Buy this retailer secretly buying back its stock, Bank of America says

US Top News and Analysis 

RH ‘s acclerated share repurchases over the last few weeks is boosting Bank of America’s confidence in the home furnishings retailer. Analyst Curtis Nagle reiterated his buy rating on the stock in a note to clients Wednesday, highlighting that the company repurchased nearly $400 million of its shares, the largest buyback since 2017. It brings the yearly total to an estimated $676 million. “We view the increased buybacks as a potential sign of increased confidence in the business by RH senior leadership,” Nagle wrote. “While trends are not likely to have materially changed since RH reported 3Q results on December 9, RH’s CEO did state that he was ‘never more excited about our future’ and shares are only trading at 14.5x 2023 EPS.” Shares of RH suffered in 2022, falling 50% as investors veered out of consumer discretionary stocks. The bank’s $338 price target implies 22% upside from Wednesday’s close. Despite near-term headwinds, Nagle expects RH to experience double-digit sales growth and greater than $30 in earnings per share over the next two to three years. The opening of the first international gallery should also offer new channels, he added. “While trends are likely to remain challenged near term on macro uncertainty and pressure from a housing downturn, RH is a proven share taker with pricing power and ample initiatives to drive long-term growth,” he said. — CNBC’s Michael Bloom contributed to this report.

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Biden's expected nicotine rule brings failed 1920s Prohibition to 2023

When it comes to public health, we should follow the facts and science, as opposed to political posturing. If history has taught us anything, it’s that prohibition is rarely the answer when addressing a public health problem. Outright bans of products tend to produce the opposite result of their intent, spurring more product consumption and fueling unregulated black markets. Unfortunately, this is the approach the Food and Drug Administration (FDA) is taking when it comes to adults over 21 consuming tobacco products.

Just look at the early 1920s, when the average annual per capita consumption of hard liquor shot up 11.64 percent during the national prohibition of alcohol. Not only were people consuming more, but the product they were consuming was more potent. It’s estimated that the potency of Prohibition-era products distributed by underground markets was more than 150 percent of the potency of products produced either before or after Prohibition.

So, when President Biden recently announced a plan to publish a proposed rule in May 2023 that could eliminate nearly 98 percent of the nicotine found in cigarettes, it’s difficult not to see this as a 21st-century “Prohibition.” We know it didn’t work for alcohol, so why does this administration think banning nicotine in cigarettes will be different?

No one wants kids smoking, but the most recent National Youth Tobacco Survey by the FDA and Centers for Disease Control and Prevention (CDC) shows combustion cigarette use among adolescents is trending even further downward, with only 1.5 percent of students now reporting consumption of traditional cigarettes since Congress passed a law raising the smoking age to 21 in 2019. Instead of addressing the core concern of youth e-cigarette use, this proposed rule only stands to pull the rug out from under more than 30 million adults, forcing them to essentially quit smoking cold turkey or — much like during Prohibition — get their fix through illicit markets. 

In response to cigarette tax hikes in New York City alone, over half the cigarettes smoked are now smuggled. Can you imagine the impact Biden’s federal proposal would have nationwide? Surging black-market sales lead to more funding for organized crime and less for “mom-and-pop” corner stores. In addition, the illicit tobacco market has been found to fund terrorist organizations overseas — so it wouldn’t be surprising to see a cigarette ban directly correlated to more funding for terrorist groups such as Hamas and Hezbollah. 

Instead of pushing for prohibition, the administration should implement harm-reduction tactics for cigarettes, similar to how they’ve addressed marijuana and opioid use. Harm reduction is proven to work. For example, when it comes to combating the HIV crisis, cities that have needle and syringe programs have an average annual decrease in HIV prevalence of 18.6 percent, compared with an annual average increase of 8.1 percent in cities without these programs. 

The Biden administration could use the $712 million annually given to the Center for Tobacco Products to educate adults on alternatives to cigarettes. Countries such as Japan, Britain and Sweden have done so and have seen significant drops in cigarette consumption as adults have transitioned. Or, if Biden wants to really get serious about reducing nicotine usage, he should encourage the FDA to exercise the authority given to it by Congress to better regulate synthetic nicotine, the main ingredient in e-cigarette products such as youth-favorite Puff Bar.

