WeWork reportedly expected to lay off 2,000 workers as early as this week - CNBC

A WeWork logo is seen at a WeWork office in San Francisco, September 30, 2019.

Kate Munsch | Reuters

WeWork is expected to lay off at least 2,000 people, about 13% of its staff, as soon as this week, the Guardian newspaper reported.

WeWork staff told the Guardian that they believe the cuts will not stop there, suggesting more of the company's 15,000 person workforce could be sacked. The Information reported in September that executives and bankers have discussed cutting up to a third of those workers. The embattled start-up is attempting to turn its fortunes around with painful cost reduction measures.

Employees also told the Guardian that little to no work is getting done at the company and new projects have been put on hold.

WeWork declined to comment to the Guardian. Representatives for the company did not immediately respond to CNBC's request for additional comment.

Last month, the start-up pulled the plug on plans to go public. Its much-anticipated IPO prospectus in August revealed a massive $900 million loss in the first six months of 2019 and drew skepticism over its corporate governance. WeWork had a private market valuation of about $47 billion but its potential value in the public market had been slashed significantly.

There has also been a showdown between former CEO Adam Neumann and SoftBank chief Masayoshi Son, who has invested billions into the start-up. Neumann stepped down last month. It was also reported that SoftBank has readied a financing package to take control of the company and further sideline Neumann, who is also a co-founder.

WeWork rents out office spaces to start-ups, freelancers and enterprises by investing in real estate in some of the most expensive markets around the world. It makes money back over time as companies and individuals pay their rent or membership fees.

Read more about the Guardian's report on WeWork's plans to sack 2,000 staff here.

— CNBC's Alex Sherman and Lauren Feiner contributed to this report.

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2019-10-15 06:35:32Z
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US futures point to a higher open - CNBC

U.S. stock index futures were higher Tuesday morning, as traders look ahead to a new earnings season.

At around 04:10 a.m. ET, Dow futures rose 100 points, indicating a positive open of more than 102 points. Futures on the S&P and Nasdaq were both also higher.

Overall, market players are monitoring developments on the trade front. U.S. Treasury Secretary Steven Mnuchin told CNBC that tariffs will go up in December if there is no deal in place with China.

"I have every expectation if there's not a deal those tariffs would go in place, but I expect we'll have a deal," Mnuchin said Monday.

Furthermore, the U.S. has also decided to stop trade negotiations with Turkey and raised its steel prices to 50%. The decision followed an earlier U.S. announcement to remove all U.S. troops from the northern border of Syria with Turkey.

Investors are also looking ahead to a new earnings season. BlackRock, Citigroup, Goldman Sachs, Wells Fargo and J.P. Morgan Chase are set to release their latest performance numbers before the bell. United Airlines and Interactive Brokers will also release earnings after the bell.

On the data front, the Empire State manufacturing figures are due to be released at 08:30 a.m. ET.

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2019-10-15 06:13:44Z
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Don’t get too excited about progress on Trump’s ‘greatest and biggest deal ever’ - MarketWatch

“The greatest and biggest deal ever made for our Great Patriot Farmers in the history of our Country,” as President Trump described it, triggered a broad rally in U.S. stocks on Friday. The Dow DJIA, +1.21% and S&P SPX, +1.09% closed off session highs, but buyers are wary amid a report China wants more talks.

Indeed, our call of the day, suggests last week’s bullish reaction may have been overdone.

Morgan Stanley MS, +2.14% says those who are banking on this trade deal wrapping up are getting ahead of themselves and that the deal with China is an “uncertain” arrangement at best, according to a note from strategists Michael Zezas and Meredith Pickett.

“There is not yet a viable path to existing tariffs declining, and tariff escalation remains a meaningful risk,” the bank wrote. “Thus, we do not yet expect a meaningful rebound in corporate behavior that would drive global growth expectations higher.”

Nevertheless, investors seem to be focusing on the silver lining. Trump said Washington will suspend a tariff hike planned this week on $250 billion of Chinese goods, in return for China agreeing to buy as much as $50 billion of American farm goods.

Future hikes remain in place, though.

For real progress to be made, Morgan Stanley says it will need to see more progress on issues like enforcement and intellectual-property protections.

“Until such evidence is available, we must conclude that this pause is more ‘uncertain’ than ‘durable,’” the strategists wrote.

The chart

Kevin Muir, strategist at East West Investment Management, calls this illustration from Crescat Capital’s Tavi Costa his “new favourite chart.”

Outlook for rising prices is at a fresh 40-year low while core & median CPI are at decade highs.

Inflation tends to surprise investors at the top of the business cycle.

