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  • The US economy grew much faster than previously thought in the third quarter | CNN Business

    The US economy grew much faster than previously thought in the third quarter | CNN Business

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    CNN
     — 

    America’s economy grew much faster than previously thought in the third quarter, a sign that the Federal Reserve’s battle to cool the economy to fight inflation t is having only limited impact.

    The Commerce Department’s final reading Thursday morning showed gross domestic product, the broadest measure of the US economy, grew at an annual pace of 3.2% between July and September. That was above the 2.9% estimate from a month ago. Economists surveyed by Refinitiv had expected GDP to stay unchanged from its previous reading.

    The report said the stronger-than-expected reading was due to increases in exports and consumer spending that were partly offset by a decrease in spending on new housing. Consumer spending is responsible for more than two-thirds of the nation’s economic activity.

    The Fed has been raising interest rates throughout the year to cool demand for goods and services and reduce inflation. Economists have been worried for quite some time that the Fed’s actions could tip the US economy into recession next year.

    Inflation has cooled in recent readings, but the US economy has stayed strong. Some surveys released this week suggest the Fed’s higher rates are not slowing spending by businesses or consumers.

    A recent survey of chief financial officers found the current level of interest rates have not impacted their spending plans. And consumer confidence improved in December according to a survey by the Conference Board, reaching the highest level since April.

    In addition, employers have continued to hire at a historically strong pace, although layoffs have increased in some industries, especially technology.

    A separate Labor Department report Thursday showed that unemployment claims remained relatively unchanged.

    Initial weekly claims for unemployment insurance benefits ticked up to 216,000 for the week ended, December 17. The previous week’s total was upwardly revised by 3,000 to 214,000.

    Economists were expecting initial claims to land at 222,000, according to Refinitiv.

    The weekly initial claims totals are hovering around pre-pandemic levels. In 2019, weekly claims averaged 218,000.

    Continuing claims, which include people who are collecting benefits on an ongoing basis, dropped slightly to 1.672 million for the week ended December 10. The prior week’s number of continuing claims were revised up to 1.678 million.

    The final GDP report is one of most backward-looking readings the government releases, looking at the state of the economy nearly three months ago. The current forecast from economists is that growth in the current period will be only 2.4%, significantly slower than Thursday’s reading.

    Still, Wall Street was concerned that the GDP report could give the Fed more runway to raise rates. Stocks fell modestly Thursday. Dow futures were 200 points, or 0.6% lower. S&P 500 futures fell 0.8%.

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  • Having a credit card with trip insurance could save you thousands on your next vacation | CNN Underscored

    Having a credit card with trip insurance could save you thousands on your next vacation | CNN Underscored

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    CNN
     — 

    CNN Underscored reviews financial products such as credit cards and bank accounts based on their overall value. We may receive a commission through the LendingTree affiliate network if you apply and are approved for a card, but our reporting is always independent and objective. Terms apply to American Express benefits and offers. Enrollment may be required for select American Express benefits and offers. Visit americanexpress.com to learn more.

    Everyone is in need of that next big vacation, but before you go ahead and click the “book now” button, you’ll want to make sure you’re using a credit card that will cover you in case something unfortunate happens. Many people are unaware that some credit cards include various travel insurance benefits, which could come in handy during your next trip. For instance, if you ever need to cancel your trip because you get sick, or if your flight is delayed and you have to stay the night at a hotel, the right credit card can have you covered.

    Knowing the ins and outs of these travel insurance protections and which credit card provides what coverage could potentially save you a boatload of money. Hopefully you’ll never have to use these benefits, but if you do, your wallet could be pleasantly surprised.

    Credit card travel protections are not the same thing as travel insurance, which is a broad policy you can buy to cover a specific trip or series of trips. The travel protections that come on eligible credit cards are tailored to cover specific issues you might encounter on a trip. There are typically seven different benefits that credit cards can potentially cover — here’s a quick explanation of each type of coverage:

    Trip cancellation and interruption insurance: If you need to cancel a covered trip or if your covered trip is interrupted in the middle of travel due to illness, injury, weather or terrorist incident, this coverage will reimburse you for your nonrefundable expenses related to the delay cancellation. There are a number of exclusions, so you’ll need to read the fine print of your particular credit card for details.

    In regards to the coronavirus pandemic, this is where your credit card can help you out. If you fall ill with coronavirus and need to cancel your trip or cut it short as a result, you can file a claim with your credit card if it has trip cancellation or interruption coverage. The same coverage also applies if a quarantine is imposed by a physician due to coronavirus, or if an authoritative power imposes travel restrictions.

    However, if you choose to cancel a trip as a precautionary measure, this isn’t considered a covered event, and the travel insurance on your credit card most likely won’t reimburse you for your lost expenses.

    Trip delay insurance: If your common carrier (meaning an airine, bus, cruise ship or train) is delayed for a certain number of hours due to a covered reason, such as weather or mechanical issues, you can be reimbursed for many eligible out-of-pocket expenses, such as meals, transportation, lodging and toiletries.

    Lost luggage reimbursement: If your carrier loses or damages your carry-on or checked luggage, you’ll be reimbursed up to a maximum amount.

    Baggage delay reimbursement: If your checked baggage is delayed for a certain number of hours, you’ll be reimbursed up to a maximum amount per day for eligible essentials, such as clothing and toiletries.

    Rental car insurance: Many credit cards offer rental car damage coverage, which allows you to waive some of the pricey insurance policies offered by car rental agencies.

    Some cards offer what’s known as “secondary” car rental insurance, which means your credit card coverage will only kick in after any other insurance coverage takes place, such as your own personal auto policy. Other credit cards offer “primary” car rental insurance, meaning you don’t have to worry about filing a claim with anyone else first.

    Travel accident insurance: If you (or in some cases, your immediate family members) suffer an accidental death or dismemberment during travel, your beneficiary can make a claim for coverage on credit cards with this policy.

    Emergency evacuation insurance: If you’re injured or become sick during a trip far from home that results in an emergency evacuation, you’ll be covered for eligible medical services and transportation.

    Chase Sapphire Reserve: Best overall for travel protections
    Chase Sapphire Preferred Card: Best travel protections with a low annual fee
    The Platinum Card® from American Express: Best for earning flexible rewards
    United Club Infinite Card: Best for United flyers
    Delta SkyMiles® Reserve American Express Card: Best for Delta flyers
    Bank of America® Premium Rewards® credit card: Best for earning cash back
    Ink Business Preferred Credit Card: Best for business travelers

    Here’s a look at the specific travel protections that are available on each of these credit cards:

    Trip cancellation / trip interruption Trip delay Lost luggage Baggage delay Rental car Travel accident Emergency evacuation
    Chase Sapphire Reserve Yes Yes Yes Yes Yes Yes Yes
    Chase Sapphire Preferred Yes Yes Yes Yes Yes Yes No
    American Express Platinum Yes Yes Yes No Yes Yes Yes
    United Club Infinite Card Yes Yes No Yes Yes No No
    Delta SkyMiles Reserve Amex Yes Yes Yes No Yes Yes Yes
    Bank of America Premium Rewards Yes Yes Yes Yes Yes No Yes
    Ink Business Preferred Yes Yes Yes Yes Yes Yes No

    Let’s dive into the details of each of these cards and see which one might be the best choice for you when you’re booking a trip in 2022.

    If travel insurance is one of your top priorities when it comes to a credit card, the Chase Sapphire Reserve is the best choice out there. In fact, it’s the only card that offers all seven types of coverage mentioned in the chart above. And across those categories, it offers top-of-the-line insurance and generous reimbursement caps.

    Where this card really stands out is in its trip delay coverage. If your mode of transportation is delayed for six hours or more, the coverage kicks in immediately. On many credit cards that offer this protection, the coverage doesn’t apply until your transportation is delayed for 12 hours or more — or only when it requires an overnight stay.

    So if you were supposed to fly out in the morning, but your flight gets delayed seven hours to late in the afternoon, the Chase Sapphire Reserve will cover food for you in the interim, along with your traveling spouse or domestic partner and all traveling dependents under the age of 22. That could save you quite a bit of money on expenses you weren’t planning for.

    The Chase Sapphire Reserve also shines with its emergency evacuation and transportation insurance. This benefit will cover you for up to $100,000 in medical services or transportation. Many other cards don’t even offer this protection — or cover you for a lower amount. But if you do find you need to use this coverage, call the benefits administrator immediately, as they will need to approve and coordinate your evacuation.

    And while it’s a benefit you hope you never have to use, the Sapphire Reserve will insure you for up to $1,000,000 in the case of accidental death or dismemberment. Every other card on our list that offers this coverage only insures you to up to half the amount.

    Despite the Chase Sapphire Reserve truly having it all, its $550 annual fee isn’t something to balk at. But it’s a small price to pay to get so many protections on every trip you pay for with the card. And once you take into consideration the $300 yearly travel credit, Priority Pass Select lounge access and other benefits, your net out-of-pocket cost for being a card holder is relatively low.

    Read CNN Underscored’s review of the Chase Sapphire Reserve.
    Learn more and apply for the Chase Sapphire Reserve.

    The Chase Sapphire Preferred is only a slight step down from the Chase Sapphire Reserve — it includes most of the same travel insurance protections, just not to the same extent. But the annual fee on this card is significantly lower at just $95 per year.

    Sapphire Preferred card holders get the same trip interruption and cancellation coverage as the Sapphire Reserve — up to $10,000 per person and $20,000 per trip if your trip is halted or canceled for a covered reason. You’ll be reimbursed for any prepaid, nonrefundable travel expenses, such as airfare, tours and hotels. This will even cover you if you’re sick — just make sure to get a doctor’s note.

    Other travel protections are also comparable between the two cards, but the main difference is that to be eligible for trip delay insurance with the Chase Sapphire Preferred, your flight needs to be delayed at least 12 hours — or require an overnight stay — and there’s no emergency evacuation coverage.

    Additionally, the auto rental collision damage insurance on the Chase Sapphire Preferred is primary coverage but will only cover you for up to the actual cash value of the rental car. Conversely, the maximum on the Sapphire Reserve is $75,000, which could potentially cover damage beyond the car itself in the event of an accident.

    Read CNN Underscored’s review of the Chase Sapphire Preferred.
    Learn more and apply for the Chase Sapphire Preferred.

    The travel insurance benefits on the Amex Platinum card were improved at the start of 2020, which means you’ll now have even more protection on your next vacation.

    The Amex Platinum has the same trip cancellation and interruption insurance as the Chase cards, but with one limitation — you are limited up to $10,000 per trip and a maximum limit of $20,000 per eligible card per 12 consecutive month period. This shouldn’t be a problem for most travelers, but if you find yourself canceling trips regularly, you’ll want to use a different card. Neither the Amex Platinum nor the Chase cards cover voluntary cancellations.

    You’ll also get trip delay insurance with the Amex Platinum, up to $500 per ticket, and to be eligible, your trip only has to be delayed by six hours or more. You’re limited to a maximum of two claims per card in a 12-month period, but unlike the cancellation and interruption coverage, this is a benefit you might find yourself using somewhat often — especially if you travel often.

