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  • Plane crash into multi-family home in New Hampshire kills 2 people on board, officials say | CNN

    Plane crash into multi-family home in New Hampshire kills 2 people on board, officials say | CNN

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    CNN
     — 

    A single-engine airplane crashed into a home Friday evening near an airport in New Hampshire, killing both people on board, officials said.

    Although parts of the multifamily home where eight people lived erupted in flames following the crash, no fatalities were reported on the ground.

    “There were no injuries at the multifamily building. Unfortunately, those on the plane have perished,” Keene officials said, describing the crash as an accident and saying emergency personnel was responding to the scene.

    The men who died were identified as Lawrence Marchiony, 41, of Baldwinville, Massachusetts, and Marvin David Dezendorf, 60, of Townshend, Vermont, according to the Keene Police Department.

    The Beechcraft Sierra aircraft crashed north of Keene Dillant-Hopkins Airport just before 7 p.m. Friday, the Federal Aviation Administration told CNN.

    “Last night at 6:48 p.m., the call came into 911, so our first responders responded to the call. It was a plane crash, a small plane that hit a multifamily building and started a subsequent fire that was declared out at 8:47 p.m.,” Mayor George Hansel said during a Saturday news conference.

    “The crash occurred right after departure from the Dillant-Hopkins Airport shortly after departure,” Hansel added.

    The mayor said the eight people who resided in the home were displaced and the Red Cross is helping to relocate them.

    The FAA and the National Transportation Safety Board are investigating the crash. The transportation safety board will oversee the investigation and release updates.

    “This incident is still under investigation, further information regarding the accident will be made public when it is released by the NTSB,” the City of Keene said in a news release posted to Facebook Monday.

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  • The Fed isn’t about to back down from its inflation fight | CNN Business

    The Fed isn’t about to back down from its inflation fight | 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.


    London
    CNN Business
     — 

    Twelve days from now, the Federal Reserve will meet again, and expectations for the central bank’s next moves are firming up. The consensus among investors: Persistently hot inflation means the Fed will need to continue with its string of aggressive interest rate hikes, which is unprecedented in the modern era.

    What’s happening: Markets see a 99% probability that rates will rise by another three-quarters of a percentage point, reaching a range of 3.75% to 4%.

    A hike of that magnitude is now “a given,” Quincy Krosby, chief global strategist for LPL Financial, told clients on Wednesday. “Concern is now focused on December, and whether the Fed is prepared to transition to smaller rate hikes.”

    That’s up from a 60% probability one month ago. So what changed?

    Inflation, mainly. The US Consumer Price Index rose 8.2% in the year to September after rising 8.3% annually in August. While CPI peaked at 9.1% in June, that reading was still uncomfortably elevated and higher than economists had expected.

    The 6.6% annual uptick in shelter costs was of particular concern. It takes longer for housing expenses to come back down than some other categories, since renters tend to sign leases for 12-month periods. The monthly rise in core services costs (excluding energy) was the largest gain in three decades.

    The data underscored the need for the Federal Reserve to stay tough — while a strong jobs report for September will deliver confidence the central bank can do so without causing undue harm to the US economy.

    Fed officials have said as much. In an interview with Reuters on Friday, St. Louis Fed President James Bullard said inflation had become “pernicious,” which means that “frontloading” larger rate hikes is logical.

    The market impact: The S&P 500 kicked off the week with a 3.8% rally before dropping 0.7% on Wednesday. It’s still plodding along in a bear market, about 23% below its January peak. So long as the Fed signals its intention to keep the pressure on, boosting the odds of a US recession, volatility is expected to persist.

    Even relatively solid corporate earnings may not be sufficient to change the direction.

    “So far, the results are decent, but they’re being compared to consensus estimates that have been persistently lowered since early summer,” noted strategists at Charles Schwab.

    Tesla

    (TSLA)     posted a solid quarter of earnings and record revenue, but now says it will likely fall short of its target for a 50% growth in the number of cars it sells this year.

    Quick rewind: As recently as July, the company said it was still aiming for a target of 50% growth from the 936,000 cars it delivered in 2021.

    But with two quarters of disappointing deliveries caused by supply chain issues and Covid-related shutdowns in China, that goal has looked increasingly out of reach, my CNN Business colleague Chris Isidore reports.

    CEO Elon Musk said that the electric carmaker is not struggling with demand.

    “We expect to sell every car that we make, for as far in the future as we can see,” he said on a call with analysts on Wednesday.

    Instead, the company said it would “just” miss its target due to complications with delivery of cars from its factories to customers at the end of the year.

    Shares are down 5% in premarket trading on Thursday. They’ve dropped 37% year-to-date, compared to a 22.5% fall in the S&P 500.

    “This quarter was not roses and rainbows,” said Dan Ives, tech analyst for Wedbush Securities. “Competition is increasing. There are some logistical challenges.”

    America’s business leaders are becoming more pessimistic. The Conference Board recently reported a slide in its CEO confidence index, which it said had hit levels not seen “since the depths of the Great Recession.”

    Of the 136 CEOs who were surveyed, 98% said they were preparing for a US recession over the next 12 to 18 months — and 99% said they were bracing for a recession in Europe.

    Notably, the business community is not being quiet about its concerns.

    Amazon founder Jeff Bezos tweeted Tuesday that “the probabilities in this economy tell you to batten down the hatches.”

    He was responding to a clip of an interview with Goldman Sachs CEO David Solomon, who told CNBC that “it’s a time to be cautious.”

    “You have to expect that there’s more volatility on the horizon now,” Solomon said. “That doesn’t mean for sure that we have a really difficult economic scenario. But on the distribution of outcomes, there’s a good chance that we have a recession in the United States.”

    American Airlines

    (AAL)    , AT&T

    (T)    , Dow, Nucor

    (NUE)     and Quest Diagnostics

    (DGX)     report results before US markets open. CSX

    (CSX)    , Snap

    (SNAP)     and Whirlpool

    (WHR)     follow after the close.

    Also today:

    • Initial US jobless claims for last week post at 8:30 a.m. ET.
    • Existing home sales for September follow at 10 a.m. ET.

    Coming tomorrow: Earnings from American Express and Verizon.

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  • FCC could ban all new purchases of Huawei and ZTE telecom gear | CNN Business

    FCC could ban all new purchases of Huawei and ZTE telecom gear | CNN Business

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    Washington
    CNN Business
     — 

    The US government is poised to ban all future telecom equipment produced by Huawei and ZTE, two Chinese technology giants, from the American market in an expanding crackdown against perceived national security risks from China, according to a person familiar with the matter.

    The restrictions, outlined in a draft order by the Federal Communications Commission, would also target video surveillance gear by three other Chinese firms: Hytera, Hikvision and Dahua, the person said, adding that the ban would only apply to new products by the companies that have not already received FCC equipment authorization.

    A vote to approve the measure is expected before mid-November, the person added. The draft order was first reported by Axios.

    Asked for comment, an FCC official confirmed the proposal’s existence and told CNN that, if approved, it would update agency rules surrounding its list of providers deemed to be unacceptable national security risks — and fulfill the agency’s congressional mandate under the Secure Equipment Act of 2021.

    That bipartisan legislation, signed by President Joe Biden last November, required the FCC to develop rules within one year to stop reviewing or approving devices made by the covered companies.

    All electronics that can emit radio frequencies must undergo an FCC authorization process before they can be sold in the United States. The long-established process is intended to keep devices out of the US market that may produce harmful signal interference. But under the draft order the FCC would, for the first time, apply a national security interest to the equipment authorization process, the person said.

    “The FCC remains committed to protecting our national security by ensuring that untrustworthy communications equipment is not authorized for use within our borders, and we are continuing that work here,” FCC Chairwoman Jessica Rosenworcel said in a statement provided to CNN Business on Thursday.

    In a separate statement, Republican commissioner Brendan Carr said: “The FCC has determined that Huawei, ZTE, and similar gear pose an unacceptable risk to our national security. That is why I have urged the FCC to stop reviewing and approving that equipment for use in the U.S. I look forward to achieving that result.”

    Spokespeople for the companies didn’t immediately respond to requests for comment.

    The proposed ban would go further than prior steps the FCC has taken against Huawei and ZTE, whose networking equipment US officials have said could be used to intercept or monitor US communications.

    Previously, the FCC restricted US telecom carriers from using federal funding to purchase products from Huawei and ZTE, as well as from other providers on the agency’s so-called “covered list.” Later, officials such as Carr highlighted how the products were still available to carriers through the use of non-federal funding, and said the FCC should use its equipment authorization powers to effectively block them from the United States entirely.

    Biden’s subsequent signing of the Secure Equipment Act started a one-year clock for the FCC to put those restrictions into place.

    The FCC has also established a program to help carriers “rip and replace” Huawei and ZTE gear from their networks, though the program’s estimated cost has ballooned to $5.6 billion, up from initial estimates of around $2 billion.

    The top US wireless carriers have said they do not use Chinese-made equipment; telecom policy experts have said it is almost exclusively found in the networks of small providers seeking to minimize costs.

    Separately, in 2019, the Trump administration added Huawei to the Commerce Department’s so-called Entity List, which restricts exports to people and organizations named on the list without a US government license. The following year, the US government expanded on those restrictions by seeking to cut Huawei off from its chip suppliers that use US-made technology.

    The policies have contributed to sharp declines in Huawei’s telecom and handset businesses as the company has sought to shift focus to cars, cloud computing and its own mobile operating system.

    Huawei’s founder and CEO has previously claimed the company would never hand data over to the Chinese government, but western security experts have said the country’s national security and intelligence laws require Chinese companies to comply with demands for information.

