Google co-founder Sergey Brin is among the wealthy men who received a subpoena this week in the lawsuit over JPMorgan Chase & Co.s JPM, +1.21%
ties to Jeffrey Epstein, the Wall Street Journal reported Friday, citing unnamed sources. The others who were subpoenaed by the U.S. Virgin Islands are Thomas Pritzker, executive chairman of Hyatt Hotels Corp. H, +1.65%
; Mortimer Zuckerman, a real estate magnate and owner of U.S. News & World Report; and Michael Ovitz, a former Hollywood talent agent, according to the Journal. Brin remains a board member of Alphabet GOOG, +2.65%
GOOGL, +2.81%,
the parent company of tech giant Google. The U.S. Virgin Islands sued JPMorgan last year, saying the bank helped facilitate Epstein’s alleged sex trafficking and abuse. The subpoenas ask the men for any communications related to JPMorgan and Epstein, but it’s unclear why, the Journal said.
Former President Donald Trump plans to fly to New York’s LaGuardia Airport Monday night, then spend the night at Trump Tower and surrender Tuesday morning before a court appearance at 2:15 p.m. Eastern time, according to an NBC 4 NY report citing unnamed sources. Trump is expected to face an arraignment on Tuesday after a Manhattan grand jury voted Thursday to indict him.
The executive board of the International Monetary Fund on Friday approved a four-year $15.6 billion loan program for Ukraine, part of a broader $115 billion international support package to help the country meet its funding needs in the wake of Russia’s invasion.
The decision clears the way for an immediate payment of about $2.7 billion to Kyiv, the Fund said in a statement.
The Extended Fund Facility (EFF) loan is the first major financing program approved by the IMF for a country involved in a war. Ukraine’s previous $5-billion IMF program expired last year.
“Russia’s invasion of Ukraine continues to have a devastating economic and social impact,” IMF First Deputy Managing Director Gita Gopinath said in a statement.
Ukrainian President Volodymyr Zelenskiy welcomed the new funding.
“It is an important help in our fight against Russian aggression,” he said on Twitter. “Together we support the Ukrainian economy. And we are moving forward to victory!”
The agreement is expected to help unlock financing for Ukraine from international donors and partners, including the World Bank and other lenders.
The $115 billion package includes the IMF loan, $80 billion in pledges and loans from other countries and $20 billion worth of debt relief commitments.
“I welcome the IMF approval of a $15.6 billion economic program for Ukraine,” U.S. Treasury Secretary Janet Yellen said in a statement late Friday. “I commend Ukraine’s efforts to pursue broad-based structural reforms under the program despite Russia’s brutal and immoral war and strongly support the program’s measures aimed at securing economic and financial stability. The program’s policies and reforms will support economic growth, strengthen good governance and anti-corruption efforts, and set the foundation for longer-term reconstruction.”
Some of Ukraine’s creditors, such as Canada, France, Germany, Japan, the UK and the US, supported the deal which required the IMF to change its rules by giving assurances that they would extend a debt-repayment standstill for the duration of the program.
The Russian invasion, launched over a year ago, has devastated Ukraine’s economy and infrastructure, killing thousands of people and driving more than a third of a pre-war population of 40 million from their homes.
U.S. stocks rallied on Friday to end a rocky month higher, while the Nasdaq Composite also posted its best quarterly gain since 2020. The Dow Jones Industrial Average DJIA, +1.26%
jumped about 414 points, or 1.3%, ending near 33,273 on Friday and up 1.9% for the month, according to preliminary FactSet figures. The S&P 500 index SPX, +1.44%
and Nasdaq Composite Index COMP, +1.74%
posted higher daily gains of 1.4% and 1.7%, respectively, which elevated their monthly gains to 3.5% and 6.7%. Investors in stocks largely looked past turbulence earlier in March after the Federal Reserve acted to calm markets following the sudden collapse of Silicon Valley Bank and Signature Banks. The Fed opened a new facility for banks to tap for liquidity with the aim of preventing forced asset sales, if other banks experience sharp deposit outflows. Friday also marked the end of the quarter, with the Dow and S&P 500 both posting back-to-back quarterly gains. The Nasdaq booked a 16.8% quarterly gain, the best quarter since the 2020, according to Dow Jones Market Data.
U.S. stocks were climbing Friday afternoon following a softer-than-expected inflation report for February, while the Nasdaq Composite was on pace for its largest quarterly advance since 2020.
