Look in the night sky this weekend for February’s full moon, where it can be glimpsed around the world.
It will reach peak illumination around 1:29 p.m. ET Sunday, but the moon will appear full from early Saturday morning through early Tuesday morning, according to NASA.
The full moon is considered a micromoon because it appears slightly smaller than normal in our sky due to its distant location in orbit around Earth right now, according to EarthSky. January’s full moon was also a micromoon.
The moon will still be very brighteven though it’s 252,171 miles (405,830 kilometers) away.
It is known as the snow moon, according to the Old Farmer’s Almanac, since February is associated with more snowfall in North America. The Arapaho tribe’s name for February’s full moon means “frost sparkling in the sun,” according to a guide compiled at Western Washington University.
Wintry-sounding names for February’s full moon vary across other Native American tribes. The Comanche call it sleet moon, while the Lakota know it as cannapopa wi, which means “when trees crack because of cold.” The month was also associated with hunger and a lack of food sources, hence the Kalapuya tribe’s moon name atchiulartadsh, or “out of food.”
Europeans have referred to February’s full moon as the Candles moon, connected to Candlemas on February 2, or the Feast of the Presentation of Jesus Christ. The moon also occurs with the end of Lunar New Year celebrations, which is the Lantern Festival.
The full moon falls in the middle of themonth of Shevat and on the holiday Tu BiShvat on the Hebrew calendar, or “New Year of the Trees,” which is celebrated by planting trees and raising ecological awareness.
Here are the rest of 2023’s top sky events, so you can have your binoculars and telescope ready.
Most years, there are 12 full moons — one for each month. But in 2023, there will be 13 full moons, with two in August.
The second full moon in one month is known as a blue moon, like the phrase “once in a blue moon,” according to NASA. Typically, full moons occur every 29 days. But most months in our calendar last 30 or 31 days, so the months and moon phases don’t always align, resulting in a blue moon about every 2½ years.
The two full moons in August can also be considered supermoons, according to EarthSky. Definitions of a supermoon vary, but the term generally denotes a full moon that is brighter and closer to Earth than normal and thus appears larger in the night sky.
Some astronomers say the phenomenon occurs when the moon is within 90% of perigee — its closest approach to Earth in orbit. By that definition, the full moon for July will also be considered a supermoon event, according to EarthSky.
Here is the list of remaining full moons for 2023, according to the Farmer’s Almanac:
If you live in an urban area, you may want to drive to a place that isn’t full of bright city lights to view the showers. If you’re able to find an area unaffected by light pollution, meteors could be visible every couple of minutes from late evening until dawn, depending on which part of the world you’re in.
Find an open area with a wide view of the sky. Make sure you have a chair or blanket so you can look straight up. And give your eyes about 20 to 30 minutes to adjust to the darkness — without looking at your phone — so the meteors will be easier to spot.
A total solar eclipse will occur on April 20, visible to those in Australia, New Zealand, Southeast Asia and Antarctica. This kind of event occurs when the moon moves between the sun and Earth, blocking out the sun.
And for some sky watchers in Indonesia, parts of Australia and Papua New Guinea, it will bea hybrid solar eclipse. The curvature of Earth’s surface can cause some eclipses to shift between total and annular as the moon’s shadow moves across the globe, according to NASA.
Like a total solar eclipse, the moon passes between the sun and Earth during an annular eclipse — but it occurs when the moon is at or near its farthest point from Earth, according to NASA. This causes the moon to appear smaller than the sun, so it doesn’t completely block out our star and creates a glowing ring around the moon.
A Western Hemisphere-sweeping annular solar eclipse will occur on October 14 and be visible across the Americas.
Be sure to wear proper eclipse glasses to view solar eclipses safelyas the sun’s light can be damaging to the eyes.
Meanwhile, a lunar eclipse can occur only during a full moon when the sun, Earth and moon align and the moon passes into Earth’s shadow. When this occurs, Earth casts two shadows on the moon during the eclipse. The partial outer shadow is called the penumbra; the full, dark shadow is the umbra.
When the full moon moves into Earth’s shadow, it darkens, but it won’t disappear. Instead, sunlight passing through Earth’s atmosphere lights the moon in a dramatic fashion, turning it red — which is why the event is often referred to as a “blood moon.”
Depending on the weather conditions in your area, it may be a rusty or brick-colored red. This happens because blue light undergoes stronger atmospheric scattering, so red light will be the most dominant color highlighted as sunlight passes through the atmosphere and casts it on the moon.
A penumbral lunar eclipse will occur on May 5 for those in Africa, Asia and Australia. This less dramatic version of a lunar eclipse happens when the moon moves through the penumbra, or the faint, outer part of Earth’s shadow.
A partial lunar eclipse of the hunter’s moon on October 28 will be visible to those in Europe, Asia, Australia, Africa, parts of North America and much of South America. Partial eclipses occur when the sun, Earth and moon don’t completely align, so only part of the moon passes into shadow.
The economy wasn’t supposed to add half a million jobs in January.
In fact, a consensus poll of 81 economists expected job gains to land at around 185,000, according to Refinitiv. After 11 months of aggressive rate hikes from the Federal Reserve, the experts were naturally expecting the economy’s job gains to slow as higher borrowing costs percolated through the economy, slowing investment and growth and pushing companies to pull back on spending and hiring.
And yet, even though it seemed impossible, the labor market is somehow getting tighter, said Rucha Vankudre, senior economist at business analytics firm Lightcast.
“I think pretty much all the labor economists in the country this morning are shocked,” Vankudre said Friday during a webinar after the jobs report was released. I think the question on everyone’s mind is, ‘How can the labor market keep getting stronger and stronger, and how can this keep happening while at the same time we are seeing prices come down?’”
Instead of lending credence to what was a bubbling belief in a soft landing, Friday’s jobs report only seems to beg more questions about not only the state of the economy, but also of the Federal Reserve’s attempts to hammer down high inflation.
On Wednesday, the Fed concluded its first policymaking meeting of 2023 by green-lighting a quarter-point interest rate hike — the smallest since March — as a reflection of progress in its fight to lower inflation.
The more moderate increase had been long telegraphed and came despite a hotter-than-expected December Job Openings and Labor Turnover Survey (JOLTS) report, which showed job openings grew to more than 11 million, or 1.9 available jobs for every job seeker.
Fed officials remain laser focused on wages and inflation, and are seeing some progress there, said Elizabeth Crofoot, Lightcast senior economist. Fluctuations are to be expected in any economic data, and it’s (always) important to remember that “one month does not make a trend,” especially for January data, she said.
“I think [Fed officials] are going to say, ‘Let’s continue to keep our eye on the data,’ and they’re going to hold steady until they see that inflation rate come down,” Crofoot said.
The January jobs report shouldn’t trigger a wholesale change of what Fed members are thinking or what they were planning on doing before this report, Sarah House, senior economist at Wells Fargo, told CNN.
“I think it suggests that the labor market remains still very strong, and there’s still a lot of wage pressures coming from that strong labor market that the Fed needs to contend with if it’s going to get inflation back to 2% on a sustained basis,” House said, noting the Fed’s target inflation rate.
The Covid pandemic was a tremendous shock to global economies, and the US labor force is still showing the effects of historic employment losses, sudden shifts in consumer behavior, discombobulated supply chains, and efforts to return to a state of normality.
The employment recovery since 2021 has been historically robust, with the monthly job gains larger than anything seen on record.
January’s jobs report came with added complexity, because it included annual updates to populations estimates and revisions to employer survey data.
“Now we know both [2021 and 2022] had faster job growth than we previously realized,” said University of Michigan economists Betsey Stevenson and Benny Doctor in a statement Friday. “The patterns remain the same: Job growth accelerated in the second half of 2021 before slowing in the first half of 2022 and slowing further in the second half of 2022.”
The January reports also bring with them “seasonal noise,” said Joe Brusuelas, principal and chief economist for RSM US.
“I’m advising policymakers and clients to ignore the topline number [of 517,000],” he said, noting it’s likely a function of seasonal adjustments and a reflection of swings in hiring activity and traditional cutbacks that take place from mid-December to mid-January.
“That being said, even if a downward revision takes away 200,000 or so off the top, you still are sitting at around 300,000,” he added.
“The job market is clearly too robust at this time to re-establish price stability; therefore, the Federal Reserve is going to have to not only hike by 25 basis points at its March meeting, it’s going to have to do so at the May meeting,” he predicted.
Last summer, Fed Chair Jerome Powell warned that “some pain” (aka rising unemployment) would likely be felt as a result of the Fed’s sweeping efforts to tackle inflation.
Yet Powell did not once utter the word “pain” during his press conference on Wednesday, said Mark Hamrick, senior economic analyst with Bankrate.
“If they were to put money on it, I think Las Vegas oddsmakers would be doubling down right now on the soft landing scenario — not to say that’s the base case, per se, but the chances seem to be growing,” Hamrick said.
“If anything, the global economic scenario has brightened in recent days and weeks — and we got a significant ray of sunshine with this January employment report, including all the revisions — but that’s not to say that consumers or businesses should be complacent with respect to an eventual risk of a recession,” he said.
So for now, the chances of a soft landing remain unknown.
“This is sort of a bumpy, turbulent ride to who knows where,” Crofoot said.
The US economy added an astonishing 517,000 jobs in January, showing that the labor market isn’t ready to cool down just yet.
The unemployment rate fellto 3.4% from 3.5%, hitting a level not seen since May 1969 — two months before Neil Armstrong stepped on the moon — according to new data released Friday by the Bureau of Labor Statistics.
Economists were expecting 185,000 jobs would be added last month, based on consensus estimates on Refinitiv.
“With 517,000 new jobs added in January 2023 and the unemployment rate at 3.4%, this is a blockbuster report demonstrating that the labor market is more like a bullet train,” Becky Frankiewicz, president and chief commercial officer of ManpowerGroup, said Friday.
The shockingly strong monthly jobs gain — a number that several economists cautioned was influenced by seasonal factors and is subject to future revisions — bucks a trend of five consecutive months of moderating job growth during the latter half of 2022.
“The blowout 517,000 increase in total employment was almost certainly a function of seasonal noise and traditional churn in early-year job and wage environment and exaggerates what is already a robust trend in hiring,” Joe Brusuelas, principal and chief economist with RSM US, said in a statement.
Nonetheless the juggernaut of a report may cause complications for the Federal Reserve, which has been trying to tame high inflation with higher interest rates, said Seema Shah, chief global strategist of Principal Asset Management.
“Is [Fed Chair Jerome] Powell now wondering why he didn’t push back on the loosening in financial conditions?” Shah said in a statement. “It’s difficult to see how wage pressures can possibly soften sufficiently when jobs growth is as strong as this, and it’s even more difficult to see the Fed stop raising rates and entertain ideas of rate cuts when there is such explosive economic news coming in.”
“The market is going to go through a roller coaster ride as it tries to decide if this is good or bad news. For now, though, looks like the US economy is doing absolutely fine,” she said.
Still, the report also showed that wage growth moderated on an annual basis: Average hourly earnings fell 0.4 percentage points to 4.4% year over year. Monthly wage gains held steady at 0.3%.
