the public markets, including in aggregate size.” He expressed concern that the Main Street investor for the most part does not have access to private markets, noting


Clayton addressed what he called the “two segments” in capital markets: the public markets, and private ones, including private equity and venture capital investments. “Twenty-five years ago, the public markets dominated the private markets in virtually every measure,” he said. “Today, in many measures, the private markets outpace the public markets, including in aggregate size.” He expressed concern that the Main Street investor for the most part does not have access to private markets, noting
Regular investors are cut out of a major financial market and the SEC chief wants to change that Cached Page below :
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Regular investors are cut out of a major financial market and the SEC chief wants to change that

The head of the SEC says more needs to be done to make it easier for companies to go public and that his office is taking a “fresh look” at allowing Main Street investors access to the private capital markets.

In a speech to the Economic Club of New York on Monday, SEC Chairman Jay Clayton said the lack of more IPOs and the inability of most of the Main Street investing public to access private markets was a “growing concern.”

Clayton addressed what he called the “two segments” in capital markets: the public markets, and private ones, including private equity and venture capital investments.

“Twenty-five years ago, the public markets dominated the private markets in virtually every measure,” he said. “Today, in many measures, the private markets outpace the public markets, including in aggregate size.”

More from Invest in You:

SEC Chair Jay Clayton’s top investing tips: Compounding, diversification and take free money

Understanding this investing basic can help you grow your money faster

There’s a retirement crisis in America where most will be unable to afford a ‘solid life’

Clayton wants to make the public capital markets (IPOs) more attractive for companies, and expand opportunities for Main Street investors to participate in the private markets. The SEC, Clayton says, is making efforts to modernize financial disclosure rules and to recognize that one size does not fit all, permitting what he calls “scaled disclosures.”

He expressed concern that the Main Street investor for the most part does not have access to private markets, noting that the cost of including individual investors in private offerings is “high.”

Clayton said he wants to take a “fresh look” at initiatives to expand access to the private markets while at the same time providing “appropriate investor protections.”

Clayton addressed several other issues in his speech, in the follow-up Q & A, and in a separate interview on CNBC:


Company: cnbc, Activity: cnbc, Date: 2019-09-10  Authors: bob pisani, cnbc staff
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Self-driving trucks are being tested on public roads in Virginia

Daimler Trucks and technology firm Torc Robotics have started to test autonomous trucks on public roads in the U.S. The routes are located on highways in southwest Virginia where Torc — which is part of Daimler Trucks following a majority stake acquisition — is based. In an announcement Monday, Daimler Trucks said that all of the “automated runs” would need an engineer to oversee the system as well as a safety driver. A driver “must constantly supervise these support features,” according to the


Daimler Trucks and technology firm Torc Robotics have started to test autonomous trucks on public roads in the U.S. The routes are located on highways in southwest Virginia where Torc — which is part of Daimler Trucks following a majority stake acquisition — is based. In an announcement Monday, Daimler Trucks said that all of the “automated runs” would need an engineer to oversee the system as well as a safety driver. A driver “must constantly supervise these support features,” according to the
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Company: cnbc, Activity: cnbc, Date: 2019-09-10  Authors: anmar frangoul
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Self-driving trucks are being tested on public roads in Virginia

Daimler Trucks and technology firm Torc Robotics have started to test autonomous trucks on public roads in the U.S.

The routes are located on highways in southwest Virginia where Torc — which is part of Daimler Trucks following a majority stake acquisition — is based.

In an announcement Monday, Daimler Trucks said that all of the “automated runs” would need an engineer to oversee the system as well as a safety driver. It added that all safety drivers held a commercial driver’s license and had special training in vehicle dynamics and automated systems. The firm said that “months of extensive testing and safety validation” had already been conducted on a closed loop track.

“Bringing Level 4 trucks to the public roads is a major step toward our goal to deliver reliable and safe trucks for the benefits of our customers, our economies and society,” Martin Daum, a member of the board of management at Daimler with responsibility for trucks and buses, said in a statement.

Five “levels” of driving automation have been defined by SAE International, a global association of engineers and technical experts. At level 4, a vehicle can drive itself under limited conditions and “will not operate unless all required conditions are met.” At level 5, a vehicle’s automated driving features can drive it under all conditions.

In the trucking sector, the impact of autonomous technology could be quite significant. A 2018 report from the UC Berkeley Center for Labor Research and Education and Working Partnerships USA found that autonomous trucks could result in the loss of 294,000 long-distance driving jobs. The report was authored by Steve Viscelli, a sociologist at the University of Pennsylvania.