Prohibition will not lead to smoking cessation, but it could spur more illicit cigarette consumption and even raise national security concerns. It’s time to enforce the laws we have on the books and apply harm reduction approaches universally.

Richard Marianos, an adjunct professor at Georgetown University, is a senior law enforcement consultant, having served more than 27 years with the U.S. Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF). He was assistant director in the Office of Public and Governmental Affairs and Special Agent in Charge of ATF’s Washington Field Division.  

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CVS and Walgreens plan to sell abortion pill mifepristone at pharmacies after FDA rule change

US Top News and Analysis 

Mifepristone (Mifeprex), one of the two drugs used in a medication abortion, is displayed at the Women’s Reproductive Clinic, which provides legal medication abortion services, in Santa Teresa, New Mexico, on June 15, 2022.
Robyn Beck | AFP | Getty Images

Walgreens and CVS will sell the prescription abortion pill mifepristone after the Food and Drug Administration this week dropped a long-standing rule that prevented drug stores from doing so.

The decision by the two largest drug store chains in the U.S. will significantly expand access to mifepristone in states where abortion is legal. The companies cannot offer the pill in states that have completely banned abortion in the wake of the Supreme Court decision that overturned Roe v. Wade.

The FDA on Tuesday changed its regulations to allow retail drug stores to dispense mifepristone so long as they complete a certification process. The agency dropped a long-standing rule that required patients to obtain the abortion pill in-person at clinics, hospitals and other certified health-care providers.

Walgreens plans to get certified and is working through the registration and training of its pharmacists to dispense mifepristone consistent with federal and state law, spokesperson Fraser Engerman said. CVS also plans to get certified in states where it is legal to do so, spokesperson Amy Thibault said.

This means patients in many parts of the U.S. will effectively be able to obtain mifepristone like other prescription medications, either in-person at a retail pharmacy or through the mail. Patients will still need to obtain their prescription from a certified health-care provider.

Mifepristone has become a central flashpoint in the political battle over abortion at the state level in the wake of the Supreme Court overturning Roe v. Wade. Several conservative groups have asked a federal court in Texas to overturn the FDA’s approval of mifepristone.

Mifepristone is the most common way to terminate a pregnancy in the U.S. Some 51% of abortions were performed with mifepristone in 2020, according to the Centers for Disease Control and Prevention.

The FDA first approved mifepristone more than 20 years ago in 2000 as a method to terminate early pregnancies, but the pill long had strict regulations around how it could be dispensed to patients. Medical organizations such as the American College of Obstetricians and Gynecologists had long argued that those regulations lacked a scientific basis and were rooted in politics.

Mifepristone is approved to end a pregnancy through the 10th week. It is used in combination with another pill called misoprostol. Mifepristone stops the pregnancy from continuing and misoprostol induces contractions that empty the uterus.

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Sitting ducks? Russian military flaws seen in troop deaths

KYIV, Ukraine (AP) — The Russian military’s top brass came under increasing scrutiny Wednesday as more details emerged of how at least 89 Russian soldiers, and possibly many more, were killed in a Ukrainian artillery attack on a single building.

The scene last weekend in the Russian-held eastern Ukrainian town of Makiivka, where the soldiers were temporarily stationed, appears to have been a recipe for disaster. Hundreds of Russian troops were reportedly clustered in a building close to the front line, well within range of Ukraine’s Western-supplied precision artillery, possibly sitting close to an ammunition store and perhaps unwittingly helping Kyiv’s forces to zero in on them.

It was one of the deadliest single attacks on the Kremlin’s forces since the war began more than 10 months ago and the highest death toll in a single incident acknowledged so far by either side in the conflict.

Ukraine’s armed forces claimed the Makiivka strike killed around 400 Russian soldiers housed in a vocational school building. About 300 more of them were wounded, officials alleged. It wasn’t possible to verify either side’s claims due to the fighting.