“It’s quite remarkable to see such a realignment of the employment picture coinciding with an easing of wage pressure,” Mark Hamrick, senior economic analyst for Bankrate, said in an interview. “I think that might be part of this report that could help keep blood pressures down among Federal Reserve officials in the near term.”
Additionally, average weekly hours jumped to 34.7 hours from 34.3, and employment in temporary help services rebounded after two months of declines, indicating further demand for labor, noted Julia Pollak, chief economist at ZipRecruiter.
The report also showed an increase in the closely watched labor force participation rate to 62.4% from 62.3%. However, the increase in the share of people working or looking to work was a function of the BLS’ annual benchmark revisions to its household survey, one of two surveys that factor in to the monthly jobs report, noted PNC chief economist Gus Faucher.
Had it not been for the revisions, that number would have been unchanged at 62.3%, he added.
“The labor market is structurally tighter post-pandemic,” he said.
Every January, the BLS makes revisions on its employment data to reflect updated population estimates and other factors.
“On net, you saw stronger hiring in 2022 than what was initially reported,” said Sarah House, chief economist with Wells Fargo, told CNN.
Average monthly job growth in 2022 was revised up from an average of 375,000 per month to 401,000, she said.
Seasonality questions aside, other trends do align to support a strong January 2023 jobs report, Bankrate’s Hamrick said.
“When you have a number of things lining up, almost like a crime scene investigation, it tends to lend some credibility to that question of believability,” he said of the surprising half-a-million-plus job gains. “What are the things that are lining up? The continued remarkably low level of jobless claims, the rise in job openings, the increase in labor force participation.”
The gains were also widespread across industries, with job growth led by leisure and hospitality, professional and business services, and health care, according to the BLS report.
Industries that shed jobs last month included motor vehicles and parts (down 6,500 jobs), utilities (down 700 jobs) and information (down 5,000 jobs).
In recent months, mass layoff announcements — especially from Big Tech — had spurred concern that the cutbacks were a harbinger of broader cutbacks to come.
That doesn’t appear to be the case, considering jobless claims have remained historically low, job openings haven’t slipped and job gains remain strong, said Giacomo Santangelo, economist at Monster.
“The news is talking about big names laying off, but we don’t really hear what happens at small firms with less than 200 employees,” he said. “What we’re seeing at Monster is a lot of firms, a majority of firms, are looking to hire.”
The glut of available jobs — there are 1.9 open positions for every one job seeker — coupled with skills that are in high demand mean that workers are likely finding jobs quickly, he said. Additionally, those laid off by large technology firms likely received generous severance packages, so not all are filing for unemployment benefits.
Friday’s report showed that the median duration of unemployment was 9.1 weeks, just a smidge above the pre-pandemic level of 8.9 weeks in February 2020.
Every year the Federal Reserve’s policymaking committee— aka the officials who decide interest rate moves — gets a slight refresh, with four of the district presidentsrotating out as official voting members and four rotating in.
The 2023 rotation brings a more dovish-leaning flock, and it comes during a critical year for the US central bank and the American economy.
This year the Federal Open Market Committee’s new voting members include the newest district president Austan Goolsbee, head of the Chicago Fed; Patrick Harker, of the Philadelphia Fed; Lorie Logan, the Dallas Fed president who started in August 2022; and Neel Kashkari, president of the Minneapolis Fed.
Rotating out as voting members are James Bullard of the St. Louis Fed; Susan Collins of the Boston Fed; Esther George, the Kansas City Fed chief who’s also retiring this month; and Loretta Mester of the Cleveland Fed.
On the whole the FOMC contingent remains largely similar, with eight of the 12 voting members continuing from 2022. The non-voting members still lend their voices and perspectives to the proceedings.
Following a stretch of seven consecutive heavy-handed interest rate hikes last year to battle rising prices, the Fed this year is expected to take a more delicate approach to its blunt monetary policy tools by downshifting on rate increases to an eventual idle.
For new Fed members, be they governors or district presidents, it can take a while to stake out their territory and potentially differ from consensus, said Ellen Meade, a Duke University economics professor who had a 25-year career at the Fed.
History has shown that the Reserve bank presidents typically tend to dissent more than board members; however, even that is a small percentage — about 7% — of votes cast, she added.
“I’m not expecting that we will see a lot of dissent in terms of votes,” she said. “I think where we might see it is how they color the data that they’re seeing.”
“Hawks” and “doves” are commonly used terms to describe Fed members’ differing monetary policy approaches. Doves tend to favor looser monetary policy and issues like low unemployment over low inflation. Hawks, however, favor robust rate hikes and keeping inflation low above all else.
“If I had to qualify them as the hawkish- or dovish-leaning, I would say that last year’s constellation was a reasonably hawkish one, and this year’s constellation is almost certainly not quite as hawkish,” Meade said.
That could change, however, if Federal Reserve Vice Chair Lael Brainard leaves to head President Joe Biden’s economic council. Brainard has been considered as leaning more dovish than Powell and others, so her departure could result in a more hawkish shift in ideology at the top of the Fed.
This particular Fed is obviously not quite as well known, Meade noted, adding that “because we have some new policymakers voting in 2023, we don’t have as much information on their policy inclinations as we did for last year’s voters.”
For any potential split to occur would take some large moves in labor market outcomes – something not seen to this point, Meade said.
“If [moderating inflation] holds up and the labor market softens but doesn’t take a very negative turn, then I think consensus is with us,” she said. “I think the question is what happens if the labor market starts to turn quickly?”
The Fed has indicated, through its economic projections, that it would tolerate unemployment rising to the 4.5% to 4.75% range. But if that grows closer or past 5% and inflation hasn’t moderated as much as desired, “then I think we’re in a place where we’re going to see more signs of disagreement.”
As it stands now, Fed officials have largely been singing from the same songbook, said Claudia Sahm, a former Fed economist and founder of Sahm Consulting.
“Whether it was voting members or non-voting members, you didn’t see a lot of pushback in public,” she said. “There was really a unified force of ‘we’re going to go big, and we’re going to go fast.’”
“The Fed is being very clear across the board, even people you would think of as more ‘dovish,’ that they do not want to let up too soon and get us into a situation where then they have to come back and do even more,” she said. “I don’t think that switching up who’s voting will matter much.”
“They’re all hawks now,” Sahm added.
The Fed also does not want to be in a position where it is lulled into a false sense of security by positive inflation data, she added. Fed Governor Christopher Waller put it bluntly in a speech last week: “We do not want to be head-faked.”
“It’s going to take months and months of good news, and frankly, we’re in store for a bumpy ride this year,” Sahm said. “It’s not like every month is going to be good news on inflation.”
2023 Federal Open Market Committee
Permanent voting members (Board of Governors):
Jerome Powell, chair
Lael Brainard, vice chair
Michael Barr, vice chair for supervision
Michelle Bowman, governor
Lisa Cook, governor
Philip Jefferson, governor
Christopher Waller, governor
Voting Districts:
John Williams, New York (permanent voting district)
*Austan Goolsbee, Chicago
*Patrick Harker, Philadelphia
*Lorie Logan, Dallas
*Neel Kashkari, Minneapolis
Non-voting districts:
Helen Mucciolo, interim first vice president, New York
Loretta Mester, Cleveland
Thomas Barkin, Richmond
Raphael Bostic, Atlanta
Mary Daly, San Francisco
James Bullard, St. Louis
Esther George, Kansas City (plans to retire this month)
A version of this story first appeared in CNN Business’ Before the Bell newsletter. Not a subscriber? You can sign up right here.
New York CNN
—
The Federal Reserve is going to raise interest rates again on Wednesday. But will it be another half-point hike or just a quarter-point increase? And what about the rest of the year?
The Fed’s actions beyond this week’s meeting will depend primarily on whether inflation is truly slowing. Investors will get another clue when the January jobs report is released on Friday.
Economists predict that 185,000 jobs were added last month, a slowdown from the gain of 223,000 jobs in December and 263,000 in November. A further deceleration in the labor market would likely please the Fed, as it would show that last year’s rate hikes are successfully taking some air out of the economy.
The Fed knows it’s in a tough situation. Inflation pressures are partly fueled by wage gains for workers. In an environment where the unemployment rate is at a half-century low of 3.5%, employees have been able to command big increases in pay to keep up with rising prices of consumer goods and services.
Along those lines, average hourly earnings, a measure of wages that is also part of the monthly jobs report, are expected to increase 4.3% year-over year. That’s down from 4.6% in December and 5.1% in November.
As wage growth cools, so do price increases. The Fed’s favorite measure of inflation – the Personal Consumption Price Index or PCE – rose “just” 5% over the past 12 months through last December, compared to a 5.5% annual increase in November.
That is still uncomfortably high, but the trend is moving in the right direction.
The problem for the Fed, though, is that it may need to keep raising interest rates until there is further evidence that the labor market is cooling off enough to push the rate of inflation even lower.
Several other job market indicators continue to show that the US economy is in no serious danger of a recession just yet. The number of people filing for weekly jobless claims dipped last week to 186,000, a nine-month low. Investors will get the latest weekly initial claims numbers on Thursday.
The market will also be closely watching reports about private-sector job growth from payroll processor ADP and the Job Openings and Labor Turnover Survey (JOLTS) from the Department of Labor this week. The last JOLTS report showed that more jobs were available than expected in November.
Still, some expect that wage growth should continue to fall, which should take pressure off the Fed somewhat.
“Wage growth has been on a slowing trajectory, and we suspect that softer wage growth will be a trend in 2023 as jobs available contract,” said Tony Welch, chief investment officer at SignatureFD, a wealth management firm, in a report.
Not everyone agrees with that assessment. Organized labor has been winning bigger pay increases lately in the transportation industry. And more workers at tech and retail giants have been unionizing as of late.
“Workers will be loath to relinquish the bargaining power they perceive to have gained over the past year,” said Jason Vaillancourt, global macro strategist at Putnam, in a report.
Vaillancourt also pointed out that many consumers are still flush with cash that they saved up during the early stages of the pandemic. That could mean that inflation isn’t going away anytime soon.
And even though the pace of jobs gains may be slowing, it’s not as if economists are starting to predict monthly job losses like the US has had in previous recessions.
“Combine a strong labor market with a still substantial reserve of excess savings, and you have all the components in place to keep the Fed up at night,” Vaillancourt said.
So as long as hopes for an economic “soft landing” persist, the Fed will have to keep worrying that inflation is too high. That increases the chances the Fed could go too far with rate hikes and ultimately lead to a recession.
Wall Street is clearly buying into the “soft landing” argument. Just look at how well tech stocks have done so far this year, despite a series of high-profile layoff announcements from top Silicon Valley companies in the past few months.
The Nasdaq is up 11% so far in January, putting it on track for its best monthly performance since July.
Some argue that more tech layoffs won’t be a problem. Investors seem to be (somewhat perversely) taking the view that companies cutting costs is a good thing for profits and that revenue likely won’t be impacted in a negative way because consumers are still spending.
