ETF Summary

The U.S. economy continued to crank out jobs in May, with nonfarm payrolls surging more than expected despite multiple headwinds, the Labor Department reported Friday.

Payrolls in the public and private sector increased by 339,000 for the month, better than the 190,000 Dow Jones estimate and marking the 29th straight month of positive job growth.

The unemployment rate rose to 3.7% in May against the estimate for 3.5%, even though the labor force participation rate was unchanged. The jobless rate was the highest since October 2022, though still near the lowest since 1969.

Average hourly earnings, a key inflation indicator, rose 0.3% for the month, which was in line with expectations. On an annual basis, wages increased 4.3%, which was 0.1 percentage point below the estimate. The average workweek fell by 0.1 hour to 34.3 hours.

Markets reacted positively to the report, with futures tied to the Dow Jones Industrial Average up about 200 points. Treasury yields rose as well.

May’s hiring jump was almost exactly in line with the 12-month average of 341,000 in a job market that has held up remarkably well in an economy that has been slowing.

Professional and business services led job creation for the month with a net 64,000 new hires. The government helped boost the numbers with an addition of 56,000 jobs, while health care contributed 52,000.

Other notable gainers included leisure and hospitality (48,000), construction (25,000) and transportation and warehousing (24,000).

May’s job numbers come amid a challenging time for the economy, with many experts still expecting a recession later this year or early in 2024.

Recent data has shown that consumers continue to spend, though they are dipping into savings and increasingly using credit cards to pay for their purchases. A resilient labor market also has helped underpin spending, with job openings rising back above 10 million in April as employers still find it difficult to fill open positions.

One major potential headache appears to have been eliminated, as warring factions in Washington this week have reached a debt ceiling deal. An agreement is on its way to President Joe Biden’s desk for a signature following passage in the House and Senate this week.

There remain other issues ahead, though.

The Federal Reserve has raised benchmark interest rates 10 times since March 2022 in an effort to fight inflation that hasn’t gone away. In recent days, some policymakers have indicated a willingness to take a break in June from the succession of hikes as they look to see what impact the policy tightening is having on the economy.

Other data points have shown that the manufacturing sector of the economy is in contraction, though the much larger services sector has held in expansion. The ISM manufacturing index released Thursday also showed that prices are pulling back, a positive sign for the Fed.

Even as its parent company goes under, buybuy Baby is likely to survive.

Analysts believe that as part of Bed Bath & Beyond’s bankruptcy reorganization, the company will look to sell the United States’ largest specialty baby-product retailer, which Bed Bath & Beyond acquired in 2007.

Buybuy Baby is already seeing interest from outside suitors. Last week, CNBC reported the online rival retailer Babylist as well as an unnamed retail group have expressed interest in purchasing some or all of buybuy Baby’s assets.

Natalie Gordon, founder of Babylist, did not respond to a request for comment. CNBC reported Gordon’s company was seeking to acquire buybuy Baby’s domain and trademark.

The investment firm representing the unnamed retailer, which CNBC said would seek to keep as many as 75% of buybuy Baby’s stores open, confirmed in an email that it was representing the unnamed firm but declined to comment further.

Buybuy Baby has emerged as the last baby-specific retailer standing after the 2018 failure of Babies R Us. As of late April, 120 buybuy Baby stores were still open, alongside 360 of Bed Bath & Beyond’s namesake stores, CNBC said.

Despite its seemingly more stable footing, buybuy Baby’s financial performance has been lackluster. It reported same-store sales in the low-single digits in the 2021 holiday quarter; in the most recent quarter before its parent company filed for bankruptcy, it said sales had fallen more than 20% — though this was slightly better performance than Bed Bath & Beyond’s 34% decline.

A representative for Bed Bath & Beyond did not respond to a request for comment.

Still, the baby retail segment maintains healthy growth, a trend on which buybuy Baby should be able to capitalize, said Neil Saunders, managing director at GlobalData analytics and consulting company.

‘I think buybuy Baby has a future,’ Saunders said. While it is likely to be sold at a bargain given the general mismanagement of its parent, he said, its mere presence in the baby category alone will prove valuable.

‘It’s a part of the market where clients still appreciate advice and insight from specialists,’ Saunders added. ‘So there’s still a need for this category in a way there just isn’t for Bed Bath & Beyond.’

Bed Bath & Beyond filed for bankruptcy protection in April. The company said in its filing that it expected to close all its stores, including those for buybuy Baby, by June 30.

DETROIT — General Motors plans to invest more than $1 billion in two Michigan plants for the production of next-generation heavy-duty trucks, the company said Monday.

The investment includes $788 million to prepare its Flint Assembly plant to build the heavy-duty gas and diesel trucks. Another $233 million will be invested in the automaker’s Flint Metal Center to support production of the vehicles. Both plants are located in mid-Michigan.

Despite GM’s commitment to exclusively offer all-electric vehicles by 2035, the company continues to invest in traditional vehicles such as the Chevrolet Silverado and GMC Sierra heavy-duty pickups.

