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Founder Fitness: Why Your Body Is Part of Your Business Strategy

Fri, 27 Feb 2026 01:45:03 GMT

Entrepreneurs are trained to think in terms of systems like capital, operations, strategy, and execution. We invest in coaches, software, masterminds, and market research. Yet one of the most powerful assets behind every successful business is often overlooked:

The founder’s body.

Energy, focus, resilience, creativity, and emotional regulation don’t come from motivation alone. They come from physiology. In today’s fast-moving, high-pressure economy, founder fitness isn’t a luxury, it’s a strategic advantage.

At Wealth Builders Kingdom, we talk often about mindset, legacy, and leadership. But mindset doesn’t operate in a vacuum. The body fuels the brain. The nervous system drives decision-making. And physical health determines how long you can play the game at a high level.

In this article, we’ll explore why fitness for entrepreneurs is foundational to business growth, how founder health habits directly impact leadership performance, and how high-performance leadership starts with taking care of the one asset you can’t replace, that is you.

The Hidden Cost of Ignoring Founder Health

Most founders don’t burn out because they lack ambition. They burn out because their bodies can’t sustain the pace.

The Entrepreneurial Reality

Modern founders face:

Long workdays and screen exposure
Chronic stress and decision fatigue
Irregular sleep and meals
High cognitive and emotional demands

Over time, this lifestyle taxes the nervous system and erodes performance.

Burnout Isn’t a Mindset Problem (It’s a Physical One)

When the body is under-resourced:

Focus declines
Emotional reactivity increases
Creativity stalls
Leadership presence weakens

No amount of positive thinking can override physical depletion.

Fitness for Entrepreneurs Is About Capacity, Not Aesthetics

Founder fitness isn’t about six-packs or marathon medals. It’s about capacity, your ability to handle pressure, think clearly, and lead effectively.

Physical Capacity Equals Business Capacity

A fit body supports:

Sustained energy throughout the day
Faster recovery from stress
Sharper cognition under pressure
Greater emotional regulation

These traits directly affect how you show up as a leader.

Fitness as Risk Management

Just like diversifying investments, physical fitness reduces risk:

Lower risk of chronic illness
Fewer energy crashes
Reduced stress-related decision errors

Healthy founders make better long-term decisions.

The Physiology of High-Performance Leadership

Leadership isn’t just intellectual, it’s biological.

The Nervous System Drives Leadership Behavior

Your nervous system determines whether you operate from:

Calm focus or constant urgency
Strategic thinking or reactive firefighting
Confidence or anxiety

Regular movement and exercise help regulate the nervous system, creating the internal stability leaders need.

Stress Without Recovery Is a Performance Killer

Entrepreneurs experience stress daily. The problem isn’t stress, it’s lack of recovery.

Fitness routines act as:

Stress outlets
Mood stabilizers
Cognitive resets

This is why high-performance leadership always includes physical care.

Founder Health Habits That Scale With Your Business

The most successful founders don’t wait until burnout to take care of themselves. They build habits that scale.

Consistency Beats Intensity

Founder health habits work best when they are:

Simple
Repeatable
Sustainable

You don’t need extreme workouts; you need reliable ones.

Keystone Habits That Compound

A few core habits create outsized returns:

Daily movement
Prioritized sleep
Hydration and nutrition
Stress management

These habits compound just like capital.

Exercise as a Strategic Thinking Tool

Some of the best business insights don’t happen at a desk.

Movement Enhances Creativity and Clarity

Exercise increases:

Blood flow to the brain
Neurotransmitters tied to focus and mood
Problem-solving capacity

Many founders report their clearest thinking happens during or after workouts.

Decision-Making Improves With Physical Training

Regular exercise is linked to:

Better impulse control
Improved long-term planning
Reduced emotional reactivity

These are essential traits for strategic leadership.

Time Constraints: The Founder’s Biggest Excuse

“I don’t have time” is the most common reason founders skip fitness.

Reframing the Time Argument

Fitness doesn’t take time; it creates time by:

Increasing energy
Improving focus
Reducing illness and downtime

A 30-minute workout often returns hours of productivity.

Fitness as a Non-Negotiable Meeting

High-level founders treat workouts like board meetings:

Scheduled
Protected
Non-negotiable

If it’s optional, it won’t happen.

Strength, Stamina, and Mental Toughness

Business requires endurance.

Physical Strength Builds Mental Resilience

Training the body teaches:

Discipline
Delayed gratification
Comfort with discomfort

These qualities translate directly into leadership resilience.

Stepping Into Pressure With Confidence

Founders who train regularly often report:

Greater confidence in high-stakes situations
Improved presence in negotiations
Stronger boundary-setting

Physical strength reinforces psychological strength.

Founder Fitness and Emotional Leadership

Leadership is emotional work.

Exercise Regulates Mood and Stress Hormones

Regular movement helps balance:

Cortisol (stress hormone)
Dopamine (motivation)
Serotonin (mood stability)

This supports calmer, more grounded leadership.

Leading Others Requires Self-Regulation

Teams mirror their leaders. A regulated leader creates:

Psychological safety
Clear communication
Stable culture

Founder's health habits ripple outward.

Building a Founder Fitness Routine That Works

The best routine is the one you’ll actually follow.

Start With What’s Realistic

Ask yourself:

What can I do 3–5 times per week?
What fits my current season?

Small wins build momentum.

Effective Options for Busy Founders:

Strength training 2–3x/week
Walking meetings
Short high-intensity sessions
Mobility and recovery work

Fitness should support your business, not compete with it.

Nutrition, Energy, and Cognitive Performance

Food is fuel for leadership.

Blood Sugar Stability Matters

Poor nutrition leads to:

Energy crashes
Brain fog
Irritability

Balanced meals support steady performance.

Founders Don’t Need Perfect Diets, Just Smart Ones

Focus on:

Protein for satiety and muscle
Whole foods for micronutrients
Hydration for cognitive clarity

Nutrition is a performance tool, not a moral issue.

Sleep: The Most Underrated Business Asset

Sleep is often the first thing founders sacrifice and the most expensive.

Sleep Deprivation Mimics Poor Leadership

Lack of sleep reduces:

Judgment
Emotional intelligence
Risk assessment

Chronic sleep loss undermines even the best strategies.

High-Performance Leadership Requires Recovery

Sleep supports:

Learning and memory
Emotional regulation
Hormonal balance

Protecting sleep protects your leadership edge.

Founder Fitness as Legacy Thinking

Wealth Builders Kingdom is about more than short-term wins; it’s about legacy.

Health Determines How Long You Can Lead

Generational wealth requires:

Longevity
Consistency
Sustainable performance

Your body carries the vision forward.

Modelling Success for the Next Generation

When founders prioritise health, they:

Normalize balance
Redefine success
Lead by example

Legacy starts with how you live today.

Fitness and Identity: Who You Believe You Are

How you care for your body reinforces identity.

Identity Drives Behaviour

When you see yourself as:

A high-performance leader
A disciplined founder
A resilient decision-maker

Your actions align accordingly.

Fitness Reinforces Self-Trust

Keeping promises to yourself builds:

Confidence
Integrity
Momentum

These traits show up everywhere in business.

Practical Tips to Integrate Fitness Into Founder Life

Here are simple ways to begin:

Schedule workouts like meetings
Stack habits (movement after calls)
Track progress, not perfection
Focus on consistency over intensity
Celebrate energy gains, not just metrics

Fitness should feel supportive, not punishing.

Why Founder Fitness Aligns With Wealth Builders Kingdom

At Wealth Builders Kingdom, the focus is holistic success:

Mindset
Strategy
Community
Sustainability

Founder fitness aligns with this philosophy by ensuring leaders are physically equipped to execute their vision.

Your Body Is a Business Asset—Treat It Like One

Every strategy, investment, and partnership flows through one system first: you.

Fitness for entrepreneurs isn’t about vanity. It’s about:

Energy
Focus
Emotional intelligence
Longevity

Founder health habits are leadership habits. And high-performance leadership begins with the body that carries the vision.

If you want a business that lasts, start with the asset that makes everything else possible.

Peer Mentoring Networks: The Secret Weapon of High-Performing Entrepreneurs

Fri, 20 Feb 2026 01:45:07 GMT

Entrepreneurship is often painted as a solo journey, late nights, bold decisions, and personal grit driving success. But behind nearly every high-performing entrepreneur is something far less glamorous and far more powerful: a strong peer mentoring network.

In today’s fast-moving business landscape, talent and hustle alone aren’t enough. Entrepreneurs who scale sustainably, pivot intelligently, and maintain clarity under pressure tend to have one thing in common, they don’t grow alone. Peer mentoring for entrepreneurs has become one of the most valuable tools for founders who want real growth, real accountability, and real results.

At Wealth Builders Kingdom, we believe success is built faster and smarter, when entrepreneurs surround themselves with aligned peers.

Let’s explore why peer mentoring networks are becoming the secret weapon of high-performing founders and how you can leverage them effectively.

What Is Peer Mentoring for Entrepreneurs?

Peer mentoring is a collaborative relationship between entrepreneurs at similar stages of business growth who support one another through shared insight, accountability, and experience.

Unlike traditional coaching or consulting, peer mentoring is:

Reciprocal – everyone gives and receives value
Experience-driven – advice comes from real-world application
Relationship-based – trust and long-term connection matter

These relationships often live inside business mastermind groups, founder circles, or structured peer communities designed to foster growth.

Rather than learning from someone far ahead or far removed, entrepreneurs gain insights from peers who understand the challenges right now.

Why High-Performing Entrepreneurs Don’t Build Alone

Success can be isolating. The higher you climb, the fewer people understand your decisions, pressure, or vision. Peer mentoring networks fill this gap.

Shared Perspective Reduces Blind Spots

Even the smartest founders have blind spots. Peer mentors challenge assumptions, ask better questions, and offer perspectives you may never see on your own.

Faster Problem Solving

Instead of spending weeks figuring something out alone, peer mentors often say:

“I’ve been there.”
“Here’s what worked and what didn’t.”
“Avoid this mistake.”

That speed compounds over time.

Emotional Resilience and Mental Clarity

Entrepreneurship isn’t just strategic, it’s emotional. Peer mentoring creates a safe space to:

Process setbacks
Celebrate wins without guilt
Stay grounded during uncertainty

This emotional stability directly impacts decision quality.

The Power of Business Mastermind Groups

A business mastermind group is a structured peer mentoring environment where entrepreneurs meet regularly to support one another’s growth.

Well-run mastermind groups provide:

Goal clarity and accountability
Strategic feedback from trusted peers
Exposure to new tools, ideas, and opportunities
Long-term relationship capital

Napoleon Hill introduced the concept over a century ago, but modern entrepreneurs have refined it into one of the most effective growth frameworks available today.

Founder Accountability: The Growth Multiplier Most Entrepreneurs Miss

Accountability is one of the biggest benefits of peer mentoring and one of the most overlooked.

Why Self-Accountability Isn’t Enough

Founders are great at holding teams accountable, but often struggle to hold themselves accountable when:

No one is watching
Priorities conflict
Motivation dips

Peer mentoring introduces external founder accountability, the kind that creates follow-through without shame or pressure.

Accountability That Feels Supportive, Not Punitive

In strong peer networks, accountability looks like:

Weekly or monthly check-ins
Clear commitments
Honest feedback
Encouragement, not judgment

This keeps entrepreneurs moving forward even when momentum fades.

How Peer Mentoring Accelerates Business Growth

Peer mentoring for entrepreneurs doesn’t just feel good; it produces measurable outcomes.

Smarter Decision-Making

When major decisions arise, founders with peer networks:

Test ideas before execution
Evaluate risks more clearly
Avoid emotional or reactive choices
Expanded Opportunity Awareness

Peers often open doors to:

Strategic partnerships
New markets
Speaking engagements

Investment opportunities

Your network doesn’t just support growth, it creates it.

Sustainable Scaling

High-performing entrepreneurs don’t just grow fast; they grow sustainably.

Peer mentoring helps founders:
Avoid burnout
Balance ambition with alignment

Build businesses that support their lives, not consume them

Characteristics of High-Impact Peer Mentoring Networks

Not all groups are created equal. The most effective peer mentoring networks share common traits.

Aligned Values and Vision

Growth is smoother when peers share:

Ethical standards
Long-term thinking
Commitment to personal development
Diversity of Experience

Strong groups include entrepreneurs with:

Different industries
Complementary strengths
Varied perspectives

This diversity strengthens collective intelligence.

Structure and Consistency

Effective networks aren’t casual chats.

They include:

Regular meetings
Clear expectations
Defined outcomes

Structure creates momentum.

Practical Tips for Getting the Most From Peer Mentoring

Whether you’re joining a new group or strengthening an existing one, these tips will help you maximise value.

1. Show Up Prepared

Come to meetings with:

Clear goals
Honest challenges
Openness to feedback

The more you give, the more you gain.

2. Be Coachable

Peer mentoring only works when ego is left at the door. Listen fully even when feedback feels uncomfortable.

3. Commit to Action

Insight without action creates frustration. Commit to one or two clear next steps after each session.

4. Protect the Container

Confidentiality and respect are essential. Trust is the currency of peer mentoring.

Why Peer Mentoring Is Especially Critical in Today’s Economy

The modern business environment is more complex than ever:

Rapid technology shifts
Economic uncertainty
Increased competition
Information overload

Peer mentoring networks help entrepreneurs filter noise, adapt faster, and stay focused on what truly matters.

In uncertain times, community becomes a competitive advantage.

The Wealth Builders Kingdom Approach to Peer Mentorship

At Wealth Builders Kingdom, we recognise that wealth isn’t just financial, it’s mental, relational, and strategic.

Our peer mentoring environments are designed to support:

Vision-driven entrepreneurs
Long-term wealth builders
Leaders committed to growth with integrity

We emphasise:

Deep relationships over surface networking
Accountability rooted in purpose
Collaboration over competition

Because real success is built together.

Building Generational Impact Through Peer Connection

Entrepreneurs who invest in peer mentoring often discover something powerful:

Their growth doesn’t just impact them; it impacts families, communities, and future generations.

When founders grow with clarity and support, they:

Make better decisions
Build healthier businesses
Create legacies that last

Peer mentoring networks are not just tools; they are ecosystems for transformation.

Success Grows Faster in Community

Behind every high-performing entrepreneur is a network of peers who challenge, support, and sharpen them. Peer mentoring for entrepreneurs, business mastermind groups, and founder accountability are no longer optional; they’re essential.

If you’re serious about scaling your business, protecting your mindset, and building lasting success, the question isn’t whether you need a peer network.

It’s who you’re building it with.

At Wealth Builders Kingdom, we believe the future belongs to entrepreneurs who grow together intentionally, strategically, and purposefully.

Why Mindset Is the Real Currency of Generational Wealth

Fri, 13 Feb 2026 18:41:14 GMT

When people think about generational wealth, they usually picture bank accounts, real estate, investment portfolios, or successful businesses passed down through families. While those assets matter, they are not the true foundation of lasting wealth. Money can be earned, lost, and earned again but mindset is what determines whether wealth grows or disappears over time.

At Wealth Builders Kingdom, the focus goes deeper than tactics and tools. The truth is simple but powerful: mindset is the real currency of generational wealth. Without the right beliefs, habits, and psychological framework, even large fortunes can vanish within a generation or two.

In this article, we’ll explore what a generational wealth mindset really is, why it matters more than money alone, and how wealth mindset coaching and success psychology for entrepreneurs play a crucial role in building a legacy that lasts.

Redefining Generational Wealth

It’s More Than Inheritance

Generational wealth isn’t just about what you leave behind; it’s about what you teach, model, and instill.

Families that maintain wealth across generations pass down:

Financial literacy
Decision-making skills
Emotional discipline
Long-term thinking

Money is the result. Mindset is the engine.

Without the right mindset, inherited wealth often becomes a burden rather than a blessing.

Why Money Alone Isn’t Enough

The Statistics Tell the Story

History shows that many families lose their wealth within two or three generations. This doesn’t happen because money disappears, it happens because mindsets don’t transfer.

Common reasons wealth fades:

Poor financial habits
Entitlement without responsibility
Fear-based decision making
Lack of purpose or direction

A strong generational wealth mindset protects against these patterns.

What Is a Generational Wealth Mindset?

Thinking Beyond the Present

A generational wealth mindset is the ability to think in decades, not days. It’s rooted in:

Long-term vision
Stewardship over consumption
Discipline over impulse
Growth over comfort

This mindset shifts the question from “How much can I make?” to “How can this impact my family for generations?”

Mindset as a Transferable Asset

What Children Actually Inherit

Children don’t just inherit money, they inherit:

Beliefs about success
Attitudes toward risk
Emotional responses to failure
Confidence (or fear) around wealth

This is why wealth mindset coaching is so powerful. It helps entrepreneurs and leaders consciously shape what they pass on.

The Role of Success Psychology for Entrepreneurs

Why Inner Work Drives Outer Results

Entrepreneurs face constant uncertainty. Decisions are rarely black and white, and emotional resilience becomes a competitive advantage.

Success psychology for entrepreneurs focuses on:

Managing fear and self-doubt
Building confidence under pressure
Developing emotional intelligence
Maintaining clarity during growth

These psychological skills don’t just build businesses, they build leaders capable of sustaining wealth.

Scarcity vs. Abundance Thinking

One Creates Wealth, the Other Destroys It

A scarcity mindset says:

“There’s never enough.”
“If I win, someone else loses.”
“I should protect what I have at all costs.”
An abundance mindset says:
“Opportunities can be created.”
“Value multiplies when shared.”
“Growth is possible for everyone.”

Generational wealth grows in abundance, not fear.

Wealth Mindset Coaching: The Missing Link

Why Strategy Without Mindset Falls Short

Many people have access to information, books, courses, and podcasts but still struggle to build lasting wealth. The issue isn’t knowledge; it’s alignment.

Wealth mindset coaching helps individuals:

Identify limiting beliefs around money
Rewire habits tied to self-sabotage
Build confidence in decision-making
Develop consistency and discipline

At Wealth Builders Kingdom, mindset is treated as a foundational asset not an afterthought.

How Mindset Shapes Financial Decisions

Everyday Choices Add Up

Wealth isn’t built in big moments alone. It’s built in small, repeated decisions:

Whether to invest or avoid risk
Whether to save or spend impulsively
Whether to learn or stay comfortable

A generational wealth mindset guides these decisions with clarity and intention.

Teaching Wealth Without Teaching Entitlement

The Balance Every Family Needs

One of the biggest fears around generational wealth is raising children who feel entitled rather than empowered.

Mindset-focused families teach:

Responsibility alongside opportunity
Work ethic alongside privilege
Purpose alongside profit

This balance ensures wealth becomes a tool, not a crutch.

Legacy Thinking vs. Lifestyle Thinking

Two Very Different Approaches to Wealth

Lifestyle thinking focuses on:

Immediate comfort
Status symbols
Short-term rewards

Legacy thinking focuses on:

Systems that outlast individuals
Education and preparation
Sustainable growth

A generational wealth mindset always prioritizes legacy over luxury.

Emotional Intelligence: An Overlooked Wealth Skill

Why Emotions Drive Financial Outcomes

Emotional reactions like fear, greed, pride often cause the biggest financial mistakes. Success psychology for entrepreneurs emphasizes emotional awareness because it directly impacts wealth.

Emotional intelligence helps with:

Staying calm during market shifts
Handling failure without quitting
Leading teams effectively
Making rational, long-term decisions

These skills protect wealth as much as any investment strategy.

Practical Ways to Build a Generational Wealth Mindset

1. Redefine What Success Means

Success isn’t just income; it’s impact, freedom, and sustainability.

2. Practice Long-Term Thinking

Ask how today’s decisions affect the next 10–20 years.

3. Normalize Financial Conversations

Open, age-appropriate conversations build confidence and understanding.

4. Invest in Personal Growth

Mindset development is just as important as financial education.

Why Entrepreneurs Have a Unique Opportunity

Builders Shape Generations

Entrepreneurs don’t just create income; they create systems, cultures, and examples. When paired with wealth mindset coaching, entrepreneurship becomes a vehicle for generational transformation.

Entrepreneurs with the right mindset:

Build businesses that outlive them
Create employment and opportunity
Pass down skills, not just assets

The Ripple Effect of a Strong Wealth Mindset

Beyond Money

A generational wealth mindset impacts:

Confidence
Leadership
Community involvement
Philanthropy

Wealth built with intention often becomes a force for good beyond the family itself.

Breaking Limiting Beliefs Around Money

Awareness Is the First Step

Common limiting beliefs include:

“Money is hard to earn.”
“Wealth changes people.”
“I’m not meant to be wealthy.”

Wealth mindset coaching helps identify and replace these beliefs with empowering truths.

Why Mindset Must Come First

Tools Follow Belief

Strategies, investments, and businesses are only as effective as the mindset behind them. Without the right internal foundation, external success becomes unstable.

Mindset:

Determines consistency
Shapes resilience
Guides behavior

That’s why it’s the real currency of generational wealth.

How Wealth Builders Kingdom Supports This Shift

At Wealth Builders Kingdom, the focus is not just on financial growth but on the mindset that sustains it. By integrating wealth mindset coaching with principles from success psychology for entrepreneurs, individuals are equipped to build legacies rooted in clarity, confidence, and purpose.

Wealth That Lasts Starts Within

Generational wealth isn’t built by accident. It’s built by individuals who understand that money is a tool but mindset is the foundation.

When beliefs, habits, and emotional intelligence align with long-term vision, wealth becomes sustainable, transferable, and meaningful.

The true inheritance isn’t just what’s left behind, it’s the mindset that created it. And that mindset is the most valuable currency of all.

If you want wealth that lasts beyond your lifetime, start where it truly begins: within.

Why Integrated Consulting Teams Outperform Solo Advisors

Mon, 09 Feb 2026 15:25:57 GMT

In today’s complex business environment, no entrepreneur, investor, or organization operates in isolation.