    Where this card falls short is that its car rental insurance only provides secondary coverage, so if you have an accident, you’ll first need to file a claim with any other insurance providers — such as your own personal auto insurance company — before this insurance kicks in. It’s much easier to have a card that offers primary coverage, though having some sort of protection is better than no protection at all.

    You'll have secondary car rental coverage on your Amex Platinum card if an accident occurs.

    The Amex Platinum also carries a $695 annual fee (see rates and fees), but it comes with many luxury perks such as airport lounge access — including the very popular American Express Centurion Lounges — elite hotel status, elite car rental status, monthly Uber Cash credits, airline incidental fee credits and credits for purchases at Saks Fifth Avenue.

    Read CNN Underscored’s review of the Amex Platinum Card.
    Learn more and apply for the Amex Platinum Card.

    The United Club Infinite Card doesn’t offer as many travel protections as some of the other high-end cards on our list. But if you’re flying United and want to reap the travel benefits of using the airline’s premium credit card, you’ll still receive a number of important protections with this card.

    Trip cancellation and trip interruption insurance both come with the United Club Infinite Card, as well as primary car rental insurance. You’ll also get trip delay reimbursement coverage, although travel must be delayed at least 12 hours or require an overnight stay to apply.

    The United Club Infinite Card also offers baggage delay reimbursement, which means if your bags are delayed in getting to your final destination by six hours or more, you can be reimbursed for essential toiletries and clothing until your bags arrive, up to $100 per day. However, you can only submit a claim for the first three days with this card, while many other cards provide reimbursement for up to five days.

    Despite not covering every travel protection on the list, the United Club Infinite Card also comes with United Club membership, a $100 statement credit for Global Entry or TSA Precheck and the ability to check your first and second bag for free when flying United, and it earns 4 miles for every dollar you spend on United purchases.

    Learn more and apply for the United Club Infinite Card.

    The Delta Reserve Amex comes with the exact same travel insurance protections as the Amex Platinum card. This means you’ll have access to trip cancellation and trip interruption insurance, trip delay reimbursement, lost luggage reimbursement, secondary auto rental collision damage insurance, travel accident insurance and emergency evacuation coverage.

    If you have a medical emergency during your trip, the Delta Reserve Amex has emergency evacuation coverage.

    But, if you’re a regular Delta flyer, you may want to have the Delta Reserve Amex over the American Express Platinum for its Delta perks, especially since it carries a lower $550 annual fee (see rates and fees). In addition to the card’s travel protections, you’ll get complimentary access to Delta Sky Clubs and Amex Centurion Lounges when flying Delta, complimentary upgrades on Delta when available and your first checked bag free on Delta flights.

    Read CNN Underscored’s review of the Delta Reserve Amex.
    Learn more and apply for the Delta Reserve Amex.

    For those looking for a simple credit card that earns cash back but also comes with some basic travel insurance protections, the Bank of America Premium Rewards Credit Card could be your best option.

    Like all the other cards on our list, you’ll get trip cancellation and trip interruption insurance with the Bank of America Premium Rewards, although your coverage is significantly lower than what the other cards provide — up to $2,500 per person.

    Many other cards cover you for up to $10,000 per person, so if your trips are typically on the expensive side, you’ll probably want to pick another card. But most travelers will find the $2,500 maximum more than sufficient.

    You’ll also be covered for essentials with the card if your trip is delayed by 12 hours or more (or requires an overnight stay) and if your luggage is lost or delayed. The card also has secondary auto rental collision damage insurance and provides emergency evacuation coverage.

    And when you’re not on the road, the Bank of America Premium Rewards card earns 2 points for every dollar you spend on travel and dining, and 1 point per dollar on everything else. Points can be redeemed for cash back at a rate of 1 cent apiece, and you can even increase those rates if you have status in Bank of America’s Preferred Rewards program.

    If you’re a business traveler who wants to keep all of your expenses on your business credit card, the Ink Business Preferred has you covered. You’ll find that the coverage on the Ink Business Preferred is almost exactly the same as the Chase Sapphire Preferred, which is great for a business card that only costs $95 a year.

    Related: Get a highest-ever bonus with these Chase business credit cards.

    The main difference between the Ink Business Preferred and other Chase credit cards is that while you’re insured if your trip is involuntarily interrupted or canceled, you’ll only be reimbursed for up to $5,000 per person and up to $10,000 per covered trip. Many other cards cover double that amount, but that’s typically only necessary if you’re booking a big, lavish trip.

    Other travel insurance protections on the Ink Business Preferred include trip delay insurance, baggage delay reimbursement, lost luggage reimbursement, primary auto rental collision damage waiver and travel accident insurance, all comparable to the protections on the personal Sapphire Preferred.

    Read CNN Underscored’s review of the Ink Business Preferred.
    Learn more and apply for the Ink Business Preferred.

    Make sure you book your trip with a credit card that has travel insurance protections to cover you if disaster strikes.

    With so many credit card travel insurance protections and the many nuances to each benefit, you’ll want to first consult with your credit card company to find out the exact coverage terms on your card. You might find that you’ll only be covered if your trip is over a certain number of miles from your home or a minimum number of days away — and in some cases, even a maximum number of days.

    Some credit cards also require that you pay for the trip entirely with your credit card, while other cards allow you to just put a portion of the trip on the respective card. In some cases, the rules can even differ across protections on the same card. But if you only need to put a portion of the trip cost on your card to be covered, you could use points or miles to pay for your trip and just put the taxes on the card.

    With the coronavirus pandemic dragging into 2021, it’s likely that travel may be touch and go for at least a portion of the upcoming year, and you’ll want to be protected if you have unanticipated issues before or during your trip. So before you book your 2022 — or even 2023 — travel, make sure you know what travel insurance protections are important to you, and use a credit card that will cover you in case the worst happens.

    Looking for a new credit card? Check out CNN Underscored’s list of the best credit cards currently available.

    Get all the latest personal finance deals, news and advice at CNN Underscored Money.

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  • Here’s what’s in the $1.7 trillion federal spending bill | CNN Politics

    Here’s what’s in the $1.7 trillion federal spending bill | CNN Politics

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    CNN
     — 

    Senate leaders unveiled a $1.7 trillion year-long federal government funding bill early Tuesday morning.

    The legislation includes $772.5 billion for non-defense discretionary programs and $858 billion in defense funding, according to a bill summary from Democratic Sen. Patrick Leahy, chair of the Senate Committee on Appropriations.

    The sweeping package includes roughly $45 billion in emergency assistance to Ukraine and NATO allies, boosts in spending for disaster aid, college access, child care, mental health and food assistance, more support for the military and veterans and additional funds for the US Capitol Police, according to Leahy’s summary and one from Sen. Richard Shelby of Alabama, the top Republican on the Senate Appropriations Committee.

    However, the bill, which runs more than 4,000 pages, left out several measures that some lawmakers had fought to include. An expansion of the child tax credit, as well as multiple other corporate and individual tax breaks, did not make it into the final bill. Neither did legislation to allow cannabis companies to bank their cash reserves – known as the Safe Banking Act. Also, there was also no final resolution on where the new FBI headquarters will be located.

    The spending bill is the product of lengthy negotiations between top congressional Democrats and Republicans. Lawmakers reached a “bipartisan, bicameral framework” last week following a dispute between the two parties over how much money should be spent on non-defense domestic priorities. They worked through the weekend to craft the legislation.

    The Senate is expected to vote first to approve the deal this week and then send it to the House for approval before government funding runs out on December 23. The bill would keep the government operating through September, the end of the fiscal year.

    Congress originally passed a continuing resolution on September 30 to temporarily fund the government in fiscal year 2023, which began October 1.

    More aid for Ukraine: The spending bill would provide roughly $45 billion to help support Ukraine’s efforts to defend itself against Russia’s attack.

    About $9 billion of the funding would go to Ukraine’s military to pay for a variety of things including training, weapons, logistics support and salaries. Nearly $12 billion would be used to replenish US stocks of equipment sent to Ukraine through presidential drawdown authority.

    Also, it would provide $13 billion for economic support to the Ukrainian government.

    Other funds would address humanitarian and infrastructure needs, as well as support European Command operations.

    Emergency disaster assistance: The bill would appropriate more than $38 billion in emergency funding to help Americans in the west and southeast affected by recent natural disasters, including tornadoes, hurricanes, flooding and wildfires. It would aid farmers, provide economic development assistance for communities, repair and reconstruct federal facilities and direct money to the Federal Emergency Management Agency’s Disaster Relief Fund, among other initiatives.

    Overhaul of the electoral vote counting law: A provision in the legislation aims at making it harder to overturn a certified presidential election, in a direct response to the January 6 attack on the US Capitol.

    The changes would overhaul the 1887 Electoral Count Act, which then-President Donald Trump tried to use to overturn the 2020 election.

    The legislation would clarify the vice president’s role while overseeing the certification of the electoral result to be completely ceremonial. It also would create a set of stipulations designed to make it harder for there to be any confusion over the accurate slate of electors from each state.

    Higher maximum Pell grant awards: The bill would increase the maximum Pell grant award by $500 to $7,395 for the coming school year. This would be the largest boost since the 2009-2010 school year. About 7 million students, many from lower-income families, receive Pell grants every year to help them afford college.

    Increased support for the military and veterans: The package would fund a 4.6% pay raise for troops and a 22.4% increase in support for Veteran Administration medical care, which provides health services for 7.3 million veterans.

    It would include nearly $53 billion to address higher inflation and $2.7 billion – a 25% increase – to support critical services and housing assistance for veterans and their families.

    The bill also would allocate $5 billion for the Cost of War Toxic Exposures Fund, which provides additional funding to implement the landmark PACT Act that expands eligibility for health care services and benefits to veterans with conditions related to toxic exposure during their service.

    Beefing up nutrition assistance: The legislation would establish a permanent nationwide Summer EBT program, starting in the summer of 2024, according to Share Our Strength, an anti-hunger advocacy group. It would provide families whose children are eligible for free or reduced-price school meal with a $40 grocery benefit per child per month, indexed to inflation.

    It would also change the rules governing summer meals programs in rural areas. Children would be able to take home or receive delivery of up to 10 days worth of meals, rather than have to consume the food at a specific site and time.

    The bill would also help families who have had their food stamp benefits stolen since October 1 through what’s known as “SNAP skimming.” It would provide them with retroactive federal reimbursement of the funds, which criminals steal by attaching devices to point-of-sale machines or PIN pads to get card numbers and other information from electronic benefits transfer cards.

    More money for child care: The legislation would provide $8 billion for the Child Care and Development Block Grant, a 30% increase in funding. The grant gives financial assistance to low-income families to afford child care.

    Also, Head Start would receive nearly $12 billion, an 8.6% boost. The program helps young children from low-income families prepare for school.