A transition does seem to be taking place in the automotive industry as a whole. On Monday, research from Canalys estimated that 414,000 cars with level 2 driving functions were sold in the U.S. during the second quarter of 2019. This represents 10% of all new cars sold during that period, according to the firm.

At level 2, “driver support features” include steering and brake/acceleration support and lane centering. A driver “must constantly supervise these support features,” according to the SAE.

The last few years have seen a range of tests and developments take place in the autonomous vehicle sector.

Mike Hawes, the chief executive of the U.K.-based Society of Motor Manufacturers and Traders, told CNBC.com via email that the shift to connected and autonomous vehicles represented “the greatest change to how we travel since the invention of the car.”

“But safety is the number one priority for the automotive industry and self-driving vehicles are still some way off because of the challenges involved with equipping them to handle all possible driving situations,” Hawes added.


Company: cnbc, Activity: cnbc, Date: 2019-09-10  Authors: anmar frangoul
Keywords: news, cnbc, companies, trucks, driving, support, vehicle, vehicles, public, features, autonomous, level, daimler, safety, roads, tested, virginia, selfdriving


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Saudi Aramco CEO confirms IPO will list locally ‘very soon’

ABU DHABI — Saudi Aramco, the world’s biggest oil company, is prepared for a listing on the Riyadh stock exchange and it will take place “very soon,” its CEO said Tuesday. “What we have always said is that Aramco is ready for listing whenever the shareholders make a decision to list,” Aramco President and CEO Amin Nasser told reporters at the World Energy Conference in Abu Dhabi. Nasser also confirmed the state oil giant’s aims to list internationally in addition to Saudi Arabia, though did not


ABU DHABI — Saudi Aramco, the world’s biggest oil company, is prepared for a listing on the Riyadh stock exchange and it will take place “very soon,” its CEO said Tuesday. “What we have always said is that Aramco is ready for listing whenever the shareholders make a decision to list,” Aramco President and CEO Amin Nasser told reporters at the World Energy Conference in Abu Dhabi. Nasser also confirmed the state oil giant’s aims to list internationally in addition to Saudi Arabia, though did not
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Saudi Aramco CEO confirms IPO will list locally 'very soon'

ABU DHABI — Saudi Aramco, the world’s biggest oil company, is prepared for a listing on the Riyadh stock exchange and it will take place “very soon,” its CEO said Tuesday.

“What we have always said is that Aramco is ready for listing whenever the shareholders make a decision to list,” Aramco President and CEO Amin Nasser told reporters at the World Energy Conference in Abu Dhabi.

“And as you heard from His Royal Highness Prince Abdulaziz yesterday, it is going to be very soon. So, we are ready — that is the bottom line.”

Nasser also confirmed the state oil giant’s aims to list internationally in addition to Saudi Arabia, though did not specify which other locations are under consideration.

“The primary listing is to list locally but we are ready also for listing outside in other districts,” Nasser said.

When asked whether he would prefer to see Aramco list in Tokyo, Japan, he replied: “We are ready to list wherever shareholders decide.”

Reuters reported on Monday that the kingdom plans to list 1% of Aramco on its local stock exchange before the end of this year and another 1% in 2020, citing sources, as first steps ahead of a public sale of roughly 5% of the company.

The oil giant has delayed its IPO, originally scheduled for 2018, reportedly over Saudi concerns about public scrutiny over its finances and because of the complexity of its corporate structure. The listing would be the largest public offering in history.


Company: cnbc, Activity: cnbc, Date: 2019-09-10  Authors: natasha turak sam meredith, natasha turak, sam meredith
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Maintaining separation between Aramco and its regulator is a ‘must,’ Saudi energy minister says

ABU DHABI — New Saudi Energy Minister Prince Abdulaziz bin Salman has underlined the importance of regulation for Saudi Aramco, the world’s largest oil company, as it gears up for a long-anticipated initial public offering (IPO). “I have no doubt in my mind that emphasizing the separation between Aramco, the corporate, and the ministry as regulator is a must,” he told CNBC contributor Helima Croft at an audience of delegates at the 24th World Energy Congress in Abu Dhabi Monday. “The regulator c


ABU DHABI — New Saudi Energy Minister Prince Abdulaziz bin Salman has underlined the importance of regulation for Saudi Aramco, the world’s largest oil company, as it gears up for a long-anticipated initial public offering (IPO). “I have no doubt in my mind that emphasizing the separation between Aramco, the corporate, and the ministry as regulator is a must,” he told CNBC contributor Helima Croft at an audience of delegates at the 24th World Energy Congress in Abu Dhabi Monday. “The regulator c
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Maintaining separation between Aramco and its regulator is a 'must,' Saudi energy minister says

ABU DHABI — New Saudi Energy Minister Prince Abdulaziz bin Salman has underlined the importance of regulation for Saudi Aramco, the world’s largest oil company, as it gears up for a long-anticipated initial public offering (IPO).

