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Senate Democrats prepare to work on Biden infrastructure plan ‘with or without’ Republicans

President Joe Biden is negotiating an infrastructure plan with Senate Republicans, but Majority Leader Chuck Schumer says Democrats are prepared to go it alone.

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U.S. Senate Majority Leader Chuck Schumer (D-NY) touts Senate Democrats legislative accomplishments as he holds a news conference at the U.S. Capitol in Washington, March 25, 2021.

Jonathan Ernst | Pool | Reuters

Senate Democrats plan to forge ahead with crafting a massive infrastructure package next month — regardless of whether Republicans get on board — as they push to pass a bill this summer.

Senators will be out of Washington next week for the Memorial Day holiday. When lawmakers return, Democrats aim to write an infrastructure plan that touches on everything from transportation to broadband, utilities and job training.

“As the President continues to discuss infrastructure legislation with Senate Republicans, the committees will hold hearings and continue their work on the Build Back Better agenda — with or without the support of Republican Senators,” Senate Majority Leader Chuck Schumer, D-N.Y., wrote in a letter to Democrats on Friday. “We must pass comprehensive jobs and infrastructure legislation this summer.”

President Joe Biden has worked with Senate Republicans to see if they can strike a bipartisan deal to revamp American infrastructure. After the latest back-and-forth in their talks, the sides appear far from an agreement on what should go into a bill and how the government should pay for it.

As the White House and Republicans struggle to reach a consensus, some Democrats have called on their party to try to pass a bill without GOP support. Democrats can do so through the budget reconciliation process, which requires a simple majority vote in the evenly split Senate.

Republicans on Thursday sent Biden a $928 billion infrastructure counteroffer. It came in at roughly half of the $1.7 trillion proposal the White House last sent the GOP. The Biden administration first put forward a $2.3 trillion infrastructure plan.

Responding to the offer, White House press secretary Jen Psaki praised “constructive” additions to road, bridge and rail spending. She said the White House “remains concerned” about Republicans’ proposed spending on modernizing railways and transitioning to clean energy, along with the party’s calls to pay for infrastructure with previously passed coronavirus relief funds.

The White House has said it expects nearly all of the aid money to be spent. Redirecting the funds could jeopardize support for small businesses and hospitals, Psaki said.

Despite the lingering differences, the sides expect to continue talks. Biden could meet again with Sen. Shelley Moore Capito, the West Virginia Republican leading negotiations with the White House, as soon as next week.

The parties will have to work through two huge disagreements to strike a deal. First, they have disparate visions of what counts as infrastructure.

The White House wants to include programs such as care for elderly and disabled Americans, which it calls vital for putting Americans back to work and boosting the economy. Republicans want to limit the legislation to areas including transportation, broadband and water.

Biden and Republicans could also struggle to find a compromise on how to pay for the infrastructure plan. The president wants to hike the corporate tax rate to at least 25% — and crack down on corporate tax avoidance overseas and individual tax underpayment at home — to offset the spending.

The GOP has said it will not support changes to its 2017 tax cuts as part of an infrastructure bill. The party slashed the corporate rate to 21% from 35%.

It is unclear how much longer talks will go on if Democrats and Republicans cannot strike a deal. On Thursday, Capito said Republicans “continue to negotiate in good faith.”

In his letter, Schumer noted that he was “encouraged” by the Senate Environment and Public Works Committee advancing a roughly $300 billion bipartisan surface transportation bill this week.

Senate Minority Leader Mitch McConnell, a Kentucky Republican who previously said he would work to fight Biden’s broader economic agenda, said Thursday that his party would continue to engage with the president.

“We’d like to get an outcome on a significant infrastructure package,” he told CNBC.

Democrats passed Biden’s first big-ticket bill, a $1.9 trillion coronavirus relief plan, without a Republican vote in March.

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Source: https://www.cnbc.com/2021/05/28/biden-infrastructure-plan-schumer-says-senate-democrats-will-work-on-bill-in-june.html

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The Fed moves up its timeline for rate hikes as inflation rises

However, the central bank gave no indication as to when it will begin cutting back on its aggressive bond-buying program.

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The Federal Reserve on Wednesday considerably raised its expectations for inflation this year and brought forward the time frame on when it will next raise interest rates.

However, the central bank gave no indication as to when it will begin cutting back on its aggressive bond-buying program, though Fed Chairman Jerome Powell acknowledged that officials discussed the issue at the meeting.

“You can think of this meeting that we had as the ‘talking about talking about’ meeting,” Powell said in a phrase that recalled a statement he made a year ago that the Fed wasn’t “thinking about thinking about raising rates.”

As expected, the policymaking Federal Open Market Committee unanimously left its benchmark short-term borrowing rate anchored near zero. But officials indicated that rate hikes could come as soon as 2023, after saying in March that it saw no increases until at least 2024. The so-called dot plot of individual member expectations pointed to two hikes in 2023.