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  • The Fed only cares about inflation. That’s bad news for you | CNN Business

    The Fed only cares about inflation. That’s bad news for you | CNN Business

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    New York
    CNN Business
     — 

    Jerome Powell and other members of the Federal Reserve are obsessed with choking off inflation once and for all, even if the Fed’s series of aggressive rate hikes slow the economy to a crawl. That could be bad news for consumers, investors and Corporate America.

    What’s more, many market experts and economists note that the rate of inflation, while still uncomfortably high, is falling and should continue to decline – but there is a noted lag effect. Fed vice chair Lael Brainard admitted as much in a speech Monday, saying that “policy actions to date will have their full effect on activity in coming quarters.”

    Still, the Fed isn’t done raising rates. Investors are pricing in the strong probability of a fourth consecutive three-quarters of a percentage point hike at the Fed’s next meeting on November 2. And the chances of a fifth straight hike of that magnitude at the Fed’s December 14 meeting are also on the rise.

    It seems that Powell wants to atone for his mistake of repeatedly calling inflation “transitory” for much of last year. So the Fed is going to keep raising rates to prove that it is taking inflation seriously, even if that leads to a bigger pullback in stocks…and tipping the economy into a recession.

    Needless to say, that’s a problem. Especially since the Fed has two mandates: price stability and maximum employment. That means the jobs market might get hit due to the Fed’s laser-like focus on inflation.

    “My concern is that the Fed is tightening so quickly and so significantly without knowing what it means for the economy,” said Brian Levitt, global market strategist with Invesco.

    Keep in mind that the Fed’s series of rate hikes are unprecedented in the “modern” era of central banking, i.e. after Alan Greenspan became Fed chair in 1987 and the Fed became far more transparent.

    The Fed was far more opaque before Greenspan, and the market didn’t pick apart every speech, policy move and economic forecast the way Wall Street does now. Inflation in the 1970s and early 1980s was also a much different animal, due largely to an oil price shock that lasted years because of a supply shortage.

    The current inflation crisis stems from more temporary (we won’t say transitory) supply chain issues tied to the pandemic as well as the rapid reopening of the global economy following a brief recession.

    But the economy is now showing cracks. Long-term bond yields have surged, and mortgage rates have popped, cooling off the housing market. The stock market has deflated as well, wringing even more excess from the economy.

    “We’re more cautious because the Fed is tightening into a weakening economy,” said Keith Lerner, co-chief investment officer and chief market strategist with Truist Advisory Services. “These supersized hikes are the most aggressive in decades. But the Fed has scar tissue from inflation.”

    As painful this current bout of inflation is for Americans, it’s nothing compared to what people lived through in the early 1980s before then Fed chair Paul Volcker squashed inflation with a series of massive rate hikes.

    Unless pricing pressures pick up again, it appears the year-over-year increase for the consumer price index (CPI) peaked at 9% in June. That’s a big move from about 2.3% in February 2020 just before the pandemic shutdown. But 9% is still a far cry from the CPI high during the Volcker years of 14.6% in early 1980.

    And with consumer and wholesale prices already edging lower, some experts worry that the continued uber-hawkish stance by the Fed will do more harm than good for the economy.

    “The speed at which the Fed is increasing rates will certainly have some unintended consequences,” said Michael Weisz, president of Yieldstreet, an investment firm that specializes in so-called alternative assets such as real estate, private equity, venture capital and art.

    Weisz said the surge in interest rates could lead to a “consumer credit crunch being more pronounced,” in which loans beyond mortgages might become more expensive and harder to get.

    Rate hikes raise the costs for companies to pay down their debt, increasing the possibility of corporate bankruptcies and defaults on commercial loans. It may even potentially lead to stagflation…the double whopper of stagnant growth and continued inflation. In other words, prices may remain high and the job market will probably be worse.

    “The Fed runs a real risk of over-tightening, as the impacts of the restrictive policy may not flow through inflation and unemployment data until it’s too late,” Weisz added.

    As long as inflation remains the bigger issue for the economy, the Fed is going to focus more on getting prices under control. After all, the unemployment rate is at 3.5%, a half-century low.

    “The Fed has made it clear their number one priority right now is price stability,” said Dustin Thackeray, chief investment officer of Crewe Advisors. “Until the Fed sees sustained evidence their monetary policy is having a material impact on…the job market, they will maintain their persistent efforts in reining in inflationary pressures.”

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  • The econ Nobel offers a timely warning about central banks’ power | CNN Business

    The econ Nobel offers a timely warning about central banks’ power | CNN Business

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    This story is part of CNN Business’ Nightcap newsletter. To get it in your inbox, sign up for free, here.


    New York
    CNN Business
     — 

    The Nobel in economics is sort of the step-cousin of the Nobel family.

    It came about nearly 70 years after its literature and sciences counterparts, in 1969, and is technically called the “Sveriges Riksbank Prize in Economic Sciences.” It is awarded by the Swedish central bank, in honor of the namesake renaissance man Alfred Nobel who established the prizes.

    Some scholars really dislike the economics prize, including one of Nobel’s own descendants, who dismissed it as a “PR coup by economists.”

    But hey, it still comes with a cash prize. And it’s also pretty useful in reminding the world that economics as an academic field is, frankly, a barely understood hodge-podge of studies that is constantly evolving and so variable it’s almost useless outside of academia. (And I mean that with the utmost respect to economists, who, not unlike journalists, knew what they were doing when they chose their life of suffering.)

    Here’s the thing: Ben Bernanke, the former Federal Reserve chairman who guided the US economy through the 2008 financial crisis and subsequent recession, was awarded the Nobel in economics along with two other economists, Douglas Diamond and Philip Dybvig. (Congrats to all the winners, with apologies to Doug and Phil, who will forever be referred to in headlines about the Nobel as “and two other economists.”)

    Bernanke, who previously taught at Princeton and earned his Ph.D from MIT, received the award for his research on the Great Depression. In short, his work demonstrates that banks’ failures are often a cause, not merely a consequence, of financial crises.

    That was groundbreaking when he published it in 1983. Today, it’s conventional wisdom.

    WHY IT MATTERS

    The timing is everything here. The Nobel committee has been known to play politics (see: that time Barack Obama was awarded the Nobel Peace Prize after being in office for just eight months). And right now, it is using its spotlight to call attention to the high-stakes gamble playing out at central banks around the world, most notably the Fed.

    The rapid run-up in interest rates, led by the US central bank, is causing markets around the world to go haywire. And it’s especially bad news for emerging economies.

    Monetary tightening — especially when it is aggressive and synchronized across major economies — could inflict worse damage globally than the 2008 financial crisis and the 2020 pandemic, a United Nations agency warned earlier this month. It called the Fed’s policy “imprudent gamble” with the lives of those less fortunate.

    LESSONS FROM HISTORY

    On Monday, Diamond, one of the three newly minted Nobel laureates, acknowledged that the rate moves around the world were causing market instability.

    But he believes the system is more resilient than it used to be because of hard lessons learned from the 2008 crash, my colleague Julia Horowitz reports.

    “Recent memories of that crisis and improvements in regulatory policies around the world have left the system much, much less vulnerable,” Diamond said.

    Let’s hope he’s right.

    Oh hey, speaking of the Fed inflicting pain: We’re about to see big job losses, according to Bank of America.

    Under the rate hikes imposed by Jay Powell & Co, the US economy could see job growth cut in half during the fourth quarter of this year. Early next year, the bank expects to see losses of about 175,000 jobs a month.

    The litigation between Elon Musk and Twitter is officially on hold. The two sides now have until October 28 to work out a deal or once again gear up for a courtroom battle.

    The big question now is all about the money.

    Here’s the deal: Not even the world’s richest person has this kind of cash just lying around. Musk’s wealth is tied up in Tesla stock, which he can’t easily offload for a whole bunch of reasons. He needs to borrow the money, which means he’s got to get banks to pony up.

    By most accounts, he’ll be able to make it happen. But the Twitter deal is a harder pitch to make now than it was back in April, when Musk said he’d lined up more than $46 billion in financing, including two debt commitment letters from Morgan Stanley and other unnamed financial institutions, my colleague Clare Duffy writes.

    Musk has spent the past several months trashing Twitter as he sought to renege on his offer. Meanwhile, tech stocks have been hammered, ad revenues are declining, and the global economy has inched closer to a recession, sapping investor appetite for risk.

    Musk’s legal team said last week the banks that had committed debt financing previously were “working cooperatively to fund the close.”

    Twitter is, understandably, skeptical, given the many curve balls Musk has thrown at them since he got involved with the company earlier this year. The company raised concerns last week that a representative for one of the banks testified that Musk had not yet sent a borrowing notice and “has not otherwise communicated to them that he intends to close the transaction, let alone on any particular timeline.”

    What’s Musk’s endgame?

    No one knows, perhaps least of all Musk. But many legal experts following the case say Musk understood he’d likely lose at trial and then be forced to buy Twitter anyway. He’d rather buy the entire company than be deposed by Twitter’s lawyers and do further damage to Twitter in a trial.

    And the banks may not be able to walk away even if they want to.

    “The only way they could get out of it is to claim a material adverse effect and that Twitter has changed so much since they agreed to the deal that they no longer want to finance the deal,” said George Geis, professor of strategy at the UCLA Anderson School of Management.

    Even if the banks succeeded there, Musk may not be off the hook. The judge in the case could rule that Musk was at fault for the financing falling through — not a far-fetched notion after all the trash-talking — and order him to sue Morgan Stanley to provide the funds or close the deal without it.

    Bottom line, it seems like Musk will end up owning Twitter one way or another. And given his only vague musings about what he’d actually do with it, there are a whole host of unknowns lurking in Twitter’s future.

    Enjoying Nightcap? Sign up and you’ll get all of this, plus some other funny stuff we liked on the internet, in your inbox every night. (OK, most nights — we believe in a four-day work week around here.)

