People crossing street in Tokyo’s busy Akihabara downtown area
Leopatrizi | Istock | Getty Images
Japan commemorated its “Respect for the Aged Day” earlier this week, with the national holiday underscoring a somewhat problematic fact — the country has a record number of elderly citizens to celebrate.
Government data released ahead of the event showed that Japan’s population aged 65 and over had risen to an all-time high of 36.25 million.
While the country’s overall population has been declining, the segment of those aged 65 and above has grown to 29.3% of the population, the highest share of any country, according to the Statistics Bureau of the Ministry of Internal Affairs and Communications.
According to Robert Feldman, senior advisor at Morgan Stanley MUFG Securities, the data fuels further concerns about demographic shifts and a labor crunch in the country.
A survey from Teikoku Databank last month showed that 51% of companies across sectors in Japan feel there is a shortage of full-time employees.
“The labor shortage is just as bad as ever,” said Feldman, noting that it’s especially felt in labor-intensive industries such as food service.
Meanwhile, 2023 saw the number of Japan’s workers aged 65 and over rise for a 20th consecutive year to reach a record 9.14 million, Statistics Bureau data showed.
Feldman warned that as these elderly workers begin to retire from the workforce, there won’t be the same number of young workers stepping up to replace them.
No one-size-fits-all solution
Based on recent trends, Japan’s proportion of elderly people is expected to continue to rise, hitting 34.8% in 2040, according to the National Institute of Population and Social Security Research.
Meanwhile, a recent research note from Morgan Stanley’s Feldman estimated that based on past demographic trends, the total labor force could drop from about 69.3 million in 2023 to about 49.1 million in 2050.
The Japanese government has recognized the economic and societal harms that could result from these trends and has taken steps to counter them.
Several measures have been aimed at reversing the country’s declining birth rates, with Prime Minister Fumio Kishida’s office rolling out policies such as providing more funds for child-rearing and support for more child-care facilities in the country.
Local governments have even taken steps to support public dating apps that are aimed at getting Japanese people to mingle, marry and have children.
Boosting birth rates, however, will do little to solve labor shortages in the short term. So, Japan has been steadily opening up to more migration over recent years, hitting a record 2 million foreign workers in 2024 and eyeing up to 800,000 more over the next five years, according to local media reports.
Replacing expected demographic losses in the country over the next couple of decades will require the country to add foreign-born workers at a much faster rate, in the tens of millions, according to Feldman.
“I don’t think that’s going to happen, which means that a large portion of that drop in the domestic labor force has to be made up by better productivity of those young people who will remain,” Feldman said.
Creating this productivity growth amongst workers will require more capital to invest into workers’ productivity and the implementation of new technologies such as AI and automation, he added.
Earlier this year, Carlos Casanova, senior economist for Asia at UBP, told CNBC’s “Squawk Box Asia,” that AI technology has often been cited as the solution to Japan’s demographic crisis but had so far done little to mitigate it.
“We have a society that is increasingly consumer oriented, so you do want to have a big workforce that is making money and that is spending money in order to sustain economic momentum,” Casanova said.
“AI can be part of the solution, but there are other things that they have to do,” he added, suggesting in addition to immigration, the country works on social and structural changes such as increasing the female workforce participation rate.
An ambulance rushes wounded people to a hospital in Beirut on September 17, 2024, after explosions hit locations in several Hezbollah strongholds around Lebanon amid ongoing cross-border tensions between Israel and Hezbollah fighters.
Anwar Amro | Afp | Getty Images
Pagers used by hundreds of members of the militant group Hezbollah exploded near simultaneously in Lebanon and Syria on Tuesday, killing at least nine people – including an 8-year-old girl — and wounding several thousand, officials said. They blamed Israel in what appeared to be a sophisticated, remote attack.
Among those wounded was Iran’s ambassador to Lebanon. The mysterious incident came amid rising tensions between Israel and Iran-backed Hezbollah, which have exchanged fire across the Israel-Lebanon border since the Oct. 7 attack by Hamas that sparked the war in Gaza.
The pagers that exploded had been newly acquired by Hezbollah after the group’s leader ordered members to stop using cell phones, warning they could be tracked by Israeli intelligence. A Hezbollah official told The Associated Press the pagers were a new brand the group had not used before.
At about 3:30 p.m. local time on Tuesday, pagers started heating up and then exploding in the pockets and hands of those carrying them — particularly in a southern Beirut suburb and the Beqaa region of eastern Lebanon where Hezbollah has a strong presence, and in Damascus, where several Hezbollah members were wounded, Lebanese security officials and a Hezbollah official said. The Hezbollah official spoke on condition of anonymity because he was not authorized to talk to the press.
The AP reached out to the Israeli military, which declined to comment. The explosions came hours after Israel’s internal security agency said it had foiled an attempt by Hezbollah to kill a former senior Israeli security official using a planted explosive device that could be remotely detonated.
Experts said the pager explosions showed signs of being a long-planned operation – though the means were not immediately known. Investigators had no immediate word on how the pagers were detonated or if explosives had somehow been sneaked into each pager.
Ambulances rush wounded people to a hospital in the southern Lebanese city of Saida on September 17, 2024.
Mahmoud Zayyat | Afp | Getty Images
Whatever the means, it targeted an extraordinary breadth of people with hundreds of small explosions — all at once, wherever the pager carrier happened to be — that left some maimed.
One video circulating online showed a man picking through produce at a grocery store when the bag he’s carrying at his hip explodes, sending him sprawling to the ground and bystanders running. AP photographers at area hospitals said the emergency rooms were overloaded with patients. Some had missing hands or chunks blown out of their legs near the pocket area.
Lebanon’s health minister, Firas Abiad, said at least nine people were killed, including an 8-year-old girl, and 2,750 wounded — 200 of them critically — by the explosions. Most had injuries in the face, hand, or around the abdomen.
