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On board the doomed Bayesian superyacht that claimed Mike Lynch’s life were not only his family and friends but also crucial business figures who encapsulated the key phases of his career.

High-flying former employees at his tech group Autonomy, allies who helped push through its multibillion-dollar sale to HP, and the legal brains who defended him after that deal turned sour were all in attendance on the Mediterranean when it ran into storms on Monday morning.

Lynch was pronounced dead on Thursday after the yacht he boarded with 21 other passengers sank off the coast of Sicily.

He was celebrating his recent acquittal on fraud charges linked to HP’s $11.7 billion acquisition of Lynch’s tech group Autonomy in 2011.

Lynch was joined by his wife, Angela Bacares, who survived, and his 18-year-old daughter, Hannah Lynch, whose body was recovered on Friday morning.

Other passengers included critical allies who had supported Lynch through the tech mogul’s most turbulent period.

The getaway was a symbolic voyage on what Lynch had described as the beginning of a “second life.”

The coincidental car crash: Steven Chamberlain

Rumors have now swirled about the connections between the guests on the boat and the coincidental death of Steven Chamberlain in a collision with a driver in Cambridgeshire, just days before the boat sank.

Chamberlain was a veteran at Autonomy and went on to become chief operating officer at Darktrace, a company widely connected with Autonomy. He took a “leave of absence” to defend himself during Lynch’s recent trial in the United States.

Former Autonomy NED: Jonathan Bloomer

The body of Jonathan Bloomer, 70, as well as that of his wife, Judy Bloomer, 71, were recovered alongside Lynch’s on Wednesday.

Autonomy appointed Bloomer as a non-executive board member in 2010. He chaired the group’s audit committee during the HP sale and was a key witness for Lynch’s defense during his fraud trial in California. At the time of his passing, Bloomer was an international chair at Morgan Stanley International.

Bloomer told prosecutors that Lynch “wasn’t particularly interested in the finance side” of Autonomy, preferring to focus on strategy and the company’s products.

Lynch’s lawyers: Chris Morvillo and Ayla Ronald

Chris Morvillo, 59, passed away aboard the Bayesian yacht with his wife, American jewelry designer Neda Morvillo, 57.

Morvillo, a lawyer at magic circle firm Clifford Chance, represented Lynch in his criminal trial in the U.S.

He told the legal podcast For the Defense that the case “covered one-third of my career” after his first meeting with Lynch in 2012, as HP’s unrest grew.

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In a rare LinkedIn post following the trial, which would also prove to be one of his last, Morvillo thanked his daughters and his late wife, Neda.

“I am so glad to be home,” Morvillo wrote.

“And they all lived happily ever after…”

Ayla Ronald, a 36-year-old senior associate at Clifford Chance, was also on board the Bayesian with her partner, Matthew Fletcher. Both survived the sinking.

Ronald’s company profile details how she also defended Lynch in his fraud trial with HP.

Extensive links to Darktrace 

After Lynch sold Autonomy, for which he is reported to have received £500 million ($656 million), he set up the venture capital fund Invoke Capital in 2012, which would see his influence expand deep into the U.K. tech scene in his final years.

Invoke was an early-stage investor in Darktrace, now subject to a $5.3 billion acquisition from U.S. private equity firm Thoma Bravo. The VC fund also invested in British AI company Luminance, which closed a $40 million funding round in April.

Lynch and his wife Angela held millions of their net worth in their final years through Darktrace, with a source telling Fortune they collectively had a 3% stake in the £4 billion ($5.25 billion) valued company at the time of their passing. Fortune exclusively revealed the deal is expected to still complete later in 2024.

Several former high flyers from Lynch’s Autonomy days leaped into key positions at Darktrace. Poppy Gustafsson, Darktrace’s current CEO, was a corporate controller at Autonomy. In a LinkedIn post commemorating the lives lost, Gustafsson said “Without Mike, there would be no Darktrace. We owe him so much.”

The links appear deep; Darktrace’s founding CEO Nicole Eagan also served as chief marketing officer at Autonomy, during the acquisition period involving HP. Neither Eagan or Gustafsson were on the boat, and both continue to hold leadership positions at Darktrace today.

Invoke Capital: Charlotte Golunski

Charlotte Golunski is another person with long-held business ties to Lynch. She is a partner at Invoke Capital, joining during its formation in 2012. Invoke Capital shared offices with Darktrace near London’s Trafalgar Square for a number of years.

Before joining Invoke, Golunski worked for Lynch at Autonomy and HP Autonomy for a year after the acquisition.

Golunski, 35, survived the sinking of the Bayesian alongside her partner, James Emsley, and their 1-year-old daughter. She had been asleep on the deck of the yacht with her baby when the storm hit, describing how she felt oscillations in the boat before it went down minutes later.

She told the Italian outlet La Repubblica how she held her baby above her arms in the water before she was rescued.

This story was originally featured on Fortune.com

NEW YORK (AP) — The Federal Reserve is poised to cut its benchmark interest rate next month from its 23-year high, with consequences for consumers when it comes to debt, savings, auto loans and mortgages. Right now, most experts envision three quarter-point Fed cuts — in September, November and December — though even steeper rate cuts are possible.

“The time has come” for the Fed to reduce interest rates, Powell said Friday in his keynote speech at the Fed’s annual economic conference in Jackson Hole, Wyoming. “The direction of travel is clear, and the timing and pace of rate cuts will depend on incoming data, the evolving outlook, and the balance of risks.”

Based on Powell’s remarks and recent economic data, the central bank is expected to cut its key rate by a quarter-point when it meets next month and to carry out additional rate cuts in the coming months.

Read more: What the Fed rate decision means for bank accounts, CDs, loans, and credit cards

Here’s what consumers should know:

What would the Fed’s rate cuts mean for savers?

