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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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    New York
    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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  • Washington moved fast to crack down on TikTok but has made little progress with Big Tech | CNN Business

    Washington moved fast to crack down on TikTok but has made little progress with Big Tech | CNN Business

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    CNN
     — 

    In a matter of days, the United States is expected to ban federal employees from downloading or using TikTok on government-issued phones or tablets, marking the country’s broadest crackdown on the short-form video app to date.

    The looming ban is the result of a bill that’s moved through Congress in the final days of the year with lightning-fast speed and bipartisan support. It’s gone from being just another proposal from a Republican lawmaker to being unanimously adopted in the Senate, backed by House Speaker Nancy Pelosi and added to a massive year-end congressional spending package. The proposed ban has support from the White House, which already blocks TikTok on its devices.

    The TikTok measure, while limited in its impact on the app’s wider US user base, highlights how quickly lawmakers can act when a combination of national security fears, bipartisan anti-China suspicions, and more targeted proposals cause the legislative stars to align.

    But in fast-tracking the bill, Congress can’t help but draw attention to its notable lack of progress on regulating American tech giants more broadly — despite years of reports, hearings and proposed legislation.

    The stark difference between the two illustrates how simple narratives, well-funded lobbying and genuinely thorny policy questions can make or break a bill. It also hints at how a select few Big Tech companies continue to maintain their dominance in the market and their centrality in the lives of countless US households.

    The tech industry’s largest players have faced a kitchen sink of allegations in recent years. From knee-capping nascent rivals; to harming children and mental health; to undermining democracy; to spreading hate speech and harassment; to censoring conservative viewpoints; to bankrupting local news outlets; Big Tech has been made out as one of Washington’s largest villains.

    But over the course of this year, TikTok has once again emerged as an even bigger target, two years after the Trump administration threatened to ban the application in the United States amid rising tensions with China. And one reason why is the relatively straightforward case that US policymakers have put forward for banning the app.

    The central allegation against TikTok is that the company poses a potential national security risk. US officials have worried that the Chinese government could pressure TikTok or its parent company, ByteDance, into handing over the personal information of its US users, which could then be used for Chinese intelligence operations or the spreading of Chinese-backed disinformation.

    There’s no evidence yet that that has actually happened. Still, policymakers and security experts have said China’s national security laws make it a possibility — identifying a kernel of risk that fits into a broader anti-China narrative linked to issues including trade, human rights and authoritarianism. Those concerns were renewed after a report this year suggested US user data had been repeatedly accessed by China-based employees. TikTok has disputed the report.

    In recent weeks, numerous states have leapt on the bandwagon, further increasing the pressure on Congress to act. More than a dozen states have now banned TikTok on state government devices, from Maryland to South Dakota.

    TikTok has insisted it maintains robust security controls on its data and that it prioritizes user privacy. It has also taken steps in recent months to wall off US user data from other parts of its business, both technologically and organizationally. But earlier this year, it acknowledged that China-based employees can access TikTok user data and declined to commit to cutting off those data flows in general.

    Since 2020, TikTok has been negotiating with the US government on a possible deal to keep the app running in the United States. But those talks have so far proven fruitless, giving an opening to policymakers in Congress and at the state level to seek restrictions on TikTok.

    “We’re disappointed that Congress has moved to ban TikTok on government devices—a political gesture that will do nothing to advance national security interests—rather than encouraging the Administration to conclude its national security review,” said Brooke Oberwetter, a TikTok spokesperson.

    TikTok’s head of public policy, Michael Beckerman, has called the ban affecting government devices a “political approach that doesn’t have any real impact on national security.”

    “We think a lot of the concerns are maybe overblown,” Beckerman told CNN’s Jake Tapper on Tuesday, “but we do think these problems can be solved” through the ongoing government negotiations.

    TikTok has significantly expanded its Washington presence in recent years.

    In 2019, ByteDance had 17 lobbyists and spent $270,000 on lobbying, according to public records gathered by the transparency group OpenSecrets. By the end of last year, its lobbyist count had more than doubled and the company had spent nearly $5.2 million on lobbying.

