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Toll Brothers’ record shows the American housing boom has no end in sight

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US economy roars into high gear

Unemployment keeps falling and home prices keep going up. It’s a great recipe for a strong housing market.

Nothing has been able to stop the housing boom — not even higher interest rates.

Luxury home builder Toll Brothers (TOL) said Tuesday that demand for its houses was strong across the country — the company signed a record number of contracts last quarter.

Toll Brothers reported quarterly financial results that easily topped forecasts and raised its outlook for the year, citing a backlog of new homes for the third quarter.

Higher rates do not seem to be an issue for prospective buyers, mainly because the job market remains strong and housing prices are rising.

The company said that the average price of its homes in the most recent quarter was $851,900, compared to $791,400 a year ago. And Toll Brothers expects that prices for the current quarter will range between $840,000 and $870,000.

The only weak spot was California, where demand cooled a bit.

Toll Brothers executive chairman Robert Toll said the company believes the new home market can continue to grow in the coming years — especially as people seek to cash in on the rising value of their current home and trade up.

As the value of people’s homes increases, empty nesters and homeowners looking for bigger houses have more equity to work with, Toll said in the company’s press release. He also expects those two groups and Millennials will fuel demand for new homes in the coming years.

Shares of Toll Brothers surged more than 11% on the solid earnings Tuesday — but the stock is still down 20% for the year.

The results are the latest sign that the recent homebuilder stock slump may have been an overreaction. Investors feared that rate hikes would weaken demand for homes. That hasn’t happened yet.

Rival builder Lennar (LEN) also reported healthy quarterly results in late June.

Retail giant Home Depot (HD) just posted strong numbers last week as well, another sign that people continue to spend on their houses. Home Depot rival Lowe’s (LOW) will report results Wednesday and analysts are expecting a nearly 30% jump in earnings.

CNNMoney (New York) First published August 21, 2018: 10:45 AM ET

World's largest yacht

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World's largest yacht

Aston Martin IPO values James Bond’s favorite car brand at $5.6 billion

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You could own James Bond's car

Aston Martin is joining the ranks of listed automakers with an IPO that values the British company at more than $5 billion. But its first day of trading in London got off to a rocky start.

The favorite carmaker of fictional British secret service agent James Bond priced its shares at £19.00 ($24.70), giving it a valuation of £4.3 billion ($5.6 billion).

The final listing price is 16% below the top of the range that Aston Martin had targeted, reflecting investor doubts about whether the carmaker should be valued in the same league as Italian rival Ferrari.

Shares dipped nearly 5% in London trading.

In going public, the British company is asking investors to overcome fears about US threats to tax foreign autos and the potential for Britain’s planned exit from the European Union to disrupt supply chains and markets.

Aston Martin, which has a history of bankruptcy filings, is now producing healthy profits.

It sold more than 5,000 cars in 2017, its best performance in nine years. That generated record revenue of £876 million ($1.1 billion), an increase of nearly 50% over the previous year.

Earnings for the first half of this year show that momentum has continued. Revenue was up 8% over the same period a year earlier, while profit increased 14%, according to the numbers that were published last month.

Aston Martin brings back the Superleggera

Aston Martin has in recent years sought to capitalize on its high-end brand. But analysts at Bernstein see several potential problems.

They argue the Aston Martin brand is not as strong as that of Ferrari (RACE), which is bolstered by decades of racing history and a slew of Formula 1 championships. The British automaker also has much tighter margins than its Italian rival and a worrying history of uneven sales.

With money raised from the IPO earmarked for existing shareholders rather than investment in the company, Aston Martin executives could be pinning too much hope on the success of a planned SUV.

“Given its current financials and apparently rather less robust demand, it’s a big stretch for us to see how it can possibly match Ferrari’s profitability,” analysts at Bernstein wrote recently. “We can’t see it getting anywhere close.”

Aston Martin’s owners include Mercedes-Benz parent Daimler (DDAIF), private equity firm Investindustrial and investors based in Kuwait.