“A theme that can’t go unnoticed this month is how traders are rewarding firms for cutting jobs. With corporate layoffs making headlines each evening, you might think the consumer is strained. Maybe not so much. It turns out that demand is decent,” said Frank Newman, portfolio manager at Ally Invest, in a report.
But a continuation of the Nasdaq’s surge may depend a lot on how well a quartet of tech leaders do when they report fourth quarter earnings next week: Facebook and Instagram owner Meta Platforms, Apple
(AAPL), Google owner Alphabet
(GOOGL) and Amazon
(AMZN).
“A set of much weaker-than-expected reports from these firms could dent the market’s strong start to 2023,” said Daniel Berkowitz, senior investment officer for investment manager Prudent Management Associates, in a report.
So far, tech earnings season is not off to an inspiring start, with Microsoft
(MSFT), Intel
(INTC) and IBM
(IBM) all reporting weak results. But it’s important to note that that trio is part of the “old tech” guard while Apple, Amazon, Alphabet and Meta all have more rapidly growing businesses.
Tesla
(TSLA) reported strong results last week, which could be a sign of good things to come from other more dynamic tech companies.
Wednesday: Fed meeting; US ADP private sector jobs; US JOLTS; China Caixin PMI; Europe inflation; earnings from AmerisourceBergen
(ABC), Humana
(HUM), T-Mobile
(TMUS), Novartis
(NVS), Altria
(MO), Peloton
(PTON), Meta Platforms, McKesson
(MCK), MetLife
(MET) and AllState
(ALL)
Thursday: US weekly jobless claims; US productivity; BOE meeting; ECB meting; Germany trade data; earnings from Cardinal Health
(CAH), ConocoPhillips
(COP), Merck
(MRK), Bristol-Myers
(BMY), Honeywell
(HON), Eli Lilly
(LLY), Stanley Black & Decker
(SWK), Hershey
(HSY), Sirius XM
(SIRI), Penn Entertainment
(PENN), Ferrari
(RACE), Harley-Davidso
(HOG)n, Apple, Amazon, Alphabet, Ford
(F), Qualcomm
(QCOM), Starbucks
(SBUX), Gilead Sciences
(GILD), Hartford Financial
(HIG), Clorox
(CLX) and WWE
(WWE)
Friday: US jobs report; US ISM non-manufacturing (services) index; earnings from Cigna
(CI), Sanofi
(SNY), LyondellBasell
(LYB) and Regeneron
(REGN)
Rep. George Santos began his third week as a congressman with an array of questions still swirling around the New York Republican’s personal and campaign finances.
He ended the week with even more unanswered questions – after his campaign submitted a raft of changes to federal election regulators, including appearing to install a new campaign treasurer without that person’s permission.
“I can’t think of another example (of a campaign) that has presented such a wide variety of legal concerns,” said Erin Chlopak, senior director of campaign finance at the watchdog group Campaign Legal Center and a former lawyer with the Federal Election Commission. “I feel like the George Santos saga is like a campaign finance law school course, all in one.”
Santos, who faces multiple investigations about his finances and lies about his biography and resume, repeatedly refused to respond to reporters’ inquiries about his filings and finances this week – saying at one point that he does not “touch” FEC reports.
Leaving his office Friday morning on Capitol Hill, Santos told a reporter that he would put together a news conference “soon” to “address everything.”
“We’ll give you all the answers to everything you’re asking for,” he said.
Santos’ personal lawyer Joe Murray declined to comment when reached by CNN this week. “In light of all the complaints that have been filed, it would just be inappropriate to discuss anything about it,” he said.
Santos’ longtime campaign treasurer Nancy Marks has not responded to multiple inquiries from CNN.
Here’s what you should know about the latest developments:
As of Friday afternoon, it was not clear who serves as treasurer of the Santos campaign – the person responsible for filing disclosure reports with the FEC, authorizing spending and ensuring that the campaign complies with federal campaign finance laws.
Earlier this week, Santos’ campaign filed paperwork installing Thomas Datwyler, a Wisconsin-based political consultant, as the new treasurer of his campaign and several Santos-aligned political committees.
But in a statement Wednesday, Datwyler’s lawyer said that his client had turned down the treasurer’s position and that the campaign had filed the paperwork without Datwyler’s authorization.
Campaign finance experts say only someone with access to the campaign committee’s login credentials can file electronic amendments with the FEC.
Derek Ross, Datwyler’s attorney, told CNN that agency officials said they were aware of the situation and sent letters to Datwyler on Friday to “confirm the authenticity and accuracy of the various filings.”
Datwyler’s team has responded, “notifying the FEC that the filings are unauthorized and Mr. Datwyler should be removed as treasurer,” Ross said.
Santos, like all congressional candidates, faces a looming Tuesday deadline to file new reports with the FEC that detail his fundraising and spending during the closing weeks of 2022.
Santos this week also filed a slew of amended reports with the FEC that only added to the confusion about the source of the loans he has said he made to his campaign.
In some filings, the campaign did not check boxes denoting that two six-figure loans came from the candidate’s personal funds.
Campaign finance experts say it’s hard to tell whether the unmarked boxes amounted to little more than sloppy bookkeeping or point to something more serious. Over the course of his campaign, Santos’ reports have offered inconsistent information about the loans.
But how Santos achieved the financial windfall to provide more than $700,000 in loans to his successful 2022 campaign has been a central question ever since the 34-year-old flipped a Long Island-based House seat in November, helping Republicans secure their narrow majority in the chamber.
During his unsuccessful 2020 campaign for the House, he reported a salary of $55,000 and no assets in his candidate filings to Congress.
Two years later, Santos reported a $750,000 salary from the Devolder Organization, which he said had earned between $1,000,001 and $5 million in income the previous year. He also reported owning an apartment in Rio De Janeiro, a checking account valued at between $100,001 and $250,000, and a savings account worth between $1,000,001 and $5 million.
For weeks, Santos has faced questions about the dozens of expenses his campaign has reported at exactly $199.99, one cent below the threshold above which the campaign is required to retain receipts.
The Campaign Legal Center has filed a complaint with the FEC that describes the disbursements as “odd and seemingly impossible.” It notes that one of the $199.99 expenses was purported to be for a “hotel stay” at the luxury W Hotel South Beach in Florida in October 2021, where the lowest-price room typically would have cost more than $700.
Those anonymous entries later were removed in revised filings.
Clopak of the Campaign Legal Center said those entries just add to the cloud surrounding Santos’ campaign.
“We have campaign finance disclosure laws to serve to ensure a number of interests,” she said. “One of the things is to make sure that voters are informed about the sources of … the money that they spend and what they spend it on.”
“When people file reports indicating that the recipients of their campaign spending is ‘anonymous,’ that defeats the very purpose of those transparency laws,” Clopak said.
The Federal Reserve’s preferred inflation gauge showed prices rose at a slower pace last month, indicating further progress in the central bank’s battle with higher prices.
The Personal Consumption Expenditures price index, or PCE, rose by 5% in December, compared to a year earlier, the Commerce Department reported Thursday.
In December alone, prices rose 0.1% from November.
On a month-to-month basis, prices for goods decreased 0.7% and prices for services increased 0.5%, according to the PCE price index for December. Within those categories, food prices increased 0.2% and energy prices decreased 5.1%.
Core PCE, which doesn’t include the more volatile food and energy categories, increased by4.4% annually,downfrom November’s annual rate of 4.7%. On a monthly basis, it was up 0.3%.
Core PCE, which is now at its lowest level since October 2021,is the Fed’s favored inflation gauge as it provides a more complete picture of consumer costs and spending.
“It’s clear, continued progress on the inflation front — which is something we expected, but good to see,” Joe Davis, Vanguard’s global chief economist, told CNN. “I think you’re seeing continued softening across the entire report.”
The data showed that consumers pulled back in December, with spending falling by 0.2% from the month before. Personal income rose 0.2% last month, the smallest increase since April.
Through much of 2022, consumer spending remained robust in spite of high inflation, rising interest rates, and simmering recession fears. However, as the months dragged on, economic data suggested that consumers were running out of dry powder: Reliance on credit grew and delinquencies started to tick up, while savings levels declined.
Retail sales fell 1.1% in December, the Commerce Department reported earlier this month.
In Friday’s report, the personal saving rate as a percentage of disposable income increased to 3.4% from 2.9% in November. The savings rate is now up 1 percentage point from its September low.
The increase is “a sign that consumers are growing cautious after rapidly drawing down their savings last year,” Lydia Boussour, senior economist for EY Parthenon, said in a statement.
Separately on Friday, a closely watched measurement of consumer attitudes toward the economy showed increased confidence in January for the second consecutive month. The University of Michigan’s consumer sentiment index landed at 64.9 for January, up nearly 9% from December.
Despite the uptick, the director of the school’s Surveys of Consumers cautioned that there are “considerable downside risks” to sentiment and that two-thirds of consumers surveyed said they expect an economic downturn to occur in the next year.
Massud Ghaussy, senior analyst of Nasdaq IR Intelligence, said consumer sentiment hinges heavily on the labor market.
“The big question this year so far is, ‘is the jobs market the next shoe to fall?’” he told CNN. “The economic picture is still quite murky, and the reason why we’re seeing consumer confidence still relatively strong is because of a strong job market.”
Friday’s PCE report is the last key inflation data before the Federal Reserve meets next week for its first policymaking meeting of 2023.
Economists and investors are expecting the Fed to raise its benchmark rate by just quarter of a point, signaling another downshift following a spree of blockbuster rate hikes last year.
The Fed is not expected to pivot simply because inflation is cooling, Davis said, noting that PCE isn’t yet at the Fed’s 2% target.
The labor market, which has remained strong and tight despite inflation and interest rate hikes, remains a crucial area of focus in the Fed’s inflation fight. The latest data on employment turnover as well as job growth will be released next week.
“The labor market is clearly Exhibit A in this debate between a soft landing or a mild recession,” Davis said. “The bigger wild card is, do the modest layoffs that we’re seeing in the technology sector in particular spread to other parts of the economy?”
In the fervor-filled days leading up to the November 16 launch of the long-awaited Artemis I mission, an uncrewed trip around the moon, some industry insiders admitted to having conflicting emotions about the event.
On one hand, there was the thrill of watching NASA take its first steps toward eventually getting humans back to the lunar surface; on the other, a shadow cast by the long and costly process it took to get there.
“I have mixed feelings, though I hope that we have a successful mission,” former NASA astronaut Leroy Chiao said in an opinion roundtable interview with The New York Times. “It is always exciting to see a new vehicle fly. For perspective, we went from creating NASA to landing humans on the moon in just under 11 years. This program has, in one version or another, been ongoing since 2004.”
There have been numerous delays with the development of the rocket at the center of the Artemis I mission: NASA’s Space Launch System (SLS), the most powerful rocket ever flown — and one of the most controversial. The towering launch vehicle was originally expected to take flight in 2016. And the decade-plus that the rocket was in development sparked years of blistering criticism targeted toward the space agency and Boeing, which holds the primary contract for the SLS rocket’s core.
NASA’s Office of Inspector General (OIG) repeatedly called out what it referred to as Boeing’s “poor performance,” as a contributing factor in the billions of dollars in cost overruns and schedule delays that plagued SLS.
