Delta bars employees from using Sky Club lounges

The Sky Lounge during a tour of Delta Air Lines Terminal C at LaGuardia Airport (LGA) in the Queens borough of New York, US, on Wednesday, June 1, 2022.

Stephanie Keith | Bloomberg | Getty Images

Delta Air Lines plans to curb employee access to its plush and popular airport lounges next month, its latest attempt to ease crowding.

Starting Feb. 2, Delta won’t allow employees to use the airline’s airport Sky Clubs when they’re flying standby with company travel privileges, the carrier told staff in a long memo on Wednesday. They will also be barred from using the Sky Clubs when traveling for company business.

“The employee discount on Delta Sky Club memberships also is discontinued,” said the memo, which was seen by CNBC. “While we understand this may be disappointing, know this decision was not made lightly. We are sure you’ll agree that delivering an elevated experience to our most loyal customers must be our priority.”

The lounges aren’t free for Delta employees. But they’ve been able to access them, provided they have certain credit cards or buy Sky Club memberships, while traveling with employee benefits or flying on nonrevenue seats, so-called nonrevving. Next month, staff will only be granted access to the lounges if they’re flying with a paid-for ticket.

Complimentary seats on planes are a major perk for airline staff, and they aren’t just used for vacation. Pilots and flight attendants often don’t live in their airline base cities and commute to work without paying for seats if space is available.

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“When we put our customers first and ensure that they have the best experience, they will continue to prefer Delta’s premium products and services — which ultimately benefits all of us,” the memo went on to say.

Delta previously announced stricter policies for Sky Club entry for regular customers, also set to take effect in February.

“Delta people understand the role we all play in delivering an elevated customer experience. That’s why employees will refrain from accessing Delta Sky Clubs when using their standby travel privileges or traveling for company business,” the airline said in a statement.

The measures come as Delta tries to reduce long lines and crowds at the lounges. Travelers have returned in droves, bearing piles of frequent flyer miles accumulated during the Covid pandemic and American Express rewards cards that grant entry to the clubs.

Delta and other major carriers are making elite status harder to earn this year in response, scaling back after pandemic freebies that allowed grounded customers to hold onto their perks. They are also making lounges bigger.

The changes announced Wednesday also apply to other airlines’ employees who are flying with Delta through complimentary staff travel benefits. A Delta spokesman said data wasn’t available on how many employees use its airport lounges while nonrevving.

Employees and retirees who bought club memberships or have Amex cards that come with lounge access can request a prorated reimbursement from Delta, the airline said.

“The solution to their own self-created crowding problem is to boot their own employees,” said one Delta pilot, who spoke on the condition of anonymity because he isn’t allowed to speak with the media. The pilot said that he and his wife each have an Amex Platinum card, which carries a $695 annual fee, and that he uses a Sky Club once a month to “go get an hour of peace and quiet” before a dayslong assignment. The lounges offer a wide array of free food, drinks, seating and workspace.

“We’re not freeloaders,” said the pilot, who said he and his wife spend thousands a month on their Amex cards, but that he’s considering canceling them because of the lounge access change. “I’m not Jeff Bezos.”

A spokeswoman for the Delta pilots’ union, the Air Line Pilots Association, declined to comment and said the benefit isn’t one that’s negotiated in aviators’ contract. Union leaders have been reviewing a new contract proposal this week that could lead to a tentative agreement.

A Delta flight attendant who also spoke to CNBC on the condition of anonymity for similar reasons as the pilot, called the decision “awful and humiliating.”

“This is a decision Spirit would make, not legacy Delta,” said the flight attendant, referring to the industry’s banner budget airline, which doesn’t have lounges.

Delta last year encouraged senior leaders to skip the Sky Clubs to avoid crowding. Delta didn’t say if it had plans to reverse the policy, which after Feb. 2 will be in effect “until further notice.”

American and United say they aren’t planning similar policy changes for their lounges, though carriers occasionally tweak employee travel policies. For example, those carriers paused certain employee travel perks to London over the summer due to congestion.

Nike CEO John Donahoe touts strength in Gen Z China shopper

Nike CEO on economy, China market, state of consumer and company outlook

Nike CEO John Donahoe said Thursday the company is “really focused” on Gen Z consumers in China and that the athletic apparel retailer is continuing to see strong demand in the region, even amid Covid-related disruptions. 