    That pales in comparison, however, to the full force of Big Tech’s lobbying machine, which has become one of the largest in Washington.

    Meta was the biggest internet industry lobbying giant last year, spending upward of $20 million. Next was Amazon at $19 million, then Google at almost $10 million. Combined, that’s roughly $49 million in lobbying — almost 10 times what was spent by TikTok’s parent, which nevertheless clocked in at number four on the list.

    Tech giants have repeatedly deployed their CEOs to Capitol Hill, who in some cases have made arguments citing the threat of Chinese competition. They’ve also leaned on help from trade associations they’re members of and relied on advertising campaigns to make the case against some of the biggest legislative threats to their business.

    One of those bills, the American Innovation and Choice Online Act (AICOA), would erect new barriers between tech platforms’ various lines of business, preventing Amazon, for example, from being able to compete with third-party sellers on its own marketplace. That legislation was a product of a 16-month House antitrust investigation into the tech industry that concluded, in 2020, that many of the biggest tech companies were effectively monopolies.

    For much of this year, supporters of AICOA insisted the legislation had enough votes to pass, and they called on Senate Majority Leader Chuck Schumer to bring it to a floor vote. But between intense tech lobbying and doubts about whether the bill did in fact have the votes, it never received the floor time its supporters wanted. The same fate awaited other tech-focused antitrust bills, such as one that would have forced Apple to allow users to download iPhone apps from any website, not just its own app store.

    For a brief moment this month, lawmakers seemed poised to pass a bill that could force Meta, Google and other platforms to pay news organizations a larger share of ad revenues. But the legislation stumbled after Meta warned it could have to drop news content from its platforms altogether if the bill passed.

    Time and again, Silicon Valley’s biggest players have maneuvered expertly in Washington, defending their turf from lawmakers keen to knock them down a peg.

    But it isn’t just lobbying that has made some of these bills difficult to pass. It’s much more challenging to impose sweeping regulations on an entire industry than it is to pass a bill governing how the US government handles its own technology.

    The TikTok bill banning the app from government devices is seen as having a limited potential impact on the company’s wider US user base, which skews younger. A ban on public employees’ use of the app likely wouldn’t reach the many teens or other young people with whom the app has grown increasingly popular.

    With at least 100 million US users as of 2020, and likely more by now, TikTok has become almost “too big” to ban outright, some analysts have said.

    Politically speaking, in light of TikTok’s deep foothold among US consumers, a ban affecting government devices also represents low-hanging fruit for policymakers who enjoy clear legal authority over official devices and don’t have to worry about triggering a consumer backlash that a broader ban might invite.

    By contrast, decisions about the rules government might impose on tech platforms have called into question how those regulations may affect different parts of the economy, from small businesses to individual users to the future of the internet itself.

    In some cases, as with proposals to revise the tech industry’s decades-old content moderation liability shield, Section 230 of the Communications Decency Act, legislation may raise First Amendment issues as well as partisan divisions. Democrats have said Section 230 should be changed because it gives social media companies a pass to leave some hate speech and offensive content unaddressed, while Republicans have called for changes to the law so that platforms can be pressured to remove less content.

    The cross-cutting politics and the technical challenges of regulating an entire sector of technology, not to mention the potential consequences for the economy of screwing it up, have combined to make it genuinely difficult for lawmakers to reach an accord.

    It’s no wonder, then, that when Congress sees an easier victory within its grasp, lawmakers take it.

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  • Twitter hit by legal complaints from 100 former employees following Musk’s layoffs | CNN Business

    Twitter hit by legal complaints from 100 former employees following Musk’s layoffs | CNN Business

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    New York
    CNN
     — 

    Twitter has been hit with allegations from 100 former employees affected by mass layoffs at the company, including that it unfairly laid off more women than men, terminated employees who were actively on medical or parental leave and reneged on promises related to severance pay.