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  • White-collar workers are feeling the brunt of the Fed’s rate hikes. Here’s why | CNN Business

    White-collar workers are feeling the brunt of the Fed’s rate hikes. Here’s why | CNN Business

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


    New York
    CNN Business
     — 

    September’s hotly anticipated jobs data ended up cooling markets on Friday. Stocks fell sharply as investors evaluated the report, which showed more jobs than expected were added to the US economy and indicated that more pain-inflicting interest rate hikes from the Federal Reserve lie ahead.

    But a breakdown of the numbers shows that the Fed’s plans to weaken the labor market to fight persistent inflation may already be working, just not for everybody.

    White-collar office workers appear to be feeling the brunt of the Fed’s actions: The financial and business sector saw a large decline in employment last month. Legal and advertising services also experienced drops. Service and construction workers, meanwhile, are still thriving.

    What’s happening: The US economy added 263,000 jobs in September, higher than analyst estimates of 250,000. The unemployment rate came in at 3.5%, down from 3.7% in August.

    Leading the gain in jobs was the leisure and hospitality industry, which added 83,000 jobs in September — and employment in food services and drinking places made up 60,000 of those jobs alone. Manufacturing and construction also came in hot, adding 22,000 and 19,000 jobs, respectively.

    The largest non-governmental losses in jobs came from the financial industry, which shed 8,000 between August and September. Large banks hire in cycles, extending offers to recent graduates in the early fall months. That makes this September’s drop particularly significant.

    Business support services — such as telemarketing, accounting and administrative and clerical jobs — are also bleeding jobs. The sector lost 12,000 in September. Meanwhile, legal services lost 5,000 jobs, and advertising services also dropped 5,000 jobs.

    What it means: The Federal Reserve’s hawkish policy appears to be cooling certain parts of the economy, but not others. Finance workers are likely beginning to worry as their industry depends on stock and lending markets which have been particularly hard hit by Fed actions.

    Friday’s numbers indicate that we’re beginning to see that impact in the employment data.

    What remains to be seen is whether the Fed can cool the economy just by loosening employment in white-collar industries or if these losses will trickle down to other industries, hurting lower-income workers.

    Coming up: Earnings season begins in earnest this week with big banks like JPMorgan, Citigroup

    (C)    , Morgan Stanley

    (MS)     and BlackRock

    (BLK)     reporting. Investors will be watching closely for any guidance on hiring and layoff plans.

    Two key inflation indicators, PPI and CPI are also set to be released. Expect markets to react poorly if inflation comes in hot.

    A panel of top US economists just released its economic outlook for the next year, and it’s not great.

    The panel of 45 forecasters, led by the National Association for Business Economics (NABE), said they expected slower growth, higher inflation, higher interest rates, and weakening employment in both 2022 and 2023 than they previously expected.

    Most of the worries come down to the Federal Reserve’s interest rate policy.

    “More than three-quarters of respondents believe the odds are 50-50 or less that the economy will achieve a ‘soft landing’,” said NABE Vice President Julia Coronado. “More than half the panelists indicate that the greatest downside risk to the U.S. economic outlook is too much monetary tightness.”

    NABE panelists downgraded their median forecast for real GDP for the fourth quarter of 2022 to a 0.1% increase, compared to a 1.8% increase in the May 2022 survey. The vast majority of respondents placed more than a 25% probability of a recession occurring in 2023, with the most likely start date in the first quarter.

    The latest report comes as a growing number of economists are predicting that recession is imminent. Former US Treasury Secretary Larry Summers told CNN on Thursday that it’s “more likely than not” the US will enter a recession, calling it a consequence of the “excesses the economy has been through.”

    Friday’s jobs report showed that the share of workers telecommuting or working from home because of the pandemic ticked lower — falling to just 5.2% in September from 6.5% in August.

    Fully remote work in the United States, which many predicted would remain the norm long after the pandemic, appears to be edging away, especially as the job market loosens for white collar workers and employees have less leverage.

    Last week, a KPMG survey of US-based CEOs found that two-thirds believed in-office work would be the norm within the next three years.

    Still, it may not be enough to help an ailing commercial real estate market, where the outlook is dire. New York City office properties declined by nearly 45% in value in 2020 and are forecast to remain 39% below their pre-pandemic levels long-term as hybrid policies continue, according to a recent study from the National Bureau of Economic Research.

    Looking forward: The Bureau of Labor Statistics has noted that while hybrid work may still be popular, Covid-19 is no longer fueling work from home trends. The October report will rephrase its telework questions to remove references to the pandemic.

    Since May 2020, each jobs report has asked: “At any time in the last four weeks, did you telework or work at home for pay because of the Coronavirus pandemic?”

    In May 2020, 35.4% answered yes.

    Starting next month, the question will be revised. “At any time in the last week did you telework or work at home for pay?” it will ask, limiting the timeline and eliminating any reference to the pandemic.

    The US bond market is closed for Columbus Day/Indigenous Peoples’ Day.

    Coming later this week:

    ▸ Third quarter earnings season begins. Expect reports from big banks like JPMorgan Chase

    (JPM)    , Wells Fargo

    (WFC)    , Citigroup

    (C)    , Morgan Stanley

    (MS)    , PNC

    (PNC)     and US Bancorp

    (USB)     and consumer staples like Pepsi

    (PEP)    , Walgreen

    (WBA)    s and Domino’s

    (DMPZF)    . 

    ▸ CPI and PPI, two closely watched measures of inflation in the US are also due to be released. 

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  • US Postal Service proposes new prices ‘to offset’ inflation | CNN Politics

    US Postal Service proposes new prices ‘to offset’ inflation | CNN Politics

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    CNN
     — 

    The US Postal Service on Friday proposed increased prices “to offset the rise in inflation,” according to a statement from the agency.

    The price hikes, which have been approved by the Governors of the U.S. Postal Service, include a three-cent increase to purchase a stamp and a four-cent increase to mail a postcard. The changes amount to a 4.2% price increase for first class mail, according to USPS.

    The proposal must now be reviewed by the Postal Regulatory Commission.

    The announcement from the US Postal Service comes as consumers around the nation continue to grapple with rising prices for groceries, gas and other necessities. The US Postal Service has publicly struggled financially in recent years, and President Joe Biden signed a law earlier this year to overhaul the USPS’ finances and allow the agency to modernize its service.

    “As operating expenses continue to rise, these price adjustments provide the Postal Service with much needed revenue to achieve the financial stability sought by its Delivering for America 10-year plan,” US Postal Service said on Friday. “The prices of the U.S. Postal Service remain among the most affordable in the world.”

    Unlike other government agencies, the USPS generally does not receive taxpayer funding, and instead must rely on revenue from stamps and package deliveries to support itself.

    The Postal Service is also looking to increase fees for P.O. Box rentals, money orders and the cost to purchase insurance when mailing an item.

    If approved by the Postal Regulatory Commission the changes would take effect January 22, 2023, after midnight.

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  • Opinion: The Fed doesn’t have a choice anymore. Get ready for a recession | CNN Business

    Opinion: The Fed doesn’t have a choice anymore. Get ready for a recession | CNN Business

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    Editor’s Note: Gad Levanon is the chief economist at the Burning Glass Institute. He’s the former head of The Conference Board’s Labor Market Institute. The opinions expressed in this commentary are his own.

    To many economists and analysts, the US economy has represented a paradox this year. On the one hand, GDP growth has slowed significantly, and some argue, even entered a recession. On the other hand, overall employment growth has been much stronger than normal.

    While GDP declined at an annualized rate of 1.1% in the first half of 2022, the US economy added 2.3 million jobs in the last six months, far more than in any other six-month period in the 20 years prior to the pandemic.

    This tight labor market – and the rapid wage growth it has spurred – is causing inflation to become more entrenched. The Consumer Price Index, which measures a basket of goods and services, was 8.3% year-over-year in August. That’s lower than the 40-year high of 9.1% in June, but still painfully high. To address it, the Federal Reserve is likely to drive the economy into a recession in 2023, crushing continued job growth.

    Why has employment growth remained so strong? First, the US economy is holding on better than many expected. The Atlanta Fed’s GDPNow estimate for real GDP growth in the third quarter of 2022 is 2.3%, suggesting that while the economy is now growing much more slowly than it did last year, we are still not in a recession. When the demand for goods and services strengthens, so does the demand for workers producing these goods and services.

    Second, despite the slowing of the economy and the growing fears of recession, layoffs are still historically low. Initial claims for unemployment insurance, an indicator highly correlated with layoffs, were 219,000 for the week ended October 1 – higher than the week prior, but still one of the lowest readings in recent decades. After years of increasingly traumatic labor shortages, many employers are reluctant to significantly reduce the number of workers even as their businesses are slowing. That’s because companies are worried that they will have trouble recruiting new workers when they start expanding again.

    Third, many industries are growing faster than normal because they are still recovering from the pandemic. Convention and trade show organizers, car rental companies, nursing homes and child day care services, among others, are all growing fast because they are still well below pre-pandemic employment levels.

    Fourth, just as some industries are growing because they are still catching up, others are experiencing high growth as they adjust to a new normal of higher demand. Demand for data processing and hosting services, semiconductor manufacturing, mental health services, testing laboratories, medical equipment and pharmaceutical manufacturing is higher than before the pandemic. And it’s likely that these represent structural changes to buying patterns that will keep demand high.

    Fifth, during the pandemic, corporate investments in software and R&D reached unprecedented levels, which drove a rapid increase in new STEM jobs. Because these workers are especially well paid, they have had plenty of disposable income to spend on goods and services, which has supported job growth throughout the economy.