The Russian military sought to blame the soldiers for their own deaths. Gen. Lt. Sergei Sevryukov said in a statement late Tuesday that their phone signals allowed Kyiv’s forces to “determine the coordinates of the location of military personnel” and launch a strike.

Emily Ferris, a research fellow on Russia and Eurasia at the Royal United Services Institute in London, told The Associated Press it is “very hard to verify” whether cellphone signaling and geolocation were to blame for the accurate strike.

She noted that Russian soldiers on active duty are forbidden from using their phones — exactly because there have been so many instances in recent years of their being used for targeting, including by both sides in the Ukraine war. The conflict has made ample use of modern technology.

She also noted that blaming the soldiers themselves was a “helpful narrative” for Moscow as it helps deflect criticism and steer attention toward the official cellphone ban.

Russian President Vladimir Putin sought to move the conversation along, too, as he took part via video link in a sending-off ceremony Wednesday for a frigate equipped with the Russian navy’s new hypersonic missiles.

Putin said the Zircon missiles that the Admiral Gorshkov frigate was carrying were a “unique weapon,” capable of flying at nine times the speed of sound and with a range of 1,000 kilometers (620 miles). Russia says the missiles can’t be intercepted.

Meanwhile, away from the battlefields, France said Wednesday it will send French-made AMX-10 RC light tanks to Ukraine — the first tanks from a Western European country — following an afternoon phone call between French President Emmanuel Macron and Ukrainian President Volodymyr Zelenskyy on Wednesday.

The French presidency didn’t say how many tanks would be delivered and when. The NATO member has given Ukraine anti-tank and air defense missiles and rocket launchers.

Later Wednesday, President Joe Biden confirmed that the U.S. is considering sending Bradley Fighting Vehicles to Ukraine. The Bradley is a medium armored combat vehicle that can carry about 10 personnel, or be configured to carry additional ammunition or communications equipment.

The Pentagon has already provided Ukraine with more than 2,000 combat vehicles, including 477 Mine Resistant Ambush Protected Vehicles and more than 1,200 Humvees.

The weekend Makiivka strike seemed to be the latest blow to the Kremlin’s military prestige as it struggles to advance the invasion of its neighbor.

But Ferris, the analyst, said “there should be a bit of caution around leaning too heavily on this (attack) as a sign of (the) Russian army’s weakness.”

As details of the strike have trickled out in recent days, some observers detected military sloppiness at the root of so many deaths.

U.K. intelligence officials said Wednesday that Moscow’s “unprofessional” military practices were likely partly to blame for the high casualties.

“Given the extent of the damage, there is a realistic possibility that ammunition was being stored near to troop accommodation, which detonated during the strike, creating secondary explosions,” the U.K. Defense Ministry said on Twitter.

In the same post, the ministry said the building struck by Ukrainian missiles was little more than 12 kilometers (7.5 miles) from the front line, within “one of the most contested areas of the conflict,” in the partially Russian-occupied Donetsk region.

“The Russian military has a record of unsafe ammunition storage from well before the current war, but this incident highlights how unprofessional practices contribute to Russia’s high casualty rate,” the update added.

The Russian Defense Ministry, in a rare admission of losses, initially said the strike killed 63 troops. But as emergency crews searched the ruins, the death toll mounted. The regiment’s deputy commander was among the dead.

That stirred renewed criticism inside Russia of the way the broader military campaign is being handled by the Ministry of Defense.

Vladlen Tatarsky, a well-known military blogger, accused Russian generals of “demonstrating their own stupidity and misunderstanding of what’s going on (among) the troops, where everyone has cellphones.”

“Moreover, in places where there’s coverage, artillery fire is often adjusted by phone. There are simply no other ways,” Tatarsky wrote in a Telegram post.

Others blamed the decision to station hundreds of troops in one place. “The cellphone story is not too convincing,” military blogger Semyon Pegov wrote. “The only remedy is not to house personnel en masse in large buildings. Simply not to house 500 people in one place but spread them across 10 different locations.”

Unconfirmed reports in Russian-language media said the victims were mobilized reservists from the region of Samara, in southwestern Russia.