“We’re still the number one cool and favorite brand in Shanghai and in Beijing. We’re really focused on the Gen Z consumer in China, we saw a very good response from the Gen Z consumer who wants the most innovative products and wants brands that are globally relevant,” Donahoe told CNBC’s “Closing Bell.” 

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“We saw good response in Q2, and we have the same focus and outlook going forward,” he said.

At the end of Nike’s fiscal second-quarter, ended Nov. 30, China’s “zero Covid policy” was still in effect and 1,500 Nike stores across the region were shut down, leading to a 3% drop in sales compared with the year-ago period.

Revenue in China – the sneaker giant’s third-biggest market by revenue – was down 22% during the period from the same quarter in 2021, when Covid disruptions were more stable in the region.

Donahoe didn’t address whether spending has ramped back up now that China has rescinded its zero Covid policy and reopened, but he said the company is confident the region remains a strong market. 

“We factored in some disruption in our outlook, but we view that as transitory, we still believe in the fundamentals of China,” said Donahoe. 

“We invested in building hyperlocal product where we take an iconic franchise like Air Force One, or Dunk and we localize it so it’s relevant for the Chinese consumer — and the Chinese consumer really responded to that,” he said.

For the last several quarters, Nike, like other retailers, has been grappling with a glut of inventory but Donahoe said the problem is primarily in North America and the company aims to see levels normalized by the end of the fiscal year in May. 

“The consumer is still paying list price for the Nike products that they know and love. In the areas where we have excess inventory, which is primarily apparel in North America, we are working through it. We’re discounting and working through it,” said Donahoe. 

Recently, the sneaker giant has tried to move away from wholesalers in favor of a direct-to-consumer strategy, but during its most recent fiscal quarter, wholesale revenue jumped 19% – largely because the company finally had the inventory available to sell to those partners. 

Nike has invested heavily in its direct-to-consumer strategy, but Donahoe glossed over that focus on Thursday and said wholesalers remain “very, very important” to Nike. 

“Consumers in this day and age want to get what they want, when they want it, how they want it, and in our industry, they’ve been very clear they want a premium and consistent shopping experience regardless of channel,” he said.  

The top executive also brushed off concerns over the macroenvironment, saying, “We’re prepared for anything but our focus is to make sure that we get stronger through this period, regardless of how the inflation and economy play out.”

Peltz may be overreaching with Disney proxy fight

Bob Iger, chief executive officer of The Walt Disney Co.

Patrick T. Fallon | Bloomberg | Getty Images

Activist investor Nelson Peltz spent about 30 minutes Thursday morning speaking with CNBC’s Jim Cramer and David Faber in a wide-ranging interview about why he wants a Disney board seat.

But his argument barely touched on what should be his strongest point — Disney’s consistent failure to plan for CEO succession.

Peltz referred to his fund’s slide presentation on Disney’s failures under the leadership of past CEOs Bob Iger and Bob Chapek. He said if he had to distill the presentation down to its core, it would revolve around Disney’s poor share performance and Trian’s track record of value creation. Trian noted that Disney’s share price peaked in 2021 but currently trades near its eight-year-low. The stock was up about 3% Thursday.

But Disney’s underperformance in 2022 mirrored an industry-wide slump led by Netflix‘s stalled growth. Disney’s share price spike in 2021 was caused by the same phenomenon — investors charging into streaming services with significant subscriber growth. Disney and Netflix are both down about 38% in the past 12 months. Other media stocks are down even more. Paramount Global shares have slumped 45%. Warner Bros. Discovery shares are down almost 50% since its AT&T merged WarnerMedia with Discovery on April 8.

Peltz blamed Disney Chief Executive Bob Iger and its board for overpaying for 21st Century Fox in 2019 for the company’s decision to scrap its dividend during the pandemic. But asking for a board seat based on Iger’s track record of acquisition decision making isn’t going to win over many investors. Iger’s string of deals during his tenure as CEO — acquiring Pixar, LucasFilm and Marvel — before Fox were some of the best acquisitions in the history of the media industry.

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Trian also noted Disney’s “flawed direct-to-consumer strategy” in a filing “despite reaching similar revenues as Netflix and having a significant IP advantage.” Netflix launched its streaming business years before Disney debuted Disney+ in 2019. It’s natural that Netflix would be ahead of Disney (and every other streaming service) in terms of profitability and free cash flow generation.