CNNMoney (London) First published October 3, 2018: 4:38 AM ET

Bumble to expand to India with the help of actress Priyanka Chopra

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New York
CNN Business
 — 

Bumble is the latest online dating app to compete for the hearts of women in India.

Bumble, which requires women to make the first move, announced Wednesday plans to launch in India later this year. Indian celebrity Priyanka Chopra, a new investor in the company, will advise on the expansion.

The news comes less than a week after rival Tinder launched a My Move feature in India that gives women the option to prevent men from initiating a conversation.

But Bumble’s efforts for an expansion in India have been in the works for awhile. Founder and CEO Whitney Wolfe Herd said the newly engaged Chopra first told her “Indian women needed Bumble” months ago. Chopra was among a group of high-profile women who helped Bumble kickoff its networking app, Bumble Bizz, in October 2017.

“It was clear then we shared a passion for empowering young women on a global level,” Wolfe Herd told CNN in an e-mail. “From there we began architecting a plan to partner and launch Bumble in India.”

Wolfe Herd said the challenge in entering the Indian market is “localizing the experience and attracting women” — an area in which Chopra will help.

Chopra’s manager, Anjula Acharia, is also an investor and adviser. Acharia helped Chopra — who was already established in India — reach fame in the United States. But Acharia has a long history of crossover efforts. She was instrumental in introducing artists such as Britney Spears and Lady Gaga to India — a background that could translate to Acharia helping Bumble resonate with the local audience.

Bumble’s local app will be in both Hindi and Hinglish — a hybrid between Hindi and English — and available on iOS and Android. It will also roll out new safety features before entering the region, which has a reputation for violence against women. In June, India was named the most dangerous country in the world to be a woman.

Wolfe Herd said it will only require Indian women to provide the first initial of their name — no first or last names — and provide new ways to report “bad behavior” in the app.

Bumble already has photo verification features and more than 4,000 content moderators who review photos and profiles.

Before Bumble, Wolfe Herd was an early employee and exec at Tinder but left the company in 2014 after suing for sexual harassment and discrimination. The case was eventually settled.

But tension between the two dating companies has become increasingly palpable as a result of very public litigation between the Bumble and Match Group, Tinder’s parent company.

In March, Match Group targeted Bumble with a lawsuit accusing the company of patent infringement and stealing trade secrets. Bumble asked the court last week to dismiss the case.

Separately, Bumble filed a counter lawsuit against Match Group. Bumble argues that Match Group is using litigation as revenge over failed acquisition talks. Both lawsuits are ongoing.

While Bumble already operates in over 160 countries, India is a significant market because of its size. According to a report from Bain & Co, India has 390 million internet users, the second largest of any country behind China.

How can I protect my investments from inflation?

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How can I protect my investments against inflation?

Even as your investments increase in value, inflation can eat away at what they’re worth.

There are things investors can do to hedge the immediate effects of inflation, or earn a return that outpaces inflation over time. But it can be hard to predict.

wealth-coach-card

“After-inflation returns are the only ones that matter for investors in the real world,” says Robinson Crawford, an investment adviser with Montebello Avenue.

Even if inflation is currently rising more slowly than analysts predicted, it’s better to be prepared.

Financial advisers say one of the most consistent hedges against inflation is a properly diversified stock portfolio.

Equities have historically outpaced inflation, says Sean C. Gillespie, a financial planner with Redeployment Wealth Strategies says that while there is inherent volatility in a stock portfolio, “equities are a long-term asset for your plan just like inflation is a long-term threat.”

To figure out where to put your money in the stock market, investors could look to a total return strategy that relies on equities to provide positive inflation-adjusted returns over the long term.

“Of course, investors have to accept more risk when investing in stocks and endure periods when the returns have not outpaced inflation,” says Dejan Ilijevski, an investment adviser at Sabela Capital Markets. “Although some investors may assume that higher inflation leads to lower stock performance, US market history shows that nominal annual stock returns are unrelated to inflation.”

Gold and commodities

Gold and commodities have been standard havens from inflation for investors.

“Traditionally commodities and gold have been good inflation hedges,” says Stephanie Bucko, a chartered financial analyst and co-founder of Mana Financial Life Design. But she says it is important to take into account the US dollar’s strength as part of this equation.