“I have no doubt in my mind that emphasizing the separation between Aramco, the corporate, and the ministry as regulator is a must,” he told CNBC contributor Helima Croft at an audience of delegates at the 24th World Energy Congress in Abu Dhabi Monday.

“The regulator cannot be a person, the regulator has to be an institution. That regulator role has to be defined, and the contours of the role of the regulator has to be understood,” he added.

The oil giant delayed its IPO, originally scheduled for 2018, reportedly over Saudi concerns about public scrutiny over its finances and because of the complexity of its corporate structure.

Aramco now expects to list shares within the next two years. The IPO aims to raise cash for a government looking to significantly reduce its budget deficit and diversify its economy beyond oil as part of Crown Prince Mohammed bin Salman’s Vision 2030.


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Real US debt levels could be 2,000% of economy, a Wall Street report suggests

And larger levels of debt can be sustained so long as other conditions, like leverage levels, or debt to capital, are manageable. “Debt problems could, arguably would have, already happened at lower levels of debt if the macro conditions forced it.” ‘Profoundly negative effects’The warnings about potential debt hazards come as the total federal debt outstanding has surged to $22.5 trillion, or about 106% of GDP. 633%, which tallies up an “infinite horizon” of obligations for social programs, rat


And larger levels of debt can be sustained so long as other conditions, like leverage levels, or debt to capital, are manageable. “Debt problems could, arguably would have, already happened at lower levels of debt if the macro conditions forced it.” ‘Profoundly negative effects’The warnings about potential debt hazards come as the total federal debt outstanding has surged to $22.5 trillion, or about 106% of GDP. 633%, which tallies up an “infinite horizon” of obligations for social programs, rat
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Real US debt levels could be 2,000% of economy, a Wall Street report suggests

Total potential debt for the U.S. by one all-encompassing measure is running close to 2,000% of GDP, according to an analysis that suggests danger but also cautions against reading too much into the level. AB Bernstein came up with the calculation — 1,832%, to be exact — by including not only traditional levels of public debt like bonds but also financial debt and all its complexities as well as future obligations for so-called entitlement programs like Social Security, Medicare and public pensions. Putting all that together paints a daunting picture but one that requires nuance to understand. Paramount is realizing that not all of the debt obligations are set in stone, and it’s important to know where the leeway is, particularly in the government programs that can be changed either by legislation or accounting.

“This conceptual difference is important to acknowledge because this lens is often used by those who wish to paint a dire picture about debt,” Philipp Carlsson-Szlezak, chief U.S. economist at AB Bernstein, said in the report. “While the picture is dire, such numbers don’t prove we are doomed or that a debt crisis is inevitable.” Crisis measures cut both ways — sometimes a seemingly smaller level of debt can cause outsized problems during times of economic stress, such as during the financial crisis. And larger levels of debt can be sustained so long as other conditions, like leverage levels, or debt to capital, are manageable. The key is not always gross dollar amount but rather ability to pay. “U.S. debt is large. And it’s growing. But if we want to think about debt problems (in any sector – sovereign, households, firms or financials) the conditions rather than the levels are more significant,” Carlsson-Szlezak said. “Debt problems could, arguably would have, already happened at lower levels of debt if the macro conditions forced it.”