“Cost increases and schedule delays of Core Stage development can be traced largely to management, technical, and infrastructure issues driven by Boeing’s poor performance,” one 2018 report from NASA’s OIG, the first in a series of audits the OIG completed surrounding NASA’s management of the SLS program, read. And a report in 2020 laid out similar grievances.
For its part, Boeing has pushed back on the criticism, pointing to rigorous testing requirements and the overall success of the program. The OIG report also included correspondence from NASA, which noted in 2018 that it “had already recognized the opportunity to improve contract performance management” and agreed with the report’s recommendations.
Despite all the heated debate that has followed SLS, by all accounts, the rocket is here to stay. And officials at NASA and Boeing said its first launch two months ago was practically flawless.
“I worked over 50 Space Shuttle launches,” Boeing SLS program manager John Shannon told CNN by phone. “And I don’t ever remember a launch that was as clean as that one was, which for a first-time rocket — especially one that had been through as much as this one through all the testing — really put an exclamation point on how reliable and robust this vehicle really is.”
The Artemis program manager at NASA, Mike Sarafin, also said during a post-launch news conference that the rocket “performed spot-on.”
But with its complicated history and its hefty price tag, SLS could still face detractors in the years to come.
Many have questioned why SLS needs to exist at all. With the estimated cost per launch standing at more than $4 billion for the first four Artemis missions, it’s possible commercial rockets, like the massive Mars rocket SpaceX is building, could get the job done more efficiently, as the chief of space policy at the nonprofit exploration advocacy group Planetary Society, Casey Dreier, recently observed in an article laying out both sides of the SLS argument.
(NASA Administrator Bill Nelson noted that the $4 billion per-launch cost estimate includes development costs that the space agency hopes will be amortized over the course of 10 or more missions.)
Boeing was selected in 2012 to build SLS’s “core stage,” which is the hulking orange fuselage that houses most of the massive engines that give the rocket its first burst of power at liftoff.
Though more than 1,000 companies were involved with designing and building SLS, Boeing’s work involved the largest and most expensive portion of the rocket.
That process began over a decade ago, and when the Artemis program was established in 2019, it gave the rocket its purpose: return humans to the moon, establish a permanent lunar outpost, and, eventually, pave the path toward getting humans to Mars.
But the SLS is no longer the only rocket involved in the program. NASA gave SpaceX a significant role in 2021, giving the company a fixed-price contract for use of its Mars rocket as the vehicle that will ferry astronauts to the lunar surface after they leave Earth and travel to the moon’s orbit on SLS. SpaceX’s forthcoming rocket, called Starship, is also intended to be capable of completing a crewed mission to the moon or Mars on its own. (Starship, it should be noted, is still in the development phases and has not yet been tested in orbit.)
Boeing has repeatedly argued that SLS is essential and capable of performing tasks that other rockets cannot.
“The bottom line is there’s nothing else like the SLS because it was built from the ground up to be human rated,” Shannon said. “It is the only vehicle that can take the Orion spacecraft and the service module to the moon. And that’s the purpose-built design — to take large hardware and humans to cislunar space, and nothing else exists that can do that.”
Starship, meanwhile, is not tailored solely to NASA’s specific lunar goals. SpaceX CEO Elon Musk has talked for more than a decade about his desire to get humans to Mars. More recently, he has said Starship could also be used to house giant space telescopes.
Yet, another reason critics remain skeptical of SLS is because of its origins. The rocket’s conception can be traced back to NASA’s Constellation program, which was a plan to return to the moon mapped out under former President George W. Bush that was later canceled.
But the SLS has survived. Many observers have suggested a big reason was the desire to maintain space industry jobs in certain Congressional districts and to beef up aerospace supply chains.
Much of the criticism levied against SLS, however, has focused on the actual process of getting the rocket built.
At one point in 2019, former NASA administrator Jim Bridenstine considered sidelining the SLS rocket entirely, citing frustrations with the delays.
“At the end of the day, the contractors had an obligation to deliver what NASA had contracted for them to deliver,” Bridenstine told CNN by phone last month. “And I was frustrated like most of America.”
Still, Bridenstine said, when his office reviewed the matter, it found “there were no options that were going to cost less money or take less time than just finishing the SLS” — and the rocket was never ultimately sidelined. (Bridenstine noted he was also publicly critical of delayed projects led by SpaceX and others.)
The SLS rocket ended up flying its first launch more than six years later than originally intended. NASA had allocated $6.2 billion to the SLS program as of 2018, but that price tag more than tripled to $23 billion as of 2022, according to an analysis by the Planetary Society.
Those escalating costs can be traced back to the type of contracts that NASA signed with Boeing and its other major suppliers for SLS. It’s called cost-plus, which puts the financial burden on NASA when projects face cost overruns while still offering contractors extra payments, or award fees.
In testimony before the Senate Appropriations Subcommittee on Science last year, current NASA Administrator Bill Nelson criticized the cost-plus contracting method, calling it a “plague.”
More in vogue are “fixed-price” contracts, which have a firm price cap, like the kind NASA gave to Boeing and SpaceX for its Commercial Crew Program.
In an interview with CNN in December, however, Nelson stood by cost-plus contracting for SLS and Orion, the vehicle that is designed to carry astronauts and rides atop the rocket to space. He said that without that type of contract, in his view, NASA’s private-sector contractors simply wouldn’t be willing to take on a rocket designed for such a specific purpose and exploring deep space. Building a rocket as specific and technically complex as SLS isn’t a risk many private-sector companies are anxious to take on, he noted.
“You really have difficulty in the development of a new and very exquisite spacecraft … on a fixed-price contract,” he said.
“That industry is just not willing to accept that kind of thing, with the exception of the landers,” he added, referring to two other branches of the Artemis program: robotic landers that will deliver cargo to the moon’s surface and SpaceX’s $2.9 billion lunar lander contract. Both of those will use fixed-price — often referred to as “commercial” — contracts.
“And even there, they’re getting a considerable investment by the federal government,” Nelson said.
Still, government watchdogs have not pulled punches when assessing these cost-plus contracts and Boeing’s role.
“We did notice very poor contractor performance on Boeing’s part. There’s poor planning and poor execution,” NASA Inspector General Paul Martin said during testimony before the House’s Subcommittee on Space and Aeronautics last year. “We saw that the cost-plus contracts that NASA had been using…worked to the contractor’s — rather than NASA’s — advantage.”
Shannon, the Boeing executive, acknowledged in an interview that Boeing and SLS have faced loud detractors, but he said that the value of the drawn out development and testing program would become evident as SLS flies.
“I am extremely proud that NASA — even though there were significant schedule pressures — they could set up a test program that was incredibly comprehensive,” he said. “The Boeing team worked through that test process and hit every mark on it. And you see the results. You see a vehicle that is not just visually spectacular, but its performance was spectacular. And it really put us on the road to be able to do lunar exploration again, which is something that’s very important in this country.”
But the rocket is still facing criticism. During a Congressional hearing with the House’s Science, Space, and Technology Committee in March 2022, NASA’s Inspector General said that current cost estimates for SLS were “unsustainable,” gauging that the space agency will have spent $93 billion on the Artemis program from 2012 through September 2025.
Martin, the NASA inspector general, specifically pointed to Boeing as one of the contractors that would need to find “efficiencies” to bring down those costs as the Artemis program moves forward.
In a December 7 statement to CNN, Boeing once again defended SLS and its price point.
“Boeing is and has been committed to improving our processes — both while the program was in its developmental stage and now as it transitions to an operational phase,” the statement read, noting the company already implemented “lessons learned” from building the first rocket to “drive efficiencies from a cost and schedule perspective” for future SLS rockets.
“When adjusted for inflation, NASA has developed SLS for a quarter of the cost of the Saturn V and half the cost of the Space Shuttle,” the statement noted. “These programs have also been essential to investing in the NASA centers, workforce and test facilities that are used by a broad range of civil and commercial partners across NASA and industry.”
The successful launch of SLS was a welcome winning moment for Boeing. Over the past few years, the company has been mired in controversy, including ongoing delays and myriad issues with Starliner, a spacecraft built for NASA’s Commercial Crew Program, and scandal after scandal plaguing its airplane division.
Now that the Artemis I mission has returned safely home, NASA and Boeing can turn to preparing more of the gargantuan SLS rockets to launch even loftier missions.
SLS is slated to launch the Artemis II mission, which will take four astronauts on a journey around the moon, in 2024. From there, SLS will be the backbone of the Artemis III mission that will return humans to the lunar surface for the first time in five decades and a series of increasingly complex missions as NASA works to create its permanent lunar outpost.
Shannon, the Boeing SLS program manager, told CNN that construction of the next two SLS rocket cores is well underway, with the booster for Artemis II on track to be finished in April — more than a year before the mission is scheduled to take off. All of the “major components” for a third SLS rocket are also completed, Shannon added.
For the third SLS core and beyond, Boeing is also moving final assembly to new facilities Florida, freeing up space at its manufacturing facilities to increase production, which may help drive down costs.
Shannon declined to share a specific price point for the new rockets or share any internal pricing goals, though NASA is expected to sign new contracts for the rockets that will launch the Artemis V mission and beyond, which could significantly change the price per launch.
Nelson also told CNN in December that NASA “will be making improvements, and we will find cost savings where we can,” such as with the decision to use commercial contracts for other vehicles under the Artemis program umbrella.
How and whether those contracts bear out remain to be seen: SpaceX needs to get its Starship rocket flying, a massive space station called Gateway needs to come to fruition, and at least some of the robotic lunar landers designed to carry cargo to the moon will need to prove their effectiveness. It’s also not yet clear whether those contracts will result in enough cost savings for the critics of SLS, including NASA’s OIG, to consider the Artemis program sustainable.
As for SLS, Nelson also told reporters December 11, just after the conclusion of the Artemis I mission, that he had every reason to expect that lawmakers would continue to fund the rocket and NASA’s broader moon program.
“I’m not worried about the support from the Congress,” Nelson said.
And Bridenstine, Nelson’s predecessor who has been publicly critical SLS, said that he ultimately stands by SLS and points out that, controversies aside, it does have rare bipartisan support from its bankrollers.
“We are in a spot now where this is going to be successful,” Bridenstine said last month, recalling when he first realized the Artemis program had support from the right and left. “All of America is going to be proud of this program. And yes, there are going to be differences. People are gonna say well, you should go all commercial and drop SLS…but at the end of the day, what we have to do is we have to bring together all of the things that are the best programs that we can get for America and use them to go to the moon.”
After the United States hit its debt ceiling on Thursday, the Treasury Department is now undertaking “extraordinary measures” to keep paying the government’s bills.
A default could be catastrophic, causing “irreparable harm to the US economy, the livelihoods of all Americans and global financial stability,” Treasury Secretary Janet Yellen has warned.
“If that happened, our borrowing costs would increase and every American would see that their borrowing costs would increase as well,” Yellen said. “On top of that, a failure to make payments that are due, whether it’s the bondholders or to Social Security recipients or to our military, would undoubtedly cause a recession in the US economy and could cause a global financial crisis.”