I mostly agree with the deflationary concerns, but is inflation the most underrated risk out there? pic.twitter.com/n8JDfycxOY

— Otavio (Tavi) Costa (@TaviCosta) October 13, 2019

“Tavi’s chart illustrates clearly the market is completely complacent about inflation,” Muir wrote on Twitter TWTR, +2.07%  . “Yeah, I know the deflationists will argue that it will resolve itself with a GFC-type-bust. Maybe, but true financial crises occur when something happens that NO-ONE-BELIEVES-CAN-HAPPEN.”

The buzz

While traders are understandably preoccupied with the trade deal, the third-quarter earnings season kicks off this week with the first reports expected Tuesday from big banks JPMorgan JPM, +1.69%  , Goldman Sachs GS, +2.41% and Citibank C, +2.16%  , along with fellow Dow components Johnson & Johnson JNJ, +1.76%   and UnitedHealth Group UNH, -0.74%  .

Away from the markets, Gordon Sondland, the U.S. ambassador caught up in the latest White House controversy, is expected to tell Congress his text message reassuring another envoy that there was no quid pro quo in their interactions with Ukraine was based solely on what President Trump told him. Stay tuned.

There’s lots of build-up heading into Tuesday night’s Democratic presidential debate, and with Elizabeth Warren challenging Joe Biden for the front-runner label, the backdrop is significantly different from prior discussions.

The stat

12.4% — That’s how much Brown University’s $4.2-billion endowment rallied in fiscal 2019. No other Ivy League school managed to beat the S&P 500’s SPX, +1.09% 10.4% over the same time period, Barron’s reported.

The economy

Banks are closed for Columbus Day, and there are no economic releases on the schedule. Notable reports coming up this week include retail sales figures and September housing starts, due out Wednesday and Thursday, respectively.

Random reads

Oversubscribed! The utter failure of cutting the cord.

Ken Fisher is paying the price for his inappropriate comments.

Alex Trebek gets real about his situation.

Should we soak the rich? Absolutely!

This dark video was shown to a bunch of Trump supporters at the president’s Miami resort last week, according to the New York Times.

Need to Know starts early and is updated until the opening bell, but sign up here to get it delivered once to your email box. Be sure to check the Need to Know item. The emailed version will be sent out at about 7:30 a.m. Eastern.

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2019-10-14 11:28:00Z
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Dow Jones Futures: Will China Trade Deal Caution Chill Stock Market Rally? Apple At Highs, Microsoft, Google, Nvidia Near Buys - Investor's Business Daily

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Dow Jones Futures: Will China Trade Deal Caution Chill Stock Market Rally? Apple At Highs, Microsoft, Google, Nvidia Near Buys  Investor's Business DailyView full coverage on Google News
https://www.investors.com/market-trend/stock-market-today/dow-jones-futures-china-trade-deal-spur-stock-market-rally-apple-stock-microsoft-stock-google-stock-nvidia/

2019-10-14 10:36:42Z
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Wall Street’s Sky-High Expectations Are About to Collide With Reality - The New York Times

Wall Street’s eternally optimistic forecasters are expecting corporate profit growth to surge by the middle of next year — views that are about to collide with reality as hundreds of companies report financial results and update investors on their prospects.

American companies go through this ritual every three months: sharing financial statements and holding conference calls in which they sometimes offer their expectations for future quarters, what Wall Street calls “guidance.” For this quarter, it begins with reports from several big banks on Tuesday.

In between these reports, executives continue to issue guidance, trying to nudge expectations higher or lower with speeches at conferences or other events so official results don’t jolt investors.

Lately, they’ve been doing less of the in-between nudging, and that could make this round of earnings reports more important than usual.

“Companies are starting to do what they do when there is rampant uncertainty, which is just stop issuing guidance,” said Savita Subramanian, head of United States equity strategy at Bank of America Merrill Lynch. “Companies just basically go dark.”

During the three months that ended in September, companies in the S&P 500 offered the fewest updates — positive or negative — to investors since 2000, according to the bank’s analysts.

The “rampant uncertainty” that Ms. Subramanian referred to flows from many sources: signs that the economy and job growth are slowing, evidence that the manufacturing sector may already be in a recession, and the trade war’s toll on China, Japan and Germany.

Plus, politics and the 2020 presidential election were always going to be a distraction, but the impeachment investigation has made it harder to know where policy will go.

On Friday, President Trump said the United States and China had reached an interim deal to avert a planned tariff increase on Tuesday. But the agreement was spoken and would take several weeks to write, doing little to remove the uncertainty surrounding the economic battle between Beijing and Washington.