According to Greg McBride, chief credit analyst for Bankrate, savers should lock in attractive yields right now, before the expected rate cuts begin.

“For those who might be looking at Certificates of Deposit or bonds — you want to jump on that now,” he said. “There is not a benefit to waiting because interest rates are going to be moving lower.”

McBride stressed that anyone closer to retirement has a good opportunity to lock in CDs at the current relatively high rates.

“If you do so, you’ll provide yourself a predictable flow of interest income at rates that should outpace inflation by a pretty healthy margin,” said McBride.

How would the rate cuts affect credit card debt and other borrowing?

“Your credit card bill is not going to plunge the day after the next Fed meeting,” cautions LendingTree chief credit analyst Matt Schulz. “Nobody should expect miracles.”

That said, the declining benchmark rate will eventually mean better rates for borrowers, many of whom are facing some of the highest credit card interest rates in decades. The average interest rate is 23.18% for new offers and 21.51% for existing accounts, according to WalletHub’s August Credit Card Landscape Report.

Still, “it’s really important for people to understand that rates probably aren’t going to fall that quickly,” Schulz said.

He said it’s important to take steps such as seeking a 0% interest balance transfer or a low-interest personal loan. You can also call your credit card issuer to see if you can negotiate a better rate.

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Read more: What credit card users need to know if the Fed cuts rates in September

“In the short term, those things will have a much bigger effect than falling interest rates,” Schulz said.

How about mortgages?

The Federal Reserve’s benchmark rate doesn’t directly set or correspond to mortgage rates, but it does have an influence, and the two “tend to move in the same direction,” said LendingTree senior economist Jacob Channel.

In recent weeks, mortgage rates have already declined ahead of the Fed’s predicted cut, he pointed out.

“It goes to show that even when the Fed isn’t doing anything and just holding steady, mortgage rates can still move,” Channel said.

Melissa Cohn, the regional vice president of William Raveis Mortgage, echoed this, saying that the most important thing is what signal the Fed is sending to the market, rather than the rate change itself.

“I’ve heard from a lot of people who locked in (their mortgage rate) over the course of the past 18 months, when rates were at their peak, already asking whether it’s time to refinance and what savings they could have,” she said. “I think that the outlook is good, and hopefully that spills into the real estate market, and we get more buyers in the market.”

Channel said that the majority of Americans have mortgages at 5%, so rates may have to fall further than their current average of 6.46% before many people consider refinancing.

Read more: How the Federal Reserve rate decision affects mortgage rates

And auto loans?

“With auto loans, it’s good news that rates will be falling, but it doesn’t change the basic blocking and tackling of things, which is that it’s still really important to shop around and not just accept the rate that a car dealer would offer you at the dealership,” said Bankrate’s McBride. “It’s also really important to save what you can and be able to try to put as much down on that vehicle as you can.”

McBride does predict that the beginning of rate cuts and the avoidance of a recession will lead to lower auto loan rates in 2024 — at least for borrowers with strong credit profiles. For those with lower credit profiles, double digit rates will likely persist for the remainder of the year.

What’s going on with inflation and the job market?

Last week, the government reported that consumer prices rose just 2.9% in July from a year ago, the smallest increase in over three years. Employment data, however, gives some economists pause. New data has showed hiring in July was much less than expected and the jobless rate has reached 4.3%, the highest in three years — one measure of a weakening economy. That said, robust retail sales have helped quell fears of a recession.

The rate at which the Fed continues to cut rates after September will depend in part on what happens next with inflation and the job market, in the coming weeks and months.

___

The Associated Press receives support from Charles Schwab Foundation for educational and explanatory reporting to improve financial literacy. The independent foundation is separate from Charles Schwab and Co. Inc. The AP is solely responsible for its journalism.

As a senior citizen, you probably will end up paying property taxes for as long as you are a homeowner. However, depending on the state you live in and often once you hit your 60s (usually around the ages of 61 to 65), you may be eligible for a property tax exemption. This exemption is often referred to as a homestead exemption for seniors and sometimes as a “senior freeze.” It’s important to understand how this works in order to determine if you’ll be able to take advantage of this property tax exemption. You can also work with a financial advisor who can help you make a retirement plan, including any tax savings or exemptions that you may qualify for.

How Do These Property Tax Exemptions Work?

Every state handles property tax exemptions differently, but generally, a homestead tax exemption program does not mean that you will stop paying any property taxes as a senior. These typically are programs that reduce your future property taxes but not do end them. After all, most local governments are funded by property taxes. If property taxes disappeared entirely for seniors, cities and town budgets would likely suffer.

Frequently, the way these programs work, the assessed value of the property freezes, once you have successfully applied and been accepted for a homestead exemption. So if your home’s property value was frozen at $200,000, five years from now, if your home is now worth $220,000, you’ll be paying taxes on a $200,000 home and not a $220,000 home.

As noted above, the taxes homeowners pay will differ from state to state. For instance, Ohio allows qualifying homeowners to exempt up to $25,000 of the market value of their homes from all local property taxes. So if you were eligible for the state’s property tax exemption and have a $150,000 home, once you crunched the numbers with a property tax calculator, the property taxes would possibly be calculated as though your home’s market value was $125,000.

Ultimately, these senior freezes don’t just provide a needed monetary break for seniors, it can help keep them in their homes and neighborhood. After all, a senior citizen is often living on a fixed income. If property values keep climbing, a senior making a low to moderate income may struggle to remain in a home that they’ve spent most of their life in.

Factors You’ll Want to Keep in Mind With a “Senior Freeze”

Because states all handle property tax exemptions differently, you may find that you don’t live in a state that isn’t yet offering a homestead exemption. Or you may find that your state offers a senior freeze, but you make too much money to qualify. So you definitely want to investigate your own state, before you determine whether you will be able to put the brakes on paying property taxes.