Though the Fed raised its headline inflation expectation to 3.4%, a full percentage point higher than the March projection, the post-meeting statement continued to say that inflation pressures are “transitory.” The raised expectations come amid the biggest rise in consumer prices in about 13 years.

“This is not what the market expected,” said James McCann, deputy chief economist at Aberdeen Standard Investments. “The Fed is now signaling that rates will need to rise sooner and faster, with their forecast suggesting two hikes in 2023. This change in stance jars a little with the Fed’s recent claims that the recent spike in inflation is temporary.”

Markets reacted to the Fed news, with stocks falling and government bond yields higher as investors anticipated tighter Fed policy ahead, including the likelihood that the bond purchases will slow as soon as this year.

“If you’re going to get two rate hikes in 2023, you have to start tapering fairly soon to reach that goal,” said Kathy Jones, head of fixed income at Charles Schwab. “It takes maybe 10 months to a year to taper at a moderate pace. Then you’re looking at we need to start tapering maybe later this year, and if the economy continues to run a little bit hot, rate hikes sooner rather than later.”

Even with the raised forecast for this year, the committee still sees inflation trending to its 2% goal over the long run.

“Our expectation is these high inflation readings now will abate,” Powell said at his post-meeting news conference.

Powell also cautioned about reading too much into the dot-plot, saying it is “not a great forecaster of future rate moves. “Lift-off is well into the future,” he said.

Powell did note that some of the dynamics associated with the reopening are “raising the possibility that inflation could turn out to be higher and more persistent than we anticipate.”

Powell said progress toward the Fed’s dual employment and inflation goals was happening somewhat faster than anticipated. He particularly noted the sharp rebound in growth that now has the Fed seeing GDP 7% in 2021.

“Much of this rapid growth reflect the continued bounceback in activity from depressed levels, and the factors more affected by the pandemic remain weak but have shown improvement,” he said.

Officials raised their GDP expectations for this year to 7% from 6.5% previously. The unemployment estimate remained unchanged at 4.5%.

The statement tempered some of the language of previous statements since the Covid-19 crisis. Since last year, the FOMC had said the pandemic was “causing tremendous human and economic hardship across the United States and around the world.”

Wednesday’s statement instead noted the progress vaccinations had made against the disease, noting that “indicators of economic activity and employment have strengthened. The sectors most adversely affected by the pandemic remain weak but have shown improvement.”

Investors were watching the meeting closely for statements about how Fed officials see an economy undergoing rapid expansion since the depths of the pandemic crisis in 2020.

Recent indicators show that in some respects the U.S. is expanding at the fastest rate since World War II. But that growth also has come with inflation, and the central bank has faced pressure from various sources to at least start curtailing the at least $120 billion in bond purchases it is making each month.

At his post-meeting news conference Chairman Jerome Powell noted that Fed officials “had discussions” on the progress made toward the inflation and employment goals relative to the asset purchases, and will continue do do so in the months ahead.

Markets had been looking for the possibility that the committee would address its open-market operations where it provides short-term funding for financial institutions. The so-called overnight repo operations, where banks exchange high-end collateral for reserves, have been seeing record demand lately as institutions look for any yield above the negative rates they are seeing in some markets.

The committee did raise the interest it pays on excess reserves by 5 basis points to 0.15%.

In a separate matter, the FOMC announced that it would extend dollar-swap lines with global central banks through the end of the year. The currency program is one of the last remaining Covid-era initiatives the Fed took to keep global markets flowing.

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“This is not what the market expected,” said James McCann, deputy chief economist at Aberdeen Standard Investments. “The Fed is now signaling that rates will need to rise sooner and faster, with their forecast suggesting two hikes in 2023. This change in stance jars a little with the Fed’s recent claims that the recent spike in inflation is temporary.”

Source: https://www.cnbc.com/2021/06/16/fed-holds-rates-steady-but-raises-inflation-expectations-sharply-and-makes-no-mention-of-taper.html

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Oracle guidance misses expectations, stock drops

Oracle reported better-than-expected results and showed accelerating growth compared with the immediate impact of the coronavirus last year.

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Safra Catz, co-chief executive officer of Oracle Corp.

David Paul Morris | Bloomberg | Getty Images

Oracle shares fell 5% in extended trading on Tuesday after the company offered lower quarterly revenue guidance than expected as it plans to increase capital expenditures to support cloud computing workloads. The guidance came on Oracle’s earnings call after the enterprise software maker issued better-than-expected earnings and faster revenue growth than last quarter.

Here’s how the company did:

  • Earnings: $1.54 per share, adjusted, vs. $1.31 per share as expected by analysts, according to Refinitiv.
  • Revenue: $11.23 billion, vs. $11.04 billion as expected by analysts, according to Refinitiv.