Regardless of the companies’ reasons, the relative silence since their last reports means stock investors may be in for a lot of bad news all at once.

Then there’s the matter of the habitually overenthusiastic Wall Street analysts who rate stocks and try to predict where they’re heading. Stock prices hinge on expectations — not on what just happened — and the predictions look increasingly divorced from reality.

Right now, the collective forecast is that profits at S&P 500 companies will jump more than 10 percent in 2020, a view that defies expectations for the economy to slow further.

“It doesn’t look likely,” said Ralph Davidson, chief global equity strategist at BTG Pactual, a Brazilian investment bank, of the profit forecast. “We expect guidance to be coming down.”

It’s not that double-digit profit growth is unprecedented. In 2018, earnings jumped 22 percent after a sharp cut in corporate taxes. But it’s becoming clear that last year’s surge was a one-time jolt.

The current year offers an example of what may happen if it dawns on analysts that they’re being too rosy.

Last October, they were forecasting that profits would grow about 10 percent in 2019. Those targets came down fast at the end of the year because of sudden worry that the trade war and rising interest rates might tip the economy into a recession.

As the year progressed, and companies reported results, the analysts cut the forecast down, again and again.

Now, they expect that profits will have grown just under 2 percent once the year is done. For the third quarter, which ended in September, analysts expect S&P 500 companies to report that their profits fell 3 percent.

Lower profits aren’t necessarily bad news for the economy. One reason corporate earnings have been pinched is that wages have been rising. That reflects the strong job market and helps support consumer spending, which is the bedrock for economic growth in the United States.

Nor does a slowdown in profits definitely mean stocks will fall. The key reason that stocks haven’t done worse as growth targets have been reduced is the Federal Reserve’s decision to cut interest rates.

The central bank made its first cut in July and, most recently, announced that it would expand its balance sheet, a process that pumps money into financial markets. All of this has been good for stocks.

But eventually investors will have to turn their attention back to the fundamental question of whether profits are going to keep growing, and how fast. And that could make the next few weeks rocky.

“I think we’re going to see a wave of negative guidance on next year’s earnings,” said Ms. Subramanian of Bank of America. “And that might not be great for the market.”

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https://www.nytimes.com/2019/10/14/business/stock-market-earnings-season.html

2019-10-14 07:00:00Z
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WeWork opens new sites at breakneck speed despite cash-burn concerns - Reuters

NEW YORK (Reuters) - WeWork has opened almost as many new locations in the last 3-1/2 months as it did in the whole first half of this year, likely accelerating the speed with which the office-sharing company is burning through cash as increasingly hard-nosed investors scrutinize its prospects for going public.

FILE PHOTO: The WeWork logo is displayed outside of a co-working space in New York City, New York U.S., January 8, 2019. REUTERS/Brendan McDermid/File Photo

According to a Reuters analysis of information on the company’s website, WeWork had 622 sites open in 123 cities on Oct. 10. That compares with its footprint of 528 locations in 111 cities on June 30 that was outlined in the prospectus for its abandoned IPO.

The website also identifies 89 sites as “coming soon” and 117 sites as “just announced” - all new locations that are yet to open.

Altogether, WeWork says on the website that it will soon have 845 locations in 125 cities, but it is unclear whether all those will still open. A WeWork spokesman declined to comment on its plans.

The quickening pace of new office openings adds to the risks for WeWork, a company that has created a global brand for its shared workspace concept but was forced to halt plans to go public on Sept. 30 because of investor concerns about how it was valued and whether its business model is sustainable.

The company is now cutting back, including laying off some employees and closing or selling entities that are not essential to its core operations as it seeks to avoid running out of cash. On Friday, WeWork said it will shut down its WeGrow private school in New York City as it pares peripheral operations.

The 97 new locations WeWork added in the first half of this year on average cost $2.63 million each in design and construction costs, up 38% from the $1.91 million that 82 openings each cost in the first half of 2018, according to the IPO document. It added 94 new locations between the start of July and Oct. 10, according to its website.

Whether the average size of a new location in the latest burst of openings is similar to those in the first half of this year is unclear. A WeWork spokesman declined to comment.

“Investors don’t want to invest in a company with such a high cash-burn rate,” said Gina Szymanski, a portfolio manager at real estate-focused AEW Capital Management LP in Boston. “They have got to slow their growth down and focus a little bit more on profitability.”

BLEEDING CASH

WeWork has only about $2.5 billion of cash on hand as of June 30, according to the prospectus that was issued in August.

It will run out of money in the second quarter of next year if the company’s current trajectory doesn’t change, according to research by AllianceBernstein. Some media reports in recent days said it may run out of cash before the end of the year without a new lifeline.