    These factors are spurring positive momentum that will not disappear overnight. Employment growth is likely to slow down from its historically high rates, but it will still remain solid in the coming months. ManpowerGroup’s Employment Outlook Survey shows that the hiring intentions for the fourth quarter are still very high, despite dropping from the previous quarter.

    Next year, however, will look very different. Many of the industries that are still recovering from the pandemic will have reached pre-pandemic employment levels. With demand saturated, those industries may revert to slower hiring. But this alone is unlikely to push job growth into negative territory. What will do that is monetary policy.

    There are two ways to rein in the labor market: Either reduce demand for workers or increase the labor supply. But it’s hard to engineer a boost in labor supply. That takes the kind of legislative action needed to increase immigration, drive people into the labor force or grow investment in workforce training. This is likely to prove elusive in today’s polarized political environment.

    The only option that leaves the Fed is to engineer a recession by continuing to raise interest rates. Expect to see that happen in 2023.

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  • Mortgage rates take a breather after rising for several weeks in a row | CNN Business

    Mortgage rates take a breather after rising for several weeks in a row | CNN Business

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    After rising for six weeks in a row, mortgage rates retreated last week.

    The 30-year fixed-rate mortgage averaged 6.66% in the week ending October 5, down from 6.70% the week before, according to Freddie Mac.

    Mortgage rates have more than doubled since the start of this year as the Federal Reserve continues its unprecedented campaign of hiking interest rates in order to tame soaring inflation. But uncertainty about the possibility of a recession and the impact of rate hikes on the economy have made mortgage rates more volatile.

    “Mortgage rates decreased slightly this week due to ongoing economic uncertainty,” said Sam Khater, Freddie Mac’s chief economist. “However, rates remain quite high compared to just one year ago, meaning housing continues to be more expensive for potential homebuyers.”

    The average mortgage rate is based on a survey of conventional home purchase loans for borrowers who put 20% down and have excellent credit, according to Freddie Mac. But many buyers who put down less money upfront or have less than perfect credit will pay more.

    Investors and analysts have been scrutinizing each piece of economic data, searching for clues about the Fed’s next steps and the future of the US and global economies, said Danielle Hale, Realtor.com’s chief economist.

    The Fed does not set the interest rates borrowers pay on mortgages directly, but its actions influence them. Mortgage rates tend to track the yield on 10-year US Treasury bonds. As investors see or anticipate rate hikes, they often sell government bonds, which sends yields higher and mortgage rates rise.

    Over the past month, yields on 10-year Treasuries soared from 3.25% to nearly 4% before falling back around 3.75% this week.

    Hale likened investors’ actions to a driver navigating a road in dense fog, prone to over-correcting at each turn.

    “Signs that we are closer to the end of the tightening cycle – such as a surprisingly steep decline in job openings – tend to cause rates to slip, while rates bounce higher on signals like robust activity in the services sector,” Hale said.

    Even though rates dipped slightly this week, the average interest rate for a 30-year, fixed-rate loan is still more than double what it was at this time last year.

    A year ago, a buyer who put 20% down on a $390,000 home and financed the rest with a 30-year, fixed-rate mortgage at an average interest rate of 2.99% had a monthly mortgage payment of $1,314, according to calculations from Freddie Mac.

    Today, a homeowner buying the same-priced house with an average rate of 6.66% would pay $2,005 a month in principal and interest. That’s $691 more each month.

    As rates have been rising over the last several weeks, fewer people have been applying for mortgages said Bob Broeksmit, president and CEO of the Mortgage Bankers Association.

    Ongoing economic uncertainty together with Hurricane Ian’s devastation in Florida resulted in a 14% decline in mortgage applications last week from the week before, he said.

    MBA also found that an increasing number of borrowers are applying for adjustable rate mortgages, or ARMs. Applications for ARMs climbed to nearly 12% of all applications last week.

    The average rate for the ARM tracked by Freddie Mac (a 5-year Treasury-indexed hybrid ARM) was 5.36%, more than a percentage point lower than the 30-year fixed rate.

    “While rate increases are needed to tame inflation and alleviate the burden it places on household budgets, higher borrowing costs have caused consumers to think twice about major purchases like homes and cars,” said Hale.

    With more prospective buyers sitting on the sidelines, those still looking to buy have a little more breathing room.

    Correction: “Today’s home shoppers have more choices, but for many, the increased cost of financing and higher home prices mean fewer affordable options,” Hale said. “As challenging as it may be to set and stick to a budget in this environment of rising prices and rates, it’s more important than ever to do so.”
    A previous version of this story misstated the number of weeks mortgage rates have been rising. Rates rose for six consecutive weeks before falling this week.

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  • The bond market is crumbling. That’s bad for Wall Street and Main Street | CNN Business

    The bond market is crumbling. That’s bad for Wall Street and Main Street | CNN Business

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


    New York
    CNN Business
     — 

    The global bond market is having a historically awful year.

    The yield on the 10-year US Treasury bond, a proxy for borrowing costs, briefly moved above 4% on Wednesday for the first time in 12 years. That’s a bad omen for Wall Street and Main Street.

    What’s happening: This hasn’t been a pretty year for US stocks. All three major indexes are in a bear market, down more than 20% from recent highs, and analysts predict more pain ahead. When things are this bad, investors seek safety in Treasury bonds, which have low returns but are also considered low-risk (As loans to the US government, Treasury notes are seen as a safe bet since there is little risk they won’t be paid back).

    But in 2022’s topsy-turvy economy, even that safe haven has become somewhat treacherous.

    Bond returns, or yields, rise as their prices fall. Under normal market conditions, a rising yield should mean that there’s less demand for bonds because investors would rather put their money into higher-risk (and higher-reward) stocks.

    Instead markets are plummeting, and investors are flocking out of risky stocks, but yields are going up. What gives?

    Blame the Fed. Persistent inflation has led the Federal Reserve to fight back by aggressively hiking interest rates, and as a result the yields on US Treasury bonds have soared.

    Economic turmoil in the United Kingdom and European Union has also caused the value of both the British pound and the euro to fall dramatically when compared to the US dollar. Dollar strength typically coincides with higher bond rates as well.

    So while we’d normally see a rising 10-year yield as a signal that US investors have a rosy economic outlook, that isn’t the case this time. Gloomy investors are predicting more interest rate hikes and a higher chance of recession.

    What it means: Portfolios are aching. Vanguard’s $514.5 billion Total Bond Market Index, the largest US bond fund, is down more than 15% so far this year. That puts it on track for its worst year since it was created in 1986. The iShares 20+ Year Treasury bond fund

    (TLT)     (TLT) is down nearly 30% for the year.

    Stock investors are also nervously eyeing Treasuries. High yields make it more expensive for companies to borrow money, and that extra cost could lower earnings expectations. Companies with significant debt levels may not be able to afford higher financing costs at all.

    Main Street doesn’t get a break, either. An elevated 10-year Treasury return means more expensive loans on cars, credit cards and even student debt. It also means higher mortgage rates: The spike has already helped push the average rate for a 30-year mortgage above 6% for the first time since 2008.

    Going deeper: Still, investors are more nervous about the immediate future than the longer term. That’s spurred an inverted yield curve – when interest rates on short-term bonds move higher than those on long-term bonds. The inverted yield curve is a particularly ominous warning sign that has correctly predicted almost every recession over the past 60 years.

    The curve first inverted in April, and then again this summer. The two-year treasury yield has soared in the last week, and now hovers above 4.3%, deepening that gap.

    On Monday, a team at BNP Paribas predicted that the inverted gap between the two-year and 10-year Treasury yields could grow to its largest level since the early 1980s. Those years were marked by sticky inflation, interest rates near 20% and a very deep recession.

    What’s next: The bond market may face fresh volatility on Friday with the release of the Federal Reserve’s favored inflation measure, the Personal Consumption Expenditure Price Index for August. If the report comes in above expectations, expect bond yields to move even higher.

    The Bank of England held an emergency intervention to maintain economic stability in the UK on Wednesday. The central bank said it would buy long-dated UK government bonds “on whatever scale is necessary” to prevent a market crash.

    Investors around the globe have been dumping the British pound and UK bonds since the government on Friday unveiled a huge package of tax cuts, spending and increased borrowing aimed at getting the economy moving and protecting households and businesses from sky-high energy bills this winter, reports my colleague Mark Thompson.

    Markets fear the plan will drive up already persistent inflation, forcing the Bank of England to push interest rates as high as 6% next spring, from 2.25% at present. Mortgage markets have been in turmoil all week as lenders have struggled to price their loans. Hundreds of products have been withdrawn.

    “This repricing [of UK assets] has become more significant in the past day — and it is particularly affecting long-dated UK government debt,” the central bank said in its statement.

    “Were dysfunction in this market to continue or worsen, there would be a material risk to UK financial stability. This would lead to an unwarranted tightening of financing conditions and a reduction of the flow of credit to the real economy.”

    Many final salary, or defined-benefit, pension funds were particularly exposed to the dramatic sell-off in longer dated UK government bonds.

    “They would have been wiped out,” said Kerrin Rosenberg, UK chief executive of Cardano Investment.

    The central bank said it would buy long-dated UK government bonds until October 14.

    Steep drops in bond prices may be signaling doom and gloom for the economy, but some analysts say short-term bonds are still looking more attractive than equities right now.

    “Record low yields have kept fixed income in the shadow of equities for decades,” said analysts at BNY Mellon Wealth Management in a research note. “But the aggressive shift in Fed policy is beginning to change this.”

    Central banks around the globe have responded to elevated inflation by hiking interest rates– and bond yields have increased alongside them. The two-year US Treasury bond is currently yielding nearly 4%. That’s still a relatively low return, but better than the S&P 500’s dividend yield of around 1.7%.

