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Tag: finance and investments

  • Fed Chair Powell: Inflation fight will take ‘a significant period of time’ | CNN Business

    Fed Chair Powell: Inflation fight will take ‘a significant period of time’ | CNN Business

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    Minneapolis
    CNN
     — 

    The US labor market remains “extraordinarily strong” and Friday’s monster jobs report underscored that the central bank has more work to do to bring down inflation, Federal Reserve Chairman Jerome Powell said Tuesday.

    “We didn’t expect it to be this strong,” Powell said of the January jobs report, which showed the US economy added 517,000 jobs. “It kind of shows you why we think that this will be a process that takes a significant period of time.”

    Powell was speaking during a question-and-answer session with David Rubenstein of the Economic Club of Washington.

    “The disinflationary process has begun,” Powell said, noting progress especially in goods prices. However, price gains within the services sector remain high, he added.

    The Fed expects “significant” declines in inflation to occur this year. It will take “not just this year but next year to get down to 2%,” the central bank’s inflation target, Powell said. And rates will have to remain at a restrictive level “for a period of time” before that happens, he noted.

    Powell expects housing inflation to come down by the middle of this year but is keeping the closest watch on a metric within the Personal Consumption Expenditures report: Core services excluding housing.

    “There has been an expectation that [inflation] will go away quickly and painlessly; I don’t think it’s guaranteed that’s the base case,” Powell said. “It will take some time.”

    The major US stock indexes rallied during Powell’s discussion but then fell in early afternoon trading, with the Dow down by around 200 points or 0.6%, the S&P lower by 0.3% and the tech-heavy Nasdaq down by 0.2%.

    While economists said the January job total was heavily influenced by seasonal factors and will probably be adjusted downward, it was probably too hot for the Fed’s liking. The robustness of the labor market has stood somewhat at odds with the Fed’s efforts to lower inflation.

    “The labor market is strong because the economy is strong,” Powell said.

    The current labor market is also a reflection of the pandemic’s lasting effect on the US economy and labor supply, he noted. The demand exceeds the supply by 5 million people, and the labor force participation rate has declined, he said.

    “It feels almost more structural than cyclical,” he said.

    A key reason Chair Powell wants more slack in the labor market is out of concern that a tight employment situation will continue to push up wages, which could then keep inflation elevated. As the unemployment rate rises, workers lose bargaining power for higher wages and households pull back on spending.

    Fed officials also want to keep inflation expectations anchored.

    “We had a labor market with 3.5% unemployment in 2018 and ’19, and we had inflation just barely getting to 2%, and wages moving up for most of the people at the lower end of the spectrum,” he said. “We all want to get back to that place.”

    And the Fed will react accordingly with the data to ensure it does, he said.

    “If we continue to get, for example, strong labor market reports or higher inflation reports, it may well be the case that we have to do more and raise rates more,” he said.

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  • Bed Bath & Beyond is closing 150 more stores | CNN Business

    Bed Bath & Beyond is closing 150 more stores | CNN Business

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    New York
    CNN
     — 

    Bed Bath & Beyond is closing 150 more stores — just a week after the struggling retailer announced the closure of 87 locations.

    The company’s brick-and-mortar footprint has already shrunk dramatically, a regulatory filing showed late Monday, and the new closings mean it will have shuttered 400 stores in the past year — almost half the 950 or so stores it had open in February 2022.

    That includes last week’s announcement that it was also closing all 49 remaining Harmon Face Value stores, which sold cosmetics; plus 5 buybuy Baby locations. A list of the new store closures wasn’t immediately available.

    A turnaround doesn’t look imminent: The embattled home goods chain forecasts first quarter sales to be down by 30% to 40% with “sequential, quarterly sales improvement thereafter” the filing said.

    The company also said Monday it was planning to raise some $1 billion through an offering of preferred stock and warrants in a last-ditch effort to stave off bankruptcy. If it can’t complete the complex transaction, it would “likely file for bankruptcy protection.” It also appointed Holly Etlin, a bankruptcy expert, as interim chief financial officer.

    The chain has said in recent weeks that it had defaulted on a loan and may not be able to remain in business, raising concerns about its future. Bed Bath & Beyond held talks in recent days with an investment firm to underwrite a significant portion of the proposed offering, according to Reuters.

    Bed Bath and Beyond has been part of the meme stock phenomenon, with shares skyrocketing as much as 400% last year when activist investor and GameStop chairman Ryan Cohen took a stake and sought changes.

    Shares of the retailer, which closed up 92% at $5.86 in a rollercoaster session Monday, were down 40% in in pre-market trading Tuesday.

    Founded in 1971, Bed Bath & Beyond became a staple for affordable home decor, kitchenware and college dorm room furniture. It’s also known for its ubiquitous 20% off blue coupons, and cavernous stores with merchandise stacked high to the ceilings.

    But the company struggled to make the transition to online shopping and fend off larger chains such as Walmart and Target

    (TGT)
    . Many shoppers switched to those competitors as the novelty of Bed Bath & Beyond’s coupons faded.

    The company was also hit hard during the pandemic, closing stores temporarily during 2020 while rivals remained open. The company lost 17% of its sales in 2020 and 14% in 2021.

    – Reuters contributed to this report

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  • BP’s annual profit more than doubles to $28 billion | CNN Business

    BP’s annual profit more than doubles to $28 billion | CNN Business

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    Hong Kong
    CNN
     — 

    BP’s annual profit more than doubled last year to nearly $28 billion, extending a record run of earnings for the world’s oil majors that is adding to calls for higher taxes on the windfall gains.

    The British energy giant said in a statement that underlying replacement cost profit rose to $27.7 billion for 2022, compared with $12.8 billion the previous year. The metric is a key indicator of oil companies’ profitability.

    BP

    (BP)
    also announced on Tuesday a further $2.75 billion in share buybacks and hiked its dividend for the fourth quarter by around 10% to 6.61 cents per share.

    The earnings are the latest in a series of record-setting results by the world’s biggest energy companies, which have enjoyed bumper profits off the back of soaring oil and gas prices.

    Last week, Shell

    (RDSA)
    reported a record profit of almost $40 billion for 2022, more than double what it raked in the previous year after oil and gas prices soared following Russia’s invasion of Ukraine.

    — This is a developing story and will be updated.

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  • Australia’s central bank signals more tightening ahead after hiking rates to decade high | CNN Business

    Australia’s central bank signals more tightening ahead after hiking rates to decade high | CNN Business

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    Sydney
    Reuters
     — 

    Australia’s central bank raised its cash rate by 25 basis points to a decade-high of 3.35% on Tuesday and reiterated that further increases would be needed, in a more hawkish policy tilt than many had expected.

    Wrapping up its February policy meeting, the Reserve Bank of Australia (RBA) also dropped previous guidance that it was not on a pre-set path and forecast inflation would only return to the top of its target range of 2-3% by mid-2025.

    “The Board expects that further increases in interest rates will be needed over the months ahead to ensure that inflation returns to target and that this period of high inflation is only temporary,” governor Philip Lowe said in a statement.

    Markets were surprised by the hawkish tone of the RBA which shattered any expectations of an imminent pause to the tightening campaign. The futures market has priced in a peak rate of 3.9%, implying at least two more rate hikes in March and April, compared with 3.75% before the decision.

    The local dollar shot up to $0.6940, extending earlier gains. Three-year government bond yields jumped 15 bps to 3.254% while ten-year yields also surged 15 bps to 3.615%.

    “The surprise was not in the decision, but rather the shift in tone and forward guidance in the Governor’s Statement,” said Gareth Aird, head of Australian economics at CBA, as he updated his call for rates to peak at 3.85% after the decision, compared with 3.35% previously.

    “This change implies that the RBA Board has essentially made up their mind and intend to raise the cash rate further over coming months, if the economic data prints in line with their updated forecasts.”

    Markets had expected a quarter-point move, with some risk of a bigger rise given recent inflation data had surprised on the high side. This was the ninth hike since last May, lifting rates by a total of 325 basis points.

    Lowe said that core inflation had been higher than expected, with the trimmed mean gauge accelerating to 6.9% last quarter from a year ago, above the central bank’s previous forecast of 6.5%.

    Inflation is expected to decline to 4.75% this year and only slow to around 3% by mid-2025, according to the RBA’s latest forecasts.

    The RBA also expects economic growth to average around 1.5% over 2023 and 2024.

    The interest rate increases so far, including Tuesday’s move, will add over A$900 a month in repayments to the average A$500,000 mortgage, according to RateCity, a deadweight for a population that holds A$2 trillion ($1.3 trillion) in home loans.

    Housing prices fell for the ninth straight month in January, with prices in Sydney and Melbourne down about 10% from a year ago.

    There are signs that consumers are finally pulling back on spending as the cost of living surges and rate increases bite. Australian retail sales recorded the biggest drop in more than two years in December.

    The next big test is the December quarter wage growth report later this month, which analysts expect to be robust given the labor market is at its strongest in nearly 50 years.