Markets move faster, regulations evolve constantly, and opportunities often sit at the intersection of multiple disciplines. Yet many businesses still rely on a single advisor to guide major decisions, financial, operational, legal, or strategic.

While solo advisors bring valuable expertise, they are often limited by the scope of their individual knowledge. That’s where integrated consulting services come in.

An integrated consulting team combines diverse experts into a cohesive business advisory network, offering clients a broader perspective, deeper insights, and smarter execution. Instead of fragmented advice, businesses gain coordinated strategies powered by collaboration and strategic partnerships.

In this article, we’ll explore why integrated consulting teams consistently outperform solo advisors and how this model helps businesses build resilience, scale sustainably, and make confident decisions in an increasingly interconnected world.

What Are Integrated Consulting Services?

A Unified Approach to Advisory Support

Integrated consulting services involve a coordinated team of professionals working together across disciplines to support a client’s goals. Instead of separate advisors operating independently, the team aligns strategy, communication, and execution.

Common areas covered by integrated teams include:

Financial planning and analysis
Business strategy and operations
Legal and compliance guidance
Marketing and brand development
Technology and systems optimization
Leadership and organisational development

The key difference lies in integration. Advisors don’t just offer opinions; they collaborate, cross-check insights, and align recommendations to serve a unified vision.

Solo Advisors vs. Integrated Teams: A Clear Contrast

The Limitations of Going It Alone

Solo advisors often face challenges such as:

Limited bandwidth and capacity
Narrow specialization
Reliance on external referrals without coordination
Delayed decision-making when issues cross domains

While solo advisors can be effective for specific tasks, they may struggle to support businesses navigating growth, transitions, or complex strategic shifts.

The Strength of Collaborative Expertise

Integrated consulting teams excel because they:

Share knowledge across disciplines
Anticipate ripple effects of decisions
Reduce blind spots
Provide faster, more informed recommendations

Instead of reacting to problems as they arise, teams proactively design strategies that account for multiple variables at once.

The Power of a Business Advisory Network

Collective Intelligence in Action

A strong business advisory network functions like a strategic ecosystem. Each advisor brings a unique lens, but all operate toward shared outcomes.

Benefits of a robust advisory network include:

Diverse perspectives : Different viewpoints challenge assumptions and refine strategy
Depth of expertise : Specialists contribute advanced knowledge in their domains
Continuity : If one advisor is unavailable, the team maintains momentum
Accountability : Advisors hold each other to higher standards

This collective intelligence leads to better decisions, fewer surprises, and more sustainable growth.

Strategic Partnerships: The Multiplier Effect

Why Collaboration Creates Competitive Advantage

At the heart of integrated consulting lies strategic partnerships, intentional relationships between professionals who trust each other’s expertise and collaborate seamlessly.

Strategic partnerships enable:

Faster problem-solving through shared resources
Innovation sparked by cross-disciplinary thinking
Streamlined communication for clients
Stronger long-term planning

Rather than juggling multiple disconnected advisors, clients benefit from a unified advisory experience where experts work together behind the scenes.

How Integrated Teams Deliver Better Strategy

Seeing the Big Picture

Integrated consulting teams don’t just solve isolated problems, they design strategies that align with long-term goals.

For example:

A financial recommendation is evaluated alongside tax efficiency
A growth strategy is assessed for operational feasibility
A marketing initiative is aligned with brand positioning and compliance

This approach ensures that every recommendation supports the broader vision, not just short-term wins.

More Confident Decision-Making

Reduced Guesswork, Increased Clarity

When advisors collaborate in real time, clients receive clearer guidance faster. Instead of waiting for multiple opinions from separate professionals, integrated teams synthesise insights into actionable recommendations.

This leads to:

Quicker execution
Reduced decision fatigue
Greater confidence in outcomes

For business leaders, speed and clarity can be the difference between seizing an opportunity and missing it.

Risk Management Through Integration

Fewer Blind Spots, Stronger Safeguards

One of the biggest advantages of integrated consulting services is improved risk management. When advisors work in isolation, risks can slip through the cracks.

Integrated teams help identify:

Financial risks tied to operational decisions
Legal implications of strategic moves
Reputational risks in marketing and partnerships

By addressing risk collectively, businesses gain stronger protection and long-term stability.

Practical Benefits for Business Owners and Investors

What Clients Actually Experience

Working with an integrated consulting team often results in:

Streamlined communication
Fewer conflicting recommendations
Clear accountability
Long-term strategic alignment

Clients no longer act as intermediaries between advisors. Instead, the advisory team collaborates internally, saving time and reducing stress for decision-makers.

Scalability: Growing Without Outgrowing Your Advisors

Built for Long-Term Success

As businesses scale, their needs evolve. Solo advisors may struggle to keep up with increased complexity, but integrated teams are built for growth.

They can:

Add specialised expertise as needed
Adjust strategy without disruption
Support expansion into new markets or industries

This scalability makes integrated consulting an ideal model for entrepreneurs and organisations with long-term ambitions.

Practical Tips: Choosing the Right Integrated Consulting Team

What to Look For

If you’re considering integrated consulting services, keep these tips in mind:

1. Alignment of Values and Vision

Choose a team that understands your mission and long-term goals.

2. Proven Collaboration

Ask how advisors work together and communicate internally.

3. Depth and Breadth of Expertise

Look for a balanced mix of specialists rather than generalists alone.

4. Transparent Communication

Integrated teams should provide clear, coordinated guidance, not conflicting opinions.

Why Integrated Consulting Fits the Future of Business

A Model Built for Connection

The future of business is interconnected. Success depends on relationships, adaptability, and informed decision-making across disciplines.

Integrated consulting reflects this reality by combining:

Human expertise
Strategic partnerships
Collaborative execution

Rather than relying on a single voice, businesses gain a chorus of aligned experts working toward shared success.

How Wealth Builders Kingdom Embodies This Approach

At Wealth Builders Kingdom, the integrated consulting model is rooted in collaboration, stewardship, and strategic alignment. By leveraging a strong business advisory network and trusted strategic partnerships, clients receive guidance that’s not only comprehensive but also deeply intentional.

This approach empowers individuals and organizations to:

Build wealth responsibly
Navigate complexity with confidence
Make decisions that align with purpose and prosperity

Collaboration Wins Every Time

In an increasingly complex business landscape, the days of relying solely on a single advisor are fading. While solo advisors offer value, integrated consulting teams consistently outperform by delivering broader insight, faster decisions, and more resilient strategies.

Through integrated consulting services, a strong business advisory network, and intentional strategic partnerships, businesses gain clarity, confidence, and long-term advantage.

When expertise is aligned, collaboration becomes a catalyst for growth, and that’s where true wealth is built.

Building a Kingdom Mindset: Leadership Principles for Long-Term Wealth

Fri, 30 Jan 2026 12:13:10 GMT

True wealth is about more than numbers in a bank account. It’s about purpose, stewardship, influence, and legacy. In today’s fast-paced, profit-first culture, many leaders chase short-term wins only to find themselves burned out, misaligned, or constantly starting over.

A Kingdom mindset offers a different path.

Rooted in principles of service, integrity, and long-term vision, this mindset transforms how leaders approach money, business, and influence. It shifts the focus from accumulation to multiplication, from transactions to transformation, and from short-term success to lasting impact.

If you’re building a business, leading a team, or stewarding resources with intention, developing a Kingdom mindset is one of the most powerful wealth building strategies you can adopt.

Let’s explore how leadership grounded in Kingdom principles creates sustainable success and long-term value.

What Is a Kingdom Mindset in Leadership?

A Kingdom mindset isn’t about religion in the workplace, it’s about values-driven leadership that prioritizes purpose, people, and stewardship.

At its core, a Kingdom mindset means:

Leading with integrity, not ego
Building wealth as a tool, not an idol
Creating value that outlives you
Viewing leadership as service, not status

This mindset recognizes that leadership is influence and influence is a responsibility.

When leaders adopt this approach, wealth becomes something that flows through them, not something they cling to.

Why Mindset Matters More Than Money

Before strategies, systems, or scaling, wealth starts in the mind.

Your business leadership mindset determines:

How you handle setbacks
How you treat people
How you define success
How you make decisions under pressure

A scarcity mindset chases fast money and short-term wins. A Kingdom mindset plays the long game. Long-term wealth is rarely built by accident.

It’s built intentionally starting with how you think.

Leadership Principle #1 – Stewardship Over Ownership

One of the most foundational Kingdom leadership principles is stewardship.

Stewardship means understanding that:

Your business is entrusted to you
Your wealth is a responsibility
Your influence has consequences

When leaders see themselves as stewards, they make different choices. They invest wisely, treat people fairly, and prioritize sustainability over shortcuts.

Practical Stewardship Tips

Track where money flows, not just profits
Invest in systems that outlast individuals
Build teams, not just revenue streams
Reinvest in growth, education, and impact

This approach creates stability and trust, two essentials for long-term value creation.

Leadership Principle #2 – Vision Beyond Immediate Results

Kingdom-minded leaders think in generations, not quarters.

They ask:

Will this decision still matter in five years?
Does this align with our core values?
Are we building something worth inheriting?

Short-term success can be exciting, but long-term vision builds resilience.

How to Develop Long-Term Vision

Set goals beyond financial metrics
Measure impact alongside income
Build repeatable, scalable systems
Resist trends that don’t align with your mission

Strong vision anchors leadership during seasons of uncertainty and growth.

Leadership Principle #3 – Value Creation Over Value Extraction

One of the most effective wealth building strategies is focusing on value creation, not extraction.

Value extraction asks, “What can I get?”

Value creation asks, “What problem can I solve?”

Kingdom leaders understand that wealth follows service .

Examples of Long-Term Value Creation

Offering solutions that genuinely help people
Investing in employee development
Creating ethical, customer-centered business models
Prioritizing quality over quick wins

When value creation leads, profitability follows naturally and sustainably.

Leadership Principle #4 – People-Centered Leadership

Businesses don’t scale, people do.

A Kingdom mindset places people at the center of leadership. Employees, clients, and partners are seen as contributors, not commodities.

Traits of People-Centered Leaders

They listen before leading
They empower instead of micromanage
They celebrate growth, not just output
They address conflict with grace and clarity

This leadership style builds loyalty, reduces burnout, and creates cultures where excellence thrives.

Leadership Principle #5 – Integrity as a Growth Strategy

Integrity isn’t just a moral value, it’s a business advantage.

Inconsistent leadership erodes trust. Consistent integrity builds credibility that compounds over time.

Ways Integrity Builds Wealth

Stronger partnerships
Repeat customers and referrals
Reduced internal friction
Clear decision-making

Leaders with integrity don’t need to chase opportunities, opportunities find them.

Faith, Discipline, and Financial Wisdom

A Kingdom mindset balances faith with responsibility.

Faith fuels vision.
Discipline fuels execution.

Successful leaders:

Budget intentionally
Avoid unnecessary debt
Invest with patience
Seek wise counsel

These habits protect resources and create margin for growth, generosity, and innovation.

Applying Kingdom Principles to Modern Business

A Kingdom mindset isn’t outdated, it’s deeply relevant.

In today’s economy, people are drawn to businesses that:

Stand for something
Treat people ethically
Create real value
Operate transparently

Leaders who integrate Kingdom values into modern systems often find they outperform those chasing trends without purpose.

Common Misconceptions About Kingdom Wealth

“Kingdom wealth means avoiding profit.”

Profit is not the problem, misaligned priorities are.

“Faith-based leadership limits growth.”

In reality, it often creates stronger foundations for scaling.

“Long-term thinking slows success.”

It actually protects success from collapse.

True wealth isn’t just built, it’s sustained.

Building Your Kingdom Leadership Roadmap

To grow into Kingdom leadership:

Clarify your values
Align business goals with purpose
Invest in people and systems
Measure success beyond money
Commit to long-term value creation

Consistency compounds character and character compounds wealth.

Wealth That Builds More Than You

Building a Kingdom mindset is about more than financial growth; it's about impact, integrity, and inheritance.

When leaders prioritize stewardship, people, and purpose, wealth becomes a byproduct of value, not the sole objective. These leadership principles don’t just build businesses, they build legacies.

At Wealth Builders Kingdom, the goal isn’t just to grow wealth but to develop leaders who build with wisdom, vision, and lasting impact.

The question isn’t how much you can accumulate but how much you can multiply for generations to come.

Cybersecurity Is a Business Strategy Not Just an IT Issue

Fri, 23 Jan 2026 18:31:32 GMT

When many business owners hear the word cybersecurity , they picture firewalls, passwords, and IT teams working behind the scenes. While technology is part of the picture, cybersecurity today goes far beyond servers and software. It’s about protecting revenue, reputation, customer trust, and long-term growth.

In a digital-first economy, cybersecurity is no longer optional or limited to the IT department. It’s a core business strategy that affects every area of an organization, from leadership and operations to marketing and finance. Companies that understand this shift are better positioned to manage risk, build trust, and scale confidently.

In this article , we’ll explore why cybersecurity belongs at the strategy table, how it supports effective business risk management, and why a proactive data protection strategy is essential for modern organizations.

The Changing Cyber Threat Landscape

Cyber threats are no longer rare or limited to large corporations. Small and mid-sized businesses are increasingly targeted because attackers know these organizations often lack robust protections.

Cybercrime Is a Business Problem

Modern cyber threats include:

Data breaches
Ransomware attacks
Phishing scams
Insider threats
Supply chain vulnerabilities

Each of these incidents can disrupt operations, damage brand credibility, and lead to financial losses. This makes cybersecurity as critical as legal compliance, financial planning, or customer service.

Why Cybersecurity Can’t Live Only in IT

Treating cybersecurity as solely an IT responsibility creates dangerous blind spots.

Cyber Risk Impacts the Entire Organization

Cybersecurity touches:

Leadership: Strategic decisions about growth, partnerships, and investments
Finance: Fraud prevention, financial data protection, and regulatory fines
Operations: Business continuity and system availability
Marketing & Sales: Customer trust and brand reputation
Human Resources: Employee access, training, and insider risk

When cybersecurity is isolated in IT, organizations miss the opportunity to align protection with broader business goals.

Cybersecurity as a Core Business Strategy

A strong cybersecurity approach supports the organization’s mission, values, and long-term objectives.

Protecting Revenue and Growth

Cyber incidents can:

Halt operations for days or weeks
Lead to lost customers
Delay product launches
Drain financial resources

Embedding cybersecurity into business planning helps leaders anticipate risks and avoid disruptions that stall growth.

Building Trust With Customers and Partners

Trust is a competitive advantage. Customers expect their personal and financial information to be handled responsibly.

A clear data protection strategy:

Demonstrates professionalism and accountability
Strengthens customer loyalty
Builds confidence with partners and investors

Businesses that prioritize cybersecurity signal reliability and long-term stability.

The Role of Cybersecurity Consulting

Many organizations lack in-house expertise to fully assess and manage cyber risk. This is where cybersecurity consulting becomes invaluable.

What Cybersecurity Consulting Provides

Cybersecurity consultants help businesses:

Identify vulnerabilities across systems and processes
Assess risk based on business impact, not just technical flaws
Develop policies aligned with business goals
Create incident response and recovery plans
Support compliance with industry regulations

Rather than focusing only on tools, cybersecurity consulting connects technology decisions to business outcomes.

Cybersecurity and Business Risk Management

Cyber threats are a form of business risk just like financial, legal, or operational risks.

Treating Cyber Risk Like Any Other Business Risk

Effective business risk management includes:

Identifying potential threats
Evaluating their likelihood and impact
Implementing controls to reduce exposure
Monitoring and adjusting as the business evolves

When cybersecurity is integrated into enterprise risk management, leaders can make informed decisions instead of reacting to crises.

Understanding the Cost of Inaction

Ignoring cybersecurity risks can lead to:

Regulatory penalties
Legal action
Loss of intellectual property
Reputational damage

These consequences often cost far more than proactive prevention.

Developing a Strong Data Protection Strategy

Data is one of the most valuable assets a business owns. Protecting it should be a strategic priority.

What Is a Data Protection Strategy?

A data protection strategy defines how an organization:

Collects data
Stores data
Uses data
Shares data
Secures data throughout its lifecycle

This strategy aligns security controls with business needs, legal obligations, and customer expectations.

Key Elements of an Effective Data Protection Strategy

1. Data Classification

Understand what data you collect and which data is most sensitive.

2. Access Control

Limit access based on roles and responsibilities.

3. Encryption and Secure Storage

Protect data at rest and in transit.

4. Backup and Recovery

Ensure critical data can be restored quickly after an incident.

5. Policy and Training

Employees should understand how to handle data safely.

Cybersecurity Starts With Leadership

Cybersecurity strategy begins at the top.

Executive Buy-In Matters

When leadership prioritizes cybersecurity:

Budgets align with risk exposure
Policies are enforced consistently
Security becomes part of company culture

Executives don’t need to be technical experts but they do need to understand cyber risk in business terms.

Asking the Right Questions

Leaders should ask:

What data is critical to our business?
What would happen if systems were unavailable for 24–72 hours?
Are employees trained to recognize cyber threats?
Do we have a response plan if something goes wrong?

These questions help move cybersecurity from a technical conversation to a strategic one.

Employee Awareness: The Human Factor

Technology alone cannot stop cyber threats. Employees play a major role in security.

Why Training Is Essential

Common cyber incidents begin with:

Clicking a phishing link
Using weak passwords
Sharing sensitive information unintentionally

Regular training helps employees become the first line of defense instead of the weakest link.

Creating a Security-Conscious Culture

A strong culture encourages:

Reporting suspicious activity
Following policies consistently
Understanding the “why” behind security rules

Security becomes part of daily operations not an obstacle.

Cybersecurity and Business Continuity

Cybersecurity planning supports business resilience.

Preparing for the Unexpected

Even with strong controls, incidents can happen.

A business-focused cybersecurity strategy includes:

Incident response planning
Disaster recovery testing
Clear communication protocols

These preparations minimize downtime and protect customer relationships during disruptions.

Aligning Cybersecurity With Business Growth

As businesses grow, cyber risk increases.

Scaling Securely

Growth introduces:

New systems and tools
More employees and access points
Expanded digital presence

Cybersecurity consulting helps ensure security scales alongside the business rather than lagging behind.

Common Cybersecurity Myths That Hurt Businesses

Myth 1: “We’re Too Small to Be a Target”

Reality: Small businesses are often targeted because they’re less protected
.

Myth 2: “Our IT Team Handles That”

Reality: Cybersecurity affects strategy, finance, operations, and reputation.

Myth 3: “Security Slows Us Down”

Reality: Proactive security prevents costly disruptions and delays.

Practical Steps to Treat Cybersecurity as a Strategy

Include cybersecurity in leadership discussions
Conduct regular risk assessments
Invest in cybersecurity consulting when needed
Develop and maintain a clear data protection strategy
Train employees consistently
Review and adapt as the business evolves

Small, intentional steps lead to meaningful protection.

Cybersecurity Is a Smart Business Investment

Cybersecurity is no longer just a technical requirement, it’s a strategic business decision. Organizations that integrate cybersecurity into business risk management protect their assets, build trust, and create a foundation for sustainable growth.

By viewing cybersecurity through a business lens and leveraging expert cybersecurity consulting, companies can develop a data protection strategy that supports both security and success.

If you’re ready to align cybersecurity with your business goals, start by treating it as the strategic investment. It truly is one that protects not only your systems, but your future.

AI-Driven Strategy: How Smart Businesses Win in 2026

Fri, 16 Jan 2026 17:56:09 GMT

In 2026, the most successful businesses aren’t just working harder, they’re working smarter. Across industries, leaders are discovering that intuition alone is no longer enough to stay competitive in a fast-moving, data-rich world. The companies pulling ahead are the ones using artificial intelligence to sharpen their strategy, streamline operations, and make confident decisions backed by real insights.

But here’s the truth: winning with AI isn’t about chasing trends or replacing people with machines. It’s about using AI as a strategic partner, one that helps businesses understand their data, spot opportunities faster, and make better decisions every day.

At Wealth Builders Kingdom , we help entrepreneurs and organizations use modern tools to build sustainable, scalable success. Let’s explore how AI-driven strategy is shaping business growth in 2026 and how smart businesses are using it to win.

Why AI Is No Longer Optional in 2026

AI has moved beyond experimentation. Today, it’s embedded in how businesses market, sell, hire, forecast, and serve customers.

Companies that delay adoption often struggle with:

Slower decision-making
Rising operational costs
Missed growth opportunities
Inconsistent customer experiences

Meanwhile, businesses that embrace AI thoughtfully gain a powerful advantage clarity.

This shift has made AI business strategy a core component of competitive planning, not just a technical add-on.

What Is an AI-Driven Business Strategy?

Strategy Powered by Intelligence, Not Guesswork

An AI-driven strategy uses artificial intelligence to analyze data, automate insights, and guide decision-making across the organization.

Rather than relying solely on past experience or limited reports, AI helps leaders:

Identify patterns humans might miss
Predict outcomes before they happen
Respond quickly to market changes
Allocate resources more effectively

The goal isn’t complexity, it’s smarter execution.

AI as a Decision Support Tool

AI doesn’t replace leadership. It enhances it.

By processing massive amounts of information in real time, AI supports:

Strategic planning
Performance tracking
Risk assessment
Opportunity forecasting

This creates a foundation for confident, data-driven decision making at every level of the business.

How Smart Businesses Are Using AI in 2026

AI for Strategic Planning and Forecasting

Planning for the future has always involved uncertainty. AI reduces that uncertainty by analyzing historical data, market trends, and external signals.

Businesses use AI to:

Forecast sales and demand
Model different growth scenarios
Identify seasonal patterns
Prepare for economic shifts

This allows leaders to plan proactively instead of reacting under pressure.