    “For the first time in several years, bonds are attractive investment options. In addition to providing diversification versus equities…you now get paid for owning them,” wrote Barry Ritholtz of Ritholtz Wealth Management on Wednesday.

    Consider the alternative: the S&P is down more than 20% year to date.

    The US Bureau of Economic Analysis releases its third estimate for Q2 GDP and US weekly jobless claims.

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  • SpaceX, NASA to launch 3 astronauts and 1 cosmonaut to the ISS. Here’s everything you need to know | CNN

    SpaceX, NASA to launch 3 astronauts and 1 cosmonaut to the ISS. Here’s everything you need to know | CNN

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    Sign up for CNN’s Wonder Theory science newsletter. Explore the universe with news on fascinating discoveries, scientific advancements and more.



    CNN
     — 

    SpaceX and NASA are set to launch a crew of astronauts who hail from all over the world on a trip to the International Space Station.

    The mission, which will include some historic firsts, is moving forward even as rising geopolitical tensions brew on the ground.

    The four crew members — astronauts Nicole Mann and Josh Cassada of NASA, astronaut Koichi Wakata of JAXA, or Japan Aerospace Exploration Agency, and cosmonaut Anna Kikina of Roscosmos — are on track to launch aboard a SpaceX Crew Dragon spacecraft at 12 p.m. ET Wednesday from Kennedy Space Center in Florida. If bad weather or other issues interfere, the teams could try again Thursday at 11:38 a.m. ET.

    A live broadcast on NASA’s website kicked off just after 8:30 a.m. ET Wednesday. NASA will also stream a post-event briefing, tentatively scheduled for 1:30 p.m. ET, to discuss the launch.

    Dubbed Crew-5, the mission is the sixth astronaut flight launched as a joint endeavor between NASA and SpaceX, a privately held aerospace company, to the space station.

    The upcoming spaceflight marks a historic moment, as Mann will not only become the first Native American woman ever to travel to space. She’ll also serve as mission commander, making her the first woman ever to take on such a role for a SpaceX mission.

    What’s more, Kikina will be the first Russian to join a SpaceX mission as part of a ride-sharing deal NASA and Russia’s space agency, Roscosmos, inked in July. Her participation in the flight is the latest clear signal that, despite mounting tensions over Russia’s invasion of Ukraine, the decades-long US-Russia partnership in space will persist — at least for now.

    After the anticipated launch on Wednesday, the Crew Dragon spacecraft will separate from the SpaceX rocket that boosts it to orbit and begin a slow, precise trek to the ISS, which orbits about 200 miles (322 kilometers) above the Earth’s surface. The spacecraft is aiming to dock with the space station on Thursday around 5 p.m. ET.

    Launching NASA astronauts to the space station aboard a SpaceX Crew Dragon spacecraft is nothing new. The space agency collaborated with SpaceX for years to transition the task of shuttling people to and from the space station after NASA retired its Space Shuttle Program in 2011.

    With the return of astronaut launches from US soil, SpaceX has offered a stage for several historic firsts. The Crew-4 Dragon mission, for example, carried NASA astronaut Jessica Watkins, the first Black woman ever to join the ISS crew.

    On this flight, Mann, a registered member of the Wailacki tribe of the Round Valley Reservation, will become the first Native American woman ever to travel to orbit.

    “I am very proud to represent Native Americans and my heritage,” Mann said. “I think it’s important to celebrate our diversity and also realize how important it is when we collaborate and unite, the incredible accomplishments that we can have.”

    In her role as commander, Mann will be responsible for ensuring the spacecraft is on track from the time it launches until it docks with the ISS and again when it returns home with the four Crew-5 astronauts next year. Never before has a woman taken on the commander role on a SpaceX mission, though a couple of women served in that position during the Space Shuttle Program.

    Kikina, the Roscosmos cosmonaut, will become the first Russian ever to launch on a SpaceX vehicle at a time when US-Russian relations are hitting near fever pitch over the Ukraine war.

    But officials at NASA have said repeatedly that joint operations with Russia on the ISS, where the two countries are the primary operators, will remain isolated from the fray. Kikina’s flight comes just weeks after NASA’s Dr. Frank Rubio launched to the ISS aboard a Roscosmos Soyuz capsule.

    “I really love my crewmates,” Kikina told reporters after she arrived at the Florida launch site on Saturday. “I really feel good, comfortable. … We will do our job the best way: happy.”

    READ MORE: Meet the space trailblazers of color who empowered others to dream

    Mann and her fellow NASA astronaut Josh Cassada, who grew up in White Bear Lake, Minnesota, both joined NASA in 2013. Cassada has described Mann as one of his “closest friends on the planet.”

    As with Mann, this mission will be the first trip to space for Cassada and Kikina.

    For veteran astronaut Wakata, who has previously flown on both NASA’s space shuttle and Russia’s Soyuz spacecraft, this trip marks his fifth spaceflight mission.

    “I still remember when I first flew and saw our beautiful home planet,” he recalled during an August press conference. “It was so wonderful, such a beautiful planet, then I felt very lucky to be able to call this planet our home.”

    After reaching the ISS, the crew will join the seven astronauts already aboard the ISS — including four NASA astronauts, a European Space Agency astronaut and two Russian cosmonauts.

    There will be a handover period, where the current ISS crew will help the newly arrived astronauts settle in before a separate Crew Dragon spacecraft brings the four astronauts who were part of SpaceX’s Crew-4 mission back home.

    Then the Crew-5 astronauts will set to work conducting spacewalks, during which astronauts exit the ISS, to maintain the space station’s exterior, as well as performing more than 200 science experiments.

    “Experiments will include studies on printing human organs in space, understanding fuel systems operating on the Moon, and better understanding heart disease,” according to NASA.

    Crew-5 is slated to return from space in about five months.

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  • Out-of-service satellites must be removed within 5 years, FCC says | CNN Business

    Out-of-service satellites must be removed within 5 years, FCC says | CNN Business

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    Sign up for CNN’s Wonder Theory science newsletter. Explore the universe with news on fascinating discoveries, scientific advancements and more.


    Washington
    CNN Business
     — 

    Satellites that are no longer in service must get out of the sky far more quickly under a new rule adopted by US federal regulators Thursday — and it’s all in the name of combating the garbage in Earth’s orbit.

    Unused satellites in low-Earth orbit, which is the area already most congested with satellites, must be dragged out of orbit “as soon as practicable, and no more than five years following the end of their mission,” according to the new Federal Communications Commission rule.

    That’s far less time than the long-standing rule of 25 years that has been criticized as too lax. Even NASA advised years ago that the 25-year timeline should be reduced to five years.

    “Twenty-five years is a long time. There is no reason to wait that long anymore, especially in low-Earth orbit,” FCC Chairwoman Jessica Rosenworcel said at Thursday’s meeting. The FCC rule passed unanimously.

    The goal of this rule is prevent the dangerous proliferation of junk and debris in space. Already, there’s estimated to be more than 100 million pieces of space junk traveling uncontrolled through orbit, ranging in size from a penny to an entire rocket booster. Much of that debris, experts say, is too small to track.

    Collisions in space have happened before. And each collision can span thousands of new pieces of debris, each of which risk setting off even more collisions. One well-known theory, called “Kessler Syndrome,” warns that it’s possible for spaceborne garbage to set of disastrous chain reactions, potentially causing Earth’s orbit to become so cluttered with junk that it could render future space exploration and satellite launches impractical and even impossible.

    More than half of the roughly 10,000 satellites the world has sent into orbit since the 1950s are now obsolete and considered “space junk,” Rosenworcel said, adding that the debris poses risks to communication and safety.

    The FCC plan had been questioned by some US lawmakers who have said the rules could create “conflicting guidance” and without clear congressional authority. But Thursday’s vote moved forward nonetheless.

    “At risk is more than the $279 billion-a-year satellite and launch industries and the jobs that depend on them,” according to an FCC document released earlier this month. “Left unchecked, orbital debris could block all of these benefits and reduce opportunities across nearly every sector of our economy.”

    The number of satellites in low-Earth orbit, which is the sphere of orbit extending about 2,000 km or 1,200 miles out, has grown exponentially in recent years, thanks in large part to massive, new “megaconstellations” of small satellites pouring into space, largely by commercial companies. Most notably, Elon Musk’s SpaceX has launched about 3,000 satellites to space for its space-based internet service, Starlink.

    There’s also plans to put tens of thousands of new satellites in low-Earth orbit in years to come, FCC commissioner Nathan Simington noted during Thursday’s meeting.

    Commercial companies have routinely promised to take the debris issue seriously, and SpaceX had already agreed to comply with the recommended five-year rule for getting defunct satellites out of orbit.

    But there has long been a broader push within the space community to codify new regulations. So the FCC announced plans in early September to at least vote on updates to US regulations.

    The FCC also specified that it will apply the rule not only to the US satellite operators it oversees but also to “non-US-licensed satellites and systems seeking US market access.”

    “A veritable Cambrian explosion of commercial space operations is just over the horizon, and we had better be ready when it arrives,” said Simington.

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  • Wages are the most important number to watch in the jobs report | CNN Business

    Wages are the most important number to watch in the jobs report | 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 Business
     — 

    Investors, economists and members of the Federal Reserve will be poring over the September jobs report on Friday morning for clues about the health of the economy. But one figure may matter more than most…and it’s not the number of jobs added or the unemployment rate. It’s wage growth.

    Inflation is not just a function of the price of oil and other commodities and production costs like manufacturing and shipping. How much workers take home in their paychecks is also a big part of the inflation picture.

    When people have more money in their wallets (virtual or good old-fashioned leather ones), they tend to be more willing to spend it. That gives companies additional flexibility to raise prices.

    Average hourly wages rose 5.2% over the past 12 months according to the August jobs report. That’s down from a 2022 peak growth rate of 5.6% in March.