    “High inflation makes life difficult for people and damages the functioning of the economy. And if high inflation were to become entrenched in people’s expectations, it would be very costly to reduce later,” warned Lowe as he signaled the bank’s intention to extend the tightening cycle.

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  • Gold giant Newmont’s $16.9 billion bid for Australia’s Newcrest clouded by deal doubts | CNN Business

    Gold giant Newmont’s $16.9 billion bid for Australia’s Newcrest clouded by deal doubts | CNN Business

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    Melbourne
    Reuters
     — 

    Top gold producer Newmont

    (NEM)
    Corp said it had made a $16.9 billion offer for Australian peer Newcrest

    (NCMGF)
    Mining to build a global gold behemoth, although investors and analysts said it undervalued the target amid a leadership change.

    Newcrest is seeking a new boss, with previous chief executive Sandeep Biswas having stepped down in December, while global interest rates are expected to peak this year and turn down, polishing the outlook for gold prices.

    The Australian gold miner said that it was considering the all-share proposal in a filing that was a response to media speculation over the weekend. The initial feedback from shareholders is that they want a higher price, according to a person familiar with Newcrest’s deliberations.

    “A good litmus test for a reasonably-priced deal is one where both seller and buyer feel somewhat aggrieved by selling out too low or by paying too much,” said Simon Mawhinney, chief investment officer at Allan Gray, Newcrest’s largest shareholder with a 7.36% stake. “It’s not clear to me that this kind of symmetry exists with these deal terms.”

    Newcrest shares surged as much as 14.4% to A$25.60 ($17.77), the highest since May 2022, but remained below the implied current offer price of $27.16, suggesting investors were not convinced the deal would pan out. Shares closed 9.3% higher at A$24.53.

    Newmont, which is already the world’s biggest gold producer by market capitalization and by ounces produced, said the combination represented “a powerful value proposition.”

    Newcrest’s operations include its top class Cadia asset in Australia, an expanding footprint in North America and Papua New Guinea, and growth potential in copper, highly prized as key to the energy transition. BHP

    (BBL)
    Group offered $6.4 billion for Australian copper miner Oz

    (OZMLF)
    Minerals Minerals in December.

    The Newmont proposal is via an agreed scheme of arrangement that would need to be recommended by the Newcrest board and subject to due diligence, various regulatory approvals and a shareholder vote that could stretch out for months.

    The indicative offer implies a 21% premium to Newcrest’s last closing value of A$22.45, materially below the traditional 30% takeover premium, noted analyst Jon Mills of Morningstar, which values Newcrest at about A$31 per share.

    Newcrest shareholders would receive 0.380 Newmont shares for every Newcrest share, giving them a 30% stake in the enlarged miner. It is a 4.7% improvement from a previous 0.363 per share offer that Newcrest already rejected for not providing enough value to shareholders, Newcrest disclosed on Monday.

    If investors don’t back the deal, the board will be under pressure to improve Newcrest’s value, perhaps by breaking out assets like Havieron and Telfer in Australia, or Lihir in Papua New Guinea, said Barrenjoey analyst Dan Morgan.

    Newcrest has been expected to announce a new chief executive this year after Biswas announced his retirement after eight years.

    Sherry Duhe, formerly chief financial officer, who joined Newcrest in February last year, is interim chief executive while a global internal and external search for a replacement is underway.

    Newcrest has been viewed as a target in recent years given its middling performance, but only a handful of buyers are big enough to take it out, said an investment banker who was not authorized to speak publicly about the matter.

    The all-share nature of the offer meant the timing is more likely to be linked to Newcrest’s leadership vulnerability than a big call on the gold price, but it probably also reflects a constructive view on the precious metal, the banker added.

    Risks are growing for gold to break higher, Morgan Stanley in a note on Jan. 16, noting that its macroeconomists were now forecasting lower rates and a weaker U.S. dollar, in tailwinds for the metal.

    Morgan Stanley is looking towards a bull case of spot gold reaching $2,160 in the fourth quarter, up from $1,866 an ounce.

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  • EV maker Rivian to cut 6% of jobs amid price war | CNN Business

    EV maker Rivian to cut 6% of jobs amid price war | CNN Business

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    Reuters
     — 

    Rivian Automotive is laying off 6% of its workforce in an effort to cut costs as the EV maker, already grappling with falling cash reserves and a weak economy, braces for an industry-wide price war.

    The company is focusing resources on ramping up vehicle production and reaching profitability, Chief Executive R.J. Scaringe said in an email to employees on Wednesday announcing the job cuts. Reuters obtained a copy of the email.

    Layoffs at Rivian come amid falling EV prices kicked off by cuts made recently by Elon Musk-led Tesla

    (TSLA)
    and Ford Motor Co.

    The price cuts by Tesla and Ford are expected to hurt EV upstarts such as Rivian, Lucid Group and British startup Arrival, which Monday said it would lay off half its staff.

    Despite a blockbuster initial public offering in November 2021, Rivian’s shares have fallen nearly 90% from their peak that month to Tuesday’s close. Rivian’s stock was trading down 4% on Nasdaq on Wednesday, paring some losses after news of the job cuts.

    “We must focus our resources on ramp and our path to profitability,” Scaringe said in the email, in which he apologized to employees for the necessity of the cuts.

    A Rivian spokesman confirmed the email was sent, but declined further comment.

    “They’re bleeding cash and would like to grow at a much faster rate, but they continue to struggle with their EV production ramp and have been unable to meaningfully drive down unit costs,” CFRA Research analyst Garrett Nelson said. “We think that is what’s behind this decision.”

    Rivian is focusing on ramping up production of its R1 trucks and EDV delivery vans for top shareholder Amazon.com and launching its R2 platform, he said. “The changes we are announcing today reflect this focused roadmap.”

    Irvine, California-based Rivian, which has about 14,000 employees, will let go of about 840 staff in a move that will not affect manufacturing operations at its plant in Normal, Illinois.

    Rivian, which has been losing money on every vehicle it builds, narrowly missed its full-year production target of 25,000 vehicles last year as it dealt with supply-chain disruptions caused by the COVID-19 pandemic. It had previously halved that target.

    To further conserve its cash, Rivian late last year shelved plans to build delivery vans in Europe with Mercedes. Rivian had earlier pushed back by a year to 2026 the planned launch of a smaller R2 vehicle family at the $5 billion plant it is building in Georgia.

    Last July, Rivian, which is scheduled to report fourth-quarter results on Feb. 28, laid off staff and suspended some programs as part of a broader restructuring.

    The company has a market valuation of $17.8 billion. Its cash and cash equivalents stood at $13.27 billion as of Sept. 30, 2022, down from over $18 billion a year earlier.

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  • Larry Summers: More likely the Fed can pull off a soft landing, but don’t get hopes up | CNN Business

    Larry Summers: More likely the Fed can pull off a soft landing, but don’t get hopes up | CNN Business

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    New York
    CNN
     — 

    After a shocking jobs report, Larry Summers, treasury secretary under Bill Clinton, said he is more encouraged the Fed can pull off a soft landing, but cautioned it is a “big mistake” to think the economy is “out of the woods” on Fareed Zakaria GPS Sunday.

    Friday’s job’s report saw an astonishing 517,000 jobs added in January and unemployment tick down to 3.4%, the lowest since 1969. Economists had predicted 185,000 jobs, expecting a slower jobs market after almost a year of aggressive rate hikes from the Federal Reserve.

    The Fed once hiked interest rates less aggressively this week, reflecting a sense inflation is cooling. It brings up the question: Can the United States pull off a soft landing, bringing down inflation without triggering a recession?

    Summers said it “looks more possible that we’ll have a soft landing than it did a few months ago,” but he has continued fears about inflation indicators that have come back to earth, but are still too high for his liking.

    “They’re still unimaginably high from the perspective of two or three years ago, and that getting the rest of the way back to target inflation may still prove to be quite difficult,” Summers said.

    Zakaria asked if triggering a recession was worth it to bring down inflation, if 3 to 3.5% inflation rates could become the norm.

    Summers said it’s a trade-off between short run reductions in unemployment, and permanent changes in inflation.

    “The benefit we can get from pushing unemployment low is on almost all economic theories and likely not to be a permanent one,” Summers said. “But if we push inflation up and those issues become entrenched, we’re going to live with that inflation for a long time.”

    The US has about 3 million people who have just stopped looking for work. Summers attributed it to older people who decided to retire earlier than normal patterns would suggest during COVID.

    He said there is a “grand reassessment” of the workplace post-COVID.

    “You don’t get to be a CEO if you don’t love being in the office,” Summers said. “And so CEOs want all their people to come back and be working, but lots of people like their dens better than they like their cubicles.”

    Summers also had advice for President Joe Biden as a debt ceiling crisis brews in Washington.

    “I would advise him that it’s not a viable strategy for the country to default on obligations,” Summers said. “That’s the stuff of banana republics, and that he’s not going to engage in any of that stuff.”