    The allegations were included as part of the former employees’ demands for arbitration against the company, according to a statement on Tuesday by attorney Shannon Liss-Riordan.

    Liss-Riordan is the same attorney who has brought four proposed class action lawsuits against Twitter by former employees affected by Elon Musk’s takeover. The arbitration demands are meant to help workers who can’t participate in that litigation because of contracts they signed with the company.

    Claims in the arbitration demands mirror those in the lawsuits. Some also claim that Musk placed “unreasonable demands” on Twitter’s workforce in an effort to shrink its staff, according to the statement.

    “The conduct of Twitter since Musk took over is incredibly egregious, and we will pursue every avenue to protect workers and extract from Twitter the compensation that is due to them,” Liss-Riordan said in the statement. She added that her firm has heard from hundreds of former Twitter employees and has filed only the “first wave” of arbitration demands.

    “We are ready to fight them one by one, on behalf of potentially thousands of employees if that becomes necessary,” she said.

    Liss-Riordan previously brought three proposed class action suits on behalf of female employees, disabled employees and contractors who were laid off. Another suit was filed by a group of former employees who accuse Twitter of breach of contract because it allegedly failed to follow through on promises to allow remote work and provide consistent severance benefits after the acquisition.

    Twitter, which recently laid off much of its communications department, did not immediately respond to a request for comment regarding the arbitration demands. Twitter has denied the breach of contract allegations in the lawsuit brought by former employees about remote work and severance, and it has not responded to the claims in the three other suits.

    Liss-Riordan has also filed three complaints against Twitter with the National Labor Relations Board on behalf of employees affected by the layoffs.

    The mounting claims by former employees come after Twitter terminated about half of its staff in a mass layoff last month shortly after Musk’s takeover. Musk later pushed out hundreds of additional employees, including by requiring them to agree to an ultimatum to work “extremely hardcore” or leave the company.

    The former employees suing Twitter scored an early win last week when a judge ruled in favor of their motion ordering the company to alert all laid-off employees of the pending lawsuits before requiring them to sign severance agreements waiving their rights to litigation.

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  • After Twitter users voted to oust Elon Musk as CEO, he wants to change how polls work | CNN Business

    After Twitter users voted to oust Elon Musk as CEO, he wants to change how polls work | CNN Business

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    New York
    CNN
     — 

    When Elon Musk polled Twitter users about whether to reinstate former President Donald Trump’s account, he quickly followed through on the majority’s wish to do so. “Vox Populi, Vox Dei,” he pronounced via tweet, Latin for “the voice of the people is the voice of God.”

    Likewise, when Twitter users voted on another of his polls to provide “general amnesty to suspended accounts,” he went ahead and did it. He also heeded user votes in a poll to restore the accounts of tech journalists that he had suspended on Friday.

    But since a clear majority of Twitter users voted for Musk to step down as Twitter CEO in another poll on Sunday, Musk has remained conspicuously (and uncharacteristically) silent. Now, he appears to think the problem isn’t him, but who gets to vote in the polls.

    In a tweet Monday, roughly 12 hours after his CEO poll ended, Musk suggested that he would change how polling on Twitter works so that only those who pay for Twitter’s updated subscription service can vote. After one Twitter user said, “Blue subscribers should be the only ones that can vote in policy related polls,” Musk responded, “Good point. Twitter will make that change.”

    While it’s unclear how he would restrict voting to only those who pay for the company’s subscription service, such a change could dramatically reduce the number of Twitter users who could vote in polls. It would also skew those who can vote to the users who are willing to pay up for Twitter Blue, which includes the controversial paid verification feature Musk pushed to introduce. Musk’s Monday tweet immediately prompted comparisons to poll taxes.

    The incident is yet another example of the inconsistencies and chaos in Musk’s management of Twitter since acquiring the company in October. After coming under fire this weekend for a controversial new policy restricting users from posting links to rival platforms, Musk pledged to effectively crowdsource “major policy changes” at Twitter by polling users about them and soon launched the poll about whether he should remain as CEO.

