Trump advisor Kevin Hassett says 3.2% GDP growth 'absolutely' sustainable this year, could even go higher - CNBC

The "blockbuster" economic growth in the first quarter is "absolutely" sustainable, Kevin Hassett, an economic advisor to President Donald Trump, said Friday on CNBC.

First-quarter gross domestic product grew by 3.2%, according to an initial reading by the Bureau of Economic Analysis of the economy for that period. It was more than expected and was the first time since 2015 that first-quarter GDP topped 3%.

Hassett, chairman of the Council of Economic Advisers, said that the Trump administration had already been forecasting 3.2% economic growth for this year.

"Maybe we would revise it up," he said on "The Exchange, referring to the 2019 forecast. "The [first-quarter] number was three-tenths lower because of the government shutdown and … the first quarter tends to be low because the winter weather isn't really accounted for right in the statistics."

"You add that all together, this is really blockbuster news and suggests that the risks on the upside are very high for GDP this year," he added.

The surge in growth was driven by a smaller trade deficit and the largest accumulation of unsold merchandise since 2015. Those are both seen as temporary boosters that could ultimately weigh on the economy later this year. Because of that, Morgan Stanley economists are forecasting that GDP will slow to 1.1% in the second quarter.

Hassett agreed that when there is a lot of growth in inventories, it should give people pause about the next quarter. However, he said in this case there is no need for concern.

"Incomes are growing at a very high rate and consumption has not been," he said. "Our expectation is that the shelves are being filled but they're going be emptied out and production isn't going to go down they way it normally does when you get an inventory spike."

"The consumers are having their consumption catch up with income," he added.

Hassett isn't the only Trump administration official taking a victory lap. Earlier Friday, National Economic Council Director Larry Kudlow called the 3.2% GDP growth "a blowout number." However, he still insisted the Federal Reserve should cut interest rates.

"The inflation rate continues to slip lower and lower," Kudlow told CNBC's "Squawk on the Street" on Friday. "Even according to the Fed's own spokespeople, from the chairman on down, that could open the door to a target rate reduction."

— CNBC's Michael Sheetz and Reuters contributed to this report.

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https://www.cnbc.com/2019/04/26/trump-advisor-kevin-hassett-gdp-growth-sustainable-could-go-higher.html

2019-04-26 18:12:41Z
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Here's who stands to get rich from Uber's IPO - CNBC

Uber seeks to raise about $9 billion in cash in its initial public offering next month when it is expected to debut on the New York Stock Exchange under the symbol "UBER."

The company plans to offer 180 million shares at $44 to $50 per share, according to an updated filing released Friday morning, valuing the company between $80.53 billion and $91.51 billion on a fully diluted basis. The valuation is well below earlier reports that suggested Uber could be valued as high as $120 billion. At the low end of its price range, Uber's market cap would be $73.7 billion, which would even fall below its last private valuation of about $76 billion.

Even at the lower end of its pricing, Uber will still be the largest tech IPO to debut this year. The company may have scaled back expectations after seeing excitement around its rival Lyft's stock quickly fizzle out. The stock, which has a market cap of about $16 billion, is down more than 27% for the quarter since debuting in late March.

Still, Uber's IPO is set to make its top shareholders worth billions. Assuming Uber prices at $47 per share, the midpoint of its stated range, SoftBank stands to gain the most from the IPO. Based on its post-IPO share count in the filing, the firm would earn more than $10 billion in the offering. Even Uber's ousted former CEO and co-founder Travis Kalanick stands to gain $5.3 billion in the IPO, based on the same assumptions. His co-founder, Garrett Camp, stands to gain about $3.7 billion through LLCs he manages, under these assumptions.

Here's where each major shareholder will stand after the public offering, based on their post-IPO share counts and assuming Uber prices at the midpoint of its stated range at $47 per share:

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Watch: Uber anticipates IPO price between $44-50 per share

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https://www.cnbc.com/2019/04/26/uber-ipo-the-largest-shareholders.html

2019-04-26 18:10:36Z
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Ford under criminal investigation for emissions testing problems - The Verge

Ford Motor Company admitted in a financial filing on Friday that it’s under investigation by the US Department of Justice over its internal emissions testing practices. The investigation is still in the “preliminary stages,” according to the automaker.

Notably, Ford says the investigation has nothing to do with the use of “defeat devices,” or software meant to deceive regulators, which was the issue at the center of Volkswagen’s Dieselgate scandal.

Ford announced in February that it had launched an investigation into its own emissions testing practices after employees raised red flags over potential consistency problems. Those employees discovered Ford may have been miscalculating “road load,” which is a measurement of the forces — like aerodynamic drag or tire resistance — on a car when it’s traveling at a constant speed on smooth, flat ground. (Coming up with a lower road load figure in the lab versus in the real world, for example, could lead an automaker to believe its cars were getting better fuel economy and therefore emitting less pollution.)