    The United States has an “utterly bizarre system” where Congress votes on budgets and then separately has to authorize paying the bills incurred by those budgets, Zakaria pointed out, adding a crisis could be on the horizon because House Republicans don’t want to pay the bills until President Biden agrees to spending cuts, even though budgets were set by both parties.

    Biden should insist “Congress do its job and approve the borrowing to finance the spending.”

    Summers noted it only takes a few responsible Republicans to raise the debt limit.

    “That some in the Republican Party may bow to the demands of the extremists does not mean that the President of the United States should do that.”

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  • Why did we get a monster jobs report if the economy is slowing? | CNN Business

    Why did we get a monster jobs report if the economy is slowing? | CNN Business

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    Minneapolis
    CNN
     — 

    The economy wasn’t supposed to add half a million jobs in January.

    In fact, a consensus poll of 81 economists expected job gains to land at around 185,000, according to Refinitiv. After 11 months of aggressive rate hikes from the Federal Reserve, the experts were naturally expecting the economy’s job gains to slow as higher borrowing costs percolated through the economy, slowing investment and growth and pushing companies to pull back on spending and hiring.

    And yet, even though it seemed impossible, the labor market is somehow getting tighter, said Rucha Vankudre, senior economist at business analytics firm Lightcast.

    “I think pretty much all the labor economists in the country this morning are shocked,” Vankudre said Friday during a webinar after the jobs report was released. I think the question on everyone’s mind is, ‘How can the labor market keep getting stronger and stronger, and how can this keep happening while at the same time we are seeing prices come down?’”

    Instead of lending credence to what was a bubbling belief in a soft landing, Friday’s jobs report only seems to beg more questions about not only the state of the economy, but also of the Federal Reserve’s attempts to hammer down high inflation.

    On Wednesday, the Fed concluded its first policymaking meeting of 2023 by green-lighting a quarter-point interest rate hike — the smallest since March — as a reflection of progress in its fight to lower inflation.

    The more moderate increase had been long telegraphed and came despite a hotter-than-expected December Job Openings and Labor Turnover Survey (JOLTS) report, which showed job openings grew to more than 11 million, or 1.9 available jobs for every job seeker.

    Fed officials remain laser focused on wages and inflation, and are seeing some progress there, said Elizabeth Crofoot, Lightcast senior economist. Fluctuations are to be expected in any economic data, and it’s (always) important to remember that “one month does not make a trend,” especially for January data, she said.

    “I think [Fed officials] are going to say, ‘Let’s continue to keep our eye on the data,’ and they’re going to hold steady until they see that inflation rate come down,” Crofoot said.

    The January jobs report shouldn’t trigger a wholesale change of what Fed members are thinking or what they were planning on doing before this report, Sarah House, senior economist at Wells Fargo, told CNN.

    “I think it suggests that the labor market remains still very strong, and there’s still a lot of wage pressures coming from that strong labor market that the Fed needs to contend with if it’s going to get inflation back to 2% on a sustained basis,” House said, noting the Fed’s target inflation rate.

    The Covid pandemic was a tremendous shock to global economies, and the US labor force is still showing the effects of historic employment losses, sudden shifts in consumer behavior, discombobulated supply chains, and efforts to return to a state of normality.

    The employment recovery since 2021 has been historically robust, with the monthly job gains larger than anything seen on record.

    January’s jobs report came with added complexity, because it included annual updates to populations estimates and revisions to employer survey data.

    “Now we know both [2021 and 2022] had faster job growth than we previously realized,” said University of Michigan economists Betsey Stevenson and Benny Doctor in a statement Friday. “The patterns remain the same: Job growth accelerated in the second half of 2021 before slowing in the first half of 2022 and slowing further in the second half of 2022.”

    The January reports also bring with them “seasonal noise,” said Joe Brusuelas, principal and chief economist for RSM US.

    “I’m advising policymakers and clients to ignore the topline number [of 517,000],” he said, noting it’s likely a function of seasonal adjustments and a reflection of swings in hiring activity and traditional cutbacks that take place from mid-December to mid-January.

    “That being said, even if a downward revision takes away 200,000 or so off the top, you still are sitting at around 300,000,” he added.

    “The job market is clearly too robust at this time to re-establish price stability; therefore, the Federal Reserve is going to have to not only hike by 25 basis points at its March meeting, it’s going to have to do so at the May meeting,” he predicted.

    Federal Reserve Board Chairman Jerome Powell speaks during a news conference after a Federal Open Market Committee meeting on February 01, 2023, in Washington, DC. The Fed announced a 0.25 percentage point interest rate increase to a range of 4.50% to 4.75%.

    Last summer, Fed Chair Jerome Powell warned that “some pain” (aka rising unemployment) would likely be felt as a result of the Fed’s sweeping efforts to tackle inflation.

    Yet Powell did not once utter the word “pain” during his press conference on Wednesday, said Mark Hamrick, senior economic analyst with Bankrate.

    “If they were to put money on it, I think Las Vegas oddsmakers would be doubling down right now on the soft landing scenario — not to say that’s the base case, per se, but the chances seem to be growing,” Hamrick said.

    “If anything, the global economic scenario has brightened in recent days and weeks — and we got a significant ray of sunshine with this January employment report, including all the revisions — but that’s not to say that consumers or businesses should be complacent with respect to an eventual risk of a recession,” he said.

    So for now, the chances of a soft landing remain unknown.

    “This is sort of a bumpy, turbulent ride to who knows where,” Crofoot said.

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  • Apple is the only US tech giant to have avoided significant layoffs. Will it last? | CNN Business

    Apple is the only US tech giant to have avoided significant layoffs. Will it last? | CNN Business

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    CNN
     — 

    In less than three months, four of the big five US tech companies have cut tens of thousands of employees combined, shattering myths about the industry’s seemingly unstoppable growth in the process.

    But there has been one notable exception: Apple.

    To date, Apple

    (AAPL)
    has not announced any substantial cuts, thanks in part to slower headcount growth than some of its peers during the pandemic and continued demand for its core products. Some analysts think more modest cost cuts could be coming, however.

    The iPhone maker is set to report earnings results for the final three months of 2022 on Thursday after the bell. It is expected to post a rare year-over-year decline in revenue.

    While these expectations show the strain Apple’s business is under, Wedbush Securities’ Dan Ives said in a note this week that pent-up demand for upgrading iPhones remains strong. “Apple will likely cut some costs around the edges, but we do not expect mass layoffs from Cupertino this week,” Ives wrote.

    Tom Forte, a senior research analyst at DA Davison, agreed there will be staff reductions, but likely not as drastic as those at other large tech companies. “Apple will cut headcount,” he said in a recent interview on Bloomberg TV, but suggested the cuts would come through attrition or reductions at the retail level.

    “While they haven’t done so yet, like everyone else, they will adjust their headcount for the current level of demand,” he said.

    Fueled by a surge in demand for digital products earlier in the pandemic, Big Tech went on a massive hiring spree.

    Amazon

    (AMZN)
    and Meta each doubled their headcount between the third quarter in 2019 and the third quarter 2022, according to data shared in the companies’ securities filings. Alphabet, meanwhile, grew its headcount 64% during that time, and Microsoft grew its staff by more than 50% over approximately the same period.

    Apple, by comparison, grew its headcount by a more modest 20%. As of September 2022, Apple said it had approximately 164,000 full-time employees.

    Many tech CEOs, with varying degrees of remorse, have blamed over-hiring in the early days of the pandemic for the mass layoffs now. As pandemic restrictions eased last year, the demand for digital services shifted back toward pre-pandemic levels. Inflation pinched consumer and business spending, and rising interest rates evaporated the easy money tech companies had tapped into. And one-by-one, amid the whiplash, household names in Silicon Valley began announcing widespread layoffs to adjust to the new environment.

    While Apple has not announced layoffs, its business has been strained in other ways. Like other Big Tech companies, it has faced threats of antitrust action in the United States and EU. Earlier this month, Apple also said CEO Tim Cook had agreed to a massive pay cut this year, following a shareholder vote on his compensation package after its stock fell about 27% in 2022.

    As consumer spending tightened, global smartphone shipments plunged 18% in the fourth quarter of 2022, according to market research firm Canalys. Apple’s business also faced supply chain hurdles linked to China’s Covid lockdowns and unrest that hit a key production site in Zhengzhou, China late last year.

    Still, Apple’s business is weathering the downturn better than some of its fellow tech giants. In its most-recent earnings report, the company reported sales grew 8% year-over-year and that the company hit a September quarter revenue record for iPhone.

    Thursday’s earnings results will show whether Apple can keep defying gravity.

    “Apple continues to innovate with high-quality, industry-leading products supported by a powerful digital platform,” analysts at Monness, Crespi and Hardt wrote in an investor note Tuesday. “However, regulatory headwinds persist and we believe the darkest days of this downturn are ahead of us.”