    So how aggressively will the Fed need to raise rates going forward? A lot will depend on whether wage growth continues to slow.

    Companies can’t raise prices as much if workers are making less or they risk big destruction in demand.

    The problem is that wage growth above 5% is still historically high. Before the pandemic, wages typically rose just 3% year-over-year. But labor shortages, due to Covid-19 and people dropping out of the workforce, shifted power from employers to employees when it came to worker pay.

    That’s another reason why companies have continued to raise prices: To offset rising costs.

    The government reported Friday that its preferred inflation metric, personal consumption expenditures (PCE), rose 6.2% from a year ago in August. That was lower than July’s reading.

    But the so-called core PCE figure, which excludes food and energy prices, rose 4.9% through August, up from a 4.7% increase in July.

    What’s more, the Fed typically is looking for just a 2% growth rate in the headline PCE number as a sign of price stability. That’s not going to happen anytime soon. In fact, the Fed’s latest forecasts suggest that the central bank thinks PCE will rise 5.4% this year, up from projections of 5.2% in June.

    “I don’t see anything in the near-term to give the Fed tons of comfort that inflation is on the trajectory to 2%,” said David Petrosinelli, senior trader with InspireX. “Wages will remain elevated and that will keep the Fed in a pickle.”

    But there’s another concern. Wages, while still rising, are not actually keeping pace with the increase in consumer prices. You don’t need to be a math genius to realize that 5.2% is less than 6.2%.

    “Wages are a real pain point. People are paying more but not making more,” said Marta Norton, chief investment officer of the Americas with Morningstar Investment Management. With that in mind, Norton said there is a “higher probability of stagflation.”

    Stagflation is the nasty economic combination of stagnant growth and persistent inflation.

    Retail sales have held up relatively well despite inflation pressures, but Norton warns that can’t last forever. American shoppers would eventually reach their breaking point and just start buying essentials. A slowdown in consumption will inevitably lead to lower prices…but also slower economic growth.

    “Inflation is its own cure. Consumers have the power to spend or not spend,” she said.

    The third quarter is mercifully over. It’s been another doozy for the market. September in particular was bleak. It was the worst month for the Dow since the start of the pandemic in March 2020.

    But even though we’re seemingly in a bear market for everything as bonds, gold and bitcoin have all tumbled this year as well, there are some hopeful signs for the next few months.

    The fourth quarter is typically a festive time on Wall Street. Investors tend to buy stocks in anticipation of robust consumer shopping during the holidays. Businesses typically spend more as well to flush out those yearly budgets. And major companies also often give rosy guidance in October about earnings expectations for the coming year.

    “October has been a turnaround month—a ‘bear killer’ if you will,” said Jeff Hirsch, editor-in-chief of the Stock Trader’s Almanac, in a recent blog post.

    Hirsch added that a dozen bear markets since World War II have ended in the month of October. And of those twelve, seven market bottoms happened during midterm election years.

    Traders will definitely be keeping close tabs on Washington this fall to see if Republicans gain control of the House. That could lead to more gridlock in DC, which investors tend to like.

    Whether or not Corporate America and investors are going to be so bullish this October is up for debate given the concerns about inflation, interest rates and the global economy. After all, October is also famous for huge crashes, most recently in 2008 but also in 1987 and, of course, 1929.

    So stocks definitely could take another turn for the worse. But experts are hopeful that the end of the bear market is in sight.

    “We’re nearer to a bottom,” said Christopher Wolfe, chief investment officer of First Republic Private Wealth Management. “A lot of quality companies are on sale. It’s a time to be patient and reposition.”

    Monday: US ISM manufacturing; China stock markets closed all week

    Tuesday: US job openings and labor turnover (JOLTS); Japan inflation; Australia interest rate decision

    Wednesday: US ADP private sector jobs; US ISM services; OPEC+ meeting

    Thursday: US weekly jobless claims; earnings from ConAgra

    (CAG)    , Constellation Brands

    (STZ)    , McCormick

    (MKC)     and Levi Strauss

    (LEVI)

    Friday: US jobs report; Germany industrial production; earnings from Tilray

    (TLRY)

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  • Chinese hacking group targeting US agencies and companies has surged its activity, analysis finds | CNN Politics

    Chinese hacking group targeting US agencies and companies has surged its activity, analysis finds | CNN Politics

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    Washington
    CNN
     — 

    An elite Chinese hacking group with ties to operatives indicted by a US grand jury in 2020 has surged its activity this year, targeting sensitive data held by companies and government agencies in the US and dozens of other countries, according to an expert at consulting giant PricewaterhouseCoopers.

    The findings highlight the biggest cyber-espionage challenge facing the Biden administration: combating a Chinese hacking program that the FBI has called more prolific than that of all other governments in the world combined.

    The Justice Department has aggressively sought to expose the alleged data-stealing campaigns through indictments, and made the case that Chinese hackers have robbed American companies of intellectual property, causing huge losses. But China-based hackers have often developed new tools or otherwise altered their operations, according to analysts.

    One of the Chinese groups tracked by PwC has targeted dozens of US organizations in the last year, including government agencies and software or tech firms, said Kris McConkey, who leads PwC’s global cyber threat intelligence practice. The intruders often comb networks for data that could offer insights into foreign or trade policy, he said, but also dabble in cryptocurrency schemes for personal profit. He declined to detail what types of US government agencies, whether at the federal, state or local level, were targeted.

    “They are, by far, the most active and globally impactful [hacking group] that we track at the minute,” McConkey, who closely follows China-based hackers, told CNN. He believes the attackers have been successful in breaching at least some organizations because they operate on a vast scale, targeting organizations in at least 35 countries this year alone.

    McConkey traced part of the activity to an ostensibly legitimate cybersecurity company based in the Chinese city of Chengdu, but he stopped short of publicly connecting the hacking to the Chinese government. US officials have for years accused China of using front companies to conduct hacking that feeds the government’s sprawling intelligence collection efforts.

    China has repeatedly denied allegations of hacking and Beijing has in recent months stepped up its own accusations that Washington has conducted cyber operations against Chinese assets.

    Cybersecurity issues have been a repeated source of friction between the world’s two biggest economies; President Joe Biden raised the subject on a call with Chinese President Xi Jinping last year.

    McConkey was one of multiple private cyber specialists who exposed the operations, and sometimes the alleged locations, of hackers from China, Iran and elsewhere at a recent conference called LABScon, hosted by US security firm SentinelOne, in Scottsdale, Arizona.

    Adam Kozy, who tracked Chinese hackers at the FBI from 2011 to 2013, showed the audience a photo of a People’s Liberation Army building in the city of Fuzhou that allegedly houses officers who conduct information operations against Chinese adversaries. That unit has targeted Taiwan, Kozy said, and “is the main area for China’s disinformation operations.”

    In their investigations of foreign hackers, the FBI and Justice Department prosecutors have drawn on those types of revelations from private researchers.

    At least one FBI agent and officials from the National Security Agency and the US Cybersecurity and Infrastructure Security Agency attended the conference, a reminder of how reliant government officials are on data held by tech firms to pursue spies and cybercriminals. Sometimes that work happens not in a classified facility but in the halls of a luxury hotel.

    Morgan Adamski, a senior NSA official, told conference attendees that the coronavirus pandemic changed how her agency worked with private firms to guard sensitive data targeted by hackers.

    “The pandemic actually helped because it no longer revolved around big government meetings in a room, in a SCIF [Sensitive Compartmentalized Information Facility], where you couldn’t use any of the information,” said Adamski, who heads the NSA’s Cybersecurity Collaboration Center, which works with defense contractors to blunt the impact of foreign hacking.

    After US defense contractors began working from home during the pandemic, she said, Chinese government hackers exploited the virtual private networking (VPN) software the contractors were using. One hacked contractor, which she didn’t name, shared data with federal agencies so they could build a clearer picture of what was going on.

    Asked by CNN whether the NSA and other federal agencies responding to the hacks were able to evict the Chinese hackers, Adamski said it’s an iterative process.

    “When you talk about nation-state actors, you kick them out, but they’re going to come back,” Adamski said, “especially if you’re a defense industrial base company that is producing critical military intelligence for the Department of Defense.”

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  • EPA preparing to release strict vehicle emissions rules | CNN Politics

    EPA preparing to release strict vehicle emissions rules | CNN Politics

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    CNN
     — 

    The US Environmental Protection Agency is preparing to release strict new proposed federal emissions standards for light-duty vehicles that, if implemented, would move the US car market decisively toward electric vehicles over the next decade.

    The EPA is considering emissions standards that could make up to two-thirds of new passenger vehicles sold in the US electric by 2032, according to a source familiar with the proposal.

    If implemented, the new greenhouse gas performance standards would start for light-duty vehicles that are model year 2027 and gradually increase through model year 2032.

    By 2032, the rules would ensure that 64% to 67% of all new-car sales in the US would be electric vehicles, according to the source.

    The EPA’s proposal, which was first reported by The New York Times, comes after California air regulators voted last year to ban the sale of new gasoline-powered cars by 2035 and set interim targets to phase these cars out.

    EPA spokesperson Tim Carroll did not comment on the specifics of the proposal but said the agency is working on developing new standards “to accelerate the transition to a zero-emissions transportation future, protecting people and the planet,” as directed by a previous executive order from President Joe Biden.

    “Once the interagency review process is completed, the proposals will be signed, published in the Federal Register, and made available for public review and comment,” Carroll said.

    The new rules could come as soon as Wednesday.

    The EPA proposal is a monumental step toward zero-emissions vehicles, coming as the US tries to keep up with other countries racing toward EV adoption, one expert told CNN.

