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| | Top News  Shutterstock Unveiling one of the biggest changes in the industrial giant's history, General Electric (GE) announced plans this morning to split into three global public companies:
Aviation: Helping customers achieve greater efficiency and sustainability and invent the future of flight.
Healthcare: Driving innovation in precision health to address critical patient and clinical challenges (spinoff targeted for early 2023).
Renewable Energy and Power: Supporting customers and communities seeking to provide affordable, reliable, and sustainable power (spinoff targeted for early 2024).
Backdrop: After CEO Larry Culp took the reins in 2018, he went on to apply a similar philosophy he used to revamp diversified conglomerate Danaher (DHR). In one of his first moves, he slashed GE's valued dividend to a token penny a share. Two years later, he sold off GE's BioPharma business to his former employer for $21.4B, and in March, he combined GE Capital Aviation Services with AerCap (AER). He also implemented a 1-for-8 reverse stock split, which went into effect in July, to reduce the number of shares outstanding to an amount "more typical of companies with comparable market capitalization."
"By creating three industry-leading, global public companies, each can benefit from greater focus, tailored capital allocation, and strategic flexibility to drive long-term growth and value for customers, investors, and employees," Culp said in a statement. "Through the transition, GE will be able to monetize its stakes in AerCap and Baker Hughes (BKR), prioritizing further debt reduction. Each of the three resulting independent companies will be well capitalized with investment-grade ratings."
Bottom line: Following the transactions, General Electric will be an aviation-focused company. Culp will serve as non-executive chairman of GE Healthcare upon its spinoff and will remain chairman and CEO of GE until the second spinoff, when he will lead the GE "pure play" aviation company going forward. The company expects to incur ~$2B in one-time separation, transition and operational costs, and less than $500M in tax costs. GE +11% premarket. | | Central Banking President Biden looks like he's getting serious about possibly replacing Jerome Powell as head of the Federal Reserve. According to a report from Bloomberg, Fed Governor Lael Brainard was interviewed for the top job at the U.S. central bank when she visited the White House last week. At the time, Biden said he'd make a decision "fairly quickly," with Powell's current term expiring in February. Bigger picture: Brainard is the only Democrat on the Fed's Board of Governors and the only non-Trump appointee. She has opposed Powell on numerous occasions, including on matters of big bank oversight and regulation, and has found a path to address climate change through the Fed's financial stability mission. Brainard has also advocated for making the financial system more inclusive and is seen as a safe bet that would continue Powell's interest rate policy. Meanwhile, Fed Governor Randal Quarles announced yesterday he would resign in December, giving the Biden administration another opportunity to influence the direction of future monetary policy. Quarles was already on the fence about leaving after his role as vice chair of bank supervision expired in October and his time as chair of the Financial Stability Board was due to run out next month. A trading controversy already led to the resignation of two regional Fed presidents (Kaplan and Rosengren) in September, while Biden could fill several other seats on the seven-member Fed Reserve Board within the next few months (Clarida's term expires in January and there is still a vacancy from Janet Yellen). New lineup: Even if she is not nominated as chair, there's a good chance Brainard could replace Quarles as vice chair of supervision. That would not only give her increased influence over the nation's banking system, but she would also be "given a reasonable amount of free hand," said Tom Graff, head of fixed income at Brown Advisory. "Obviously, Brainard would be a stronger, more stringent regulator than Quarles was." | | Sponsored By StartEngine  With a goal to help raise $10 billion by 2029, StartEngine has big plans... and they're already gaining momentum: - 146% revenue growth YoY in the first half of 2021.
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Disclaimer:Reg A+ offering made available through StartEngine Crowdfunding, Inc. Investment is speculative, illiquid, and involves a high degree of risk, including the possible loss of your entire investment. View StartEngine Crowdfunding, Inc's offering circular and selected risks. Past performance may not be indicative of future results. | | Economy Shutterstock A labor shortage across the U.S. is leading retailers to sweeten their pay and benefits. Macy's (NYSE: M) is latest to raise its minimum wage to $15, which will go into effect for new and current workers by next May. Once that happens, the company's average base pay will be above $17/hour across its workforce of 100K employees, and average total pay will be $20/hour. That's not all: Macy's is partnering with Guild Education for a program that will offer bachelor's degrees, boot camps, English language learning and professional certificates. 100% of tuition, books and fees will be covered under the program, which is expected to cost $35M over the next four years. Target ( TGT), Walmart ( WMT), Starbucks ( SBUX) and Chipotle ( CMG) have also offered similar perks. "This is not just a reaction to the tight labor market, although to be sure, this is a difficult market to hire in," said Danielle Kirgan, chief transformation and human resources officer at Macy's. "This is more of our signal to our colleagues that this is really how we operate - investing back in our colleagues in a variety of ways. Go deeper: Economists say changing demographics like aging and retiring workers are also a factor behind the recent labor shortages, as well as demands for better pay and flexible working arrangements. Macy's may be trying to combat all of those factors with its new moves, especially with many people today willing to walk away from their jobs or switch employment. On a macro scale, a shortage of retail workers could threaten the economic recovery amid further disruptions to the supply network. | | Energy The U.N. climate talks in Glasgow, known as COP26, are continuing this week, with many of the parties looking for concrete pledges to combat the damaging effects of climate change. It's a trend that's been seen since the 2015 Paris Agreement to curb warming at 1.5 degrees Celsius above pre-industrial levels, where progress is yet to be made despite many workshops, summits and conferences. "It is always 'the time is now,' 'the time has come,'" said Kenya's Environment Minister Keriako Tobiko. "Actually there's no more time, let's put the money on the table." Case in point: A global deal to eradicate new car emissions by 2040 is struggling to attract support from the world's biggest automakers. Volkswagen ( OTCPK:VLKAF) has said it would not sign the agreement, while Toyota's (NYSE: TM) signature is unlikely to agree given the reluctance of key governments - like the U.S., Germany and China - to join the pact. They have expressed concerns over infrastructure needed to support the shift, as well as options of pursuing synthetic fuels with lower carbon content, though Ford (NYSE: F), General Motors (NYSE: GM), Daimler ( OTCPK:DDAIF) and Volvo Cars ( OTCPK:GELYY) have all signed on to the accord. "Sadly, the COP26 looks set to become the biggest finance greenwash event in history," stated Kenneth Haar, researcher at the Corporate Europe Observatory, adding that "self-regulation" among companies with a heavy carbon footprint was at the heart of the private finance proposals. Outlook: Greenwashing claims aren't limited to corporations. At a U.N. climate summit 12 years ago in Copenhagen, rich nations promised to hand developing countries $100B a year by 2020 to help them adapt to climate change, though that hasn't happened yet (the COP26 Presidency now feels that could happen by 2023). The negotiations ultimately boil down to questions of fairness and trust, as well as language and enforcement mechanisms that will ensure the money will be spent appropriately. | | Today's Markets In Asia, Japan -0.8%. Hong Kong -0.2%. China +0.2%. India -0.2%.
In Europe, at midday, London +0.2%. Paris +0.3%. Frankfurt +0.3%.
Futures at 6:20, Dow -0.1%. S&P flat. Nasdaq +0.2%. Crude +0.4% at $82.26. Gold flat at $1827.30. Bitcoin +2.3% at $67382.
Ten-year Treasury Yield -4 bps to 1.46%
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