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  • Alex Murdaugh hid settlement of more than $4 million from family of his late housekeeper, her son testifies | CNN

    Alex Murdaugh hid settlement of more than $4 million from family of his late housekeeper, her son testifies | CNN

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    CNN
     — 

    Disgraced South Carolina attorney Alex Murdaugh never told the family of his late housekeeper that he collected more than $4 million in insurance settlements after she fell at his home, according to testimony at his double murder trial Friday.

    Outside the presence of the jury, Judge Clifton Newman heard testimony about Murdaugh’s alleged financial schemes as the court weighs whether to allow the admission of such evidence.

    Prosecutors want the evidence of financial wrongdoing admitted to show that the scion of one of the state’s most powerful families was, in their words, a desperate thief on the verge of being exposed at the time of the 2021 murders of his wife and adult son.

    Defense attorneys have portrayed the defendant as a loving father and husband being prosecuted after a poorly handled investigation while the real killers remain at large.

    Michael Satterfield, a son of Gloria Satterfield, who worked as housekeeper for the Murdaugh family for more than 20 years, testified in the second week of the murder trial. She died a few weeks after a fall at the Murdaugh home in 2018.

    Satterfield’s son told the court that Murdaugh offered to “go after my insurance company” to help their family with medical bills and other expenses.

    Michael Satterfield testified that Murdaugh at one point said Satterfield and his brother could each get $100,000 from the insurance company. They never got the money, he testified. And Murdaugh never mentioned a $5 million umbrella policy that he had in addition to a policy for a smaller amount.

    In June 2021, Michael Satterfield testified, his family heard their case was settled but Murdaugh did not disclose that he had collected on two settlements – one for more than $500,000 and another for $3.8 million.

    “Did he get your permission to steal your money?” Waters asked.

    “No.”

    “Did you ever get one cent from Alex Murdaugh?” Waters asked later.

    “No.”

    In December 2021, an attorney for the Satterfield family said Murdaugh agreed to a $4.3 million settlement with the family. He also issued an apology to the Satterfields.

    The first witness called Friday, also outside the jury’s presence, was Jan Malinowski, president and CEO of Palmetto State Bank. Palmetto’s former president, Russell Laffitte, was convicted of six counts of financial fraud crimes in November.

    Malinowski, who testified at Laffitte’s trial, told the court that Murdaugh’s mounting debt to the bank was regularly covered, without justification, by loans from Laffite.

    In August 2021, two months after the murders, Murdaugh’s account had an overdraft of more than $350,000, Malinowski testified. Laffitte responded with a $400,000 transfer to the defendant’s account.

    Murdaugh at the time owed the bank more than $4 million, Malinowski testified.

    Would the loans have kept coming had the bank known “that Murdaugh had been stealing money from his partners or … his clients?” asked Creighton Waters, a prosecutor with the South Carolina Attorney General’s Office – which is prosecuting the case because of the Murdaugh family’s long ties with the local solicitor’s office.

    “No sir,” the CEO replied.

    Waters, eliciting laughter in the courtroom, said the bank had “perhaps the most generous overdraft policy ever seen.”

    “Quite possibly,” Malinowski replied with a slight smile.

    Prosecutors, in pretrial filings, accuse Murdaugh of killing his wife, Margaret “Maggie” Murdaugh, and his 22-year-old son Paul Murdaugh to distract attention from alleged financial crimes, which the state contends were about to come to light when they were killed on June 7, 2021.

    In addition to the murder counts, he faces 99 charges related to those purported schemes.

    A pretrial motion from the state contended “the murders served as Murdaugh’s means to shift the focus away from himself and buy some additional time to try and prevent his financial crimes from being uncovered, which, if revealed, would have resulted in personal legal and financial ruin for Murdaugh.”

    The defense has fought the admissibility of the evidence in the murder case, asserting the fraud cases are irrelevant to the question of Murdaugh’s guilt in the murders of his wife and son.

    Murdaugh, who was disbarred amid a mountain of allegations of white-collar theft and fraud, faces 99 charges stemming from 19 grand jury indictments, including allegedly defrauding his clients and former law firm of nearly $9 million, according to the attorney general’s office.

    Under each case, Murdaugh faces the possibility of two sentences of life in prison without the possibility of parole if convicted.

    On Thursday, the chief financial officer of Murdaugh’s former law firm testified about confronting the now-disbarred attorney about missing funds the morning his wife and son were killed.

    Jeanne Seckinger, CFO of the firm formerly known as PMPED, testified outside the jury’s presence.

    The morning of the murders, Seckinger confronted Murdaugh about $792,000 in missing funds, she said Thursday, testifying that legal fees should have been made payable to the law firm – renamed to Parker Law Group after Murdaugh’s ouster – and not to individual attorneys.

    But Seckinger and other members of the firm realized in May 2021 they had not received a fee check stemming from a settlement signed in a case Murdaugh shared with another attorney, Seckinger testified, which was a concern.

    At the time, Murdaugh was facing a lawsuit from the family of 19-year-old Mallory Beach, who was killed in February 2019 when a boat, owned by Murdaugh and allegedly driven by Paul, struck a bridge piling.

    Murdaugh’s financial records – which state court filings said “would expose (Murdaugh) for his years of alleged misdeeds” – could have been disclosed following a hearing in the civil case scheduled for June 10, 2021, three days after the killings.

    But the June 10 hearing was canceled after Maggie and Paul’s deaths, Seckinger said Thursday, and the firm opted not to confront Murdaugh about the missing money.

    Eventually, the firm did confront Murdaugh about the missing money and “it was my understanding that Alex admitted it,” Seckinger testified.

    Before the firm could announce Murdaugh’s resignation, however, Seckinger testified she heard Murdaugh had been shot while on the side of the road. Murdaugh later told authorities he conspired with a former client to kill him as part of an insurance fraud scheme, purportedly so his surviving son could collect a $10 million life insurance payout.

    Finally, the court on Friday heard from a ballistics expert who told the court the .300 Blackout rifle cartridge casings found near Maggie’s body had identical markings to older casings found near the Murdaugh home as well as at a shooting range on their property.

    The older casings found near the house and in the shooting range “had those same matching mechanism marks to conclude they’d been loaded into, extracted and ejected from the same firearm as those at the crime scene around Margaret Murdaugh’s body,” Paul Greer, a firearm examiner with the South Carolina Law Enforcement Division, testified.

    The prosecution has said Maggie was killed with a .300 Blackout AR-15 rifle that was a “family weapon” but the weapon has yet to be found.

    During cross-examination by the defense on Friday, Greer said it is “hard to say” whether different .300 Blackout rifles could create the same markings on casings – but reaffirmed he was confident in his findings.

    Greer test fired one .300 Blackout rifle found in the gun room on the Murdaugh property and said the results were inconclusive on whether its ejected casings were an exact match with the casings found around Maggie’s body – but he said if the casings were not from that exact weapon, they came from one identical to it.

    Prosecutors have also said the Murdaughs owned other AR-style rifles, including one Murdaugh bought his son to replace another that went missing. The prosecution has said the replacement is “nowhere to be found.”

    Greer had similar testimony when the defense asked if Paul was killed with the camouflage-patterned gun Alex Murdaugh had on him when first responders arrived at the crime scene. The expert said he test fired that gun and the results were inconclusive. Greer testified he could not tell whether the casings were a match, but that it was possible the gun – or a weapon with similar characteristics – killed Paul.

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  • The US economy added a whopping 517,000 jobs in January | CNN Business

    The US economy added a whopping 517,000 jobs in January | CNN Business

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    Minneapolis
    CNN
     — 

    The US economy added an astonishing 517,000 jobs in January, showing that the labor market isn’t ready to cool down just yet.

    The unemployment rate fell to 3.4% from 3.5%, hitting a level not seen since May 1969 — two months before Neil Armstrong stepped on the moon — according to new data released Friday by the Bureau of Labor Statistics.

    Economists were expecting 185,000 jobs would be added last month, based on consensus estimates on Refinitiv.

    “With 517,000 new jobs added in January 2023 and the unemployment rate at 3.4%, this is a blockbuster report demonstrating that the labor market is more like a bullet train,” Becky Frankiewicz, president and chief commercial officer of ManpowerGroup, said Friday.

    The shockingly strong monthly jobs gain — a number that several economists cautioned was influenced by seasonal factors and is subject to future revisions — bucks a trend of five consecutive months of moderating job growth during the latter half of 2022.

    “The blowout 517,000 increase in total employment was almost certainly a function of seasonal noise and traditional churn in early-year job and wage environment and exaggerates what is already a robust trend in hiring,” Joe Brusuelas, principal and chief economist with RSM US, said in a statement.

    Nonetheless the juggernaut of a report may cause complications for the Federal Reserve, which has been trying to tame high inflation with higher interest rates, said Seema Shah, chief global strategist of Principal Asset Management.

    “Is [Fed Chair Jerome] Powell now wondering why he didn’t push back on the loosening in financial conditions?” Shah said in a statement. “It’s difficult to see how wage pressures can possibly soften sufficiently when jobs growth is as strong as this, and it’s even more difficult to see the Fed stop raising rates and entertain ideas of rate cuts when there is such explosive economic news coming in.”