AI in Marketing and Customer Experience

Understanding customers is one of AI’s greatest strengths.

In 2026, businesses are using AI to:

Personalize marketing messages
Predict customer behavior
Optimize ad spend
Improve customer retention

Instead of generic campaigns, AI enables targeted strategies that speak directly to customer needs improving ROI and loyalty.

AI for Operational Efficiency

Behind the scenes, AI is transforming operations.

Smart businesses use AI to:

Automate repetitive tasks
Optimize supply chains
Reduce waste and inefficiencies
Improve scheduling and logistics

These improvements don’t just save time they free teams to focus on higher-value work that drives growth.

The Power of Data-Driven Decision Making

Turning Data Into Actionable Insight

Most businesses already have data but data alone doesn’t create value. AI bridges the gap between information and action.

With AI tools, companies can:

Analyze customer data in real time
Monitor performance across departments
Identify underperforming areas quickly
Test strategies before full implementation

This transforms raw data into clear, strategic direction.

Reducing Risk and Improving Accuracy

Human decisions are influenced by bias, emotion, and incomplete information. AI helps balance intuition with evidence.

Benefits include:

More accurate forecasting
Earlier risk detection
Objective performance measurement
Better long-term planning

This doesn’t eliminate risk but it makes it manageable.

AI Consulting Services: Why Expertise Matters

AI Strategy Is Not One-Size-Fits-All

One of the biggest mistakes businesses make is adopting AI tools without a clear strategy. Technology without alignment can create confusion instead of clarity.

This is where AI consulting services play a crucial role.

AI consultants help businesses:

Identify the right use cases
Choose tools that match business goals
Integrate AI with existing systems
Train teams for adoption

The result is smarter implementation and faster results.

Aligning AI With Business Goals

Successful AI strategies always start with a simple question: What problem are we trying to solve?

AI consulting ensures that:

Technology supports revenue growth
Automation enhances not disrupts workflows
Data insights align with strategic priorities

This alignment is what separates successful AI adoption from expensive experimentation.

Common Myths About AI in Business

“AI Is Only for Large Corporations”

Not true. In 2026, AI tools are more accessible and scalable than ever. Small and mid-sized businesses use AI to compete with larger players often more efficiently.

“AI Will Replace My Team”

AI is best used to augment human capability, not replace it.

Businesses that succeed with AI focus on:

Enhancing productivity
Supporting better decisions
Allowing teams to focus on creative and strategic work

AI becomes a partner not a threat.

Practical Steps to Build an AI-Driven Strategy

Step 1 – Assess Your Data Readiness

Start by understanding what data you already have:

Customer data
Sales data
Operational metrics
Marketing performance

Clean, organized data is the foundation of any successful AI initiative.

Step 2 – Identify High-Impact Use Cases

Focus on areas where AI can create immediate value, such as:

Sales forecasting
Customer insights
Process automation
Financial analysis

Avoid trying to do everything at once.

Step 3 – Invest in Guidance and Training

Working with experienced AI consultants and training your team ensures adoption is smooth and sustainable.

This investment pays off through:

Faster implementation
Higher ROI

Better internal buy-in

Measuring Success With AI

KPIs That Matter

AI success isn’t about how advanced the technology is, it’s about results.

Track metrics like:

Revenue growth
Cost reduction
Customer satisfaction
Decision speed
Forecast accuracy

Clear KPIs keep AI aligned with business outcomes.

The Competitive Advantage of AI in 2026

In today’s market, speed and insight matter more than ever.

Businesses that use AI strategically:

Adapt faster to change
Make smarter investments
Serve customers more effectively
Build resilient, scalable operations

AI isn’t the future, it’s the present.

Winning Smarter With AI

In 2026, smart businesses don’t guess, they know. By combining human expertise with intelligent systems, AI-driven strategy empowers leaders to make confident, informed decisions that drive lasting success.

At Wealth Builders Kingdom, we believe AI is most powerful when it’s aligned with purpose, clarity, and growth. Whether you’re exploring AI for the first time or refining an existing approach, the right strategy can transform how your business operates and competes.

When intelligence meets intention, success follows.

Trump’s win brings uncertainty to borrowers hoping for student loan forgiveness

6122ee467d22433199917c7d — Fri, 08 Nov 2024 18:51:30 GMT

Trump’s win brings uncertainty to borrowers hoping for student loan forgiveness

Savannah Britt owes about $27,000 on loans she took out to attend college at Rutgers University, a debt she was hoping to see reduced by President Joe Biden’s student loan forgiveness efforts.

Her payments are currently on hold while courts untangle challenges to the loan forgiveness program. But as the weeks tick down on Biden’s time in office, she could soon face a monthly payment of up to $250.

“With this new administration , the dream is gone. It’s shot,” said Britt, 30, who runs her own communications agency. “I was hopeful before Tuesday. I was waiting out the process. Even my mom has a loan that she took out to support me. She owes about $18,000, and she was in the process of it being forgiven, but it’s at a standstill.”

President-elect Donald Trump and his fellow Republicans have criticized Biden’s loan forgiveness efforts, and lawsuits by GOP-led states have held up plans for widespread debt cancellation. Trump has not said what he would do on loan forgiveness, leaving millions of borrowers facing uncertainty over their personal finances.

The economy was an important issue in the election, helping to propel Trump to victory. But for borrowers, concerns about their finances extend beyond inflation to include their student debt, said Persis Yu, managing counsel for the Student Borrower Protection Center.

“That’s a big part of what is making life unaffordable for them is this burden of expenses that they can’t seem to get out from under,” Yu said.

Student loan cancellation was not a focus of the campaign for either Trump or Vice President Kamala Harris , who steered clear of the issue at her political events. The issue came up just once in the September presidential debate, when Trump hammered Harris and Biden for failing to deliver their promise of widespread forgiveness. Trump called it a “total catastrophe” that “taunted young people.”

Biden promised the student loan cancellation program during his run for the presidency. From its launch, Biden’s loan forgiveness faced relentless pushback from opponents who said it heaped advantage on elites and came at the expense of those who repaid their loans or did not attend college.

Biden’s first plan to cancel up to $20,000 for millions of people was blocked by the Supreme Court last year. A second, narrower plan has been halted by a federal judge after Republican-led states sued. A separate policy intended to lower loan payments for struggling borrowers has been paused by a judge, also after Republican-controlled states challenged it.

Overall, Biden’s efforts were relatively unpopular, even among those with student loans. Three in 10 U.S. adults said they approved of how Biden had handled student loan debt, according to a poll this spring from the University of Chicago Harris School of Public Policy and The Associated Press-NORC Center for Public Affairs Research . Four in 10 disapproved. The others were neutral or didn’t know enough to say.

Project 2025, the blueprint for a hard-right turn in American government that aligns with some Trump priorities , calls for getting the federal government out of the student loan business and doing away with repayment plans that pre-date the Biden administration.

Even without directly addressing student loans, Trump has made promises that would affect them. He has pledged to eliminate the U.S. Department of Education, which manages the $1.6 trillion federal student loan portfolio. It’s unclear which entity would take that responsibility if the department were eliminated, which would require approval from Congress.

Yu noted the Biden administration managed to cancel student loans for about 5 million borrowers , even though the signature forgiveness effort has been blocked. The administration did it by leaning into loan cancellation programs already in effect. For example, an existing student loan forgiveness program for public service workers has granted relief to more than 1 million Americans, up from just 7,000 who were approved before it was updated by the Biden administration two years ago.

“A lot of the cancellation that we saw in the last couple of years was because the Biden administration was committed to making the programs that are actually enshrined in law work for people,” Yu said.

The challenge of repaying the $23,000 she has borrowed to study education policy at Columbia University weighs on 23-year-old Zaakirah Rahman, but she said she did not see an alternative to pursing an advanced degree.

“It feels like the threshold for things is getting higher and suddenly getting a bachelor’s degree isn’t enough,” she said. “It’s expensive. It’s super expensive. But it seems like you don’t really have a choice.”

Sabrina Calazans, 27, owes about $30,000 on federal student loans from her college days at Arcadia University in Pennsylvania. Her payments also have been on hold, but she could soon face a monthly payment of over $300.

“As a first-generation American, I live at home with my family, I contribute to our household finances, and that payment is a lot for me and so many others like me,” said Calazans, who is originally from Brazil.

In her role as managing director for Student Debt Crisis Center, Calazans said she has been telling people to stay up to date on developments by using the loan simulator on the Federal Student Aid website and reading updated information on forgiveness qualifications and repayment programs.

“There’s a lot of confusion about student loans,” Calazans said, and not just among young people. “We’re seeing a lot of parents take out more debt for their children to be able to go to school. We’re seeing older folks go back to school and having to take out loans as well.”

SOURCE: AP NEWS

Stock market today: Wall Street rallies on Election Day as economy remains solid

6122ee467d22433199917c7d — Tue, 05 Nov 2024 18:59:23 GMT

Stock market today: Wall Street rallies on Election Day as economy remains solid

U.S. stocks are rallying Tuesday as voters head to the polls on the last day of the presidential election and as more data piles up showing the economy remains solid.

The S&P 500 was up 1.2% in afternoon trading, rising closer to its record set last month . The Dow Jones Industrial Average was up 431 points, or 1%, as of 12:50 p.m. Eastern time, while the Nasdaq composite was 1.5% higher.

Treasury yields also rallied after a report showed growth for retailers, transportation companies and other businesses in the U.S. services industries accelerated last month. That was despite economists’ expectations for a slowdown, and the Institute for Supply Management said it was the strongest growth since July 2022.

The strong data offered more hope that the U.S. economy will remain solid and avoid a long-feared recession following the worst inflation in generations .

Excitement about the artificial-intelligence boom also helped lift the stock market, as it has for much of the last year. Software company Palantir Technologies jumped 23% after delivering bigger profit and revenue than analysts expected for the latest quarter. It’s an industry known for thinking and talking big, and CEO Alexander Karp said, “We absolutely eviscerated this quarter, driven by unrelenting AI demand that won’t slow down.”

It helped offset a 6.3% drop for NXP Semiconductors. The Dutch company fell to one of the largest losses in the S&P 500 after warning that weakness it saw in the industrial and other markets during the latest quarter is spreading to Europe and the Americas.

The market’s main event, though, is the election, even if the result may not be known for days, weeks or months as officials count all the votes. Such uncertainty could upset markets, along with an upcoming meeting by the Federal Reserve on interest rates later this week. The widespread expectation is for it to cut its main interest rate for a second straight time, as it widens its focus to keeping the job market solid in addition to getting inflation under control.

Despite all the uncertainty heading into the final day of voting, many professional investors suggest keeping the focus on the long term and what corporate profits will do over the next few years and a decade. The broad U.S. stock market has historically tended to rise regardless of which party wins the White House, even if each party’s policies help and hurt different industries’ profits underneath the surface.

Since 1945, the S&P 500 has risen in 73% of the years where a Democrat was president and 70% of the years when a Republican was the nation’s chief executive, according to Sam Stovall, chief investment strategist at CFRA.

The U.S. stock market has tended to rise more in magnitude when Democrats have been president, in part because a loss under George W. Bush’s term hurt the Republican’s average. Bush took over as the dot-com bubble was deflating and exited office when the 2008 global financial crisis and Great Recession were devastating markets.

The S&P 500 ended up rising 69.6% from that Election Day in 2020 through Monday, following President Joe Biden’s win. It set its latest all-time high on Oct. 18, as the U.S. economy bounced back from the COVID-19 pandemic and managed to avoid a recession despite a jump in inflation.

In the prior four years, the S&P 500 rose 57.5% from Election Day 2016 through Election Day 2020, in part because of cuts to tax rates signed by Trump.

Investors have already made moves in anticipation of a win by either Trump or Vice President Kamala Harris. The value of the Mexican peso might fall if Trump’s tariffs on Mexico come to fruition, for example.

But Paul Christopher, head of global investment strategy at Wells Fargo Investment Institute, suggests not getting caught up in the pre-election moves, or even those immediately after the polls close, “which we believe will face inevitable tempering, if not outright reversals, either before or after Inauguration Day.”

In the bond market, the yield on the 10-year Treasury rose to 4.34% following Tuesday morning’s strong report on U.S services businesses from 4.29% late Monday.

In stock markets abroad, indexes were mixed in Europe and Asia. The moves were mostly modest outside of jumps of 2.3% in Shanghai and 2.1% in Hong Kong.

SOURCE: AP NEWS

The president could invoke a 1947 law to try to suspend the dockworkers’ strike. Here’s how

6122ee467d22433199917c7d — Wed, 02 Oct 2024 18:35:11 GMT

The president could invoke a 1947 law to try to suspend the dockworkers’ strike. Here’s how

Some manufacturers and retailers are urging President Joe Biden to invoke a 1947 law as a way to suspend a strike by 45,000 dockworkers that has shut down 36 U.S. ports from Maine to Texas.

At issue is Section 206 of the Labor Management Relations Act of 1947, better known as the Taft-Hartley Act. The law authorizes a president to seek a court order for an 80-day cooling-off period for companies and unions to try to resolve their differences.

Biden has said, though, that he won’t intervene in the strike.

Taft-Hartley was meant to curb the power of unions

The law was introduced by two Republicans — Sen. Robert Taft of Ohio and Rep. Fred Hartley Jr. of New Jersey — in the aftermath of World War II. It followed a series of strikes in 1945 and 1946 by workers who demanded better pay and working conditions after the privations of wartime.

President Harry Truman opposed Taft-Hartley, but his veto was overridden by Congress.

In addition to authorizing a president to intervene in strikes, the law banned “closed shops,” which require employers to hire only union workers. The ban allowed workers to refuse to join a union.

Taft-Hartley also barred “secondary boycotts,’' thereby making it illegal for unions to pressure neutral companies to stop doing business with an employer that was targeted in a strike.

It also required union leaders to sign affidavits declaring that they did not support the Communist Party.

Presidents can target a strike that may “imperil the national health and safety”

The president can appoint a board of inquiry to review and write a report on the labor dispute — and then direct the attorney general to ask a federal court to suspend a strike by workers or a lockout by management.

If the court issues an injunction, an 80-day cooling-off period would begin. During this period, management and unions must ”make every effort to adjust and settle their differences.’'

Still, the law cannot actually force union members to accept a contract offer.

Presidents have invoked Taft-Hartley 37 times in labor disputes

According to the Congressional Research Service, about half the time that presidents have invoked Section 206 of Taft-Hartley, the parties worked out their differences. But nine times, according to the research service, the workers went ahead with a strike.

President George W. Bush invoked Taft-Hartley in 2002 after 29 West Coast ports locked out members of the International Longshore and Warehouse Union in a standoff. (The two sides ended up reaching a contract.)

Biden has said he won’t use Taft-Hartley to intervene

Despite lobbying by the National Association of Manufacturers and the National Retail Federation, the president has maintained that he has no plans to try to suspend the dockworkers’ strike against ports on the East and Gulf coasts.

On Wednesday, before leaving Joint Base Andrews for an air tour of North Carolina to see the devastation from Hurricane Helene, Biden said the port strike was hampering efforts to provide emergency items for the relief effort.

“This natural disaster is incredibly consequential,” the president said. “The last thing we need on top of that is a man-made disaster — what’s going on at the ports.”

Biden noted that the companies that control East and Gulf coast ports have made huge profits since the pandemic.

“It’s time for them to sit at the table and get this strike done,” he said.

Though many ports are publicly owned, private companies often run operations that load and unload cargo.

William Brucher, a labor relations expert at Rutgers University, notes that Taft-Hartley injunctions are “widely despised, if not universally despised, by labor unions in the United States.”

And Vice President Kamala Harris is relying on support from organized labor in her presidential campaign against Donald Trump.

If the longshoremen’s strike drags on long enough and causes shortages that antagonize American consumers, pressure could grow on Biden to change course and intervene. But experts like Brucher suggest that most voters have already made up their minds and that the election outcome is “really more about turnout” now.

Which means, Brucher said, that “Democrats really can’t afford to alienate organized labor.”

SOURCE: AP NEWS

You aren’t likely to lose a job in the US but may find it harder to land one

6122ee467d22433199917c7d — Thu, 05 Sep 2024 17:55:08 GMT

You aren’t likely to lose a job in the US but may find it harder to land one

Laid off by the music streaming service Spotify last year, Joovay Arias figured he’d land another job as a software engineer fairly soon. His previous job search, in 2019, had been a breeze.

“Back then,” he said, “I had tons of recruiters reaching out to me — to the point where I had to turn them down.”

Arias did find another job recently, but only after an unexpected ordeal.

“I thought it was going to be something like three months,’’ said Arias, 39. “It turned into a year and three months.’’

As Arias and other jobseekers can attest, the American labor market, red-hot for the past few years, has cooled. The job market is now in an unusual place: Jobholders are mostly secure, with layoffs low, historically speaking. Yet the pace of hiring has slowed, and landing a job has become harder. On Friday, the government will report on whether hiring slowed sharply again in August after a much-weaker-than-expected July job gain.

“If you have a job and you’re happy with that job and you want to hold onto that job, things are pretty good right now,” said Nick Bunker, economic research director for North America at the Indeed Hiring Lab. “But if you’re out of work or you have a job and you want to switch to a new one, things aren’t as rosy as they were a couple of years ago.’’

Since peaking in March 2022 as the economy accelerated out of the pandemic recession, the number of listed job openings has dropped by more than a third, according to the government’s latest monthly report on openings and hiring .

Temporary-help firms have reduced jobs for 26 of the past 28 months. That’s a telling sign: Economists generally regard temp jobs as a harbinger for where the job market is headed because many employers hire temps before committing to full-time hires.

In a roundup this week of local economic conditions , the Federal Reserve’s regional banks reported signs of a decelerating job market. Staffing agencies have said that job gains have slowed “as firms are approaching hiring decisions with greater hesitancy,” the New York Fed found. “Job candidates are lingering on the market longer.”

The Minneapolis Fed said that a staffing agency reported that “businesses are getting a lot more picky” about whom they hire. And the Atlanta Fed found that “only a few” companies planned to step up hiring.

Job-hopping, so rampant two years ago, has slowed as workers have gradually lost confidence in their ability to find better pay or working conditions somewhere else. Just 3.3 million Americans quit their jobs in July, compared with a peak of 4.5 million in April 2022.

“People are staying put because they’re afraid they won’t find new jobs,’’ said Aaron Terrazas, chief economist at the employment website Glassdoor.

And the Labor Department has reported, in its annual revised estimates of employment growth, that the economy added 818,000 fewer jobs in the 12 months that ended in March than it had previously estimated.

In one respect, it’s not at all surprising that the pace of hiring is now moderating. Job growth in 2021 and 2022, as the economy roared back from the COVID-19 recession, was the most explosive on record. Workers gained leverage they hadn’t enjoyed in decades. Companies scrambled to hire fast enough to keep up with surging sales. Many employers had to jack up pay and offer bonuses to keep employees.

It was inevitable — and even healthy, economists say, in the long run — for hiring to slow, thereby easing pressure on wage growth and inflation pressures. Otherwise, the economy could have overheated and forced the Fed to tighten credit so aggressively as to cause a recession.

The post-pandemic jobs boom was a marked contrast to the sluggish recovery from the Great Recession of 2007-2009. Back then, it took more than six years for the economy to recover the jobs that had been lost. By contrast, the breathtaking pandemic job losses of 2020 — 22 million — were reversed in less than 2 1/2 years.

Still, the surging economy ignited inflation, leading the Fed to raise interest rates 11 times in 2022 and 2023 to try to cool the job market and slow inflation. And for a while, the economy and the job market appeared immune from higher borrowing costs. Consumers kept spending, businesses kept expanding and the economy kept growing.

But eventually the continued high rates began leaving their mark. Several high-profile companies, including tech giants like Spotify, announced layoffs last year in the face high interest rates. Outside of the economy’s technology sector, though, and, to a lesser extent, finance, most American companies haven’t cut jobs. The number of people filing first-time applications for unemployment benefits is barely above where it was before the pandemic struck.

Yet the same companies that are keeping workers aren’t necessarily adding more.

“Compared to a year or two ago, it’s a lot more difficult, particularly for entry-level folks,’’ Glassdoor’s Terrazas said. “Because of the gradual drip of layoffs in tech and finance, in professional services over the past year and a half, there have been a lot of high-skilled, experienced folks on the job market.

“By all evidence, they are finding jobs. But they are also pushing more entry-level folks further and further down the queue… Recent grads, folks without a lot of on-the-job experience are feeling the effects of suddenly competing with people who have two, five, 10 years’ experience in the jobs market. When those big fish are in the market, the little fish naturally get squeezed out.’’

Despite the pressure of the highest interest rates in decades, the economy remains in solid shape, having grown at a healthy 3% annual pace from April through June. Most Americans are enjoying solid job security.

Still, given the growing difficulty of changing jobs, even some of those job holders are feeling the chill.

“The reality is a lot of people, even when they have jobs, are feeling a lot of angst about the economy,’’ Terrazas said. “People are feeling a little bit job insecurity, a lot more pressure in the workplace than they have in a while.’’

In an August survey, the New York Fed found that Americans as a whole are more worried about losing their jobs now than at any time since 2014, when people were just beginning to feel the full effects of the recovery from the Great Recession of 2008-2009.

Adding to the anxiety is that memories of the recent job boom are still fresh.

“The reference point for most people is still 2021, 2022, when the job market was very strong, and what looks like for us economists as a normalization (of the job market from unsustainable levels), I think for a lot of people feels like a loss of status,’’ Terrazas said.

Consider Abby Neff, who, since graduating from Ohio University in May 2023, has struggled to find the “old-fashioned writing job’’ that she hoped to land in journalism

“It’s been pretty tough,” she said, “to find a permanent journalism job.”