How stocks are trading
The Dow Jones Industrial Average DJIA, +1.26%
rose 340 points, or 1%, to 33,199.
The S&P 500 SPX, +1.44%
gained almost 47 points, or 1.2%, to nearly 4,098.
The Nasdaq Composite COMP, +1.74%
advanced almost 173 points, or 1.4%, to 12,186.
For the week, the Dow is on track to gain 3% while the S&P was on pace to rise 3.2% and the Nasdaq Composite was heading for a 3.1% increase, according to FactSet data, at last check.
What’s driving markets
U.S. stocks were up sharply Friday afternoon as investors weighed data showing signs of moderating inflation.
“Core price pressures” eased in February, Barclays said in an economics research note Friday. “On balance, the easing in February PCE inflation was fairly broad-based across goods and services, barring housing.”
The personal-consumption-expenditures, or PCE, price index increased 0.3% in February, with inflation slowing to 5% year over year from 5.3% in January, according to a report Friday from the Bureau of Economic Analysis.
Core PCE, the Federal Reserve’s preferred inflation gauge that excludes energy and food prices, rose 0.3% last month for a year-over-year rate of 4.6%. That’s slightly lower than forecasts from economists polled by the Wall Street Journal and softened from the 4.7% increase seen over the 12 months through January.
While the Federal Reserve has been battling high inflation with interest rate hikes, futures traders are betting that rates have already peaked and that the Fed will likely reverse course and cut rates at least a couple of times before the end of the year, according to the CME’s FedWatch tool.
The market is pricing in a “coin flip” as to whether the Fed raises its benchmark rate by a quarter percentage point at its May policy meeting, said Matt Stucky, senior portfolio manager at Northwestern Mutual Wealth Management Co., in a phone interview Friday.
“We think we’re getting pretty close to the end” of the rate-hiking cycle, he said. Stucky expects the Fed may stop hiking once “cracks” start to form in the labor market, with job losses in “nonfarm payrolls.”
Meanwhile, consumer spending edged up 0.2% in February while personal incomes rose 0.3%, according to a Bureau of Economic Analysis report Friday.
“Incomes and spending are hanging in there and inflation’s cooling,” said Mike Skordeles, head of U.S. economics at Truist, in a phone interview Friday. “That has positive implications for markets” and the economy, he said.
Stocks traded higher following the release of the final reading on U.S. consumer sentiment for March from the University of Michigan. While confidence ticked lower compared with earlier estimates, inflation expectations moderated.
U.S. stocks have held up relatively well this quarter, shrugging off the Fed rate hikes and renewed recession fears. Since hitting its highest level of the year in early February, the S&P 500 has been trading in an increasingly narrow range, leaving analysts divided about where the market might be heading next.
“We need to see what the overall economy does,” said Kim Caughey Forrest, founder and chief investment officer of Bokeh Capital Partners. “I think GDP matters, and if GDP holds up while inflation comes down, that could be good for stocks.”
The Nasdaq Composite has risen around 16% since the start of the year, putting it on track for its best quarterly gain since the three months through June 2020, according to FactSet data, at last check. The technology -heavy Nasdaq jumped more than 30% in the second quarter of 2020 as stocks rebounded from the global market rout tied to COVID-19 that year.
The S&P 500 and Dow were also track for quarterly gains in late afternoon trading.
“The bond market is definitely more concerned about recession risks than stocks are,” said Skordeles, who is expecting a recession in the second half of the year. “They couldn’t be sending more different signals.”
New York Fed President John Williams said Friday in a speech at Housatonic Community College that stress in the U.S banking system will cause banks to tighten credit and probably lead to lower consumer spending.
Metropolitan Bank Holding Corp. MCB, +33.64%
shares rallied after issuing a financial update assuring investors that it is well capitalized. The regional lender closed 27% down on Thursday.
Spero Therapeutics SPRO, +0.69%
shares slipped after the clinical-stage biopharmaceutical company posted fourth-quarter revenue of $47.4 million in 2022, higher than the $2.7 million in the same period of the previous year. The uplift was due to the company’s signings with GSK and Pfizer.
Chicken Soup for the Soul Entertainment CSSE, -37.50%
sank after the streaming-service parent company announced it would sell some stock and reported a fourth-quarter loss.
Virgin Orbit Holdings’s VORB, -41.19%
stock tumbled after the space-launch company said late Thursday that it would axe 675 – or 85% – of its staff and reportedly cease operations for the foreseeable future.