The Institute for the Study of War saw in the incident further evidence that Moscow isn’t properly utilizing the reservists it began calling up last September.

“Systemic failures in Russia’s force generation apparatus continue to plague personnel capabilities to the detriment of Russian operational capacity in Ukraine,” the think tank said in a report late Tuesday.

Ferris, of the Royal United Services Institute, said the Makiivka strike shows the Russian army is more interested in growing its number of troops, not in training them in wartime skills.

“That’s really how Russia conducts a lot of its warfare — by overwhelming the enemy with volume, with people,” she said. “The Kremlin view, unfortunately, is that soldiers’ lives are expendable.”

In a grinding battle of attrition, Russian forces have pressed their offensive on Bakhmut in Donetsk despite heavy losses. The Wagner Group, a private military contractor owned by Yevgeny Prigozhin, a millionaire businessman with close ties to Putin, has spearheaded the Bakhmut offensive.

U.S. intelligence officials have determined that convicts Wagner pulled from prisons accounted for 90% of Russian casualties in fighting for Bakhmut, according to a senior administration official who requested anonymity to discuss the finding.

The White House said last month that intelligence findings showed Wagner had some 50,000 personnel fighting in Ukraine, including 40,000 recruited convicts. The U.S. assesses that Wagner is spending about $100 million a month in the fight.

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Kozlowska reported from London. Aamer Madhani in Washington contributed to this report.

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Follow the AP’s coverage of the war at https://apnews.com/hub/russia-ukraine

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Asia shares up as sentiments boosted by Fed minutes, US jobs

TOKYO (AP) — Asian shares are mostly higher following a rally on Wall Street as investors assessed minutes from the Federal Reserve’s latest meeting of policymakers and welcomed encouraging data on U.S. jobs.

Worries over China’s economic slowdown were weighing on regional sentiment.

Japan’s benchmark Nikkei 225 rose 0.9% in morning trading to 25,943.93. Australia’s S&P/ASX 200 edged up 0.1% to 7,068.60. South Korea’s Kospi added 0.6% to 2,268.29. Hong Kong’s Hang Seng jumped 2.3% to 21,274.44, while the Shanghai Composite gained 0.6% to 3,143.63.

“Despite the positive close in Wall Street, the fade of earlier gains and muted moves in the U.S. equity futures this morning are driving more measured upside in the Asia session,” Yeap Jun Rong, a market analyst at IG, said in a report.

The government will release its weekly unemployment report on Thursday and its closely watched monthly employment report, for December, on Friday. Strong jobs numbers are seen as an indication of inflationary pressures that support further interest rate increases by the Federal Reserve.

Widespread COVID-19 cases in China have added to gloom over a long-term slump in its property sector and over the impact of pandemic restrictions that were only recently loosened as the virus gained ground in the worst nationwide outbreak so far.

“Retail sales in general should be weaker in December compared to the prior month,” said Robert Carnell, regional head of research Asia-Pacific at ING. He said demand might bounce back during the Lunar New Year later in the month.

“After the long holiday, there could be even more daily COVID cases, and then another quiet month for retail. The road to recovery may not be smooth for retailers,” he said.

On Wall Street, major indexes rallied following a government report showing that job openings increased more than expected in November. Stocks then shed some of their gains after the minutes from the Fed meeting last month underscored how the central bank remains determined to keep rates high to crush inflation.

The S&P 500 rose 0.8% to 3,852.97, with more than 80% of shares notching gains. The Dow Jones Industrial Average rose 0.4% to 33,269.77, and the Nasdaq composite added 0.7% to 10,458.76. Small company stocks outpaced the broader market, lifting the Russell 2000 index 1.2% to 1,772.54.

Banks, companies that rely on consumer spending and communications stocks accounted for a big share of the rally. Citigroup rose 2.6%, Starbucks added 3.6% and Netflix gained 4.9%.

The Fed raised its key short-term interest rate last month for the seventh time in 2022 and signaled more hikes to come. The increase was smaller than those from the previous four meetings, reflecting signs that inflation, while still high, has been easing.

The minutes from the mid-December meeting show Fed officials remained determined to keep rates high, taking little comfort from inflation’s decline from a peak of 9.1% in June to 7.1% in November.