Hezbollah said in a statement that two of its members were among those killed. The Hezbollah official who spoke anonymously identified one of the dead as Mahdi Ammar, the son of one of the group’s members in the Lebanese parliament.
“We hold the Israeli enemy fully responsible for this criminal aggression that also targeted civilians,” Hezbollah said, adding that Israel will “for sure get its just punishment.”
Iranian state-run IRNA news agency said that the country’s ambassador, Mojtaba Amani, was superficially wounded by an exploding pager and was being treated at a hospital.
Previously, Hezbollah leader Hassan Nasrallah had warned the group’s members not to carry cellphones, saying that they could be used by Israel to track their movements and to carry out targeted strikes.
The images seen Tuesday showed signs of detonation, said Alex Plitsas, a weapons expert at the Atlantic Council. “A lithium ion battery fire is one thing, but I’ve never seen one explode like that. It looks like a small explosive charge,” Plitsas said.
That raises the possibility Israel was aware of a shipment of pagers heading to Hezbollah and managed to modify the pagers before delivery, he said.
Another possibility is an electronic pulse “that was sent from afar and burnt the devices and caused their explosion,” said Yehoshua Kalisky, a scientist and senior researcher at the Institute for National Security Studies, a Tel Aviv think tank. “It is not some random action; it was deliberate and known.”
Lebanese army soldiers stand guard near a hospital (not pictured) in Beirut on September 17, 2024, after explosions hit locations in several Hezbollah strongholds around Lebanon amid ongoing cross-border tensions between Israel and Hezbollah fighters.
Anwar Amro | Afp | Getty Images
Israel has a long history of carrying out deadly operations behind enemy lines.
In January, Saleh Arouri, a senior Hamas official, was killed in an airstrike on a Beirut apartment building blamed on Israel. In July, Israel assassinated Hezbollah’s top commander in another airstrike. Hours later, Ismail Haniyeh, Hamas’ supreme leader, died in a mysterious explosion in Iran, also blamed on Israel.
Israel has killed Hamas militants in the past with booby-trapped cellphones and it’s widely believed to have been behind the Stuxnet computer virus attack on Iran’s nuclear program in 2010.
Tuesday’s explosions came at a time of heightened tensions between Lebanon and Israel. Hezbollah and Israeli forces have been clashing near-daily for more than 11 months against the backdrop of war in Gaza between Israel and Hamas, a Hezbollah ally that is also backed by Iran.
The clashes have killed hundreds in Lebanon and dozens in Israel and displaced tens of thousands on both sides of the border. On Tuesday, Israel said that halting Hezbollah’s attacks in the north to allow residents to return to their homes is now an official war goal.
Kelcie Lesko and Tim Khalil remember the moment when they gave up on buying their first home.
It was June 2023, when U.S. homebuyers were scrambling to beat out rising mortgage rates and snatch up what they could from a limited number of units on the market. Amid soaring house prices, many buyers made all-cash offers. Lesko and Khalil, a New Jersey couple, had lost out on about 15 bids on properties in Monmouth County at that point.
“We were just getting blown out of the water,” says Lesko, 28, who works in marketing. They had stretched their original budget from $300,000 to $380,000, and had been offering tens of thousands over list price to keep up with other bids.
Their last offer was a “beautiful” two-bedroom house with lots of space and a backyard, which they sensed “was going to be the one,” says Khalil, 30, a police officer. They offered $380,000 on the $315,000 residence and shook the hand of the seller, who said it was between them and another offer.
When their offer was rejected, “it was like a slap in the face telling us, ‘Wake up, this is just not for you,'” says Lesko.
Kelcie Lesko and Tim Khalil gave up on buying their first home in New Jersey.
Courtesy of Kelcie Lesko and Tim Khalil
They decided to stop looking for a home. Instead, they continue to rent a two-bedroom apartment for just under $3,000 per month.
“We both make good money. We both have good jobs. We’ve both done the right things to prepare us to become homeowners,” says Lesko. “But the way things are with the real estate market right now, I don’t think it’s possible for us to own a home.”
Lesko and Khalil are emblematic of many frustrated would-be buyers in their late 20s to early 40s who, despite doing everything “right,” find themselves priced out of homeownership.
Most members of the millennial generation entered adulthood during the 2008 financial crisis and aftermath. They faced a bleak job market, stagnant wages and mounting student debt, which hindered their ability to save.
As they enter their peak homebuying years, they face a housing shortage that’s driven the median U.S. home price to $412,300. That’s 40% higher than their parents paid in 1990, even after adjusting for inflation.
If they manage to stay ahead of rising costs of living and save enough for a bigger down payment, they’re further squeezed by higher mortgage rates, which have more than doubled since 2022 andincreased monthly payments.
And while buyers must spend more, they often have to lower expectations for what they’ll get: They’re finding that available homes are smaller, farther away or in need of costly repairs.
In conversations with CNBC Make It, millennial buyers describe the trade-offs they face and their feelings of devastation, disappointment and anger that the goalposts keep moving and they can’t seem to win.
First-time homebuyers face a very different real estate market than their parents
Homes have always been a major expense for first-time buyers, including boomers and Gen Xers. What’s changed is that houses — along with college tuition, rent and health-care costs — have become significantly more expensive, even when adjusted for inflation.
In recent years, the average 30-year fixed mortgage rate more than doubled from historic lows of around 3% in 2020 to a high of 7.6% in October 2023. The average has since come down slightly to 6.2%.
“When you look at mortgage costs relative to how much a typical family earns, it’s untenable — there’s not really any way for a middle-class family to afford a home right now if they’re a first-time homebuyer,” says Daryl Fairweather, senior economist at Redfin.
The median house price in the U.S. is now 5.8 times more than the median annual income of $80,000. In 1990, homes cost just two times as much as the median income.
