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An employee preps a John Deere & Co. excavator for sale at Martin Equipment in Rock Island, Illinois.Daniel Acker | Bloomberg | Getty ImagesWith May coming to a close, Wall Street analysts are fine tuning their recommendations as COVID-19 vaccinations pave the way for further economic re-opening this summer.  We used TipRanks analyst forecasting service to pinpoint stocks earning bullish support from the Street, narrowing our search to only calls made by the best-performing analysts. These are the analysts with the highest success rate and average return per rating, taking into consideration the number of ratings published by each analyst.Here are top Wall Street analysts' five favorite stocks heading into June:    Advanced Micro DevicesNorthland Capital analyst Gus Richard says it's to infinity and beyond for Advanced Micro Devices. In line with this optimistic take, the five-star analyst reiterated a Buy rating and $116 price target.Richard believes that the semiconductor name will have a solid Q2, but argues the real question is whether PC demand will slow as the economy re-opens. According to the analyst, the answer is yes, but points out that AMD's "better products" are helping it to take market share from Intel. "One of the most difficult markets to penetrate is the corporate client. In CY19 Intel was short on 14nm capacity and late on 10nm and this limited its ability to meet demand opening the door for AMD in the corporate market. We estimate that AMD currently has a 5% to 7% share of the higher-margin corporate client market and expect its share to accelerate as corporations dual source," Richard explained.Additionally, based on Intel's recent results and the analyst's industry checks, Intel has been focused on low-end Chromebooks, and "these dynamics bode well for a strong 2H for AMD in the client market," in Richard's opinion.With this in mind, Richard argues that over the next few years, AMD's revenue share in the PC clients market will reach around 50%, from 20% currently. It also is in the second year of a game console product cycle, which the analyst believes could lead to an improvement in gross margins for this segment.It should also be noted that AMD has an advantage in the x86 server space. "We believe leadership in the x86 market is driven primarily by process technology and to a lesser extent design differentiation. INTC is chasing government money to build foundries in the US putting it into competition with TSMC. While INTC has struck a longterm supply agreement with TSMC they are also becoming a competitor to TSMC. It is in TSMC's best interest to favor AMD over INTC as it will get all of AMD's lead edge logic business," Richard commented.Landing a top 40 spot on TipRanks' list of best-performing analysts, Richard boasts a 71% success rate and 33.8% average return per rating.AmedisysOperating in the healthcare services space, Amedisys offers home healthcare (HH), hospice services and disease management programs.According to Oppenheimer's Michael Wiederhorn, the company's "growth story remains on track," prompting the analyst to maintain a Buy rating. In addition, he left the $325 price target as is."We hosted meetings with Amedisys and believe the company remains well-positioned for growth in the post-pandemic era, driven by organic opportunities as it bulks up its BD staff and leverages opportunities to further penetrate existing markets with its sizable hospice platform, which included ~$600 million in acquired hospice revenues," Wiederhorn noted.Across both of its main segments, trends have been bouncing back, with elective procedures moving toward 100% of baseline. As for the hospice business, Amedisys' primary focus is on admissions, but Wiederhorn points out that LOS issues might have normalized.Some investors have expressed concern about labor inflation, but Wiederhorn doesn't see this as a significant issue. The analyst tells investors that "despite the ongoing noise in the marketplace," labor inflation is under control and management is watching the wage environment."Amedisys has continued to generate low turnover rates (15%) that are well below the market and historical levels (40%) due in large part to its predictive analytics that identify vulnerable employees," Wiederhorn added.When it comes to M&A, the company is "optimistic on the longer-term upside from home health M&A, as the myriad of pandemic-related benefits, including sequestration, payroll tax, Medicare accelerated payments, CARES Act money and the RAP impact, are set to expire," says Wiederhorn. He also points out that Amedisys has made a significant effort to establish partnerships which "leverage its high quality scores.""The company spoke positively regarding its SNF @ Home Partnership with Sound Physicians, which deploys some form of capitation, while its Fresenius dialysis partnership has partial capitation," Wiederhorn stated.Thanks to his 76% success rate and 23.6% average return per rating, Wiederhorn is ranked #34 out of over 7,000 analysts tracked by TipRanks.DeereEven though Deere bumped up its outlook for 2021, Jefferies analyst Stephen Volkmann thinks these estimates "could prove conservative." With this in mind, the top analyst reiterated a Buy rating. In addition, he gave the price target a lift, with the figure moving from $400 to $450.When trying to call Deere's next peak, it is "complicated," in Volkmann's opinion. "First, management's commentary around the cycle – both Large and Small Ag business at roughly 110-115% of mid-cycle – excludes the last supercycle and therefore undercounts the potential. Second, we estimate overall ASPs have increased 40-50% since the 2013 peak through a combination of emissions regulations, increased technology content, and normal inflation," the analyst explained.So, what's the bottom line? Volkmann estimates that the total potential revenue is $55 billion, and at 20% EBIT margin, this amounts to $30 in earnings power, not including additional capital employment. According to the management team at Deere, for 2021, consolidated sales are set to rise 23.5%-28.5% (compared to the previous 16%-25% estimate), with this factoring in FX and pricing tailwinds.Volkmann points out that although the company is benefitting from commodity price inflation, management has warned about a $750 million freight/logistics and material costs headwind for the rest of this year. In addition, given that the 2021 order book is filled, it might be hard for Deere to