The Justice Department and the Environmental Protection Agency have filed a complaint against Norfolk Southern Corp. for unlawful discharge of pollutants and hazardous substances in the Feb. 3 train derailment in East Palestine, Ohio.
The complaint seeks penalties and injunctive relief for the unlawful discharge of pollutants, oil and hazardous substances under the Clean Water Act, according to statements released by the Justice Department and the EPA. The Justice Department and EPA are also seeking a declaratory judgment on liability for past and future costs under the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA).
“When a Norfolk Southern train derailed last month in East Palestine, Ohio, it released toxins into the air, soil, and water, endangering the health and safety of people in surrounding communities,” Attorney General Merrick Garland said in a statement. “With this complaint, the Justice Department and the EPA are acting to pursue justice for the residents of East Palestine and ensure that Norfolk Southern carries the financial burden for the harm it has caused and continues to inflict on the community.”
In a separate statement, EPA Administrator Michael Regan said: “No community should have to go through what East Palestine residents have faced. With today’s action, we are once more delivering on our commitment to ensure Norfolk Southern cleans up the mess they made and pays for the damage they have inflicted as we work to ensure this community can feel safe at home again.”
Norfolk Southern has created a website, nsmakingitright.com, to track its progress in cleaning up the site.
“Our job right now is to make progress every day cleaning up the site, assisting residents whose lives were impacted by the derailment, and investing in the future of East Palestine and the surrounding areas,” a spokesperson for Norfolk Southern told MarketWatch. “We are working with urgency, at the direction of the U.S. EPA, and making daily progress. That remains our focus and we’ll keep working until we make it right.”
More than 9.4 million gallons of affected water have been recovered and transported off-site for final disposal, according to Norfolk Southern, along with 12,904 tons of waste soil that has been removed for proper disposal.
The company has also flushed 5,200 feet of affected waterways and sampled more than 275 private drinking water wells, according to nsmakingitright.com.
The suit from the Justice Department and the EPA comes just two weeks after Ohio Attorney General Dave Yost filed a 58-count civil lawsuit against Norfolk Southern over the derailment in East Palestine.
No one was killed or injured in the Ohio derailment, but the incident has been described as a “PR nightmare” for Norfolk Southern and the rail industry. The derailed cars included 11 tank cars carrying hazardous materials that subsequently ignited, damaging an additional 12 railcars, according to the National Transportation Safety Board, and setting off concerns about the impact on air and water quality and dangers to health in the region.
Earlier this month, Norfolk Southern CEO Alan Shaw was grilled by senators when he provided testimony on the disaster before the Senate Committee on Environment and Public Works.
While safety was the primary focus of the hearing, Shaw was also pressed on Norfolk Southern’s stock buybacks and the company’s use of precision scheduled railroading, which focuses on the movement of individual train cars rather than whole trains.
In his testimony, Shaw vowed to do “everything it takes” for the community affected by the derailment.
Rail safety was thrust into the spotlight again this week with the derailment of a BNSF train carrying ethanol and corn syrup in Minnesota early Thursday.
Everstream Analytics, a supply-chain analytics company, has been researching train derailments involving Class I rail carriers between 2018 and 2023. A Class I carrier is defined as any carrier earning annual revenue greater than $943.9 million, according to the U.S. government’s Surface Transportation Board. Data show that derailments across rail companies increased considerably in the U.S. between 2021 and 2022, according to Everstream Analytics.
There is perhaps no part of the sordid tale of Donald Trump, the National Enquirer and the hush-money payments to an adult-film actress and a Playboy bunny who claimed to have had sex with him, that has lodged itself more firmly in the public consciousness than the phrase catch-and-kill.
The term arguably first became part of the national lexicon on Friday, Nov. 4, 2016, when the Wall Street Journal broke news about the dubious journalistic practice involving the man who would be elected president just four days later.
Fast forward 6½ years and that revelation has snowballed into the first-ever criminal indictment of a former president with a Manhattan grand jury voting to bring charges against Trump for his role in the payoffs.
Back in 2016, I was a media reporter at the Journal and on that late Friday afternoon found myself at the heart of what would become a major political scandal, when then-colleague Michael Rothfeld came up to me asking for some help.
Mike, an investigative reporter, explained that he and legal-affairs reporter Joe Palazzolo had uncovered a wild story about how the National Enquirer paid a Playboy bunny $150,000 for her kiss-and-tell story of having an affair with Donald Trump in 2006. But, once she signed the contract and was given her check, the supermarket tabloid had never run the story.