That means mortgage payments are generally bigger, and it takes much longer for millennials to save for a down payment. Depending on location, it now costs $74,000 to $140,000 to put down 20% on a typical U.S. house, not including closing and other costs.
When communications professional Kelly Diehr, 31, and her husband started looking for a Denver-area home in January 2024, they figured a budget of $600,000 would go a long way. That was, after all, the median price for a house in the area at the time.
But the upfront costs of owning are much higher compared with those faced by homebuyers her age in the late 1990s, like her parents’ generation, she says, and the money doesn’t go as far.
“You go into the market, and you realize you have to give up on the ideal home that you thought you were gonna get, because six figures nowadays is nothing to buy a home,” says Diehr.
Kelly Diehr struggled to find an affordable home in Denver.
Courtesy of Kelly Diehr
For $600,000, many of the available homes were over 20 years old, located in less-desirable areas and in need of serious renovations, such as new flooring, kitchens and bathrooms.
When she was growing up, Diehr’s immigrant mother from Brazil “hammered” at the idea of the American Dream — a pillar of which is homeownership, long viewed as a source of stability and independence.
“We start looking and think, ‘OK, we’re making more than our parents, we should be able to get a better home than them right now,'” says Diehr. “For $600,000, you’d think we’d be getting a turn-key home: three bedrooms, all-wood floors, two bathrooms and a decent backyard. And that is absolutely not the case.”
You go into the market, and you realize you have to give up on the ideal home that you thought you were gonna get, because six figures nowadays is nothing to buy a home.
Kelly Diehr
first-time homebuyer
To better compete with other bids, the couple upped their budget by dipping into stock investments. They ended up buying a newly constructed three-bedroom home for $789,000 in April 2024. They were able to negotiate $47,000 in seller credits, which they used to buy down their mortgage interest rate to a more manageable 4.25%.
Diehr feels grateful they were able to make it work, but the trade-off was withdrawing from their retirement savings and spending about $200,000 more than they had originally budgeted.
Many major U.S. cities are only affordable to the highest earners
For many young Americans, big cities like Los Angeles and New York offer the appeal of more job options, better pay, and a chance to meet different people. The rub? Even entry-level homes there can seem reserved for the wealthy.
When Jonathan Ochart, 32, moved from San Antonio to LA in March 2023, he thought he might be able to buy a small condo for $450,000. “One bedroom, 600 to 700 square feet, nothing fancy,” he says.
The founder and CEO of a marketing and public relations company, Ochart was already a homeowner, having purchased a detached, two-bedroom house in San Antonio for roughly $275,000 in 2021. At that time, he was able to secure a 30-year fixed mortgage rate of 2.86% — a far cry from the nearly 8% banks charged in 2023.
Jonathan Ochart gave up on buying a condo in Los Angeles.
Courtesy of Jonathan Ochart
“The only reason I was able to accomplish that was the historically low mortgage rates,” says Ochart, who now earns a net profit of about $100 per month renting out the home.
In LA, the condo listings in Ochart’s price range were far from his preferred neighborhoods and usually needed renovations, or they came with high homeowners association fees as part of a special assessment for repairs. Newer places in his budget turned out to be studio apartments that were closer to 350 square feet, without much closet space.
Ochart could have sold his San Antonio property to increase his budget. But he preferred to keep the home as a fallback option in case he ever had to return to Texas, especially since it was “locked in at a monthly price” that he can afford.
In early 2024, Ochart gave up on buying a condo in LA, where monthly mortgage costs would have been around $3,500 to $4,000. Instead, he found a rental he likes for about $2,100 per month, roughly half of what he would have spent on a home.
It feels “like a Catch-22,” says Ochart: “You can afford places in [smaller] cities that might not have job opportunities, but when you move to a bigger city with job opportunities, you’re priced out.”
You can afford places in [smaller] cities that might not have job opportunities, but when you move to a bigger city with job opportunities, you’re priced out.
The median price of a home in Los Angeles county is just under $960,000, according to Zillow listings data. That’s 14 times the median annual household income of $82,455 in that county, according to the most recent U.S. Census data.
“Compared to the boomers or Gen X generation? It’s apples to oranges. It’s just not a level playing field,” says Ochart about the income now needed to afford a home.
It’s not just big cities that have become unaffordable
The rise in metro-area home prices has had a spillover effect in many mid-sized cities, which saw an influx of buyers from larger metros seeking more space and affordability during the Covid lockdowns in 2020, leading to rapid home price growth during the same period.
These “pandemic darlings,” as they became known, include mid-sized cities like Boise, Idaho; Tacoma, Washington; and Grand Rapids, Michigan. In Grand Rapids, median home prices were on the rise before the pandemic and then soared 54% from 2020 to $285,000 in June 2024, according to Zillow sales data.
Grand Rapids’ swift home price growth has squeezed out local buyers like Timothy Ham, 40, a veteran and network security engineer who had to relocate to Kalamazoo, an hour’s drive away.
Timothy Ham couldn’t find an affordable property in his hometown of Grand Rapids, Michigan.
Courtesy of Timothy Ham
In 2022, Ham struggled to find a one-bedroom rental in Grand Rapids for about $700 a month. For that same amount, he realized he could buy a $100,000 home with a VA loan that didn’t require a down payment.
However, the only affordable places he could find in Grand Rapids were “uninhabitable,” Ham says. Instead, he had better luck in Kalamazoo, where he purchased a two-bedroom house for $79,000, with mortgage payments of $635 per month.
While Ham was able to secure monthly payments well below what most Americans pay, living in Kalamazoo came with trade-offs, like having to drive an hour each way to work. He also says he moved into a “rougher neighborhood” where he hears gunfire “on a regular basis.”
Although he loves Kalamazoo and is happy to be a homeowner, the experience left him frustrated.