In the meantime, Neff, 23, has joined the government’s AmeriCorps agency, which mobilizes Americans to perform community service, in southeastern Ohio. The job doesn’t pay much. But it has given her the opportunity to write and to learn about everything from forestry to sustainable agriculture to watershed management.

She hadn’t expected to encounter such difficulty in finding a job in her field.

“I feel like I did all the ‘right things’ in college,’’ Neff said ruefully.

She edited a campus magazine and made contacts in the business. She has landed some interviews, only to learn later that the job was filled without her having heard from the employer.

“I will get ‘ghosted,’ ‘’ she said. “I almost feel like I have to hunt employers down to even get a response to an application or submission.”

Arias, the software engineer, started looking for a job “the minute I got laid off’’ in June 2023. At first, he was casual about it. He took time off to care for his newborn daughter and drew money out of his severance package from Spotify. But when the job hunt proved difficult, he “decided to really ramp it up’’ early this year.

Arias started driving for a ride-sharing service and getting job leads from passengers. He reached out to a company through which he had taken part in a computer coding bootcamp, seeking contacts. Eventually, the networking paid off with a new job.

Yet the process proved much more frustrating than he had envisioned. Employers he had communicated with would vanish without explanation.

“That’s the worst part about the experience,’’ Arias said. “You get that introductory message. Then you send your resume. And then that’s it. Communication would end there. Or you’d get an automated response. So you don’t know what happened, what you did wrong … It just feels really demoralizing, really stressful, because you don’t know what happened.”

SOURCE: AP NEWS

Wall Street rallies, and Dow jumps more than 700 after an encouraging update on U.S. unemployment

6122ee467d22433199917c7d — Thu, 08 Aug 2024 18:43:04 GMT

Wall Street rallies, and Dow jumps more than 700 after an encouraging update on U.S. unemployment

U.S. stocks are climbing toward their best day in nearly two years on Thursday after a better-than-expected report on unemployment eased worries about the slowing economy .

The S&P 500 was rallying by 2.4% in afternoon trading, a day after a big early gain evaporated and flipped into a loss. The Dow Jones Industrial Average was up 725 points, or 1.9%, as of 2:22 p.m. Eastern time, and the Nasdaq composite was 3% higher as Nvidia and other Big Tech stocks helped lead the way.

Treasury yields also climbed in the bond market, a signal investors are feeling less worried about the economy , after a report showed fewer U.S. workers applied for unemployment benefits last week. The number was better than economists expected.

It was exactly a week ago that worse-than-expected data on unemployment claims helped enflame worries that the Federal Reserve has kept interest rates at too high of an economy-slowing level for too long in order to beat inflation . That helped send markets reeling , along with a rate hike by the Bank of Japan that sent shockwaves worldwide by scrambling a favorite trade among some hedge funds.

At the worst of it, at least so far, the S&P 500 was down roughly 9% from its record set last month. Such drops are regular occurrences on Wall Street, and “corrections” of 10% happen roughly every year or two.

What made this drop particularly scary was how quickly it happened. A measure of how much investors are paying to protect themselves from future drops for the S&P 500 briefly surged toward its highest level since the COVID crash of 2020.

Still, the market’s swings look more like a “positioning-driven crash” driven by too many investors piling into similar trades and then exiting them together, rather than the start of a long-term downward market caused by a recession, according to strategists at BNP Paribas.

They say it looks more similar to the “flash crash” of 2010 than the 2008 global financial crisis or the 2020 recession caused by the pandemic.

Of course, markets have been quick to turn over the past week regardless of any long-term predictions.

“Today’s jobless claims data may ease some of the concerns raised by last week’s soft jobs report,” said Chris Larkin, managing director, trading and investing, at E-Trade from Morgan Stanley. “But with inflation data due out next week and the stock market still working through its biggest pullback of the year, it’s unclear how much this will move the sentiment needle.”

In the meantime, big U.S. companies continue to turn in profit reports for the spring that are mostly better than analysts expected.

Eli Lilly jumped 9.4% to help lead the market after it delivered stronger profit and revenue than Wall Street had forecast. Sales of its Mounjaro diabetes treatment and its Zepbound weight-loss counterpart are booming, and the company raised its financial forecast for the year.

Big Tech stocks also rose to claw back some of their sharp losses from the last month. After a handful of them almost singlehandedly drove the S&P 500 to dozens of all-time highs this year, the group known as the “Magnificent Seven” lost momentum last month amid criticism their prices went too high in investors’ frenzy around artificial-intelligence technology.

How this handful of stocks performs carries extra impact on the S&P 500 and other indexes because they’re by far the market’s most valuable companies. Nvidia , which has become the poster child for the AI trade, rose 6.3% to trim its loss for the week so far to 4% and it was the day’s strongest single force pushing upward on the S&P 500.

Gains of 1.7% for Microsoft and 1.8% for Apple were also big propellants, along with Eli Lilly.

They helped offset a drop of 11.7% for McKesson, which topped analysts’ expectations for profit in the latest quarter but fell short on revenue. It said growth slowed in its medical-surgical business.

Bumble, the Texas-based dating app, lost nearly a third of its value, 31.9%, after its forecast for revenue in the third quarter came in well below Wall Street’s.

In the bond market, the yield on the 10-year Treasury rose to 4.01% from 3.95% late Wednesday.

In stock markets abroad, indexes were mixed across Asia and Europe. In Japan, which has been home to some of the market’s wildest moves, the Nikkei 225 ticked down by 0.7%. That looked like a ripple following its tidal swings of down 12.4% and up 10.2% to start the week. ___

SOURCE: AP NEWS

American consumers feeling more confident in July as expectations of future improve

6122ee467d22433199917c7d — Tue, 30 Jul 2024 20:10:24 GMT

American consumers feeling more confident in July as expectations of future improve

American consumers felt more confident in July as expectations over the near-term future rebounded. However, in a reversal of recent trends, feelings about current conditions weakened.

The Conference Board, a business research group, said Tuesday that its consumer confidence index rose to 100.3 in July from a downwardly revised 97.8 in June.

The index measures both Americans’ assessment of current economic conditions and their outlook for the next six months.

The measure of Americans’ short-term expectations for income, business and the job market rose in July to 78.2 from 72.8 in June. A reading under 80 can signal a potential recession in the near future.

Consumers’ view of current conditions dipped in July to 133.6, from 135.3 in June.

Elevated prices for food and groceries remain the main driver of consumers’ view of the U.S. economy. Though inflation has come down considerably since the Federal Reserve started boosting interest rates in March of 2022, price increases remain well above pre-pandemic levels.

“Even though consumers remain relatively positive about the labor market, they still appear to be concerned about elevated prices and interest rates, and uncertainty about the future; things that may not improve until next year,” said Dana Peterson, The Conference Board’s chief economist.

The number of respondents who said they planned to purchase a home fell to a 12-year low as elevated interest rates, sky-high home prices and a lack of supply continue to discourage home shoppers .

The number of consumers predicting a recession inched up this month but is still well of its 2023 peak, the board said.

Consumer spending accounts for nearly 70% of U.S. economic activity and is closely watched by economists for signs how the American consumer is feeling.

While the U.S. economy and labor market remain broadly healthy, some weakness has surfaced, spurred by higher interest rates.

The unemployment rate ticked up to 4.1% in June — the highest rate since November 2021 — even as America’s employers added another 206,000 jobs last month.

Also Tuesday, the government reported that postings for U.S. job openings fell slightly in June . There were 8.18 million job vacancies in June, still a strong number, but down from 8.23 million in May.

The nation’s economy accelerated in the second quarter at a strong 2.8% annual pace , but that comes after growth of just 1.4% in the January-March quarter.

This year’s economic slowdown reflects the much higher borrowing rates for home and auto loans, credit cards and many business loans resulting from the Fed’s aggressive series of interest rate hikes.

The Fed wraps up its current two-day meeting on Wednesday, but most analysts expect no change to interest rates. Most are forecasting the first rate cut in more than four years to come at its next meeting in September.

SOURCE: AP NEWS

US employers added a solid 206,000 jobs in June in a sign of continued economic strength

6122ee467d22433199917c7d — Fri, 05 Jul 2024 14:54:05 GMT

US employers added a solid 206,000 jobs in June in a sign of continued economic strength

America’s employers delivered another healthy month of hiring in June, adding 206,000 jobs and once again displaying the U.S. economy’s ability to withstand high interest rates.

Last month’s job growth did mark a pullback from 218,000 in May. But it was still a solid gain, reflecting the resilience of America’s consumer-driven economy, which is slowing but still growing steadily.

Still, Friday’s report from the Labor Department contained several signs of a slowing job market. The unemployment rate ticked up from 4% to 4.1%, a still-low number but the highest rate since November 2021. The rate rose in large part because 277,000 people began looking for work in June, and not all of them found jobs right away.

The government also sharply revised down its estimate of job growth for April and May by a combined 111,000. And it said average hourly pay rose just 0.3% from May and 3.9% from June 2023. The year-over-year figure was the smallest such rise since June 2021 and will likely be welcomed by the Federal Reserve in its drive to fully conquer inflation. Most economists think the Fed will begin cutting its benchmark rate in September, and the details in Friday’s jobs report did nothing to counter that expectation.

Just two sectors — government and a category that includes healthcare and social assistance, neither of which captures the economy’s underlying strength — accounted for roughly three-quarters of June’s job growth. Economists also noted that job growth from April through June averaged 177,000, a decent figure but still the lowest three-month average since January 2021.

Other economists, while agreeing that the job market is slowing, suggested that it remains resilient.

“Both May and June hiring was above 200,000 even after revisions, and the trajectory looks stable,” said Eric Winograd, U.S. economist at AllianceBernstein. “The best available evidence is that the labor market remains strong and that any deceleration remains modest.”

The state of the economy is weighing heavily on voters’ minds as the presidential campaign intensifies. Despite consistent hiring, relatively few layoffs and gradually cooling inflation, many Americans have been exasperated by still-high prices and assign blame to President Joe Biden.

Economists have been repeatedly predicting that the job market would lose momentum in the face of the high rates engineered by the Fed, only to see the hiring gains show continued strength. Still, signs of an economic slowdown have emerged in the aftermath of the Fed’s series of rate hikes. The U.S. gross domestic product — the total output of goods and services — grew at a lethargic annual pace of 1.4% from January through March, the slowest quarterly pace in nearly two years.

Consumer spending, which accounts for about 70% of all U.S. economic activity and which has powered the expansion the past three years, rose at just a 1.5% pace last quarter after growing more than 3% in each of the previous two quarters. In addition, the number of advertised job openings has declined steadily since peaking at a record 12.2 million in March 2022.

At the same time, while employers might not be hiring so aggressively after having struggled to fill jobs the past two years, they aren’t cutting many, either. Most workers are enjoying an unusual level of job security.

Hal Lawton, CEO of Tractor Supply, a retail chain that caters to customers in rural areas, said his company still feels under pressure to increase wages. Average hourly pay at Tractor Supply, based in Brentwood, Tennessee, workers exceeds $16. And with rent and food prices high, workers are still seeking pay raises.

“You’ve got a tight labor market, and frontline workers are feeling the pinch of their budgets,” Lawton said. “They’re still out there looking for those wage increases.”

During 2022 and 2023, the Fed raised its benchmark interest rate 11 times to try to conquer the worst streak of inflation in four decades, lifting its key rate to its highest point in 23 years. The punishingly higher borrowing rates that resulted, for consumers and businesses, were widely expected to trigger a recession. They didn’t. The economy and the job market instead have shown surprising resilience.

Meanwhile, inflation has steadily declined from a 9.1% peak in 2022 to 3.3%. In remarks this week at a conference in Portugal, Fed Chair Jerome Powell noted that price increases in the United States were slowing again after higher readings earlier this year. Powell did caution that further evidence that inflation is moving toward the Fed’s 2% target level would be needed before the policymakers would cut rates.

“This is the kind of report that the Federal Reserve wants to see,’’ said Gus Faucher, chief economist at PNC Financial Services Group. “This looks pretty darn good. The labor market is not as strong as it was last year at this time. But the labor market at that time was unsustainably strong.’’

Chris Thomas, an engineering manager in Christiansburg, Virginia, said he can see first-hand that the job market has lost momentum. When Thomas began a previous job hunt back in 2021, when tech startups were desperate to hire, he landed interviews with about a third of the companies he applied to. It took him just a month to find a job.

But after he was laid off in April from a job at a startup, it was clear that the landscape had changed. First, he sought leads through his network of friends and business associates. No luck. Then he sent out hundreds of resumes to positions he thought he was qualified to take. He drew few responses.

Finally, after a nearly three-month search, Thomas landed a job at the end of June.

“This is a very, very different job market than the one we had three years ago,’’ he said.

SOURCE: AP NEWS

Meta Must Face Lawsuit Claiming It Prefers Hiring Foreign Workers, Appeals Court Rules

6122ee467d22433199917c7d — Thu, 27 Jun 2024 18:46:04 GMT

Meta Must Face Lawsuit Claiming It Prefers Hiring Foreign Workers, Appeals Court Rules

Meta must face a proposed class-action lawsuit alleging it prefers hiring foreign workers over U.S. citizens, a California-based federal appeals court ruled Thursday, after the lawsuit was originally thrown out in late 2022.

KEY FACTS

The lawsuit alleges Meta violated Section 1981 , a law prohibiting discrimination in contracts, by allegedly discriminating against U.S. citizens in its hiring.

The judges in a 2-1 decision ruled that while citizenship discrimination differs from racial discrimination, which is the basis of Section 1981, it is not different in regard to its relevance to the text of the law itself, according to court filings .

The lawsuit was brought by software engineer Purushothaman Rajaram, who alleges that Meta refused to hire him because it allegedly “prefers to hire noncitizens holding H-1B visas to whom it can pay lower wages,” court filings show.

Meta, the parent company of Facebook, Instagram, Threads and WhatsApp, has previously denied wrongdoing, according to Reuters .

Daniel Low of Kotchen Low, the firm representing Rajaram, told Forbes in a statement involved parties are “pleased that the Ninth Circuit agreed with our interpretation of Section 1981,” adding that: “Citizenship discrimination against U.S. citizens has become a significant problem in recent years with a number of tech companies improperly favoring H-1B visa workers over U.S. citizens.”

Representatives for Meta and did not immediately respond to Forbes’ request for comment.

CHIEF CRITIC

Judge Lawrence VanDyke dissented in Thursday’s ruling. He wrote that the case is not easy to interpret, but he personally liked the majority’s conclusion better than his own. “A statute that protects against this sort of discrimination may be what this country needs, but it isn’t what Congress gave us in Section 1981,” he wrote. “And it’s not my role to transform this statute into what I wish it was. I therefore reluctantly dissent.”

KEY BACKGROUND

Rajaram unsuccessfully applied to Meta on several occasions between 2020 and 2022, according to court filings . He filed the complaint against the company in May 2022, and is seeking class-action status, according to Reuters . The lawsuit was thrown out by a federal judge in November 2022, but he appealed the decision last May and the appeals court heard oral arguments on the case in October.

TANGENT

In mid-May, independent presidential candidate Robert F. Kennedy Jr. and American Values 2024, the super PAC backing his candidacy, filed a lawsuit against Meta, alleging it violated the First Amendment by blocking a campaign ad on Instagram and Facebook.

SOURCE: FORBES

AI could help spread false and misleading information on Holocaust, UNESCO report warns

6122ee467d22433199917c7d — Tue, 18 Jun 2024 18:07:10 GMT

AI could help spread false and misleading information on Holocaust, UNESCO report warns

A United Nations agency is warning that developments in artificial intelligence could spawn a new surge in Holocaust denial.

A report published Tuesday by UNESCO concludes that AI could result in false and misleading claims about the Holocaust spreading online, either because of flaws in the programs or because hate groups and Holocaust deniers will intentionally use AI programs to generate content that falsely calls into question the murder of Jews and other groups by the Nazis.

One of the biggest concerns is that AI could be used to create so-called deepfakes of the Holocaust — realistic images or videos that could be used to suggest the Holocaust didn’t happen or was exaggerated. That could lead to greater antisemitism and a lack of understanding of a key moment in 20th-century history. The report noted that some AI-assisted programs allow users to interact with simulated historical figures, including prominent Nazis like Adolf Hitler.

“If we allow the horrific facts of the Holocaust to be diluted, distorted or falsified through the irresponsible use of AI, we risk the explosive spread of antisemitism and the gradual diminution of our understanding about the causes and consequences of these atrocities,” Audrey Azoulay said in a statement accompanying the report.

Widespread use of AI for assistance in education, research and writing are increasing the likelihood that unreliable data and artificial intelligence “hallucinations” could increase public misunderstandings about the Holocaust, even inadvertent ones. AI programs whose understanding of the world is based on relatively narrow sources can also return incomplete or misleading responses when asked about the Holocaust.

UNESCO’s report called on tech companies to establish ethical rules for the development and use of AI, to reduce the chances of unreliable information and to prevent bad actors from harnessing their programs in order to encourage violence and to spread lies about the Holocaust.

The report was published in partnership with the World Jewish Congress.

SOURCE: AP NEWS

American Express, citing fees, and says customers have other options

6122ee467d22433199917c7d — Wed, 05 Jun 2024 18:13:13 GMT

American Express, citing fees, and says customers have other options

Online marketplace behemoth eBay said it plans to no longer accept American Express, citing what the company says are “unacceptably high fees” and that customers have other payment options to shop online.

It’s a notable blow to American Express, whose customers are often the most attractive among merchants and spend the most money per month on their cards. But it’s not the first time merchants have voiced opposition to AmEx’s business practices by walking away, most notably the warehouse chain Costco nearly a decade ago.

“After careful consideration, eBay has decided to no longer accept American Express globally effective Aug. 17 due to the unacceptably high fees American Express charges for processing credit card transactions,” said eBay spokesman Scott Overland, in a statement.

Overland said that eBay customers have become aware of new ways to pay for items, making payments more competitive than ever before, and AmEx was no longer a necessary partner for eBay. eBay has increasingly been offering customers buy now, pay later options on purchases through Apple Pay, PayPal and other companies like Klarna and Affirm as well.

“We know that the vast majority of eBay customers are willing to use alternative payment options to continue enjoying buying and selling on our marketplace,” Overland said.

Online merchants have become increasingly combative with payment processors in recent years over the fees they charge to accept payments. Amazon had a similar fight with Visa in the U.K. roughly two years ago, where Amazon threatened to drop Visa as a payment acceptance type over what it also called high fees.

Visa and Amazon eventually resolved their differences , and there was no disruption of service.

Like other payment processors, AmEx takes a percentage of each transaction a merchant processes on their network. The fee varies by industry, and the fees that the largest merchants pay are typically a closely guarded trade secret. The National Retail Federation says the average fee to accept a credit card is roughly 2% but can be as high as 4% on premium rewards credit cards like AmEx.

In a statement, American Express says that eBay’s cost to accept AmEx cards is “comparable to what eBay pays for similar cards on other networks” and that AmEx cardmembers typically spend double at eBay what is spent on other networks.

“We find eBay’s decision to drop American Express as a payment choice for consumers to be inconsistent with their stated desire to increase competition at the point of sale,” said Adam Isserlis, a spokesman for AmEx.

AmEx has been on an aggressive campaign, under its current CEO Steve Squeri, to be a more universally accepted payment option across all merchants in an effort to combat the negative image that AmEx is less accepted and only available for its cardmembers for travel, dining, high-end shops or in dense urban areas. AmEx says its cards are now accepted at 99% of the places that Visa and Mastercard are accepted in the U.S., a metric it achieved in 2019.

But there have been setbacks along the way.

When Costco announced it would drop American Express in 2015, it was a major blow to AmEx since Costco represented roughly 10% of cardmember loans and roughly $80 billion in network volumes. It was also one of AmEx’s most prominent partnerships.

Analysts at Keefe, Bruyette & Woods estimate that eBay may represent roughly 0.5% of AmEx’s worldwide network volume and it’s unlikely that AmEx will budge much on pricing with eBay.

SOURCE: AP NEWS

Cybersecurity labeling for smart devices aims to help people choose items less likely to be hacked

6122ee467d22433199917c7d — Wed, 22 May 2024 19:10:43 GMT

Cybersecurity labeling for smart devices aims to help people choose items less likely to be hacked

Consumer labels designed to help Americans pick smart devices that are less vulnerable to hacking could begin appearing on products before the holiday shopping season, federal officials said Wednesday.

Under the new U.S. Cyber Trust Mark Initiative , manufacturers can affix the label on their products if they meet federal cybersecurity standards. The types of devices eligible for labels include baby monitors, home security cameras, fitness trackers, refrigerators and other internet-connected appliances.

The White House first announced the “Cyber Trust” labels last year and the Federal Communications Commission finalized the details in March, clearing the way for the labels to start showing up in several months.

“You should hopefully, by the holiday season, start to see devices that have this trustmark on it,” said Nicholas Leiserson, the assistant national cyber director for cyber policy and programs. Leiserson made his comments Wednesday during a cybersecurity panel at Auburn University’s McCrary Institute in Washington.

The labels will also include QR codes that consumers can scan for security information about their devices.

Officials have likened the labels to the Energy Star program, which rates appliances’ energy efficiency, and say the idea is to empower consumers while also encouraging manufacturers to enhance their cybersecurity.

Amazon, Best Buy, Google, LG Electronics USA, Logitech and Samsung are among industry participants.

The proliferation of so-called smart devices has coincided with growing cybercrime in which one insecure device can often give cyberintruders a dangerous foothold on a home network.

SOURCE: AP NEWS

Nervous about falling behind the GOP, Democrats are wrestling with how to use AI

6122ee467d22433199917c7d — Mon, 06 May 2024 18:52:53 GMT

Nervous about falling behind the GOP, Democrats are wrestling with how to use AI

President Joe Biden’s campaign and Democratic candidates are in a fevered race with Republicans over who can best exploit the potential of artificial intelligence , a technology that could transform American elections — and perhaps threaten democracy itself.