The deal had given exclusive rights to the story to the Enquirer, so the move to bury it effectively locked the story up for good.
At the time, I focused primarily on newspaper and digital media companies. In a previous life, I had worked in tabloids, so I was familiar with that world.
I made some calls and struck gold, discovering that this kind of payoff was a time-honored method by which supermarket tabloids like the Enquirer protected friends and made bad news about powerful people go away. Usually the favor was returned later — quid pro quo — as a juicier story down the road or via some other form of payback.
It emerged that this kind of thing was called a catch-and-kill.
It was an explosive phrase that ran in the third paragraph of that first Journal story and subsequently appeared prominently in stories written about the subject by many media organizations for years to come.
That first catch-and-kill story would lead to numerous other revelations by the Journal’s crack team led by Joe and Mike about additional payoffs, most importantly one to adult-film star Stormy Daniels.
MarketWatch and the Wall Street Journal are both published by Dow Jones, which is owned by News Corp.
The payment for her story had been made not by the Enquirer but directly, by Trump’s then–personal lawyer, Michael Cohen, who was later reimbursed by the Trump organization, purportedly booked by the Trump Organization as legal fees.
That chain of payments resulted in Cohen’s pleading guilty to campaign-finance violations and going to prison, as well as, ultimately, to the charges brought by the Manhattan district attorney’s office on Thursday.
Given the tawdriness of the tale — replete with an army of characters with names that sounded made up, like Trump friend and AMI chief executive David Pecker — the phrase catch-and-kill has taken on a larger-than-life dimension that has come to define the Trump era as much as “Make America Great Again.”
The numbers: The cost of U.S. goods and services rose by a milder 0.3% in February, perhaps a sign the Federal Reserve’s fight against high inflation is showing grudging progress.
Prices had risen by a sharp 0.6% in January, based on the so-called PCE index.
The yearly increase in prices declined to 5% from 5.3% in the prior month, the government said Friday, marking the lowest level in more than a year and a half.
That’s still about three times the rate of inflation before the pandemic, however.
Senior Federal Reserve officials have signaled they plan to raise interest rates just once more before pausing to determine how much a sharp increase in borrowing costs brings down inflation. The Fed has jacked up its key short-term U.S. rate to a top end of 5%, a remarkably fast acceleration from nearly zero one year ago.
Higher interest rates temper inflation by slowing the economy, but the effects can sometimes take up to a year or more to be fully felt. The Fed wants to avoid going too far or cause any more stress on the U.S. financial system after the failure of Silicon Valley Bank.
Key details: The more closely followed core index also increased 0.3% last month, matching Wall Street’s forecast.
The core rate of inflation in the past 12 months slipped to 4.6% from 4.7%.
The PCE is viewed by the Fed as the best predictor of future inflation trends. It is formally known as the personal consumption expenditures price index.
The central bank pays especially close attention to the core gauge that strips out volatile food and energy costs.
Unlike it’s better-known cousin, the consumer price index, the PCE gauge takes into account how consumers change their buying habits due to rising prices.
They might substitute cheaper goods such as chicken thighs for more expensive ones like boneless breasts to keep costs down. Or buy generic medicines instead of brand names.
Big picture: The Fed is trying to straddle a fine line: Bring inflation back down to its 2% target, but without causing a severe economic reaction.
Whether the Fed will be able to hold the line on just one more rate hike is far from certain.
If inflation stays high, the central bank would have to end its pause on rate hikes and risk a recession. A slim majority of economists, in fact, already believe a downturn is imminent.
Steadily falling inflation, on the other hand, could allow the Fed to pull a rabbit out of the proverbial hat.
Looking ahead: “For an economy looking to avoid recession, this was a good report,” said Robert Frick, corporate economist at Navy Federal Credit Union.
“For the Fed, it could be one and done in May,” said senior economist Sal Guatieri of BMO Capital Markets.
Market reaction: The Dow Jones Industrial Average DJIA, +0.50%
and S&P 500 SPX, +0.57%
rose in Friday trades. The yield on the 10-year Treasury note TMUBMUSD10Y, 3.535%
declined several basis points to 3.53%.
ROME (AP) — Pope Francis is expected to be discharged on Saturday from the Rome hospital where he is being treated for bronchitis, the Vatican said.
Vatican spokesman Matteo Bruni said in a written statement on Friday that the pope’s recovery has been “normal” and that he ate a pizza Thursday for dinner.