    Now, Musk appears to be ignoring the results of the CEO poll and looking to overhaul how polls work without first polling users about what is arguably another “major policy change.”

    Musk’s poll, and his limited reaction to it so far, could add to the growing uncertainty about his commitment to remaining Twitter’s CEO. Musk has faced criticism from Twitter users and advertisers for his decision to eliminate much of the company’s staff, restore the accounts of a number of incendiary users, and the whiplash from seemingly rushing out new policies and features only to pull them later. The Tesla CEO is also facing pressure from the carmaker’s shareholders to find a replacement at Twitter, after Tesla’s stock has declined significantly this year.

    Musk has not directly commented on the user vote that he should step down from running Twitter. Musk said last month that he expects to “reduce my time at Twitter, and find somebody else to run Twitter, over time.” But in a tweet Sunday he said: “No one wants the job who can actually keep Twitter alive. There is no successor.”

    CNBC reported Tuesday that Musk is “actively searching” for a new Twitter CEO, citing anonymous sources. Twitter, which recently cut most of its public relations team, did not immediately respond to a request for comment. Musk responded to the story on Twitter with two crying laughing emojis.

    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.

    A range of other wild card candidates have publicly offered to take on the job, including former T-Mobile CEO John Legere and rapper Snoop Dogg.

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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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  • Elon Musk says he will step down as Twitter CEO if voted out by a poll he tweeted | CNN Business

    Elon Musk says he will step down as Twitter CEO if voted out by a poll he tweeted | CNN Business

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    New York
    CNN
     — 

    Twitter’s mercurial new boss may be out the door after less than two months on the job, if results of a Twitter poll go against him.

    Elon Musk tweeted a poll Sunday evening asking people to vote on whether he should step down as Twitter’s CEO. Musk said he would abide by the poll’s results.

    As of Sunday evening, “Yes” was winning by a margin of 58% to 42%.

    In several follow-up tweets, Musk suggested that he was serious about leaving and made a vague threat about Twitter’s future if he is voted out.

    “As the saying goes, be careful what you wish, as you might get it,” Musk tweeted.

    Since buying Twitter for $44 billion and taking over as CEO in late October, Musk has journeyed from one controversy to the next.

    A brief and incomplete recap:

    – Musk immediately laid off several top executives and laid off about half of Twitter’s staff.
    – He then gave an ultimatum to the remaining staff that they need to do “extremely hardcore” work or leave — and another thousand or so employees headed out the door.
    – Musk has fired employees who openly disagreed with him and publicly named and shamed former employees who were engaged in difficult moderation discussions as part of the ongoing “Twitter Files.”
    – Musk has also started, stopped and started again a revised verification system that costs $8 for a blue check mark and initially led to widespread account spoofing.
    – Musk has frequently changed Twitter’s rules by executive fiat and with no notice, banning people who violate the new rules — including several tech journalists and an account that tracked his jet. Musk had once tweeted that allowing the ElonJet account to remain on Twitter demonstrated his commitment to free speech on the platform.
    – He has waded deeply into the culture wars, allowing some of the platform’s permanently banned accounts back on, including former President Donald Trump and many people who had been engaged in misinformation, conspiracy theories or hate speech.

    Meanwhile, brands have been removing their advertising from Twitter left and right. Musk has frequently stated that Twitter’s finances are dire.

    Replying to a tweet Sunday, in which MIT artificial intelligence researcher Lex Fridman said he would take the CEO job, Musk hinted he hasn’t been completely happy with his new gig.

    “You must like pain a lot,” Musk tweeted, noting the company “has been in the fast lane to bankruptcy since May.”

    Yet Musk denied that he has a new CEO in mind.

    “No one wants the job who can actually keep Twitter alive. There is no successor,” Musk tweeted. “The question is not finding a CEO, the question is finding a CEO who can keep Twitter alive.”