    “The market is going to go through a roller coaster ride as it tries to decide if this is good or bad news. For now, though, looks like the US economy is doing absolutely fine,” she said.

    Still, the report also showed that wage growth moderated on an annual basis: Average hourly earnings fell 0.4 percentage points to 4.4% year over year. Monthly wage gains held steady at 0.3%.

    “It’s quite remarkable to see such a realignment of the employment picture coinciding with an easing of wage pressure,” Mark Hamrick, senior economic analyst for Bankrate, said in an interview. “I think that might be part of this report that could help keep blood pressures down among Federal Reserve officials in the near term.”

    Additionally, average weekly hours jumped to 34.7 hours from 34.3, and employment in temporary help services rebounded after two months of declines, indicating further demand for labor, noted Julia Pollak, chief economist at ZipRecruiter.

    The report also showed an increase in the closely watched labor force participation rate to 62.4% from 62.3%. However, the increase in the share of people working or looking to work was a function of the BLS’ annual benchmark revisions to its household survey, one of two surveys that factor in to the monthly jobs report, noted PNC chief economist Gus Faucher.

    Had it not been for the revisions, that number would have been unchanged at 62.3%, he added.

    “The labor market is structurally tighter post-pandemic,” he said.

    Every January, the BLS makes revisions on its employment data to reflect updated population estimates and other factors.

    “On net, you saw stronger hiring in 2022 than what was initially reported,” said Sarah House, chief economist with Wells Fargo, told CNN.

    Average monthly job growth in 2022 was revised up from an average of 375,000 per month to 401,000, she said.

    Seasonality questions aside, other trends do align to support a strong January 2023 jobs report, Bankrate’s Hamrick said.

    “When you have a number of things lining up, almost like a crime scene investigation, it tends to lend some credibility to that question of believability,” he said of the surprising half-a-million-plus job gains. “What are the things that are lining up? The continued remarkably low level of jobless claims, the rise in job openings, the increase in labor force participation.”

    The gains were also widespread across industries, with job growth led by leisure and hospitality, professional and business services, and health care, according to the BLS report.

    Industries that shed jobs last month included motor vehicles and parts (down 6,500 jobs), utilities (down 700 jobs) and information (down 5,000 jobs).

    In recent months, mass layoff announcements — especially from Big Tech — had spurred concern that the cutbacks were a harbinger of broader cutbacks to come.

    That doesn’t appear to be the case, considering jobless claims have remained historically low, job openings haven’t slipped and job gains remain strong, said Giacomo Santangelo, economist at Monster.

    “The news is talking about big names laying off, but we don’t really hear what happens at small firms with less than 200 employees,” he said. “What we’re seeing at Monster is a lot of firms, a majority of firms, are looking to hire.”

    The glut of available jobs — there are 1.9 open positions for every one job seeker — coupled with skills that are in high demand mean that workers are likely finding jobs quickly, he said. Additionally, those laid off by large technology firms likely received generous severance packages, so not all are filing for unemployment benefits.

    Friday’s report showed that the median duration of unemployment was 9.1 weeks, just a smidge above the pre-pandemic level of 8.9 weeks in February 2020.

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  • Snap stock plunges 15% as revenue growth stalls | CNN Business

    Snap stock plunges 15% as revenue growth stalls | CNN Business

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    New York
    CNN
     — 

    Snapchat’s parent company reported stalled revenue growth and a large net loss for the final three months of 2022, as it confronts tighter advertiser budgets amid broader economic uncertainty.

    Snap’s quarterly revenue was just shy of $1.3 billion, essentially flat from the year prior. For the full year, Snap’s revenue grew 12%, a slower rate that the company attributed to “rapid deceleration in digital advertising growth.”

    The situation appears to be even worse in the current quarter. Snap said it has already seen a roughly 7% revenue decline so far in the first quarter compared to the year prior. It estimates revenue for the first three months of the year will be down between 2% and 10% compared to the previous year. (Those figures were included in an investor letter, despite Snap saying it would not provide specific guidance for the quarter.)

    Meanwhile, Snap posted a net loss of more than $288 million in the quarter, compared to the $22.5 million in net income it earned in the same period a year ago.

    Snap

    (SNAP)
    shares fell as much as 15% in after-hours trading following the report.

    The report marked the fourth straight quarter of net losses for Snap, which has suffered from increased competition in the social media market, disruptions to its ad business from Apple’s app privacy changes and weaker advertiser demand amid fears of a looming recession. High interest rates and inflation have also impacted many large tech firms.

    Snap’s earnings could be a concerning bellwether for the other tech giants that rely on the health of the digital ad market, including Facebook-parent Meta and Google-parent Alphabet, both of which are set to report results this week.

    Shares of Meta and Alphabet dipped slightly in after-hours trading Tuesday following Snap’s results.

    Snap in August became one of the first big tech firms to announce major layoffs when it said it would cut 20% of its staff. A slew of other tech companies have followed suit in recent months, including Meta, Alphabet, Amazon, Mircrosoft and others, resulting in tens of thousands of job losses in the industry.

    In addition to challenges in the digital advertising market, Snap pointed to a change to its ad platform that it expects “will drive improvement for our partners and our business over time, but that may be disruptive… in the near term.”

    Perhaps the lone bright spot for Snap in the results is its audience. The company reported having 375 million daily active users in the quarter, an increase of 17%. Snap’s subscription service Snapchat+, which launched last year in an attempt to grow new revenue sources, reached more than 2 million paying subscribers in the fourth quarter, it said.

    The company also said it expects to realize the $500 million in cost reductions it had promised as a result of its restructuring by the end of the first quarter.

    Still, Scott Kessler, an analyst for investment firm Third Bridge, said in an investor note following the report that, “one of the big questions about Snap is whether it remains a growth story or can soon continue as a growth story,” given its gloomy outlook for the start of this year.

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  • What to look for in Friday’s jobs report | CNN Business

    What to look for in Friday’s jobs report | CNN Business

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    Minneapolis
    CNN
     — 

    A week that has been chock-full of economic data will be capped off Friday with the first US jobs report of 2023.

    Economists estimate that 185,000 positions were likely added in January, according to Refinitiv.

    That would be a considerable drop from the 504,000 jobs added in January 2022 and the 520,000 added in January 2021. It also would nearly match the 183,000 monthly average between 2010 and 2019, Bureau of Labor Statistics data shows.

    And yet, while the Federal Reserve’s aggressive rate hikes have helped make a dent in inflation and resulted in slower economic activity without stark rises in unemployment, the full effects have yet to come, Fed Chair Jerome Powell warned Wednesday.

    “I would say it is a good thing the disinflation we have seen so far has not come at the expense of a weaker labor market,” Powell said in a news conference following the Fed’s first monetary policymaking meeting of the year. “But I would also say the inflationary process you see under way is really at an early stage.”

    America’s unemployment rate dipped back down in December to 3.5%, once again matching a 50-year low. It’s expected to tick up to 3.6% come Friday.

    Layoff announcements — led by large tech firms — are picking up steam: The 43,651 job cuts announced in December jumped to 102,943 in January, according to a new data released Thursday morning by Challenger, Gray & Christmas.

    Still, those spikes in cutbacks haven’t become widespread. New data released Thursday by the Labor Department showed weekly initial jobless claims fell for the fourth time in five weeks, landing at 183,000, which is the lowest weekly total since April.

    “It’s a very interesting time where it’s really not clear whether what we’re seeing is a welcome, healthy rebalancing of the labor market — or a more worrying stall,” said Julia Pollak, senior economist with ZipRecruiter.

    Beyond the key headline indicators of payroll gains, unemployment and average hourly earnings, here are some other areas of the jobs report that Pollak and other economists will scrutinize when the January jobs report is released Friday morning.

    In December, the average working week for employees — including part-time workers — was 34.3 hours, according to BLS data.

    That’s down from the January 2021 high of 35 hours when the average workweek ballooned as workers were scarce and other employees were forced to pick up the slack and the extra shifts, Pollak said.

    “Typically, in good times, the workweek tends to be somewhere between 34.3 and 34.6 hours on average, and somehow it’s slowed all the way down to the bottom end of that range,” she said. “If it continues to deteriorate, that would suggest weakening demand for labor.”

    And usually, when demand gets weak, hiring stalls and layoffs and job losses follow, she said.

    As businesses recovered from the pandemic, they’ve increasingly relied on staffing agencies and contract employees. That sector started the pandemic with 2.9 million employees, plummeted to 1.9 million during the April 2020 trough, hit a record high of 3.56 million in July 2022 and has declined in each month since.

    “The recent decline in temp staffing is mostly the result of a healthy recovery in full-time, in-house hiring,” Pollak said. “But if it falls much below 3 million, I think that would be a warning sign as well.”

    Temporary and contract hiring can show where businesses expand and reduce their workforce at the margins, said Sarah House, senior economist at Wells Fargo.