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But there are several factors you’ll want to keep in mind:

• There are rules: Because these state programs are often but not always aimed at low-income seniors, it should come as no surprise that there are generally always going to be rules baked into these property tax exemptions, such as second homes or vacation homes not being eligible for a senior freeze.

• You may just get a credit: Often these tax exemptions come in the form of a credit on property tax bills.

• Only one homeowner may need to qualify: Don’t assume that both homeowners have to be the eligible age to participate in a senior freeze. You may be able to take advantage of the property tax exemption as long as one homeowner is the eligible age.

• This may not just apply to homeownership: These senior freezes generally don’t only apply to houses. Often, if you’re 65 or older, you’ll be able to reduce your property tax bill not only on a house but mobile and manufactured homes, houseboats, townhomes, condominiums and so on.

• You will have to apply: You typically need to apply for a senior freeze. You may not need to renew it every year, but generally, the first year you would have to apply for a property tax exemption. It likely won’t automatically be granted to you.

• You’ll provide more information after applying: When you apply for a senior freeze, you’ll typically furnish your age and date of birth on the application. You may later need to provide, perhaps to a county auditor, documentation in the form of a driver’s license or birth certificate.

The senior freeze can be a good fit for many to cut down on property taxes that might prevent them from owning their homes during retirement. Just keep these rules in mind before deciding to apply. Consider speaking with a financial advisor to build an appropriate tax strategy.

The Bottom Line 

Saving for retirement was hard and managing your money while retired is even harder. If you are eligible for a homestead exemption for seniors in your state you may want to consider applying for one. You won’t get out of paying property taxes entirely but the senior freeze will stop property taxes in their tracks. You may want to sell your home someday for a variety of reasons but thanks to a property tax exemption, if you do move out it likely won’t be because property taxes were too high.

Tips for Retirement Planning

• Retiring can be hard enough without having to worry about whether you have enough money or not. You may want to work with a financial advisor to help you create a retirement plan so that you don’t have to worry. You’ll be able to make long-term financial goals and get a roadmap on how to achieve those goals. Finding the right financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with up to three financial advisors who serve your area, and you can interview your advisor matches at no cost to decide which one is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.

• You can also take advantage of SmartAsset’s free retirement calculator to help you determine if you’re saving enough to meet your long-term goals.

• Keep an emergency fund on hand in case you run into unexpected expenses. An emergency fund should be liquid — in an account that isn’t at risk of significant fluctuation like the stock market. The tradeoff is that the value of liquid cash can be eroded by inflation. But a high-interest account allows you to earn compound interest. Compare savings accounts from these banks.

• Are you a financial advisor looking to grow your business? SmartAsset AMP helps advisors connect with leads and offers marketing automation solutions so you can spend more time making conversions. Learn more about SmartAsset AMP.

Photo credit: ©iStock.com/Andrii Zastrozhnov, ©iStock.com/Jinda Noipho, ©iStock.com/Jirapong Manustrong

The post At What Age Do Seniors Stop Paying Property Taxes? appeared first on SmartAsset Blog.

Nvidia (NASDAQ: NVDA) has been one of the biggest beneficiaries of the booming spending on artificial intelligence (AI) development. Its graphics processing units (GPUs) are a key piece of infrastructure for training and running large language models, the backbone of generative AI. Big tech companies like Alphabet (NASDAQ: GOOG) (NASDAQ: GOOGL) and Meta Platforms (NASDAQ: META) are spending billions of dollars to get their hands on as many Nvidia GPUs as possible right now.

That’s been great for Nvidia and its shareholders. Sales more than tripled in its fiscal first quarter, reaching a record $26 billion in total revenue. But that kind of growth can’t last forever.

Analysts expect more modest sales growth of “just” 38.4% next year. But some comments from Nvidia’s biggest customers suggest that number might be too high.

Nvidia’s biggest customers just admitted they’re overspending on AI

While Nvidia has seen its profits soar as a result of all the AI spending, the same isn’t necessarily true of a lot of its biggest customers. A step up in capital expenditures like those required to build AI data centers can be a crunch on cash flow. That’s especially true if those investments don’t produce an immediate impact on revenue.

That’s the challenge for cloud providers that rent computing infrastructure to developers. The three largest cloud providers are Microsoft, Amazon, and Google. If a developer comes to one of them and needs access to compute power they don’t have, it will go to one of its competitors. As a result, they need to build data centers fast enough amid the current AI boom to ensure when a new customer comes to them, or an existing customer asks for more capacity, they can serve them.

Alphabet CEO Sundar Pichai made this clear when asked about spending on AI during the company’s second-quarter earnings call. “I think the one way I think about it is when we go through a curve like this, the risk of under-investing is dramatically greater than the risk of over-investing for us here,” he told analysts. In other words, he’s intentionally overspending right now to ensure he gets as many customers as possible. Microsoft and Amazon are likely taking a similar approach.

Meanwhile, Meta Platforms is building its own data center capacity to support its AI development. CEO Mark Zuckerberg has ambitions of turning Meta into the leading AI company in the world. And that requires having the infrastructure in place before the company’s software is ready for training and deployment.

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“It’s hard to predict how this will trend multiple generations out into the future, but at this point I’d rather risk building capacity before it is needed, rather than too late, given the long lead times for spinning up new infra projects,” he said during Meta’s second-quarter earnings call.

His comments echo Pichai’s. Meta is spending now with the expectation that it will grow into its capacity. At some point, however, it will rightsize its data centers. At that point, it will significantly slow down its spending on servers and chips like Nvidia’s.