“I’m kind of put off that I was born and raised in Grand Rapids, served in the military for 20 years, and it’s like, ‘Now we don’t have a home for you, go somewhere else,'” says Ham. “But at the end of the day, you’ve still got to figure out a solution.”
First-time buyers are now wealthier, more likely to get family help
Taken together, these factors have created an environment where only certain prospective homebuyers succeed.
Americans now need to earn around $111,000 to afford a median-priced home with a 20% down payment — a staggering 50% increase over the past four years, according to Bankrate. To keep up with those prices, 36% of millennial and younger homebuyers rely on family help to cover down payments, up from 18% in 2019, according to Redfin.
The financial support helps them enter the market sooner, secure better mortgage terms and compete more effectively for a limited number of homes — at the expense of lower-income buyers and people without family help.
First-time buyers are increasingly older, too. In the 1980s, Americans tended to buy in their late 20s, but these days the median age is closer to 35, according to the National Association of Realtors. The share of first-time homebuyers has also declined since the 1980s — from roughly half of all buyers down to just under a third in 2023.
That’s largely because millennials must compete with boomers for homes, and that isn’t a fair fight. The average millennial has 30% less wealth at 35 than the average baby boomer did at the same age. And they only have 9.4% of the total U.S. wealth, compared with 51.8% for boomers.
The coming years could be tough for younger buyers, since there aren’t nearly enough propertiesto meet demand. As it stands, there’s a housing shortage of 4 million homes, according to NAR’s most recent estimates. While construction has picked up in recent years, it’s remained below pre-2009 levels due to continued supply shortages, high mortgage rates and a severe deficit of construction workers.
“We will need 1.8 million new housing units for about five consecutive years to remove the housing shortage deficit,” says Lawrence Yun, chief economist at NAR. Until that gap is closed, experts expect prices to keep trending upwards.
Revisiting the American Dream: ‘It just doesn’t make sense to spend all that money’
Nearly 3 in 4 millennials say that owning a home is a key part of the American Dream, the belief that anyone can achieve “success” and upward mobility through hard work.
Millennials who are unable to buy can feel a hit to their sense of selves. Others may stretch their housing budgets to keep up with the Joneses, at the cost of other financial goals like saving for retirement.
“That idea of owning your own land is deeply embedded in the American psyche,” says Ramit Sethi, bestselling author and star of Netflix’s “How to Get Rich.” “It’s underappreciated when it comes to home-purchasing decisions.”
Falling short can feel like a personal failure, says Brad Klontz, a financial psychologist and certified financial planner. That’s because homebuying is often driven by emotions, like the fear of missing out: “Without a doubt, whether it’s the right decision or the wrong decision, you’re being influenced by a bunch of subconscious biases and beliefs.”
That idea of owning your own land is deeply embedded in the American psyche.
Ramit Sethi
star of Netflix’s “How to Get Rich”
Emotional decisions can lead buyers to spend more on housing than they can afford, says Klontz. Indeed, nearly half of current U.S. homeowners have regrets about their purchase, citing unexpected expenses as the No. 1 regret, according to a recent Bankrate survey.
Given how unaffordable homes are, Klontz recommends taking a hard look at the numbers. You might be better off investing your money, rather than using it to try to buy a home, he says: “Where’s it written that in order to have really ‘made it’ you need to be a homeowner?”
“For me, real estate isn’t just financial, it’s also personal,” says Ochart. The home he secured in Texas with a low interest rate gives him a sense of “safety.”
At the same time, he says, “if you don’t love the space, and you don’t love the neighborhood, it just doesn’t make sense to spend all that money that you’ve worked so hard to save.”
While Kelcie Lesko and her husband believe they’re better off not buying a home for now, they remain “devastated” by the state of the real estate market.
Even if interest rates drop, it likely won’t affect housing costs right away. Home prices are expected to rise by 15% to 25% in the next five years, largely driven by the gap between supply and demand, according to Yun, NAR’s chief economist.
For now, Lesko has lost hope that she’ll be a homeowner anytime soon. Without a windfall or generational wealth, “it’s nearly impossible for people our age to buy a home,” she says.
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Former FTX CEO Sam Bankman-Fried, who faces fraud charges over the collapse of the bankrupt cryptocurrency exchange, walks outside the Manhattan federal court in New York City on March 30, 2023.
Amanda Perobelli | Reuters
Prosecutors in the criminal trial against FTX founder Sam Bankman-Fried compared one of the defense’s arguments to a scene in the 1994 film “Dumb and Dumber,” in which actor Jim Carrey says IOUs are “as good as money.”
In a written brief on Thursday to Judge Lewis Kaplan, who’s presiding over the Manhattan trial, assistant U.S. attorneys for the Southern District of New York took issue with several of the jury instructions provided by the defense team.
One specific directive reminded prosecutors of the 29-year-old comedy about two less-than-intelligent friends, played by Carrey and Jeff Daniels, who take a cross-country trip to Colorado to return a briefcase full of money to its owner, though the cash had actually been left as ransom.
“If you find that FTX customers, after depositing funds with FTX, received a credit to transact on the FTX exchange and therefore received the right to withdraw an equivalent amount of funds at a later time upon request, that is insufficient to establish that they were deprived of property,” the jury instruction from the defense says.
Much of the government’s case hinges on billions of dollars that FTX, Bankman-Fried’s crypto exchange, siphoned out of customer accounts and used largely to try and cover up losses at sister hedge fund Alameda Research after cryptocurrency prices plunged. Funds also allegedly went to paying for things such as a $35 million property in the Bahamas and political donations.
Customers were ultimately unable to retrieve much of their money as FTX and Alameda were simultaneously imploding.
The defense, according to prosecutors, is trying to make the claim to the jury that clients still had a credit to the funds they deposited even if the money wasn’t there because it was being used for other things. Prosecutors say the argument is “untethered to the facts of the case” and that a “credit to obtain funds at a later date, if such funds are ultimately available, is clearly not the same, or as valuable, as the money or property itself.”