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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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  • US lawmakers set to grill Sam Bankman-Fried on the collapse of FTX | CNN Business

    US lawmakers set to grill Sam Bankman-Fried on the collapse of FTX | CNN Business

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    New York
    CNN
     — 

    With his vast crypto empire in ruins, Sam Bankman-Fried is preparing to be grilled by US lawmakers who are demanding answers about how his digital asset exchange, FTX, came unraveled, leaving at least a million customers unable to access their funds.

    Bankman-Fried tweetedf Friday that he was willing to appear Tuesday before the House Financial Services Committee, which is investigating the crypto-industry titan’s spectacular collapse last month.

    The 30-year-old entrepreneur, who resigned as CEO at the same time FTX and dozens of affiliated companies filed for bankruptcy, said there would be a “limit to what I will be able to say, and I won’t be as helpful as I’d like,” in response to Rep. Maxine Waters, the Democratic chairwoman of the committee. “But as the committee still thinks it would be useful, I am willing to testify on the 13th.”

    Also testifying Tuesday will be John Ray, a veteran restructuring expert who’s been tasked with shepherding FTX through bankruptcy as its new chief executive.

    “The scope of the investigation underway is enormous,” Ray said in prepared remarks released Monday.

    While the probe isn’t completed, Ray said, FTX’s collapse appears to stem from the concentration of power “in the hands of a very small group of grossly inexperienced and unsophisticated individuals” who failed to implement virtually any corporate controls.

    Ray also states as fact that “customer assets from FTX.com were commingled with assets from the Alameda trading platform.” That’s a key issue for investigators, as FTX and Alameda were, on paper, separate entities.

    Bankman-Fried has publicly stated that he never “knowingly” commingled funds.

    A representative for Bankman-Fried’s lawyer said the FTX founder would testify remotely from the Bahamas, where the company was based.

    The representative declined to comment on whether Bankman-Fried would also testify before a Senate Banking Committee hearing on Wednesday.

    Tuesday’s hearing is set to begin at 10 a.m. ET.

    Speaking to Congress is familiar terrain for the crypto celebrity-turned-pariah, who had cultivated a reputation as the industry Good Guy in Washington. He and other FTX executives made lavish political and charitable donations while advocating for legislation that would clarify the regulatory bounds of the digital asset space.

    In FTX’s heyday, Bankman-Fried regularly appeared on congressional panels, charming lawmakers and pushing for light-touch regulation of the nascent industry. Bankman-Fried himself gave roughly $40 million to campaigns and political action committees, largely backing Democrats, during the 2022 midterm election cycle, according to Federal Election Commission records.

    This time around, though, he’s unlikely to get the same warm welcome, as lawmakers and lobbying groups who’d aligned with FTX are scrambling to distance themselves from one of the most shocking corporate implosions in history.

    In the weeks since his companies collapsed, multiple investigations, including a criminal probe into FTX and its sister hedge fund, Alameda, have begun that could lead to charges against Bankman-Fried, legal experts say. At the same time, SBF has been regularly tweeting and granting interviews with the media, casting himself as a somewhat bumbling but ultimately well-meaning chief executive who got out over his skis.

    “I didn’t knowingly commit fraud,” he told the BBC over the weekend. “I didn’t want any of this to happen. I was certainly not nearly as competent as I thought I was.”

    That sentiment echoes statements he previously made at the New York Times’ DealBook Summit and in an interview with ABC’s “Good Morning America.”

    His testimony to Congress, however, carries additional legal weight.

    “SBF is putting himself at significant risk by testifying before Congress,” said Howard Fischer, a former Securities and Exchange Commission lawyer. “”Anything SBF says that is contradicted by either documentary evidence or the statements of other people will be grounds to cast doubt on his credibility.

    Further, Fischer says, if his testimony before Congress is “substantially impugned” by other evidence, Bankman-Fried “might also face charges relating to that.”