She added: “It would certainly undermine the role of the dollar as a reserve currency that is used in transactions all over the world. And Americans — many people — would lose their jobs and certainly their borrowing costs would rise.”
Dire warnings of debt ceiling trouble aren’t new. Federal lawmakers have reached agreements in the past, and this Congress has some time — until at least early June, according to Yellen’s public estimates — to reach an agreement on whether to raise or suspend the debt limit.
Many economists say they expect an agreement will be reached. However, given the current “extremely fractious political environment,” it could be a long process that would contribute to “flare-ups” in financial market volatility, Moody’s Investors Service said in a note Thursday.
So what happens to the economy in a worst-case scenario of default?
It’s an understandable question with an unsatisfying answer, said Michael Pugliese, vice president and economist with Wells Fargo’s corporate and investment bank.
“The honest truth is, no one knows,” he said. “A widespread default by the US government is not something we’ve ever experienced and not something we’ve ever even come close to experiencing.”
While a default isn’t something that can be modeled in the way a more historically common economic event such as a recession can be, the events of 2011 could lend some perspective as to what would happen if the debt ceiling drama turns into a debacle, said Gregory Daco, chief economist at EY-Parthenon.
“2011 was the first time in a long time that we came close to a debt ceiling breach,” he said. “And that was a time when there was a lot of political fragmentation and there was a strong desire to essentially attach spending cuts to any debt ceiling increase.”
The current environment includes similar brinksmanship and desires to attach spending cuts, he said.
But some fear this fight may be tougher than those in the past, a concern reinforced by the fact it took 15 ballots to elect the Speaker of the House in what is normally the easiest vote taken by a new Congress.
The economy nearly 13 years ago was different, as well.
At the time, the Fed was in an easy monetary policy mode and the economy in a weaker position, as it was still recovering from the Great Recession of 2008, Pugliese said. Unemployment was north of 9% in July 2011.
That same year, Treasury projected the “X date” — the date on which it would be unable to pay its obligations on time — would fall on August 2, 2011. That ultimately was the date when Congress passed, and President Barack Obama enacted, a law increasing the ceiling.
The actual economic impact of the debt ceiling run-up in 2011 is hard to isolate and quantify, Pugliese said, noting how the sluggish US economic recovery also experienced spillover effects from global events, notably Europe’s sovereign debt crisis.
Still, there were some indications that the protracted congressional battle contributed to a shake-up in the economy then, he said. Real GDP growth was a weak -0.1% on a quarter-over-quarter annualized basis in the third quarter of 2011. Financial markets were roiled, consumer confidence weakened, the US economic policy uncertainty index set a new high and Standard & Poor’scredit rating agency downgraded the United States to AA+ from AAA.
“I think you would be hard pressed to say [the debt ceiling debacle] was a positive thing,” he said. “I think of it more as one other hurdle among a lot of other hurdles for the economy as it emerged from 9% unemployment at the time.”
This time, if the X date were to come without a resolution, there is speculation that the Treasury could prioritize principal and interest payments to prevent a technical default, Pugliese said. There are potentially other “break the glass” options from the Treasury and Federal Reserve, but those are untested and short-term solutions, he added.
“Someone, somewhere is going to get shortchanged if the government doesn’t have all of its money, whether that’s Social Security beneficiaries, defense contractors, civil service employees, veterans, [etc.],” he said.
Adding to the uncertainty is the current economic climate, Daco said.
“We are going into this delicate period at a time when the US economy is clearly slowing down and at a time when the global economic backdrop is also weakening … so the economic environment against which this debt ceiling debacle is unfolding is one of increased economic softening.”
While a self-inflicted recession would be likely after the point when an X date is hit, some upheaval could come sooner, Daco said.
“Financial markets and private sector actors tend to react ahead of that date,” he said. “If there is the anticipation that we will get very close to that drop-dead date, then financial market volatility generally tends to increase, stock prices tend to react adversely.”
A Treasury default would undermine the global financial system, said Louise Sheiner, policy director at the Hutchins Center on Fiscal and Monetary Policy and former senior economist with the Fed and the Council of Economic Advisers.
“If Treasuries become something that people are worried about holding, then that has ripple effects throughout capital markets throughout the world, in ways that are really difficult to predict,” she said.
Considering the potential consequences in the United States and abroad, Sheiner believes the debt ceiling will be lifted or suspended — eventually.
“There’s no other way around it,” she said. “There’s no way that Congress is going to cut spending 20% in the middle of the year. It would plunge the economy into a recession. It would be a terrible policy.”
She added: “If you care about the long-term debt, you have to actually change different laws, Social Security law, Medicare, or the tax law … you want to do that in the appropriate process, you want to do it well thought out. It’s not the kind of thing that should be done under duress.”
CNN’s Maegan Vazquez, Matt Egan and Tami Luhby contributed to this report.
The Federal Trade Commission on Friday called for a federal court to hold “Pharma Bro” Martin Shkreli in contempt after Shkreli allegedly flouted a recent FTC investigation into his business dealings and failed to make a $64.6 million payment he owed for his prior wrongdoings.
The FTC’s contempt motion follows what the agency described as its an unsuccessful attempt to verify whether Shkreli has violated a court order barring him from ever working in the pharmaceutical industry again.
Brianne Murphy, an attorney for Shkreli, called the issue with the FTC a misunderstanding that “can get resolved relatively quickly once we get additional information and context to them.” Murphy added that Shkreli’s new business does not run afoul of the court order because the new company “is a software company, rather than a drug company.”
Shkreli was released from federal prison last year after serving a shortened sentence. He was convicted of securities fraud in 2017 for mismanaging two investments funds.
Shkreli also infamously raised prices for the life-saving medication Daraprim by 4,000% while he was head of Turing Pharmaceuticals. His conduct earned him the title of “most hated man in America” by multiple publications. More recently, he was the subject a 134-page ruling in 2022 by the US District Court for the Southern District of New York that banned him for life from participating in the pharmaceutical industry, as part of a separate FTC antitrust case against him.
That legally binding order triggered a new investigation into Shkreli’s activities in October, when public reports indicated he had co-founded a new “Web3 drug discovery software platform” known as Druglike, Inc.
When the FTC emailed Shkreli to get documents from him and to schedule an interview about the matter, Shkreli repeatedly missed deadlines and allegedly slow-walked his responses, according to an FTC court filing Friday.
“Shkreli has not attempted—much less ‘diligently,’ as Second Circuit law requires—to comply with the Order in a reasonable manner,” the filing said.
The FTC also said Shkreli had been ordered to make his multimillion-dollar payment — representing a refund of his ill-gotten Daraprim gains — by March 6, 2022. But in fact, the FTC said, “to date he has paid nothing toward the judgment, and has made no efforts to comply with this provision of the Order.”
As far as his involvement with Druglike, the FTC added: “Shkreli’s noncompliance is also clear and unambiguous: Shkreli has not submitted a supplemental Compliance Report, provided access to relevant documents, or made himself available for an interview.”
The Federal Election Commission has tossed out claims by the Republican National Committee that Google’s spam filters in Gmail are illegally biased against conservatives, according to an agency letter obtained by CNN.
The decision resolves a joint FEC complaint filed last year spearheaded by the RNC that alleged Gmail’s automated filters had sent Republican fundraising emails to spam at a higher rate than for Democratic candidates during the 2020 election cycle. The RNC didn’t immediately respond to a request for comment.
The FEC decision to dismiss the complaint and close the case is the latest defeat for Republicans who have sought on multiple occasions to bring the agency’s powers to bear against tech platforms over allegations of anti-conservative bias. In 2021, the FEC dismissed a similar RNC claim against Twitter over the company’s decision to temporarily suppress the New York Post’s reporting about Hunter Biden’s laptop, saying the content moderation decision appeared to have been made “for a valid commercial reason.”
The FEC took the same stance on the Gmail filtering issue in a letter to Google last week, and which the company provided to CNN on Wednesday.
In the Jan. 11 letter, the FEC said its review “found no reason to believe that [Google] made prohibited in-kind corporate contributions” to Democrats in the form of more favorable email filtering treatment.
In order to be considered a violation, the FEC wrote, “a contribution must be made for the purpose of influencing an election for federal office,” adding that Google’s public statements have made clear its spam filtering exists “for commercial, rather than electoral, purposes.”
Even if it were true that Gmail spam filtering happened to favor Democratic campaigns over Republican ones, the FEC wrote — an allegation the commission neither explicitly endorsed nor rejected — that outcome would not necessarily make Gmail’s underlying conduct an illegal campaign contribution.
In its letter, the FEC cited Google’s public statements claiming that its reasons for spam filtering include blocking malware, phishing attacks and scams.
“In sum, Google has credibly supported its claim that its spam filter is in place for commercial reasons and thus did not constitute a contribution within the meaning of the [Federal Election Campaign Act],” it wrote.
Documents related to the case will be made available to the public by Feb. 10, according to the letter.
“The Commission’s bipartisan decision to dismiss this complaint reaffirms that Gmail does not filter emails for political purposes,” said José Castañeda, a Google spokesperson. “We’ll continue to invest in our Gmail industry-leading spam filters because, as the FEC notes, they’re important to protecting people’s inboxes from receiving unwanted, unsolicited, or dangerous messages.”
While the FEC did not weigh in directly on Gmail’s practices, the letter highlighted the limitations and context surrounding a 2022 academic study that the RNC had leaned heavily upon in its initial complaint.
The study by North Carolina State University researchers had involved an experiment testing the spam filters of Gmail, Microsoft Outlook and Yahoo! Mail. Its findings suggested that of the three email providers, Gmail was the likeliest to mark emails from Republican campaigns as spam.
The RNC had cited the study’s findings as evidence of “illegal, corporate in-kind contributions” to Democratic candidates, including Joe Biden, and called for an FEC investigation.
But the FEC’s letter cited several factors that cast doubt on the RNC’s interpretation of the research, including the study’s own statements of limitations and a Washington Post interview with one of the study’s lead authors, who had said Republicans were “mischaracterizing” the paper.
The study itself acknowledged that it covered a short period of time, and that its findings could have been affected by campaigns’ own tactical decision-making as well as other variables the study did not account for, the FEC wrote, adding that in its response to the RNC allegations Google had said the researchers used a sample of 34 email addresses “when Gmail has 1.5 billion users.”
“Though the NCSU Study appears to demonstrate a disparate impact from Google’s spam filter, it explicitly states that its authors have ‘no reason to believe that there were deliberate attempts from these email services to create these biases to influence the voters,’” the FEC added.
Meanwhile, a separate RNC lawsuit against Google over the same Gmail filtering issue is still ongoing. And Google has continued with an FEC-approved pilot project that allows political campaigns to bypass Gmail’s spam filters. More than 100 political entities are participating in that program, a Google spokesperson told CNN on Wednesday.
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
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The largest six banks in the United States have been given until July to show the Federal Reserve what effects disastrous climate change scenarios couldhave on their bottom lines.
Noting the risks could be “material,” the Fed said the banks will have to show how their finances fare under a number of climate stress tests, including heat waves, wildfires, floods and droughts, according to details of a new Fed pilot program released on Tuesday.