In a footnote, the prosecution writes, “A popular movie from the 1990s illustrates the point: a briefcase, once filled with money, is not the same as a briefcase later filled with IOUs.” In “Dumb and Dumber,” when the briefcase reaches its owner, it’s filled with paper.
“That’s as good as money, sir,” says Carrey, playing the character Lloyd Christmas.
Actor Jim Carrey.
Filippo Monteforte | AFP | Getty Images
Mark Cohen, Bankman-Fried’s lead defense attorney, didn’t immediately respond to CNBC’s request for comment.
Bankman-Fried, 31, faces seven criminal fraud charges tied to the collapse of his crypto empire late last year. Bankman-Fried, who has pleaded not guilty, could face life in prison if convicted.
The first three weeks of the trial have been highlighted by testimony from Bankman-Fried’s former close friends, who were also top executives at FTX and Alameda and have since turned on him, some through plea deals with the government. The trial is scheduled to resume late next week and extend into November.
On numerous occasions, Judge Kaplan has called sidebar meetings with the lead government attorneys and Bankman-Fried’s lawyers, to discuss their demeanor in the courtroom. Most recently, on Thursday, Kaplan ripped into lawyers from both sides, in particular telling the prosecution that their latest expert witnesses knew nothing specific about important details and yet called Bankman-Fried’s behavior criminal. Both sides were warned to do better and to communicate more with each other.
— CNBC’s Kate Rooney and Dawn Giel contributed to this report.
Disney ‘s (DIS) first-ever breakout of ESPN’s financials is another key step in CEO Bob Iger’s turnaround for the embattled entertainment giant, displaying a stable top line and plenty of room for growth. The ESPN numbers were part of a recast of Disney’s results from the first nine months of its fiscal year 2023 in preparation for a new reporting structure. Effective in the fiscal fourth quarter, which is set to be released on Nov. 8, Disney will report as three separate segments: sports; entertainment, including non-sports streaming and media operations; and experiences, which includes parks and resorts, and consumer products. For the nine months ended July 1, ESPN delivered $12.56 billion in revenue, according to this week’s 8K government filing from Disney. ESPN linear TV networks and ESPN+ streaming make up the bulk of Disney’s new sports segment, which chalked up overall revenue of $13.2 billion from the three months ended Dec. 31, 2022, through July 1, 2023. The new structure largely accounts for breaking sports out of entertainment, which had recasted revenue of $31.11 billion in the first nine months of fiscal 2023. The experiences division, which was basically unchanged in Iger’s segment overhaul, had $24.39 billion during the first three quarters of fiscal 2023. Growing losses in Disney’s linear TV assets may compel the company to sell all or some of them. It’s a portfolio, including ABC on the broadcast side and numerous cable channels. These assets “may not be core to Disney,” Iger said in a July CNBC interview . Treating sports as its own division allows Iger to think about the ESPN channels and ESPN+ in a different way than the company’s other linear networks and streaming properties. The CEO said Disney is open to strategic partners for ESPN that can help with distribution. Disney in August announced a deal with sports book Penn Entertainment to create ESPN Bet. DIS YTD mountain Disney YTD Bringing in new partners “will not be easy,” Morgan Stanley said in a note this week. However, Disney’s sports unit is “starting off on a more stable base than we had expected and should benefit from broadly rising engagement levels across both its live content and shoulder programming,” the analysts explained. Morgan Stanley has an overweight (buy) rating on Disney and a price target of $105 per share. Goldman Sachs, meanwhile, lowered its Disney price target to $125 per share from $128 but maintained its buy rating on the stock. The analysts said in a Thursday note that the stock is at “the point of peak uncertainty” heading into its fiscal fourth-quarter results. The issues facing Disney, says Goldman, are ESPN’s streaming path, a resolution of Hulu ownership with CNBC-parent Comcast , potential asset sales, and improved creative output. Bottom line Linear networks may be in secular decline as more households cut the cord and push to streaming. But the new sports disclosure from Disney proves that live sports have longevity and ESPN is more durable than what the market is crediting Disney. ESPN is clearly outperforming the rest of the traditional TV market, making it even more imperative that it seeks the right partnership with a deep-pocketed company — our dream scenario is Apple (AAPL) after the launch of Vision Pro — and launch its own direct-to-consumer offering and create the most value for Disney shareholders. We’re also encouraged that Disney is on track to achieve the $5.5 billion cost savings target set earlier this year by Iger. We feel confident that the balance sheet is in good shape to buy Hulu and there is still excess capital to do a small dividend. We were initially worried about the debt on Disney’s balance sheet but management has been aggressively paying it down, which puts the company on a more stable financial footing. We’ll look for continued improvement when Disney’s fiscal fourth-quarter earnings come out next month. (Jim Cramer’s Charitable Trust is long DIS, AAPL. See here for a full list of the stocks.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust’s portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY , TOGETHER WITH OUR DISCLAIMER . NO FIDUCIARY OBLIGATION OR DUTY EXISTS, OR IS CREATED, BY VIRTUE OF YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTING CLUB. NO SPECIFIC OUTCOME OR PROFIT IS GUARANTEED.
The Disney+ website on a laptop computer in the Brooklyn borough of New York, US, on Monday, July 18, 2022.
Gabby Jones | Bloomberg | Getty Images
Disney‘s (DIS) first-ever breakout of ESPN’s financials is another key step in CEO Bob Iger’s turnaround for the embattled entertainment giant, displaying a stable top line and plenty of room for growth.