Still smarting from being outmaneuvered on social media by Donald Trump and his allies in 2016, Democratic strategists said they are nevertheless treading carefully in embracing tools that trouble experts in disinformation. So far, Democrats said they are primarily using AI to help them find and motivate voters and better identify and overcome deceptive content.

″Candidates and strategists are still trying to figure out how to use AI in their work. People know it can save them time — the most valuable resource a campaign has,” said Betsy Hoover, director of digital organizing for President Barack Obama’s 2012 campaign and co-founder of the progressive venture capital firm Higher Ground Labs. “But they see the risk of misinformation and have been intentional about where and how they use it in their work.”

Campaigns in both parties for years have used AI — powerful computer systems, software or processes that emulate aspects of human work and cognition — to collect and analyze data.

The recent developments in supercharged generative AI , however, have provided candidates and consultants with the ability to generate text and images, clone human voices and create video at unprecedented volume and speed.

That has led disinformation experts to issue increasingly dire warnings about the risks posed by AI’s ability to spread falsehoods that could suppress or mislead voters, or incite violence, whether in the form of robocalls, social media posts or fake images and video.

Those concerns gained urgency after high-profile incidents that included the spread of AI-generated images of former President Donald Trump getting arrested in New York and an AI-created robocall that mimicked Biden’s voice telling New Hampshire voters not to cast a ballot.

The Biden administration has sought to shape AI regulation through executive action , but Democrats overwhelmingly agree Congress needs to pass legislation to install safeguards around the technology.

Top tech companies have taken some steps to quell unease in Washington by announcing a commitment to regulate themselves. Major AI players, for example, entered into a pact to combat the use of AI-generated deepfakes around the world. But some experts said the voluntary effort is largely symbolic and congressional action is needed to prevent AI abuses.

Meanwhile, campaigns and their consultants have generally avoided talking about how they intend to use AI to avoid scrutiny and giving away trade secrets.

The Democratic Party has “gotten much better at just shutting up and doing the work and talking about it later,” said Jim Messina, a veteran Democratic strategist who managed Obama’s winning reelection campaign.

The Trump campaign said in a statement that it “uses a set of proprietary algorithmic tools, like many other campaigns across the country, to help deliver emails more efficiently and prevent sign up lists from being populated by false information.” Spokesman Steven Cheung also said the campaign did not “engage or utilize” any tools supplied by an AI company, and declined to comment further.

The Republican National Committee, which declined to comment, has experimented with generative AI. In the hours after Biden announced his reelection bid last year, the RNC released an ad using artificial intelligence-generated images to depict GOP dystopian fears of a second Biden term: China invading Taiwan, boarded up storefronts, troops lining U.S. city streets and migrants crossing the U.S. border.

A key Republican champion of AI is Brad Parscale , the digital consultant who in 2016 teamed up with scandal-plagued Cambridge Analytica , a British data-mining firm, to hyper target social media users. Most strategists agree that the Trump campaign and other Republicans made better use of social media than Democrats during that cycle.

DEMOCRATS TREADING CAREFULLY

Scarred by the memories of 2016, the Biden campaign, Democratic candidates and progressives are wrestling with the power of artificial intelligence and nervous about not keeping up with the GOP in embracing the technology, according to interviews with consultants and strategists.

They want to use it in ways that maximize its capabilities without crossing ethical lines. But some said they fear using it could lead to charges of hypocrisy — they have long excoriated Trump and his allies for engaging in disinformation while the White House has prioritized reining in abuses associated with AI.

The Biden campaign said it is using AI to model and build audiences, draft and analyze email copy and generate content for volunteers to share in the field. The campaign is also testing AI’s ability to help volunteers categorize and analyze a host of data, including notes taken by volunteers after conversations with voters, whether while door-knocking or by phone or text message.

It has experimented with using AI to generate fundraising emails, which sometimes have turned out to be more effective than human-generated ones, according to a campaign official who spoke on the condition of anonymity because he was not authorized to publicly discuss AI.

Biden campaign officials said they plan to explore using generative AI this cycle but will adhere to strict rules in deploying it. Among the tactics that are off limits: AI cannot be used to mislead voters, spread disinformation and so-called deepfakes, or deliberately manipulate images. The campaign also forbids the use of AI-generated content in advertising, social media and other such copy without a staff member’s review.

The campaign’s legal team has created a task force of lawyers and outside experts to respond to misinformation and disinformation, with a focus on AI-generated images and videos. The group is not unlike an internal team formed in the 2020 campaign — known as the “Malarkey Factory,” playing off Biden’s oft-used phrase, “What a bunch of malarkey.”

That group was tasked with monitoring what misinformation was gaining traction online. Rob Flaherty , Biden’s deputy campaign manager, said those efforts would continue and suggested some AI tools could be used to combat deepfakes and other such content before they go viral.

“The tools that we’re going to use to mitigate the myths and the disinformation is the same, it’s just going to have to be at a higher pace,” Flaherty said. “It just means we need to be more vigilant, pay more attention, be monitoring things in different places and try some new tools out, but the fundamentals remain the same.”

The Democratic National Committee said it was an early adopter of Google AI and uses some of its features, including ones that analyze voter registration records to identify patterns of voter removals or additions. It has also experimented with AI to generate fundraising email text and to help interpret voter data it has collected for decades, according to the committee.

Arthur Thompson, the DNC’s chief technology officer, said the organization believes generative AI is an “incredibly important and impactful technology” to help elect Democrats up and down the ballot.

“At the same time, it’s essential that AI is deployed responsibly and to enhance the work of our trained staff, not replace them. We can and must do both, which is why we will continue to keep safeguards in place as we remain at the cutting edge,” he said.

PROGRESSIVE EXPERIMENTS

Progressive groups and some Democratic candidates have been more aggressively experimenting with AI.

Higher Ground Labs — the venture capital firm co-founded by Hoover — established an innovation hub known as Progressive AI Lab with Zinc Collective and the Cooperative Impact Lab, two political tech coalitions focused on boosting Democratic candidates.

The goal was to create an ecosystem where progressive groups could streamline innovation, organize AI research and swap information about large language models, Hoover said.

Higher Ground Labs, which also works closely with the Biden campaign and DNC, has since funded 14 innovation grants, hosted forums that allow organizations and vendors to showcase their tools and held dozens of AI trainings.

More than 300 people attended an AI-focused conference the group held in January, Hoover said.

Jessica Alter, the co-founder and chair of Tech for Campaigns, a political nonprofit that uses data and digital marketing to fight extremism and help down-ballot Democrats, ran an AI-aided experiment across 14 campaigns in Virginia last year.

Emails written by AI, Alter said, brought in between three and four times more fundraising dollars per work hour compared with emails written by staff.

Alter said she is concerned that the party might be falling behind in AI because it is being too cautious.

“I understand the downsides of AI and we should address them,” Alter said. “But the biggest concern I have right now is that fear is dominating the conversation in the political arena and that is not leading to balanced conversations or helpful outcomes.”

HARD TO TALK ABOUT AN ‘AK-47’

Rep. Adam Schiff, the Democratic front-runner in California’s Senate race , is one of few candidates who have been open about using AI. His campaign manager, Brad Elkins, said the campaign has been using AI to improve its efficiency. It has teamed up with Quiller, a company that received funding from Higher Ground Labs and developed a tool that drafts, analyzes and automates fundraising emails.

The Schiff campaign has also experimented with other generative AI tools. During a fundraising drive last May, Schiff shared online an AI-generated image of himself as a Jedi. The caption read, “The Force is all around us. It’s you. It’s us. It’s this grassroots team. #MayThe4thBeWithYou.”

The campaign faced blowback online but was transparent about the lighthearted deepfake, which Elkins said is an important guardrail to integrating the technology as it becomes more widely available and less costly.

“I am still searching for a way to ethically use AI-generated audio and video of a candidate that is sincere,” Elkins said, adding that it’s difficult to envision progress until there’s a willingness to regulate and legislate consequences for deceptive artificial intelligence.

The incident highlighted a challenge that all campaigns seem to be facing: even talking about AI can be treacherous.

“It’s really hard to tell the story of how generative AI is a net positive when so many bad actors — whether that’s robocalls, fake images or false video clips — are using the bad set of AI against us,” said a Democratic strategist close to the Biden campaign who was granted anonymity because he was not authorized to speak publicly. “How do you talk about the benefits of an AK-47?”

SOURCE: AP NEWS

Tesla cuts the price of its “Full Self Driving” system by a third to $8,000

6122ee467d22433199917c7d — Mon, 22 Apr 2024 19:39:15 GMT

Tesla cuts the price of its “Full Self Driving” system by a third to $8,000

Tesla knocked roughly a third off the price of its “Full Self Driving” system — which can’t drive itself and so drivers must remain alert and be ready to intervene — to $8,000 from $12,000, according to the company website.

Tesla CEO and billionaire Elon Musk promised in 2019 that there would be a fleet of robotaxis on the road in 2020, but the promise has yet to materialize, and the system still has to be supervised by humans.

The cuts, which occurred on Saturday, follow Tesla’s moves to slash $2,000 off the prices of three of its five models in the United States late Friday. That’s the latest evidence of the challenges facing the electric vehicle maker.

Tesla reduced the prices of the Model Y, a small SUV which is Tesla’s most popular model and the top-selling electric vehicle in the U.S., and also of the Models X and S, its older and more expensive models. Prices for the Model 3 sedan and the Cybertruck stayed the same.

The price reduction came the day after Tesla’s stock dropped below $150 per share , wiping out all gains made over the past year. The Austin, Texas , company’s stock price has dropped about 40% so far this year amid falling sales and increased competition. Discounted sticker prices are a way to try to entice more car buyers.

SOURCE: AP NEWS

US consumer sentiment falls slightly as outlook for inflation worsens

6122ee467d22433199917c7d — Fri, 12 Apr 2024 17:00:11 GMT

US consumer sentiment falls slightly as outlook for inflation worsens

Consumer sentiment about the U.S. economy has ticked down but remains near a recent high, with Americans’ outlook largely unchanged this year.

The University of Michigan’s consumer sentiment index , released Friday in a preliminary version, slipped to 77.9 this month, down from March’s figure of 79.4. Sentiment is about halfway between its all-time low, reached in June 2022 when inflation peaked, and its pre-pandemic averages. The survey has been conducted since 1980.

“Consumers are reserving judgment about the economy in light of the upcoming election, which, in the view of many consumers, could have a substantial impact on the trajectory of the economy,” said Joanne Hsu, director of the consumer survey.

The index had dropped to 61.3 as recently as November before jumping in the following two months by the most in more than three decades . It has since moved mostly sideways.

Stronger consumer optimism can sometimes translate into more spending, which typically boosts the economy. Most economists expect consumer spending to remain healthy as long as the job market stays strong.

“Looking beyond the recent minor monthly volatility, sentiment remains on a rising trend,” Oren Klachkin, an economist at Nationwide, said in a research note. “It’s still a positive environment for the consumer.”

Among the respondents to the survey, sentiment fell the most among Republicans. Among independents, it edged down, and it rose slightly among Democrats. Americans’ economic views have become more driven by political partisanship in recent decades.

An increase in gas prices likely contributed to the decline in consumers’ outlook, according to Ian Shepherdson, chief economist at Pantheon Macroeconomics. The average national price of a gallon of gas has jumped about 7% from a month ago, according to AAA, to $3.63 a gallon.

Americans’ perceptions of future inflation also rose, probably reflecting still-high prices. Consumers expect inflation to be 3.1% a year from now, which would exceed the Federal Reserve’s 2% target. Still, that would be below the current level of 3.5%.

Inflation has tumbled from a peak of 9.1% in the summer of 2022 but has remained elevated so far this year. Prices excluding volatile food and energy costs, rose 3.8% in March from a year earlier, the same as in the previous month and well above the Fed’s target.

SOURCE: AP NEWS

Powell: Fed still sees rate cuts this year; election timing won’t affect decision

6122ee467d22433199917c7d — Wed, 03 Apr 2024 19:08:51 GMT

Powell: Fed still sees rate cuts this year; election timing won’t affect decision

Federal Reserve officials will likely reduce their benchmark interest rate later this year, Chair Jerome Powell said Wednesday, despite recent reports showing that the U.S. economy is still strong and that U.S. inflation picked up in January and February.

“The recent data do not ... materially change the overall picture,” Powell said in a speech at Stanford University, “which continues to be one of solid growth, a strong but rebalancing labor market, and inflation moving down toward 2% on a sometimes bumpy path.”

Most Fed officials “see it as likely to be appropriate” to start cutting their key rate “at some point this year,” he added.

In his speech, Powell also sought to dispel any notion that the Fed’s interest-rate decisions might be affected by this year’s presidential election campaign. The Fed will meet and decide whether to cut rates during the peak of the campaign, in July and September.

Fed officials will face a delicate decision during those months and during their upcoming meetings in May and June. The policymakers must take care not to cut rates too soon or inflation could stay high — or even re-accelerate. Annual inflation ticked up in February to 2.5%, according to the central bank’s preferred measure , though that was down sharply from its peak of 7.1%.

Yet if Fed officials wait too long to reduce rates, the current high borrowing costs for mortgages, car loans and business loans could seriously weaken the economy — even tip it into a recession.

Though inflation has cooled significantly from its peak, it remains above the Fed’s 2% target. And average prices are still well above their pre-pandemic levels — a source of discontent for many Americans and potentially a threat to President Joe Biden’s re-election bid.

The recent pickup in inflation, though slight, has led some economists to postpone their projections for when the Fed will begin cutting rates. Rate cuts would begin to reverse the 11 increases the Fed carried out beginning in March 2022 to fight the worst inflation bout in four decades. A lower Fed rate would likely lead, over time, to reduced borrowing rates for households and businesses.

Some economists now predict that the central bank’s first rate cut won’t come until July or even later. That expectation has fueled speculation on Wall Street that the Fed might end up deciding to delay rate cuts until after the presidential election. The Fed’s November meeting will take place Nov. 6-7, immediately after Election Day.

Former President Donald Trump has called Powell “political” for considering rate cuts that Trump has said could benefit Biden and other Democrats. Powell was first nominated to be Fed chair by Trump, who has said that, if he is elected president, he will replace Powell when the chair’s term ends in 2026.

In his speech Wednesday, Powell noted that Congress intended the Fed to be fully independent of politics, with officials serving long terms that don’t coincide with elections.

“This independence,” Powell said, “both enables and requires us to make our monetary policy decisions without consideration of short-term political matters.”

In the past, presidents such as Lyndon Johnson and Richard Nixon sometimes bluntly pressured Fed leaders to cut rates before elections to try to boost the economy. In contrast, recent presidents have avoided publicly pressuring the Fed, with the striking exception of Trump, who denounced Powell for raising the Fed’s benchmark rate in 2018 during the Trump presidency.

“If you look at the modern historical record, you’ll see that the Fed has been prepared to move or not move, and do what it thinks is the right thing for the economy ... without regard to outside considerations,” Powell said, “and it’s important to just have people know that.”

When they met two weeks ago, Fed officials forecast that they could cut their benchmark rate three times this year. Still, nearly half the 19 policymakers penciled in just two or fewer rate cuts.

Strong economic growth could diminish the likelihood of a Fed rate cut later this year for two reasons. One is that steady hiring and brisk consumer spending can lead companies to raise prices and thereby worsen inflation.

The other reason is that a healthy economy reduces the need for the Fed to cut rates, which tends to stimulate growth. Typically, the central bank reduces its key rate when growth stumbles and companies start cutting jobs. Powell and other officials have underscored that as long as the economy remains healthy, they can take time to assess the path of inflation and ensure that it’s headed back down to their 2% target.

Last week, a government report showed that consumer spending accelerated in February , and prices rose faster than is consisted with the Fed’s inflation target for the second straight month.

“On inflation, it is too soon to say whether the recent readings represent more than just a bump,” Powell said. “Given the strength of the economy and progress on inflation so far, we have time to let the incoming data guide our decisions on policy.”

In remarks this week, some other Fed officials reiterated their expectations for three quarter-point rate reductions this year, while also underscoring that such cuts would depend on inflation slowing from the January and February readings.

“I think three is still reasonable, but it’s a close call,” Loretta Mester, president of the Federal Reserve’s Cleveland branch, told reporters Tuesday.

Still, Raphael Bostic, president of the Atlanta Fed, said earlier Wednesday on CNBC that he envisions just one interest rate cut this year, likely in the final three months of the year.

Mester and Bostic are among the 12 policymakers with a vote on the central bank’s interest rate decisions this year.

SOURCE: AP NEWS

Judge dismisses lawsuit by Musk’s X against nonprofit researchers tracking hate speech on platform

6122ee467d22433199917c7d — Mon, 25 Mar 2024 19:56:23 GMT

Judge dismisses lawsuit by Musk’s X against nonprofit researchers tracking hate speech on platform

A federal judge has dismissed a lawsuit by Elon Musk’s X Corp. against the non-profit Center for Countering Digital Hate, which has documented the increase in hate speech on the site since it was acquired by the Tesla owner.

X, formerly known as Twitter, had argued the center’s researchers violated the site’s terms of service by improperly compiling public tweets, and that its subsequent reports on the rise of hate speech cost X millions of dollars when advertisers fled.

On Monday, U.S. District Court Judge Charles Breyer dismissed the suit, writing in his order that it was “unabashedly and vociferously about one thing” — punishing the nonprofit for its speech.

X had alleged that the nonprofit “scraped” its site for data, which is against its terms of service. But the judge found that X failed to “allege losses based on technological harms” — that is, the company didn’t show how the scraping led to financial losses for X.

X had sought millions of dollars in damages, arguing that the nonprofit’s reports led to the exodus of advertisers and the loss of ad revenue.

But the judge agreed with CCDH’s argument saying X cannot seek damages for the independent acts of third parties based on CCDH’s reports, or its “speech.”

The center is a nonprofit with offices in the U.S. and United Kingdom. It regularly publishes reports on hate speech , extremism or harmful behavior on social media platforms like X, TikTok or Facebook. The organization has published several reports critical of Musk’s leadership , detailing a rise in anti-LGBTQ hate speech as well as climate misinformation since his purchase.

In a statement posted to X, the social media platform said it “disagrees with the court’s decision and plans to appeal.”

Imran Ahmed, the center’s founder and CEO, said the lawsuit amounted to a “hypocritical campaign of harassment” by a billionaire who talks about protecting free speech but who then uses his wealth to try to silence his critics. He said the lawsuit shows the need for a federal law requiring tech companies to release more information about their operations, so that the public can understand how these powerful platforms are shaping society.

“We hope this landmark ruling will embolden public-interest researchers everywhere to continue, and even intensify, their vital work of holding social media companies accountable for the hate and disinformation they host and the harm they cause,” said Ahmed.

Roberta Kaplan, the center’s attorney, said the dismissal of X’s suit shows “even the wealthiest man cannot bend the rule of law to his will.”

“We are living in an age of bullies, and it’s social media that gives them the power that they have today,” Kaplan said in an email to reporters. “It takes great courage to stand up to these bullies; it takes an organization like the Center for Countering Digital Hate. We are proud and honored to represent CCDH.”

The center is not the only group that has pointed to the rise of hateful material on X since Musk’s purchase in October 2022. Last November, several big advertisers including IBM, NBCUniversal and its parent company Comcast, said that they stopped advertising on X after a report from the liberal advocacy group Media Matters said their ads were appearing alongside material praising Nazis. It was yet another setback as X tries to win back big brands and their ad dollars, X’s main source of revenue. X has also sued Media Matters .

Later that month, Musk went on an expletive-ridden rant in response to advertisers that halted spending on X in response to antisemitic and other hateful material, saying they are are engaging in “blackmail” and, using a profanity, essentially told them to go away.

SOURCE: APNEWS

US consumer sentiment ticks down slightly, but most expect inflation to ease further

6122ee467d22433199917c7d — Fri, 15 Mar 2024 18:11:15 GMT

US consumer sentiment ticks down slightly, but most expect inflation to ease further

Consumers became slightly less optimistic about the economy this month, though they continue to expect inflation to cool further, a potential sign that price increases will keep slowing.

The University of Michigan’s consumer sentiment index , released Friday in a preliminary version, slipped to 76.5 in March, barely below February’s figure of 76.9. Americans’ outlook has essentially remained fixed since January, when it leapt higher. Sentiment is now about halfway between its all-time low, reached in June 2022 when inflation peaked, and its pre-pandemic averages.

Americans’ outlook on the economy will likely have a significant effect on the presidential race, which will likely focus heavily on perceptions of President Joe Biden’s economic record.

Friday’s consumer sentiment figure follows inflation reports this week that showed that for a second straight month, prices rose at a pace faster than is consistent with the Federal Reserve’s 2% target. The consumer price index rose 3.2% in February compared with a year ago, up from 3.1% in January.

Yet the University of Michigan report showed that Americans’ outlook for inflation hasn’t changed this month compared with February. Consumers expect inflation over the next year to be 3%, the same as in the previous month. And over the next five to 10 years, they expect inflation to be 2.9%, also unchanged from February. While those figures exceed the Fed’s inflation target, they’re only slightly higher than the pre-pandemic averages.

SOURCE: AP NEWS

Bill that could make TikTok unavailable in the US advances quickly in the House

6122ee467d22433199917c7d — Fri, 08 Mar 2024 20:49:07 GMT

Bill that could make TikTok unavailable in the US advances quickly in the House

A bill that could lead to the popular video-sharing app TikTok being unavailable in the United States is quickly gaining traction in the House as lawmakers voice concerns about the potential for the platform to surveil and manipulate Americans.

The measure gained the support of House Speaker Mike Johnson and could soon come up for a full vote in the House. The bill advanced out of committee Thursday in a unanimous bipartisan vote — 50-0.