    Help to pay utility bills: The bill would provide $5 billion for the Low Income Home Energy Assistance Program. Combined with the $1 billion contained in the earlier continuing resolution, this would be the largest regular appropriation for the program, according to the National Energy Assistance Directors Association. Home heating and cooling costs – and the applications for federal aid in paying the bills – have soared this year.

    Enhance retirement savings: The bill contains new retirement rules that could make it easier for Americans to accumulate retirement savings – and less costly to withdraw them. Among other things, the provisions would allow penalty-free withdrawals for some emergency expenses, let employers offer matching retirement contributions for a worker’s student loan payments and increase how much older workers may save in employer retirement plans.

    More support for the environment: The package would provide an additional $576 million for the Environmental Protection Agency, bringing its funding up to $10.1 billion. It would increase support for enforcement and compliance, as well as clean air, water and toxic chemical programs, after years of flat funding.

    It also would boost funding for the National Park Service by 6.4%, restoring 500 of the 3,000 staff positions lost over the past decade. This would be intended to help the agency handle substantial increases in visitation.

    Plus, the legislation would provide an additional 14% in funding for wildland firefighting.

    Additional funding for the US Capitol Police: The bill would provide an additional $132 million for the Capitol Police for a total of nearly $735 million. It would allow the department to hire up to 137 sworn officers and 123 support and civilian personnel, bringing the force to a projected level of 2,126 sworn officers and 567 civilians.

    It would also give $2 million to provide off-campus security for lawmakers in response to evolving and growing threats.

    Investments in homelessness prevention and affordable housing: The legislation would provide $3.6 billion for homeless assistance grants, a 13% increase. It would serve more than 1 million people experiencing homelessness.

    The package also would funnel nearly $6.4 billion to the Community Development Block Grant formula program and related local economic and community development projects that benefit low- and moderate income areas and people, an increase of almost $1.6 billion.

    Plus, it would provide $1.5 billion for the HOME Investment Partnerships Program, which would lead to the construction of nearly 10,000 new rental and homebuyer units and maintain the record investment from the last fiscal year.

    Increased health care funding: The package would provide more money for National Institutes of Health, the Centers for Disease Control and Prevention and the Assistant Secretary for Preparedness and Response. The funds are intended to speed the development of new therapies, diagnostics and preventive measures, beef up public health activities and strengthen the nation’s biosecurity by accelerating development of medical countermeasures for pandemic threats and fortifying stockpiles and supply chains for drugs, masks and other supplies.

    More resources for children’s mental health and for substance abuse: The bill would provide more funds to increase access to mental health services for children and schools. It also would invest more money to address the opioid epidemic and substance use disorder.

    Tiktok ban from federal devices: The legislation would ban TikTok, the Chinese-owned short-form video app, from federal government devices.

    Some lawmakers have raised bipartisan concerns that China’s national security laws could force TikTok – or its parent, ByteDance – to hand over the personal data of its US users. Recently, a wave of states led by Republican governors have introduced state-level restrictions on the use of TikTok on government-owned devices.

    Enhanced child tax credit: A coalition of Democratic lawmakers and consumer advocates pushed hard to extend at least one provision of the enhanced child tax credit, which was in effect last year thanks to the Democrats’ $1.9 trillion American Rescue Plan. Their priority was to make the credit more refundable so more of the lowest-income families can qualify. Nearly 19 million kids won’t receive the full $2,000 benefit this year because their parents earn too little, according to a Tax Policy Center estimate.

    New cannabis banking rules: Lawmakers considered including a provision in the spending bill that would make it easier for licensed cannabis businesses to accept credit cards – but it was left out of the legislation. Known as the Safe Banking Act, which previously passed the House, the provision would prohibit federal regulators from taking punitive measures against banks for providing services to legitimate cannabis businesses.

    Even though 47 states have legalized some form of marijuana, cannabis remains illegal on the federal level. That means financial institutions providing banking services to cannabis businesses are subject to criminal prosecution – leaving many legal growers and sellers locked out of the banking system.

    FBI headquarters: There was also no final resolution on where the new FBI headquarters will be located, a major point of contention as lawmakers from Maryland – namely House Majority Leader Steny Hoyer – pushed to bring the law enforcement agency into their state. In a deal worked through by Senate Majority Leader Chuck Schumer, the General Services Administration would be required to conduct “separate and detailed consultations” with Maryland and Virginia representatives about potential sites in each of the states, according to a Senate Democratic aide.

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  • First images of British banknotes featuring King Charles III unveiled | CNN Business

    First images of British banknotes featuring King Charles III unveiled | CNN Business

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    London
    CNN Business
     — 

    The first images of banknotes featuring Britain’s King Charles III were unveiled on Tuesday by the Bank of England.

    Charles’ portrait will appear on English notes of £5, £10, £20 and £50. Meanwhile, the rest of the design will remain the same as the current notes that feature the late Queen Elizabeth II on the front. The cameo in the transparent security window will also feature the current monarch, the United Kingdom’s central bank said in a press release.

    The new banknotes are expected to enter circulation by mid-2024 and will co-circulate with notes featuring the Queen’s portrait, which will remain legal tender in the UK, according to the bank.

    “This is a significant moment, as The King is only the second monarch to feature on our banknotes,” Bank of England Governor Andrew Bailey said ahead of the release.

    The reverse side of the notes will remain unchanged – the current designs feature portraits of Winston Churchill, Jane Austen, JMW Turner and Alan Turing on the reverse of the £5, £10, £20 and £50 notes, respectively.

    “To minimize the environmental and financial impact of this change, new notes will only be printed to replace worn banknotes and to meet any overall increase in demand for banknotes,” the Bank of England added.

    Earlier this month, the first coins bearing the official effigy of King Charles III entered circulation. The 4.9 million 50 pence coins feature the King’s portrait, and on the reverse, a design symbolizing the “life and legacy” of the late Queen, according to the Royal Mint.

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  • Here’s who Elon Musk could pick to be Twitter’s next CEO | CNN Business

    Here’s who Elon Musk could pick to be Twitter’s next CEO | CNN Business

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    New York
    CNN
     — 

    Elon Musk may soon be on the lookout for a new chief executive to run Twitter.

    After mounting criticism of his chaotic leadership at Twitter, including recent decisions to suspend tech journalists and introduce (and then delete) a controversial policy banning linking out to rival platforms, Musk posted a poll asking whether he should step down as CEO. The poll ended Monday morning with 57% of voters in favor of Musk handing off the top job.

    Musk has not commented on the results of the poll. In fact, Musk went an uncharacteristically long time on Monday without tweeting at all. But even if Musk doesn’t immediately honor his own poll, the Tesla CEO will likely only continue to face pressure from the carmaker’s investors to hand the reins to someone else sooner than later. Tesla stock is down 34% since his deal to buy Twitter closed and more than 63% since the start of this year, as investors worry about his many competing priorities. (Musk has also for years mused about finding a successor to run Tesla, with no obvious progress.)

    Musk, for his part, said in a tweet Sunday before the poll had closed: “No one wants the job who can actually keep Twitter alive. There is no successor.”

    If Musk were to look for a new Twitter CEO, he’d likely have many willing takers. Already, the list of people who have offered to run the platform includes former T-Mobile CEO John Legere, MIT artificial intelligence researcher Lex Fridman and rapper Snoop Dogg (who could perhaps run Twitter with the help of his friend and entertainment personality Martha Stewart). Tom Anderson, a founder of MySpace, also commented on Musk’s poll about stepping down from CEO, saying, “depends on who you get to run it,” with a thinking-face emoji.

    There are also some highly qualified candidates out there — such as former Facebook COO Sheryl Sandberg and CTO Mike Schroepfer, who both left their roles at the social media giant earlier this year — although convincing them to take on the chaos machine that is Twitter could be difficult. Jack Dorsey, Twitter founder, CEO of Block and friend to Musk, has previously said he would not return to run the social network.

    The most obvious potential candidates for a new Twitter CEO are the Musk lieutenants who have been helping to run the company since his takeover. The short list likely includes investor Jason Calacanis, Craft Ventures partner David Sacks and Sriram Krishnan, an Andreessen Horowitz general partner focused on crypto and Twitter’s former consumer teams lead.

    If Musk does pick someone else, it might allow him to hand over some of the day-to-day responsibility, and accountability, of running Twitter. But one thing would almost certainly not change: Musk remains very much in charge. Musk pushed out the company’s former leadership and board of directors, and as the company’s owner and sole board director, he will ultimately have the power to hire and fire whoever he wants at the company’s helm.

    Calacanis, who emerged in the tech world as a reporter during the dot com boom, is an early-stage investor who has backed well-known companies such as Uber and Robinhood. He has also launched several media properties and hosts two podcasts (one in partnership with Sacks).

    Calacanis tweeted on Sunday night asking, “Who would like the most miserable job in tech AND media?! Who is insane enough to run twitter?!?!” Calacanis also ran his own Twitter poll asking followers whether he or Sacks should run the company, separately or together, or whether someone else should take over. The majority of respondents voted for “other.”

    In April, shortly after Musk offered to buy Twitter, Calacanis told the billionaire in a text message that “Twitter CEO is my dream job.”

    Sacks, who along with Musk was among the original founding team at PayPal, has at least some experience managing a social network. He founded and ran enterprise communications platform Yammer, before selling it to Microsoft in 2012 for $1.2 billion.

    Sacks has been particularly unflinching in echoing Musks’ talking points, whether it’s justifying a feud with Apple or attempting to stir up outrage about a Twitter account that posted publicly available information about the whereabouts of Musk’s private jet. A Twitter user asked Sacks last month what he and Musk disagree about, and Sacks responded with just one thing: “Chess.”

    On paper, Krishnan may be the most obvious choice of the group. He has direct experience working on the Twitter product, having previously helped manage the teams responsible for features of the platform such as search and the home timeline. He also previously worked on mobile ad products for Snap and Facebook.

    More recently, he has invested in crypto startups at Andreessen Horowitz, which could give him experience helpful to fulfill Musk’s goal of building payment capabilities for Twitter and making it more than just a social media app.

    Krishnan is arguably the least well-known — and therefore perhaps the least controversial — of Musk’s current Twitter leadership team, which could help deflect some of the recent negative attention the company has received.

    Some Twitter users have speculated about other possible leaders for the social media company, including Donald Trump son-in-law Jared Kushner, who was spotted watching the World Cup with Musk over the weekend.

    Kushner is friendly with the Saudi Royal Family, one of Twitter’s largest investors. Prior to working as an advisor in Trump’s White House, Kushner worked for his family’s real estate development company, and last year he said he would leave politics and start an investment firm. Kushner also previously owned the weekly New York newspaper, the New York Observer.

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  • Housing slump likely to continue but some see hopeful signs ahead | CNN Business

    Housing slump likely to continue but some see hopeful signs ahead | CNN Business

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    A version of this story first appeared in CNN Business’ Before the Bell newsletter. Not a subscriber? You can sign up right here.


    New York
    CNN
     — 

    Mortgage rates have ticked down recently, but are still up dramatically from a year ago thanks to the surge in long-term bond yields as the Federal Reserve hiked interest rates.