When political operator James Carville said nearly 30 years ago that he’d like to be reincarnated as the bond market because then he “can intimidate everybody,” he couldn’t have known this included the stock investors of 2023. He spoke as a top aide to President Bill Clinton during a previous bond-market crash that was serving to retrain an economy that was just starting to cruise while crimping the administration’s plans for expansive fiscal programs. Stocks had a choppy, enervating year in ’94 before the Federal Reserve pivoted having forestalled an inflation outburst, easing incrementally into a slowing economy in 1995 to help clear the way for the late-’90s boom. Something of a different set-up today, with inflation down but not decisively and the speedy surge in yields the perfect excuse to crystallize investor fears over everything including the durability of the economic expansion, equity valuations, the size of federal deficits, the health of banks and whatever else gets the butterflies fluttering in the gut. While there’s no precise or reliable way that stocks and bonds interact at all times, it’s surely the case that the U.S. stock indexes peaked just as the 10-year Treasury yield began its breakneck surge from 3.7% in late July to a touch of 5% this past Friday. At Friday’s close of 4224 on Friday, the S & P 500 is off 8% from the July high, with its equal-weighted version down 11%. Cyclical stocks have given back much of their accrued outperformance off the October 2022 low and credit spreads have finally started showing a bit of concern – all this despite (or is it because of) persistent upside surprises in the economic data and a budding recovery in corporate-earnings growth. .SPX YTD mountain S & P 500 YTD Yet the S & P was also at about the current level on Sept. 22, when the 10-year was a half-percentage-point lower, as well as on June 2, when it was at 3.7%. So, there is no trustworthy formula for calibrating cross-asset equilibrium. A year ago, the 3% threshold was considered one the stock market could not easily abide. It’s taken as a given in most corners of the investment business that higher rates available on bonds serve mechanically to compress equity valuations. Bank of America equity and quantitative strategist Savita Subramanian says this assumption is “mostly false.” She says that while higher real (inflation-adjusted) yields have broadly served to detract from stock multiples, “the swing factor is earnings and the correlation between rates and [price/earnings ratio] has been minimal historically because higher rates often meant better growth and higher – not lower – P/E.” What’s driving the bond market? It’s been the pace, causes and implied message of the yield surge that has undercut demand for equities in recent months. Extremes in bond volatility are not easily ignored across markets, given that Treasuries are the water in the pipes of the world financial system. The CME Group noted Friday that the 30-year Treasury volatility index just hit its highest level in a decade outside the worst of the Covid market shock. As Federal Reserve Chair Jay Powell himself detailed in a talk on Thursday, there are several factors driving the bond move in unknowable combination and with uncertain implications. The market pricing out imminent-recession risk and a rapid, belated appreciation of the Fed’s “higher-for-longer” message on rates are driving some significant component of the Treasury selloff, by most appearances. The move has occurred without much repricing of the Fed’s peak short-term rate or much of a rise in implied inflation expectations. The psychology around heavy supply of government securities, particularly longer-term maturities, since a July Treasury financing announcement, is also at play. Even though, as Bespoke Investment Group details, there is little historical correspondence between deficits and the level of rates (the short-lived late-’90s Federal surplus occurred alongside 4%-to-6% 10-year yields). Of course, even if long-term yields were rising largely in response to a better-than-expected economy and a patient but resolute Fed, the effect is to have long rates rising much faster than short-term yields, un-inverting the Treasury curve – which is something that historically happened as the economy neared a recession. It’s a tricky interplay of causes, effects and superstitions: A strong economy driving yields higher to test the economy’s resilience, taking mortgage rates to 8% and repricing credit as consumer-savings ebb, feeding a late-cycle narrative a full year after economists surveyed by Bloomberg News reached a 100% probability of a recession within a year. We are now in just about the longest stretch since a peak in the Leading Economic Indicators with the economy not (presumably) in recession, and the gap between LEI and current GDP growth is quite wide. Friday, yields did settle back a bit after another torrid ramp over the prior four days, a welcome moment of relief but perhaps experienced as the horror-film monster seeming to go away with a half-hour of running time left. Bond buying opportunity? At some level, the counterweight to higher yields is higher yields, as investors start to view the current income attractive to lock in now that real rates are near 2.5% on a ten-year look-ahead, better compensation than was available for most of the past two decades. We don’t quite know that level where buyers start to exert more sway, but if nothing else there is now more of a yield buffer available in fixed income against further volatility across a portfolio. As Bespoke laid out last week: “Since 1997, the current level of real yields (eighth decile) generally leads to the highest forwards returns for USD-denominated emerging-markets debt; high yield also tends to outperform. Periods of 6-month real yield change like the one we’re currently in (10y TIPS yields up 100+ bps) represent a 10th decile reading…that leads to above-typical returns across corporates, EM, and stocks. All signs point to the current backdrop being a good place to add risk in fixed income.” Gone unmentioned so far is the plague of atrocities and externalities that are dominating the front pages, spreading public unease and averting investors from risk. For a second straight Friday, the CBOE Volatility Index closed at a weekly high on heavy hedging demand. Gold is up 9% in the two weeks since the attacks on Israel. Typically and eventually, nonspecific worry over global instability or military conflict are buyable by opportunistic investors, though granted this bout comes with one house of Congress crippled by a small minority of the majority party and a prolonged auto strike. The instinct to stack it all on the “too hard to figure out” pile is understandable, no matter how good Netflix’s subscriber growth was last quarter. Which is how the stock market finds itself here, with real or incipient breakdowns in regional banks and transportation stocks, the median S & P 500 component down for the year. Four weeks ago here , as the air was full of predictions of a fourth-quarter rally, I mused: “It’s hard not wonder if the ‘typical seasonal weakness’ idea is so well-known and has played so close to the script this year that investors are leaning unduly on it…When sometimes, for a proper correction to run its course, a bit of fear and price-insensitive liquidation are desirable.” The S & P 500 has gone on to drop a bit further, rally weakly and then roll back toward a five-month low. We haven’t quite seen indiscriminate selling, though hedge funds as a group are now pressing short index bets hard. Broader sentiment is worried but not panicky.. Yet the index enters next week sitting right on potential support at its 200-day moving average; the Fed is done talking for its pre-meeting blackout period and might well be done tightening indefinitely; earnings are coming in well above forecasts even if the market is scoffing at them; the most profitable companies in history in mega-cap tech report results in coming days; the S & P has been up 15 Mondays in a row and, it must be said, the heart of the traditional fourth-quarter seasonal tailwind period is just underway just as many have begun to doubt we’ll enjoy any this year.