‘Profoundly negative effects’

The warnings about potential debt hazards come as the total federal debt outstanding has surged to $22.5 trillion, or about 106% of GDP. Excluding intragovernmental obligations, debt held by the public is $16.7 trillion, or 78% of GDP. That latter total, considered to be more relevant as an economic burden, is likely to rise to 105% by 2028, according to Congressional Budget Office projections. However, the CBO notes that the numbers are subject to revision depending on how government policies play out. Advocates for fiscal reform argue that the debt impact has indeed reached the point where action is necessary. “Globally, we have become over-reliant on borrowing as a solution for everything. Political excuses abound for why it doesn’t matter, which just clearly isn’t the case,” said Maya MacGuineas, president of the Committee for a Responsible Federal Budget, a bipartisan committee of legislators, business leaders and economists that counts former Federal Reserve Chairs Paul Volcker and Janet Yellen among its members. “We are quickly approaching a situation where we have dug ourselves a debt hole which is doing to have profoundly negative effects on the economy for probably decades going forward,” MacGuineas added. In its calculations, AB Bernstein pulls in debt from a variety of sources and compares it to GDP as follows: 100% of GDP using federal, state and local government debt combined.

150% for households and firms

450% for financial debt, which carries “conceptual issues and risks,” namely that debt held by financial firms often represents potential in a worst-case scenario involving various derivative instruments that can carry high notional levels that are unlikely ever to be realized.

27% in trusts for social insurance programs.

484%, which values all the promises from current social insurance programs.

633%, which tallies up an “infinite horizon” of obligations for social programs, rather than just the traditional 75 years used in computations.

Timing is everything

That total gets the debt load around the 2,000% mark, though Carlsson-Szlezak points out that different debt carries different risks. “A default on U.S. treasury bonds would be catastrophic to the global economy – whereas changes in policy (while painful for those whose future benefits were diminished) would barely register on the economic horizon,” he wrote. Impacts on individual parts of the economy would vary. Moody’s Investors Service recently warned that an already growing number of junk-rated companies could “swell dramatically” in the next downturn, “substantially increasing default risk.”


Company: cnbc, Activity: cnbc, Date: 2019-09-09  Authors: jeff cox
Keywords: news, cnbc, companies, social, 2000, financial, levels, obligations, report, federal, public, programs, real, gdp, economy, street, suggests, debt, total, wall


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Masa Son’s multi-generational vision is running into a brick wall: The public markets

SoftBank is learning the biggest obstacle to success for its $100 billion Vision Fund are the public markets. That’s where founder and CEO Masayoshi Son’s long-term ambitions are colliding head-on with the near-term expectations of Wall Street. The theme of Son’s Vision Fund, which has already deployed more than $70 billion in dozens of companies (primarily privately held technology companies) is to bet big and move quickly. Maybe going public doesn’t always line up with the goals of the Vision


SoftBank is learning the biggest obstacle to success for its $100 billion Vision Fund are the public markets. That’s where founder and CEO Masayoshi Son’s long-term ambitions are colliding head-on with the near-term expectations of Wall Street. The theme of Son’s Vision Fund, which has already deployed more than $70 billion in dozens of companies (primarily privately held technology companies) is to bet big and move quickly. Maybe going public doesn’t always line up with the goals of the Vision
Masa Son’s multi-generational vision is running into a brick wall: The public markets Cached Page below :
Company: cnbc, Activity: cnbc, Date: 2019-09-07  Authors: alex sherman
Keywords: news, cnbc, companies, technology, billion, masa, companies, running, sons, vision, softbank, public, wall, brick, fund, multigenerational, investment, longterm, markets


Masa Son's multi-generational vision is running into a brick wall: The public markets

SoftBank is learning the biggest obstacle to success for its $100 billion Vision Fund are the public markets. That’s where founder and CEO Masayoshi Son’s long-term ambitions are colliding head-on with the near-term expectations of Wall Street.

The theme of Son’s Vision Fund, which has already deployed more than $70 billion in dozens of companies (primarily privately held technology companies) is to bet big and move quickly. In one of the fund’s first press releases, SoftBank explained the purpose was to expedite building businesses that will make the next stage of the Industrial Revolution possible, requiring “unprecedented large scale long-term investment.”

Founders consistently gush over Son’s emphasis to move faster with expansion efforts and become No. 1 in their core area of business, no matter the associated costs. Son encourages his investments to push for as much market share as possible, using scale as their moat to competitive threats.

But long-term investment in growing technology companies is easier when those companies don’t have quarterly projections to hit and pressure from public investors to show consistent earnings growth. This week’s news that public investors are valuing WeWork at less than $25 billion after SoftBank’s latest investment in January marked the company at a $47 billion valuation should give Son pause. Maybe going public doesn’t always line up with the goals of the Vision Fund.