cover additional increases. That being said, the analyst argues "pricing was the standout message of the quarter, adding roughly 6 percentage points to F1H growth and 5-plus points to the full-year outlook."What's more, Deere is evaluating additional structural changes, with this potentially including overseas footprint consolidations and closures. Its key priorities are to streamline the organizational structure, make "more focused capital allocation decisions geared toward the higher-growth, higher-margin portion of the portfolio," expand the aftermarket opportunity and increase Wirtgen synergies.Volkmann lands a top 100 ranking as a result of his 74% success rate and 25.8% average return per rating.ZscalerCalling Zscaler's latest quarterly performance "another jaw dropper," Wedbush's Daniel Ives remains very much with the bulls. To this end, the analyst kept a Buy rating and $240 price target on the cloud-based information security company.Looking at the print, billings gained 71% and surpassed the consensus estimate by 20%-plus, with Ives noting its "clear that the zero trust shift is hitting another gear of growth with ZS leading the charge."Expounding on this, Ives stated, "While the bears and skeptics on ZS threw the company in the 'WFH growth tailing off crew' over the last few months, we continue to view this is a zero trust cloud transformation name that will see massive growth prospects for the foreseeable future as the company is essentially the only game in town on enterprise scale zero trust cyber security deployments."Arguing that Zscaler is in the "drivers seat" when it comes to the cloud cyber security shift over the next ten years, Ives believes that the current IT landscape has ramped up the company's ability to capitalize on the opportunity."In our opinion, ZS is the best pure play in the cloud security arena, which we believe is still in the very early innings of taking off with overall hybrid cloud workloads poised to meaningfully accelerate over the coming years and in this climate could see some strategic deals moved forward as the shift to cloud outside the firewall is catalyzing a handful of key sales cycles," Ives commented.According to the Wedbush analyst, the need to secure applications, data and consumers outside the firewall highlight the huge total addressable market.Summing it all up, Ives said, "To this point given last night's results and our increased confidence in the ZS story, we believe a further re-rating is still in the cards over the next 12 to 18 months."  Ives' stellar track record speaks for itself. The #73 rated analyst has delivered a 68% success rate and 30.4% average return per rating.  AtriCureAtriCure has developed a portfolio of products for the surgical ablation of cardiac tissue to treat persistent atrial fibrillation (AF) in concomitant and stand-alone procedures.For BTIG analyst Marie Thibault, there are multiple reasons to be bullish on AtriCure's long-term growth prospects. Bearing this in mind, the five-star analyst reiterated a Buy rating and a $76 price target.Recently, Thibault hosted a call with Dr. Michael Panutich, a cardiac electrophysiologist (EP) at the Hoag Heart & Vascular Institute, who has been performing the hybrid Convergent procedure, which involves endocardial catheter ablation and epicardial ablation using AtriCure's EPi-Sense Coagulation Device, since 2017. Given that the FDA has approved the EPi-Sense device in long-standing persistent AF, Dr. Panutich believes that the number of hospitals adopting and marketing the procedure will grow.On top of this, Thibault points out that the FDA approval could make it easier to secure reimbursement, as "fewer insurers will be able to push back on the treatment as being 'experimental' or require a failed ablation first.""This discussion left us with the impression that ATRC's minimally invasive franchise is poised for robust growth, that careful training will be key to continued success with the Convergent procedure, and that the AF field will continue to be a source of clinical progress," Thibault commented.What else is driving Thibault's confidence? The analyst highlights the ongoing momentum for AtriClip, AtriCure's product designed for use in the occlusion of the left atrial appendage, one of the most common sources of stroke. She is also expecting to see new verticals like cryoablation contribute to revenue generation.        Thibault sports an impressive 65.8% average return per rating, helping her to earn a #127 ranking.
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VSS Unity floats in microgravity at the edge of space during its third spaceflight on May 22, 2021.Virgin GalacticArk Invest's space exploration ETF has sold its last remaining shares of Virgin Galactic, completing its move away from one of the few publicly traded pure-play space stocks.Cathie Wood's firm on Tuesday sold 12 shares of Virgin Galactic from its ARKX fund, the tiny remaining piece of a position that was about 672,000 shares when the ETF first began trading in late March.The space tourism company's stock climbed as much as 6% in trading from its previous close of $25.59 a share.After hitting an all-time high above $60 a share in February, the stock began falling in the wake of delays to its test program and commercial flights, as well as share sales by chairman Chamath Palihapitiya and then founder Richard Branson.Ark cut its ARKX holding of Virgin Galactic by nearly half on April 20, after the stock slipped below $23. Shares continued to fall earlier this month, after Jeff Bezos' venture Blue Origin announced plans to launch the first crewed flight of its space tourism rocket on July 20 – a move UBS warned likely removes Virgin Galactic's first-mover advantage.Wood's firm unloaded almost all of the ETF's remaining stake in early May, when the stock traded down near $15 a share. In all, the stock lost about half its value from ARKX's debut to when the fund sold most of its position.Virgin Galactic's stock has had a resurgence, however, after the company's long delayed third spaceflight test flew successfully on Saturday. The stock erased a 30% loss year to date and now trades back above $26 a share.Additionally, Canaccord Genuity initiated coverage of Virgin Galactic on Wednesday with a buy rating, seeing the recent spaceflight test as likely the first in a series of positive catalysts.Become a smarter investor with CNBC Pro.Get stock picks, analyst calls, exclusive interviews and access to CNBC TV. Sign up to start a free trial today.