The White House has provided technical support in the drafting of the bill, though White House press secretary Karine Jean-Pierre said the TikTok legislation “still needs some work” to get to a place where President Joe Biden would endorse it.

The bill takes a two-pronged approach. First, it requires ByteDance Ltd., which is based in Beijing, to divest TikTok and other applications it controls within 180 days of enactment of the bill or those applications will be prohibited in the United States. Second, it creates a narrow process to let the executive branch prohibit access to an app owned by a foreign adversary if it poses a threat to national security.

“It’s an important, bipartisan measure to take on China, our largest geopolitical foe, which is actively undermining our economy and security,” Johnson said Thursday.

Some lawmakers and critics of TikTok have argued the Chinese government could force the company to share data on American users. TikTok says it has never done that and wouldn’t do so if asked. The U.S. government also hasn’t provided evidence of that happening.

Critics also claim the app could be used to spread misinformation beneficial to Beijing.

Former President Donald Trump attempted to ban TikTok through executive order, but the courts blocked the action after TikTok sued, arguing such actions would violate free speech and due process rights.

TikTok raised similar concerns about the legislation gaining momentum in the House.

“This bill is an outright ban of TikTok, no matter how much the authors try to disguise it. This legislation will trample the First Amendment rights of 170 million Americans and deprive 5 million small businesses of a platform they rely on to grow and create jobs,” the company said in a prepared statement.

The bill’s author, Rep. Mike Gallagher, the Republican chairman of a special House committee focused on China, rejected TikTok’s assertion of a ban. Rather, he said it’s an effort to force a change in TikTok’s ownership. He also took issue with TikTok urging some users to call their representatives and urge them to vote no on the bill.

The notification urged TikTok users to “speak up now — before your government strips 170 million Americans of their Constitutional right to free expression.” The notification also warned that the “ban” of TikTok would damage millions of businesses and destroy the lives of countless creators around the country.

TikTok users responded by flooding the offices of lawmakers with telephone calls. Some offices even shut off their phones because of the onslaught. A congressional aide not authorized to speak on the matter publicly said that lawmakers on the committee voting on the bill Thursday as well as others were inundated with calls.

“Today, it’s about our bill and it’s about intimidating members considering that bill, but tomorrow it could be misinformation or lies about an election, about a war, about any number of things,” Gallagher said. “This is why we can’t take a chance on having a dominant news platform in America controlled or owned by a company that is behold to the Chinese Communist Party, our foremost adversary.”

The bill comes about one year after TikTok’s CEO was grilled for hours by skeptical lawmakers on the House Energy and Commerce Committee concerned about data security and the distribution of harmful content. That same committee met Thursday to debate and vote on the bill.

Rep. Cathy McMorris Rodgers, the committee’s Republican chair, said TikTok’s access to so many Americans makes it a valuable propaganda tool for the Chinese government to exploit. She also noted that its parent company ByteDance is currently under investigation by the U.S. Department of Justice for surveilling American journalists.

“Through this access, the app is able to collect nearly every data point imaginable, from people’s location, to what they search on their devices, who they are connecting with, and other forms of sensitive information,” Rodgers said.

To assuage concerns from lawmakers, TikTok has promised to wall off U.S. user data from its parent company through a separate entity run independently from ByteDance and monitored by outside observers. TikTok says new user data is currently being stored on servers maintained by the software company Oracle.

The American Civil Liberties Union and other free speech advocacy groups urged lawmakers to reject the TikTok bill, saying in a letter to the Energy and Commerce Committee’s leadership that “passing this legislation would trample on the constitutional right to freedom of speech of millions of people in the United States.”

Biden’s reelection campaign has opened a TikTok account as a way to boost its appeal with young voters, even as his administration continued to raise security concerns about whether the popular social media app might be sharing user data with China’s communist government.

Jean-Pierre said the White House welcomes lawmakers’ efforts on the TikTok legislation, but lawmakers need to continue work on it.

“Once it gets to a place where we think .. it’s on legal standing and it’s in a place where it can get out of Congress, then the president would sign it,” she told reporters on Wednesday during the daily White House briefing.

She also defended the White House’s efforts to limit the dangers of TikTok, even as the president engages with influencers on the social-media platform and his campaign hosts a TikTok account.

“We are going to try to meet the America people where they are,” Jean-Pierre said. “We are trying to reach everyone. The president is the president for all Americans .. it doesn’t mean that we’re not going to try to figure out how to protect our national security.”

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SOURCE: AP NEWS

Recession has struck some of the world’s top economies. The US keeps defying expectations

6122ee467d22433199917c7d — Fri, 16 Feb 2024 21:26:31 GMT

Recession has struck some of the world’s top economies. The US keeps defying expectations

As some of the world’s biggest economies stumble into recession, the United States keeps chugging along.

Both Japan and the United Kingdom said Thursday their economies likely weakened during the final three months of 2023. For each, it would be the second straight quarter that’s happened, which fits one lay definition for a recession.

Yet in the United States, the economy motored ahead in last year’s fourth quarter for a sixth straight quarter of growth. It’s blown past many predictions coming into last year that a recession seemed inevitable because of high interest rates meant to slow the economy and inflation.

Give much of the credit to U.S. households, who have continued to spend at a solid rate despite many challenges. Their spending makes up the majority of the U.S. economy. Government stimulus helped households weather the initial stages of the pandemic and a jump in inflation, and now pay raises are helping them catch up to high prices for the goods and services they need.

On Thursday, a report showed that fewer U.S. workers filed for unemployment benefits last week. It’s the latest signal of a remarkably solid job market , even though a litany of layoff announcements has grabbed attention recently. Continued strength there should help prop up the economy.

Of course, risks still loom, and economists say a recession can’t be ruled out. Inflation could reaccelerate. Worries about heavy borrowing by the U.S. government could upset financial markets, ultimately making loans to buy cars and other things more expensive. Growing losses tied to commercial real estate could mean big pain for the financial system.

But, for now, the outlook continues to appear better for the United States than many other big economies. The mood on Wall Street is so positive that the main measure of the U.S. stock market, the S&P 500 index, topped the 5,000 level last week for the first time.

“First and foremost, it’s important to emphasize that the market’s performance is more a reflection of a thriving economy rather than unwarranted ‘animal spirits’ from investors,” according to Solita Marcelli, chief investment officer, Americas, at UBS Global Wealth Management.

When it upgraded its forecast for global growth in 2024 a couple weeks ago, the International Monetary Fund cited greater-than-expected resilience in the U.S. economy as a major reason.

Several unique characteristics of the U.S. economy have sheltered it from recessionary storms, analysts say. The U.S. government provided about $5 trillion in pandemic aid in 2020-2021, far more than overseas counterparts, which left most households in much better financial shape and supported consumer spending well into 2023.

The Biden administration has also subsidized more construction of manufacturing plants and infrastructure through additional legislation passed in 2021 and 2022 that was still having an impact last year. About one quarter of the U.S. economy’s solid 2.5% growth in 2023 was made up of government spending. Republican critics, however, charge that the extended spending contributed to higher inflation.

“We had some policies that I do think helped us a lot,” said Diane Swonk, chief economist at KPMG. “But also the structure of our economy is so much different.”

Americans have been better protected from rising rates than U.K. counterparts, for example, because most U.S. homeowners with mortgages have long, 30-year fixed rates. As a result, the Federal Reserve’s rapid rate hikes of the past two years -- which have lifted mortgage rates from around 3% to about 6.7% -- have had little effect on many U.S. homeowners.

Yet their British counterparts carry mortgages that have to be renewed every two to five years. They’ve struggled with rapidly rising mortgage rates as the Bank of England has lifted borrowing costs to combat inflation.

Catherine Mann, a member of the Bank of England’s interest-rate setting committee, said Thursday that the U.K. economy’s slowdown should be temporary. There are already signs in business surveys that the economy is picking back up, she added.

“The data we have today is rear-view mirror,” she said on the sidelines of an economic conference in Washington. Forward-looking reports “are all looking good.” Like the Fed, the Bank of England is considering reducing its benchmark rate once it is confident inflation is under control.

Another benefit for the United States is that it experienced a surge in immigration in recent years, which has made it easier for businesses to fill jobs, potentially expand their operations, and has led to more people earning wages -- and then spending those earnings.

Japan, by contrast, is rapidly aging and has seen its population shrink for years, as it is less open to foreign labor. A declining population can act as a powerful drag on economic growth.

In Europe, consumer sentiment is weak among consumers who are still feeling the effects of higher energy prices caused by the war in Ukraine.

Even China, whose economy is growing faster than the United States’, is under heavy pressure. Its stock markets have been among the world’s worst recently due to worries about a sluggish economic recovery and troubles in the property sector.

The U.S. economy faces its own challenges. Its growth is forecast to cool this year as big hikes to interest rates by the Federal Reserve make their way fully through the system.

A report on Thursday may have given a nod to that. Sales at U.S. retailers slumped by more in January from December than economists expected.

Some pillars of support for consumer spending may be weakening. Student loan repayments have resumed, consumers have largely spent their pandemic stimulus money and credit-card balances are high.

Perhaps most frustrating is the fact that prices for things at the market are still much higher than they were before the pandemic. Lower inflation means prices are rising less quickly from here, not that they’re falling back to where they used to be.

Coping with inflation remains U.S. consumers’ top concern, except for those making more than $150,000, according to a recent survey by Morgan Stanley.

When McDonald’s CEO Chris Kempczinski discussed his company’s latest quarterly results, he said he’s not seeing much change in behavior among middle- and upper-income customers. But “where you see the pressure with the US consumer is that low-income consumer, so call it $45,000 and under. That consumer is pressured.”

SOURCE: AP NEWS

Inflation is nearly back to 2%. So why isn’t the Federal Reserve ready to cut rates?

Fri, 09 Feb 2024 20:59:59 GMT

Inflation is nearly back to 2%. So why isn’t the Federal Reserve ready to cut rates?

From Wall Street traders to car dealers to home buyers, Americans are eager for the Federal Reserve to start cutting interest rates and lightening the heavy burden on borrowers.

The Fed is widely expected to do so this year — probably several times. Inflation, as measured by its preferred gauge, rose in the second half of 2023 at an annual rate of about 2% — the Fed’s target level. Yet this week, several central bank officials underscored that they weren’t ready to pull the trigger just yet.

Why, with inflation nearly conquered and the Fed’s key rate at a 22-year high, isn’t now the time to cut?

Most of the Fed’s policymakers have said they’re optimistic that even as the economy and the job market keep growing, inflation pressures will continue to cool. But they also caution that the economy appears so strong that there’s a real risk that price increases could spike again.

And some are worried that if they cut rates now and inflation re-accelerates, then the Fed could be forced into an about-face and have to raise rates again.

“History tells many stories of inflation head-fakes,” said Tom Barkin, president of the Federal Reserve Bank of Richmond, in a speech Thursday.

Inflation had seemed defeated in 1986, Barkin noted, when Paul Volcker was Fed chair.

“The Fed reduced rates, but inflation then escalated again the following year, causing the Fed to reverse course,” he said.

“I would love to avoid that roller-coaster if we can,” said, Barkin, who is among 12 Fed officials who vote on interest rate policy this year.

Several officials have said they want more time to see if inflation continues to subside. In the meantime, they note, the economy is solid enough that it can thrive without any rate cuts. Last month, for example, America’s employers delivered a burst of hiring , and the unemployment rate stayed at 3.7%.

“They’re going to be glacial, and take their time,” said Steven Blitz, chief US economist at GlobalData TS Lombard. “They’re willing to say, ‘We don’t know, but we can afford to wait so we’re going to wait.’ ”

The sturdiness of the economy has also raised questions about just how effective the Fed’s 11 rate hikes have been. If higher borrowing rates are only barely restraining the economy, some officials may conclude that high rates should stay in place longer or that few rate cuts will be needed.

“I don’t feel there’s a sense of urgency here,” Loretta Mester, president of the Cleveland Federal Reserve, told reporters Tuesday. “I think later this year, if things evolve as anticipated, we would be able to start moving the rate down.”

Yet their caution carries risks. Right now, the economy appears on track for a “soft landing ,” in which inflation would be defeated without causing a recession or high unemployment. But the longer that borrowing rates stay high, the higher the risk that many companies and consumers would stop borrowing and spending, weakening the economy and potentially sending it into a recession.

High rates could also compound the struggles of banks that are saddled with bad commercial real estate loans, which would be harder to refinance at higher rates.

The high cost of borrowing has become a headache for David Kelleher’s Chrysler-Jeep dealership just outside of Philadelphia. Just 2 1/2 years ago, Kelleher recalled, his customers could get an auto loan below 3%. Now, they’re lucky to get 5.5%.

Customers who had monthly car lease payments of, say, $400 three years ago are finding that with vehicle prices much higher and interest rates up, their monthly payments would be closer to $650. The trend is pushing many of his customers toward lower-priced used cars — or no purchase at all.

“We need the government to address the interest rates ... and understand that they’ve accomplished their goal of lowering inflation,” Kelleher said. “If interest rates can come down, I think we’re going to start selling more cars.”

Kelleher is likely to get his wish by May or June, when most economists expect the Fed to start reducing its benchmark rate, which is now at about 5.4%. In December, all but two of the 19 policymakers that participate in the Fed’s policy discussions said they expect the central bank to cut rates this year. (Twelve of those 19 actually get to vote on rate policies each year.)

Yet economic growth has accelerated since then. In the final three months of last year, the economy expanded at an unexpectedly strong 3.3% annual rate . Surveys of manufacturers and service-providers, such as retailers, banks, and shippers, also reported that business perked up last month.

Collectively, the latest reports suggest that the economy may not be headed for a soft landing but rather what some economists call a “no landing.” By that they mean a scenario in which the economy would remain robust and inflation an ongoing threat, potentially stuck above the Fed’s target. Under this scenario, the Fed would feel compelled to keep rates at elevated levels for an extended period.

Powell said last week that while the Fed wants to see continued “strong growth,” a strong economy does threaten to send inflation up.

“I think that is a risk ... that inflation would accelerate,” Powell said. “I think the greater risk is that it would stabilize at a level meaningfully above 2%. ... That’s why we keep our options open here and why we’re not rushing.”

Other officials this week drove home the point that the Fed is trying to balance the risk of cutting rates too soon — which might cause inflation to surge again — and keeping rates too high for too long, which could trigger a recession.

“At some point, the continued cooling of inflation and labor markets may make it appropriate to reduce” rates, Andrea Kugler, a recently appointed Fed governor said Wednesday in her first public speech. “On the other hand, if progress on disinflation stalls, it may be appropriate to hold the target range steady at its current level for longer.”

Some analysts have pointed to signs that the economy is becoming more productive, or efficient, allowing it grow faster without necessarily increasing inflation. Yet productivity data is notoriously hard to measure, and any meaningful improvement wouldn’t necessarily become apparent for years.

Still, “maybe the economy can take higher interest rates than we thought in 2019 before the pandemic,” said Eric Swanson, an economist at the University of California, Irvine.

If so, that might not just delay the Fed’s rate cuts, but result in fewer of them. Fed officials are still saying they plan to cut rates perhaps three times this year, below the five or six that some market analysts foresee.

SOURCE: AP NEWS

Stock market today: Big Tech carries Wall Street to another record and winning week

6122ee467d22433199917c7d — Fri, 02 Feb 2024 21:21:19 GMT

Stock market today: Big Tech carries Wall Street to another record and winning week

Big Tech stocks carried Wall Street to another record high, even as many stocks fell amid worries about the downside of a too-hot economy. Big gains for Meta Platforms and Amazon pushed the S&P 500 index up 1.1% Friday. They also vaulted the Nasdaq composite up by 1.7%. The Dow Jones Industrial Average rose a more modest 0.3%, and more stocks fell overall on Wall Street than rose. A strong jobs report pushed traders to further delay expectations for when the Federal Reserve may deliver the cuts to interest rates they desire. Treasury yields rose in the bond market.

THIS IS A BREAKING NEWS UPDATE. AP’s earlier story follows below.

NEW YORK (AP) — Big Tech stocks are once again carrying Wall Street to a record Friday, even as the majority of stocks fall amid worries about the downside of a too-hot economy.

Big gains for Meta Platforms and Amazon, which are two of the market’s most influential stocks, pushed the S&P 500 index up 1.3% and have it on track to set another all-time high. They also vaulted the Nasdaq composite up by 1.9%, with less than an hour remaining in trading.

But the Dow Jones Industrial Average, which has less of an emphasis on tech, was up a more modest 0.6%, or 221 points. And the Russell 2000 index of smaller stocks was down by 0.4%.

Stocks were feeling pressure from much higher yields in the bond market after a report showed U.S. employers hired many more workers last month than economists expected.

While the strength is a boon for workers and keeps the risk of a recession at bay, the worry is that it could keep upward pressure on inflation. That in turn would mean a longer wait for the Federal Reserve to begin cutting interest rates.

Hopes for such cuts, which can relax the pressure on the economy and goose investment prices, have been a major reason the U.S. stock market has surged to record heights. Fed Chair Jerome Powell said earlier this week that it’s unlikely cuts will begin as soon as traders had been hoping.

“The Fed threw some cold water on the idea of a March rate cut less than 48 hours ago, and today’s surprisingly strong jobs report won’t dry things off,” said Chris Larkin, managing director, trading and investing, at E-Trade from Morgan Stanley. “It’s definitely not the type of data the Fed had in mind when they said they wanted to see more evidence that inflationary pressures were under control.”

The yield for the 10-year Treasury leaped immediately after the release of the jobs report and was up to 4.03% from 3.88% late Thursday.

Traders had already pushed out bets for the timing of the first Fed rate cut to May from March following Powell’s warning earlier this week. After the jobs report, traders shifted some bets even further out the calendar to June, according to data from CME Group.

Besides the overall hiring number, the jobs report included several signals showing much more strength than expected. Average hourly earnings for workers rose more in January than forecast. The unemployment rate unexpectedly did not get worse. And the government said hiring was actually much stronger in December than it had earlier reported.

The question for the stock market will be whether the upside of such strength outweighs the downside. That is, will a stronger economy with plenty of people working make up for delayed or dashed hopes for quick and significant cuts to interest rates?

“The big payroll gains and wage gains aren’t something to be feared,” said Brian Jacobsen, chief economist at Annex Wealth Management. “The Fed has stepped back from its insistence that the labor market needs to weaken before inflation sustainably falls.”

He pointed to a report earlier this week that showed an increase in productivity for U.S. workers, which could help offset the effect of higher wages.

The jobs report landed on Wall Street amid a maelstrom of profit reports that could have helped move the market on their own.

Meta Platforms , the owner of Facebook and Instagram, soared 20.8% after it reported stronger profit for the latest quarter than expected and said it would start paying a dividend to its investors.

Amazon rallied 8.1% after it likewise reported stronger profit and revenue for the latest quarter than expected.

They’re both members of a small group of Big Tech stocks known as the “Magnificent Seven” that have been disproportionately responsible for Wall Street’s run to a record. Their huge gains have set expectations very high for their growth, which they need to meet to justify the big runs for their stock prices.

Apple , another member of the Magnificent Seven, slipped 0.1% despite reporting better profit than expected.

Charter Communications slumped 16.7% for the sharpest loss in the S&P 500 after it reported weaker profit for the latest quarter than expected.

Cigna and Chevron both climbed after reporting stronger profit for the last three months of 2023 than expected. Cigna jumped 5.6% for one of the biggest gains in the S&P 500, while Chevron rose 3.2%.

In markets abroad, stocks tumbled 1.5% in Shanghai to cap their worst week in five years. Worries about a faltering economic recovery and troubles for the real estate industry have made the market one of the world’s worst recently.

The International Monetary Fund forecast the Chinese economy would grow at a 4.6% pace this year and 4% in 2025, dropping from 5.2% last year.

Stocks were mixed elsewhere in Asia and Europe.

SOURCE: AP NEWS

Inflation slowed further in December as an economic ‘soft landing’ moves into sharper focus

6122ee467d22433199917c7d — Fri, 26 Jan 2024 18:48:46 GMT

Inflation slowed further in December as an economic ‘soft landing’ moves into sharper focus

The Federal Reserve’s preferred inflation gauge cooled further last month even as the economy kept growing briskly , a trend sure to be welcomed at the White House as President Joe Biden seeks re-election in a race that could pivot on his economic stewardship.

Friday’s government report showed that prices rose just 0.2% from November to December, a pace consistent with pre-pandemic levels and barely above the Fed’s 2% annual target. Measured from a year earlier, prices increased 2.6%.

Excluding volatile food and energy costs, so-called “core” prices rose just 0.2% from month to month and 2.9% from a year earlier — the smallest such rise since March 2021. Economists consider core prices a better gauge of the likely path of inflation.

The latest data suggests that the economy is achieving an elusive“ soft landing,” in which inflation falls back to the Fed’s target without a recession. That outcome could make it easier for the Fed to consider cutting its key interest rate, which it raised 11 times since March 2022 to attack inflation. Higher interest rates have throttled home sales by raising the cost of borrowing. Businesses have also chafed under the higher borrowing costs.

On Thursday, a government report showed that the economy expanded at a surprisingly strong 3.3% annual pace in the final three months of last year. Solid consumer spending propelled the growth, capping a year that had begun with widespread expectations of a recession but instead produced a healthy expansion.

Biden’s Republican critics have sought to highlight what had been the biggest inflation spike in four decades, for which they have largely blamed the president’s spending policies. But with inflation having dropped sharply after an extended period of gloomy consumer sentiment , Americans are starting to show signs of feeling better about the economy. A measure of consumer confidence by the University of Michigan, for example, has jumped in the past two months by the most since 1991.

The details in Friday’s report all point to inflation being in check: Measured over the past six months, prices are up just 1.9%, which is actually below the Fed’s 2% target. Over the past three months, the figure is even lower: 1.5%.