Peltz plans to mount a proxy fight and his strongest argument to shareholders shouldn’t be about Iger’s performance as a CEO. Rather, it should be about the board’s consistent failure to plan for a post-Iger world. Iger developed a history during his initial, 15-year CEO tenure of chasing away potential successors, including Jay Rasulo, Tom Staggs and Kevin Mayer. When he did give up his CEO job in 2020, he failed to leave the company completely, setting up an 18-month stretch where his handpicked successor, Chapek, felt undermined by his presence.

Now Iger’s back, and the Disney board has tasked him with finding a successor in the next two years. Iger’s track record suggests succession planning is the one area where he really struggles.

“Iger has historically dominated the succession process, but it shouldn’t be Iger’s pick, it’s the board’s pick,” said Charles Elson, founding director of the Weinberg Center for Corporate Governance. “Disney left itself susceptible to activist intervention because it’s had governance issues with succession for almost 25 years.”

Part of Trian’s pitch to investors is the succession issue, but it doesn’t come up until slide 27 of a 35-slide presentation. Most of Peltz’s argument is based on Disney’s underwhelming share performance, the decision to scrap the dividend, how the Fox deal hasn’t worked, how a hypothetical deal for Sky (a deal that didn’t actually happen) wouldn’t have worked, and Trian’s history of boosting share value. He also told CNBC that Disney either needed to acquire Comcast’s 33% stake in Hulu or “get out of the streaming business.”

Disney is addressing the share slump of the past year by bringing back Iger, a generally well-respected CEO by both employees and investors. Disney will also soon have a new board chairman. Peltz’s argument that Iger needs Trian’s help with strategic decision-making just months into stepping back into the job may be a hard sell.

It’s a far easier case to be made that Disney’s board and Iger have consistently bungled succession planning. Trian said in its presentation that Disney’s shareholder engagement process has been “among the worst (if not the worst) of all the companies we have interacted with.”

It’s possible Disney doesn’t want Peltz on the board because he’ll force the issue of succession, limiting Iger’s ability to stay as CEO longer than two years. As Trian noted in its presentation (on Slide 28), the Disney board extended Iger’s retirement date five different times between October 2011 and December 2017.

Perhaps Peltz needs to refine his message to focus on that.

WATCH: Disney is more than a media company, says Trian’s Nelson Peltz

Nelson Peltz: Disney is more than a media company, it's a consumer company

Special counsel in Biden classified documents investigation

Attorney General Merrick Garland address Biden's classified document controversy

Attorney General Merrick Garland on Thursday appointed former federal prosecutor Robert Hur as special counsel to investigate the discovery of classified government records at the private home and office of President Joe Biden.

Garland’s announcement, which cited “extraordinary circumstances,” came hours after Biden and his lawyer said that a second batch of classified documents recently had been found in a garage in the president’s private home in Wilmington, Delaware.

A first batch of classified documents had been found on Nov. 2 by lawyers for the president in an office in a Washington think tank that Biden had used while a private citizen.

It is not known why lawyers for Biden apparently waited more than two months to search for government records in other locations associated with the president.

Hur is authorized “to investigate whether any person or entity violated the law in connection with this matter,” Garland said in a public statement he made on the appointment at the Department of Justice.

Hur served as the U.S. Attorney for Maryland from 2018 through 2021, after being nominated for that post by then-President Donald Trump.

Garland previously had assigned John Lausch, the U.S. Attorney for Chicago, to handle the inquiry after the first batch of records was discovered.

The attorney general said that Lausch, who himself was appointed by Trump, last week recommended that he name a special counsel in the inquiry.

Hur, in a statement, said,  “I will conduct the assigned investigation with fair, impartial, and dispassionate judgment.”

“I intend to follow the facts swiftly and thoroughly, without fear or favor, and will honor the trust placed in me to perform this service,” Hur said.

A senior Department of Justice official told NBC News that Garland’s appointment of Hur was “not a decision he made lightly.”

“The regulations could not be more clear that based on the facts that made the US attorney launch his initial investigation, an appointment of a special counsel is required,” the official said.

House Speaker Kevin McCarthy, R-Calif., earlier Thursday said he believed Congress has to investigate the situation involving the documents.