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In this articleBRK.AWarren Buffett.Gerald Miller | CNBCBerkshire Hathaway's operating earnings rebounded as the conglomerate's businesses recovered from the pandemic hit. Chairman Warren Buffett kept buying back Berkshire shares aggressively in the first quarter, but at a slightly slower pace.Berkshire reported operating income of $7.018 billion in the first quarter, up 20% from $5.871 billion in the same period a year ago. The conglomerate's hodge-podge of businesses including insurance, transportation, utility, retail and manufacturing saw signs of a recovery amid the economy reopening.During the first quarter, the company bought back $6.6 billion of Berkshire shares, after a record $24.7 billion in buybacks last year in lieu of deal-making. The conglomerate recorded $9 billion in share buybacks in the fourth quarter.Berkshire Hathaway's cash pile grew about 5% during the quarter to more than $145.4 billion. Just slightly below the record level seen at the end of the third quarter last year.Buffett has been sitting on the sidelines as the deal-making environment becomes more competitive and market valuations turned lofty. The legendary investor said at last year's annual meeting that he hasn't seen anything attractive to pull the trigger on a sizable acquisition like he has in the past.Berkshire's equity investments also registered solid gains, increasing approximately $4.69 billion last quarter. However, Buffett has told shareholders to not focus on quarterly fluctuations in investing gains and losses."The amount of investment gains (losses) in any given quarter is usually meaningless and delivers figures for net earnings per share that can be extremely misleading to investors who have little or no knowledge of accounting rules," Berkshire said in a statement.Thanks to the buyback program and a recovery in its operating businesses, Berkshire's "B" shares have rallied more than 18% in 2021 to a record high.In total, Berkshire posted net earnings of $11.71 billion, or $7,638 per Class A share, in the first quarter. The conglomerate suffered a net loss of $49.75 billion, or $30,653 per Class A share, a year ago as the stock market's pandemic plunge dramatically lowered the value of the company's many equity investments.The conglomerate's total revenue came in at $64.6 billion last quarter, higher than the Street's estimate of $63.66 billion, according to Refinitiv.Berkshire's annual shareholder meeting will kick off Saturday at 1:30 pm ET in Los Angeles with both Buffett and Vice Chairman Charlie Munger present. The event will be held virtually without attendees for a second time.Correction: Berkshire's investment gains increased by $4.69 billion in the first quarter. A previous version of this story misstated the gains.Enjoyed this article?For exclusive stock picks, investment ideas and CNBC global livestreamSign up for CNBC ProStart your free trial now
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In this articleTSLAXPEVNIOZE594-CNChinese battery and electric vehicle maker BYD shows off a model of its Han EV series at the 2020 Beijing auto show.Evelyn Cheng | CNBCBEIJING — Chinese automaker BYD sold more than twice as many battery-powered electric cars as start-up Nio delivered in March.BYD, which is backed by U.S. billionaire Warren Buffett, disclosed Tuesday that sales of its battery-powered passenger cars totaled 16,301 units last month.That's more than double Nio's deliveries in March of 7,257 cars. Rival start-up Xpeng delivered even fewer vehicles, at 5,102 units last month. Both companies still beat analysts' expectations with those figures.In the new energy vehicle category, which includes hybrid as well as pure-electric cars, BYD sold more than 23,000 units in March — that brings the total in the first quarter to 53,380 cars.BYD also sold nearly as many oil-fueled vehicles in the first quarter, at 49,394 units.The sales of electric cars come as China's auto market recovers from the coronavirus pandemic, which hit the country the hardest in the first quarter of 2020.New motor vehicle registrations in the first quarter of this year climbed to a record high of 9.66 million, China's Ministry of Public Security said Tuesday. New energy vehicles accounted for 466,000, or just over 6% of newly registered cars, the data showed.The percentage of new energy cars nationwide that are pure electric was 81.5% in the first quarter, about the same as the ratio in 2020, according to public security data.When it comes to the global market, China's electric automakers still have a large gap to close.Electric car market leader Tesla said last week it delivered 184,800 cars worldwide in the first quarter. While the U.S. electric car maker did not break out figures for China, the company noted in a release: "We are encouraged by the strong reception of the Model Y in China and are quickly progressing to full production capacity."Elon Musk's car company began deliveries of a China-made Model Y in January. The car was the third best-selling new energy vehicle in China in February, according to the China Passenger Car Association.Tesla has installed annual production capacity for 200,000 Model Y units at its factory in Shanghai, according to an investor presentation in late January.
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Jakub Porzycki | NurPhoto | Getty Images GameStop stock has defied gravity in the past and it could again, but there are some signs its stock may be topping out, some strategists say. GameStop was down sharply Monday, off more than 30% at $225. It has been the poster child of a group of stocks shorted by hedge funds but snapped up by small investors who helped drive share prices higher. The price rises even more when hedge funds are forced to buy the stock to cover short positions. GameStop has had a wild ride. It surged to an all time high of $483 last week but appeared to run out of steam Monday, falling well below its Friday close of $325. The stock closed at $17.25 on Jan. 4, the first trading day of 2021. Arrows pointing outwards 1. Call options cost trends When viewing a stock that's had a long speculative run, it's important to look at the call options on the stock when it stops moving higher, said Julian Emanuel, chief equity and derivatives strategist at BTIG. Call options, which allow but don't require investors to buy at a certain price, are basically bets the stock will continue to rise. Aggressive buying in those options can help speculative stocks go even higher until the options themselves become too expensive. "The high price of the options themselves are likely to cause the stock to top and then sell-off or at least go sideways and ultimately sell off as the speculative mania moves on to different areas," said Emanuel. "We're seeing this today in silver." Silver has been the target of aggressive buying and has also caught the interest of traders in the Reddit forum WallStreetBets. iShares Silver Trust ETF jumped 7.1% Monday and call buying continued to surge at record levels in the ETF. Retail investors have been very active in options, opening and closing positions in the same day in many speculative stocks. As for GameStop, Emanuel said the calls appear to have become too expensive to remain a source of further upside for the stock. For instance, the at-the-money Feb. 19 call options — that is, an option with a strike price that's identical to the company's current share price — in GameStop at Friday's close cost about 50% of the company's actual share price, Emanuel said. To give that perspective, the S&P 500 Feb. 19 at-the-money options cost just 2.5% of the S&P's value. "It's difficult to maintain a level of speculative interest when it becomes too expensive to buy call options," said Emanuel. 2. Reduced demand Two other factors depressing the stock are the reduction in short interest as investors were forced to cover shorts, and that brokers have restricted buying in GameStop, Emanuel added. That takes away an important source of demand, and speculative investors become less interested, he said. "It seems the Reddit army is moving into a different area," said Chris Murphy, co-head of derivatives strategy at Susquehanna International Group. "The stock is going down and the volatility goes down." "Usually when a stock goes down, volatility goes up," he said. "In this instance, as people leave and move into other areas, you're going to see the stock price and volatility go down." The 30-day implied volatility in GameStop options on Friday was 430% but it declined to 375% and continues to fall, Murphy said. Implied volatility measures the expected swing in a stock's price. That means investors are now expecting a move as big as 23% in the stock in one day in either direction, down from 27% on Friday. Of course, GameStop has also been affected by trading restrictions. Robinhood and other online brokers last week limited buying in GameStop, but allowed investors to sell. Brokers raised margin requirements on GameStop and some other stocks. It's very hard to tell whether GameStop was near a top because of restrictions on the stock, said Steve Massocca, managing director with Wedbush Securities. "When you tell people they can't buy but can only sell, of course it usually goes in one direction," he said. Robinhood on Monday continued to prohibit clients who own more than 20 shares of GameStop from buying any new shares.