    While that’s already had a negative impact on the housing market, we’ll get more details this week about how much worse the damage has become.

    A long list of housing data is on tap. On Tuesday the US Census Bureau will report housing starts and building permits figures for November, followed by Friday’s release of new home sales data for the same month. In between that will be the November existing home sales numbers from the National Association of Realtors on Wednesday, as well as weekly data on mortgage rates and applications on Thursday.

    For the past few months, existing and new home sales have been steadily declining because of the spike in rates and the fact that home prices remain stubbornly high for first-time buyers. Housing starts and building permits have been choppier on a month-to-month basis, but those figures are both down from a year ago.

    Still, there are some promising signs that the worst could soon be over. Shares of Lennar

    (LEN)    , one of the largest homebuilders in the US, rallied after reporting earnings last week. Revenue topped forecasts and the company’s guidance for the number of homes it expected to deliver next year was a little higher than analysts’ estimates as well.

    Lennar investors “may be looking ahead to 2023, perhaps crossing the valley from recession to potential recovery,” according to CFRA Research analyst Kenneth Leon.

    Others in the industry are cautiously optimistic as well.

    According to data from Amherst Group, an investment firm that buys single-family homes to rent out, it’s important to put the recent slide in prices in context.

    Amherst said home prices are still up about 40% from pre-pandemic levels. So even a further drop of about 15% would merely bring them to mid-2021 levels. In other words, this isn’t like the mid-2000s real estate bubble bursting.

    It’s also worth noting that the job market is still strong and wages are growing. What’s more, many consumers still have decent levels of excess savings thanks to pandemic era government stimulus.

    That all amounts to a few good reasons why the housing market could avoid a severe and prolonged slump.

    “The U.S. housing market is still supported by a tight labor market, the lock-in effect of low fixed mortgage rates for existing homeowners, tight mortgage underwriting, low leverage in the mortgage sector, and low housing supply,” said Brandywine fixed-income analyst Tracy Chen in a report this month.

    “We believe we can avoid a severe housing downturn like the one in the Global Financial Crisis,” Chen added.

    Others point out that even though housing sales may remain weak due to high home prices and still elevated mortgage rates, the good news is that most existing homeowners are still paying their monthly mortgage on time.

    Again, that’s a stark contrast from 2008 when many people with subprime loans or borrowers with poor credit histories were unable to keep up with their mortgage payments.

    “Housing is not bringing down the economy. Yes, the housing market has been impacted. But mortgage delinquencies are still low,” said Gene Goldman, chief investment officer at Cetera Investment Management.

    There aren’t a ton of companies reporting their latest earnings this week. But the few that are could give more clues about the financial health of consumers and the state of corporate spending.

    Cereal giant General Mills

    (GIS)     will release earnings on Tuesday. Analysts are expecting a slight increase in both sales and profit. Consumers may be growing increasingly wary about inflation and the broader economy, but they’re still eating their Wheaties. Shares of General Mills

    (GIS)     have soared nearly 30% this year.

    Analysts are less optimistic about the outlooks for sneaker king and Dow component Nike

    (NKE)    , used car retailer CarMax

    (KMX)     and memory chip maker Micron

    (MU)    , whose semiconductors are used in devices ranging from cell phones and computers to cars.

    Earnings are expected to decline for these three companies. They won’t be the only leaders of Corporate America to report weak results.

    According to data from FactSet, fourth-quarter earnings for S&P 500 companies are expected to decline 2.8% from a year ago. Analysts have been busy cutting their forecasts too. John Butters, senior earnings analyst at FactSet, noted in a report that fourth-quarter profits were expected to rise 3.7% as recently as September 30.

    Investors are also going to be paying very close attention to what companies say in their earnings reports about their outlooks for 2023. Analysts currently are anticipating earnings growth of 5.3% for 2023. That could be too optimistic… especially if companies start cutting their own forecasts due to worries about the broader economy.

    “Odds of a recession are pretty high,” said Vincent Reinhart, chief economist and macro strategist at Dreyfus & Mellon. “That will have a knock-on effect for corporate earnings. Higher rates and weaker earnings suggest more pain for stocks.”

    Monday: Germany Ifo business climate index

    Tuesday: US housing starts and building permits; China sets loan prime rate; Bank of Japan interest rate decision; earnings from General Mills, Nike, FedEx

    (FDX)     and Blackberry

    (BB)

    Wednesday: US existing home sales; Germany consumer confidence; earnings from Rite Aid

    (RAD)    , Carnival

    (CCL)    , Cintas

    (CTAS)    , Toro

    (TTC)     and Micron

    Thursday: US weekly jobless claims; US Q3 GDP (third estimate); earnings from CarMax

    (KMX)     and Paychex

    Friday: US personal income and spending; US PCE inflation; US new home sales; US durable goods orders; US U. of Michigan consumer sentiment; Japan inflation; UK markets close early

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  • Biden begins to refill Strategic Petroleum Reserve, while Keystone Pipeline leak prompts new emergency exchange | CNN Business

    Biden begins to refill Strategic Petroleum Reserve, while Keystone Pipeline leak prompts new emergency exchange | CNN Business

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    New York
    CNN
     — 

    The Biden administration announced plans Friday to provide nearly 2 million barrels of oil to refineries through an emergency exchange and simultaneously begin efforts to replenish the Strategic Petroleum Reserve early next year.

    The new emergency exchange is aimed at addressing “potential supply disruptions” caused by the shutdown of the Keystone Pipeline due to a leak earlier this month, the Energy Department said. Part of that key pipeline remains shuttered and no timeline has been issued for a full reopening.

    Emergency exchanges allow oil refineries to borrow oil from the SPR for a short period due to supply disruptions such as hurricanes or pipeline outages. Unlike with emergency sales such as the record-setting release of 180 million barrels announced in March, this oil must be returned.

    In this case, the Energy Department agreed to provide 1.2 million barrels of oil from the SPR to ExxonMobil and 600,000 barrels to Phillips 66.

    At the same time, the Biden administration is beginning plans to repurchase crude oil for the SPR for the first time since that unprecedented release earlier this year.

    The Energy Department is planning to solicit bids to repurchase up to 3 million barrels of oil for the SPR to be delivered in February, the senior administration official said. The repurchase will pilot a new approach to buy back the oil at a fixed price, the official said.

    “Small but a signal that pledges to refill are credible,” former Obama energy official Jason Bordoff said on Twitter in response to the new steps.

    The senior administration official conceded it will take months or even years to refill the SPR, whose stockpiles are at the lowest level in 38 years.

    Comprised of underground salt caverns in Texas and Louisiana, the SPR is the world’s largest supply of emergency crude oil. It has been used during times of war and natural disaster to ease supply crunches.

    The move to begin to refill the SPR — and to lock in a price — comes as oil prices have plunged to one-year lows amid recession fears.

    “This repurchase is an opportunity to secure a good deal for American taxpayers by repurchasing oil at a lower price than the $96 per barrel average price it was sold for, as well as to strengthen energy security,” the Energy Department said in a statement.

    The administration announced in October that it planned to repurchase oil for the SPR when prices are at or below roughly $67-$72 a barrel. Officials said at the time such a move would help boost demand and provide the oil industry with an incentive to keep pumping even during times of stress.

    Oil prices dropped nearly 4% on Friday morning to as low as $73.33 a barrel. Oil trimmed its losses after the Energy Department announced the SPR moves, with crude recently trading down 1.5% to $75 a barrel.

    Prices are currently in a “very useful” range to begin the process of refilling the SPR, the senior administration official said.

    Officials stressed that the efforts to refill the SPR won’t prevent future emergency releases in the future, if necessary.

    “The SPR remains ready to respond to energy security needs today. We will be prepared and as nimble as we can to make sure the SPR is doing everything it can on behalf of energy security and American consumers,” the senior administration official said.

    The Energy Department also took a bit of a victory lap for the decision to release 180 million barrels of oil following Russia’s invasion of Ukraine.

    Noting that gas prices are now at 15-month lows, the senior administration official said that historic release “helped provide some breathing room for American families at the pump,” the official said.

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  • Why stocks keep tumbling: Good news and bad news are bad | CNN Business

    Why stocks keep tumbling: Good news and bad news are bad | CNN Business

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    New York
    CNN
     — 

    The good vibes on Wall Street are fading fast: US stocks tumbled yet again Friday as investors come to grips with a souring economy.

    Dow futures were down 400 points, or 1.3%. S&P 500 futures fell 1.4%, and Nasdaq Composite futures were 1.1% lower.

    CNN Business’ Fear and Greed Index, a measure of market sentiment, dipped perilously close to “Fear” Friday. The market had been in “Greed” mode for weeks.

    Stocks had been riding high this month on weaker-than-expected inflation and a number of stronger-than-expected reports on the broad economy and the job market. Investors were hopeful that the Federal Reserve could slow its historic pace of rate hikes and inflation could right itself sometime next year without tipping the economy into a recession.

    That excitement continued right up until Fed Chair Jerome Powell crashed Wall Street’s party Wednesday with some tough news: Economists at the Fed believe US gross domestic product, the broadest measure of America’s economy will barely grow next year. And they predict the US unemployment rate will rise to 4.6% by the end of 2023, which means roughly 1.6 million more Americans will be out of work.

    Compounding fears from those dour Fed forecasts was a worse-than-expected retail sales report Thursday that sent stocks plunging. The Dow lost 765 points Thursday, or 2.3%, the index’s worst day in three months. The S&P 500 lost 2.5% and the Nasdaq tumbled 3.2%, their worst days in a month.

    Now, economists at Moody’s Analytics predict America’s economy will grow at an annualized rate of just 1.9% in the fourth quarter, down from its previous estimate of 2.7%. Weak manufacturing and retail reports spooked Moody’s analysts, who also lowered their 2023 GDP forecast to just 0.9%, much lower than 2022’s 1.9% estimate.

    “This leaves little room for anything to go wrong,” Moody’s economist Matt Colyar wrote in an analysis.

    Sentiment on Wall Street can change on a dime, and this week is clear evidence of that: The Dow has tumbled about 1,100 points, or 3.4%, since the Fed’s policy update at 2 p.m. ET Wednesday, and the market hasn’t even opened yet Friday. Not helping stocks: It’s December. Many traders are on vacation, volume is low and tiny moves can get exacerbated.

    But, as my colleague Matt Egan notes, the market may be in a lose-lose situation. Good economic news has been bad news for investors, because the Fed is trying to cool down the economy as part of its inflation-fighting campaign. But bad economic news is also bad for investors – and everyone – because it raises the risk of a recession.

    – CNN’s Matt Egan contributed to this report

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  • The Grinch comes for retailers | CNN Business

    The Grinch comes for retailers | CNN Business

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    A version of this story first appeared in CNN Business’ Before the Bell newsletter. Not a subscriber? You can sign up right here. You can listen to an audio version of the newsletter by clicking the same link.


    New York
    CNN
     — 

    Weaker-than-expected retail sales in November pummeled market sentiment on Thursday and raised the odds that the Federal Reserve’s inflation-fighting interest rate hikes would push the economy into recession.