Biden’s lawyer, Richard Sauber, in a statement on Hur’s appointment said, “As the President said, he takes classified information and materials seriously, and as we have said, we have cooperated from the moment we informed the [National] Archives that a small number of documents were found, and we will continue to cooperate.”

“We have cooperated closely with the Justice Department throughout its review, and we will continue that cooperation with the Special Counsel,” Sauber said. “We are confident that a thorough review will show that these documents were inadvertently misplaced, and the President and his lawyers acted promptly upon discovery of this mistake.” 

Garland in November appointed another former federal prosecutor, Jack Smith, as special counsel to oversee two criminal investigations of Trump.

One of those probes is focused on whether Trump violated federal law requiring presidents to turn over government records to the National Archives and Records Administration when they leave office, and whether Trump obstructed justice when authorities sought to obtain such records he kept at his Florida residence.

FBI agents during an August raid on Trump’s home in his Mar-a-Lago club found thousands of government records, hundreds of which had classified markings on them.

Cognizant, American Airlines, Logitech and more

Los Angeles, CaliforniaJan. 11, 2023Flights prepare to take off at LAX on Jan. 11, 2023 after an FAA computer problem. 

Carolyn Cole | Los Angeles Times | Getty Images

Check out the companies making headlines in midday trading.

Cognizant — Shares of Cognizant rose 8% after the IT company raised its fourth-quarter revenue guidance. It also named Ravi Kumar S as CEO and a member of the board, effective immediately. Kumar was previously president of Infosys.

American Airlines — Shares rose more than 7% after the airline boosted its revenue and profit estimates for the fourth quarter. American Airlines, which reports earnings Jan. 26, cited strong demand and high fares for the hike in estimates.

Logitech International — The keyboard and mouse maker fell more than 16% after Logitech announced preliminary results that showed declining sales and earnings. For the quarter ending Dec. 31, Logitech said it expects net sales to be down more than 20% year over year in U.S. dollars. Operating income is projected to fall more than 30%. CEO Bracken Darrell said in statement that a slowdown in enterprise sales was partly to blame for the results.

Disney — Shares of Disney rose 4.1% after the company announced Mark Parker, the executive chairman of Nike, as its new chairman. In addition, the company opposed Nelson Peltz of Trian as he pushes for a seat on the board, igniting a proxy battle.

Hewlett Packard Enterprise — The IT giant fell 2.3% following its acquisition of startup Pachyderm, a startup that delivers software to automate reproducible machine learning pipelines that target large-scale AI applications. Separately, Evercore ISI downgraded the stock Thursday to in line from outperform.

KB Home — Shares of the homebuilding stock slipped 2.8% after earnings fell short of Wall Street’s expectations. The homebuilder reported earnings per share of $2.47, well be low a StreetAccount forecast of $2.86. The company also warned of price cuts ahead.

Tesla — Tesla fell 2% following a report that company plans to expand capacity in its Shanghai factory have been put on hold due to data concerns raised by China’s central government. The expansion was initially set to begin in the middle of the year, according to Bloomberg.

Energy stocks — Energy stocks were among the top gainers in Thursday’s session as oil prices got an extended boost following U.S. CPI data. Hess and Halliburton rose more than 4%. SLB, Marathon Petroleum, Occidental Petroleum, Coterra and Devon Energy each advanced more than 2%.

Caterpillar — Shares rose 2.4%, notching a 52-week high, after JPMorgan added the manufacturer to its focus list, saying its margin upside potential is currently underappreciated.

Bed Bath & Beyond — Bed Bath & Beyond rallied 18%, building on gains after a handful of meme stocks surged Wednesday. The stock surged almost 69% in Wednesday’s session.

 — CNBC’s Michelle Fox, Samantha Subin, Carmen Reinicke, Alex Harring and Jesse Pound contributed reportingx

President Biden had classified documents in Delaware garage

U.S. President Joe Biden returns alone to the White House after accompanying first lady Jill Biden as she underwent Mohs surgery to remove cancerous skin lesions, in Washington, U.S., January 11, 2023.

Jonathan Ernst | Reuters

Classified government documents from the Obama administration were found in a storage space in the garage of President Joe Biden’s Delaware home, Biden said Thursday.

The disclosure of that latest discovery comes three days after Biden’s special counsel Richard Sauber confirmed media reports that attorneys for the president found a first batch of classified documents from the Biden administration on Nov. 2 in an office that Biden had used as a private citizen in a Washington think tank.