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Getty Images Global travel screeched to a halt during the pandemic, and it's hurting credit card companies' bottom line.  American Express, Mastercard and Visa all reported double-digit drops in profit for the recent quarter, compared to a year ago. The companies pointed to a plunge in international travel as borders remain closed during the pandemic.  The companies earn a fee off of every transaction that runs on their network, while American Express also makes a significant portion of revenue from annual fees. A lack of cross-border payments is especially painful as those card swipes have higher margins, and end up being more lucrative. Visa was the latest major card company to report results on Wednesday. Cross-border transactions fell 29%, while Visa's revenue in the quarter was down 17% from a year ago. The company did not give guidance based on uncertainty around the virus, but said the cross-border weakness remains a "significant and continued drag on revenue growth." That will likely continue into 2021, according to Visa's CFO Vasant Prabhu.  "The cross-border recovery has been sluggish since borders remain closed, and there are significant impediments of crossing borders like quarantines and other such restrictions," Prabhu said on a call with analysts Wednesday.  Prabhu cited "significant uncertainties" including the impact of spikes in Covid infections happening in the U.S. and Europe, the timing of reopening of borders, the impact of therapeutics and a vaccine, additional stimulus programs and the economic impact once stimulus programs end. Covid cases in Europe spurred leaders of Germany and France to announce new economic restrictions for the next month, while new cases in the U.S. have hit record highs in recent weeks. Visa rival Mastercard reported earnings Wednesday, with many of the same themes. Mastercard's net income fell 28% year over year, and net revenue fell 14%, missing analysts' expectations. The company reported a 36% drop in cross-border volumes, and did not forecast a rebound in travel spending anytime soon.  "While we believe that cross-border will ultimately recover, it will take time for people to build their confidence in the safety of travel," Mastercard's chief financial officer, Sachin Mehra, said on a call with analysts Wednesday. "We believe that is tied to the broad availability of vaccines and therapeutics, likely towards the latter part of next year." Shares of Mastercard have fared the worst in the past week, and are down 11% this week. Visa and American Express are down 8% and 10% this week, respectively. Arrows pointing outwards Amex kicked off the card earnings on Friday with a 40% drop in profit from a year earlier. Travel and entertainment spending was down 69% year over year. While the company is "highly confident" that travel demand will return, "it will take a while," American Express CFO Jeffrey Campbell told CNBC in a phone interview.  "The human urge to travel is insatiable, but it will take some time to come back, just like it did after September 11th," said Campbell, who is also a former American Airlines chief financial officer. "For our company to be back at its pre-pandemic levels of earnings, we do need consumer travel to come back -- we're highly confident and in the meantime we're trying to take the right steps to rebuild growth and momentum." Business travel -- which makes up about 6% of the American Express's revenue -- could take "years to come back," Campbell said. Despite the travel-related slump, there were a few bright spots for the companies. Mastercard CEO Ajay Banga pointed to improvement in domestic travel in the quarter, including spending on lodging and sports. The card companies pointed to a rebound in domestic spending and an uptick in e-commerce that helped offset losses elsewhere. Payment volume for Visa rose 4%, while gross dollar volume, the dollar value of transactions processed, rose 1% at Mastercard. 
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Property data and analytics firm CoreLogic has received multiple potential takeover bids that value the company at north of $80 a share, sources tell CNBC's David Faber. The multiple parties interested in pursuing a deal with CoreLogic include private equity firms, Faber reported citing sources familiar with the talks. The company has already signed a non-disclosure agreement with at least one potential buyer, the people said. CoreLogic confirm later on Wednesday that it is "engaging with third parties indicating preliminary interest based on public information in the potential acquisition of the Company at a value at or above $80 per share." "No decision has been made to enter into a transaction at this time, and the Company can offer no assurance that it will enter into any transaction in the future or, if entered into, what the terms of any such transaction would be," the company added in its statement. Shares were last seen up 11.5%, around $76 a share, following news of the takeover bids. CoStar Group could be one of the potential bidders. Subscribe to CNBC PRO for exclusive insights and analysis, and live business day programming from around the world.
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Jim Cramer Scott Mlyn | CNBC CNBC's Jim Cramer said Wednesday that a lack of coronavirus stimulus is making it hard for investors to buy stocks into a worsening of the United States' Covid-19 outbreak. "It's very hard to buy a lot of stocks when you see these numbers," Cramer said on "Squawk Box," as U.S. stocks were headed to steep declines Wednesday. Dow futures were down over 600 points. "And it's shame too because with stimulus, we'd be very tempted to own some of these stocks," added Cramer. "But right now, I think everyone is just fearful." Stocks also were falling Wednesday in Europe, as multiple nations there experienced increasing coronavirus cases and leaders such as German Chancellor Angela Merkel called for tougher business restrictions to try slowing spread. The pan-European Stoxx 600 was sliding over 2.5%. U.S. investors were surely monitoring the situation in Europe, Cramer said, likely influencing the negative sentiment for Wall Street. The "Mad Money" host worried, however, about the implications of more strict public-health measures in America without more fiscal support from Washington, where Democrats and the Trump administration have been locked in a stalemate on stimulus negotiations for months. "The lockdowns without the stimulus equals what we're seeing, and I think it's a shame because had there been stimulus, we would then be focusing on earnings and the earnings are actually pretty darn good," he said.
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Hari Moorthy, Goldman Sachs global head of transaction banking. Source: Goldman Sachs Goldman Sachs wants to help any company in the world become a bank. The firm has just released software that allows clients to embed banking services into their own products as part of a push to break into the $32 billion a year industry managing cash for big corporations, according to Hari Moorthy, Goldman's global head of transaction banking. Decades late to the global cash management industry ruled by Citigroup and JPMorgan Chase, Goldman hopes to leapfrog rivals by offering a fresh approach to corporate bank accounts and cross-border payments. After building a new cloud-based system for accounts and payments, Goldman is publicly releasing software known as APIs to allow clients' programmers to build on top of the bank's platform. "We are trying to create a new industry by integrating our services into their businesses so they can cater to their clients as if we had them," Moorthy said in a phone interview. "Imagine a technology company that can use these APIs to create a solution for payments or deposits in concert with whatever else they currently provide to that client." The approach, dubbed banking-as-a-service, is inspired by what Amazon has accomplished with its cloud business. Just as Amazon enabled a generation of businesses to tap into cheap computing power, Goldman's wager could theoretically spur the proliferation of digital wallets and seamless payments throughout the corporate and consumer realms. Arrows pointing outwards Source: Goldman Sachs "This is the financial cloud for corporates," Moorthy said. "The possibilities of what we could do here are practically limitless." The strategy could help Goldman jumpstart its push into transaction banking, an area which has lagged consumer technology in ease of use but where clients are slow to switch providers. The move is part of CEO David Solomon's broader expansion into corporate and consumer banking, steady businesses that will broaden the firm's revenue base away from volatile trading and investment banking. "There's this butterfly effect that will kick in after we roll this out," Moorthy said. "It allows us to acquire clients of our clients, allows us to seamlessly be integrated in the fabric of banking and corporates." By connecting directly into Goldman's corporate platform, clients can open accounts quickly and take advantage of the bank's automated payments programs, which it created for itself as its first client. The transaction banking effort, which officially launched in June to outside clients, has garnered $28 billion in deposits and more than 200 clients so far. Moorthy rejoined Goldman Sachs in 2018 to lead the nascent effort after spending almost four years at JPMorgan. The ten biggest players reaped $32 billion in revenue from transaction banking last year, led by Citigroup, Bank of America and JPMorgan, according to institutional research firm Coalition.