The Fed’s benchmark lending rate stands at a range of 4.25% to 4.5%, up from close to zero following seven increases last year. It has forecast that the rate will reach a range of 5% to 5.25% by the end of 2023 and it isn’t calling for a rate cut before 2024.

Layoffs have been mounting in the technology sector, which is dealing with falling demand as inflation squeezes consumers.

Investors cheered several companies that reduced staff as they face weaker demand. Cloud computing software company Salesforce rose 3.6% after it announced it was laying off about 10% of its workforce. Video hosing platform Vimeo rose 4% after reportedly notifying workers about job cuts.

In energy trading, benchmark U.S. crude rose 85 cents to $73.79 a barrel in electronic trading on the New York Mercantile Exchange. It dropped $4.09 on Wednesday. Brent crude, the international pricing standard, rose 77 cents to $78.61 a barrel. U.S. crude oil settled 5.3% lower on Wall Street.

In currency trading, the U.S. dollar fell to 131.87 Japanese yen from 132.56 yen. The euro cost $1.0620, up slightly from $1.0610.

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AP Business Writers Damian J. Troise and Alex Veiga contributed to this report.

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Yuri Kageyama is on Twitter https://twitter.com/yurikageyama


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Silvergate slashes 40% of staff in the wake of a run on the crypto bank that forced it to sell assets at a loss to cover $8.1 billion in withdrawals

Business Insider 

Silvergate cut 40% of its staff as the crypto-focused bank reels from FTX’s implosion. 
Crypto-related deposits fell 68% in the fourth quarter of 2022, according to the firm.
Silvergate shares plunged more than 40% on Thursday.

Silvergate cut 40% of its staff, or 200 employees, “to account for the economic realities” facing its business and the cryptocurrency industry as a whole, the firm said on Thursday.

The collapse of FTX in particular sparked a run that forced the crypto-focused bank to cover $8.1 billion worth of customer withdrawals in late 2022.

Silvergate shares plunged more than 40% on Thursday and are down 91% from a year ago.

To meet the spike in withdrawals, Silvergate has had to sell assets at significant losses, liquidating debt the firm was holding on its balance sheet. The $718 million the company lost selling debt far exceeds Silvergate’s total profits in the past decade, according to the Wall Street Journal.

Crypto-related deposits declined 68% in the fourth quarter of 2022, shrinking from $11.9 billion in late September to $3.8 billion on December 31. The firm added that it has $4.6 billion in cash and cash equivalent, which Silvergate says exceeds its deposits. 

The company also holds $5.6 billion of US government and agency-backed debt, which the firm plans to sell part of this year. 

FTX and other crypto firms under founder Sam Bankman-Fried’s control accounted for about $1 billion of the bank’s deposits. Overall crypto-related deposits account for about 90% of Silvergate’s total, but the bank was able to survive the surge in withdrawals because most deposits are in cash or easy-to-sell securities, the Journal said.

Elsewhere, Silvergate is under fire by lawmakers, with US Senators Elizabeth Warren, John Kennedy, and Roger Marshall demanding answers from CEO Alan Lane for its business dealings with FTX and role in accepting deposits from Alameda Research, Bankman-Fried’s now bankrupt crypto hedge fund.

“Silvergate appears to be at the center of the improper transfer of billions in FTX customer funds. Americans need answers,” Warren said in a statement. “Those guilty of wrongdoing must be held accountable.”

In response to the lawmakers’ letter, Silvergate told CNBC, “Like many others, Silvergate was the victim of FTX’s and Alameda Research’s apparent misuse of customer assets and other lapses of judgment and we believe our full cooperation will help set the record straight about our role in the digital asset ecosystem.”

Read the original article on Business Insider

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Falling behind on student loans can reduce Social Security benefits by $2,500 a year

US Top News and Analysis 

A Social Security Administration office in San Francisco.
Getty Images

If you are delinquent on federal student loans and collect Social Security benefits, you may have your monthly checks reduced.

A pandemic pause has put all garnishments on hold for now.