These comments hold a lot of weight (on Nvidia’s income statement)

The reason Nvidia shareholders should pay attention to everything Pichai, Zuckerberg, and a few other big-tech executives say about their AI spending is that the business has become heavily concentrated on those customers.

Twenty-four percent of Nvidia’s total sales in the first quarter came from just two customers. Between 60% and 70% of its revenue comes from just 10 customers, according to Seligman Investments analyst Paul Wick.

With all that revenue highly concentrated among just a handful of customers, a single change in the capital expenditure policy at one of them could drastically impact Nvidia’s results. If Alphabet or Meta decide to cut back on spending in a couple of years after aggressively building capacity, Nvidia will see its growth slow considerably.

The stock is in a precarious position, with Nvidia shares trading at valuation multiples, with around 50x forward earnings and 40x enterprise value to revenue. If it continues to outperform management’s guidance and analysts’ expectations, the stock will continue zooming higher. But one quarter of poor results could send shares reeling. The comments from Alphabet and Meta suggest it may be only a matter of time before there’s a stark pullback in AI spending.

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Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool’s board of directors. John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Adam Levy has positions in Alphabet, Amazon, Meta Platforms, and Microsoft. The Motley Fool has positions in and recommends Alphabet, Amazon, Meta Platforms, Microsoft, and Nvidia. The Motley Fool recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.

Alphabet and Meta Platforms Just Sent a Major Warning to Nvidia Shareholders was originally published by The Motley Fool

Two artificial intelligence (AI) stocks have led the S&P 500 (SNPINDEX: ^GSPC) higher this year. Semiconductor company Nvidia (NASDAQ: NVDA) and server manufacturer Super Micro Computer (NASDAQ: SMCI) have see their share prices surge 159% and 119%, respectively.

Both companies recently announced 10-for-1 stock splits to make shares more affordable. Nvidia completed its split in June, and Super Micro Computer will follow suit in late September. But Wall Street analysts expect both stocks to move even higher over the next 12 months.

Nvidia’s median target of $140 per share implies 10% upside from its current share price of $127. And Super Micro’s median target of $693 per share implies 16% upside from its current share price of $600. But I think Super Micro stock will soar 100% in the next year, achieving a split-adjusted share price of $120 by August 2025.

That said, patient investors should consider buying both stocks.

Nvidia: Delayed Blackwell shipments create uncertainty ahead of earnings

Nvidia reported stellar financial results in the first quarter, crushing estimates on the top and bottom lines. Revenue rose 262% to $26 billion and non-GAAP net income climbed 461% to $6.12 per diluted share. CEO Jensen Huang said, “Our data center growth was fueled by strong and accelerating demand for generative AI training and inference on the Hopper platform.”

However, shipments of Nvidia’s Blackwell GPUs will be delayed three months due to a design flaw “discovered unusually late in the production process,” according to The Information. Blackwell chips can run training and inference workloads more quickly than the previous Hopper generation, which should further cement Nvidia’s leadership position in AI chips.

Following the report, Nvidia shares slipped to their lowest level since May, but the stock has since rebounded, suggesting the market sees little reason to worry. Indeed, Deutsche Bank analyst Ross Seymore doubts the delayed launch of Blackwell will have a material impact on the Nvidia’s near-term outlook or its ability to achieve Wall Street estimates.

However, investors should proceed cautiously. Management has yet to address the issue, so it represents an unknown that demands explanation when the company reports earnings on Aug. 28. Expectations are already high given that Nvidia has crushed Wall Street estimates in recent quarters, so bad news could cause the stock to decline sharply.

Looking ahead, Wall Street expects Nvidia’s earnings to grow at 37% annually over the next three year. That makes the current valuation of 75 times earnings look a little pricey, though not absurdly expensive. Patient investors can buy a very small position today, provided they are comfortable with the possibility of a post-earnings decline. In that scenario, investors should consider buying a slightly larger position on the pullback.

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Super Micro Computer: The market leader in AI servers is expected to gain share

Super Micro Computer designs servers and storage solutions for cloud and private data centers. Internal manufacturing capabilities and a unique building-block approach to product development allow the company to rapidly build servers with the latest chips from suppliers like Nvidia. As a result, Super Micro typically beats competitors to market by two to six months, according to CEO Charlies Liang.

That advantage has made Super Micro the leader in artificial intelligence (AI) servers, and analysts expect the company to gain share quickly. Bank of America analysts expect Super Micro to account for 17% of AI server sales by 2026, up from 10% last year. Tom Blakely at KeyBanc is more bullish. He thinks Super Micro’s market share could top 20% this year. He also says the company has “competitive moats that should sustain if not expand this share in coming years.”

Supermicro reported mixed financial results in the fourth quarter of fiscal 2024 (ended June 30). Revenue surged 143% to $5.3 billion on record demand for AI infrastructure. However, gross margin contracted 5.8 percentage points to 11.2% and non-GAAP net income climbed just 78% to $6.25 per diluted share. Wall Street expected non-GAAP earnings to increase 130% to $8.14 per diluted share.

The stock plunged following the report, reflecting concerns that margins contracted because Super Micro lacks pricing power in an increasingly competitive market. But CEO Charles Liang attributed the margin crunch to costs associated with direct liquid cooling (DLC) components. Moreover, he expects gross margin to normalize between 14% and 17% by the end of fiscal 2025 (ends June 2025) as DLC servers begin shipping in higher volume.

Importantly, investments in DLC technology could reinforce Super Micro’s position as the market leader in AI servers. Liquid cooling is more cost effective than traditional air cooling, so demand for DLC servers is expected to grow rapidly in the coming years as data centers are filled with powerful AI hardware generating tremendous amounts of heat. Super Micro has positioned itself as an early leader in DLC technology.