Sauber issued a statement earlier Thursday detailing how and where the second batch of documents was found. He said that a “small number” of records with classified markings were found in the garage. Less than a dozen classified documents had been found in the first batch.

Soon afterward, Biden talked about the discovery to reporters.

“As I said earlier this week, and by the way, my Corvette is in a locked garage, so it’s not like they’re sitting out on the street,” Biden said, referring to the documents.

“People know I take classified documents and classified materials seriously,” Biden said. “I also said we’re cooperating, fully cooperated with the Justice Department’s review.”

The president said the DOJ was immediately notified about the latest discovery, “and we’re going to see how all this unfolds.”

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Sauber on Thursday did not say what day the latest bunch of documents were found, but he did say that a search for government documents at Biden residences was completed “last night.”

Neither he nor Biden said why the White House did not reveal how and when the first batch of documents were found until two months after that happened.

“I think Congress has to investigate this,” House Speaker Kevin McCarthy, R-Calif., said after Biden spoke.

Former President Donald Trump, who is under criminal investigation for retaining classified government documents after he left office in early 2021, has suggested the DOJ kept quiet about the discovery of the Biden documents in order not to affect the midterm congressional elections on Nov. 3.

By law, presidents and vice presidents must turn over government records to the National Archives and Records Administration when they leave office. Trump had hundreds of classified documents and other government records at his residence at his Mar-a-Lago club in Palm Beach, Florida, which the FBI raided in November as part of the criminal probe.

The DOJ and the National Archives are investigating how and why Biden retained the documents after he completed two terms as vice president to President Barack Obama in January 2017.

NBC News reported later Thursday that multiple aides for Biden in the final days of the Obama administration have been interviewed by law enforcement officials in connection with that probe.

“The people who were boxing [up the vice presidential office] had no idea that there was anything in there that shouldn’t leave the White House,” a source familiar with the matter told NBC News. “There was no decision made to take certain documents that should have been presidential records or classified.”

Sauber, in his statement Thursday, said that some unstated amount of time after lawyers for the president found those documents in November at the Penn Biden Center for Diplomacy and Global Engagement, attorneys searched Biden’s residences in Wilmington and Rehoboth Beach, Delaware.

Those locations were ones “where files from his Vice-Presidential office might have been shipped in the course of the 2017 transition,” when Trump took office, Sauber said.

“The lawyers completed that review last night,” Sauber said.

“During the review, the lawyers discovered among personal and political papers a small number of additional Obama-Biden Administration records with classified markings,” Sauber said.

The lawyer added that all but one of those documents were found in a storage space in the garage of Biden’s home.

The other document, which was a single page, “was discovered among stored materials in an adjacent room,” Sauber said. “No documents were found in the Rehoboth Beach residence.”

The lawyer said that the DOJ was “immediately notified” of the discovery of the documents in Wilmington, just as had been the case when the first batch of documents was found at the Penn Biden Center.

JPMorgan Chase shutters student financial aid website Frank

Jamie Dimon said in June that he was preparing the bank for an economic “hurricane” caused by the Federal Reserve and Russia’s war in Ukraine.

Al Drago | Bloomberg | Getty Images

JPMorgan Chase on Thursday shut down the website for a college financial aid platform it bought for $175 million after alleging that the company’s founder created nearly 4 million fake customer accounts.

The country’s biggest bank acquired Frank in Sept. 2021 to help it deepen relationships with college students, a key demographic, a Chase executive told CNBC at the time.

JPMorgan touted the deal as giving it the “fastest-growing college financial planning platform” used by more than five million students at 6,000 institutions. It also provided access to the startup’s founder Charlie Javice, who joined the New York-based bank as part of the acquisition.

Months after the transaction closed, JPMorgan said it learned the truth after sending out marketing emails to a batch of 400,000 Frank customers. About 70% of the emails bounced back, the bank said in a lawsuit filed last month in federal court.

Javice, who had approached JPMorgan in mid-2021 about a potential sale, lied to the bank about her startup’s scale, the bank alleged. Specifically, after being pressed for confirmation of Frank’s customer base during the due diligence process, Javice used a data scientist to invent millions of fake accounts, according to JPMorgan.