Francis, 86, was hospitalized on Wednesday at Gemelli Polyclinic, where doctors said the pontiff was receiving antibiotics intravenously to treat his bronchitis.
The hospitalization came four days before Palm Sunday, the start of Holy Week.
Due to a chronic knee problem, Francis had already largely stopped celebrating Mass at major Catholic Church holy days but had continued to preside at the ceremonies and deliver homilies.
Italian Cardinal Giovanni Battista Re said Friday that Francis might be discharged Saturday and would thus be able to preside over — but not celebrate — Holy Week ceremonies.
“On the basis of the information I have, he’ll leave Gemelli tomorrow, so he’ll be able to preside over all the Holy Week rituals,” Italian news agency Adnkronos quoted the cardinal as saying.
Question: Can an indicted person run for president?
Answer: Yes. There’s nothing in the Constitution preventing it. Article II, Section 1, of the Constitution doesn’t mention criminal records. The only requirements to run are being a natural-born citizen at least 35 years old and resident in the U.S. for 14 years.
“ Not only can an indicted person run for president, but a convicted one can, too, legal experts say. ”
Not only can an indicted person run for president, but a convicted one can, too, legal experts say. “There’s nothing in the Constitution disqualifying individuals convicted of crimes from running for or serving as president,” ABC News legal analyst Kate Shaw told the network.
Q.: What has Trump said about a possible indictment’s effect on his campaign?
A.:“I wouldn’t even think about leaving,” he told reporters ahead of his speech at this year’s Conservative Political Action Conference. “Probably it will enhance my numbers.” Trump has said he did nothing wrong.
Trump in mid-March said he could be arrested in the coming days, encouraged his supporters to protest and wrote on social media, “TAKE OUR NATION BACK!”
Q.: What have Trump’s rivals for the GOP nomination, or other Republican politicians, said about an indictment?
A.: In a tweet Thursday, Florida Gov. Ron DeSantis, who is expected to announce his bid for the GOP presidential nomination, called the indictment “un-American” and accused the Manhattan D.A. of having a political agenda. DeSantis added that Florida would not cooperate in an extradition request.
House Speaker Kevin McCarthy said “the House of Representatives will hold [Manhattan D.A.] Alvin Bragg and his unprecedented abuse of power to account,” while Rep. Jim Jordan, R-Ohio, who has called for a probe into the Manhattan D.A.’s investigation, tweeted a single word Thursday: “Outrageous.”
Q.: What would a Trump arrest actually look like?
A.: It’s standard for defendants arrested on felony charges to be handcuffed — but it’s unclear whether an exception would be made for Trump due to his status, the New York Times reported. The former president would likely be released on his own recognizance, the Times said, because an indictment likely would contain only nonviolent felony charges. But he would be fingerprinted and photographed.
Q.: Is Bragg’s the only investigation Trump is facing?
A.: No. Besides the Manhattan district attorney’s case, Trump is facing another in Fulton County, Ga., and two federal probes led by special prosecutor Jack Smith. The Georgia probe centers on efforts by Trump and his allies to overturn that state’s 2020 election result. Smith’s investigations concern Trump’s handling of classified material after he left office, and the ex-president’s involvement in the Jan. 6 attack on the U.S. Capitol.
So Trump could be in for more charges depending on the results of those investigations.
Q.: Could something else prevent Trump from being president?
A.: The 14th Amendment bars anyone from public office who, “having previously taken an oath” to support the Constitution, “engaged in insurrection or rebellion” or gave “aid or comfort” to enemies of the U.S. Late last year, a group of 40 House Democrats introduced legislation to bar Trump from holding office, and invoked the 14th Amendment, with Rep. David Cicilline saying the ex-president “very clearly” engaged in an insurrection on Jan. 6, 2021. Trump has denied wrongdoing.
After years of investigations and probes into Donald Trump for a wide variety of alleged crimes, a Manhattan grand jury voted Thursday to indict him, marking the first time in U.S. history a former president will face criminal charges.
The indictment has yet to be unsealed so the specifics of the charges weren’t immediately clear, but the Manhattan district attorney has alleged that Trump had broken the law for his role in a hush-money payment to porn star Stormy Daniels at the height of the 2016 presidential election to silence her story claiming they once had an affair. Despite years of various investigations, Trump had so far avoided prosecution.