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A man walks a dog in the shade away from the midday sun past the New York Stock Exchange (NYSE) building in Manhattan, during hot weather in New York City, New York, U.S., August 11, 2020. Mike Segar | Reuters Dividends and buybacks are bouncing back.  At the end of the first quarter, there was tremendous concern that the levels of dividends and buybacks would be cut dramatically.  There have been cutbacks, but there's good news amid the bad. The good and bad news on dividends For lovers of dividends, the end of the first quarter and the start of the second quarter looked pretty dire.  Forty-two companies in the S&P 500 — nearly 10% — completely suspended their dividends, and 25 reduced them, in some cases considerably. "That was unprecedented," Howard Silverblatt from S&P Dow Jones Indices told me. "No company suspended their dividend in 2018 or 2019." But as the economy reopened, things began to turn around. Five of the 42 companies who suspended their dividends reinstated their dividend, at least partially. Even as some companies reinstated dividends, many more continued with what they had been doing for years: increasing dividends. A total of 216 companies have increased their dividends this year. The bottom line: Silverblatt estimates that the S&P 500 will pay out $479.1 billion in dividends in 2020, only 1.3% below the $485.5 billion paid out in 2019, which was a record year. The bad news: The S&P is yielding only 1.6%, one of the lowest dividend yields in decades.  Buybacks bouncing back from Q2 lows, but companies issuing much more stock The second quarter started out poorly, as companies sought to preserve liquidity by cutting back buybacks— big time. How big? Companies in the S&P 500 bought back $199 billion of their own stock in the first quarter. In the second quarter that figure dropped to $89 billion, a bigger than 50% reduction, according to data supplied by Goldman Sachs. But then, a funny thing happened. Just like earnings, which bottomed in the second quarter, buybacks also bottomed. In the third quarter, Goldman estimates, $112 billion was bought back, a 26% increase from the second quarter, and Goldman estimates $125 billion will be bought back in the fourth quarter. That's the good news. The bad news: while gross buybacks are climbing, companies are also issuing a lot more new shares, according to Brian Reynolds, who tracks buybacks at Reynolds Strategy. The result:  net buybacks — how much buybacks are increasing or decreasing overall share count — was flat in the second quarter and likely will also be flat for the rest of the year: "The average company reported a share count increase this quarter of 0.1%, compared to a share count decrease of 0.6% a year ago," Reynolds said in a recent note. An increase in the share count means that corporations can't rely on buybacks to boost their earnings.  Reynolds noted that the S&P Buyback Index, which consists of the 100 companies in the S&P that are buying back their stock most aggressively, had also shifted from reducing to increasing their share counts. The top holdings in the index include MGM, Best Buy, Qualcomm, Kansas City Southern, Lennar, Cummins, and Xerox. "A year ago, less than 20% of this group of companies were growing their share count. Now, 44% of them are. That is a striking shift," he said.  What's all this mean for investors? The S&P Buyback Index has underperformed this year, as investors dumped companies that had high levels of buybacks in 2019 for other parts of the market. Reynolds concludes that it may be time for those companies that can still aggressively buy back stock to outperform: "From a momentum standpoint, it appears that the stocks of companies who are still able to buy back their shares are approaching the point where we would want to buy them on weakness." Speaking of increasing buybacks: after the close, Microsoft announced that it had increased its buybacks in the third quarter dramatically, to $6.74 billion, from $5.8 billion in the second quarter. Subscribe to CNBC PRO for exclusive insights and analysis, and live business day programming from around the world.
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As parts of the world brace for a second wave of Covid-19 infections, the economic impact on Asia will likely be "limited" as the region will remain resilient, according to a Credit Suisse strategist. "I think clearly Asia is going to be resilient in the face of a second wave in developed markets in the West," said Dan Fineman, co-head of equity strategy for Asia Pacific at the Swiss bank. The U.S. is seeing a surge in coronavirus cases again in recent days, while some countries in Europe are also seeing another sharp spike. "We need to look at the shift in consumption patterns that has occurred in the West since the Covid pandemic began. Although services spending has cratered in a number of countries as the pandemic hit, we've seen a shift of consumption patterns away from services towards goods — and that has enabled Asian exports to improve in recent months," he said. "As long as that shift in consumption patterns in the West continues away from services towards goods, actually the damage to Asia from a second wave in the West might be quite limited," he told CNBC's "Street Signs Asia" on Tuesday. Top picks There are some countries worth investing in due to how they've managed the pandemic, Fineman said. He flagged South Korea as a "top pick." "They've handled the pandemic quite well, and they don't really have much of a domestic problem as far as the pandemic is concerned," Fineman said, adding that the outlook for the country's export sector has also improved. If the global economy is going to gradually recover in 2021, 2022, that means … the outperformance of emerging markets is likely. Tai Hui chief Asia market strategist at J.P. Morgan Asset Management Fineman also recommended countries such as Australia and Singapore, which he said had "relatively low risk on the pandemic." He added: "We would be looking to rotate into the higher risk, harder hit economies, places like say Hong Kong or Thailand, which have suffered more from the pandemic – if we get good news on vaccine phase three trials." Global outlook But there would be risks for corporate debt if there isn't another stimulus package in the U.S., warned Tai Hui, chief Asia market strategist at J.P. Morgan Asset Management. Uncertainty still looms over the White House and it is unclear whether the Republicans will be able to strike a stimulus deal with Democrats before the election. White House economic advisor Larry Kudlow told CNBC's "Squawk Box" on Monday that talks had slowed down, but noted they were still ongoing. However, Tai said the high yield market has already priced in some of the default risks. He said current spreads are already reflecting some of those concerns. If the global economy moves to gradual recovery next year, it will benefit emerging market assets as well as U.S. and European corporate debt in the high-yield sector, said Tai. "If the global economy is going to gradually recover in 2021, 2022, that means … the outperformance of emerging markets is likely," he told CNBC's "Squawk Box Asia" on Tuesday. "You're likely to get a weaker U.S. dollar, which typically is good news for emerging market assets, whether it's fixed income or equities."