“To cash in, Javice decided to lie, including lying about Frank’s success, Frank’s size, and the depth of Frank’s market penetration in order to induce JPMC to purchase Frank for $175 million,” the bank said. “Javice represented in documents placed in the acquisition data room, in pitch materials, and through verbal presentations [that] more than 4.25 million students had created Frank accounts.”

Instead of gaining a business with 4.25 million students, JPMorgan had one with “fewer than 300,000 customers,” JPMorgan said in the suit.

Frank emails

In the suit, JPMorgan alleged that Javice first asked her engineering chief to create “fake customer details” using algorithms. When he refused, she found a data science professor at a New York area college to create the accounts, the lender said.

The bank included incriminating emails between the unnamed professor and Javice in its suit.

For instance, Javice had allegedly asked the professor: “Will the fake emails look real with an eye check or better to use unique ID?” 

JPMorgan had access to the emails because it had acquired Frank’s technology systems as part of the acquisition, according to a person with knowledge of the situation.

Javice’s defense

‘Pinch me’

Prices fell 0.1% reflecting a slowdown for inflation

Consumer prices fell 0.1% in December, in line with forecasts

Inflation closed out 2022 in a modest retreat, with consumer prices in December posting their biggest monthly decline since early in the pandemic, the Labor Department reported Thursday.

The consumer price index, which measures the cost of a broad basket of goods and services, fell 0.1% for the month, in line with the Dow Jones estimate. That equated to the largest month-over-month decrease since April 2020, as much of the country was in lockdown to combat Covid.

Even with the decline, headline CPI rose 6.5% from a year ago, highlighting the persistent burden that the rising cost of living has placed on U.S. households. However, that was the smallest annual increase since October 2021.

Excluding volatile food and energy prices, co-called core CPI rose 0.3%, also meeting expectations. Core was up 5.7% from a year ago, once again in line.

A steep drop in gasoline was responsible for most of the monthly decline. Prices at the pump tumbled 9.4% for the month and are now down 1.5% from a year ago after surging past $5 a gallon in mid-2022.

Fuel oil slid 16.6% for the month, also contributing to a total 4.5% decline in the energy index.

Food prices increased 0.3% in December while shelter also saw another sharp gain up 0.8% for the month and now 7.5% higher from a year ago. Shelter accounts for about one-third of the total CPI index.

Used vehicle prices, also an important initial driver of inflation, were off 2.5% for the month and are now down 8.8% year over year. Medical care services increased 0.1% after dropping for two straight months, while apparel prices rose 0.5% and transportation services were up 0.2% and are still 14.6% higher from a year ago. However, airline fares fell 3.1% for the month though are still up 28.5% from a year ago.

Markets reacted little following the news, with stocks slightly lower at the open and Treasury yields also down across most durations.

Both annual increases remain well above the Federal Reserve’s 2% target, but have been consistently moving lower.

“Inflation is quickly moderating. Obviously, it’s still painfully high, but it’s quickly moving in the right direction,” said Mark Zandi, chief economist at Moody’s Analytics. “I see nothing but good news in the report except for the top-line number: 6.5% is way too high.”

CPI is the most closely watched inflation gauge as it takes into account moves in everything from a gallon of gas to a dozen eggs and the cost of airline tickets.

The Federal Reserve prefers a different gauge that adjusts for changes in consumer behavior. However, the central bank takes in a broad array of information when measuring inflation, with CPI being part of the puzzle.

There was some indication in the data that consumer are shifting behavior. Along with that came a note of caution in that the December decline was largely fed by a a drop in gas prices that may not be sustainable given market dynamics and consumer demand.

“We know that we won’t get the same kind of support from gasoline prices. So don’t expect the next report to look as good as this one,” said Simona Mocuta, chief economist at State Street Global Advisors. “But the trend is favorable.”

Markets are watching the Fed’s moves closely as officials battle against inflation that at its peak was the highest in 41 years. Supply chain bottlenecks, the war in Ukraine, and trillions in fiscal and monetary stimulus helped contribute to surging prices that spanned across most areas of the economy.

Policymakers are weighing how much further they need to go with interest rate hikes used to slow the economy and tame inflation. The Fed so far has raised its benchmark borrowing rate 4.25 percentage points to its highest level in 15 years. Officials have indicated the rate is likely to exceed 5% before they can step back to see the impact of the policy tightening.