The New York Times was first to report the indictment, which was confirmed by Trump’s lawyers, Joe Tacopina and Susan Necheles, late Thursday. “President Trump has been indicted,” they said in a statement. “He did not commit any crime. We will vigorously fight this this political prosecution in court.”
In his own statement, Trump called the indictment “political persecution and election interference at the highest level,” and accused Democrats of “cheating” and “weaponizing our justice system.”
In an emailed statement Thursday, a spokesperson for Manhattan District Attorney Alvin Braggs said arrangements are being made for Trump’s surrender: “This evening we contacted Mr. Trump’s attorney to coordinate his surrender to the Manhattan D.A.’s Office for arraignment on a Supreme Court indictment, which remains under seal. Guidance will be provided when the arraignment date is selected.”
There were news reports that Trump would turn himself in next week, and in an email to MarketWatch, Necheles said Trump’s arraignment is expected to be Tuesday.
The hush-money charges mark an extraordinary turn of events for Trump, who has been under investigation for election interference in Georgia and the storage of classified documents at his Florida mansion, as he seeks to make a political comeback with a run for the White House in 2024.
Daniels, whose real name is Stephanie Clifford, was paid $130,000 by Trump’s then-personal lawyer, Michael Cohen, after she had approached the National Enquirer offering to sell her kiss-and-tell story about having sex with Trump at a celebrity golf tournament in 2006.
Clifford then signed a non-disclosure agreement and the National Enquirer never published the story — a tabloid journalism practice known as “catch and kill.”
Cohen initially made the payment using money he took from a home equity loan on his house, and funneled it to Clifford through a shell company he created in Delaware. Cohen, who pleaded guilty in 2018 in federal court to campaign finance violations for his role in the payoff, said he was directed to make the payment by Trump who later reimbursed him.
That payment was recorded by Trump’s company as being for legal services. Federal prosecutors had argued that the payments amounted to illegal, unreported assistance to Trump’s campaign.
Trump was never charged in the federal probe but was listed in court documents as “co-conspirator number one.”
The former president has denied having an affair with Clifford and has characterized her selling the story as extortion.
Cohen had also been involved in orchestrating an earlier “catch-and-kill” payment in 2016 to former Playboy bunny Karen McDougal, who was given $150,000 for her story of having an affair with Trump by the National Enquirer, which then never ran an article.
The editor and publisher of the National Enquirer were given non-prosecution agreements in exchange for their cooperation with the federal investigation.
Trump has been facing an FBI investigation into his keeping boxes of highly classified documents after he left the White House following his defeat by President Joe Biden in 2020. He also has been subject to a grand jury probe into his alleged tampering with the election process in Georgia.
His real estate company, the Trump Organization, has been the subject of a lawsuit by the New York Attorney General’s office for allegedly falsifying business and tax records. The Manhattan district attorney had similarly looked into Trump’s business practices but has so far declined to press charges.
Virgin Orbit Holdings Inc. plans to cease operations, according to a CNBC report Thursday afternoon.
Virgin Orbit stock VORB, -16.02%
plunged 45% in after-hours trading after declining 16% in Thursday’s regular session.
The company is making the move after failing to secure necessary funding, Chief Executive Dan Hart told employees at an all-hands meeting, according to the report.
Virgin Orbit disclosed in a Thursday afternoon filing with the Securities and Exchange Commission that it would lay off about 675 employees, representing roughly 85% of the company’s workforce, “in order to reduce expenses in light of the company’s inability to secure meaningful funding.” The layoffs impact “all areas” of the company.
The company expects to incur $15 million in charges related to the layoffs. Virgin Orbit disclosed that it sold and issued a $10.9 million convertible note and would use the net proceeds to help fund severance and other related costs.
Virgin Orbit didn’t immediately respond to MarketWatch’s request for comment and confirmation of the reported plans to cease operations.
Wall Street bonuses fell 26% in 2022, the largest drop since the collapse of Lehman Brothers in 2008, as New York state and city officials dial back their expectations for the economic impact of the securities industry.
While many people bemoan the salaries commanded by the Big Apple’s white-shoe bankers, the financial sector provides an economic boost to city and state budgets, helping to find public services that touch the lives of residents.
Now, with the banking sector absorbing the impact of the collapse of Silicon Valley Bank and Signature Bank in recent weeks and of a lack of investment bank deal-making, 2023 isn’t looking particularly strong. The current malaise may signal what’s in store for bonuses and employment in the coming year.