    Despite SBF’s media tour, he’s largely evaded specifics around how the wheels came off FTX, once privately valued at more than $30 billion. In early November, when a prominent investor publicly announced he would be liquidating his holdings of FTX, it sparked a panic that amounted to a run on the bank. FTX faced a liquidity crunch so severe it was forced to file for bankruptcy less than a week later.

    In a tweet last week, Bankman-Fried said he would “shed what light I can,” including on what he thinks led to the crash and his own failings as CEO.

    Key questions that lawmakers and prosecutors are expected to focus on relate to the potential misuse of customer funds.

    “The questions are all going to be about co-mingling of assets,” said David Maria, head of litigation and regulatory affairs at the crypto exchange Bittrex … “I think there’s gonna be a lot of, ‘I don’t remember, I don’t know, I don’t have access to those files.’ “

    Ray, the new CEO who is scheduled to testify ahead of Bankman-Fried, may be able to offer more substantive insights into lawmakers’ questions given his access to the company’s financial records and unique insight into how it the business was run, Maria said.

    One of the key questions about FTX stems from a Reuters report last month that says Bankman-Fried built a “backdoor” into FTX’s accounting system, allowing him to alter the company’s financial records without tripping accounting red flags, as That Reuters report said Bankman-Fried used this “backdoor” to transfer $10 billion in FTX customer funds to Alameda, the hedge fund, and at least $1 billion is now missing.

    Bankman-Fried has denied knowledge of any such backdoor. “I don’t even know how to code,” he told cryptocurrency vlogger Tiffany Fong in an interview last month.

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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 mass unbanning of suspended Twitter users is underway | CNN Business

    The mass unbanning of suspended Twitter users is underway | CNN Business

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    New York
    CNN Business
     — 

    Thousands of previously banned Twitter users, including members of the far-right and users sharing blatant misinformation, have begun to have their accounts restored to the platform, according to an independent analysis.

    The mass restoration of accounts comes after new owner Elon Musk said late last month that he would offer “general amnesty” to many who had been removed from the platform. In following through on that commitment, however, Musk risks further alienating other users and advertisers, and exacerbating concerns among watchdog groups about the rise of hate speech on the platform under his ownership (a fact Musk has attempted to refute).

    Among those recently unbanned are a range of large and small accounts, including users promoting NFTs and cryptocurrencies, users tweeting about sports, many users tweeting in languages other than English, as well as both users that appear to be left-leaning and pro-Trump, according to observations by CNN.

    But the restored accounts also include far-right figures such as Andrew Anglin, a self-professed white supremacist who founded the neo-Nazi website The Daily Stormer, and Patrick Casey, who is associated with the far-right group “America First” and was subpoenaed by the House January 6 committee for his involvement in the Capitol riot.

    A number of accounts restored in recent days, including many with thousands of followers, used their first tweets in years to thank Musk for allowing them back on the platform, according to a review of their posts by CNN. Some also quickly began sharing conspiracy theories about issues such as Covid-19 and the 2020 US Presidential election.

    A data set of many of the unbanned accounts compiled by researcher and software developer Travis Brown, who worked for Twitter for a year in 2014 and last year began a project tracking hate speech on the platform, shows dozens of users who have had their bans reversed are using QAnon-related phrases or hashtags in their account bios. The dataset was built using Twitter’s API and a tool Brown had originally built to observe and track high-profile Twitter suspensions.

    The accounts that have been restored includes “a really strange mix of accounts” that includes apparent far-right extremists and QAnon adherents, but also, for example, a Miley Cyrus fan account that has been repeatedly suspended and appears aimed mostly at growing a large following, Brown said.

    But Brown added that other accounts he has observed as part of his hate speech tracking project have yet to be reinstated, raising questions about the criteria Twitter is using to restore previously banned accounts, although it’s possible Musk’s reinstatement process will take time. Many users on Twitter have also raised questions about Musk’s move last week to again suspend Kanye West, who has made numerous antisemitic comments, while restoring the accounts of other white supremacists and Neo-Nazis. In another instance, Musk tweeted that he would not restore Alex Jones’s account because of a personal preference.