How to calculate your Social Security COLA for 2024
There are two ways you can calculate how much your 2024 monthly Social Security check may be, according to Joe Elsasser, a certified financial planner and founder and president of Covisum, a provider of Social Security claiming software.
The best way is to take the amount of your current Social Security check and add back your monthly Medicare Part B premium, if it is deducted from your check.In 2023, the standard monthly Part B premium is $164.90. However, higher-income beneficiaries pay more, including single individuals with more than $97,000 in income and married couples with more than $194,000.
Then, apply the COLA to the entire benefit, including what you are having withheld for taxes. Next, subtract the new Medicare Part B premium for 2024, as well as taxes at the rate you have withheld. Next year, the standard monthly Part B premium will be $174.70. Higher-income individuals with more than $103,000 in income and married couples with more than $206,000 will pay more.
That should give you the size of your benefit for next year, according to Elsasser.
Alternatively, you can do a rough calculation by taking the monthly benefit you’re getting today and multiplying by 1.032.
“It would be a rough calculation, but it’s a reasonable guess,” Elsasser said.
How your 2024 benefit compares to others
The maximum benefit for a retired worker who claims at full retirement age will go up to $3,822 per month in 2024, up from $3,627 per month in 2023.
The average benefit for all retired workers will be $1,907 in 2024, up from $1,848 in 2023, according to the Social Security Administration.
Twitter CEO Jack Dorsey addresses students during a town hall at the Indian Institute of Technology (IIT) in New Delhi, India, November 12, 2018.
Anushree Fadnavis | Reuters
A team behind the decentralized social messaging app Damus, which is backed by Twitter co-founder Jack Dorsey, said on Tuesday that Apple could remove the app from its App Store within 14 days.
Damus said in a tweet that Apple is considering the ban because of the messaging app’s integration with the Lightning Network, a payment protocol that lets users exchange bitcoin directly over the network without needing another app. On Nostr — the underlying platform Damus runs on — these types of payments are known as “zaps.”
The move could stall one plan to ease the use of bitcoin and turn it into a more convenient transnational digital currency.
In its tweet, Damus said that Apple is worried that zaps could be used by content creators to sell digital content on its platform.
Damus shared an image of its Apple App Store review warning that said that Apple “noticed that your app allows users to send ‘tips’ associated with receiving content from digital content creators with a mechanism other than in-app purchase.”
Apple has a long history of prohibiting app makers from using in-app payments to sell additional content or add-ons, unless those payments go through Apple, which takes a 30% cut.
But Damus said Apple is misunderstanding the role of zaps.
Dorsey, who is also the CEO of payments company Block (formerly Square), tweeted support for Damus, alleging that the tech giant is misunderstanding “how this feature works and what it’s for,” and called for Apple CEO Tim Cook to reconsider removing Damus from the App Store.
“It’s a critical part of the future of the internet,” Dorsey said. “It has the capacity to bring people around the world into the economy without the traditional gatekeepers.”
Dorsey is a cryptocurrency adherent, and Block has made several big bets on cryptocurrency, including a system to help people “mine” bitcoin — that’s the process of running resource-intensive computer programs to validate bitcoin transactions and create new coins.
In another tweet, Damus said that Apple contacted the team and “scheduled a call to discuss the role of zaps in more detail.”
Apple did not immediately respond to a CNBC request for comment.
Last December, Dorsey donated 14 bitcoins worth roughly $245,000 at the time to the team building Nostr, which is a decentralized social media initiative intended to not be owned by any particular leader or commercial entity. Nostr users can maintain their identities on multiple Nostr-powered apps like Damus and exchange bitcoin with each other via the Lightning network.
Dorsey, one of the co-founders and former CEO of Twitter, has been championing decentralized apps as the next evolution of social media, in which users can speak their minds and not be forced to adhere to policies of social media operators.
A lot of these platforms have no algorithms to recommend particular content — a sore point for some Twitter users who complain they’re seeing less relevant content in the “For You” tab of Twitter since Elon Musk took over. They don’t sell ads, and don’t collect and sell user data, which are the classic ways that social networks make money.
Dorsey is currently also a backer of the Bluesky messaging app, which is built on top of a decentralized networking technology called the AT Protocol. Bluesky, which is still only available to users via invitations, has grown in popularity as users flee Twitter amid a rise of hate speech and bugs, but it still much smaller than the popular messaging app, which Tesla CEO Musk bought last fall.