“We like oil exposure, as this impacts our clients on a day-to-day basis related to gas prices, but it also provides a good inflation hedge,” says Bucko, adding that we saw this in the 1970s as inflation doubled and nominal oil prices skyrocketed.

But commodity markets, for the unfamiliar, can be complex and risky.

“Commodities are volatile, more so than stocks, which means that adding commodities to a portfolio may increase real return volatility, offsetting the benefits of hedging,” says Ilijevski.

Real estate is the ultimate hard asset in times of inflation since it will see price appreciation. Financial advisers suggest investors find a place for real estate in a portfolio.

Investors can gain exposure to real estate by directly owning commercial or residential property, or by investing in real estate investment trusts (REITs).

Real estate is a sound investment, says Crawford. “But I would caution that if you’re not increasing rent in your real estate, you aren’t fighting inflation.”

Short term bonds and TIPS

Short-term bonds and Treasury Inflation-Protected Securities (TIPS) are investments that are a hedge against inflation.

“Hedging seeks out asset classes that tend to positively correlate with inflation,” says Ilijevski.

For example, he says, short-term maturities allow bond-holders to more frequently roll over the principal at higher interest rates. This helps inflation-sensitive investors keep up with short-term inflation.

Similarly, TIPS, issued by the government, are also a fixed-income security hedge against inflation. Their principle is adjusted to reflect changes in the Consumer Price Index. When CPI rises, the principle increases, resulting in higher interest payments.

“TIPS absolutely merit a place in a US investor’s portfolio, especially those with significant bond holdings,” says Crawford. “The main issue is that they increase in value in conjunction with the CPI, which many would argue is not an accurate inflation measure.”

Barnes & Noble stock soars 20% as it explores a sale Barnes & Noble stock soars 20% as it explores a sale

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Editor’s Note: This story originally published on October 3, 2018.


New York
CNN Business
 — 

Barnes & Noble stock jumped more than 20% after the board said it would consider a sale of the troubled company.

The board said Wednesday it had appointed a special committee to review offers. One came from longtime Barnes & Noble chairman Len Riggio. He is the company’s largest shareholder, controlling close to 20%.

Barnes & Noble (BKS) also disclosed that a shareholder it could not identify had rapidly built up a stake in the company. To block a hostile takeover, Barnes & Noble’s board of directors approved what’s known as a poison pill.

The poison pill will kick in if the unidentified party accumulates 20% of the stock or more. At that point, shareholders will be allowed to buy Barnes & Noble’s stock at a 50% discount, diluting the value of the shares.

The announcement comes shortly after another investor disclosed a stake of close to 7%, and said he had held talks with Riggio about buying the company.

The board said Riggio would vote his shares in favor of any transaction recommended by the committee.

A potential sale is just the latest twist in the saga of Barnes & Noble, which is looking to replace its fifth chief executive in as many years.

The bookstore fired its most recent CEO, Demos Parneros, in early July, citing unspecified violations of company policy. Barnes & Noble later revealed that claims of sexual harassment and bullying led to Parneros’ termination.

In August, Parneros sued his former employer in federal court for defamation and for firing him without cause.

Barnes & Noble still has more 600 stores and 23,000 employees. Last quarter, same-store sales dropped 6.1% compared with a year ago.

Sales have fallen at Barnes & Noble during each of the past four years. New tactics, such as smaller store formats and a kitchen concept, have struggled to win back shoppers.

Neil Saunders, managing director of GlobalData Retail, said in September that most of the stores “feel tired, are too large and too cluttered, and do not offer the consumer any compelling reason to visit and buy.”

He believes Barnes & Noble will shutter more stores: “Barnes & Noble needs to slim down in order to survive.”

Barnes & Noble’s problems come as local and independent bookstores are resurgent.

The American Booksellers Association, a trade group, reported that the number of independent locations rose 6% last year to 2,470.

The internet industry is suing California over its net neutrality law

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Google CEO: Net neutrality 'a principle we all need to fight for'

The internet industry is suing the state of California over its days-old net neutrality law.