    “The fact that we see that paring down suggests that the demand backdrop is starting to soften, and maybe they just don’t see the reason to hire and expand as much as they had previously,” House said.

    The imbalance of labor demand and worker supply has been consistently highlighted by the Fed as a potential sticking point in its efforts to lower inflation. While Fed officials have noted that wages don’t appear to be driving inflation, they have expressed concern that a a low participation rate and the imbalance of worker supply and demand could cause pay to rise and, in turn, cause higher prices.

    The labor force participation rate inched up two-tenths of a percentage point in December to 62.3%. Although that came following three consecutive months of declines, the percentage of people working or actively looking for work hovered between 62.1% and 62.4% throughout 2022.

    Based on Wednesday’s labor turnover data, that gap grew wider in December: There were 11.01 million job openings, or 1.9 available jobs for every unemployed person that month.

    “Long Covid is pretty real, and there’s a sizable share of the population who continue to suffer health effects related to Covid that are preventing them from being able to work,” said John Leer, chief economist with Morning Consult. “Then there’s ongoing child care challenges; we’ve got a lot of folks who retired early; we’ve got limited immigration not where it was pre-pandemic.”

    Beyond that and the ongoing demographic shifts of Baby Boomers aging out of the workforce, there’s also possibly some “information asymmetry” that’s occurring, he said.

    “There are people outside of the labor market who aren’t working, and they just simply don’t know how needed they are right now,” he said. “And I think that’s a function of being a little removed. The world has changed pretty dramatically over the last two to three years, and it’s going to be difficult to show people that the skills they possess are needed right now.”

    The government’s monthly jobs report is scheduled to be released at 8:30 a.m. ET on Friday.

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  • Shell profits double to record $40 billion | CNN Business

    Shell profits double to record $40 billion | CNN Business

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    Hong Kong/London
    CNN
     — 

    Shell made a record profit of almost $40 billion in 2022, more than double what it raked in the previous year after oil and gas prices soared following Russia’s invasion of Ukraine.

    Europe’s largest oil company by revenue reported adjusted full-year earnings of $39.9 billion on Thursday — more than double the $19.3 billion it posted in 2021 — driven by a strong performance in its gas trading business. The company’s stock was up 1.7% in London.

    The company reported $9.8 billion in profit in the fourth quarter. Just over 40% of Shell’s full-year earnings came from its integrated gas business, which includes liquified natural gas trading operations.

    Shell CEO Wael Sawan said the results “demonstrate the strength of Shell’s differentiated portfolio, as well as our capacity to deliver vital energy to our customers in a volatile world.”

    The earnings are the latest in a series of record-setting results by the world’s biggest energy companies, which have enjoyed bumper profits off the back of soaring oil and gas prices.

    ExxonMobil this week posted record full-year earnings of $59.1 billion. Last month, Chevron

    (CVX)
    reported a record full-year profit of $36.5 billion.

    That has led to renewed calls for higher taxation. Governments in the European Union and the United Kingdom have already imposed windfall taxes on oil company profits, with the proceeds used to help households struggling with rising energy bills.

    Shell said it expected to pay an additional $2.3 billion in tax related to the EU windfall tax and the UK energy profits levy. The company paid $13 billion in tax globally in 2022.

    Shell

    (RDSA)
    also announced another $4 billion share buyback program and confirmed it would lift its dividend per share by 15% for the fourth quarter.

    This is a developing story and will be updated.

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  • Bank of England takes interest rates to highest level since 2008 | CNN Business

    Bank of England takes interest rates to highest level since 2008 | CNN Business

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    London
    CNN
     — 

    The Bank of England raised UK interest rates by half a percentage point on Thursday, moving more aggressively than its US counterpart to fight inflation.

    The central bank took rates to 4% — the highest level since the depths of the global financial crisis. UK inflation eased to 10.5% in December but remains near a 41-year high.

    The Bank of England said inflation was likely to fall sharply over the rest of the year, largely as past increases in energy and other prices fall out of the calculation. But it signaled significant uncertainty over its forecast.

    “The labor market remains tight and domestic price and wage pressures have been stronger than expected, suggesting risks of greater persistence in underlying inflation,” the bank said in a statement.

    Wholesale energy prices might also boost UK inflation more than expected, it added.

    The Bank of England had to weigh up current price growth against the risk of recession. On Tuesday, the International Monetary Fund forecast that the United Kingdom would be the only major economy to contract this year.

    The UK rate hike followed a quarter-point interest rate rise by the Federal Reserve on Wednesday. In contrast to the Bank of England, the Fed has slowed the pace of its increases as US inflation is starting to abate.

    The European Central Bank is also expected to hike rates for the 20 countries that use the euro by half a percentage point later on Thursday. Eurozone inflation fell in January but at 8.5% remains way above the ECB’s 2% target.

    — This is a developing story and will be updated.

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  • Gautam Adani fails to calm investors over market mayhem that wiped out billions | CNN Business

    Gautam Adani fails to calm investors over market mayhem that wiped out billions | CNN Business

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    New Delhi
    CNN
     — 

    Indian billionaire Gautam Adani tried to reassure investors on Thursday after he abruptly abandoned his flagship firm’s $2.5 billion share sale.

    “For me, the interest of my investors is paramount and everything is secondary,” the 60-year-old businessman said in a recorded video address. “Once the market stabilizes, we will review our capital market strategy.”

    This was the first time the tycoon has spoken about the stock market mayhem that has wiped billions off his logistics and energy business empire.

    A week-long meltdown in the value of Adani Group shares started when an American short seller accused the conglomerate of fraud. The group, which has seven listed companies, has lost more than $90 billion in market value in the week since Hindenburg Research published its report.

    Foreign banks have started to closely scrutinize the conglomerate. According to Bloomberg, Credit Suisse has stopped accepting bonds of Adani firms as collateral for margin loans to its private banking clients. The Swiss lender declined to comment on a CNN request for confirmation.

    Despite the turmoil, the group’s flagship company, Adani Enterprises, managed to issue new shares worth $2.5 billion on Tuesday. The capital raising exercise was touted as India’s biggest ever public offering by a listed company. After a tepid start, the offer was fully subscribed.

    A day later, though, Adani abandoned the deal. The shares have been trading considerably below the offer price since last week, meaning that investors in the capital raise were looking at immediate losses.

    “Hence to insulate the investors from potential losses we have withdrawn,” Adani said in the video. “This decision will not have any impact on our existing operations and future plans. We will continue to focus on timely execution and delivery of projects.”

    Adani added that his group’s fundamentals were “strong” and that it had an “impeccable track record of fulfilling our debt obligations.”

    In an investigation published on January 24, Hindenburg Research accused the Adani Group of “brazen stock manipulation and accounting fraud scheme over the course of decades.”

    The research firm also questioned the “sky-high valuations” of Adani firms and said their “substantial debt” put the entire group “on a precarious financial footing.”

    While the Adani Group had immediately denounced the report as “baseless” and “malicious,” the video address marked the first time the founder spoke about the crisis.

    But it wasn’t enough calm the markets. Shares in Adani Enterprises were down almost 9% in Mumbai, while shares in his other companies plunged 5% to 10%.

    Indian market regulators have not yet commented on the events of the past week. But, Reuters reported Wednesday that the Securities and Exchange Board of India (SEBI) was examining the stock price falls and also looking into any possible irregularities in Tuesday’s share sale, citing a source with direct knowledge of the matter.

    The scrapping of the share sale on Wednesday was a huge setback for one of India’s most prominent industrialists. Just a week ago, Adani’s sprawling group was worth over $200 billion, making him Asia’s richest man by a wide margin. At one point last year, he even overtook Jeff Bezos to become the second richest person in the world.

    On Wednesday, Adani lost his perch as Asia’s richest man, according to the Bloomberg Billionaire’s Index. He had a net worth of $72.1 billion, according to the index, behind Mukesh Ambani, who has a fortune of $81 billion.

    CNN’s Mark Thompson contributed to this report.

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  • Biden administration takes another step toward advancing a controversial oil drilling project in Alaska | CNN Politics

    Biden administration takes another step toward advancing a controversial oil drilling project in Alaska | CNN Politics

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    CNN
     — 

    The Interior Department’s Bureau of Land Management on Wednesday advanced the controversial Willow oil drilling project on Alaska’s North Slope, releasing the final environmental impact statement before the project can be approved.

    The ConocoPhillips proposed Willow drilling plan is a massive and decadeslong project that the state’s bipartisan Congressional delegation says will create much-needed jobs for Alaskans and boost domestic energy production in the US.

    But environmental groups fear the impact of the planet-warming carbon pollution from the hundreds of millions of barrels of oil it would produce – and say it will deal a significant blow to President Joe Biden’s ambitious climate agenda.

    The final environmental report from the Bureau of Land Management recommends a slightly smaller version of what ConocoPhillips originally proposed, putting the number of drilling sites at three instead of five. The Department of Interior is also recommending other measures to try to lower the pollution of the project, and recommending a smaller footprint of gravel roads and pipelines.