    What’s happening: US retail sales, which measure the total amount of money that stores make from selling goods to customers, fell 0.6% in November, the weakest performance in nearly a year. The drop concerned economists who had expected monthly sales to shrink by just 0.1%. It’s also a sharp reversal from October’s sales increase of 1.3%.

    That’s a bad sign for the economy. Just last month Bank of America CEO Brian Moynihan told CNN that the continued strength of the US consumer is nearly single-handedly staving off recession. Consumer spending is a major driver of the economy, and the last two months of the year can account for about 20% of total retail sales — even more for some retailers, according to National Retail Federation data.

    Market mania: The weak report means that spending faltered just as the holiday season started, a critical time for retailers to ramp up profits and get rid of excess inventory. Investors weren’t too happy about that.

    Shares of Costco

    (COST)     closed Thursday 4.1% lower, Target

    (CBDY)     fell by 3.2%, Macy’s

    (M)     dropped 3.5% and Abercrombie & Fitch

    (ANF)     was down 6.2%.

    The entire sector took a blow — the VanEck Retail ETF, with Amazon

    (AMZN)    , Home Depot

    (HD)     and Walmart

    (WMT)    as its top three holdings, fell by 2.2%. The SPDR S&P Retail ETF, which follows all S&P retail stocks, was down 2.9%.

    Weak sales are likely to continue, say analysts, and if they do, then retailers’ bottom lines and fourth-quarter earnings will suffer.

    “The headwinds of the past year are catching up to consumers and forcing them to be more conservative in their holiday shopping this winter,” warned Morgan Stanley economist Ellen Zentner in a note.

    The Fed factor: November’s report could indicate that consumers are feeling the double-punch of sky-high inflation and painful interest rate hikes from the central bank. This retail sales data adds to recessionary concerns, as it suggests that consumers may be becoming more cautious with their spending.

    “Households are increasingly relying on their savings to sustain their spending, and many families are resorting to credit to offset the burden of high prices. These trends are unsustainable, and the current credit splurge is a true risk, especially for families at the lower end of the income spectrum,” said Gregory Daco and Lydia Boussour, economists at EY Parthenon.

    While American bank accounts are still fairly robust, they’re beginning to dwindle. In the third quarter of 2022, credit card balances jumped 15% year over year. That’s the largest annual jump since the New York Fed began keeping track of the data in 2004.

    “Against this backdrop, we expect consumers will rein in their spending further in coming months,” said Daco and Boussour. “Real consumer spending should see modest growth in the final quarter of the year, but we expect it will barely grow in 2023.”

    Bottom line: If Bank of America’s Moynihan was right, the US economy is in trouble.

    US mortgage rates came in lower once again this week, marking the fifth consecutive drop in a row.

    The 30-year fixed-rate mortgage averaged 6.31% in the week ending December 15, down from 6.33% the week before, according to Freddie Mac. A year ago, the 30-year fixed rate was 3.12%, reports my colleague Anna Bahney.

    That’s a sharp reversal from the upward trend in rates we’ve seen for most of 2022. Those increases were spurred by the Federal Reserve’s unprecedented campaign of harsh interest rate hikes to tame soaring inflation. But mortgage rates have tumbled in the last several weeks, following data that showed inflation may have finally reached its peak.

    The Fed announced on Wednesday that it will continue to raise interest rates — albeit by a smaller amount than it has been.

    “Mortgage rates continued their downward trajectory this week, as softer inflation data and a modest shift in the Federal Reserve’s monetary policy reverberated through the economy,” said Sam Khater, Freddie Mac’s chief economist.

    “The good news for the housing market is that recent declines in rates have led to a stabilization in purchase demand,” he added. “The bad news is that demand remains very weak in the face of affordability hurdles that are still quite high.”

    American regulators have been granted unprecedented access to the full audits of Chinese companies like Alibaba

    (BABA)     and JD.com

    (JD)     after threatening to kick the tech giants off US stock exchanges if they did not receive the data.

    The announcement marks a major breakthrough in a yearslong standoff over how Chinese companies listed on Wall Street should be regulated. It will come as a huge relief for these firms and investors who have invested billions of dollars in them, reports my colleague Laura He.

    “For the first time in history, we are able to perform full and thorough inspections and investigations to root out potential problems and hold firms accountable to fix them,” Erica Williams, chair of the Public Company Accounting Oversight Board, said in a statement Thursday, adding that such access was “historic and unprecedented.”

    More than 100 Chinese companies had been identified by the US securities regulator as facing delisting in 2024 if they did not hand over the audits of their financial statements.

    On Friday, China’s securities regulator said it’s looking forward to working with US officials to continue promoting future audit supervision of companies listed in the United States.

    There are more than 260 Chinese companies listed on US stock exchanges, with a combined market capitalization of more than $770 billion, according to recent calculations posted by the US-China Economic and Security Review Commission.

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  • Delisting risks for China tech stocks averted as US gets ‘historic’ access to audit data | CNN Business

    Delisting risks for China tech stocks averted as US gets ‘historic’ access to audit data | CNN Business

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    Hong Kong
    CNN
     — 

    US regulators have gained full access to the audits of Chinese companies for the first time, reducing the threat that tech giants such as Alibaba

    (BABA)     and JD.com

    (JD)     could be kicked off US stock exchanges.

    The announcement marks a major breakthrough in a yearslong standoff over how Chinese companies listed on Wall Street should be regulated. It will come as a huge relief for these firms and investors who have invested billions of dollars in them.

    “For the first time in history, we are able to perform full and thorough inspections and investigations to root out potential problems and hold firms accountable to fix them,” Erica Williams, chair of the Public Company Accounting Oversight Board (PCAOB), said in a statement Thursday, adding that such access was “historic and unprecedented.”

    More than 100 Chinese companies — including Alibaba, JD.com, and Baidu — had been identified by the US securities regulator as facing delisting in 2024 if they did not hand over the audits of their financial statements.

    On Friday, China’s securities regulator said it’s looking forward to working with US officials to continue promoting future audit supervision of companies listed in the United States.

    “We have always advocated solving issues of audit supervision on cross-border listings through regulatory cooperation mechanisms,” the China Securities Regulatory Commission said in a statement.

    There are more than 260 Chinese companies listed on US stock exchanges, with a combined market capitalization of more than $770 billion, according to recent calculations posted by the US-China Economic and Security Review Commission.

    But investors often face a lack of transparency when it comes to Chinese stocks. US regulators have been long demanding access to the books of these companies, but Beijing had resisted such scrutiny, citing national security concerns.

    The United States had increased pressure by passing a law in December 2020 requiring Chinese companies listed in the US to open their books to audit watchdogs. If they failed to comply with the requirements for three straight years, they would be delisted.

    In August, China finally agreed to let US officials inspect the audit work of these firms.

    In Friday’s statement, the PCAOB said it had inspected the audits of eight Chinese companies completed by KPMG Huazhen LLP in China and PricewaterhouseCoopers in Hong Kong. The board will finalize the inspection reports and make them public as early as next year.

    “This is the beginning of our work to inspect and investigate firms in China, not the end,” Williams said in the statement.

    She added that the watchdog is continuing to demand complete access in mainland China and Hong Kong moving forward.

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  • The Fed lifts rates by half a point, acknowledging that inflation is easing | CNN Business

    The Fed lifts rates by half a point, acknowledging that inflation is easing | CNN Business

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    Washington, DC
    CNN
     — 

    The Federal Reserve approved a half-point interest rate hike on Wednesday, a smaller increase than in recent months and an acknowledgment that inflation is finally easing.

    The increase marks a shift for the central bank after an unprecedented year that includes seven-straight rate hikes as part of an aggressive campaign to try and bring down the highest inflation since the early 1980s.

    While lower than the four consecutive three-quarter-point hikes approved at the Fed’s previous meetings, Wednesday’s rate hike is still twice the size of the central bank’s customary quarter-point increase and will likely deepen the economic pain for millions of American businesses and households by pushing up the cost of borrowing even further.

    Fed officials will increase the rate that banks charge each other for overnight borrowing to a range of 4.25-4.5%, the highest since 2007.

    The Fed also released its highly anticipated Summary of Economic Projections, which includes what is colloquially known as the dot plot. Investors pay close attention to these forecasts, which show where each of its 19 leaders expect interest rates to go in the future, for clues about the path of rate hikes in the new year and beyond.

    The December projections showed a more aggressive monetary policy tightening path, with the median “dot” rising to a new peak in federal fund rates of 5-5.25% up from 4.5-4.75% in September. That would mean Fed officials expect to raise rates by half a percent more than they did three months ago, when the plot was last released.

    Policymakers also projected that PCE inflation, the Fed’s favored price gauge, would remain above its 2% target until at least 2025. Further projections showed souring expectations for the health of the US economy, with Fed officials now predicting that unemployment will rise to 4.6% by the end of 2023 and remain at that level through 2024. That’s 0.2 percentage points higher than the 4.4% rate they were expecting in September and significantly higher than the current 3.7% rate.

    GDP, a measure of economic output, is also projected to drop to 0.5% next year, down from 1.2% in September.

    The forecast will likely stoke investors’ and economists’ fear that the US economy will endure a recession next year. Federal Reserve Chair Jerome Powell said last month that there is still a chance the economy can avoid recession but said the odds are slim.

    “To the extent we need to keep rates higher longer, that’s going to narrow the path to a soft landing,” he said at an economic forum last month.

    Still, the economy has so far withstood the hikes. The job market is healthy, wages are growing, Americans are spending and GDP is strong. Business is also good: Companies are largely beating revenue expectations and reporting positive earnings results.

    Fed Chair Powell is schedule to hold a post-meeting press conference at 2:30 p.m. Wednesday.

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  • Danish bank pleads guilty to multi-billion dollar fraud scheme on U.S. Banks | CNN Business

    Danish bank pleads guilty to multi-billion dollar fraud scheme on U.S. Banks | CNN Business

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    CNN
     — 

    Federal prosecutors announced a plea deal and $2 billion forfeiture Tuesday with Danske Bank, one of Denmark’s largest banks, for illegally allowing foreign actors to funnel money through their branch in Estonia in order to gain unlawful access to the US financial system.

    The guilty plea marks the end of a years-long investigation into the company after accusations that it funneled billions of dollars in illicit payments from high-risk clients, including in Russia, into countries including the United States.

    Danske Bank agreed forfeit over $2 billion as part of the plea agreement, according to the Justice Department, which required the bank to plead guilty to one count of conspiracy to commit bank fraud.

    In addition to the criminal guilty plea, the SEC announced a separate settlement with Danske Bank over the allegations of money laundering in which the bank agreed to pay approximately $413 million.

    The Justice Department said that it will credit the bank approximately $850 million to settle other claims with SEC and the Danish authorities.