With respect to guidance, Oracle CEO Safra Catz called for 94 cents to 98 cents in adjusted earnings per share and 3% to 5% revenue growth in the fiscal first quarter. Analysts polled by Refinitiv are expecting fiscal first-quarter adjusted earnings of $1.03 per share and the equivalent of 3% revenue growth.

“We expect to roughly double our cloud capex spend in FY 2022 to nearly $4 billion,” Catz said. “We are confident that the increased return in the cloud business more than justifies this increased investment, and our margins will expand over time.”

Revenue rose 8% year over year in Oracle’s fiscal fourth quarter, which ended on May 31, according to a statement. In the prior quarter revenue grew 3%. The accelerating growth benefited from a comparison against the quarter last year when the coronavirus arrived in the U.S. and Oracle’s revenue fell some 6%.

Oracle’s top segment by revenue, cloud services and license support, generated $7.39 billion, which was up 8% and above the FactSet consensus estimate of $7.32 billion in revenue. The company said revenue from its second-generation cloud infrastructure doubled in the quarter, but it did not provide the figure in dollars.

The cloud license and on-premises license segment contributed $2.14 billion in revenue, up 9% and more than the $2.05 billion consensus.

The company’s hardware revenue, at $882 million, was exactly in line with analysts’ estimates, declining 2%.

During the quarter Oracle announced new public-cloud computing options that draw on Arm-based chips, and the U.S. Supreme Court ruled on a longstanding case between Oracle and Google, declaring that Google’s copying of Java code was fair use.

Notwithstanding the after-hours move, Oracle stock is up 26% since the start of the year, while the S&P 500 index is up 13% over the same period.

In May, Barclays analysts lowered their rating on the stock to the equivalent of hold from the equivalent of buy after the price had moved upward as investors rotated out of growth and into value. “To see further relative outperformance a growth acceleration at Oracle is needed, and we don’t have enough tangible data points for this yet,” the analysts wrote.

WATCH: The great tech tug-o-war

Here’s how the company did:

Source: https://www.cnbc.com/2021/06/15/oracle-orcl-earnings-q4-2021.html

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RH beats earnings, hikes outlook as retail rebound boosts high-end home goods; shares jump

Shares of the high-end furniture retailer surged Wednesday after the company beat analysts’ profit and sales estimates for the fiscal first quarter.

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Jason Kempin | Getty Images Entertainment | Getty Images

Shares of the high-end furniture retailer RH surged in extended trading Wednesday after the company beat analysts’ profit and sales estimates for the fiscal first quarter.

RH also hiked its full-year outlook, building on the momentum it’s seeing in the luxury home category, and gave a stronger-than-expected sales forecast for the second quarter.

In a letter to shareholders, Chief Executive Officer Gary Friedman said the remainder of this year “will surely be a tale of two halves” for the retail industry. But he said that “the un-masking of the general public could lead to a Roaring Twenties type of consumer exuberance.”

The company’s stock was last up more than 7%.

Here’s how RH did in the quarter ended May 1 compared with what analysts were anticipating, using Refinitiv estimates:

  • Earnings per share: $4.89 adjusted vs. $4.10 expected
  • Revenue: $861 million vs. $758 million expected

RH’s net income for the fiscal first quarter grew to $130.7 million, or $4.19 per share, compared with a loss of $3.2 million, or 17 cents per share, a year earlier. Excluding one-time adjustments, it earned $4.89 per share, topping expectations for $4.10.

Revenue surged 78% to $861 million from $483 million a year earlier. That also beat expectations for $758 million.

Friedman said that a strong housing and renovation market, a record stock market, low interest rates, and the reopening of the U.S. economy all bode well for the company in the quarters ahead.

RH hiked its fiscal 2021 outlook for revenue growth to a range of 25% to 30%, compared with a prior range of 15% to 20%. Analysts had been looking for a 19.7% increase year over year.

For its fiscal second quarter, RH expects revenue to grow 35% to 37%. Analysts had been looking for a 27.2% jump.

The company is preparing to kick off its global expansion in the spring of 2022, starting with England. To drive future growth, it is also considering expanding into new services, potentially into areas such as landscape architecture. It currently offers interior design consulting.

RH shares are up roughly 37% year to date. The company has a market cap of about $13 billion.

Find the full earnings press release from RH here.

Source: https://www.cnbc.com/2021/06/09/rh-earnings-q1-2021.html

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The Fed moves up its timeline for rate hikes as inflation rises

However, the central bank gave no indication as to when it will begin cutting back on its aggressive bond-buying program.

CNBC2 days ago

Oracle guidance misses expectations, stock drops

Oracle reported better-than-expected results and showed accelerating growth compared with the immediate impact of the coronavirus last year.

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