The lawsuit, filed on Wednesday by major trade groups representing broadband companies, is the second major lawsuit filed against the state over the law — the first was brought by the Justice Department.

On Sunday evening, California Governor Jerry Brown signed what is considered to be the strictest net neutrality law in the country. Under the law, internet service providers will not be allowed to block or slow specific types of content or applications, or charge apps or companies fees for faster access to customers.

Hours later, the federal government filed a lawsuit in which it alleged that California was “attempting to subvert the Federal Government’s deregulatory approach” to the internet. The DOJ argues states can’t pass their own laws governing internet companies, because broadband services cross state lines. It is fighting the state over a clause in the 2017 order repealing Obama-era federal net neutrality protections. In that order, the FCC said it could pre-empt state-level net neutrality laws.

The impending legal battle could drag on for many months if not longer, Daniel Lyons, an associate professor at Boston College Law School who specializes in telecommunications and Internet regulation, told CNN.

A lot is riding on the outcome. The California law is considered the most thorough state-level net neutrality legislation yet passed, and other states are expected to use it as a blueprint for their own laws.

If California wins in court, it would open the door for those other states to take similar actions. However, the FCC could try to come back with an order to block their efforts again, Lyons said.

California will likely claim that the pre-emption provision is invalid, Lyons said, while the federal government will attempt to get an injunction to stop the law from taking effect. in doing so, it will claim that the law will cause harm if allowed to take effect.

“These attempts at getting a preliminary injunction seem weak and are likely to fail for the same reasons that the Internet Service Provider [ISP] industry was unable to obtain a stay of the FCC’s former net neutrality rules in 2015,” said telecommunications attorney Pantelis Michalopoulos, a partner at Steptoe & Johnson LLP who has argued net neutrality cases. “The Internet Service Providers offer speculative theories about why they will suffer irreparable injury. These theories do not appear to satisfy the test for a preliminary injunction.”

The industry groups taking part in the new lawsuit represent major companies including AT&T, Comcast and Verizon, as well as other cable companies and wireless providers across the US. The groups had previously lobbied against the state law. (CNN is owned by AT&T.)

“We oppose California’s action to regulate internet access because it threatens to negatively affect services for millions of consumers and harm new investment and economic growth. Republican and Democratic administrations, time and again, have embraced the notion that actions like this are preempted by federal law,” the trade groups USTelecom, CTIA — The Wireless Association, The Internet & Television Association, and the American Cable Association said in a statement. “We will continue our work to ensure Congress adopts bipartisan legislation to create a permanent framework for protecting the open internet that consumers expect and deserve.”

In a statement Wednesday afternoon, Attorney General Xavier Becerra indicated the state would fight to protect its new law.

“This suit was brought by power brokers who have an obvious financial interest in maintaining their stronghold on the public’s access to online content. California, the country’s economic engine, has the right to exercise its sovereign powers under the Constitution and we will do everything we can to protect the right of our 40 million consumers to access information by defending a free and open Internet,” Becerra said in a statement.

State Senator Scott Wiener, a co-author of the bill, previously told CNN he expected the ISPs to sue over the law.

“The internet service providers have every right to sue California, just like California has every right—indeed an obligation—to protect our residents’ access to an open internet,” Wiener said after the trade groups filed their suit.

CNNMoney (San Francisco) First published October 3, 2018: 5:46 PM ET

Why it’s time for investors to go on defense

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CNN
 — 

It’s time for investors to start making safer bets.

That’s what Howard Marks, co-chairman of Oaktree Capital, told CNNMoney editor-at-large Richard Quest on “Markets Now” on Wednesday.

“Defense is more important than offense” right now, said Marks, the author of “Mastering the Market Cycle: Getting the Odds on Your Side.”

Investors should consider taking a stake in utilities, and decreasing their investments in more volatile tech stocks, he said.

Defense is the name of the game for a few reasons.

Though stocks have been soaring, Marks warned that we may be nearing the end of the bull cycle.

“I’m not saying get out,” he said. “I think that being out of the market is pretty dangerous today, and I think it would be a mistake to raise cash.” But more reliable stocks can protect investors from big losses if the climate changes.