But when collections are in effect, the reduction in annual Social Security benefits is about $2,500 on average, based on 2019 data, according to new research from the Center for Retirement Research at Boston College.

That typically amounts to 4% to 6% of household income, a significant amount that could pay off the average person’s credit card balance, the research found.

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The number of Social Security beneficiaries who find themselves in this situation is small, based on delinquency rates. Less than 5% of beneficiaries currently have student loan debt.

But those balances are expected to be “substantially” higher for future beneficiaries, who are also expected to have higher delinquency rates, according to the research.

“Among younger cohorts, the share of people holding student loans are much larger,” said Siyan Liu, research economist at the Center for Retirement Research.

“If that continues on into retirement, then a much larger proportion of them, if they have trouble making payments, could be facing benefit upsets,” she said.

Social Security benefits are typically subject to partial withholdings after prolonged federal student loan delinquencies.

The Social Security withholding amount for student loan debtors is typically either 15% of the total monthly benefit or the amount by which the benefit exceeds $750 per month — whichever is less.

“It has been a real issue for people who are on a fixed income and have no other support,” said Adam Minsky, a Boston-based lawyer specializing in student loan law.

“That 15% really can make the difference between being able to pay for rent or food or medication,” Minsky said.

Social Security benefit withholding typically happens after 425 days of delinquency and a loan holder fails to restart repayment.

The money withheld is applied towards the federal loan balances.

How much money is at stake

About 2.7 million consumers ages 62 and up owed more than $107.3 billion in federal loans as of September, according to the U.S. Department of Education.

The average annual Social Security benefits at risk due to student loan delinquency is expected to increase to $2,594 for future beneficiaries — those currently aged 35 to 61 — up from $2,299 for current beneficiaries ages 62 and up based on 2019 data, according to the Center for Retirement Research.

However, the share of household income at risk is expected to decline to 4.4% for future beneficiaries, down from 6.1% for current beneficiaries.

Today’s Social Security beneficiaries who are behind on federal student loans are not subject to benefit withholdings, as those collections have been suspended as part of the federal student loan payment pause that has been in effect since March 2020, Minsky noted.

“No one is having their Social Security checks garnished right now,” Minsky said.

President Joe Biden’s Fresh Start initiative is slated to give borrowers a full year after the payment pause ends to try to get out of default before collections on benefits resume, he noted.

How policy may influence debts

Biden has proposed broad student loan forgiveness of up to $10,000 for federal student loans, or up to $20,000 for Pell grant recipients.

The fate of the plan is now in the hands of the U.S. Supreme Court, which is scheduled to consider it in February.

If the plan goes through, it would result in an average forgiveness of $12,000 per borrower, according to the Center for Retirement Research.

Both Black and Hispanic households, who are more likely to have Pell grants, would have their share of debt holders cut in half, the research found. The share of Black borrowers with debt would be reduced to 12% from 22%.

Yet future beneficiaries in those groups are currently expected to see their delinquency rates rise, according to the Center for Retirement Research.

The plan would also have a dramatic impact on delinquency rates, as delinquent borrowers could have their entire balances forgiven.

While Black borrowers stand to see the largest decrease in delinquency rates, Hispanic borrowers would see the largest relative decrease, the research found.

Because Biden’s plan would reduce both debt and delinquency for future retirees, it would also shrink racial inequality, the Center for Retirement Research said.

Some Democratic lawmakers are also eyeing another way of providing relief.

VIDEO0:5700:57
Biden administrations stops taking applications for student loan debt forgiveness

In December, four House Democrats introduced a bill, the Student Loan Relief for Medicare and Social Security Recipients Act, that would eliminate student loan debt balances held for more than 20 years by Medicare and Social Security disability insurance beneficiaries.

It remains to be seen whether the proposal may gain traction on Capitol Hill.

“We should eliminate as much student debt as we can for everyone, but especially for those who have spent decades of their lives working to pay it off,” Rep. Adam Schiff, D-Calif., said in a statement. “This bill would ensure that instead of triaging their benefits, seniors and disabled individuals can focus more on their health, their families, and thriving in their best years.”

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