    “I believe it’s pretty doable,” said Margo Oge, chair of the International Council on Clean Transportation and a former Obama EPA official. “The industry is there. Europe is ahead of the US, China is ahead of Europe, and these companies are global companies.”

    Oge noted that in the US, California is already proposing 70% new zero-emissions vehicle sales by 2030 and other states are planning to adopt California’s rules – meaning much of the US car industry will be transitioning ahead of any proposed federal rule.

    Still, the EPA’s proposal takes a different approach from California’s policy. Whereas California is mandating car companies sell a certain percentage of electric vehicles, the EPA would gradually raise greenhouse gas emissions standards to increasingly stringent levels from 2027 to 2032, pushing the industry toward electric vehicles to meet those high standards.

    The EPA rule would ensure that the rest of the country and the US car industry would follow California’s lead, Oge said.

    Biden has made electrifying the cars that Americans drive a key part of his climate goals. In 2021, the president set a new target that half of all vehicles sold in the US by 2030 would be battery electric, fuel-cell electric or plug-in hybrid.

    The US Treasury Department is set to release rules for new federal electric vehicle tax credits on April 18. While these tax credits are complex and could take time for consumers to take full advantage of, experts hope they will help accelerate the transition to EVs in the US.

    “Given the industry, the [Inflation Reduction Act] and what companies are doing globally, I just don’t see this number as being out of reach,” Oge said.

    The proposed EPA rules will go through a lengthy public comment process and could be changed before they are finalized.

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  • Federal appeals court tosses state antitrust suit seeking to break up Meta | CNN Business

    Federal appeals court tosses state antitrust suit seeking to break up Meta | CNN Business

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    CNN
     — 

    A group of states that sued to break up Facebook-parent Meta in 2020 were years too late to file their challenge and failed to make a persuasive case that the company’s data policies harmed competition, a federal appeals court ruled Thursday in a sweeping victory for the tech giant.

    In siding with Meta, the decision by a three-judge panel of the US Court of Appeals for the DC Circuit upheld a lower-court decision tossing out the suit initially filed by New York and dozens of other states.

    The decision is a blow to regulators who have cited Meta as a prime example of the way tech giants have allegedly abused their dominance. And it casts a shadow over a parallel antitrust case against Meta that was brought by the Federal Trade Commission at around the same time.

    The states’ original complaint had sought to unwind Meta’s past acquisitions of Instagram and WhatsApp, accusing the company of a “buy-or-bury” approach that violated antitrust laws.

    In 2021, a federal judge dismissed the complaint, saying that the lawsuit came long after the acquisitions had been completed in 2012 and 2014. Thursday’s appellate decision agreed.

    “An injunction breaking up Facebook, ordering it to divest itself of Instagram and WhatsApp under court supervision, would have severe consequences, consequences that would not have existed if the States had timely brought their suit and prevailed,” wrote Senior Circuit Judge Raymond Randolph.

    In addition, Randolph wrote, state allegations claiming that Meta’s — then Facebook’s — policies placing restrictions on app developers were anticompetitive didn’t hold up.

    The policies in question, Randolph wrote, simply told app developers they could not use Facebook’s platform “to duplicate Facebook’s core products,” and did not rise to the level of an antitrust violation under federal law.

    Although the states argued that Facebook’s policies at the time — which have since been removed — discouraged innovation by the company’s rivals, the complaint failed to establish how widely the policies affected Facebook’s third-party developers.

    “The States thus have not adequately alleged that this policy substantially foreclosed Facebook’s competitors, giving us an additional reason to reject their exclusive dealing theory,” the court held.

    A spokesperson for New York Attorney General Letitia James didn’t immediately respond to a request for comment.

    In a statement, Meta said the state’s case reflected a mischaracterization of “the vibrant competitive ecosystem in which we operate.”

    “In affirming the dismissal of this case, the court noted that this enforcement action was ‘odd’ because we compete in an industry that is experiencing ‘rapid growth and innovation with no end in sight,’ Meta said. “Moving forward, Meta will defend itself vigorously against the FTC’s distortion of antitrust laws and attacks on an American success story that are contrary to the interests of people and businesses who value our services.”

    In spite of Thursday’s decision, Meta must still face a similar lawsuit by the FTC, which also seeks to break up the company in connection with its Instagram and WhatsApp acquisitions.

    Last year, the same federal judge who dismissed the state suit, James Boasberg, allowed the federal suit to proceed. Boasberg had tossed out the FTC suit as well in 2021, saying the agency had failed to make an initial showing that Meta holds a monopoly in personal social networking. But he permitted the FTC to re-file its complaint with changes.

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  • Microsoft to pay $20 million to settle Xbox Live privacy allegations | CNN Business

    Microsoft to pay $20 million to settle Xbox Live privacy allegations | CNN Business

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    Washington
    CNN
     — 

    Microsoft will pay $20 million to settle US government allegations that the tech giant violated children’s privacy by illegally collecting their personal information through its Xbox Live gaming service.

    According to the Federal Trade Commission, Microsoft broke the law by failing to tell parents about the full breadth of information it gathered from kids under the age of 13.

    That information, the FTC said in a lawsuit filed Monday, included the fact that children may share images of themselves in their account profiles, as well as video and audio recordings of themselves, their real names and logs of their activity on the platform.

    Microsoft also allegedly kept for years the personal information of millions of people, including children, who started creating accounts with Xbox Live but who never completed the sign-up process.

    “Even when a user indicated that they were under 13, they were also asked, until late 2021, to provide additional personal information including a phone number and to agree to Microsoft’s service agreement and advertising policy, which until 2019 included a pre-checked box allowing Microsoft to send promotional messages and to share user data with advertisers,” the FTC said in a release.

    In a statement, Microsoft said: “We recently entered into a settlement with the U.S. Federal Trade Commission (FTC) to update our account creation process and resolve a data retention glitch found in our system. We are committed to complying with the order.”

    Parental settings give adults some control over what their children’s accounts show to other users. For example, Xbox Live’s default settings restrict who children can interact with on the service, the FTC said. But other default settings, the agency alleged, allow kids to access third-party games and apps with minimal friction.

    Microsoft failed to sufficiently disclose to parents what information the company was collecting from kids and how it was being used, the FTC said, alleging violations of the Children’s Online Privacy Protection Act (COPPA).

    In agreeing to settle the claims, Microsoft committed to several additional measures beyond the financial penalty.

    Microsoft agreed to delete any personal information it collects from kids if they don’t complete the account registration process. It also agreed to tell third-party game publishers when a user may be a child, effectively putting the third-party publishers on notice to comply with COPPA in handling the user’s information.

    The settlement comes as the FTC has challenged Microsoft’s $69 billion acquisition of video game giant Activision-Blizzard, a proposed deal that would turn Microsoft into the world’s third-largest game publisher and give it control over popular franchises such as “Call of Duty” and “World of Warcraft.”

    US and UK officials have alleged that Microsoft’s acquisition could give it anti-competitive control over the games industry by being able to withhold titles from rival platforms, particularly in the nascent cloud gaming sector. To address the concerns, Microsoft has struck licensing deals with other companies to ensure their customers continue to have access to Activision games following the deal’s close.

    Those concessions have convinced the European Union to approve the deal, but litigation to block the deal involving US and UK regulators remains ongoing.

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  • 5 ways a debt default could affect you | CNN Politics

    5 ways a debt default could affect you | CNN Politics

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    CNN
     — 

    President Joe Biden and House Republicans may have as little as a month to prevent the US from defaulting on its debt, which would impact millions of Americans and unleash economic and fiscal chaos here and around the world.

    Treasury Secretary Janet Yellen warned Monday that the government may not be able to pay all of its bills in full and on time as soon as June 1. However, the forecast was uncertain, and the default date might come several weeks later, she said. The US hit its $31.4 trillion debt ceiling in January, and Treasury has been using cash and “extraordinary measures” to satisfy obligations since then.

    Just what would happen if the nation defaults on its debt is unknown since it’s never actually happened before. A close call in 2011 roiled the financial markets and prompted Standard & Poor’s to downgrade the US’ credit rating to AA+ from AAA.

    Yellen gave a sense of the turmoil it would cause in her letter to House Speaker Kevin McCarthy on Monday.

    “If Congress fails to increase the debt limit, it would cause severe hardship to American families, harm our global leadership position, and raise questions about our ability to defend our national security interests,” she wrote.

    To be clear, a debt default doesn’t mean all payments would stop and people would permanently lose out on money they are owed. Treasury would have the funds to satisfy some obligations, but it’s not certain how the agency would handle the disbursements. Much would also depend on how long it takes Congress to address the borrowing cap.

    “Tens of millions of people across the country who expect payments from the federal government may not get them on time,” said Shai Akabas, director of economic policy at the Bipartisan Policy Center.

    Here are five ways that Americans could be affected by debt default:

    About 66 million retirees, disabled workers and others receive monthly Social Security benefits. The average payment for retired workers is $1,827 a month in 2023.

    Almost two-thirds of beneficiaries rely on Social Security for half of their income, and for 40% of recipients, the payments constitute at least 90% of their income, according to the National Committee to Preserve Social Security and Medicare.

    These payments could be delayed in a debt default scenario, though it’s possible Treasury could continue making on-time payments because of the entitlement program’s trust fund, Akabas said.

    The benefits are disbursed four times a month, on the third day of the month and on three Wednesdays. Roughly $25 billion a week is sent out, according to the Congressional Budget Office.

    “Even a short delay in the payment of Social Security benefits would be a burden for the millions of Americans who rely on their earned benefits to pay for out-of-pocket health care expenses, food, rent and utilities,” Max Richtman, the committee’s CEO, said in a statement.