Marks also pointed to the trade war with China as another reason for investors to tread carefully.

“We have a trade battle with China, it’s probably going to get solved, but it may go off the rails,” he said. “And if it goes off the rails, it has very serious consequences for the world economy.”

CNNMoney's

“Markets Now” streams live from the New York Stock Exchange every Wednesday at 12:45 p.m. ET. Hosted by CNNMoney’s business correspondents, the 15-minute program features incisive commentary from experts.

You can watch “Markets Now” at CNNMoney.com/MarketsNow from your desk or on your phone or tablet. If you can’t catch the show live, check out highlights online and through the Markets Now newsletter, delivered to your inbox every afternoon.

7 things to know before the bell

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premarket thursday
Click chart for more in-depth data.

1. The race to driverless cars: SoftBank (SFTBF) and Toyota (TM) are forming a joint venture that will use driverless-car technology to offer new services, such as mobile convenience stores and delivery vehicles in which food is prepared en route.

SoftBank will own just over half of Monet, the new business, while Toyota will hold the rest.

It’s the latest in a series of driverless development partnerships announced by tech companies and carmakers. SoftBank’s $100 billion Vision Fund, its tech-focused investment arm, had already committed $2.3 billion to General Motors’ self-driving car unit GM Cruise.

On Wednesday, Honda (HMC) and General Motors (GM) said they were teaming up to create a new generation of fully autonomous vehicles. BMW (BMWYY) has joined the board of Apollo, an autonomous driving project from Chinese internet firm Baidu (BIDU).

2. Facebook under investigation: The Irish Data Protection Commission has launched a formal probe into a Facebook (FB) hack that affected as many as 50 million accounts.

The commission will investigate whether the company complied with its obligations under new European data protection laws that came into effect in May. Facebook said last week that it closed the loophole, but 90 million users were forcefully logged out of their accounts as a precaution.

Irish regulators are investigating because Facebook’s international headquarters is in Dublin.

There are still many unanswered questions about the hack: Who carried it out? And what were they trying to access?

3. Bonds sell-off: The yield on 10-year US Treasuries has spiked to the highest level in seven years following the release of positive economic data.

US hiring data published Wednesday was stronger than expected, and momentum could continue Thursday if initial claims numbers add to the optimism. A strong US economy and the expectation of rate hikes by the Federal Reserve are fueling the trend.

“The underlying message is that the US economy isn’t just in fine fettle, it’s on fire,” said Kit Juckes, strategist at Societe Generale.

4. CNN means business: On Thursday, CNNMoney becomes the all-new CNN Business, covering the companies, personalities, and innovations driving business forward.

This new initiative will focus on the single biggest financial story of our generation: how technology is upending every corner of the global economy, forcing businesses, workers, and society itself to adapt rapidly, or be left behind.

5. Global market overview: US stock futures were lower.

European markets dropped in early trade following a negative trading session in Asia. The Shanghai Composite was closed for a holiday.

The Dow Jones industrial average closed 0.2% higher on Wednesday, while the S&P 500 added 0.1% and the Nasdaq gained 0.3%.

Before the Bell newsletter: Key market news. In your inbox. Subscribe now!

6. Earnings and economics: Constellation Brands (STZ) will release earnings before the open. Costco (COST) is set to follow after the close.

Shares in Danske Bank (DNKEY) opened 3% lower after the Danish lender said it had received requests for information from the US Department of Justice in connection to its money laundering scandal.

Markets Now newsletter: Get a global markets snapshot in your inbox every afternoon. Sign up now!

7. Coming this week:
Thursday — Costco (COST) earnings; CNN Business launches
Friday — US jobs report

CNNMoney (London) First published October 4, 2018: 5:07 AM ET

Kendall Jenner Exposes Some Cheeks In Tommy Hilfiger Show

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Remember, a Jedi can feel the Force flowing through him. I can’t get involved! I’ve got work to do! It’s not that I like the Empire, I hate it, but there’s nothing I can do about it right now. It’s such a long way from here. I call it luck. You are a part of the Rebel Alliance and a traitor! Take her away!

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