Following the CPI report, market pricing pointed toward an increased probability that the Fed would approve a 0.25 percentage point rate increase on Feb. 1. That would represent another step down for the central bank after it approved four consecutive 0.75 percentage point hikes last year before slowing down to a 0.5-point increase in December.

American Airlines hikes revenue estimates after strong Q4

Planes are seen at Charlotte Douglas International Airport on December 28, 2022 in Charlotte, United States.

Peter Zay | Anadolu Agency | Getty Images

American Airlines shares rose nearly 5% in premarket trading Thursday after the carrier hiked its revenue and profit estimates for the fourth quarter thanks to strong demand and high fares.

American estimates revenue rose as much as 17% over 2019, up from a previous forecast of an 11% to 13% increase over the period three years earlier, before the Covid pandemic.

American said revenue per seat mile likely climbed 24% in the quarter from 2019, above its prior forecast of 18% to 20%.

It expects to report adjusted earnings per share of between $1.12 and $1.17, up from its previous estimate of between 50 cents and 70 cents.

The update Thursday is the first indication of how a major airline coped with a rocky end of the year, when severe weather sparked mass cancellations around the U.S. during the busy holiday travel season. American is scheduled to report full results on Jan. 26.

Delta Air Lines is set to announce quarterly results Friday morning. Its shares were up more than 2% in premarket trading.

What new warehouse data is signaling about inflation and the economy

Vcg | Visual China Group | Getty Images

National warehouse storage rates remain elevated, but the prices did not rise quarter over quarter in Q4 2022, according to WarehouseQuote’s just-released Warehouse Pricing Index report.

“Rates remain at these levels as a result of warehouse inventories not coming down significantly in November and December,” said Jordan Brunk, chief marketing officer of WarehouseQuote.

Warehouse pricing and inventory data are indicators of consumer strength. Even as supply chain inflation slows, warehouse rates are high because there is a lot of inventory, which leaves less available space. The price for that space is sold at a premium. When the consumer is buying, there is more demand, and retailers take out more inventory from warehouses, with extra space putting pressure on warehouse rates.

The market is anxiously awaiting the release of the December consumer inflation data on Thursday as a sign of a further inflation easing, with goods inflation in the CPI expected to continue to come down now that supply chains are operating more normally.

Historic inventory levels occurred last year as companies brought in a lot of supply thinking the consumer would continue to buy. But with the waning of stimulus dollars and the broader economic slowdown amid high inflation, consumer spending has slowed and shoppers have become more selective, forcing retailers to steep markdowns to move product. 

As a result, inventory builds have dropped, “but we still have a ways to go before reaching ‘normal’ inventory levels,” WarehouseQuote said in the report.

Retail inventories remain elevated, it noted, up 17% in the 12 month period between October 2021 to October 2022. 

Brunk tells CNBC that even as inventory trends down, and supply chain inflation eases, he expects the recent strength in warehouse storage pricing to continue on a steady upward trajectory because of the combination of low vacancy rates, industrial real estate rents, and labor costs, as well as a slowdown in the entrance of newly built warehousing capacity because of rising cost of capital and slowing economy.

In a regional breakdown of price increases over the final three quarters of last year, the Northeast saw the highest percentage increase, at 12%, relative to the baseline of Q1 2022. The Midwest and West Coast regions also saw increases of 8% and 7%, respectively.

“The Northeast has seen an increase with the diversion of trade,” Brunk said, referring to the shift in overseas cargo volumes from California to East Coast ports led by New York. “This increase in port traffic also led to an increase in warehouse pricing in the Northeast region. We continue to watch this trend as trade continues to move steadily to the East Coast and Gulf.”

New York has been the nation’s busiest port for several months, surpassing California and threatening its long-held lead. Shippers have moved away from ports including Los Angeles and Long Beach due to concerns about labor union and port management battles. A recent CNBC Supply Chain survey showed more logistics managers are concerned about moving trade back to the West Coast.

WarehouseQuote’s new report cited the movement of furniture away from the West Coast to Texas as one example of this trade diversion.

The Southeast was down overall, but Brunk tells CNBC that Georgia, which has processed a tremendous amount of trade diversion containers, has seen an increase, especially at the Savannah port.

General capacity and lease rates in the Georgia market are up 5.37% year-over-year (2021-2022), according to its data.