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Whatever the outcome, the November presidential election promises to bring a period of uncertainty and volatility to the markets. However, equities are still your best long-term bet, two experts said on Tuesday at the CNBC Financial Advisor Summit, a day-long virtual conference for financial advisors. After hitting fresh highs even during the Covid-19 crisis, stocks have proved remarkably resilient, said Jeffrey Mills, the chief investment officer at Bryn Mawr Trust. "There could be some front-loaded selling but I do feel like that's a near-term phenomenon," he said. More from FA 100:CNBC ranks the top-rated financial advisory firms of 2020Stock market is 'OK,' right now, says top advisorAdvisors use tech to helps clients adjust to new environment Overall, there is no alternative that offers a comparable return, Mills said. "There is going to be this continued pull toward equity markets — where else are you going to go when you need to earn a certain percentage to fund retirement, fund education?" When broken down by industry, infrastructure, renewable energy and technology will be among the big sector winners with a potential Joe Biden win, said Daniel Clifton, head of policy research at Strategas Securities. At the same time, Biden could ease concerns about the trade war with China and lack of stimulus to bolster the economy in the wake of the coronavirus. On the flipside, some investors fear a Biden win could lead to higher corporate taxes and tighter regulations. However, the odds that Biden could push through tax increases without a Democratic-controlled Congress, are "as close to zero as you could possibly imagine," Clifton said. Alternatively, if President Donald Trump is reelected, there will be "huge upside" in industries such as defense, financials and even the for-profits, Clifton said, including prisons, education and student loan lenders. In either case, "investors are going to have plenty of opportunities going into this election," he added.  Investors are going to have plenty of opportunities going into this election. Daniel Clifton head of policy research at Strategas Securities More than a third, or 37%, of top-rated financial advisory firms said they believe the Democratic nominee will be elected as the next U.S. president, compared to 20% predicting Trump will come out ahead, according to a recent poll of firms on the 2020 CNBC FA 100 list. Most also said that there will likely be no change in the congressional breakdown, predicting that the Republicans will retain control of the Senate and Democrats will retain control of the House. Even if the election does lead to market swings, it's not a reason to change your overall investment strategy, according to both advisors. "Using the election as a specific catalyst to make investment decisions without the benefit of hindsight is really difficult," said Mills.
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JPMorgan Chase is making a play to sell more services to millions of American small business owners, pushing into an area pioneered by fintech firms including Square, PayPal and First Data, CNBC has learned. The bank is rolling out a checking account that is paired with a new fintech-inspired service called QuickAccept, according to JPMorgan executives. QuickAccept lets merchants take card payments within minutes, either through a mobile app or a contactless card reader, and users will see sales hit their Chase business accounts on the same day. That fast funding is offered free, unlike competitors including Square, which typically take a day or more and charge a 1.5% fee to make instant transfers. "Our competition either doesn't have same-day funding, or they charge for it," Max Neukirchen, CEO of JPMorgan's merchant services arm, said in an interview. "We think it's a great differentiator for businesses because getting money into their account quickly is so important as they manage their cash flow." The move shows that JPMorgan, the biggest U.S. bank by assets, isn't content letting newer rivals monopolize emerging trends. Small merchants struggled with point-of-sale card transactions until 2009, when Twitter co-founder Jack Dorsey came up with the idea for a piece of hardware that attached to smartphones. That was the launching point for Square, and now the company manages $100 billion in payment volumes annually and has an $83 billion market capitalization. That swift ascent caught the eye of JPMorgan CEO Jamie Dimon, who mentioned Square during a February 2019 investor conference. "They came out with this whole dongle to process stuff and it was a great idea," Dimon said at the event. "They did all stuff we could have done that we didn't do." Square slipped 2.5% in premarket trading on Wednesday. Besides Square, PayPal is a major player in this arena. The payments firm, which first gained traction as the rails for eBay sellers, now has 346 million active accounts globally. Another player is Clover, an Andreessen Horowitz-backed start-up that was acquired by First Data in 2012. First Data was later bought by Fiserv. Max Neukirchen, CEO of Merchant Services, JP Morgan Source: JP Morgan Now, as fintech firms including Square and PayPal move more directly into competition with banks by offering lending products and digital wallets that increasingly resemble checking accounts, JPMorgan is ready to fight back. The bank designed its QuickAccept card reader, a hardware device that processes card payments via tap, dip or swipe, internally with the help of a team gained from its 2017 WePay acquisition, Neukirchen said. The firm leaned on tech investments made in the bank's Treasury Services division to help process payments faster, he said. Mass migration JPMorgan will migrate "a large portion" of its more than three million small business customers to the new service, said Jen Roberts, CEO of the Chase business banking unit. It is targeting customers with less than $500,000 in annual revenue who want to avoid paying fees, she said. The pitch to these customers: Bring more of your overall transactions to JPMorgan's new all-in-one solution, called Chase Business Complete Banking, rather than cobbling together services from banks and fintech providers, she said. A monthly fee is waived if they hit either $2,000 in average daily balances, $2,000 in QuickAccept volumes or $2,000 spent on a small business credit card. "We know there are obviously those that are using competitors' products, we can see them settling into their deposit accounts," Roberts said. "Our hope is that through this more integrated experience, they will migrate their business over to QuickAccept through Business Complete Banking." Instead of having to separately sign up for a merchant services account, a process that JPMorgan said previously took longer than a week, payments capabilities can be unlocked with a few clicks. Processing fees At stake for JPMorgan and its competitors, of course, are lucrative card-processing fees. The bank charges 2.6% plus 10 cents per tap, dip or swipe transaction and 3.5% plus 10 cents per transaction that is keyed into the mobile app, JPMorgan said. The card reader costs $49.95. That's all in line with what competitors charge. Jen Roberts, CEO of Business Banking, JP Morgan Source: JP Morgan The upheaval caused by the coronavirus pandemic could prove to be an opportunity for Chase. The bank piloted its service in Utah earlier this year, and 95% of users were new to the bank's small business brand, and more than two-thirds were owners of businesses formed this year, the bank said. The bank's experience there suggests that it's not just digitally-savvy e-commerce merchants that will benefit from this new service, but other sectors that have resisted electronic payments until now, Roberts said. "We've had construction companies, landscapers, people who don't like to accept credit cards regularly but will do it for a big ticket," she said. "They want to accept payments easily while they're on the go, but they aren't who you would consider e-commerce."