Grocery prices, after nearly two years of sharp increases, were unchanged in December and were just 1.3% higher than a year earlier. Chicken prices actually dipped 0.4% from November to December; they’re up 1.2% compared to a year ago. Beef and veal prices, though, climbed 0.3% in December and are still 8.7% higher than 12 months earlier.

The report arrives less than week before the Fed will hold its latest policy meeting. The central bank is considered sure to keep interest rates unchanged, but attention will be focused on Chair Jerome Powell’s news conference for any clues about when the Fed might begin to cut rates.

“The Fed will be welcoming the inflation data,” said Lydia Boussour, senior economist at consulting firm EY. “It does suggest that inflation is on track and the Fed is well-positioned to start (cutting rates) in a few months.”

During 2023, inflation fell steadily as global supply chains recovered from pandemic-era disruptions and more Americans came off the sidelines to take jobs, which helped slow wage growth. Slower-rising pay eases the pressure on businesses to raise prices to offset higher labor costs. According to the Fed’s preferred measure, inflation peaked at 7.1% in June 2022.

More Americans now appear to be pushing back against the price spikes of the past two years. In response, there are signs that some companies are forgoing price hikes or implementing smaller increases.

The Fed’s most recent beige book report, a collection of anecdotes mostly from businesses around the country, found many examples of companies finding that they now have less ability to raise prices.

That trend appears particularly evident at auto dealerships. Car dealers now have many more vehicles on their lots than in the depths of the pandemic, when factory shutdowns left consumers desperate to find a new or used car. David Kelleher, for example, who owns a Chrysler-Jeep dealership just outside Philadelphia, said his profit margins have plunged 70% since 2021 now that consumers have more options and can haggle again.

Kelleher is offering enhanced discounts to try to attract buyers.

“There’s less appetite to absorb the higher cost,” he said.

In the aftermath of the pandemic, Kelleher said, he might have had five Jeep Wranglers on his lot and 25 customers who wanted one, giving him significant pricing power. Now, he has 78 Wranglers, and many of his competitors are well-stocked as well.

“That’s good for the consumer,” who can play the dealers off each other, Kelleher conceded.

In December, the Fed’s policymakers had projected that they would carry out three quarter-point rate cuts this year. Yet they provided little hint of when the first cut might occur. Late last year, Wall Street traders had bet that the first rate cut would occur in March.

Several Fed officials, though, have pushed back against such assumptions. Christopher Waller, an influential figure on the Fed’s Board of Governors, last week reiterated his view that inflation is on track to return to the Fed’s 2% goal . But Waller cautioned that any decision to cut rates should be “carefully calibrated and not rushed” — remarks that were widely interpreted as downgrading the likelihood of a March cut.

Friday’s price data showed a lower level of inflation than did the most recent consumer price index, released earlier this month, which showed inflation at 3.4% in December. The more widely known CPI shows higher inflation than the Fed’s preferred measure partly because it puts greater weight on housing and rents, whose prices are higher than for many other goods and services.

SOURCE: AP NEWS

Overdraft fees could drop to as low as $3 under new Biden proposal

6122ee467d22433199917c7d — Thu, 18 Jan 2024 20:05:13 GMT

Overdraft fees could drop to as low as $3 under new Biden proposal

The cost to overdraw a bank account could drop to as little as $3 under a proposal announced by the White House, the latest effort by the Biden administration to combat fees it says pose an unnecessary burden on American consumers, particularly those living paycheck to paycheck.

The proposed change by the Consumer Financial Protection Bureau would potentially eliminate billions of dollars in fee revenue for the nation’s biggest banks, which were gearing up for a battle even before Wednesday’s announcement. Exactly how much revenue depends on which version of the new regulation is adopted.

Banks charge a customer an overdraft fee if their bank account balance falls below zero. Overdraft started as a courtesy offered to some customers when paper checks used to take days to clear, but proliferated thanks to the growing popularity of debit cards. So, for instance, a $10 debit card transaction could cost a bank customer $40 if their balance goes below zero.

“For too long, some banks have charged exorbitant overdraft fees — sometimes $30 or more — that often hit the most vulnerable Americans the hardest, all while banks pad their bottom lines,” President Joe Biden said in a statement. “Banks call it a service — I call it exploitation.”

Under the proposed rule, banks could only charge customers what it would cost them to break even on providing overdraft services. This would require banks to show the CFPB the costs of running their overdraft services, a task few banks would want to handle.

Alternatively, banks could use a benchmark fee that would apply across all affected financial institutions. Regulators proposed several fees — $3, $6, $7 and $14 — and will gather industry and public input on the most appropriate amount. The CFPB says it arrived at these figures by looking at how much it cost banks to recoup losses from accounts that went negative and were never paid back.

Banks could also provide small lines of credit to allow customers to overdraft, a service that would operate like a credit card. Some banks like Truist Bank currently offer that type of service.

According to research conducted by Bankrate last August, the average overdraft fee was $26.6 1. Some banks charge as much as $39. The nation’s biggest banks still take in roughly $8 billion in overdraft fees every year, according to data from the CFPB and banks’ public records. The bureau’s research also shows overdraft fees overwhelmingly impact the poor and households of color, who often overdraft multiple times a year.

Biden has made the elimination of “junk fees” one of the cornerstones of his administration’s economic agenda heading into the 2024 election. Overdraft fees have been at the center of that campaign, and the White House directed government regulators last year to do whatever is in their power to further curtail the practice.

The rules would apply only to banks with more than $10 billion in assets, which is roughly 175 banks that make up most of the financial institutions Americans do business with. The rules spare small banks and credit unions, some of which rely disproportionately on overdraft fees. CFPB officials told reporters that it chose to focus on the largest banks since most Americans bank at these large institutions and that is where the widespread abuses have historically happened. Roughly two-thirds of all overdraft fees are charged by these 175 banks.

Decades ago, banks created a service that allowed certain customers with checking accounts to go negative in their accounts to avoid bouncing paper checks. What started as a niche service became a massive profit center for the banks after the proliferation of debit cards that caused customers to debit their bank accounts for small and large amounts of money multiple times a day.

Overdraft fees have been a financial bonanza for the banking industry, with the CFPB estimating that banks collected $280 billion in overdraft fees in the last 20 years. These fees became so popular that one bank CEO named his boat the “ Overdraft .”

But banks have changed their overdraft practices in response to political and popular pressure in the last few years, and question the need for the government regulators to step in now. Most of the biggest banks have added safeguards to customers’ accounts to allow them to bring the balance back into positive territory before they incur a fee. Bank of America, once considered by industry critics to be the biggest abuser of overdraft fees, cut its fee from $35 to $10 two years ago and says revenue from overdraft fees is now less than 10% of what it had been.

JPMorgan, the nation’s largest bank, now gives customers a $50 cushion when they go negative in their account. CEO Jamie Dimon told lawmakers in 2022 that with changes the bank has made, roughly 70% of all transactions that cause a negative balance do not incur overdraft fees.

The banking industry is expected to fight the new regulations vigorously to protect the fee revenue. The regulations are likely to end up in a protracted legal battle that could reach the Supreme Court. If the rule is adopted and survives political and legal challenges, the new regulations would go into effect in the autumn of 2025.

Banks have long argued that government regulations on overdraft could cause them to eliminate the service altogether. While some banks have eliminated overdraft fees and created accounts that cannot go negative, Bankrate estimates that roughly nine out of 10 banks still offer the service.

“If enacted, this proposal could deprive millions of Americans of a deeply valued emergency safety net while simultaneously pushing more consumers out of the banking system,” said Lindsey Johnson, president and CEO of the Consumer Bankers Association, the trade and lobby organization for the larger consumer banks.

SOURCE: AP NEWS

New funds will make investing in bitcoin easier. Here’s what you need to know

6122ee467d22433199917c7d — Fri, 12 Jan 2024 18:30:07 GMT

New funds will make investing in bitcoin easier. Here’s what you need to know

Nearly a dozen new bitcoin funds began trading in U.S. markets for the first time Thursday, providing increased access to the cryptocurrency for everyday investors.

The new exchange-traded funds, or ETFs, give investors an asset that closely tracks the price of bitcoin.

The Securities and Exchange Commission approved 11 funds from asset managers such as Blackrock, Invesco and Fidelity late Wednesday. The wave of approvals may work in your favor as fund managers seek to attract investors by competing on fees.

Besides being a win for the fund managers, the approvals are also a win for the cryptocurrency industry, which has needed a victory after nearly two years of turmoil, including the failure of several crypto firms, most notably FTX in November 2022.

The SEC’s approval, however, was lukewarm at best. Gary Gensler, the agency’s chairman, has repeatedly said cryptocurrencies need more regulation and investor protections.

“Investors should remain cautious about the myriad risks associated with bitcoin and products whose value is tied to crypto,” Gensler said.

The regulatory greenlight had been anticipated for several months , however, and the price of bitcoin has jumped about 70% since October on the belief that bitcoin ETFs will drive up demand for the cryptocurrency.

Bitcoin rose 2% in early trading Thursday, and trading in the new ETFs was mixed.

Some analysts think that ETFs may help stabilize crypto prices by broadening their use and potential audience. But many remain concerned that crypto ETFs will place too much risk and volatility into Americans’ retirement accounts.

“The notorious price volatility of bitcoin, as well as its fluctuating values against stablecoins and other cryptocurrencies, could expose mainstream investors to a less familiar spectrum of investment risks,” said Yiannis Giokas, senior director of Moody’s Analytics.

Here are some things to know about bitcoin ETFs.

WHY ALL THE EXCITEMENT OVER A BITCOIN ETF?

An exchange traded fund, or ETF, is an easy way to invest in something or a group of things, like gold or junk bonds, without having to take possession of those assets. Unlike traditional mutual funds, ETFs trade like stocks, which means they can be bought and sold throughout the day.

Since the inception of bitcoin, anyone wanting to own one would have to buy it. That in turn would mean either having to learn what a cold wallet is or having to open an account at a crypto trading platform like Coinbase or Binance.

A spot bitcoin ETF could open the door to many new investors who don’t want to take such extra steps.

The price of bitcoin has already soared in anticipation of the SEC’s approval, with bitcoin trading at $47,500 Thursday, up from around $27,000 in mid-October. The price had sunk as low as $16,000 in November of 2022 following the implosion of the crypto exchange FTX.

HOW WOULD THE ETF WORK?

New bitcoin ETFs will perform like the SPDR Gold Shares ETF (GLD), which allows anyone to invest in gold without having to find someplace to store a bar or having to protect it. It’s the same reason some people invest in the SPDR Bloomberg High Yield Bond ETF (JNK), which lets investors simply buy one thing instead of the more than 1,000 low-quality bonds that make up the index.

The Bitcoin Strategy ETF (BITO) has been in existence since 2021, but it holds futures related to bitcoin, not the cryptocurrency itself. Those prices do not track as closely as a straight-up bitcoin ETF.

HOW MANY BITCOIN ETFS COULD THERE BE?

The SEC said it gave approval to 11 ETFs, but more are certain to apply for trading in the coming months.

WHAT ARE THE DISADVANTAGES OF AN ETF?

Longtime crypto fans might object. Cryptocurrencies like bitcoin were created in part due to mistrust of the traditional financial system. Wall Street would become an intermediary between investors and cryptocurrency in the case of ETFs.

ETFs also charge fees, though they tend to be relatively low compared with the overall financial industry. These fees are shown through what’s called the expense ratio, which indicates how much of a fund’s assets the ETF will take each year to cover its costs.

WHEN IS IT BETTER TO HOLD ACTUAL BITCOIN?

An ETF will not put actual cryptocurrency into investors’ accounts, meaning that they cannot use it. Also, an ETF would not provide investors with the same anonymity that crypto does, one of the big draws for many crypto investors.

WHAT CONCERNS SHOULD INVESTORS HAVE?

The biggest concern for an investor in one of these ETFs is the notorious volatility in the price of bitcoin.

Despite failing to catch on as a replacement for fiat, or paper, currencies, bitcoin soared near $68,000 in November of 2021. A year later it plunged below $20,000 as investors shunned riskier assets and a series of company blowups and scandals shook faith in the crypto industry.

Even as regulators and law enforcement crack down on some of cryptos bad actors, like Sam Bankman-Fried of FTX, the industry still has a “Wild West” feel to it.

A hack of the SEC’s X account this week, when a fake tweet claimed the ETFs had been approved, sent prices soaring and raised questions about both the ability of scammers to manipulate the market and the SEC’s ability to stop them.

SOURCE: AP NEWS

Microsoft’s new AI key is first big change to keyboards in decades

6122ee467d22433199917c7d — Fri, 05 Jan 2024 18:59:03 GMT

Microsoft’s new AI key is first big change to keyboards in decades

Computer keyboards are making room for an artificial intelligence chatbot button as Microsoft unveils its first major keyboard redesign in three decades.

Starting this month, some new personal computers that run Microsoft’s Windows 11 operating system will have a special “Copilot key” that launches the software giant’s AI chatbot.

Getting third-party computer manufacturers like Dell to add an AI button to laptops is the latest move by Microsoft to capitalize on its close partnership with ChatGPT-maker OpenAI and make itself a gateway for applications of generative AI technology.

Although most people now connect to the internet — and many AI applications — by phone rather than computer, it’s a symbolic kickoff to what’s expected to be a competitive year as tech companies race to outdo each other in AI applications even as they haven’t yet resolved all the ethical and legal ramifications. The New York Times last month sued both OpenAI and Microsoft alleging that tools like ChatGPT and Copilot — formerly known as Bing Chat — are infringing on copyrighted news articles.

The keyboard redesign will be Microsoft’s biggest change to PC keyboards since it introduced a special Windows key in the 1990s. Microsoft’s four-squared logo design has evolved, but the key has been a fixture on Windows-oriented keyboards for about three decades.

The newest AI button will be marked by the ribbon-like Copilot logo and be located near the space bar. On some computers it will replace the right “CTRL” key, while on others it will replace a menu key.

Microsoft is not the only company with customized keys. Apple pioneered the concept in the 1980s with its “Command” key marked by a looped square design (it also sported an Apple logo for a time). Google has a search button on its Chromebooks and was first to experiment with an AI-specific key to launch its voice assistant on its now-discontinued Pixelbook.

But Microsoft has a much stronger hold on the broader PC market through its licensing agreements with third-party manufacturers like Lenovo, Dell and HP. About 82% of all desktop computers, laptops and workstations run Windows, compared to 9% for Apple’s in-house operating system and just over 6% for Google’s, according to market research firm IDC.

Dell Technologies on Thursday was the first to unveil a Copilot key on its newest XPS laptops.

Microsoft hasn’t yet said which other computer-makers are installing the Copilot button beyond Microsoft’s own in-house line of premium Surface devices. It said some of the companies are expected to unveil their new models at next week’s CES gadget show in Las Vegas.

SOURCE: AP NEWS

Social media companies made $11 billion in US ad revenue from minors, Harvard study finds

6122ee467d22433199917c7d — Thu, 28 Dec 2023 12:54:49 GMT

Social media companies made $11 billion in US ad revenue from minors, Harvard study finds

Social media companies collectively made over $11 billion in U.S. advertising revenue from minors last year, according to a study from the Harvard T.H. Chan School of Public Health published on Wednesday.

The researchers say the findings show a need for government regulation of social media since the companies that stand to make money from children who use their platforms have failed to meaningfully self-regulate. They note such regulations, as well as greater transparency from tech companies, could help alleviate harms to youth mental health and curtail potentially harmful advertising practices that target children and adolescents.

To come up with the revenue figure, the researchers estimated the number of users under 18 on Facebook, Instagram, Snapchat, TikTok, X (formerly Twitter) and YouTube in 2022 based on population data from the U.S. Census and survey data from Common Sense Media and Pew Research. They then used data from research firm eMarketer, now called Insider Intelligence, and Qustodio, a parental control app, to estimate each platform’s U.S. ad revenue in 2022 and the time children spent per day on each platform. After that, the researchers said they built a simulation model using the data to estimate how much ad revenue the platforms earned from minors in the U.S.

Researchers and lawmakers have long focused on the negative effects stemming from social media platforms, whose personally-tailored algorithms can drive children towards excessive use. This year, lawmakers in states like New York and Utah introduced or passed legislation that would curb social media use among kids, citing harms to youth mental health and other concerns.

Meta, which owns Instagram and Facebook, is also being sued by dozens of states for allegedly contributing to the mental health crisis.

“Although social media platforms may claim that they can self-regulate their practices to reduce the harms to young people, they have yet to do so, and our study suggests they have overwhelming financial incentives to continue to delay taking meaningful steps to protect children,” said Bryn Austin, a professor in the Department of Social and Behavioral Sciences at Harvard and a senior author on the study.

The platforms themselves don’t make public how much money they earn from minors.

Social media platforms are not the first to advertise to children, and parents and experts have long expressed concerns about marketing to kids online, on television and even in schools. But online ads can be especially insidious because they can be targeted to children and because the line between ads and the content kids seek out is often blurry.

In a 2020 policy paper , the American Academy of Pediatrics said children are “uniquely vulnerable to the persuasive effects of advertising because of immature critical thinking skills and impulse inhibition.”

“School-aged children and teenagers may be able to recognize advertising but often are not able to resist it when it is embedded within trusted social networks, encouraged by celebrity influencers, or delivered next to personalized content,” the paper noted.

As concerns about social media and children’s mental health grow, the Federal Trade Commission earlier this month proposed sweeping changes to a decades-old law that regulates how online companies can track and advertise to children. The proposed changes include turning off targeted ads to kids under 13 by default and limiting push notifications.

According to the Harvard study, YouTube derived the greatest ad revenue from users 12 and under ($959.1 million), followed by Instagram ($801.1 million) and Facebook ($137.2 million).

Instagram, meanwhile, derived the greatest ad revenue from users aged 13-17 ($4 billion), followed by TikTok ($2 billion) and YouTube ($1.2 billion).

The researchers also estimate that Snapchat derived the greatest share of its overall 2022 ad revenue from users under 18 (41%), followed by TikTok (35%), YouTube (27%), and Instagram (16%).

SOURCE: AP NEWS

From AI and inflation to Elon Musk and Taylor Swift, the business stories that dominated 2023

6122ee467d22433199917c7d — Thu, 21 Dec 2023 15:51:31 GMT

From AI and inflation to Elon Musk and Taylor Swift, the business stories that dominated 2023

The tide turned against inflation.

Artificial intelligence went mainstream — for good or ill.

Labor unions capitalized on their growing might to win more generous pay and benefits.

Elon Musk renamed and rebranded the social media platform Twitter, removed guardrails against phony or obscene posts and ranted profanely when advertisers fled in droves.

The American housing market, straining under the weight of heavy mortgage rates, took a wallop.

And Taylor Swift’s concert tour scaled such stratospheric heights that she invigorated some regional economies and drew a mention in Federal Reserve proceedings.

A look back at 10 top business stories in 2023:

RAGING AGAINST INFLATION

The Fed and most other major central banks spent most of the year deploying their interest-rate weapons against the worst bout of inflation in four decades. The trouble had erupted in 2021 and 2022 as the global economy roared out of the pandemic recession, triggering supply shortages and igniting prices.

By the end of 2023, though, the Fed, the European Central Bank and the Bank of England had taken a breather. Their aggressive rate hikes had brought inflation way down from the peaks of 2022, when Russia’s invasion of Ukraine sent energy and grain prices rocketing and intensified price spikes.

In the United States, the Fed’s policymakers delighted Wall Street investors by signaling in December that 2024 would likely be a year of rate cuts — three to be exact, in their expectations — and not rate hikes. The Bank of England and ECB sounded a more cautious note, suggesting that inflation, though trending down, remained above their target.

“Should we lower our guard?” Christine Lagarde, the ECB president, told reporters. “We ask ourselves that question. No, we should absolutely not lower our guard.”

The Council on Foreign Relations, which tracks interest rates in 54 countries, found that central banks turned aggressive toward inflation in the spring of 2022. Policies remain tight, the council found, but the overall anti-inflation stance has eased.

AI GOES MAINSTREAM

Artificial intelligence thrust itself into public consciousness this year. But the technology, while dazzling for its ability to retrieve information or produce readable prose, has yet to match people’s science fiction fantasies of human-like machines.

Catalyzing a year of AI fanfare was ChatGPT . The chatbot gave the world a glimpse of advances in computer science, even if not everyone learned quite how it works or how to make the best use of it.

Worries escalated as this new cohort of generative AI tools threatened the livelihoods of people who write, draw, strum or code for a living. AI’s ability to produce original content helped fuel strikes by Hollywood writers and actors and legal challenges from bestselling authors.

By year’s end, the AI crises had shifted to ChatGPT’s own maker, OpenAI, which was nearly destroyed by corporate turmoil over its CEO, and to a meeting room in Belgium, where European Union leaders emerged after days of talks with a deal for the world’s first major AI legal safeguards .

WORKERS SCORE GAINS

The long-battered American labor movement flexed its muscle in 2023, taking advantage of widespread worker shortages to demand — and receive — significantly better pay and benefits. From Hollywood writers and actors to autoworkers to hotel workers, 510,000 laborers staged 393 strikes in the first 11 months of 2023, according to Cornell University’s Labor Action Tracker.

Under its pugnacious new president, Shawn Fain, the United Auto Workers struck the Big Three automakers — Ford, General Motors and Stellantis, the parent of Chrysler, Jeep and Ram — and won pay raises, improved benefits and numerous other concessions .

Hollywood writers and actors, as a result of their walkouts, secured higher pay and protection from the unrestricted use of artificial intelligence , among other concessions.

The unions’ gains marked a resurgence for their workers after years following the Great Recession of 2007-2009 when union power further dwindled, wage gains languished and employers seemed to have their pick of job candidates. An explosive economic rebound from the COVID-19 recession of 2020 and a wave of retirements left companies scrambling to find workers and provided labor unions with renewed leverage

Still, even now, unions remain a shadow of what they once were: As of last year, roughly 10% of U.S. employees belonged to labor unions, way down from 20% in 1983. And back in the 1970s, the United States experienced an average of 500 strikes a year, involving 2 million workers, said Johnnie Kallas, a labor expert at Cornell.