Meta Platforms ‘ vision to sell a future where people work, play and mingle in a virtual world may finally be getting its long-overdue validation thanks to an unlikely partner. Apple on Monday unveiled its highly anticipated mixed reality product, known as Vision Pro , at its annual Worldwide Developers Conference . The product, expected to hit the market in 2024 at a steep $3,499 price tag, allows users to interact with content and popular iPhone apps without the controller. The launch from Apple comes at a time when interest in the metaverse appears to have dwindled, and investors are putting their hopes on the promise of artificial intelligence. It’s been more than a year and a half since Meta Platforms made its bet. So confident in the bright future of the metaverse, Facebook rebranded itself as Meta Platforms in 2021 to better reflect its vision beyond social media. At the time, CEO Mark Zuckerberg called the metaverse the “next frontier,” and likened it to social networking when the company first launched. With Meta’s big bet, brands like Walmart , Roblox and popular casual dining chain Chipotle Mexican Grill , quickly hopped on the trend . Even luxury brands like Gucci entered the virtual world. That hype soon died down as the economy slowed and technology stocks hit a wall, leaving many investors questioning Meta’s gamble and whether the masses would adopt this vision. More than a year and a half later Apple’s metaverse entry may finally offer the much-needed support to Meta’s overambitious vision, and lure once skeptical investors back to the virtual world. “It’s a huge validation point,” said Deepwater Asset Management’s Gene Munster. “The big picture metaverse takes a step forward.” So far this year, Meta’s made a comeback from its 2022 selloff, with shares up more than 120%. But those gains mostly stem from the company’s focus on cost cutting and AI, rather than the metaverse’s potential. Apple’s bet on a ‘grand slam’ For years, Wall Street’s viewed Apple as a technology bellwether. It’s one of the largest companies worldwide, and bigger than many overseas markets . It makes up nearly 7.5% of the S & P 500’s weighting, with its market capitalization closing Friday at about $2.85 trillion. Earlier this week, shares hit an all-time high before retreating. “You’re so large, you can’t have new products that do just okay,” said Paul Meeks, portfolio manager at Independent Solutions Wealth Management. “Everything you do has got to be a grand slam home run to keep the stock valuation up.” Wall Street and investors alike expect a relatively muted market launch. JPMorgan’s Samik Chatterjee, said in a recent note that he isn’t bracing for significant volumes, although he views the headset as a “potential catalyst” for the industry long term. “Apple has proven in the past that consumer engagement can deliver willingness to pay premium pricing and Apple’s focus is clearly to hit an home run on consumer engagement as opposed to volumes with the first device in what admittedly will be a multi-year journey for the platform,” he wrote. Advisors Capital Management’s JoAnne Feeney viewed the first iteration as geared toward a smaller market of wealthier, ardent fans and developers. She expects newer, more affordable models at different price points further down the road, similar to the iPhone’s trajectory. Rolling out the product, even at the steep price, incentivizes the developer community to build out apps for consumers, and allows Apple to defer costs incurred with app creation, the portfolio manager said. This should also generate similar excitement around Meta’s headset platform, according to Deepwater’s Munster. Facing a tough macro backdrop Apple’s entry into virtual reality couldn’t come at a more inconvenient time, as lingering recession fears and still-high inflation pinch consumer pockets and stamp out big-ticket purchases. With the company — and metaverse vision — so dependent on consumer adoption, this creates a difficult near-term setup, Meeks said. But this backdrop could prove a major boon for Meta’s Quest Pro, at less than a third of the price, D.A. Davidson’s Tom Forte highlighted in a cent downgrade of Apple . While some fear the steep price tag threatens to scare off most buyers, many investors draw similarities to previous product launches. When the iPhone debuted in 2007, investors scoffed at the high sticker price, with a similar phenomenon occurring during Vision Pro’s reveal. More than 15 years after the iPhone’s release, Apple’s captured a major chunk of the worldwide smartphone market, while managing to convince consumers to wait hours in winding lines for the latest models. The iPhone 14 starts at a whopping $799. Apple may not always offer the most consumer-friendly price point, but it always enters a market with top-tier design, oftentimes doing so later than competitors as it builds out features, Feeney said. Bernstein’s Toni Sacconaghi highlighted the company’s strong track record of creating new markets through its products, in a recent note. Its entry into the smartphone, wireless and music player industry, to name a few, increased the market tenfold within five years, he said. “On net, we believe AR adoption will be a long-term journey and not financially material to Apple in the near term,” he said.
Former FTX chief executive Sam Bankman-Fried (C) arrives to enter a plea before US District Judge Lewis Kaplan in the Manhattan federal court, New York, January 3, 2023.
Ed Jones | AFP | Getty Images
Federal prosecutors are attempting to bar indicted FTX co-founder Sam Bankman-Fried from using encrypted messaging software, citing efforts that may “constitute witness tampering,” according to a letter filed in Manhattan federal court Friday.
Bankman-Fried reached out to the “current General Counsel of FTX US who may be a witness at trial,” prosecutors said. Ryne Miller, who was not identified by name in the government filing, is the current counsel for FTX US, and a former partner at Kirkland & Ellis.
The government claims that Bankman-Fried wrote to Miller via Signal, an encrypted messaging app, on Jan. 15, days after bankruptcy officials at crypto exchange disclosed the recovery of more than $5 billion in FTX assets.
“I would really love to reconnect and see if there’s a way for us to have a constructive relationship, use each other as resources when possible, or at least vet things with each other,” Bankman-Fried allegedly told Miller.
Bankman-Fried has also been in contact with “other current and former FTX employees,” the filing said. Federal prosecutors allege that Bankman-Fried’s request suggests an effort to influence the witness’s testimony, and that Bankman-Fried’s effort to improve his relationship with Miller “may itself constitute witness tampering.”
Both Miller and a representative for Bankman-Fried declined to comment.
In restricting Bankman-Fried’s access to Signal and other encrypted messaging platforms, the government cites a need to “prevent obstruction of justice.” Federal prosecutors claim that Bankman-Fried directed Alameda and FTX through Slack and Signal, and ordered his employees set communications to “autodelete after 30 days or less.”
Citing previously undisclosed testimony from ex-Alameda CEO Caroline Ellison, the government claimed that Bankman-Fried indicated “many legal cases turn on documentation and it is more difficult to build a legal case if information is not written down or preserved.” Ellison pled guilty to multiple charges of fraud and has been cooperating with the U.S. Attorney’s efforts to build a case against Bankman-Fried.
Bankman-Fried pled not guilty to eight charges in connection with the collapse of his multibillion-dollar crypto empire, FTX. He is due in federal court in October, after being released on $250 million bond.