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Mario Gabelli Scott Mlyn | CNBC Investor Mario Gabelli struck a positive note on Tuesday on the U.S. economy even as coronavirus cases in the country are on the rise. More than 8 million coronavirus cases have been confirmed in the U.S. alone, according to data from Johns Hopkins University. A CNBC analysis also found that cases are growing by 5% or more in 35 states. This recent infection increase comes as the latest economic data shows signs the U.S. recovery may be stalling. However, Gabelli thinks the U.S. economy will continue to recover into the new year. "In the U.S., I see extraordinarily good growth in 2021," Gabelli, chairman of Gamco Investors, said at the annual CNBC Financial Advisor Summit. "That's because of a long runway for automobiles, a long runway for housing and I see some return of spending in commercial aviation." Fiat Chrysler reported earlier this month their auto sales jumped 38% from the second to third quarter. Meanwhile, General Motors said its car sales improved sequentially each month during the third quarter. The used-car market in the U.S. has also been on fire this year as more people avoid mass transportation during the coronavirus pandemic, pushing shares of Autonation and CarMax sharply higher. On the travel front, the Transportation Security Administration said Monday they screened more than 1 million travelers over the weekend, reaching a seven-month high. Airline stocks have been under massive pressure in 2020 as the pandemic upended the overall travel industry. However, airline shares are up sharply over the past six months as the travelers feel more comfortable flying. Delta Air Lines and United are both up at least 30% over the past six months. JetBlue and American Airlines have gained 42.5% and 15.7%, respectively, over that time period. Gabelli also advised investors buy a market-tracking exchange-traded fund, which could lead to annualized returns ranging between 6% to 8% over the next decade. To be sure, Gabelli sees some risks on the horizon. He noted that while the Federal Reserve is expected to maintain an easy stance on monetary policy near term rates will start rising "over time." "If I go back 30 to 40 years ago, the 10-year yield was at 7% or 8%. Today, it's [about] 70 basis points," Gabelli said. "So, what's going to happen to multiples when those rates invariably rise to reflect the underlying inflation?" Gabelli added that "taxes are likely to go up," which would hinder corporate profits. Opportunity in sports betting The investor highlighted sports betting companies as an attractive investment opportunity as professional sports leagues ramp up their seasons and more states legalize sports gambling. "I'm looking at how to participate in that," he said, noting that stocks such as Manchester United, Liberty Media Braves and MSG Networks are attractive investments with exposure to this trend. Manchester United shares are down more than 30% year to date along with Braves stock. MSG Networks — which broadcasts games of the New York Knicks and New York Rangers —  has dropped 46.8% in 2020.
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Would you talk differently if you knew a machine was listening to you and grading you based on what you were saying, or based on whether you were using positive or negative words, or even if the sound of your voice was optimistic or pessimistic? Apparently, Wall Street executives are talking differently. They are trying to game machine algorithms on earnings calls. You've heard of George Carlin's "7 words you can't say on TV?" We may now have "words you can't say on an earnings report." A recent study found that executives on earnings calls are increasingly avoiding using negative words and trying to sound more upbeat, so machine algorithms will score the call as more "positive" than "negative." Oh man. Anything to fool the algos. This is a new round in the war between machines and people. Machines can fool people, but people are trying to fool machines, too. All of this makes sense if you understand the evolution of trying to figure out what is "really" going on with corporate earnings. First, there were earnings reports, which came out of the creation of the Securities and Exchange Commission in the early 1930s. Then there were earnings calls. Then there were analysts trying to figure out the "body language" of the executives on the calls to determine how they "really" felt about their company prospects. Then came machines listening to executives for keywords that were deemed important and deciding whether the calls sounded "upbeat" or "downbeat" based on the words being used. Now, there's a new twist: Seems like the executives have figured out that the machines are listening, and that if they (the executives) avoid using certain words that sound "downbeat" or "negative" they can improve the score they will get, and their earnings call will magically sound more positive. So say Sean Cao, Wei Jiang, Baozhong Yang & Alan L. Zhang, authors of "How to Talk When a Machine Is Listening: Corporate Disclosure in the Age of AI," published on the National Bureau of Economic Research website. Their main conclusion: "Firms with high expected machine downloads manage textual sentiment and audio emotion in ways catered to machine and AI readers, such as by differentially avoiding words that are perceived as negative by computational algorithms as compared to those by human readers, and by exhibiting speech emotion favored by machine learning software processors." In other words, humans are using words they think the machines want to hear and that will give them a more positive score. The authors noted that this effect was particularly notable on companies that had very high interest in their filings. In other words, the more people paying attention, the more likely the execs were to change their behavior. Of course, we have known for years about the ability of machines to analyze earnings calls, but the authors say "our study is the first to identify and analyze the feedback effect, i.e., how companies adjust the way they talk knowing that machines are listening." OK, so we are in a giant hall of mirrors. Humans (investors) are trying to figure out what other humans (corporate executives) really feel about their company's prospects by listening to earnings calls that are analyzed by machines, and the humans (corporate executives) are changing their behavior so the machines will tell the other humans (investors) that things are better than they really are, or at least as good as the executives really meant it to sound. Got that? What could go wrong? "Humans are taking machines and using them to analyze emotional signals so we can analyze other humans more efficiently," said DataTrek's Nicholas Colas. "But the machines are doing it on a scale humans could never do. There's an endless loop that is being set up, and expect this to get even more refined over time." Even the study authors are a little worried about where this will ultimately lead us: "Such a feedback effect can lead to unexpected outcomes, such as manipulation and collusion," they said. Subscribe to CNBC PRO for exclusive insights and analysis, and live business day programming from around the world.
