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Powell stresses importance of lending programs, calls economic outlook ‘extraordinarily uncertain’

Many of the key programs that the central bank has used since March are expiring at the end of the year….

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Federal Reserve Chairman Jerome Powell emphasized the importance of the lending programs it has deployed during the coronavirus pandemic, telling senators in testimony to be delivered Tuesday that they’ve been integral in keeping the economic fallout from being worse.

Treasury Secretary Steven Mnuchin, who will appear twice on Capitol Hill with Powell this week, has said that the legislation that enabled the programs does not permit them to run past Dec. 31. The two officials are speaking as part of required updates on the CARES Act funding initiatives Congress passed to aid the economy through the pandemic.

Many of the key programs that the central bank has used since March are expiring at the end of the year, and the Fed will be forced to return the funding that supports them.

“These programs serve as a backstop to key credit markets and have helped restore the flow of credit from private lenders through normal channels,” Powell said in prepared remarks for the Senate Finance Committee. “We have deployed these lending powers to an unprecedented extent.”

In separate remarks, Mnuchin said the $455 billion in funding directed to the Fed would be better used for other purposes. The Fed has said it would have preferred to continue the programs into next year.

“Based on recent economic data, I continue to believe that a targeted fiscal package is the most appropriate federal response. I strongly encourage Congress to use the $455 billion in unused funds from the CARES Act to pass an additional bill with bipartisan support,” Mnuchin said. “The Administration is standing ready to support Congress in this effort to help American workers and small businesses that continue to struggle with the impact of COVID-19.”

The Fed programs in question helped it buy corporate bonds, provided financing to small- and medium-sized businesses through the Main Street lending facility, and channeled money to state and local governments.

While Powell said the programs “helped unlock almost $2 trillion of funding,” the actual use of them was much smaller than that – a little over $100 billion in all, though the Fed has stressed that their mere presence provided important confidence to markets.

Addressing the economy, Powell provided a lukewarm outlook that he again said will be dependent on the progress of the virus, which has been spreading rapidly lately.

“As we have emphasized throughout the pandemic, the outlook for the economy is extraordinarily uncertain and will depend, in large part, on the success of efforts to keep the virus in check,” he said. “The rise in new COVID-19 cases, both here and abroad, is concerning and could prove challenging for the next few months. A full economic recovery is unlikely until people are confident that it is safe to reengage in a broad range of activities.”

Powell called the recent news on vaccines “very positive” for the medium term, but said “significant challenges and uncertainties remain, “including timing, production and distribution, and efficacy across different groups.”

“It remains difficult to assess the timing and scope of the economic implications of these developments with any degree of confidence,” he added.

Powell repeated that the Fed stands at the ready to use its policy tools. In addition to the lending and liquidity programs, the Fed has cut its benchmark borrowing rate to near zero and is buying at least $120 billion of bonds a month.

The Fed chair will be able to continue using a handful of other programs aimed mainly at keeping markets functioning with money not tied to the CARES Act.

In separate remarks, Mnuchin said the $455 billion in funding directed to the Fed would be better used for other purposes. The Fed has said it would have preferred to continue the programs into next year.

Source: https://www.cnbc.com/2020/11/30/powell-stresses-importance-of-lending-programs-calls-economic-outlook-extraordinarily-uncertain.html

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International: Top News And Analysis

CNBC International is the world leader for news on business, technology, China, trade, oil prices, the Middle East and markets.

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Source: https://www.cnbc.com/us-top-news-and-analysis/

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Earnings

Corporate Company Earnings, Find Earnings Per Share and Earnings History Online

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Source: https://www.cnbc.com/earnings/

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Nike earnings and sales beat estimates as retailer books record revenue in North America

Nike on Thursday reported fiscal fourth-quarter earnings and sales that topped analysts’ estimates, fueled by record revenue in North America.

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A man walks in front of Nike products exhibit, on February 22, 2021 in New York City.

John Smith | Corbis News | Getty Images

Nike on Thursday reported fiscal fourth-quarter earnings and sales that topped analysts’ estimates, fueled by record revenue in its largest market, North America.

It also offered a better-than-expected sales outlook for the upcoming year, driven by optimism around its women’s category, apparel business and Jordan brand.

Nike continues to benefit from consumers seeking out comfortable clothing to wear for workouts but also around the house. Even as people return to schools, offices and other social settings, many are still searching for relaxed options such as sneakers and stretchy pants.

Nike also saw a boost to its wholesale business — something that was largely inactive a year earlier during the Covid pandemic, when shopping malls and department stores had to temporarily shut their doors and put orders for merchandise on pause. Some of Nike’s key wholesale partners include Dick’s Sporting Goods, Foot Locker and JD Sports.

Nike shares jumped more than 12% in after-hours trading.

Here’s how the company did during its fiscal fourth quarter, compared with what analysts were anticipating, using Refinitiv estimates:

  • Earnings per share: 93 cents vs. 51 cents expected
  • Revenue: $12.34 billion vs. $11.01 billion expected

Nike’s net income for the period ended May 31 rose to $1.5 billion, or 93 cents per share, compared with a loss of $790 million, or 51 cents per share, a year earlier. That topped analysts’ forecast of 51 cents per share, using Refinitiv data.

Total revenue rose to $12.34 billion from $6.31 billion a year earlier, topping estimates for $11.01 billion. Sales were aided by the company selling more goods at full price and relying less on markdowns.

In North America, Nike’s biggest market, sales more than doubled to a record $5.38 billion as the company surged from a year earlier when the Covid pandemic was hitting the retail industry the hardest. The region’s sales were up 29% on a two-year basis.

In Greater China, sales were up just 17% at $1.93 billion. Though China is typically one of the fastest-growing markets for Nike, consumers in China have threatened a boycott after some Western brands including Nike expressed concern about allegations of forced labor in Xinjiang.

Management said Thursday that Nike is seeing improvement in China sequentially month by month.

“Building on our 40-year history in Greater China, we continue to invest in serving consumers with the best products Nike has to offer in locally relevant ways,” CFO Matt Friend said during a post-earnings conference call.

Digital sales were up 41% compared with the prior year and rose 147% compared with the same period in 2019.

The company said its membership model is helping to fuel its e-commerce business. Online purchases from Nike members, who receive first access to exclusive products and other perks, hit a record $3 billion during the fourth quarter. Nike said it now has more than 300 million members globally.

“Fueled by our momentum, we continue to invest in innovation and our digital leadership to set the foundation for Nike’s long-term growth,” said Nike CEO John Donahoe.

In fiscal 2022, Nike is expecting revenue to grow a low double-digit percentage, surpassing $50 billion. Analysts were looking for annual revenue of $48.5 billion.

The company anticipates the first half of the year to grow faster than the second half, Friend said.

“It’s important to note as we normalize our post-pandemic business and continue to reshape the marketplace, we do not expect quarter-by-quarter growth to be linear,” he said.

Nike also anticipates supply chain delays and higher logistics costs will persist throughout much of fiscal 2022. The headaches have been plaguing much of the retail industry for months now. A shortage of containers and a dearth of truck drivers, among other factors, have stalled merchandise from getting from ports to warehouses to shoppers’ homes.

Nike shares are down more than 5% year to date. The company has a market cap of $211 billion.

Find the full earnings press release from Nike here.

Nike continues to benefit from consumers seeking out comfortable clothing to wear for workouts but also around the house. Even as people return to schools, offices and other social settings, many are still searching for relaxed options such as sneakers and stretchy pants.

Source: https://www.cnbc.com/2021/06/24/nike-nke-q4-2021-earnings.html

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