    “I’ve found it really hard … to generalize about how and why certain accounts are allowed back,” Brown said.

    Twitter, which has made substantial cuts to its public relations team, did not immediately respond to a request for comment and questions on the number of previously banned accounts restored or its process for doing so.

    Musk said last month that he would begin restoring most previously banned accounts to the platform, after having polled his Twitter followers about whether to offer “general amnesty to suspended accounts, provided that they have not broken the law or engaged in egregious spam.” The poll, which garnered more than three million votes, finished with more than 72% voting in favor of the proposition. It is not clear how Musk and Twitter’s remaining staff are sorting out which accounts were banned for spam or illegal activity.

    The new Twitter owner had already begun to restore the accounts of some prominent, controversial users that had previously been banned or suspended from the platform, most notably former President Donald Trump, as well as conservative Canadian podcaster and all-beef diet promoter Jordan Peterson and the right-leaning satire website Babylon Bee.

    Some of the accounts restored in the latest wave have already raised concerns from civil rights groups. The Anti-Defamation League on Monday described as “deeply disturbing” Twitter’s decision to allow Anglin back on the platform.

    “The return of extremists to the platform has the potential to supercharge the spread of extremist content and disinformation, and this in turn could lead to the increased harassment of users,” Yael Eisenstat, vice president of ADL’s Center for Technology and Society said in a statement to CNN. “Musk’s actions to date show that he is not committed to a transparent process that incorporates the best practices we have learned from civil society groups.”

    Before taking over Twitter, Musk said he disagreed with the platform’s policy of permanent bans, which were typically doled out only after a user had received a number of “strikes” for repeatedly violating Twitter’s policies, including those against Covid-19 or civic integrity misinformation.

    Shortly after acquiring the company, Musk said he would create a “content moderation council” prior to making major changes, but there is no evidence such a group was ever formed or involved in the decisions to bring back violative accounts. Instead, Musk has appeared to make the decisions himself.

    Musk and Twitter have repeatedly stressed that the platform’s rules have not changed, despite restoring accounts that had repeatedly violated its rules and ceasing enforcement of the company’s policy prohibiting Covid-19 misinformation. In a blog post last month, Twitter said that its trust and safety team “remains strong and well-resourced, and automated detection plays an increasingly important role in eliminating abuse.” Content that violates Twitter’s rules, it added, will be demoted on the platform.

    Yoel Roth, Twitter’s former head of trust and safety who left the company following Musk’s takeover, criticized the billionaire Twitter owner’s top-down approach to content decisions in an interview with journalist Kara Swisher last month, suggesting that the platform had started to be run by “dictatorial edict rather than by a policy.” He also raised concerns about layoffs that hit Twitter’s safety teams.

    Restoring additional, previously banned accounts could exacerbate several big issues Twitter is currently facing. It could further alienate Twitter’s advertisers, many of whom have fled the platform in the wake of the chaos since Musk took over and out of fear that their ads could end up running alongside objectionable content. Musk has said the departure of key Twitter advertisers in recent weeks has led to a “massive drop in revenue” for the company.

    Ads for major brands, including Kia, Amazon, Snap and Uber, have already begun to appear alongside tweets from reinstated accounts such as Anglin’s, according to reporting from the Washington Post and observations by CNN. (Kia told CNN it “continues to monitor the evolving Twitter environment and work closely with their teams on advertisement placement and usage.” The other brands did not immediately respond to CNN’s requests for comment.)

    It could also draw more attention from Apple, which Musk previously tweeted had threatened to remove Twitter from its app store. Musk later said that the concern had been resolved following a meeting with Tim Cook, but Apple has previously shown a willingness to remove social media platforms from its app store over concerns about their ability to moderate hate speech and other potentially harmful content. Getting booted from Apple’s app store would be detrimental to Twitter’s business by making it harder for the iPhone maker’s more than one billion global customers to access the app, and difficult if not impossible for iPhone users to receive app updates.

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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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