Of course, the Vision Fund isn’t a Kumbaya charity program. It’s a late-stage venture capital/private equity fund, with investments from SoftBank, sovereign wealth funds from Saudi Arabia and The United Arab Emirates, and other technology companies including Apple, Qualcomm, Foxconn and Sharp. Everyone in the fund is there to make money, and in order to make money, investments need to be liquid. Going public is still the best way to make this happen.

Still, public monetization seems to be the biggest wrench in SoftBank’s long-term strategy. Uber, SoftBank’s other huge investment ($7.6 billion), recently went public to disappointing results. SoftBank is now more than $600 million underwater on its ride-sharing investment.

Its investment in Slack has fared better: The firm invested around $335 million in Slack from 2017 to 2018 at between $8.70 and $11.91 a share. As of Friday’s close, its stake was worth just over $1 billion. Even so, the value of this stake has declined almost 30% since Slack’s debut, and shares tumbled 8.8% on Friday to $27.38, the lowest since the company’s market debut in June and barely above the debut “reference price” of $26.


Company: cnbc, Activity: cnbc, Date: 2019-09-07  Authors: alex sherman
Keywords: news, cnbc, companies, technology, billion, masa, companies, running, sons, vision, softbank, public, wall, brick, fund, multigenerational, investment, longterm, markets


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Euro gains on hopes of German fiscal stimulus

The euro rose on Monday after a report that Germany may boost fiscal stimulus increased hopes that governments will act to boost growth in the region, though expectations of further central bank easing kept a lid on gains. Germany is considering the creation of a “shadow budget” that would enable Berlin to boost public investment beyond the restrictions of constitutionally enshrined debt rules, three people familiar with the internal discussions told Reuters. Euro gains were capped, however, bef


The euro rose on Monday after a report that Germany may boost fiscal stimulus increased hopes that governments will act to boost growth in the region, though expectations of further central bank easing kept a lid on gains. Germany is considering the creation of a “shadow budget” that would enable Berlin to boost public investment beyond the restrictions of constitutionally enshrined debt rules, three people familiar with the internal discussions told Reuters. Euro gains were capped, however, bef
Euro gains on hopes of German fiscal stimulus Cached Page below :
Company: cnbc, Activity: cnbc, Date: 2019-09-06
Keywords: news, cnbc, companies, fiscal, boost, stimulus, german, hopes, central, report, officials, gains, public, rai, euro, ecb, expectations, monetary


Euro gains on hopes of German fiscal stimulus

The euro rose on Monday after a report that Germany may boost fiscal stimulus increased hopes that governments will act to boost growth in the region, though expectations of further central bank easing kept a lid on gains.

Germany is considering the creation of a “shadow budget” that would enable Berlin to boost public investment beyond the restrictions of constitutionally enshrined debt rules, three people familiar with the internal discussions told Reuters.

Government officials are flirting with the idea of setting up independent public entities that would seize the historic opportunity of zero borrowing costs and take on new debt to increase investment in infrastructure and climate protection, the officials said.

A key part of that coalition is the commitment to keep balanced budgets. If they are waiving from that it could be very supportive for the euro and very bearish for the dollar, said Bipan Rai, North American head, FX strategy at CIBC Capital Markets in Toronto.

The euro gained to $1.1053 against the greenback, up 0.24% on the day, after earlier trading as low as $1.1014.

Euro gains were capped, however, before the European Central Banks meeting on Thursday, when the central bank is expected to introduce a new wave of monetary stimulus.

“The default is to be negative euro into ECB,” said Kenneth Broux, head of corporate research at Societe Generale. “Resuming bond purchases won’t do anything” to the euro zone economy because “the monetary policy in Europe has stopped being effective,” Broux added.

“The ECB has done all it can.” The euro may get a boost, however, if the ECB disappoints dovish expectations already baked into the market. We get the sense the market is expecting a bit too much of a dovish outcome this week and if that is the case that could imply that tactical long euro positions might do well, Rai said.

In the U.S., consumer price inflation data on Thursday and retail sales data on Friday are the main economic focus. They will come after the jobs report on Friday showed that U.S. jobs growth slowed more than expected in August.

The Federal Reserve will continue to act “as appropriate” to sustain the U.S. economic expansion, Fed Chair Jerome Powell said Friday in Zurich, bolstering expectations for a rate cut at the Fed’s meeting on Sept. 18.


Company: cnbc, Activity: cnbc, Date: 2019-09-06
Keywords: news, cnbc, companies, fiscal, boost, stimulus, german, hopes, central, report, officials, gains, public, rai, euro, ecb, expectations, monetary


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