Looking ahead, Super Micro’s guidance for fiscal 2025 implies revenue growth between 74% and 101%. If the company hits the high end of that range, its share price could increase 100% without any change in the price-to-sales ratio. And the stock currently trades at 2.5 times sales, which is a discount to the 12-month average of 3.3 times sales. That’s why I believe Super Micro stock will double by August 2025.

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Before you buy stock in Nvidia, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Nvidia wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

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Trevor Jennewine has positions in Nvidia. The Motley Fool has positions in and recommends Nvidia. The Motley Fool has a disclosure policy.

Prediction: 1 Stock-Split AI Stock to Buy Before It Soars 100% in the Next Year (Hint: Not Nvidia) was originally published by The Motley Fool

By Ann Saphir and Howard Schneider

JACKSON HOLE, Wyoming (Reuters) -No safer than a bund. Or a gilt. Or an OAT.

Long touted as hands-down the world’s “safe haven” securities, the behavior of U.S. Treasuries during and after the COVID-19 pandemic calls that label into question, suggesting they are little different from the debt issued by the likes of Germany, Britain, France, or even big corporations.

That’s the key finding of new research presented at the Kansas City Fed’s annual research conference in Jackson Hole, Wyoming. It examines a shift in investor behavior in that period that raises questions about the “exorbitant privilege” the U.S. government has long enjoyed to borrow broadly on the global market even as federal budget gaps grow ever wider.

It’s a timely question given growing deficits are seen as a near certainty regardless of who becomes the next U.S. president.

New York University’s Roberto Gomez-Cram, London Business School’s Howard Kung and Stanford University’s Hanno Lustig also throw into question the assertion that the Treasury market was dysfunctional in that period – as asserted by the Federal Reserve when it launched its massive bond buying – or just rationally pricing the risk of a massive unfunded spending shock then being prepared in response to the health emergency.

“In response to COVID, U.S. Treasury investors seem to have shifted to the risky debt model when pricing Treasurys,” wrote New York University’s Roberto Gomez-Cram, London Business School’s Howard Kung and Stanford University’s Hanno Lustig in the paper. “Policymakers, including central banks, should internalize this shift when assessing whether bond markets are functioning properly.”

The researchers looked at the behavior of Treasuries securities during the pandemic shutdown of 2020, when yields shot higher not just for U.S. debt but for bonds issued by nations across the globe.

They found that investors did not, as they had during previous episodes of global financial stress, pile into Treasuries and drive up their value. Instead, investors marked down Treasury securities, much as they did for bonds from other countries.

Meanwhile the U.S. Federal Reserve responded to the spike in U.S. Treasury yields as if it were a result of market dislocation, they said, buying up bonds to bring back order to the world’s usually most liquid debt market as they had during the Global Financial Crisis.

“In the risky debt regime, valuations will respond to government spending shocks, which may involve large yield changes in bond markets,” the researchers said, noting that they found especially big market moves on days when fiscal stimulus was announced.

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“In this environment, large-scale asset purchases by central banks in response to a large government spending increase have undesirable public finance implications,” they wrote. “These purchases, which provide temporary price support, destroy value for taxpayers but subsidize bondholders” and may also encourage governments to overestimate their true fiscal capacity, they wrote.

PUSHBACK

The paper drew pushback from the audience, including Treasury Department officials and others who said it needed to account for uncertainty unleashed around the pandemic, the fact that hundreds of billions of dollars of fiscal response to the crisis was financed without trouble, and that more recently U.S. bond yields had been dropping even with continued large deficit spending.

The paper did not reflect “the uncertainty in the episode,” U.S. Treasury Under Secretary for Domestic Finance Nellie Liang said in comments from the floor of the conference.

She noted that “with the passage of the Cares Act there is more than a trillion dollars of debt….and there is no sign of problems in that even during March or April” when global governments were first reacting to the health crisis.

(Reporting by Ann Saphir and Howard Schneider and Dan Burns; Editing by Chizu Nomiyama)

Benzinga and Yahoo Finance LLC may earn commission or revenue on some items through the links below.

NBA fans under 40 may not recognize Vinnie Johnson, but he was an integral member of the great Detroit Pistons teams of the 1980s. Known as the “Bad Boys,” they won back-to-back championships, largely because of their notoriously physical play. Benzinga looks at how this high-scoring guard parlayed $5 million in career earnings into an estimated $500 million net worth in retirement.

Trending Now:

The Bad Boys

Younger fans of today’s NBA would probably not recognize the game if they watched a tape of an NBA basketball game from the late 1980s or early 1990s. Professional basketball was incredibly physical at that time, so much so that “noncontact sport” was a misnomer.

Although the early 1980s were dominated by luminaries like Magic Johnson and Larry Bird, who battled each other in several epic contests for the championship, the Detroit Pistons were steadily building a strong team. Led by future Hall of Famers Isiah Thomas and Joe Dumars, Detroit took physical play to a new extreme. They earned the nickname “Bad Boys” due to their shamelessly physical style of basketball.

By the late 1980s, the Pistons were bona fide contenders and Vinnie Johnson was an integral team member. He was known as “The Microwave” for his ability to instantly come in off the bench and get red-hot. Johnson’s opponents could not stop him from scoring 10 points in minutes while Thomas rested. It’s not a stretch to say that Detroit wouldn’t have won back-to-back titles without Vinnie.

Read More:

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A Bad Boy Becomes a Mogul

Aside from the very physical play, there is another huge difference between today’s NBA and the era when Vinnie Johnson played: the money. Today, a player of Johnson’s talents could easily earn over $150 million during their career. By contrast, Vinnie Johnson made an estimated $5 million during his 13-year career. Yes, that was still a lot of money in the 1990s, but it still pales in comparison to player salaries today.