As well as substantial costs for opening new sites, WeWork’s current operations are also still big loss makers. In the year to June 30, its expenses were $2.9 billion and revenue just $1.54 billion.

IFR reported banking sources as saying on Friday that WeWork is in talks with JPMorgan Chase to seek $1.75 billion in bank financing that would provide it with enough liquidity to see it through to the end of the year. Chase is in talks with other banks to syndicate the letter of credit, it said.

In addition, WeWork is in discussions with banks to issue $3.25 billion in secured and unsecured bonds with warrants, IFR added.

WeWork was locked in negotiations this week with its largest shareholder, Softbank Group Corp, over a new $1 billion investment to help the company go through a major restructuring, according to sources familiar with discussions.

WeWork has certainly slowed new leasing in response to investor feedback, said Szymanski, citing AEW’s analysis of WeWork’s market presence.

The leases for many of the recently opened sites would likely have been signed before August, which was when the company first became a punching bag for investors and analysts critical of how it was being valued and run.

WeWork owner, The We Company, said in the IPO document that it has mitigated expenses by refining its design and construction processes, which included investments in new technology to help WeWork quickly and efficiently develop a workspace. The new technology wasn’t defined and the company declined to comment.

Reporting by Herbert Lash; Additional reporting by Carrie Monahan in New York; Editing by Martin Howell and Daniel Wallis

Our Standards:The Thomson Reuters Trust Principles.

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2019-10-14 05:02:00Z
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The Average Social Security Benefit Is Probably Smaller Than You Think - The Motley Fool

An estimated 44.5 million retired workers receive monthly income in the form of Social Security benefits. If you work and pay Social Security taxes, then chances are, those benefits will be an important source of income for you once your career comes to an end. But if you rely on those benefits too heavily and neglect your savings as a result, you may be in for an unpleasant reality check as soon as your golden years kick off.

Currently, 50% of married seniors and 70% of unmarried seniors get 50% or more of their income from Social Security, while for 21% of married seniors and 45% of unmarried retirees, those benefits represent 90% or more of their income. But when we look at how much money that actually translates into, it's easy to see why Social Security alone isn't enough to sustain the typical senior.

IMAGE SOURCE: GETTY IMAGES.

The average retiree on Social Security today collects $1,471 a month, or $17,652 a year. Meanwhile, the average senior aged 65 and over spends $46,000 a year on living expenses, reports the Bureau of Labor Statistics. Clearly, there's a pretty wide gap between those two numbers, and it's for this reason that planning to live on Social Security alone in retirement is a truly bad idea. If that's your intent, consider this your wakeup call to start building savings and come up with a backup plan.

What will your expenses look like in retirement?

Many people expect their living costs to drop dramatically once they retire, but many seniors don't see all that substantial a decline. And when we think about the things seniors generally spend money on, that makes sense.

Seniors require housing, transportation, food, clothing, utilities, and modest forms of leisure, like cable TV, just like working folks do. Furthermore, retirees tend to face higher healthcare costs than workers, especially when we consider the various out-of-pocket expenses associated with Medicare. And that's why most seniors can't get by on just 40% of their former income, which is what Social Security is designed to pay the average earner. Retirement just plain costs too much money.

The solution? Save as much as you can while you're working. If you start out young, you can get away with contributing smaller amounts to a retirement savings plan and growing your balance with the right investments. If you're already older, you'll need to make more sizable contributions to build a solid level of savings.

Check out the following table, which illustrates how your savings efforts might pan out, depending on the window of time you have to work with and the amount of money you sock away in a retirement plan each month:

Age You Start Saving	Monthly Retirement Plan Contribution	Total Savings by Age 65 (Assumes a 7% Average Annual Return)
30	$400	$663,000
35	$500	$567,000
40	$600	$455,000
45	$700	$344,000
50	$800	$241,000

CALCULATIONS BY AUTHOR.

The less time you give yourself to sock away funds for retirement, the less wealth you stand to amass. In our table, increasing monthly contributions doesn't help compensate for delayed savings. That's because by putting off your savings, you miss out on years of critical investment growth. And if you're wondering about the 7% return used above, it's actually a couple of percentage points below the stock market's average yearly performance.

Of course, building savings isn't the only way to supplement your Social Security benefits. You can also get a part-time job in retirement or monetize a hobby. In fact, your retirement income can come from a variety of sources. Just make sure your plan is not to have all of it come from Social Security.

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https://www.fool.com/retirement/2019/10/13/the-average-social-security-benefit-is-probably-sm.aspx

2019-10-13 13:18:00Z
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