“The pilot exercise includes physical risk scenarios with different levels of severity affecting residential and commercial real estate portfolios in the Northeastern United States and directs each bank to consider the impact of additional physical risk shocks for their real estate portfolios in another region of the country,” wrote the Fed.
The Federal Reserve first announced the pilot program in September, noting that Bank of America, Citigroup, Goldman Sachs, JPMorgan Chase, Morgan Stanley and Wells Fargo would participate.
Climate activists said that the project was long overdue (Federal Reserve Chair Jerome Powell has been questioned about it multiple times over the last year), and that other central banks are far ahead of the Fed on climate risk assessments. The Bank of England ran a similar exercise in 2021.
They also said the proposal lacked any real teeth. In its announcement the Federal Reserve stressed that the exercise “is exploratory in nature and does not have capital consequences.” It also said that it would not publish individual banks’ results.
San Francisco Federal Reserve President Mary Daly told CNN in October Thursday that this was a learning and exploratory exercise for the Federal Reserve. It would be “incredibly premature to jump to the conclusion that any new policies or programs would come out of it,” she said.
The other side: Critics of the pilot program have argued that the Federal Reserve was overstepping its boundaries and that they might soon begin to enforce financial penalties.
“The Fed’s new ‘pilot’ program is the first step toward pressuring banks into limiting loans to and investments in traditional energy companies and other disfavored carbon-emitting sectors,” wrote former Republican Senator Pat Toomey, then a ranking member of the Senate Banking Committee. “The real purpose of this program is to ultimately produce new regulatory requirements.”
Powell said last week that the central bank would not become a “climate policymaker.”
“Today, some analysts ask whether incorporating into bank supervision the perceived risks associated with climate change is appropriate, wise, and consistent with our existing mandates,” Powell said last Tuesday. “In my view, the Fed does have narrow, but important, responsibilities regarding climate-related financial risks. These responsibilities are tightly linked to our responsibilities for bank supervision. The public reasonably expects supervisors to require that banks understand, and appropriately manage, their material risks, including the financial risks of climate change.”
The discovery, movement and use of oil has played an outsized role in shaping geopolitics over the past century and a half. But over the next 50 years, global interaction and wealth are more likely to be influenced by microchips, Intel CEO Pat Gelsinger told CNN Tuesday.
“Where the technology supply chains are, and where semiconductors are built, is more important for the next five decades,” Gelsinger said in an interview with CNN’s Julia Chatterley at the World Economic Forum in Davos, Switzerland.
Intel (INTC) is betting those predictions prove true. The company announcedin 2021 it would invest $20 billion to build two new US chipmaking facilities, as well as up to $90 billion in new European factories, aimed at reasserting its position as the leader of the semiconductor industry, reports my colleague Clare Duffy.
Gelsinger said the company’s investment in new manufacturing facilities in the United States, Europe and elsewhere is important not only for the company’s future, but for the “globalization of the most critical resource to the future of the world.”
“We need this geographically balanced, resilient supply chain,” he said.
The announcements also came amid concerns about the concentration of manufacturing for chips, in Asia, particularly China and Taiwan, during the Covid-19 pandemic and as geopolitical tensions grew. Issues in the chip supply chain in recent years have caused shortages and shipping delays of everything from desktop computers and iPhones to cars.
“If we’ve learned one thing from the Covid crisis and this multi-year journey that we’ve been on it’s we need resilience in our supply chains,” Gelsinger said, adding that Intel’s manufacturing investments are aimed at “leveling that playing field so that good investment decisions can be made.”
The years following the peak of the Covid pandemic have not been good for wealth equality.
The world’s wealthiest residents have been getting far richer, far faster than everyone else over the past two years, reports my colleague Tami Luhby.
The fortune of the 1% soared by $26 trillion during that period, while the bottom 99% only saw their net worth rise by $16 trillion, according to Oxfam’s annual inequality report released Sunday.
And the wealth accumulation of the super-rich accelerated during the pandemic. Looking over the past decade, they netted just half of all the new wealth created, compared to two-thirds during the last few years.
Meanwhile, many of the less fortunate are struggling. Some 1.7 billion workers live in countries where inflation is outpacing wages. And poverty reduction likely stalled last year after the number of global poor skyrocketed in 2020.
“While ordinary people are making daily sacrifices on essentials like food, the super-rich have outdone even their wildest dreams,” said Gabriela Bucher, executive director of Oxfam International.
“Just two years in, this decade is shaping up to be the best yet for billionaires — a roaring ’20s boom for the world’s richest,” she said.
Fish caught in the fresh waters of the nation’s streams and rivers and the Great Lakes contain dangerously high levels of PFOS, short for perfluorooctane sulfonic acid, a known synthetic toxin phased out by the federal government, according to a study of data from the US Environmental Protection Agency.
The chemical PFOS is part of a family of manufactured additives known as perfluoroalkyl and polyfluoroalkyl substances, or PFAS, widely used since the 1950s to make consumer products nonstick and resistant to stains, water and grease damage.
Called “forever chemicals” because they fail to break down easily in the environment, PFAS has leached into the nation’s drinking water via public water systems and private wells. The chemicals then accumulate in the bodies of fish, shellfish, livestock, dairy and game animals that people eat, experts say.
“The levels of PFOS found in freshwater fish often exceeded an astounding 8,000 parts per trillion,” said study coauthor David Andrews, a senior scientist at Environmental Working Group, the nonprofit environmental health organization that analyzed the data.
In comparison, the EPA has allowed only 70 parts per trillion of PFOS in the nation’s drinking water. Due to growing health concerns, in 2022 the EPA recommended the allowable level of PFOS in drinking water be lowered from 70 to 0.02 parts per trillion.
“You’d have to drink an incredible amount of water — we estimate a month of contaminated water — to get the same exposure as you would from a single serving of freshwater fish,” Andrews said.
“Consuming even a single (locally caught freshwater)fish per year can measurably and significantly change the levels of PFOS in your blood,” Andrews said.
“This is an important paper,” said toxicologist Linda Birnbaum, former director of the National Institute for Environmental Health Sciences and the National Toxicology Program.
“To find this level of contamination in fish across the country, even in areas not close to industry where you might expect heavy contamination, is very concerning. These chemicals are everywhere,” she said.
It’s nearly impossible to avoid PFAS, experts say. Manufacturersadd the chemicals to thousands of products, including nonstick cookware, mobile phones, carpeting, clothing, makeup, furniture and food packaging.
A 2021 study found PFAS in 52% of tested cosmetics, with the highest levels in waterproof mascara (82%), foundations (63%) and long-lasting lipstick (62%). Polytetrafluoroethylene, the coating on nonstick pans, was the most common additive.
In fact, PFAS chemicals have been found in the blood serum of 98% of Americans, according to a 2019 report using data from the US Centers for Disease Control and Prevention’s National Health and Nutrition Examination Survey.
“These chemicals are ubiquitous in the American environment. More than 2,800 communities in the US, including all 50 states and two territories, have documented PFAS contamination,” Dr. Ned Calonge, an associate professor of epidemiology at the Colorado School of Public Health and chair of the Academies committee that wrote the report, told CNN previously.
“The analysis focused on EPA wild-caught fish in rivers, streams and throughout the Great Lakes from 2013 to 2015 as that was the latest data available,” Andrews said.
The contamination was widespread, impacting “nearly every fish across the country,” he said. “I believe there was one sample without detected levels of PFOS.”
The EWG created an interactive map of the results with details for each state. Fish caught near urban areas contained nearly three times more PFOS and overall PFAS than those caught in nonurban locations, the study found. The highest levels were found in fish from the Great Lakes.
The analysis showed PFOS accounted for an average 74% of the contamination in the fish. The remaining 25% was a mixture of other PFAS known to be equally damaging to human health, Andrews said.
CNN reached out to the EPA for comment but did not hear back before this story published.
Based on the study’s findings, people who fish for sport might “strongly” consider releasing their catch instead of taking the fish home for a meal, Andrews said.
Yet many people in lower socioeconomic groups, indigenous peoples and immigrants in the US rely eating freshly caught fish.
“They need it for food or because it’s their culture,” Birnbaum said. “There are Native American tribes and Burmese immigrants and others who fish because this is who they are. This is key to their culture. And you can’t just tell them not to fish.”
The predominant chemical in the fish, PFOS, and its sister perfluorooctanoic acid, or PFOA, are known as “long-chain” PFAS, made from an 8-carbon chain.
Manufacturersagreed in the early 2000s to voluntarily stop usinglong-chain PFAS in US consumer products, although they can still be found in some imported items. Due to growing health concerns, the use of PFOS and PFOA in food packaging was phased out in 2016 by the US Food and Drug Administration.
However, industry reworked the chemicals by making them into 4- and 6-carbon chains — today over 9,000 different PFAS exist, according to the CDC. Experts say these newer versions appear to have many of the samedangerous health effects as the 8-chain PFAS, leaving consumers and the environment still at risk.
Many of these longer-chain PFAS can be stored for years in different organs in the human body, according to the National Academies report. Scientists are examining the impact of newer versions.
“Some of these chemicals have half-lives in the range of five years,” National Academies report committee member Jane Hoppin, an environmental epidemiologist and director of the Center for Human Health and the Environment at North Carolina State University in Raleigh, told CNN previously.
“Let’s say you have 10 nanograms of PFAS in your body right now. Even with no additional exposure, five years from now you would still have 5 nanograms,” she said. “Five years later, you would have 2.5 and then five years after that, you’d have one 1.25 nanograms. It would be about 25 years before all the PFAS leave your body.”
That’s why it’s “no surprise” to find such high levels of PFOA in freshwater fish, said the director of environmental pediatrics at NYU Langone Health, Dr. Leonardo Trasande, who was not involved in the new study.
“These truly are ‘forever chemicals,’” Trasande said. “This reinforces the reality that we need to get all PFAS out of consumer products and people’s lives.”
Republican Rep. George Santos, said a company later accused of running a “Ponzi scheme” was “100% legitimate” when it was accused by a potential customer of fraud in 2020, more than a year before it was sued by the US Securities and Exchange Commission. Once the company, where he worked, came under federal scrutiny, Santos claimed publicly that he was unaware of accusations of fraud at the firm, a CNN KFile review of Santos’ social media and statements found.
Santos, the embattled freshman Republican, faces growing pressure to resign after he lied and misrepresented his educational, work and family history, including falsely claiming he was Jewish and the descendant of Holocaust survivors. Santos admitted to “embellishing” his resume, but has maintained he is “not a criminal.”
Santos worked at Harbor City Capital Corp. in 2020 and 2021, a company the SEC saidwas a “classic Ponzi scheme” in an April 2021 complaint against the firm. A Ponzi scheme is a type of fraud where existing investors are paid with funds from new investors, often promising artificially high rates of return with little risk. Santos was not named in the SEC complaint.
Joseph Murray, an attorney for Rep. Santos, told CNN in an email on Thursday that Santos was unaware of wrongdoing at the company.
“As to any questions about Harbor City Capital, in light of the ongoing investigation, and for the benefit of the victims, it would be inappropriate to respond other than to say that Congressman Santos was completely unaware of any illegal activity going on at Harbor City Capital,” Murray told CNN.