The notably profitable trucks are in high demand, and sales are needed to assist in funding the automaker’s investments in EVs.

A GM spokesman said construction related to the investments is scheduled to begin during the fourth quarter. He declined to disclose details and timing of the next-generation pickups.

In 2022, GM reported sales of its heavy-duty pickups increased 38% compared to the prior year, amounting to nearly 288,000 trucks sold.

The investment announcement comes ahead of contract negotiations between the Detroit automakers, including GM, and the United Auto Workers union this summer.

For investors, UAW negotiations are typically a short-term headwind every four years that result in higher costs. But this year’s negotiations are expected to be among the most contentious and important in recent memory, fueled by a years-long organized labor movement across the country, a pro-union president and an industry in transition to all-electric vehicles.

“When business is booming as it has been for the past decade — due to the hard work of UAW members — the company should continue to invest in its workforce,” UAW Vice President Mike Booth, who oversees the union’s GM unit, said in a release.

UAW leaders publicly laid out their top bargaining issues last week, including reinstatement of a cost-of-living adjustment that was eliminated during the Great Recession; stronger job security; and the end of a grow-in, or tiered, pay system that has members earning different wages and benefits.

Customers of Chase’s online banking services were seeing double transactions, fees and/or payments in their accounts, with the situation not immediately being resolved as of late morning on Friday.

Numerous Chase customers were posting on social media that their rent or bill payments were taken out of their accounts twice and reporting hold times with customer service approaching more than an hour. Zelle payments were also being impacted with Chase customers.

“We’re sorry that some customers are seeing duplicate transactions and fees on their checking account,” a Chase spokesperson said. “We’re working to resolve the issue and will automatically reverse any duplicates and adjust any related fees.”

Online banking services, while usually reliable, sometimes spectacularly fail or have temporary outages that tend to spook their customers. Banks typically will resolve an error in their services within hours, and no customer is liable for any errors in their accounts that occur when these happen.

Bed Bath & Beyond is expected to be dissolved after the failed retailer declared bankruptcy, but the company’s crown jewel — Buy Buy Baby — may live to see another day. 

The baby gear retailer is drawing interest from at least two bidders as its parent company Bed Bath & Beyond works to auction off its assets and keep some form of its business alive, CNBC has learned. 

The interested parties include an unknown bidder, who would purchase the banner as a going concern and keep about 75% of stores open, according to correspondence obtained by CNBC. The other interested bidder is Babylist, a direct-to-consumer baby registry website that wants to buy its trademark and domain, that company’s CEO, Natalie Gordon, confirmed to CNBC.

So far, it doesn’t appear as if there’s any interest to buy the Bed Bath banner and keep its stores open, but some bidders are interested in buying its digital assets, a person familiar with the matter told CNBC.

It’s not clear how much the unknown bidder is offering to purchase Buy Buy Baby, but it was seeking an additional $50 million in capital to shore up its proposal, according to the correspondence. That figure offers the first clue into how much bidders are willing to pay to snap up the pieces of Bed Bath’s fallen business.

The valuation of the company and its intellectual property is unclear. In its most recent quarterly securities filing, Bed Bath noted the intangible value of trade names and trademarks was just $13.4 million. 

As of late November, Bed Bath & Beyond had about $4.4 billion in assets and $5.2 billion in debts, court filings show. 

Gordon declined to share the number she offered for Buy Buy’s trademark and domain. 

Who are the bidders?

Ankura Capital Advisors, an investment banking firm, is advising the unnamed bidder and said in a May 16 email to its distribution list that the party is seeking a financial partner “to help lead the purchase of Buybuy Baby out of the BBBY bankruptcy.”

The client was seeking the additional $50 million in capital alongside its current financial sponsor to support a stalking horse bid on the asset, according to the correspondence, which was seen by CNBC. A stalking horse bid is an offer on the assets of a bankrupt company that, if accepted, sets a price floor for future bids.

The mystery bidder, who was not named in the documents seen by CNBC, is an “independent operator with several successful, complimentary retail chains in their portfolio,” according to the message.

“They are open to various structures for the investment, from equity to preferred equity and other forms of junior capital,” the message reads. “They have committed over 400 hours in extensive diligence already and have the team and experience to operate the stores as a going concern.” 

In the email, Ankura notes that Buy Buy Baby had about $90 million in inventory at the time of the bankruptcy filing and had been liquidating about $7.5 million weekly at the time the message was sent. 

Babylist bills itself as a destination for all things baby. It saw $290 million in revenue in 2022, says it’s profitable and counts over a million new parent sign ups each year. The company said it considered putting in a bid to buy the entire chain, including its stores, but it ultimately decided it didn’t fit into its overall strategic plan. 

Babylist started out as a destination for the modern parent who was tired of the same old pink and blue landscapes, but it’s now working to expand its audience to all members of the proverbial village, including grandparents who really want to show up for their grandchildren. 