The company said it hired law firm Sidley Austin to perform the investigation, and alerted the Environmental Protection Agency. Ford said Friday that it’s also now working with the California Air Resources Board to fix whatever problems might exist.

“The Department of Justice contacted us earlier this month to let us know that they had opened a criminal investigation,” the company said Friday in a statement to The Verge. “Ford is fully cooperating with the government, and we’ll keep them posted on what we’re finding through our investigation and technical review.”

Both Daimler (the parent company of Mercedes-Benz) and Fiat Chrysler Automobiles are also reportedly under criminal investigation regarding emissions, though like Volkswagen, they allegedly did use defeat devices to make some diesel cars appear cleaner to regulators. Daimler and Fiat Chrysler have faced civil charges, too. In January, Fiat Chrysler settled a civil case with the US Department of Justice for $800 million. The company also recalled 862,000 cars in March. Meanwhile, a class-action lawsuit against Daimler in the US recently got the green light to move ahead in a New Jersey court.

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https://www.theverge.com/2019/4/26/18517991/ford-criminal-investigation-emissions-testing-problems-dieselgate

2019-04-26 17:26:50Z
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Uber is paying drivers up to $40,000 each to celebrate its IPO - Business Insider

Paramount Pictures

• Uber drivers are set to receive up to $40,000 each as a "driver appreciation reward" ahead of the company's initial public offering.
• The ride-hailing giant expects to pay around $300 million to more than 1.1 million drivers worldwide this weekend.
• Uber drivers will receive one of six different cash rewards based on the number of trips they've completed. 
• Uber has also reserved 5.4 million shares for drivers to purchase at the IPO price, expected to be between $44 and $50.
• Visit MarketsInsider.com for more information about Uber.

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Uber drivers are set to receive up to $40,000 as a "driver appreciation reward" ahead of the ride-hailing giant's initial public offering. 

The company announced in a Securities and Exchange Commission filing published on Friday that it would pay around $300 million to its more than 1.1 million drivers worldwide. It expects to make the payments on or around April 27. 

"To acknowledge drivers who have participated in our success, we are paying a one-time cash driver appreciation reward to qualifying drivers in jurisdictions where we operate through owned operations," Uber said in the filing.

Eligible US drivers will receive one of six different cash rewards based on the number of Uber trips they've completed. Drivers are in line to earn $100 for making at least 2,500 trips, $500 for at least 5,000 trips, $1,000 for at least 10,000 trips, and $20,000 for at least 20,000 trips.

The largest reward — for 40,000 trips — is $40,000.

To qualify for the reward, drivers must have completed at least 2,500 Uber trips, including one this year as of April 7, and their account must be in good standing. Payouts to non-US drivers will be adjusted to reflect different average hourly earnings across regions.

Uber is also giving its drivers a chance to buy its stock before the general public. It has reserved 5.4 million shares for drivers through a directed share program. Drivers who qualify for the driver-appreciation reward will be able to buy those shares at the IPO price, which Uber expects to be between $44 and $50 a share.

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https://www.businessinsider.com/initial-public-offering-uber-rewarding-drivers-2019-4

2019-04-26 14:41:28Z
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Walmart, Target shares tumble as Amazon announces one-day shipping for Prime members - CNBC

As if promising two-day delivery wasn't enough, Amazon just raised the bar for retailers across the U.S. — chiefly Walmart and Target — to offer even faster and cheaper shipping for online purchases. Or to lean into their bricks-and-mortar stores, something Amazon can't do, even more.

The e-commerce company announced on Thursday it will be making one-day shipping the standard for all Amazon Prime members, expecting to spend $800 million during the second quarter of this year to improve its warehouses and delivery infrastructures to make this possible.

Target shares were down more than 5% Friday morning. Walmart shares tumbled 2.5%.

With more than 100 million paying Prime members across the country, it's estimated Amazon reaches more than 50% of U.S. households today, and growing. And so the impact of its move toward an even speedier shipping option is going to be substantial. This means more and more consumers are going to get used to having whatever they order on the internet show up at their doorsteps in 24 hours or less. Walmart and Target are going to need to make sure they meet these changing expectations.

Already, near 40% of consumers want online orders to arrive in two days, free of charge, according to a survey by the National Retail Federation of about 3,000 U.S. adults from Oct. 23 through Nov. 30 of last year. 29% of people said they didn't complete a purchase online after finding out two-day shipping wasn't free.

"Just as Amazon did with Prime 2-day delivery 14 years ago, we see a broad-based 1-day shipping offering increasing consumer e-commerce expectations (essentially more people will get used to 1 day vs. 2 day shipping … and grow to expect 1-day shipping)," Morgan Stanley analyst Brian Nowak said in a research note.

"This, in our view, is likely to cause other brands, manufacturers, retailers, and logistics companies to have to invest more aggressively to compete with Amazon and its differentiated delivery," he added. "The cost to compete within e-commerce continues to rise."