    In a statement, the Interior Department said it “has substantial concerns about the Willow project and the preferred alternative as presented in the final SEIS, including direct and indirect greenhouse gas emissions and impacts to wildlife and Alaska Native subsistence.”

    The Biden administration now has 30 days to issue a final decision on the project, after which drilling could begin. In its statement, Interior said it could select a different alternative on the project, including taking no action or further reducing the number of drill sites.

    ConocoPhillips and members of the Alaska Congressional delegation have been pushing the administration to finalize the project by the end of February to take advantage of cold and icy conditions needed to drill in the Arctic. If the company misses that window, it could push the project’s start date to next year.

    Erec Isaacson, president of ConocoPhillips Alaska, said in a statement that nearly five years of regulatory review should conclude “without delay.” Isaacson added the project is “ready to begin construction immediately” after Interior’s final decision is issued.

    According to the Interior Department’s own estimation, the project would produce 629 million barrels of oil over the course of 30 years and would release around 278 million metric tons of planet-warming carbon emissions. Climate groups say that’s equivalent to what 76 coal-fired power plants produce every year.

    “The world and the country can’t afford to develop that oil,” said Jeremy Lieb, a senior attorney for environmental law firm Earthjustice. Lieb and other advocates are concerned that Willow may be the start of a future drilling boom in the area.

    “Willow is just the start based on what industry has planned,” Lieb said. “The total estimate for the amount of oil that could be accessible in the region around Willow is 7 or 8 billion barrels.”

    For the Willow project, ConocoPhillips is proposing five drilling sites on federal land in Alaska’s North Slope, and the project would include a processing facility, pipelines to transport oil, gravel roads, at least one airstrip and a gravel mine site.

    The project – and the public comment process leading up to it – has also received heavy criticism from the nearby Alaska Native village of Nuiqsut, which some villagers evacuated last year during a gas leak in a ConocoPhillips project in the area. Nuiqsut officials recently released a letter calling the Bureau of Land Management’s public input process “disappointing and inadequate,” criticizing both the Trump and Biden administration’s timeline.

    The bureau’s “engagement with us is consistently focused on how to allow projects to go forward; how to permit the continuous expansion and concentration of oil and gas activity on our traditional lands,” Nuiqsut officials wrote in their letter.

    Alaska’s entire Congressional delegation – including newly elected Rep. Mary Peltola, a Democrat – have urged the White House and Interior to approve the project, saying it would be a huge boost to state’s economy.

    Sen. Lisa Murkowski, in particular, has been urging the White House and Biden personally to greenlight Willow, she told CNN.

    “I’ve been pretty persistent on this,” she told CNN in an interview this summer. “Let’s just say, any conversation I’ve ever had with the White House, anyone close to the White House, I’ve brought up the subject of Willow.”

    As gas prices spiked last summer, Murkowski, Sen. Joe Manchin of West Virginia, a Democrat, and other Senate Republicans tightened the pressure on Biden to approve a major domestic oil drilling project. Environmental advocates, meanwhile, argued the project will not bring US gas prices down any time soon, as the infrastructure will take years to build.

    “When you think about those things that should be teed up and ready to go, this is one where in my view there’s really no excuse for why we should see further delay,” Murkowski said. “This is something that’s been in the works that’s gone through so much process, across multiple administrations.”

    This story has been updated with more information.

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  • Biden proposes ‘junk fee’ bill to cut hidden fees for credit cards and concert tickets | CNN Business

    Biden proposes ‘junk fee’ bill to cut hidden fees for credit cards and concert tickets | CNN Business

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    CNN
     — 

    President Joe Biden announced new progress Wednesday on his administration’s “competition agenda,” specifically taking aim at junk fees while calling on Congress to pass legislation targeting hidden fees across multiple industries.

    These costs can “drain hundreds of dollars a year from the pockets of hardworking American families, especially folks who are already struggling to make ends meet — but not anymore after today,” Biden said at the fourth meeting of the Presidential Competition Council on Wednesday.

    The proposed legislation in partnership with the Consumer Financial Protection Bureau, called the Junk Fee Protection Act, would target four types of excessive fees:

    • excessive online concert, sporting event and entertainment ticket fees
    • airline fees for families sitting together on flights
    • exorbitant early termination fees for TV, phone and internet services
    • surprise resort and destination fees

    In brief remarks before the meeting, Biden had called out credit card late fees in particular as “a junk fee if there ever was one,” saying the new guidance from the CFPB would reduce these fees.

    “Today’s rule proposes to cut those fees from $31 on average to $8,” he added. “That change is expected to save tens of millions of dollars for Americans, roughly $9 billion a year in total savings.”

    Biden called on Congress to pass the junk fee legislation, saying it would give “hardworking Americans just a little bit more breathing room.” It’s part of a plan, he added, to build “an economy that’s competitive and an economy that works for everyone.”

    Rohit Chopra, director of the CFPB, noted before the announcement that “over a decade ago, Congress banned excessive credit card late fees.”

    “But companies have exploited a regulatory loophole that has allowed them to escape scrutiny for charging an otherwise illegal junk fee,” he added in a statement to CNN. “Today’s proposed rule seeks to save families billions of dollars and ensure the credit card market is fair and competitive.”

    Another fee category that frustrates many customers is event tickets sold online, for which additional fees are frequently high — and typically appear late in the checkout process when a customer is about to make the purchase.

    For example, earlier this year, lawmakers grilled Live Nation president and CFO Joe Berchtold following a ticket sales debacle over exorbitant ticketing fees. Although the company said Wednesday it supports reform, it also said it opposes the proposed legislation.

    “We stand ready to work with the President and Congress on many common sense ticketing reforms, while also speaking out against proposed legislation that would benefit scalpers over artists and fans,” the company said in a statement.

    Biden’s Transportation Department also took steps last fall during the previous meeting of the Competition Council to reduce “unnecessary hidden fees,” from airline and travel sites that the the President warned were “weighing down family budgets.”

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  • The bizarre history of Groundhog Day — or, how we decided to trust a subterranean rodent | CNN

    The bizarre history of Groundhog Day — or, how we decided to trust a subterranean rodent | CNN

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    CNN
     — 

    Every year, Americans in snowy states wait with bated breath to see whether Punxsutawney Phil will spot his shadow. And every year, we take Phil’s weather forecast – six more weeks of winter, or an early spring? – as gospel, meteorology be damned.

    It’s about as strange (and cute) as holidays get. So how did Groundhog Day go from a kooky local tradition to an annual celebration even those of us who don’t worry about winter can find the fun in?

    We explore Groundhog Day’s origins from a tiny event to an American holiday we can all be proud of. Spoiler: there are badgers, immortality and at least one groundhog on the menu.

    Every February 2, the members of the Punxsutawney Groundhog Club trek to Gobbler’s Knob, Punxsutawney Phil’s official home just outside of town. Donning top hats and tuxedos, the group waits for Phil to leave his burrow, and if he sees his shadow, the town gets six more weeks of winter. If he doesn’t see his shadow, Punxsutawney gets an early spring.

    But the early seeds of the Groundhog Day we know today were planted thousands of years ago, according to Dan Yoder, a folklorist “born and raised in the Groundhog Country of Central Pennsylvania” who penned the definitive history of the folk holiday turned national tradition.

    The holiday evolved over centuries as it was observed by different groups, from the Celts to Germans to the Pennsylvania Dutch and eventually, by those in other parts of the US. Its evolution began in the pre-Christian era of Western Europe, when the Celtic world was the predominant cultural force in the region. In the Celtic year, instead of solstices, there were four dates – similar to the dates we use today to demarcate the seasons – that were the “turning points” of the year. One of them, per Yoder, was February 1.

    These turning point dates were so essential to Europeans at the time that they Christianized them when Western Europe widely adopted Christianity. While May 1 became May Day, and November 1 became All Saints’ Day, the February 1 holiday was pushed to the following day – and would eventually become Groundhog Day.

    First, though, the February holiday was known as “Candlemas,” a day on which Christians brought candles to church to be blessed – a sign of a source of light and warmth for winter. But like the other three “turning points,” it was still a “weather-important” date that signified a change in the seasons, Yoder wrote.

    In 1973, Punxsutawney Phil delighted onlookers with his cuteness and disappointed them by predicting six more weeks of winter.

    And when agriculture was the biggest, if not only, industry of the region, predicting the weather became something of a ritual viewed as essential to the health of crops and townsfolk. There was some mysticism attached to the holiday, too, as seen in a poem from 1678 penned by the naturalist John Ray:

    “If Candlemas day be fair and bright

    Winter will have another flight

    If on Candlemas day it be showre and rain

    Winter is gone and will not come again.”