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U.S. President Donald Trump holds a campaign rally in Carson City, Nevada, October 18, 2020. Carlos Barria | Reuters The S&P 500 is up about 5% since the end of July, and that higher market historically would favor the occupant of the White House if stocks hold their gains into the election. But strategists say the so-called stock market indicator may not be working for President Donald Trump, and it looks like the market is betting on a win by Joe Biden. The Democratic former vice president leads by 8.9% in RealClearPolitics average of major polls. "You could say the market is discounting that Trump is going to lose," said Daniel Clifton, Strategas Research head of policy research. "Normally, the S&P predicts the presidential election, but that's usually confirmed by the election portfolio." Clifton said a portfolio of stocks that should do well during a Biden presidency have been outperforming Trump stocks. For instance, the Invesco Solar ETF TAN has gone from $45.01 on July 31, to $74.63, up 1.5% Monday in a down market. Biden is a proponent of more clean power and solar energy. Sam Stovall, CFRA chief investment strategist, said since World War II, there have been only two instances where the president or his party lost in November when the market was higher between July 31 and the November election. Stovall believes this year could be similar because there is a geopolitical disruption — the coronavirus pandemic. One of the years when the S&P indicator didn't work was 1968, when the nation was divided over the Vietnam War. There were protests and presidential candidate Robert Kennedy and civil rights leader Martin Luther King Jr. were assassinated. That year, the S&P 500 was up 5.8%, and Americans elected Republican Richard Nixon president. In 1980, Democrat Jimmy Carter did not win reelection. During his term, 52 American diplomats and citizens were held hostage in the U.S. Embassy in Tehran for more than 400 days, and were released when Republican Ronald Reagan was inaugurated. Stovall said those two election periods were affected by geopolitical disruptors, and this year the market is already pricing in some of Biden's policies. "I think the market is moving 40% on things getting better with Covid, and then 60%, based on the election, the belief we should end up with a Democratic victory and a likely Democratic sweep, that would increase the possibility of economic stimulus coming from Washington," said Stovall. Biden 'portfolio' higher Matthew Bartolini, head of SPDR Americas Research at State Street Global Advisors, said the Biden portfolio is showing up in clean energy ETFs, like SPDR S&P Kensho Clean Power ETF CNRG, a clean energy fund, and in SPDR S&P Kensho Intelligent Structures SIMS, an ETF focused on sustainable, intelligent infrastructure. "[CNRG] is one of the best performing ETFs in our lineup. ... We've seen a vast move upward, 160% since March 23," he said. SIMS is also up about 80% this year. For a Trump portfolio, he would include ETFs for metals and mining and traditional infrastructure, such as XME, the SPDR S&P Metals and Mining ETF, and XLI, the Industrial Select Sector SPDR Fund ETF. Trump and Biden, are diametrically opposed on trade. "Biden takes more of a globalist view, repealing tariffs that have been put in place," said Bartolini. He said he would suggest SPDR S&P China ETF GXC and FEZ, the SPDR Euro Stoxx ETF. Bartolini said Trump's "America First" strategy is more U.S. focused, so his policy may positively impact ETFs that represent American small and mid-cap stocks, such as SPSM, the SPDR Portfolio S&P 600 Small Cap ETF, and SPMD, the SPDR Portfolio S&P 400 Mid-cap ETF. Biden wants to raise taxes, so that may hurt sectors with high effective tax rates like consumer staples and retail, Bartolini said. The retail ETF is XRT, SPDR S&P Retail ETF. "The market is starting to believe Joe Biden will not raise the corporate tax rate until 2022. There's a possibility he would raise taxes in 2021 but would have a phase-in," said Clifton. "From a market perspective, the Strategas high tax basket which should be underperforming is not underperforming. The market is saying 'we're really not sure taxes are going up in 2021.'"
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CNBC's Jim Cramer  is worried President Donald Trump's administration will keep applying pressure to China into the election, creating a headwind for the market.  "I think that the president is keeping the heat on. I expect more negatives about China," Cramer said on "Squawk on the Street." Cramer's remarks Thursday come as the relationship between the U.S. and China continues to grow increasingly frigid, following a brief cooling in January after the two sides agreed to a phase-one trade agreement. However, China is reportedly far from meeting its commitments on goods purchases under the deal, which was reached after a back-and-forth tariff war between the world's two largest economies that began in 2018.   At a White House briefing Monday, Trump said the trade deal now means "very little in the overall import of things," then again criticized China's handling of the coronavirus and blamed the country for the pandemic.  "We view China differently than we did eight months ago. Very much differently," said Trump, who had initially praised China's coronavirus response but now argues its government was not transparent in sharing information on the initial outbreak.  While the virus emerged from Wuhan, China, public health experts say the U.S. government's failure to act quickly to contain the virus, as well as a lack of coordination between federal and state entities, are partly responsible for America having more reported cases of Covid-19 than any other country.  White House spokesman Judd Deere said in a statement to CNBC that Trump "is constantly reviewing our relations with China." But the president has "nothing to announce at this time," Deere added.  The Trump administration has also ratcheted up scrutiny of Chinese tech companies — specifically ByteDance, which owns the social media video app TikTok, and Tencent, which owns the messaging app WeChat.  Last week, Trump signed a pair of executive orders that banned U.S. firms from transacting with ByteDance and Tencent's WeChat. The orders go into effect in September, although there is still some confusion over how they would be implemented.  Business leaders from major American companies including Ford Motor Co. and Disney voiced their concerns over a WeChat ban to the White House earlier this week, according to a report from The Wall Street Journal.  Tensions between the U.S. and China also have intensified over Beijing's sweeping national security law it imposed on Hong Kong this summer. The Trump administration recently sanctioned 11 people, including Hong Kong Chief Executive Carrie Lam.  The U.S. Treasury Department said it was targeting Lam for "implementing Beijing's policies of suppression of freedom and democratic processes" in the former British colony.  China responded with its own batch of sanctions on U.S. officials, including Republican U.S. Sens. Ted Cruz of Texas and Marco Rubio of Florida.  - CNBC's Berkeley Lovelace Jr. contributed to this report. 
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