While Walmart and Target don't break out for Wall Street how much money they spend on shipping and related expenses each year, we know those costs have eaten into profit margins and continue to do so. And investors have punished Walmart and Target, at least in the near term, for having to spend more money to compete.

Walmart in January of 2017 started offering free two-day shipping on orders totaling more than $35, dropping its minimum purchase threshold, which had been $50 up until then. And it bought Jet.com for $3 billion in 2016 as another bid to juice its online business and compete with Amazon, but also to be able to reach shoppers in bigger cities in a faster window of time.

Target, meanwhile, in March of 2018 made free two-day shipping available for all of its credit card holders, with no minimum purchase requirement. For all other Target shoppers, two-day shipping comes free with a minimum online order of $35. Target had lowered its purchase threshold to $25 from $50 in 2015, but raised it back to $35 in 2017. And on the acquisition front, Target acquired same-day delivery platform Shipt for $550 million in 2017, allowing it to get to customers in bigger cities like New York in under 24 hours.

"While margins have been pressured ... now [Walmart and Target] have a much more sophisticated supply chain," Stacey Widlitz, president of SW Retail Advisors, said. "It's been paying off," because same-store sales have continued to climb at these retailers, she said. "The real issue is when you get to the holidays. ... That's when people will be saying, 'Oh my God, I need this same day or in one day.'"

To be sure, Walmart, Target and many of Amazon's other rivals like Best Buy, Kohl's and Home Depot are increasingly touting their buy online, pick up in store options. And that's something Amazon hasn't been able to match at scale, without a far-reaching network of bricks-and-mortar locations like these other companies.

There's evidence more and more shoppers are turning to this option, too.

Target this past holiday season said the amount of online orders it fulfilled through either in-store pickup or its curbside pickup service was up 60 percent from a year ago and accounted for roughly 25 percent of online sales during November and December.

A recent, April survey from Coresight Research found 46% of online shoppers in the U.S. had collected at least one of their online orders from a bricks-and-mortar store within the past 12 months. Coresight said Walmart and Target are the two most popular U.S. retailers for buying online and picking up in store, followed by Best Buy and Home Depot.

— CNBC's Courtney Reagan contributed to this reporting.

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2019-04-26 14:02:06Z
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2019 Starts off with a Bang in the First Quarter with Strong Economic Performance - The White House

As discussed in the 2019 Economic Report of the President, the Council of Economic Advisers demonstrated that the strong economic performance in 2017 and 2018 was not merely a continuation of trends already under way during the preceding post-recession expansion, but rather constituted a distinct break from trend and positive surprise relative to expectations. We see in today’s advance estimate of real GDP growth in the first quarter of 2019 that the economy continues to outperform expectations.

As shown in the figure below, in their final longer-term forecasts before the November 2016 election, the Congressional Budget Office and the Federal Open Market Committee on average projected four-quarter real GDP growth in 2017, 2018, and 2019 of 2.2, 2.0, and 1.7 percent, respectively. In actuality, real GDP grew 2.5 percent in 2017, 3.0 percent in 2018, and in the first quarter of 2019 grew at an annualized rate of 3.2 percent.

Moreover, we consider the 2019:Q1 advance estimate likely underestimates the current pace of economic growth in the United States for two reasons.  First, as shown in the following table, in recent years estimates of real GDP growth in the first quarter of a calendar year have on average been below growth during the subsequent three quarters.  Indeed, over the past 25 years, the Q1 estimate has, on average, been 0.9 percentage point lower than the average of Q2, Q3, and Q4 estimates. This suggests there may be some lingering seasonality in the official estimates of first-quarter real GDP growth.

Second, the Bureau of Economic Analysis (BEA) now estimates that the partial government shutdown in 2019:Q1 lowered the overall growth rate of real GDP by 0.3 percentage point at an annual rate. In their technical note, the BEA states that “the full effects of the partial federal government shutdown on the first quarter estimates cannot be quantified because they are embedded in the regular source data that underlie the estimates and cannot be separately identified.” In the absence of residual seasonality and the government shutdown, real GDP growth in the first quarter of this year might have been up to 1.2 percentage points higher, implying an annualized growth rates of 4.4 percent.

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https://www.whitehouse.gov/articles/2019-starts-off-with-a-bang-in-the-first-quarter-with-strong-economic-performance/

2019-04-26 13:53:01Z
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Amazon Making 1-Day Shipping Standard for Prime Members - WNEP Scranton/Wilkes-Barre

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Amazon Making 1-Day Shipping Standard for Prime Members  WNEP Scranton/Wilkes-Barre

More than a decade ago, Amazon launched its Prime membership *service* with the promise of free two-day shipping. The unique offer helped attract millions of ...

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https://wnep.com/2019/04/26/amazon-making-1-day-shipping-standard-for-prime-members/

2019-04-26 13:48:00Z
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