    “Today’s guilty plea by Danske Bank and two-billion-dollar penalty demonstrate that the Department of Justice will fiercely guard the integrity of the U.S. financial system from tainted foreign money – Russian or otherwise,” Deputy Attorney General Lisa Monaco said in a statement Tuesday. “Whether you are a U.S. or foreign bank, if you use the U.S. financial system, you must comply with our laws… Failure to do so may well be a one-way ticket to a multi-billion-dollar guilty plea.”

    The bank, according to the Justice Department, was aware of billions of dollars being funneled over an eight-year period through an Estonia branch into accounts in the United States and elsewhere without the proper anti-money laundering information about each account. The Estonia branch of the bank processed around $160 billion during that time period, prosecutors say.

    The bank promised customers they could move money through an Estonia branch with little to no oversight, prosecutors allege. Bank employees in Estonia conspired with their customers, the department alleged, and helped “to shield the true nature of their transactions, including by using shell companies that obscured actual ownership of the funds.”

    Though Danske Bank was aware the branch had potentially broken the law and was not meeting the standards of the company’s anti-money laundering program, executives overlooked the transactions and lied about information regarding Danske Bank Estonia’s customers and their risk profile.

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  • What to expect from this week’s Fed meeting | CNN Business

    What to expect from this week’s Fed meeting | CNN Business

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    New York
    CNN
     — 

    The Federal Reserve is expected to raise interest rates by half a point at the conclusion of its two-day policy meeting on Wednesday, an indication that the central bank is pulling back on its aggressive stance as signs begin to emerge that inflation may be easing.

    Although that increase would be smaller than the three-quarter-point hikes announced at the past four Fed meetings, it’s nothing to scoff at.

    It’s still double the Fed’s customary quarter-point hike, and a sizable increase that will likely cause economic pain for millions of American businesses and households by pushing up the cost of borrowing for homes, cars and other loans.

    The Fed’s anticipated action would increase the rate that banks charge each other for overnight borrowing to a range of between 4.25% and 4.5%, the highest since 2007.

    Federal Reserve Chairman Jerome Powell confirmed last month that smaller rate hikes could be expected, saying: “The time for moderating the pace of rate increases may come as soon as the December meeting.”

    But while inflation is unlikely to slow dramatically any time soon, partly due to continued pressure on wages amid a shortage of workers, Wall Street appears to believe the Fed will eventually be forced to pivot away from, or even reverse its regimen of rate hikes. Traders are largely pricing in rate cuts in the second half of 2023.

    The Fed will conclude its rate hike regimen by the second quarter of next year, predicted JPMorgan analysts in a recent note. “With inflation continuing to fade and fiscal policy likely on hold, the Fed is likely to end its tightening cycle early in the new year and inflation could begin to ease before the end of 2023,” they wrote. The analysts expect two quarter-point hikes in the first half of 2023.

    But the average period between peak interest rates and the first reductions by the Fed is 11 months, which could mean that even if the central bank stops actively hiking rates, they could remain elevated into 2024.

    Investors will closely read the Fed’s economic outlook, the Summary of Economic Projections, which is also due out Wednesday. And they will watch Powell’s press conferences for clues about what’s to come — though they may end up sorely disappointed.

    ​”We expect Fed Chair Powell will insist on the need to hold policy at a restrictive level for some time to bring inflation down toward the 2% target,” wrote Gregory Daco, chief economist at EY-Parthenon, in a note to clients Monday. “This will serve to push back against current market pricing … Powell will stress that history cautions strongly against prematurely loosening policy.”

    The Fed has increased its benchmark lending rate six times this year in an attempt to discourage borrowing, cool the economy and bring down historically high inflation that peaked at 9.1% over the summer.

    Even if interest rate hikes do ease off, they will remain high, and economists are largely expecting that the US economy will endure a recession next year. Powell said in November that there is still a chance the economy avoids recession but the odds are slim, noting: “To the extent we need to keep rates higher longer, that’s going to narrow the path to a soft landing.”

    In an interview that aired on CBS on Sunday, Treasury Secretary Janet Yellen — Powell’s predecessor at the Fed — said there is “a risk of a recession. But it certainly isn’t, in my view, something that is necessary to bring inflation down.”

    And the economy has so far withstood the Fed’s aggressive rate hikes. The job market is healthy, wages are growing, Americans are spending and GDP is strong. Business is also good: Companies are largely beating revenue expectations and reporting positive earnings results.

    The Fed isn’t acting alone, it’s just one of nine central banks expected to make a rate announcement this week. Landing softly on the ever-narrowing path between high inflation and recession is a global concern as central banks across the world contend with similar economic problems.

    The European Central Bank, the Bank of England and the Swiss National Bank are expected to follow the United States with half-point moves of their own on Thursday. Norway, Mexico, Taiwan, Colombia and the Philippines will also likely increase their borrowing costs this week.

    The Federal Reserve announces its rate hike decision Wednesday at 2 p.m., followed by a press conference with Chair Powell at 2:30 p.m.

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  • Microsoft buys stake in London Stock Exchange in cloud data deal | CNN Business

    Microsoft buys stake in London Stock Exchange in cloud data deal | CNN Business

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    London
    CNN
     — 

    Microsoft

    (MSFT)     is buying a 4% stake in the London Stock Exchange as part of a deal that will see the market operator spend at least $2.8 billion over 10 years on the software provider’s cloud services.

    The companies announced the partnership in a joint statement on Monday, touting the benefits it will deliver to the stock exchange’s customers through improved data and analytics. Shares of the London Stock Exchange Group (LSEG) gained 4% in early trade.

    The partnership “creates attractive revenue growth opportunities for both companies,” LSEG CEO David Schwimmer said in the statement.

    As part of the deal, the London Stock Exchange’s data platform and other technology infrastructure will migrate into Microsoft’s Azure cloud environment.

    The companies also plan to work together to develop new products and services for data and analytics using Microsoft Azure, Microsoft Teams and Microsoft’s artificial intelligence (AI) capabilities.

    As a start, the exchange will be able to share its data and analytics with Teams and Microsoft 365, which includes Excel and PowerPoint.

    “The partnership will build on the good progress made by LSEG on the integration of Refinitiv and enhance its position as a world-leading financial markets infrastructure and data provider,” the statement said.

    LSEG completed its $27 billion acquisition of Refinitiv last year, making it the second largest financial data company after Bloomberg. Its data and analytics business makes up two-thirds of group revenue.

    The deal with Microsoft includes a commitment by LSEG to spend at least $2.8 billion on the software provider’s cloud-related products and services over the 10-year term of the partnership. This is consistent with existing long-term spending plans, according to the statement.

    Microsoft will buy its LSEG shares from Blackstone and Thomson Reuters

    (TRI)    . The purchase is expected to complete in the first quarter of 2023.

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  • The Fed will raise rates again. But it’s playing with fire | CNN Business

    The Fed will raise rates again. But it’s playing with fire | CNN Business

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    A version of this story first appeared in CNN Business’ Before the Bell newsletter. Not a subscriber? You can sign up right here.


    New York
    CNN
     — 

    The Federal Reserve is all but guaranteed to announce Wednesday that it will once again raise interest rates. But investors are hopeful it will be a smaller increase than the last four hikes.

    Traders are betting on just a half-point increase. Federal funds futures on the Chicago Mercantile Exchange show an 80% probability of a half-point hike.

    The Fed bumped up rates by three-quarters of a percentage point in the past four meetings (June, July, September and November). That followed two smaller rate hikes earlier this year. The central bank’s key short-term interest rate, which sat at zero at the beginning of the year, is now at a range of 3.75% to 4%.

    The hope is that inflation pressures are finally starting to abate enough that the Fed can pivot — Fed-speak for a series of smaller rate hikes -— to avoid crashing the economy into a recession.

    But it may not be that simple. The government reported Friday that a key measure of wholesale prices, the Producer Price Index, rose 7.4% over the past 12 months through November. That was a bit higher than the expected rate of 7.2% but a marked slowdown from the 8% increase through October.

    The more widely watched Consumer Price Index data for November comes out Tuesday, just a day before the Fed announcement. CPI rose 7.7% year-over-year through October.

    As long as inflation remains a problem, the Fed is going to have to tread cautiously.

    “Inflation has probably peaked but it may not come down as quickly as people want it to,” said Kathy Jones, chief fixed income strategist for the Schwab Center for Financial Research.

    Jones still thinks the Fed will raise rates by only half a point this week and may look to hike them just a quarter point in early 2023. But she conceded that the Fed is now sort of “making it up as they go along.”

    The other problem: The Fed’s rate hikes this year have had limited impact on the economy so far. Yes, mortgage rates have spiked and that has severely hurt demand for housing, but the job market remains strong. Wages are growing, and consumers are still spending. That can’t last indefinitely.

    “The cumulative impact of higher rates are just beginning. Hence, the Fed has to step down its pace a bit,” Jones said.

    So investors are going to need to pay attention not to just what the Fed says in its policy statement about rates and what Powell talks about in his press conference. The Fed also will release its latest projections for gross domestic product growth, the job market and consumer prices Wednesday.

    In September, the Fed’s consensus forecasts called for GDP growth of 1.2% in 2023, an unemployment rate of 4.4% and an increase in personal consumption expenditures, the Fed’s preferred measure or inflation, of 2.8%. It seems likely that the Fed will cut its GDP target and raise its expectations for the jobless rate and consumer prices.

    The likelihood of an economic downturn is increasing, and the Fed’s projections may reflect that. But the Fed is not expected to start cutting interest rates until 2024 at the earliest, so it may be too late for the central bank to prevent a recession.

    “A pivot or pause is not a cure-all for this market,” said Keith Lerner, co-chief investment officer at Truist Advisory Services. “Rate cuts may be too late. Recession risks are still relatively high.”

    The US economy isn’t in a recession yet. But are American shoppers tapped out? We’ll get a better sense of that Thursday after the government reports retail sales figures for November.

    Economists are actually forecasting a small dip of 0.1% in retail sales from October. But it’s important to put that number in context. Retail sales surged 1.3% from September and 8.3% over the past 12 months.

    So it’s possible consumers were simply getting a head start on holiday shopping. Inflation has an effect on the numbers too, since retail sales have been impacted (positively) by the fact that people have to spend more money for stuff.

    One market strategist also pointed out that as long as price increases continue to slow, consumers will feel more confident as well.

    “Everybody has been talking about inflation this year. Going forward, it will be more about disinflation in 2023 or 2024,” said Arnaud Cosserat, CEO of Comgest Global Investors.

    What does that mean for investors? Cosserat said people should be looking for quality consumer companies that still have pricing power and can maintain their profit margins. Two stocks that his firm owns that he said fit that bill: Luxury goods maker Hermes

    (HESAF)     and cosmetics giant L’Oreal

    (LRLCF)    .