Rahul Jain, state deputy comptroller, said state and city official are baking in conservative projections for a decline in Wall Street profits and bonuses in 2023 partly because much remains unknown such as when the Fed will pause its interest rate hikes or possibly cut them.
“What we can’t tell is what the Fed will do with interest rates,” Jain told MarketWatch. “It doesn’t seem like we’ll return to the levels of 2020 and 2021, but there’s hope that 2023 will level off near 2022.”
While Wall Street and the banking sector is challenged, the overall economy remains relatively healthy, as other sectors such as travel make up for weakness in the securities industry in the New York area.
“The broad economy still matters and it’s still resilient,” he said. “People still want to do things.”
Like the FDIC and other regulators, the comptroller’s office is keeping an eye on the commercial real estate market, which will hinge on how much credit is available for loan refinancings.
“Any kind of credit crunch would make the situation worse,” Jain said.
Even with the cut, the bonus alone eclipses average U.S. wages. Full-time employees in management, professional and related occupations have the highest median weekly earnings reported by the Bureau of Labor Statistics, and the median income for this group across the U.S. was $1,729 a week, or $89,908 a year, in the fourth quarter of 2022 for men, and $1,316 per week, or $68,432 per year, for women.
Wall Street banker bonuses jumped by 28% in 2020 and grew by another 12% in 2021, only to fall 26% in 2022. That is the largest drop since the 43% fall in 2008, the year Lehman Brothers collapsed and triggered a global financial crisis.
At the same time, employment in the securities industry climbed to 190,800 by the end of 2022, the highest level in at least 20 years and surpassing the previous 20-year high of 188,900 in 2007.
Collectively, Wall Street firms generated $25.8 billion in profits in 2022, less than half the $58.4 billion produced in 2021 as the impact of inflation, the war in Ukraine and supply constraints bit into deal-making.
The securities industry accounted for about $22.9 billion in state tax revenue, or 22% of the state’s tax collections in fiscal 2021-’22, and $5.4 billion in city tax revenue, or 8% of total tax collections over the same period.
New York State Comptroller Thomas P. DiNapoli estimated a drop of $457 million in 2022 tax income for the state and of $208 million for New York City, when measured against the lucrative year of 2021.
With recession in the headlines and markets selling off in 2022, however, policy makers have already adjusted their expectations for tax income.
New York Gov. Kathy Hochul’s proposed budget assumes that bonuses in the broader finance and insurance sector will drop by 25.2% in 2022-’23, while the city’s 2023 financial plan assumes a decrease of 35.6% for the securities industry.
“While lower bonuses affect income tax revenues for the state and city, our economic recovery does not depend solely on Wall Street,” DiNapoli said in a statement. “Employment in leisure and hospitality, retail, restaurants and construction must continue to improve for the city and state to fully recover.”
The fate of Wall Street’s bonuses in 2023 remains tied up in what markets and interest rates do for the balance of the year. Based on the storm clouds over the banking sector now, it’s possible bonuses could fall again.
In one positive sign, the equities market has managed to post gains so far in 2023 after bruising losses in 2022. At last check, the S&P 500 SPX, +0.57%
is up 5.6% in 2023, while the Nasdaq COMP, +0.73%
has risen 14.9%. The Financial Select Sector SPDR exchange-traded fund XLF, -0.22%
is down 6.6% so far in 2023.
After Wall Street bonuses fell 43% in 2008, they rebounded by 39% in 2009. Such a rapid recovery may not be in the cards for the coming year, however.
Member firms at the New York Stock Exchange generated profits of $13.5 billion in the first half of 2022, down by more than half from year-ago levels, according to an October report on the securities industry in New York by the comptroller’s office.
Revenue on trading, underwriting and securities offerings dropped about 48% over the same time period, while global debt offerings dropped by 17%.
At the same time, interest-rate expenses tripled as the U.S. Federal Reserve boosted interest rates.
“Despite this uncertainty, the city’s latest forecast predicts annual profits to average $21 billion over the next five years, comparable to the 10-year pre-pandemic average of $20.3 billion,” the study said.
The bonus pool of $33.7 billion in 2022 fell 21% from 2021’s record of $42.7 billion, the largest drop since the Great Recession.
The numbers: Mortgage rates slide down to the lowest level in six weeks as consumers feel uncertain about the state of the U.S. economy.
The 30-year fixed-rate mortgage averaged 6.32% as of March 30, according to data released by Freddie Mac on Thursday.
That’s down 10 basis points from the previous week — one basis point is equal to one hundredth of a percentage point.