After retiring, Johnson wanted to do something that would provide income for himself and give back to his adopted hometown of Detroit, where he remains a legend. So, Vinnie started Piston Automotive in 1996. The company’s mission was to create jobs for Detroit residents and supply auto parts to the city’s “Big 3” automotive companies, Ford, General Motors and Chrysler.

Under Johnson’s leadership, Piston Automotive has grown to the point where it now supplies major Japanese automakers, including Nissan, Toyota and Honda. It has expanded its reach beyond Michigan and into the greater Midwest. Illinois, Kentucky, Ohio and Missouri are all covered by Piston Automotive’s footprint. The company has an estimated $2.8 billion in annual revenue and estimates put Johnson’s net worth in the $500 million range. The former bad boy has grown into a mogul.

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© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.

Dividends are a great source of passive income that can help to supplement your earned income. The good news is that it’s not tough to identify and purchase a basket of dividend stocks that can help you generate this income stream.

There are several characteristics that I look for when filtering out good dividend stocks for my portfolio. First, they must be a highly cash-generative business and possess a leading market position that ensures they can continue to churn out healthy and growing free cash flow. They also need to demonstrate a solid track record of paying out increasing dividends over the years.

The key to growing your dividend income is to steadily purchase shares of such companies and then compound your dividends by reinvesting them in the same companies. Over time, the increase in dividend per share, along with a higher stake in the business, will enable you to increase the amount of dividends you receive per year. The idea is to build up a stream of retirement passive income that you can comfortably rely on in your golden years. It is not a difficult process to understand, but it does take patience and perseverance.

Here are three dividend stocks that fit the bill and can allow you to slowly compound your wealth over the years.

1. Enbridge

Enbridge (NYSE: ENB) is a diversified energy delivery company with four core divisions: liquids pipelines, natural gas pipelines, gas utilities and storage, and renewable energy. The company is a major player in the energy sector and delivers around 30% of the crude oil produced in the U.S. and transports a fifth of the natural gas consumed there. This strong market position enables Enbridge to churn out steady cash flow as it occupies a dominant position in the energy delivery industry.

The business saw its revenue rise and then dip from 47.1 billion Canadian dollars in 2021 to CA$53.3 billion in 2022 and then to CA$43.6 billion in 2023. Net income was impacted over the years by one-off items, along with the impairment of goodwill and long-lived assets, but averaged around CA$5.9 billion over the three years. Enbridge’s free cash flow, however, was more consistent and increased from CA$1.2 billion in 2021 to CA$9.3 billion in 2023.

The company’s increasing free cash flow generation has enabled it to continuously raise its dividends over the years. Its latest quarterly dividend stood at CA$0.915 and topped off a 29-year streak of uninterrupted dividend increases at an annual rate of around 10%.

Enbridge has paid out dividends to its stockholders for more than 69 years, capping off an impressive track record for the energy delivery company. Enbridge should sustain this dividend growth with the recent acquisition of three gas utility businesses to bolster its business, for which federal approvals have already been obtained. Its Renewable Energy division is also executing the growth initiatives laid out during its Investor Day with several projects in the U.S. and Canada that have signed power purchase agreements with blue-chip companies such as Amazon and AT&T.

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For the first half of 2024, Enbridge continued to churn out strong financial results with a distributable cash flow of CA$6.3 billion, up from CA$5.9 billion in the prior year. Management’s focus on low capital intensity and utility-like growth means that investors should continue to make Enbridge’s dividend continue growing in the years ahead.

2. Home Depot

Home Depot (NYSE: HD) is the world’s largest home improvement retailer, with 2,340 retail stores and more than 760 branches across 50 states in the U.S., 10 provinces in Canada, and Mexico. The company wields considerable clout in the retail sector and is a storied name that many rely on to find a wide variety of merchandise.

The company saw sales remain stable from 2021 to 2023, rising from $151.2 billion to $152.7 billion, while gross profit remained flat at around $50.8 billion to $51 billion because of inflationary pressures. Net profit declined slightly from $16.4 billion in 2021 to $15.1 billion in 2023, mainly due to higher interest expenses as interest rates surged over the past two years.

On a positive note, Home Depot’s free cash flow stayed consistently high and averaged $14.5 billion per year from 2021 to 2023. This consistency has allowed the retailer to increase its dividends every year since 2008, with the latest being $2.25 per quarter, up 7.7% year over year.

The company once again saw its earnings for the first half of 2024 weighed down by higher expenses, with net income falling by 4.3% year over year to $8.2 billion. Free cash flow continued to stay strong and came in at $9.3 billion, and is on track to surpass its 2023 level of $17.9 billion. With inflation declining in the past year, Home Depot should see the increase in expenses easing, which will decrease the pressure on its bottom line.

The business should also witness further growth, with Home Depot acquiring SRS Distribution, a residential specialty trade distribution company, back in March 2024 for around $18.25 billion. This should enable Home Depot to extend its offerings to better serve renovators and remodelers and will add $50 billion to the company’s total addressable market, increasing it to $1 trillion. Although the transaction will be financed mainly by debt and will cause earnings per share to decrease in the first year, management anticipates that the purchase will boost earnings from the second year onward.

Meanwhile, Home Depot opened four new distribution centers earlier this year to further extend its ecosystem to Detroit, southern Los Angeles, San Antonio, and Toronto. These new centers will improve accessibility for their customers who need to access large, bulky merchandise and increase the company’s attractiveness while cementing customer loyalty.

3. Nordson

Nordson (NASDAQ: NDSN) is a precision technology company that delivers applications to the consumer, medical, electronics, and industrial sectors. The business has an excellent track record of paying out increasing dividends and is one of the few Dividend Kings out there. Nordson recently upped its quarterly dividend by 15% year over year to $0.78 from $0.68, marking its 61st consecutive dividend increase and giving the company one of the longest-running unbroken streaks of increases.