Santos told The Daily Beast in 2022 that he was “as distraught and disturbed as everyone else” to learn of allegations against Harbor City. But in a since-removed tweet on his since-deleted personal Twitter account, a potential customer questioned claims the company had a 100% bank guarantee on their investment in the form of a stand by line of credit (SBLC).
“The market instability is leading to sever (sic) capital erosion. @HarborCityCap offers you a strategy that mitigates loss and risk while creating cash flow, meanwhile your principle is 100% secured by an SBLC held by various major institutions. #fixedincome #alternativeinvestment #win,” Santos tweeted in April 2020 under the name George Devolder, using his mother’s family name.
In June, a potential customer responded to that tweet from Santos saying he looked into a SBLC from Harbor City and found it to be fraudulent.
“George, this SBLC I received from Harbor City was looked into, and Deutsche Bank claims is a complete fraud and not signed by the bank officer on the document. How do you explain this?,” the user said.
“I’m sorry I’m not following you. Could you please send me an email at George.devolder@harborcity.com and we can go over this together. Our SBLC is 100% legitimate and issued by their institution. I look forward to hearing from you,” responded Santos.
In fact, according to the SEC complaint, “at no point” was Harbor City Capital “ever issued a SBLC,” despite claims from the company.
Dylan Riddle, a spokesman for Deutsche Bank, told CNN on Monday that they had no affiliation with Harbor City Capital.
“Harbor City Capital was not a client of Deutsche Bank,” he said.
Attorney Katherine C. Donlon, the court-appointed receiver for Harbor City Capital told CNN in an email on Friday Santos was affiliated with Harbor City Capital from mid January 2020 through April 2021.
On Wednesday, the Nassau County GOP and several New York Republican congressmen called on Santos to resign. Santos still has the tacit support of House Speaker Kevin McCarthy, who said it was up to the voters to decide.
In other media reviewed by CNN’s KFile from 2020, Santos called himself “the head guy” at the Harbor City office in New York and the executive at the company. In one 2020 interview, Santos said he managed a $1.5 billion fund for the company with returns of 12% and 26% on investors’ money.
“Currently at Harbor City Capital, I manage a 1.5 billion fund, right?,” said Santos. “And I know how to manage it well. I give record returns to anybody who watches this, they’ll understand. I’m giving, a 12% fixed yield income return a year, which nobody in the market’s giving four and we’re giving 12. We’re also giving up to 20 to 26% in IRR return on our investors’ capital. So if there’s something I know how to do, it’s manage dollars and grow them.”
The SEC filed a complaint in April 2021 against Harbor City Capital and founder Jonathan P. Maroney, alleging that Maroney raised $17.1 million by deceiving more than 100 hundred investors through a series of unregistered fraudulent security offerings and used the money to enrich himself and his family. The SEC claimed that of the investor money collected and deposited into Harbor City Capital bank accounts “at most” only $449,000 were used for business expenses.
Neither Santos nor other Harbor City Capital employees were named in the complaint.
In October, Maroney was granted a stay in federal court for the SEC’s civil lawsuit, after Maroney noted that he “is currently the target in a related criminal investigation.” He is representing himself in the case.
CNN reached out to Maroney for comment but did not receive a response.
JPMorgan Chase, Bank of America, Citigroup and asset management giant BlackRock posted results that topped Wall Street’s forecasts Friday, but investors were nonetheless a little disappointed at first.
Trading was choppy, with most bank stocks falling at the open before rebounding. Shares of JPMorgan Chase
(JPM) were up about 2.5% in late afternoon trading while BofA
(BAC) was up 2%. Wells Fargo
(WFC), which reported earnings that missed Wall Street’s targets, reversed earlier losses and was up 3%. Citi
(C) was up 2% while BlackRock
(BLK) was flat.
“The earnings were solid, but the market is concerned with recession fears,” said John Curran, managing director and head of North American bank coverage at MUFG.
Investors might have been concerned by the downbeat tone of the big banks. Executives are clearly still worried about inflation and the threat of a recession this year following several big interest rate hikes by the Federal Reserve.
JPMorgan Chase CEO Jamie Dimon said in the bank’s earnings statement that although the economy is still strong and that consumers and businesses are spending and healthy, “we still do not know the ultimate effect of the headwinds coming from geopolitical tensions including the war in Ukraine, the vulnerable state of energy and food supplies, persistent inflation that is eroding purchasing power and has pushed interest rates higher.”
The bank added in the earnings release that it now expects a “mild recession” as a base economic case. CFO Jeremy Barnum added during a conference call with reporters that in addition to the slowdown that has already started in its home lending unit, it is starting to see “headwinds” in auto lending.
Meanwhile, BofA CEO Brian Moynihan noted that this is “an increasingly slowing economic environment” and Wells Fargo CEO Charlie Scharf said “we are carefully watching the impact of higher rates on our customers.” Wells Fargo recently announced plans to pull back on its massive mortgage business.
Banks are clearly worried about a looming recession, and Wall Street has taken notice.
Moody’s Investors Service analyst Peter Nerby noted in a report that “credit provisions are rising” at JPMorgan Chase and that Citi “built capital and reserves in anticipation of a slowdown in core markets.”
The Fed’s rate hikes aren’t helping either.
“Higher than expected interest rates pose a significant risk to the outlook for credit quality, loan growth and net interest margins,” said David Wagner, a portfolio manager at Aptus Capital Advisors, in an email.
Concerns about the economy were one reason why stocks plunged in 2022, suffering their worst year since 2008. As a result of the Wall Street slump, there was a major slowdown in merger activity and initial public offerings.
That hurt the investment banking businesses for the top banks. JPMorgan Chase and Citi each said that advisory fees plummeted nearly 60% in the quarter.
Goldman Sachs
(GS) and Morgan Stanley
(MS) will give more color about the health of Wall Street next Tuesday when they both report their fourth quarter results.
Goldman Sachs, which has aggressively built up a consumer banking unit over the past few years, has struggled to make money in that division. Goldman Sachs disclosed in a regulatory filing Friday that it has lost more than $3 billion in its consumer business since 2020.
There were some signs of optimism though. BlackRock, which owns the massive iShares family of exchange-traded funds, reported a rebound in assets under management from the third quarter to the fourth quarter as stocks soared in October and November.
“The current environment offers incredible opportunities for long-term investors,” said BlackRock CEO Larry Fink in the earnings release.
At Teddy & The Bully Bar restaurant near downtown Washington, DC, business has never been the same since the pandemic hit.
“It’s very challenging,” owner Alan Popovsky said. “I’m still going to be climbing the hill for quite some time. Probably for the rest of my life.”
The pandemic closed two of Popovsky’s four restaurants in the area. He said government loans saved the other two. But with city centers struggling to bring back commuters and foot traffic, he said revenue is still down more than 45%, and they’re fighting to stay open.
To make matters worse, it’s time to start paying back those loans.
“We just got over paying back the landlord,” Popovsky said. “It’s really a feeling that you’re just a hamster spinning on a wheel.”
At the start of the pandemic, as business stalled, nearly 3.8 million small business owners took out Economic Injury Disaster Loans (known as EIDL loans) from the federal government, averaging roughly $100,000 per loan, according to the Small Business Administration. Unlike some other pandemic programs, these 30-year loans, carrying an interest rate of 3.75% for businesses, were intended to be paid back.
After more than two years of deferrals, the first EIDL loan monthly payments have started to come due. Around 2.6 million businesses across the country will owe money by the end of January.
Popovsky said he owes the federal government roughly $780,000, and started receiving monthly bills for more than $3,700 in October.
“We can’t afford anything, but what we’re doing is paying the interest only right now,” he said. “We have not made a dent on the principal.”
A new survey from the National Federation of Independent Business found only 36% of their small business members have reached their pre-pandemic sales levels, while 31% of businesses are still below 75% of their pre-crisis sales.
Coming out of the pandemic, small businesses have faced difficult hurdles, like staffing shortages, supply chain issues and inflation.
Now add a possible looming recession, just as these EIDL loans come due.
“The challenges are immense for many of them and they’re having to navigate a lot of those headwinds,” said Holly Wade, executive director of the NFIB Research Center. “It is one more cost that they’re going to have to deal with, and some small business owners, unfortunately, are going to struggle with meeting those obligations.”
Lisa Klein, who owns and operates an outpatient physical therapy practice with offices in Virginia and in Washington, DC, said her practice is still trying to claw its way back after Covid-19, which is keeping some patients away or forcing costly last-minute cancellations.
“The costs of everything have gone up,” Klein said. “The whole business is still suffering, and this is just kind of adding insult to injury.”
Klein took out a $200,000 EIDL loan at the start of the pandemic but returned half of it after a year as the interest began piling up. The SBA estimates that businesses have accrued between $32 billion and $34 billion in interest over the 30-month deferment period.
She’s now paying nearly $1,000 a month, with a total balance of just under $80,000.
“It’s like you’re swimming and trying to catch up and get your head above water, and you just keep getting hit by something else,” Klein said. “But we have no choice, because if we don’t keep paying it, it’s going to accrue more interest.”
Struggling businesses can declare hardship and make partial payments of 10% of the regular monthly payment with a minimum of $25 for six months, according to the SBA. But interest will keep accruing, forcing owners like Klein to weigh short-term protection against a big bill further down the line.
Borrowers are still responsible for repaying loans even if their business closes, unless the debt has been discharged in bankruptcy, according to the SBA. For EIDL loans over $200,000, a personal guaranty was required for individuals with 20% or more ownership in the business.
Popovsky said he has considered shutting down Teddy & The Bully Bear but has felt inspired to keep fighting by the memory of his father as well as his co-founder, Melvyn, who passed away in 2014, just one year after the restaurant opened.
“I feel them saying keep pushing on, Alan, keep pushing on,” he said. “I feel like they’re the wind beneath my wings.”
Treasury Secretary Janet Yellen plans to stay in her Cabinet role heading into the third year of the administration, a decision she conveyed to President Joe Biden during a December conversation, according to two White House officials.
Biden welcomed Yellen’s desire to stay, which comes as the administration enters the critical moment of implementing Biden’s sweeping legislative wins of his first two years.
Yellen, in the final months of last year, repeatedly expressed her desire to oversee Treasury’s central role in that effort – a process that officials say Biden has repeatedly stressed to senior officials inside his administration must be carried out successfully in the months ahead.
Still, as Biden’s top economic official, Yellen drew some of the criticism for the soaring inflation that plagued much of the administration’s second year in office, leading some to believe she would be among the officials to depart during a period that historically lends itself to turnover in the first term of an administration.
Yet along with Biden’s legislative success has come the first clear signs that inflation’s grip is starting to ease – at the same moment the US economy’s strength has remained durable despite rapid Federal Reserve interest rate increases and signs of fragility in the global economy.
Biden’s Cabinet and senior team has been defined in part by its stability over his first two years in office. Still, Biden’s top advisers have been planning for departures in the weeks ahead as the administration enters the period between the midterm elections and Biden’s State of the Union address when past administrations have seen notable departures.