    Monday: UK monthly GDP; earnings from Oracle

    (ORCL)

    Tuesday: US Consumer Price Index; Germany economic sentiment

    Wednesday: Fed meeting; EU industrial production; UK inflation; earnings from Lennar

    (LEN)     and Trip.com

    (TCOM)

    Thursday: US retail sales; US weekly jobless claims; ECB and Bank of England rate decisions; earnings from Jabil

    (JBL)

    Friday: Eurozone PMI; UK retail sales; earnings from Accenture

    (ACN)    , Darden Restaurants

    (DRI)     and Winnebago

    (WGO)

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  • First Gen Z congressman-elect says he was denied DC apartment over bad credit | CNN Politics

    First Gen Z congressman-elect says he was denied DC apartment over bad credit | CNN Politics

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    CNN
     — 

    The congressman-elect set to become the first member of Generation Z to serve in Congress said Thursday his rental application for an apartment in Washington, DC, was denied because of his “really bad” credit.

    “Just applied to an apartment in DC where I told the guy that my credit was really bad. He said I’d be fine. Got denied, lost the apartment, and the application fee. This ain’t meant for people who don’t already have money,” Maxwell Frost said in a tweet.

    Frost, an Orlando-based community organizer, made history last month when he won election in Florida’s 10th Congressional District at just 25 years old. Frost surprised party leaders with his victory in a crowded primary filled with senior political figures to replace outgoing Rep. Val Demings, before comfortably winning against his Republican opponent in a solidly blue district.

    In a Twitter thread, the congressman-elect expressed frustrations with relocating to the capital, saying that he has bad credit because he “ran up a lot of debt running for Congress for a year and a half” and that he did not make enough money working for Uber to pay for the cost of living.

    Frost said that he quit his full time job during his race’s primary, because “I knew that to win at 25 yrs old, I’d need to be a full time candidate. 7 days a week, 10-12 hours a day. It’s not sustainable or right but it’s what we had to do.”

    “As a candidate, you can’t give yourself a stipend or anything till the very end of your campaign,” he added. “So most of the run, you have no $ coming in unless you work a second job.”

    CNN has reached out to Frost’s office for comment.

    In comments to The Washington Post, Frost declined to identify the building, the size of his debt or credit score, but said the building where his application was rejected was in the city’s Navy Yard neighborhood, roughly a mile from the US Capitol. He said he lost the $50 application fee.

    Frost is not the only incoming member of Congress to have struggled to find housing in DC.

    On Twitter, he referenced New York Rep. Alexandria Ocasio-Cortez, who, in 2018 became the youngest woman elected to Congress at age 29 – and who also had a hard time as an incoming lawmaker finding affordable housing in Washington on her then-salary.

    Frost pointed out that once his congressional salary kicks in, he’ll be fine, adding that “we have to do better” for others.

    “I also recognize that I’m speaking from a point of privilege cause in 2 years time, my credit will be okay because of my new salary that starts next year,” Frost said. “We have to do better for the whole country.”

    Members of the House and Senate earn $174,000 a year, according to the Congressional Research Service, but that salary will not begin until Frost is sworn in on January 3.

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  • Key inflation measure shows price pressures cooled off in November, but remain high | CNN Business

    Key inflation measure shows price pressures cooled off in November, but remain high | CNN Business

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    New York
    CNN
     — 

    Another key inflation measure shows price pressures cooled off but remained stubbornly high in November, despite the Federal Reserve’s monthslong efforts to fight inflation through higher interest rates.

    The Producer Price Index, which measures prices paid for goods and services by businesses before they reach consumers, rose 7.4% in November compared to a year earlier, the Bureau of Labor Statistics reported Friday. That’s down from the revised 8.1% gain reported for October.

    US stocks fell immediately after the report, as economists surveyed by Refinitiv had expected wholesales prices to have risen just 7.2%, annually. The higher-than-expected inflation readings raised concerns about whether the Fed will be able to slow the pace of rate hikes.

    But futures for the Fed funds rate still show a strong likelihood of a half-point increase at the central bank’s policymaking meeting next week, rather than the three-quarter point hike instituted at the last four meetings.

    “Overall inflation is moving in the right direction, though at a slow pace,” said Kurt Rankin, senior economist at PNC. “The Federal Reserve’s tightening plans will remain aggressive until clear, consistent signs of inflation’s demise have been demonstrated.”

    The PPI report generally gets less attention that the corresponding Consumer Price Index, which measures prices paid by US consumers for goods and services. But this is a rare month in which the PPI report came out before the CPI report, which is due out Tuesday.

    That and the Fed meeting scheduled for Tuesday and Wednesday next week is making this inflation report of particular importance to investors.

    “Next Tuesday’s CPI release will be more important than today’s data, but with traders on edge, any indication that prices remain elevated and that inflation is more sticky than currently believed is a negative for markets,” said Chris Zaccarelli, Chief Investment Officer for Independent Advisor Alliance.

    Overall prices rose a seasonally adjusted 0.3% compared to October — the same monthly increase as was reported in both September and October — but were slightly higher than the 0.2% rise forecast by economists.

    Stripping out volatile food and energy prices, core PPI rose 6.2% for the year ending in November, down from the revised 6.8% increase the previous month. Economists had forecast only a 5.9% increase.

    Core PPI posted a 0.4% increase from October, a far bigger rise than the revised 0.1% month-over-month rise in that previous month, and twice as big as the 0.2% rise forecast by economists.

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  • US lawmakers want answers from FTX’s Sam Bankman-Fried | CNN Business

    US lawmakers want answers from FTX’s Sam Bankman-Fried | CNN Business

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    New York
    CNN
     — 

    Lawmakers are demanding that Sam Bankman-Fried, the founder of the failed crypto exchange FTX, appear before the Senate Banking Committee next week over “significant unanswered questions ” surrounding the collapse of his companies.

    In a letter to Bankman-Fried and his lawyer, the committee’s Democratic chairman, Sen. Sherrod Brown of Ohio, and Republican Sen. Pat Toomey of Pennsylvania wrote that the American people need answers about Bankman-Fried’s “misconduct” leading to the collapse of FTX and its sister hedge fund, Alameda, both of which filed for bankruptcy on November 11.

    “You must answer for the failure of both entities that was caused, at least in part, by the clear misuse of client funds and wiped out billions of dollars owed to over a million creditors,” the senators wrote.

    It wasn’t clear whether Bankman-Fried would comply. A representative for his attorney referred to Bankman-Fried’s tweet on Sunday in which he told Rep. Maxine Waters, a California Democrat, that he couldn’t commit to testifying at a hearing scheduled for December 13, one day before the Senate committee’s hearing. “Once I have finished learning and reviewing what happened, I would feel like it was my duty to appear before the committee and explain,” Bankman-Fried wrote. “I’m not sure that will happen by the 13th.”

    Brown and Toomey said in their letter that the committee would “consider further action if he does not comply.”

    “There are still significant unanswered questions about how client funds were misappropriated, how clients were blocked from withdrawing their own money, and how you orchestrated a cover up.”

    Separately, Sens. Elizabeth Warren of Massachusetts and Tina Smith of Minnesota, both Democrats, sent letters to three regulators – the Federal Reserve, the Federal Deposit Insurance Corporation and the Office of the Comptroller of the Currency – asking them to assess the traditional banking system’s exposure to turmoil in the crypto space, a largely unregulated, parallel financial system.

    “Crypto firms may have closer ties to the banking system than previously understood,” Warren and Smith wrote. “Banks’ relationships with crypto firms raise questions about the safety and soundness of our banking system and highlight potential loopholes that crypto firms may try to exploit to gain further access.” 

    Federal prosecutors are investigating the collapse of FTX, an exchange that marketed itself as a beginner-friendly way to get involved in what was, until recently, a booming if highly volatile market for digital assets. FTX also facilitated high-risk leveraged trading that wasn’t allowed inside the United States. (The firm was based in The Bahamas.)

    FTX was one of the biggest crypto exchanges in the world until last month, when it faced a sudden wave of customer withdrawals that it couldn’t cover. One of the key questions prosecutors are likely to probe is whether FTX misappropriated customer funds when it made loans to Alameda.

    Bankman-Fried has denied accusations of misusing customer deposits. “I didn’t knowingly commingle funds,” he told The New York Times last week. “I was frankly surprised by how big Alameda’s position was.”

    Federal prosecutors are also investigating whether Bankman-Fried played a role in the collapse this spring of two interlinked cryptocurrencies, Terra and Luna, according to the New York Times, which cited two people familiar with the matter.

    The Times said the issue is part of a broadening inquiry into the collapse of FTX, and it’s not clear whether prosecutors have determined any wrongdoing by Bankman-Fried.

    In a statement to the paper, Bankman-Fried said he was “not aware of any market manipulation and certainly never intended to engage in market manipulation.”

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  • Why we think we’re in a recession when the data says otherwise | CNN Business

    Why we think we’re in a recession when the data says otherwise | CNN Business

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    A version of this story first appeared in CNN Business’ Before the Bell newsletter. Not a subscriber? You can sign up right here. You can listen to an audio version of the newsletter by clicking the same link.


    New York
    CNN Business
     — 

    It seems like you can’t go anywhere these days without colliding headfirst into another ominous prediction of imminent recession. CEOs, portfolio managers, politicians, news pundits, second cousins and even Cardi B are sounding the alarm: Hear ye! Hear ye! Economic downturn awaits all who dare enter 2023!

    But those predictions contradict the slew of positive economic data we’ve seen: The job market is healthy, wages are growing, Americans are spending and GDP is strong. Business is also good: Companies are largely beating revenue expectations and reporting positive earnings results.

    The Federal Reserve’s regimen of painful interest rate hikes meant to tame persistent inflation could certainly cool the economy — as could events in Eastern Europe and China — but the economy has been able to successfully endure nearly a year of hikes and war in Ukraine with barely a dent.

    It’s possible that recession chatter is just that. Chatter.

    What’s happening: No one would ever accuse investors of shying away from their emotions: Passions run high on trading floors where feelings are often as valid as facts and fear and greed can sometimes run the show. Economists, on the other hand, are a data-dependent, stoic bunch. The US economy is not Wall Street, and market downturns are not recessions — but sometimes they get jumbled together in the public eye and their borders become hazy.

    That appears to be the case: The Fed’s attempts to tamp down sky-high inflation are having an outsized impact on markets — the S&P 500 is down about 18% so far this year — but there has so far been little impact on the US economy as a whole.

    This week, a number of top executives warned of an economic slowdown in 2023. CEOs from Goldman Sachs, JPMorgan, General Motors, Walmart, United and Union Pacific all said they were making plans for less-profitable times ahead. But hidden behind those “CEO PREDICTS RECESSION” headlines lies a lot of uncertainty.

    Rising interest rates and geopolitical chaos are pointing towards storm clouds on the horizon, JPMorgan CEO Jamie Dimon told CNBC on Tuesday: “When you look out forward, those things may well derail the economy and cause this mild-to-hard recession that people are worried about.” When pressed to predict what was coming, he deflected. “It could be a hurricane. We simply don’t know,” he said. What was left unsaid was that sunny days are also a possibility.

    Feedback loop: United Airlines CEO Scott Kirby also told CNBC on Tuesday that “we’re probably going to have a mild recession induced by the Fed.” He then went on to say that demand in his industry is higher than ever and United entered the fourth quarter with profit margins near all-time highs. He doesn’t see any indication of a slowdown on the horizon, either.