The 30-year was last at this level in mid-February.
Last week, the 30-year was at 6.42%. Last year, the 30-year was averaging at 4.67%.
The average rate on the 15-year mortgage fell to 5.56%, from 5.68% the previous week. The 15-year was at 3.83% a year ago.
Freddie Mac’s weekly report on mortgage rates is based on thousands of applications received from lenders across the country that are submitted to Freddie Mac when a borrower applies for a mortgage.
Separate data by Mortgage News Daily said that the 30-year fixed-rate mortgage was averaging at 6.61% as of Thursday morning.
What Freddie Mac said: “Over the last several weeks, declining rates have brought borrowers back to the market but, as the spring homebuying season gets underway, low inventory remains a key challenge for prospective buyers,” Sam Khater, chief economist at Freddie Mac, said in a statement.
Market reaction: The yield on the 10-year Treasury note TMUBMUSD10Y, 3.551%
was trading below 3.6% during the afternoon trading session on Thursday.
Shares of Roku Inc. ROKU, +5.46%
rallied 2.7% in premarket trading Thursday, after the streaming-media company disclosed that it would lay off 200 employees, or about 6% of its workforce as part of a cost-cutting plan. The plan will also include the exit and sublease, or cease the use of, certain office facilities. The company expects to record charges of $30 million to $35 million as a result of the plan, which will include severance payments, notice pay and employee benefit contributions. Most of the charges will be recorded in the fiscal first quarter, and the job cuts will be “substantially complete” by the end of the second quarter. The stock has soared 57.0% over the past three months but has tumbled 50.8% over the past 12 months, while the S&P 500 SPX, +1.42%
has lost 12.5% over the past year.
Spain’s inflation rate eased more than expected in March, reaching its lowest level in 20 months as energy prices sank from a year earlier, when Russia’s invasion of Ukraine sent them surging.
The consumer price index–which measures what consumers pay for goods and services–increased 3.1% in March on year measured by European Union-harmonized standards, down sharply from the 6% on-year rise registered in February, preliminary data from the Spanish statistics office INE showed Thursday.
This marks the lowest inflation rate since July 2021, and came in below the 4.2% expected by economists in a poll from The Wall Street Journal.
The consumer price index rose 3.3% in March by national standards, easing from the 6% increase seen in February.
The marked decrease in annual inflation was mainly driven by lower energy prices than a year before, when the war in Ukraine began. Electricity and fuel prices fell in March while they increased the same month a year earlier, INE said.
Core inflation–which exclude the more volatile categories of food and energy–slowed slightly to 7.5% in March from 7.6% in February.
Compared with the previous month, consumer prices rose 0.4% by national standards and increased 1.1% by EU-harmonized standards, INE said.
Spanish inflation is expected to average 3.7% in 2023, down from 4.9% previously anticipated, according to projections from the Bank of Spain. However, core inflation is expected to ease at a slower pace than headline inflation, according to the bank’s March economic bulletin.
Write to Xavier Fontdegloria at xavier.fontdegloria@wsj.com
Electronic Arts Inc. on Wednesday announced intentions to slash 6% of its workforce as the videogame publisher looks to cut costs.
“As we drive greater focus across our portfolio, we are moving away from projects that do not contribute to our strategy, reviewing our real estate footprint, and restructuring some of our teams,” Chief Executive Andrew Wilson said in a note to employees that was also shared publicly.
U.S. stocks finished higher on Wednesday as investors waited on an update on inflation due Friday that could help inform how many more rate hikes to expect from the Federal Reserve.
The S&P 500 index SPX rose about 56 points, or 1.4%, ending near 4,027, according to preliminary FactSet data, the highest close since March 6. That was only days before the collapse of Silicon Valley Bank put a spotlight on risks in the U.S. banking system after the Fed’s yearlong stretch of quick rate hikes.
A White House spokesman suggested Chinese officials should not be upset by Taiwanese President Tsai Ing-wen’s visit to the U.S. this week, with his remarks coming after Beijing threatened retaliation if House Speaker Kevin McCarthy meets with her. “There’s no reason for them to react harshly,” said John Kirby, coordinator for strategic communications for President Joe Biden’s National Security Council, during a press briefing on Wednesday.
The Manhattan grand jury probing former President Donald Trump’s alleged role in a hush money payment to a porn star is scheduled to break for about a month, reports said Wednesday.
Politico said the break is largely due to a previously scheduled hiatus, citing a person familiar with the proceedings.