Asked about reports she had informed the White House she wanted to stay into next year, Yellen told CNN in October it was “an accurate read.”
“I feel very excited by the program that we talked about,” Yellen said at the time. “And I see in it great strengthening of economic growth and addressing climate change and strengthening American households. And I want to be part of that.”
Investors shifted their focus Tuesday from the stock market to Stockholm as Federal Reserve Chairman Jerome Powell made his first public appearance of the year.
Powell participated in a panel discussion on central bank independence at an event hosted by Sweden’s central bank, the Sveriges Riksbank.
The painful rate hikes the Fed is implementing to try to bring down inflation don’t make officials particularly popular, Powell admitted.
“Restoring price stability when inflation is high can require measures that are not popular in the short term as we raise interest rates to slow the economy,” he said, before adding that it’s important not to succumb to the need to liked.
“We should ‘stick to our knitting’ and not wander off to pursue perceived social benefits that are not tightly linked to our statutory goals and authorities,” Powell said.
He highlighted climate change as a prime example of this.
“Today, some analysts ask whether incorporating into bank supervision the perceived risks associated with climate change is appropriate, wise, and consistent with our existing mandates,” he said. “in my view, the Fed does have narrow, but important, responsibilities regarding climate-related financial risks. These responsibilities are tightly linked to our responsibilities for bank supervision. The public reasonably expects supervisors to require that banks understand, and appropriately manage, their material risks, including the financial risks of climate change.”
US inflation rates (as measured by the Labor Department’s Consumer Price Index) have been steadily falling for the past five months. That has enabled the Fed to start easing back on the size of its historically high rate hikes meant to cool the economy and fight rising prices.
Inflation in the Eurozone, meanwhile, remains at an eye-popping 9.2% — though it eased between November and December. ECB president Christine Lagarde said last month she expects interest rate hikes to rise “significantly further, because inflation remains far too high and is projected to stay above our target for too long.”
“If you compare with the Fed, we have more ground to cover. We have longer to go,” she added.
The Bank of England, meanwhile, has also warned that inflation, still at its highest level since the 1980s, isn’t going anywhere. The BoE’s chief economist Huw Pill said this week that inflation could persist for longer than expected despite recent falls in wholesale energy prices and an economy on the brink of recession.
These three central banks are fighting in different conditions, but they share a similar battle strategy: Keep tightening.
The central bankers defended the importance of independence and credibility for their institutions, which has come under fire as policymakers are accused of having let surging inflation go unchecked for too long.
December meeting minutes from the Fed, released last week, noted that the policymaking committee would “continue to make decisions meeting by meeting,” leaving options open for the size of rate hikes at the next monetary policy decision on February 1. No policymakers have forecast that it would be appropriate to reduce the bank’s benchmark borrowing rate this year. And while officials welcomed the recent softening in inflation, they stressed that “substantially more evidence” was required for a Fed “pivot.”
Last week’s jobs report further muddied the picture, showing that employment remained strong while wage growth eased.
Thursday’s CPI for December — which will be the new year’s first check on inflation — will also provide helpful clues to investors about whether US price hikes are sufficiently cooling.
Encouraging data could bolster consensus estimates that call for a quarter-percentage point interest rate hike in February, a shift lower from December’s half-point hike and the four prior three-quarter-point hikes.
It’s only early January, but so far in 2023 the pendulum on Wall Street has swung (to paraphrase Billy Joel) from sadness to euphoria.
Stocks are off to a solid start following last year’s dismal performance. Even though the Dow fell more than 110 points, or 0.3%, to close Monday’s session it is still up more than 1% this year. The S&P 500 ended Monday down 0.1% while the Nasdaq gained 0.6%. But those two indexes are each up about 1.5% since the end of 2022.
Even the CNN Business Fear and Greed Index, which looks at seven indicators of market sentiment, is now inching closer to Greed territory — after languishing in Fear mode for the better part of the past few weeks.
But why is there such optimism on Wall Street all of a sudden? The headlines still aren’t necessarily that great.
Yes, the market cheered Friday’s jobs report because it showed slowing wage growth that could lead to a further reduction in inflation pressures and smaller rate hikes from the Federal Reserve. But it also showed the pace of job growth is slowing — and that could be a precursor to an eventual recession.
Meanwhile the Institute for Supply Management’s latest data showed the services sector, a big engine of the US economy, contracted last month. And several high-profile companies in the tech, consumer, financial services (and yes, media) industries have announced big layoffs or unveiled plans to hand out pink slips. Retailers such as Macy’s
(M) and Lululemon
(LULU) are warning about sales and profits.
Add all this up and it doesn’t sound like cause for celebration.
But Wall Street is a funny place: Good news is often viewed as a bad sign, and vice versa.
Sure, it would be a big plus if the Fed is able to pull off a proverbial soft landing, slowing the economy without leading to a full-blown recession and/or significant decline in corporate profits. But that’s a big if.
There’s another possibility that bulls are clinging to as well: that there will be a recession, but a mild one that also just so happens to be one of the most widely expected and telegraphed downturns in recent memory. This isn’t a proverbial black swan. There is no “Lehman moment” to catch everyone off guard.
As long as the Fed can get inflation under control, investors might not be too concerned by a recession anyway. At least, that’s the ‘glass is half full’ argument.
“Any recession will be perceived by investors to be less problematic if inflation is judged to be sufficiently contained, and the Fed is prepared to mount an appropriate monetary response,” said Robert Teeter, managing director of Silvercrest Asset Management, in a report.
Teeter added that falling inflation levels should boost stocks this year “even as earnings remain lackluster.”
But others see a problem with that argument.
“Our concern is that most [investors]are assuming ‘everyone is bearish’ and, therefore, the price downside in a recession is also likely to be mild,” said strategists at Morgan Stanley in a report.
Instead, the Morgan Stanley strategists think investors might be surprised by just how much lower stocks go if there is a recession. They noted that the market may not be pricing in “much weaker earnings.”
Investors may also be underestimating how far the Fed is willing to go with rate hikes in order to make sure inflation finally starts to fall.
“Many investors have been reassured by the strength of the US labor market. Yet…the Federal Reserve is determined to tighten monetary policy until that strength is eradicated — the recession clock is ticking,” said Seema Shah, chief global strategist at Principal Asset Management, in a report.
And Shah does not believe the recession will be mild. She wrote after Friday’s jobs report that “a hard landing looks to be the most likely outcome this year.”
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
—
Stocks soared on Friday to their best day in more than a month. The Dow gained 700 points and the S&P 500 and Nasdaq rose by 2.3% and 2.6% respectively, as traders bet that a slowdown in wage growth could mean that inflation may finally be cooling off.
But the big turnaround story during the short first week of the year isn’t just about equities, it’s also about bonds.
What’s happening: US Treasuries recorded their worst year in history in 2022, but investors are suddenly reversing course. They now appear quite optimistic about the bond market.
Last year’s bond massacre came as the Fed raised short-term interest rates at the fastest speed in about four decades, lifting the Fed funds rate to its highest level in over a decade. Bonds are particularly sensitive to those increases — as rates are hiked, the price of existing bonds falls as investors prefer the new debt that will soon be issued with those higher interest payouts.
But now investors are betting that those rate increases are mostly over and that inflationary pressures are on a downswing.
Treasuries just notched their strongest start to a year since 2001, back when investors eagerly purchased government debt under the (correct) assumption that then-Fed chair Alan Greenspan was about to slash interest rates. This time around, investors are scooping up bonds as they anticipate the pace of Fed interest rate hikes will soon ease.
That’s great news for Treasuries. Core bonds, or US investment grade debt, tend to perform well during Fed rate hike pauses. Since 1984, core bonds have been able to generate average 6-month and 1-year returns of 8% and 13%, respectively, after the Fed stopped raising rates, according to data from LPL Financial.
That anticipation could be seen at the end of last week. Treasuries tumbled following strong private jobs data earlier in the week but quickly rebounded when US payroll data showed that wage growth was weakening.
The other side: The problem is that there’s no guarantee that interest rates will actually come down, and investors could find themselves blindsided if they don’t.
“The potential for rates to go high and stay higher for longer would hit bond markets hard, especially considering weaker economies would likely force governments to borrow more,” said Chris Varrone, managing director at Strategas, a Baird Company.
Former Treasury Secretary Larry Summers issued a warning on Friday to bond investors who assume that inflation is easing and a new era of low interest rates is upon us.
“I suspect tumult” for bonds in 2023, Summers said on Bloomberg Television. “This is going to be remembered as a ‘V’ year when we recognized that we were headed into a different kind of financial era, with different kinds of interest-rate patterns.”
Persistently high inflation may have put a damper on holiday shopping.
Macy’s chair and CEO Jeff Gennette said Friday that lulls during the non-peak weeks of the fourth quarter “were deeper than anticipated” and that consumers will continue to feel pressured into 2023, reports my colleague Ramishah Maruf.
Macy’s said Friday its net sales from the holiday quarter will likely be at the low-end to mid-point of its previously issued forecast range of $8.16 billion to $8.4 billion. It reported Q4 sales of $8.67 billion in 2021.
Americans spent more this season to keep up with high prices. US retail sales increased 7.6% during the period between November 1 to December 24 compared to the same time last year, according to the Mastercard Spending Pulse. US retail sales were lower than expected in November, falling 0.6% during the month, which was the weakest performance in nearly a year.
Gennette warned that consumer sentiment is unlikely to change with the new year.
“Based on current macro-economic indicators and our proprietary credit card data, we believe the consumer will continue to be pressured in 2023, particularly in the first half, and have planned inventory mix and depth of initial buys accordingly,” the Macy’s CEO said.
The company expects to report full results for the fourth quarter and fiscal year 2022 in early March 2023.
China’s heavy-handed crackdown on tech giants is coming to an end and the country’s economic growth is expected to be back on track soon, according to a top central bank official, my colleague Laura He reports.
The crackdown on fintech operations of more than a dozen internet companies is “basically” over, said Guo Shuqing, the Communist Party boss at the People’s Bank of China, in an interview with state-run Xinhua news agency on Saturday.
“Next, we’ll promote healthy development of internet platforms,” said Guo, who is also chairman of China’s Banking and Insurance Regulatory Commission. “We’ll encourage them to come out strong in leading economic growth, creating more jobs, and competing globally.”
His remarks came on the same day Chinese billionaire Jack Ma gave up control of Ant Group after the fintech giant’s shareholders agreed to restructure the company.
Chinese tech stocks listed on US exchanges have already enjoyed a dream start to 2023.
The Nasdaq Golden Dragon China Index — a popular index tracking Chinese firms listed in the United States — soared 13% in the first two trading days of 2023. That was the index’s best yearly start on record, according to data compiled by Refinitiv dating back to 2003.
US-listed shares of Chinese e-commerce firms Alibaba
(BABA), JD.com
(JD), and Pinduoduo
(PDD) added $53 billion to their combined market value last Wednesday alone.
The sweeping regulatory crackdown since late 2020 had driven investors away. In 2021 and 2022, the Nasdaq Golden Dragon China Index plummeted 46% and 25% respectively.