    The animal meteorology element wasn’t folded in until German speakers came to parts of Europe formerly populated by the Celtic people and brought their own beliefs to the holiday – except, instead of a groundhog, they hedged their bets on a badger. An old European encyclopedia Yoder cited points to the German badger as the “Candlemas weather prophet,” though it’s not clear why. (Sources including the state of Pennsylvania and the Punxsutawney Groundhog Club say the Germans also considered hedgehogs as harbingers of the new season.) When the holiday came overseas with the Pennsylvania Dutch, they traded the badger for an American groundhog, equally shy and subterranean and likely more prevalent in the area in which they settled.

    Many sources claim that the original Groundhog Day took place in 1887, when residents of Punxsutawney set out to Gobbler’s Knob, known as Phil’s “official” home, but the first piece of evidence Yoder found of townspeople trusting a groundhog for the weather, a diary entry, was dated 1840. And since Pennsylvania Dutch immigrants mostly arrived in the mid-to-late 18th century, it’s likely that the holiday existed for decades earlier than we have recorded, per the Library of Congress.

    Part of the reason so many of us know about Groundhog Day is due to the 1993 film of the same name. The phrase “groundhog day” even became shorthand for that déjà vu feeling of reliving the same day over and over. But Punxsutawney Phil became something of a cult celebrity even before the film debuted – he appeared on the “Today” show in 1960, according to the York Daily Record, and visited the White House in 1986. He even charmed Oprah Winfrey, appearing on her show in 1995.

    Before he was a celebrity, though, he was lunch. In a terrible twist, the earliest Groundhog Days of the 19th century involved devouring poor Phil after he made his prediction. The year 1887 was the year of the “Groundhog Picnic,” Yoder said. Pennsylvania historian Christopher Davis wrote that locals cooked up groundhog as a “special local dish,” served at the Punxsutawney Elk Lodge, whose members would go on to create the town’s Groundhog Club. Diners were “pleased at how tender” the poor groundhog’s meat was, Davis said.

    Last year, the apparently immortal and married groundhog Punxsutawney Phil predicted six more weeks of winter. AGAIN?!

    Groundhog meat eventually left the menu of Punxsutawney establishments as the townsfolk realized his worth. In the 1960s, Phil got his name, a nod to “King Phillip,” per the Groundhog Club. (The specific King Phillip he was named for is unclear; Mental Floss pointed out that there has not been a King Phillip of Germany, where many Pennsylvania settlers came from, in centuries). Before that, he was simply “Br’er Groundhog.”

    Punxsutawney Phil’s popularity has inspired several imitators: There’s Staten Island Chuck in New York, Pierre C. Shadeaux of Louisiana and Thistle the Whistle-pig of Ohio, to name a few fellow groundhog weather prognosticators. But there’s only one Phil, and he’s the original.

    Despite their early practice of noshing on Phil’s family, the Punxsutawney Groundhog Club avers that there has only been one Phil since 1886. He’s given an “elixir of life” every year at the summertime Groundhog Picnic, which “magically gives him seven more years of life,” the club said. (Groundhogs can live up to six years in the wild and up to 14 in captivity, per PBS’ Nature, so do with that what you will.)

    Phil also doesn’t have to spend the offseason alone. He’s married to Phyliss, per the Groundhog Club, who does not receive the same elixir of life and so will not live forever like her groundhog husband. There is no official word on how many wives Phil has outlived through over the years.

    As for his accuracy in weather-predicting – Phil’s hit or miss. He often sees his shadow – 107 times, in fact, per the York Daily Record, which has analyzed every single one of Phil’s official weather predictions since the 19th century. Last year, Phil saw his shadow, which coincided with a huge winter storm. Fingers crossed for better luck for us all this year.

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  • New year, new voters in Fed policymaking | CNN Business

    New year, new voters in Fed policymaking | CNN Business

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    Minneapolis
    CNN
     — 

    Every year the Federal Reserve’s policymaking committee — aka the officials who decide interest rate moves — gets a slight refresh, with four of the district presidents rotating out as official voting members and four rotating in.

    The 2023 rotation brings a more dovish-leaning flock, and it comes during a critical year for the US central bank and the American economy.

    This year the Federal Open Market Committee’s new voting members include the newest district president Austan Goolsbee, head of the Chicago Fed; Patrick Harker, of the Philadelphia Fed; Lorie Logan, the Dallas Fed president who started in August 2022; and Neel Kashkari, president of the Minneapolis Fed.

    Rotating out as voting members are James Bullard of the St. Louis Fed; Susan Collins of the Boston Fed; Esther George, the Kansas City Fed chief who’s also retiring this month; and Loretta Mester of the Cleveland Fed.

    On the whole the FOMC contingent remains largely similar, with eight of the 12 voting members continuing from 2022. The non-voting members still lend their voices and perspectives to the proceedings.

    Following a stretch of seven consecutive heavy-handed interest rate hikes last year to battle rising prices, the Fed this year is expected to take a more delicate approach to its blunt monetary policy tools by downshifting on rate increases to an eventual idle.

    For new Fed members, be they governors or district presidents, it can take a while to stake out their territory and potentially differ from consensus, said Ellen Meade, a Duke University economics professor who had a 25-year career at the Fed.

    History has shown that the Reserve bank presidents typically tend to dissent more than board members; however, even that is a small percentage — about 7% — of votes cast, she added.

    “I’m not expecting that we will see a lot of dissent in terms of votes,” she said. “I think where we might see it is how they color the data that they’re seeing.”

    “Hawks” and “doves” are commonly used terms to describe Fed members’ differing monetary policy approaches. Doves tend to favor looser monetary policy and issues like low unemployment over low inflation. Hawks, however, favor robust rate hikes and keeping inflation low above all else.

    “If I had to qualify them as the hawkish- or dovish-leaning, I would say that last year’s constellation was a reasonably hawkish one, and this year’s constellation is almost certainly not quite as hawkish,” Meade said.

    That could change, however, if Federal Reserve Vice Chair Lael Brainard leaves to head President Joe Biden’s economic council. Brainard has been considered as leaning more dovish than Powell and others, so her departure could result in a more hawkish shift in ideology at the top of the Fed.

    U.S. Federal Reserve Chairman Jerome Powell speaks during a news conference after a Federal Open Market Committee meeting on December 14, 2022, in Washington, DC.

    This particular Fed is obviously not quite as well known, Meade noted, adding that “because we have some new policymakers voting in 2023, we don’t have as much information on their policy inclinations as we did for last year’s voters.”

    For any potential split to occur would take some large moves in labor market outcomes – something not seen to this point, Meade said.

    “If [moderating inflation] holds up and the labor market softens but doesn’t take a very negative turn, then I think consensus is with us,” she said. “I think the question is what happens if the labor market starts to turn quickly?”

    The Fed has indicated, through its economic projections, that it would tolerate unemployment rising to the 4.5% to 4.75% range. But if that grows closer or past 5% and inflation hasn’t moderated as much as desired, “then I think we’re in a place where we’re going to see more signs of disagreement.”

    As it stands now, Fed officials have largely been singing from the same songbook, said Claudia Sahm, a former Fed economist and founder of Sahm Consulting.

    “Whether it was voting members or non-voting members, you didn’t see a lot of pushback in public,” she said. “There was really a unified force of ‘we’re going to go big, and we’re going to go fast.’”

    That unified messaging continued during recent speeches on how the Fed would slow it down, be patient and stay the course, Sahm added.

    “The Fed is being very clear across the board, even people you would think of as more ‘dovish,’ that they do not want to let up too soon and get us into a situation where then they have to come back and do even more,” she said. “I don’t think that switching up who’s voting will matter much.”

    “They’re all hawks now,” Sahm added.

    The Fed also does not want to be in a position where it is lulled into a false sense of security by positive inflation data, she added. Fed Governor Christopher Waller put it bluntly in a speech last week: “We do not want to be head-faked.”

    “It’s going to take months and months of good news, and frankly, we’re in store for a bumpy ride this year,” Sahm said. “It’s not like every month is going to be good news on inflation.”

    Patrick Harker, Philadelphia Fed president and CEO, new 2023 FOMC voting member

    Austan Goolsbee, Chicago Fed president and CEO, new FOMC voting member for 2023

    Lorie Logan, Federal Reserve Bank of Dallas president and CEO, and new voting member for 2023.

    Neel Kashkari, Minneapolis Fed president and CEO, and new FOMC voting member for 2023

    2023 Federal Open Market Committee

    Permanent voting members (Board of Governors):

    Jerome Powell, chair

    Lael Brainard, vice chair

    Michael Barr, vice chair for supervision

    Michelle Bowman, governor

    Lisa Cook, governor

    Philip Jefferson, governor

    Christopher Waller, governor

    Voting Districts:

    John Williams, New York (permanent voting district)

    *Austan Goolsbee, Chicago

    *Patrick Harker, Philadelphia

    *Lorie Logan, Dallas

    *Neel Kashkari, Minneapolis

    Non-voting districts:

    Helen Mucciolo, interim first vice president, New York

    Loretta Mester, Cleveland

    Thomas Barkin, Richmond

    Raphael Bostic, Atlanta

    Mary Daly, San Francisco

    James Bullard, St. Louis

    Esther George, Kansas City (plans to retire this month)

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