    So why does he think a recession is coming? “If I didn’t watch CNBC in the morning, the word ‘recession’ wouldn’t be in my vocabulary,” he said. “You just can’t see it in our data.”

    It’s almost as though Kirby predicted recession was imminent because other prominent voices predicted that recession was imminent. And it’s possible that we’re all stuck in a feedback loop that amplifies unjustified fear.

    Prophecies are often self-fulfilling. If CEOs believe recession is coming, they preemptively batten down the hatches — and that means less spending and more layoffs, which in turn can trigger an economic downturn.

    Goldman CEO David Solomon said Tuesday that the bank may soon terminate staff and exercise caution with its financial resources due to the mounting economic uncertainty. Morgan Stanley will reportedly slash its workforce by about 1,600 people, roughly 2% of the total.

    The upside: Some parts of Wall Street seem to be avoiding the recession fervor. ​​A recent study by Goldman Sachs found that smart money is betting on a soft landing. Money managers have been favoring industrial and commodity stocks that are sensitive to economic downturns. Stocks that act as a buffer during economic downturns like consumer staples and utilities have fallen out of favor at investment funds with assets totaling almost $5 trillion, Goldman strategists found.

    “Current sector tilts are consistent with positioning for a soft landing,” they wrote.

    Oil prices have tumbled to their lowest level since Christmas as worries about the health of the economy weigh on crude, overshadowing concerns about new restrictions imposed on Russian energy, reports my colleague Matt Egan.

    Brent crude, the world benchmark, lost nearly 3% on Thursday to around $77.45 a barrel.

    The oil selloff comes after the West hit Russia with new restrictions that, so far at least, do not appear to be derailing global energy markets.

    The European Union on Monday imposed a ban on seaborne oil imports from Russia, while the West placed a $60 cap on Russian oil. Both moves are designed to hurt Russia’s ability to finance its war in Ukraine, without hurting consumers by causing Moscow to slash oil production.

    “Russia oil is still on the market. As of now, it appears Russia is willing to play ball,” said Robert Yawger, vice president of oil futures at Mizuho Securities.

    The tame reaction from energy markets is a welcome gift for Americans heading on long drives this holiday season, as prices at the gas pump are expected to continue their recent plunge.

    US oil this week hit its lowest level since December 23, 2021, before recovering a little on Thursday to trade up 2% at $73.60 a barrel. That leaves oil down by 43% since briefly topping $130 a barrel in March amid fears about Russia’s invasion of Ukraine.

    The national average price for regular gasoline dipped by three cents to $3.33 a gallon on Thursday, according to AAA. Gas prices have dropped 14 cents in the past week and 47 cents in a month. The national average is a cent lower than a year ago when they averaged $3.34 a gallon.

    Britain is bracing for further disruption from strikes heading into the Christmas period, as ambulance drivers and nurses join rail operators and postal workers in the worst wave of walkouts the country has endured for at least a decade, reports my colleague Hanna Ziady.

    More than 20,000 ambulance workers, including paramedics and call handlers, are expected to strike on December 21 in a dispute over pay, according to statements from labor unions GMB, Unison and Unite.

    The strike will involve just under half of all ambulance drivers in England, Wales and Northern Ireland, although unions have said they will cover life-threatening emergencies during the walkouts. More than 10,000 ambulance workers represented by the GMB Union will strike again on December 28.

    Strikes have swept the United Kingdom this year, as workers grapple with a cost-of-living crisis and stagnating wages. Consumer prices rose by 11.1% in the year to October, a 41-year high. Once inflation is taken into account, average wages fell by the biggest drop on record earlier this year, and were still declining in the June-September period.

    According to The Times newspaper, one million UK workers are set to strike in December and January. Data from the Office for National Statistics shows Britain has already lost at least 741,000 days to strike action this year, putting it on track for its worst year of labor disputes in at least a decade.

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  • When China and Saudi Arabia meet, nothing matters more than oil | CNN Business

    When China and Saudi Arabia meet, nothing matters more than oil | CNN Business

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    Hong Kong
    CNN Business
     — 

    Chinese President Xi Jinping is visiting Saudi Arabia this week for the first time in nearly seven years, during which he is expected to sign billions of dollars of deals with the world’s largest oil exporter and meet leaders from across the Middle East.

    The visit is a sign that China and the Gulf region are deepening their economic relations at a time when US-Saudi ties have crumbled over OPEC’s decision to slash crude oil supply. As Xi wrote in an article published in Saudi media, the trip was intended to strengthen China’s relations with the Arab world.

    China is Saudi Arabia’s biggest trading partner and a source of growing investment. It’s also the world’s biggest buyer of oil. Saudi Arabia is China’s largest trading partner in the Middle East and the top global supplier of crude oil.

    “Energy cooperation will be at the center of all discussions between the Saudi-Chinese leadership,” said Ayham Kamel, head of Eurasia Group’s Middle East and North Africa research team. “There is great recognition of the need to build a framework to ensure that this interdependence is accommodated politically, especially given the scope of energy transition in the West.”

    Governments around the world have committed to drastically cutting carbon emissions over the coming decades. Countries such as Canada and Germany have doubled down on renewable energy investments to expedite their transition to net-zero economies.

    The United States has significantly increased domestic oil and gas output since the 2000s, while accelerating its transition to clean energy.

    The Russian invasion of Ukraine in February has triggered a global energy crisis that has left all countries racing to shore up supplies. And the West has further scrambled the oil markets by slapping an embargo and price cap on the world’s second biggest exporter of crude.

    Energy security has also increasingly become a key priority for China, which is facing significant challenges of its own.

    Last year, bilateral trade between Saudi Arabia and China hit $87.3 billion, up 30% from 2020, according to Chinese customs figures.

    Much of the trade was focused on oil. China’s crude imports from Saudi Arabia stood at $43.9 billion in 2021, accounting for 77% of its total goods imports from the kingdom. That amount also makes up more than a quarter of Saudi Arabia’s total crude exports.

    “Stability of energy supplies, in terms of both prices and quantities, is a key priority for Xi Jinping as the Chinese economy remains heavily reliant on oil and natural gas imports,” said Eswar Prasad, a professor of trade policy at Cornell University.

    The world’s second largest economy is heavily reliant on foreign oil and gas. 72% of its oil consumption was imported last year, according to official figures. 44% of natural gas demand was also from overseas.

    At the 20th Party Congress in October, Xi stressed that ensuring energy security was a key priority. The comments came after a spate of severe power shortages and soaring global energy prices following Russia’s invasion of Ukraine.

    As the West shunned Russian crude in the months that followed the invasion, China took advantage of Moscow’s desperate search for new buyers. Between May and July, Russia was China’s No. 1 oil supplier, until Saudi Arabia regained the top spot in August.

    “Diversity is a key ingredient for China’s long-term energy security because it cannot afford to put all of its eggs in one basket and turn itself into a captive of another power’s energy and geostrategic interests,” said Ahmed Aboudouh, a nonresident fellow with the Middle East Programs at the Atlantic Council, a research institute based in DC.

    “Although Russia is a source of cheaper supply chains, nobody can guarantee, with utmost certainty, that the China and Russia relationship will continue to shore up 50 years from now,” Aboudouh said.

    The Saudi Press Agency cited Saudi energy minister Prince Abdulaziz bin Salman as saying Wednesday that the kingdom would remain China’s “credible and reliable partner in this field.”

    Saudi Arabia also has strong motivations to deepen energy ties with China, according to Gal Luft, co-director of the Institute for the Analysis of Global Security.

    “The Saudis are concerned about losing market share in China in the face of a tsunami of heavily discounted Russian and Iranian crude,” he said. “Their goal is to ensure China remains a loyal customer even when the competitors offer [a] cheaper product.”

    Oil prices have fallen back to where they were before the Ukraine war on fears of a sharp global economic slowdown. The extent to which the Chinese economy can pick up pace next year will have a huge bearing on how bad that slump will be.

    Beyond security of supply, Saudi Arabia could offer Beijing another prize with bigger geopolitical ramifications.

    Riyadh has been in talks with Beijing to price some of its oil sales to China in the Chinese currency, the yuan, rather than the US dollar, according to a Wall Street Journal report. Such a deal could be a boost to Beijing’s ambitions to expand the Chinese currency’s global influence.

    It would also hurt the long-standing agreement between Saudi Arabia and the United States that requires Saudi Arabia to sell its oil only for US dollars and to hold its reserves partly in US Treasuries, all in return for US security guarantees. The “petrodollar system” has helped preserve the dollar’s status as the top global reserve currency and payment medium for oil and other commodities.

    Although Beijing and Riyadh never confirmed the reported talks, analysts said it was logical that the two sides would be exploring the possibility.

    “In the near future, Saudi Arabia could sell some of its oil and receive revenues in Chinese yuan, which makes economic sense as China is the kingdom’s top trading partner,” said Naser Al Tamimi, senior associate research fellow at ISPI, an Italian think tank on international affairs.

    Some believe it’s already happening, but that neither China nor the Saudis want to highlight it publicly.

    “They know too well how sensitive this issue [is] for the United States,” said Luft. “Both parties are overexposed to the US currency and there is no reason for them to continue to conduct their bilateral trade in a third party’s currency, especially when this third party is no longer a friend of either.”

    Xi’s visit could mark another step “in the erosion of the dollar’s status” as reserve currency, he added.

    Nonetheless, there are limits to the growing ties between Riyadh and Beijing.

    “The Biden administration’s approach to the Middle East has concerned the Saudis, and they see a growing relationship with China as a hedge against potential US abandonment and a tool for leverage in negotiations with the United States,” said Jon B. Alterman, director of the Middle East Program at the Center for Strategic and International Studies, a Washington DC-based think tank.

    The Biden administration has reoriented its policy priorities with a focus on countering China. At the same time, it has indicated its intention to downsize its own presence in the Middle East, sparking worries among allies there that the United States may not be as committed to the region as it used to be.

    “All that being said, Chinese-Saudi ties pale in both depth and complexity to Saudi-US ties,” Alterman said. “The Chinese remain a novelty to most Saudis, and they are additive. The United States is foundational to how Saudis see the world, and how they have seen it for 75 years.”

    Despite the possibility of shifting to yuan transactions, it’s too early to say Saudi Arabia would ditch the dollar in pricing its oil sales, analysts said.

    Eurasia Group’s Kamal believes it’s “highly unlikely” that Saudi Arabia would take such a step, unless there is an implosion on the US-Saudi relationship.

    “In essence there could be discussion on pricing of barrels to China in yuan, but this would be limited in size and probably only correspond to bilateral trade volumes,” he said.

    Prasad from Cornell University said countries like China, Russia, and Saudi Arabia are all eager to reduce their dependence on the dollar for oil contracts and other cross-border transactions.

    “However, in the absence of serious alternatives and with few international investors willing to place their trust in these countries’ financial markets and their governments, the dollar’s dominant role in global finance is hardly under serious threat,” he said.

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