That’s where Buy Buy Baby — and its long-held name recognition — would come in. 

If Babylist’s bid to acquire the banner’s trademark and domain were to be accepted, people who search for Buy Buy Baby and try to access the website would be redirected to Babylist, CEO Gordon explained. 

“We have tremendous trust with new and expecting parents but Buy Buy Baby is much better known with kind of that older generation,” she said. “So as we’re expanding to the whole family as an audience, we really think it can jumpstart us in that way.” 

Gordon said the company opted out of putting in an offer for Buy Buy Baby’s registry assets because of how quickly they can become stale. 

Plus, the company already appears to be taking share from Buy Buy Baby. Since Bed Bath’s bankruptcy was announced, Babylist has had nearly 200,000 new signups, which is a higher number of new customers than the company usually sees, it said. 

Following the bankruptcy of Babies ‘R’ Us and the potential liquidation of Buy Buy Baby, there are few major retailers families can turn to that cater exclusively to the infant category. For registries, their options include Target, Amazon and Babylist, among others.

Babylist doesn’t operate any traditional brick-and- mortar locations but is opening its first showroom in Beverly Hills, California, this summer.

The crown jewel of Bed Bath & Beyond

This is not the first time Buy Buy Baby has seen sale interest. The banner reportedly drew interest from potential buyers in 2022. It also caught the attention of activist investor Ryan Cohen, co-founder of Chewy and chair of GameStop, who last March pointed to the baby gear banner as one of the most valuable pieces of the company, arguing it could be worth several billion dollars.

At the time, Cohen pushed for a spinoff or sale. 

Buy Buy Baby has remained a bright spot in Bed Bath & Beyond’s otherwise dismal earnings reports in recent years.

In Bed Bath’s fiscal 2021 holiday quarter, same-store sales for Bed Bath & Beyond stores declined 15% — but Buy Buy Baby’s same-store sales grew by low single digits.

And more recently, during Bed Bath’s fiscal third quarter of 2022 that ended Nov. 26, sales declines were reported across the company, but Buy Buy Baby’s revenue declines outperformed Bed Bath’s. During the quarter, comparable sales at the Bed Bath banner declined 34%, while at Buy Buy Baby, they declined in the low-20% range, the company said at the time. 

When Bed Bath & Beyond locations were shuttering across the country as part of the company’s efforts to stop the financial bleeding, it opened more Buy Buy Baby locations in the hopes the stores would boost sales. 

As of late April, 120 of the stores were still open, alongside 360 of Bed Bath’s namesake stores, the company said previously. 

Auction delays

Bed Bath & Beyond’s bankruptcy auction has been delayed twice now, which could indicate the company is still trying to drum up interest for its assets. 

In the months before Bed Bath declared bankruptcy, CNBC reported the company was courting prospective buyers and lenders that would be willing to take on the company and keep its doors open. At the time, the potential buyers included private equity firm Sycamore Partners, which was particularly interested in Buy Buy Baby, and Authentic Brands, which has frequented many bankruptcy-run sales for retailers like Forever 21.

In the end, the process proved unsuccessful and produced “limited interest in a viable proposal to acquire the Debtors’ assets,” according to court records filed in the company’s bankruptcy case in April.

Still, in those filings, the company said it was confident it could offload its names and stores and said it planned to market the business to avoid outright liquidation. 

“While the commencement of a full chain wind-down is necessitated by economic realities, Bed Bath & Beyond has and will continue to market their businesses as a going-concern, including the buybuy Baby business,” the company’s chief financial officer and chief restructuring officer Holly Etlin wrote in a declaration to New Jersey’s bankruptcy court at the time. 

In the filings, the company confirmed CNBC’s prior reporting and said over 100 potential investors had been engaged by Bed Bath’s advisors. Prospective bidders were asked if they were interested in buying the business as a going concern or providing Chapter 11 financing. 

The company had been hoping a buyer would be willing to purchase either Bed Bath & Beyond or Buy Buy Baby as standalone businesses, buy the brands’ intellectual property and perhaps take on a few of their better performing stores.

“Bed Bath & Beyond has pulled off long shot transactions several times in the last six months, so nobody should think Bed Bath & Beyond will not be able to do so again. To the contrary, Bed Bath & Beyond and its professionals will make every effort to salvage all or a portion of operations for the benefit of all stakeholders,” Etlin added in the filings.

Further delays in the auction process could signal willingness on Bed Bath’s part to entertain the offer from the unknown bidder, provided the bidder can find more capital.

Ankura declined to comment on the matter. Bed Bath didn’t return a request for comment. 

Bed Bath previously told CNBC the auction had been delayed so it could have “more time to ensure the most value-maximizing transaction is achieved.” 

Stalking horse bids are now due on June 8 at 5 p.m. and final bids are now due on June 14. An auction, if necessary, is scheduled for June 16. 

CNBC’s Lillian Rizzo contributed to this report.