The company has demonstrated steady improvements in both revenue and net income over the years. Sales went from $2.4 billion in 2021 to $2.6 billion in 2023, while net income rose from $454.4 million to $487.5 million over the same period. Free cash flow averaged $525 million per year from 2021 to 2023, and Nordson’s dividend payout ratio rose from just 22% to 31% over this period, which explains why the company could continue paying out more.

The first half of 2024 saw Nordson continue its streak of free cash flow generation with $273 million churned out. Net income for the half-year dipped by 1.7% year over year to $227.8 million despite a 1.8% year-over-year increase in revenue because finance expenses more than doubled.

Despite this, the company is paying out just 40% of its earnings as dividends if we use the latest annualized earnings per share of $7.90 and compare it with the annualized dividend per share of $3.12. This simple calculation shows that the business still has ample room to raise dividends and yet reinvest most of its earnings for growth.

Nordson is also growing its business through acquisitions, with its acquisition of ARAG closing in August last year and helping to expand the company’s reach into the high-growth precision agriculture sector. Back in May this year, Nordson acquired Atrion Corporation for around $800 million to expand its medical portfolio into new markets and therapies. The purchase is complementary to Nordson’s customer base and should contribute positively to its results in the future.

With these growth drivers in place, Nordson looks well positioned to continue growing its earnings, free cash flow, and dividends well into the future.

Should you invest $1,000 in Home Depot right now?

Before you buy stock in Home Depot, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Home Depot wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Nvidia made this list on April 15, 2005… if you invested $1,000 at the time of our recommendation, you’d have $758,227!*

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See the 10 stocks »

*Stock Advisor returns as of August 22, 2024

Royston Yang has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Enbridge and Home Depot. The Motley Fool has a disclosure policy.

3 Dividend Stocks to Double Up on Right Now was originally published by The Motley Fool

Cathie Wood is struggling to get the balance right in her growth stock portfolios. The Ark Invest co-founder, CEO, and chief investment officer is losing to the market for the third time in the last four years. She’s trying not to keep it that way.

Wood offers up the daily transactions across her half-dozen exchange-traded funds. What’s she buying these days? Ark Invest added to existing positions in Ibotta (NYSE: IBTA), Roblox (NYSE: RBLX), and Guardant Health (NASDAQ: GH) on Thursday. Let’s take a closer look.

1. Ibotta

There’s no shortage of market debutantes this year that have faltered after the initial spark. Ibotta is the latest of the sinker stinkers. The digital marketing platform that rewards its growing user base for making purchases through its advertising partners went public at $88 in April, only to open at $117 on its first day of trading. It’s all been downhill from there. The stock has gone on to shed more than half of its opening high, closing below $50 on Thursday.

Ibotta became a broken initial public offering (IPO) at the end of May after disappointing the market with its first financial update as a public company. The first quarter itself was fine. Revenue rose 43%, shy of the 52% growth it posted for all of last year but still ahead of analyst expectations. Earnings also topped Wall Street profit targets. However, guidance called for a more substantial top-line slowdown for the second quarter. This is a hard sell for an IPO.

Ibotta has an intriguing business model. It offers a cash-back rewards program in which users of the free namesake app make money when they purchase — in person or online — from an Ibotta retail partner. Walmart (NYSE: WMT) is a partner as well as a minority shareholder in Ibotta.

As bad as the market reaction to the first report was, this month’s second-quarter announcement was even worse. Revenue growth slowed to 14%, or 29% adjusted for a prior-year breakage benefit. This is actually better than the adjusted 25% increase it was targeting three months earlier, but adjusted net income rose by a mere 9%.

Making matters worse, guidance for the current quarter calls for adjusted revenue growth to decelerate to 12%. It’s not a good trend. The stock plummeted 27% on its heaviest daily volume since the day it went public following the uninspiring report.

The platform is working. Ibotta has now reached more than 50 million accounts and has paid back more than $2 billion in rebates since its inception. One can argue that it may even be a recession-resilient play. If consumers are pinched, they’re going to want to save money whenever they can. For retail partners, it’s a great way to generate a lead and only have to pay when a sale is made.

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Wood bought some Ibotta when it went public in April. She’s been busy this week, adding to her early position at much lower price points in the last three trading days. She’s not the only one who thinks the stock is cheap. Ibotta’s board announced a $100 share buyback on Thursday. At current prices, this would be enough to repurchase most of the 2.5 million freshly minted shares from the IPO at almost half the price.

2. Roblox

Roblox stock is moving higher for the third consecutive month, but it’s still trading lower in 2024. The online gaming platform developer saw its revenue increase 31% for the second quarter it posted earlier this month. The 31% increase in revenue is the second-strongest gain it has posted in the last two years. Red ink continues to be a problem, but its loss narrowed. It was a beat on both ends of the income statement.

Roblox also boosted its full-year revenue and bookings guidance. The platform’s 79.5 million average daily active users has risen 21% over the past year. Average monthly unique payers and time spent on the platform are growing even faster, encouraging signs of monetization and engagement, respectively.

3. Guardant Health

The one Wood purchase on this list that’s actually trading higher this year is Guardant Health, but its 3% gain in 2023 is still well short of the market averages. Revenue rose 29% for the developer of oncological tests in the financial update announced earlier this month. Guardant also boosted its full-year revenue outlook.

Guardant is still years away from reported profitability, but it has a compelling pipeline of clinical or biopharmaceutical tests. Its own forecast calls for revenue to triple by 2028. A lot will have to go right for that to happen, but Wood doesn’t mind waiting for growth projections to play out and pay off.