    Many other government payments could also be affected, including funding for food stamps; federal grants to states and municipalities for Medicaid, highways, education and other programs; and Medicare payments to hospitals, doctors and health insurance plans.

    More than 2 million federal civilian workers and around 1.4 million active-duty military members could see their paychecks delayed. Federal government contractors could also see a lag in payments, which could affect their ability to compensate their workers.

    Also, certain veterans benefits, including disability payments and pensions for some low-income veterans and their surviving families, could be affected.

    “Such calamity would place further stress on our servicemembers, retirees, and veterans, as well as their families, caregivers, and survivors,” Rene Campos, senior director of government relations for the Military Officers Association of America, said in a blog post. “Though life in uniform is not always predictable, those who serve or have served their country expect their country to honor their commitment to service.”

    About $25 billion in pay or benefits for active-duty members of the military, civil service and military retirees, veterans and recipients of Supplemental Security Income is sent out on the first day of the month, according to the CBO.

    Americans’ investments would take a direct hit. Case in point: Markets had what was then their worst week since the financial crisis during the 2011 debt ceiling standoff after the Standard & Poor’s downgrade.

    Even if the debt ceiling impasse is resolved soon after a default, stocks could shed as much as a third of their value. That would wipe out around $12 trillion in household wealth, according to Moody’s Analytics.

    If a default occurs, yields on US Treasuries will inevitably rise to compensate for the increased risk that bondholders won’t receive the money they’re owed from the government.

    Since interest rates on loans, credit cards and mortgages are often based on Treasury yields, the cost of borrowing money and paying off debt would rise. That’s on top of the increased costs Americans are already facing from the Federal Reserve rate hikes.

    Families and businesses would also have a tougher time getting approved for lines of credit since banks would have to be more selective about to whom they loan money. That’s because their costs of borrowing money will also rise, which limits the amount of money they can lend out.

    A debt default could trigger an economic downturn, which would prompt a spike in unemployment. It would come at a particularly fragile time – when the nation is already dealing with rising interest rates and stubbornly high inflation.

    How much damage would be done would depend on how long the crisis continues. If the default lasts for about a week, then close to 1 million jobs would be lost, including in the financial sector, which would be hard hit by the stock market declines. Also, the unemployment rate would jump to about 5% and the economy would contract by nearly half a percent, according to Moody’s.

    But if the impasse dragged on for six weeks, then more than 7 million jobs would be lost, the unemployment rate would soar above 8% and the economy would decline by more than 4%, according to Moody’s. The effects would still be felt a decade from now.

    “It would be a body blow to the economy, and it would be a manufactured crisis,” said Bernard Yaros, an economist at Moody’s.

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  • Accelerating the EV revolution whether you like it or not | CNN Politics

    Accelerating the EV revolution whether you like it or not | CNN Politics

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    A version of this story appears in CNN’s What Matters newsletter. To get it in your inbox, sign up for free here.



    CNN
     — 

    The Environmental Protection Agency proposed a plan to remake the way car-obsessed Americans live, using public safety rules to accelerate the shift from internal combustion to electric vehicles.

    Just a fraction of the current auto market is EVs, but under standards announced by the EPA Wednesday, up to two-thirds of new vehicles sold in the US would be zero-emission or plug-in hybrid within a decade.

    The rules, which are not yet final, would use authority under the Clean Air Act to force auto companies to cut pollution and slash vehicle emissions by more than half. They would phase in with model year 2027 vehicles and be fully implemented by 2032. Read CNN’s full report.

    While ambitious, the goals are not unprecedented. They put the federal government on track to catch up with state governments, led by California, that want to stop allowing the sale of internal combustion vehicles by 2035. Read this report from CNN Business about why that’s not as crazy as it seems.

    There is a very big legal question mark looming behind California’s action and the EPA’s effort, which still has a public comment and revision period.

    The current Supreme Court, dominated by conservative justices, has already shown its scorn for EPA rulemaking and its indifference to addressing climate change. Last year, the court nixed the Biden administration’s plan to curb emissions from existing power plants.

    I asked CNN climate reporter Ella Nilsen for her takeaways from the EPA announcement. She offered these key points:

    ► The standards are ambitious, but doable

    If enacted, the newly proposed EPA emissions standards would be one of the Biden administration’s most aggressive climate-change policies yet – moving the US auto market decisively toward electric vehicles in the next decade.

    However, multiple experts said the standards are doable, and even lag slightly behind the California standards, which will completely phase out the sale of gas-powered cars by 2035 to usher in electric vehicles. The US is also following countries including the EU and China, which are moving more aggressively toward electric vehicles.

    ► Charging infrastructure and consumer incentives could be tricky

    This new proposed rule won’t happen overnight; it would be gradually phased in over the next decade. At the same time, the US needs to build up a network of electric charging stations in addition to the ubiquitous gas station. Federal officials have also talked about needing to incentivize more Americans to buy EVs by bringing the cost down, with federal tax credits.

    However, the new $7,500 tax credits (passed last year by Democrats in the Inflation Reduction Act) are incredibly complex due to manufacturing requirements. The credits could actually shrink the eligible number of cars that qualify (however, leased vehicles have more leeway under the new system). Regardless, it will take years for the EV infrastructure, incentives and supply to fall into place to make electric vehicles available to most Americans.

    ► This is a big deal for US climate policy

    This rule will impact the US economy, but it’s also major climate policy. The proposed EPA tailpipe standards would cut planet-warming pollution from US cars in half. Combined with the agency’s medium and heavy-duty vehicles standard, the proposals could cut nearly 10 billion tons of CO2 emissions by 2055.

    Given Americans’ reliance on cars, transportation is a big part of overall US emissions – it accounts for nearly 30% of all greenhouse gas emissions in the US, according to the EPA. Cutting down on tailpipe pollution from gas-powered cars and trucks is a big part of decarbonizing the US.

    While the federal government and key states are all in on moving toward EVs, and auto companies are spending big to get competitive in the market, Americans generally are not yet completely embracing the idea.

    Just 4% of Americans currently own an EV, and a scant 12% are seriously considering buying one, according to a Gallup poll released Wednesday. Less than half, 43%, say they would consider buying an EV in the future, and a sizable 41% are completely closed off to the idea.

    The expected partisan breakdown applies to those figures. Most of the interest in EVs is among Democrats. Most of the staunch opposition is among Republicans. Younger Americans and those making $100,000 and above are also more interested in buying an EV in the future.

    There are also key regional disparities. In the West, where states are already working to phase in EVs, only 28% say they would not buy an EV. Compare that to half of Southerners who would not consider buying an EV.

    A majority of the country is skeptical that EVs will even have an effect on the climate, according to the poll, with 61% saying EVs will help address climate change only a little or not at all.

    In a separate AP-NORC poll released this week, the most-cited major reasons for not wanting to purchase an EV – out of eight offered in the poll – were expense (60% said they cost too much) and convenience (50% said there aren’t enough charging stations available).

    Access and affordability should be addressed as inventory increases, writes CNN’s Peter Valdes-Dapena, who covers the auto industry. A decade from now, charging should be quicker and easier, EV ranges should be longer and prices should be at or below the cost of an internal combustion vehicle. Read his full report.

    Rather than fighting the rules, as the fossil fuel industry is sure to do, the auto industry is already investing heavily in EVs, responding to tougher regulation already imposed around the world and by California, which moved to ban the sale of new gas and diesel powered vehicles by 2035.

    California actually took the lead on pushing for EVs in the years when the Trump administration was dialing back on federal climate policy. Other states, like Oregon, Washington and Minnesota, have tied their standards to California’s.

    Valdes-Dapena notes that car companies with loyal customer bases are slowly making the switch. He writes:

    Currently, Toyota offers only one electric model in the United States, the BZ4X SUV, but more are planned. Honda, another Japanese brand with a loyal following, offers no EVs currently but the company is gearing up factories in Ohio to build future EV models. Honda expects to offer its first EV next year. General Motors also has a number of EV models coming in the next year or two.

    He also notes that GM has pledged to sell only electric passenger vehicles by 2035.

    And no, this does not mean internal combustion vehicles will be banned. They will still make up the vast majority of vehicles on the road in a decade even if this rule is finalized and withstands challenges in court. But it would represent a tectonic shift.

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  • FTC to seek federal court order temporarily blocking Microsoft-Activision deal | CNN Business

    FTC to seek federal court order temporarily blocking Microsoft-Activision deal | CNN Business

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    CNN
     — 

    The Federal Trade Commission on Monday sued to prevent Microsoft and Activision-Blizzard from closing their $69 billion merger.

    The filing asks the US District Court for the Northern District of California for a temporary restraining order that could keep the companies from consummating the acquisition while the FTC’s in-house court is deliberating on the deal.

    The FTC sued Microsoft in the agency’s administrative court in December, challenging the deal as anticompetitive.

    “Both a temporary restraining order and a preliminary injunction are necessary because Microsoft and Activision have represented that they may consummate the Proposed Acquisition at any time without any further notice to the Commission,” the FTC’s court filing said.

    “We welcome the opportunity to present our case in federal court,” Brad Smith, Microsoft’s president, said in a statement. “We believe accelerating the legal process in the U.S. will ultimately bring more choice and competition to the market.”

    UK competition regulators have also challenged the deal, which promises to make Microsoft the world’s third-largest video game publisher after Tencent and Sony. The acquisition would give Microsoft control over popular franchises including “Call of Duty” and “World of Warcraft.”

    Officials from the FTC and the UK have claimed that the deal could harm the gaming industry by allowing Microsoft to withhold Activision titles from rival platforms, such as Sony’s Playstation. Microsoft has struck 10-year licensing agreements with some game platforms that will ensure those titles remain available.

    Antitrust officials from the European Union blessed the deal last month, saying that Microsoft’s concessions were enough to address its competition concerns.

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