Should you invest $1,000 in Ibotta right now?

Before you buy stock in Ibotta, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Ibotta wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Nvidia made this list on April 15, 2005… if you invested $1,000 at the time of our recommendation, you’d have $758,227!*

Stock Advisor provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month. The Stock Advisor service has more than quadrupled the return of S&P 500 since 2002*.

See the 10 stocks »

*Stock Advisor returns as of August 22, 2024

Rick Munarriz has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Guardant Health, Roblox, and Walmart. The Motley Fool has a disclosure policy.

Cathie Wood Goes Bargain Hunting: 3 Stocks She Just Bought was originally published by The Motley Fool

Cava (CAVA) is serving up some savory numbers for its investors, leading the stock to new highs.

After the market close on Thursday, the Mediterranean fast-casual chain reported second quarter results that beat estimates across revenue, earnings, and same-store sales.

Net sales jumped 35.2% year over year to $233.5 million, compared with expectations of $219 million. Adjusted earnings per share came in at $0.17, versus the $0.13 expected.

Same-store sales jumped 14.4%, more than the 7.45% Wall Street expected. Sales growth was driven by higher foot traffic (up 9.5% year over year), an increase in menu price, new locations, and the launch of grilled steak on June 3.

On Wednesday, Cava stock hit a record-high close of $102.39, and on Friday, it hit an intraday high of $122.95, making its biggest intraday jump ever.

The steak launch surpassed its expectations by a landslide, CEO Brett Schulman told Yahoo Finance the team is “working on a deep pipeline of innovation” for the next few years. Schulman said the company’s “value proposition” is drawing diners as consumers trade down from fine-dining restaurants but trade up from fast food.

The company raised its full year outlook to sales growth of 8.5% to 9.5% as a “reflection of the strength we continue to see in the business,” he told Yahoo Finance, adding that he expects to hold onto momentum in Q3 and Q4.

“It implies low double digit comps [comparable same-store sales growth] for the remainder of the year,” he said.

Shares are up 180% year to date, compared to 20% for Chipotle (CMG) and 18% for the S&P 500 (^GSPC).

Slow and steady is Cava’s go-to approach to expansion. By 2032, the company plans to have 1,000 Cava locations.

Citi analyst Jon Tower said there’s still room left for growth in a note to clients. “A unit growth opportunity that continues to re-set higher, discrete same-store sales, price, and margin opportunities as the system densifies and margin tailwinds as the footprint shifts towards lower cost markets.”

In Q2, Cava opened 18 new locations, bringing the total to 341.

TD Cowen analyst Andrew Charles is bullish on Cava’s 2032 goal, citing its wide appeal. He expects 50% of next year’s new locations to have digital pick up lanes. There are currently 45 as of now.

Stifel analyst Chris O’Cull, who has a buy rating on Cava, projects long-term revenue growth in the 17-20% range, boosted by 15% unit growth and low to mid-single digit same store sales growth.

Schulman said within existing markets, there is still runway to build more brand awareness. Other future growth drivers include the relaunch of its loyalty program in October and catering.

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The company aims to market test catering in major metros in 2025 and launch it on a national scale in 2026.

It currently has 10 digital kitchen hubs and 10 hybrid kitchen hubs in various locations, as well as regular Cava locations that are testing catering.

Cava’s also experimenting with AI technology in the kitchen to increase throughput and detect when food is low. Unlike its competition, humans will walk consumers through the line to build bowls.

“Our mission is to bring heart health and humanity to food and if we lost that humanity piece, I don’t think we’d be living up to our mission,” Schulman told Yahoo Finance.

The company continues to perform at a time when fast-casual dining seems to be bucking a broader slowdown across the food industry as consumers double down on value.

“Cava was one of just a handful of publicly traded restaurant brands with positive traffic growth in the second quarter,” Schulman said on the earnings call.

He added that from 2019 to 2023, the company raised prices 12%, less than fast food price increases and grocery price increases overall, per CPI data.

“For a dollar or two more… you can get a bowl of fresh Mediterranean food at Cava versus a traditional fast food, freezer to fryer meal. We’re see seeing people trade over and trade up to us,” he told Yahoo Finance.

Chipotle blew past expectations in its report after same-store sales jumped 11.1% year over year, versus the 9.23% Wall Street anticipated. Shake Shack (SHAK) saw same-store sales climb 4%, beating estimates of 3.2%.

Sweetgreen (SG) reported its best same-store sales growth in two years, up 9%, driven by higher foot traffic and prices.

Its CEO, Jonathan Neman, told Yahoo Finance that “we’re going to be very judicious in how we use it [pricing power].” Neman claimed the chain took fewer price hikes than its rivals since the pandemic.

“As you look at the relative pricing difference between Sweetgreen, some of our fast-casual competitors and then QSR, the gap has really narrowed. QSR, you can’t get in and out of there for under $15 today,” he told Yahoo Finance.

Here’s what Cava reported, compared with Wall Street estimates, per Bloomberg consensus data:

• Revenue: $233.5 million versus $219.5 million

• Adjusted earnings per share: $0.17 versus $0.13

• Same-store sales growth: 14.4% versus 7.45%

The company raised its fiscal 2024 outlook for restaurant openings, sales growth, and restaurant-level profit margin.

It now expects sales growth of 8.5% to 9.5%, up from 4.5% to 6.5% in Q1 and its previous guidance of 3% to 5%.

The total number of new restaurants will now be between 54 and 57, up from 50 to 54. The restaurant-level profit margin is expected to be between 24.2% and 24.7%, up from 23.7% to 24.3%.

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Brooke DiPalma is a senior reporter for Yahoo Finance. Follow her on X at @BrookeDiPalma or email her at bdipalma@yahoofinance.com.

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