MUSK’S X-RATED TRANSFORMATION

A little more than a year ago, Elon Musk walked into Twitter’s San Francisco headquarters, fired its CEO and other top executives and began transforming the social media platform into what’s now known as X.

Since then, the company has been bombarded by allegations of misinformation , endured significant advertising losses and suffered declines in usage .

Disney, Comcast and other high-profile advertisers stopped spending on X after the liberal advocacy group Media Matters issued a report showing that their ads were appearing alongside material praising Nazis. (X has sued the group , claiming it “manufactured” the report to “drive advertisers from the platform and destroy X Corp.”)

The problems culminated when Musk went on an expletive-ridden rant in an on-stage interview about companies that had halted spending on X. Musk asserted that advertisers that pulled out were engaging in “blackmail” and, using a profanity, essentially told them to get lost.

“Don’t advertise,” X’s billionaire owner said.

HOUSING’S MISERABLE YEAR

Remarkably, the U.S. economy and job market largely avoided pain in 2023 from the Fed’s relentless campaign against inflation — 11 interest-rate hikes since March 2022.

Not so the housing market.

As the Fed jacked up borrowing rates, the average 30-year fixed-rate mortgage rate shot up from 4.16% in March 2022 to 7.79% in October 2023 . Home sales crumbled . For the first 10 months of 2023, sales of previously occupied homes sank 20%.

Yet at the same time and despite the sales slump, home prices kept rising. The combination of high mortgage rates and rising prices made homeownership — or the prospect of trading up to another house — unaffordable for many.

Contributing to the squeeze was a severe shortage of homes for sale . That, too, was a consequence of higher rates. Homeowners who were sitting on super-low mortgage rates didn’t want to sell their houses only to have to buy another and take on a new mortgage at a much higher rate. Mortgage giant Freddie Mac says 60% of outstanding mortgages still have rates below 4%; 90% are below 6%.

CRYPTO CHAOS (CONTINUED)

If 2022 was the year that the cryptocurrency industry collapsed, 2023 was the year of the spillover from that fall.

The year’s headlines from crypto were dominated by convictions and legal settlements as Washington regulators adopted a much more aggressive stance toward the industry.

A jury convicted Sam Bankman-Fried , the founder and former CEO of the crypto exchange FTX, of wire fraud and six other charges. Weeks later, the founder of Binance, Chengpeng Zhao, agreed to plead guilty to money laundering charges as part of a settlement between U.S. authorities and the exchange. Among the other crypto heavyweights that met legal trouble were Coinbase, Gemini and Genesis.

Yet speculation that crypto may gain more legitimacy among investors helped more than double the price of bitcoin. After years of delays, regulators are eventually expected to approve a bitcoin exchange-traded fund. Whether that would prove sufficient to sustain bitcoin’s rally over the long run remains to be seen.

BANKING JITTERS

Historically, high interest rates benefit banks; they can charge more for their loans. But in 2023, higher rates ended up poisoning a handful of them.

The industry endured a banking crisis on a scale not seen since 2008. Three midsized banks — Silicon Valley Bank, Signature Bank and First Republic Bank — collapsed.

For years, banks had loaded up their balance sheets with high-quality mortgages and Treasurys. In an era of ultra-low rates, those mortgages and bonds paid out puny interest.

Enter the specter of inflation and the Fed’s aggressive rate hikes. As rates jumped, the banks’ bonds tumbled in value because investors could now buy new bonds with much juicier yields. With pressure on the banks mounting, some anxious depositors withdrew their money. After one such bank run, Silicon Valley collapsed. Days later, Signature Bank failed. First Republic was seized and sold to JPMorgan Chase.

Investors remain concerned about midsized institutions with similar business models. Trillions of dollars in commercial real estate loans that remain on these banks’ books could become problematic in 2024.

GLOBAL MARKETS RALLY

From Austria to New Zealand, stock markets rallied through 2023. As inflation eased, stocks climbed despite sluggish global economic growth.

A tumble in crude oil prices helped slow inflation. A barrel of Brent crude, the international standard, dropped 14% through mid-December on expectations that the world has more than enough oil to meet demand.

An index that spans nearly 3,000 stocks from 47 countries returned 18% in U.S. dollar terms as of Dec. 11. Healthy gains for Apple, Nvidia and other U.S. Big Tech stocks powered much of the gains. So did the 45% return for the Danish pharmaceutical company Novo Nordisk, which sells the Wegovy drug to treat obesity and the 33% return for the Dutch semiconductor company ASML.

The bond market endured more turbulence. Bond prices tumbled for much of the year, and their yields rose, over uncertainty about how far central banks would go in raising rates to curb inflation.

The yield on the 10-year U.S. Treasury briefly topped 5% in October to reach its highest level since 2007. Yields have since eased on the expectation that the Fed is done raising rates.

WORLD ECONOMY’S RESILIENCE

Over the past three years, the global economy has absorbed one hit after another. A devastating pandemic. The disruption of energy and grain markets stemming from Russia’s invasion of Ukraine. A resurgence of inflation. Punishing interest rates.

And yet economic output kept growing in 2023, if only modestly. Optimism grew about a “soft landing” — a scenario in which high rates tame inflation without causing a recession. The head of the International Monetary Fund praised the global economy for its “remarkable resilience.’’

The United States has led the way. Defying predictions that high rates would trigger a U.S. recession, the world’s largest economy has continued to grow. And employers, fueled by solid consumer spending, have kept hiring at healthy rates .

Still, the accumulated shocks are restraining growth. The IMF expects the global economy to expand just 2.9% in 2024 from an expected 3% this year. A major concern is a weakened China, the world’s No. 2 economy. Its growth is hobbled by the collapse of an overbuilt real estate market, sagging consumer confidence and high rates of youth unemployment.

THE U.S. ECONOMY (TAYLOR’S VERSION)

Taylor Swift dominated popular culture, with her record-shattering $1 billion concert tour , her anointment as Time magazine’s Person of the Year and her high-profile romance with Travis Kelce , the Kansas City Chiefs football star.

The Swift phenomenon went further yet. It extended into the realm of the national economy. Her name came up at a July news conference by Fed Chair Jerome Powell, when Powell was asked whether Swift’s blockbuster ticket sales revealed anything about the state of the economy. Though Powell avoided a direct reply, Swift’s name came up that same month in a Fed review of regional economies: Her tour was credited with boosting hotel bookings in Philadelphia.

Economist Sarah Wolfe of Morgan Stanley has calculated that Swifties spent an average of $1,500 on airfares, hotel rooms and concert tickets to her shows (though it’s perhaps worth noting that Beyonce fans spent even more — an average $1,800).

SOURCE: AP NEWS

More Americans are expected to ‘buy now, pay later’ for the holidays. Analysts see a growing risk

6122ee467d22433199917c7d — Thu, 14 Dec 2023 19:14:56 GMT

More Americans are expected to ‘buy now, pay later’ for the holidays. Analysts see a growing risk

Consumers are expected to use “buy now, pay later” payment plans heavily this holiday season, a forecast that bodes well for retailers but that has credit experts again sounding alarm bells.

The short-term loans often come with consumer-friendly interest rates and allow shoppers to make an initial payment at checkout, then pay the rest in installments, typically over a few weeks, even months. That can be appealing to a shopper buying multiple gifts for family and friends during the holidays, particularly if they’re balancing other debt such as student loans or credit cards.

Data shows younger consumers and those with difficulty accessing credit use the loans most frequently. Used responsibly, the installment plans increase financial inclusion, according to the Federal Reserve Bank of New York . But the Fed and some analysts say key features of the plans can make borrowing too easy and saddle consumers with excessive debt.

Short-term installment loans drove $6.4 billion of online spending in October, up 6% year over year, according to a recent Adobe Analytics report on online shopping. Adobe expects usage to peak in November with spending of $9.3 billion, including a single-day record of $782 million on Cyber Monday. Overall, Adobe estimates one in five Americans plan to use buy now, pay later plans to purchase holiday gifts.

Vivek Pandya, lead analyst for Adobe Digital Insights, said that “rising interest rates, inflation in food prices, and resuming student loan repayments” have increased costs for consumers, but “data has shown that the consumer remains resilient heading into the big holiday season and (they) are embracing every opportunity to manage their budgets in more efficient ways.”

‘Buy now, pay later’ loans tend to follow a shared model . The lender runs a soft credit check on applicants, then asks for a down payment at the time of purchase along with an agreement to make between four and six payments at two-week intervals, though terms vary. Zero-interest loans are common initial offerings.

If a customer pays late or misses payments, however, they can be shut out from using the app, or face interest or fees. Sometimes these are flat amounts, as much as $25, and sometimes they’re calculated as a percentage of the outstanding loan.

Pay-in-installment companies collect fees from merchants who are grateful for the increased business. Retailers have found that customers offered a buy now, pay later option are more likely to have bigger cart sizes or to convert from browsing to checking out. In its report, the Fed cites research that finds that customers spend 20% more when buy now, pay later is available.

Most of these short-term loans are not reported to the three main credit bureaus. Consumers appreciate that because the loans don’t affect their credit scores. But this is the feature of buy now, pay later that worries experts the most because it can lead to “loan-stacking” -- when consumers take on debt with multiple lenders.

Demishia Alford, 26, of Greensboro, North Carolina said she uses the short-term loans for household goods, clothes, and plane tickets. For the holidays, she plans to use the loans to buy a new crate for her puppy, electronics, and other gifts for her in-laws, nieces, and nephews. She said the retailers she patronizes include Express, Shein, and Walmart.

According to Alford, her short-term loans average about $200 or less and help her walk a financial tightrope of sorts. She’s paying down student loans, a car loan, and several thousand dollars of credit card debt. Both her credit cards are nearly maxed out.

“I try to stay on top of it, especially in today’s economy,” she said. “Debt creeps up on you.”

Asked whether she thinks she’ll continue to use installment plans, Alford said, “Hopefully not. Hopefully I’ll be in a place where I don’t have to break up payments, and I’m not working on a budget soon.”

Kevin King, vice president of credit risk at LexisNexis Risk Solutions said that because pay-in-installment loans often go unreported to credit bureaus, and the companies don’t report to one another, lenders face an underwriting challenge. The opacity of the space, combined with the increasing number of companies offering the loans, compounds risk.

“Right now, it’s really tough for BNPL lenders to know that Kevin may have taken out a loan from four other BNPL lenders earlier this week,” he said. “That can let consumers trap themselves in debt.”

Alford — whose use of buy now, pay later loans at multiple companies is not reported to the credit bureaus, potentially masking her credit-worthiness -- is an example of the type of borrower that King worries about.

LexisNexis Risk Solutions provides many buy now, pay later lenders with alternative credit scores for assessing consumers seeking loans, including those who may not have a traditional credit score. In new research, the company found that pay-in-installment loans attract more non-prime (including subprime and near prime) credit applicants than traditional banking products and that the users are more than twice as likely to be under 35.

Jessica Sarceda, 28, of Santa Monica, California, said she’ll be using installment loans with four payments for her holiday shopping this year - mostly gifts of shoes and clothes for family and friends. She said she decided to use Zip, another company that provides short-term loans, after using the app to update her wardrobe each season. She prefers spreading out the payments to using a credit card.

“I wouldn’t say I use it for large expenses,” Sarceda said. “Payments are hundreds of dollars, not thousands. And it’s usually event-based. If there’s a music festival, or a wedding - that’s typically where I’ll use Zip.”

Starting again last month, after a pandemic-linked pause, Sarceda has also begun paying down her student loan.

For the holidays, Allison Williams, 28, in Amelia, Ohio, said she’ll be using pay-in-four loans to get her two-year-old daughter a swing set for the yard. She also plans to buy Nike merchandise for her six brothers and sisters. In the past two years, Williams has used buy now, pay later plans at stores including Target, BoxLunch, EyeBuyDirect, and Skims. She typically uses multiple lenders — Klarna, AfterPay, Sezzle, and PayPal’s Pay in 4 — for larger purchases, she said, especially when buying many items from the same retailer.

Though Williams has a credit card, she says she uses it “for things like gas and groceries to make sure I’m keeping up with my credit. If I have extra money, I just pay off (the pay-in-four loans) early.”

Jinal Shah, Chief Marketing Officer for Zip, said pay-in-four lenders are able to see quickly when borrowers are missing or unable to make payments, as happened a year and a half ago, when inflation first took a toll , and the companies adjust their underwriting accordingly, including by removing users from the platform.

“Since payments are in two-week increments, it gives us an opportunity to be ahead of the pulse,” she said. “It has more built-in signals to help us manage than with credit cards.”

The White House is threatening the patents of high-priced drugs developed with taxpayer dollars

6122ee467d22433199917c7d — Thu, 07 Dec 2023 17:44:32 GMT

The White House is threatening the patents of high-priced drugs developed with taxpayer dollars

The Biden administration is putting pharmaceutical companies on notice , warning them that if the price of certain drugs is too high, the government might cancel their patent protection and allow rivals to make their own versions.

Under a plan announced Thursday, the government would consider overriding the patent for high-priced drugs that have been developed with the help of taxpayer money and letting competitors make them in hopes of driving down the cost.

In a 15-second video released to YouTube on Wednesday night, President Joe Biden promised the move would lower prices.

“Today, we’re taking a very important step toward ending price gouging so you don’t have to pay more for the medicine you need,” he said.

The administration did not immediately release details about how the process will work and how it will deem a drug costly enough to act. White House officials would not name drugs that might potentially be targeted.

There will be a 60-day public comment period. If the plan is enacted, drugmakers are almost certain to challenge it in court.

It’s the latest health policy pitch from a White House gearing up to make its efforts to tackle drug prices a central theme in next year’s reelection campaign. Biden frequently talks about the $35 cap on insulin for Medicare enrollees that went into effect this year, as well as a plan for government officials to negotiate some drug prices paid by Medicare for the first time in history.

The federal government, however, has never taken such a move against patents, a step called “march-in rights.” But some Democratic lawmakers, including Sens. Elizabeth Warren of Massachusetts and Amy Klobuchar of Minnesota , have in recent years lobbied the Health and Human Services agency to do so with certain drugs.

The conditions for how those “march-in rights” would be used have long been debated. Pharmaceutical companies have pushed back on the idea that prices alone are enough for Washington to act against a drug’s patent. The process proposed by the administration would clarify that the drug’s patent could be in jeopardy if its price is out of reach for Americans, White House officials said.

“For the first time, ever, the high price of that taxpayer-funded drug is a factor in determining that the drug is not accessible to the public on reasonable terms,” said Biden domestic policy adviser Neera Tanden.

The plan could threaten future drugs, according to the pharmaceutical lobbying firm Pharmaceutical Research and Manufacturers of America, or PhRMA.

“This would be yet another loss for American patients who rely on public-private sector collaboration to advance new treatments and cures,” PhRMA spokesperson Megan Van Etten said.

Pharmaceutical companies have long relied on government research to develop new drugs. The most recent major breakthrough was the development of COVID-19 vaccines. U.S. taxpayers invested billions of dollars in the effort and were able, until recently, to access treatments and preventions for the virus without paying out-of-pocket for them.

When the public invests heavily in a private company’s drug, it’s fair to question whether they should have to pay high prices for it, said William Pierce, a former HHS official during President George W. Bush’s administration.

“The question becomes – what reward should there be for the taxpayers who help fund this product?” Pierce said.

SOURCE: AP NEWS

Stock market today: Wall Street moves higher ahead of US inflation update, OPEC+ meeting

6122ee467d22433199917c7d — Thu, 30 Nov 2023 14:43:02 GMT

Stock market today: Wall Street moves higher ahead of US inflation update, OPEC+ meeting

Wall Street ticked higher early Thursday ahead of the most recent data release on U.S. consumer inflation and a meeting of oil producers in Vienna.

Futures for the S&P 500 rose 0.3% before the bell and futures for the Dow Jones Industrial Average were 0.5% higher. Every sector of the S&P 500 showed gains early Thursday.

The U.S. government on Thursday reports on consumer spending for October, which includes the Federal Reserve’s preferred measure of inflation. Economists expect that measure to continue easing , as it has been since the middle of 2022. The Federal Reserve is expected to keep its benchmark interest rate steady when it meets in December and to eventually begin paring rates down if inflation remains under control.

Also Thursday, the Labor Department issues its latest weekly layoff data. The job market has remained resilient in the face of higher interest rates, though there have been some signs that it is cooling.

Salesforce jumped 9.3% in off-hours trading after the business software maker and owner of the Slack communications platform beat Wall Street’s sales and profit forecasts.

Ralph Lauren tumbled 5.5% before the bell after a regulatory filing revealed that the company’s CEO, Patrice Louvet, sold more than 95,000 shares of his stock in the company.

Trading in ImmunoGen was halted after the drugmaker said it was being acquired by AbbVie in a $10 billion deal.

Elsewhere, in Asia, Tokyo’s Nikkei 225 gained 0.5% on Thursday to 33,486.89.

The Hang Seng in Hong Kong was up 0.2% at 17,030.49. The Shanghai Composite index added 0.3% to 3,029.67.

An official survey of Chinese factory managers showed manufacturing activity slowed in November, indicating further weakness in the world’s second-largest economy despite recent signs of improvement.

“The latest surveys suggest that the economy continued to lose steam in November. However, they may be overstating the extent of slowdown due to sentiment effects,” Sheana Yue of Capital Economics said in a commentary.

South Korea’s Kospi advanced 0.6% to 2,535.29. In Australia, the S&P/ASX 200 climbed 0.7% to 7,087.30. In Bangkok, the SET fell 0.7%. India’s Sensex gained 0.2% and Taiwan’s Taiex picked up 0.4%.

The members of OPEC+, whose oil income props up their economies, were trying to forge a consensus on production cuts after postponing a meeting originally set for Sunday.

At midday in Europe, Germany’s DAX and the CAC 40 in Paris both moved 0.5% higher, while Britain’s FTSE 100 picked up 0.6%.

The latest European data showed that inflation dropped more than expected to 2.4% in November, the lowest in more than two years. P lummeting energy costs have eased a cost-of-living crisis but higher interest rates squeeze the economy’s ability to grow.

The new figure is close to the European Central Bank’s inflation target of 2% following a rapid series of interest rate hikes dating to summer 2022. But the tradeoff has been stalled economic growth.

U.S. benchmark crude oil climbed 62 cents to $78.48 a barrel in electronic trading on the New York Mercantile Exchange. It gained $1.45 on Wednesday to $77.86 a barrel.

Brent crude, the international standard, added 68 cents to $83.56 a barrel.

Treasury yields fell, taking more pressure off of stocks. The yield on the 10-year Treasury, which influences mortgage rates, inched back up to 4.29% from 4.26% late Wednesday. The yield on the 2-year Treasury settled at 4.65% after falling sharply Wednesday to 4.66% from 4.75%.

In currency dealings, the dollar rose to 147.63 Japanese yen from 147.24 yen. The euro fell to $1.0921 from $1.0971.

On Wednesday, the S&P 500 closed 0.1% lower and the Dow industrials gained just 0.1%. The tech-heavy Nasdaq composite fell 0.2% to 14,258.49.

SOURCE: AP NEWS

More Americans are expected to ‘buy now, pay later’ for the holidays. Analysts see a growing risk

6122ee467d22433199917c7d — Fri, 24 Nov 2023 13:45:40 GMT

More Americans are expected to ‘buy now, pay later’ for the holidays. Analysts see a growing risk

Consumers are expected to use “buy now, pay later” payment plans heavily this holiday season, a forecast that bodes well for retailers but that has credit experts again sounding alarm bells.

“I try to stay on top of it, especially in today’s economy,” she said. “Debt creeps up on you.”

Starting again last month, after a pandemic-linked pause, Sarceda has also begun paying down her student loan.

“Since payments are in two-week increments, it gives us an opportunity to be ahead of the pulse,” she said. “It has more built-in signals to help us manage than with credit cards.”

SOURCE: AP NEWS

Corporate, global leaders peer into a future expected to be reshaped by AI, for better or worse

6122ee467d22433199917c7d — Fri, 17 Nov 2023 00:43:22 GMT

Corporate, global leaders peer into a future expected to be reshaped by AI, for better or worse

President Joe Biden and other global leaders have spent the past few days melding minds with Silicon Valley titans in San Francisco, their discussions frequently focusing on artificial intelligence, a technology expected to reshape the world, for better or worse.

But for all the collective brainpower on hand for the Asia-Pacific Economic Cooperation conference , there were no concrete answers to a pivotal question: Will AI turn be the springboard that catapults humanity to new heights, or the dystopian nightmare that culminates in its demise?

“The world is at an inflection point — this is not a hyperbole,” Biden said Thursday at a CEO summit held in conjunction with APEC. “The decisions we make today are going to shape the direction of the world for decades to come.”

Not surprisingly, most of the technology CEOs who appeared at the summit were generally upbeat about AI’s potential to unleash breakthroughs that will make workers more productive and eventually improve standards of living.

None were more bullish than Microsoft CEO Satya Nadella, whose software company has invested more than $10 billion in OpenAI , the startup behind the AI chatbot ChatGPT.

Like many of his peers, Nadella says he believes AI will turn out to be as transformative as the advent of personal computers were during the 1980s, the internet’s rise during the 1990s and the introduction of smartphones during the 2000s.

“We finally have a way to interact with computing using natural language. That is, we finally have a technology that understands us, not the other way around,” Nadella said at the CEO summit. “As our interactions with technology become more and more natural, computers will increasingly be able to see and interpret our intent and make sense of the world around us.”

Google CEO Sundar Pichai, whose internet company is increasingly infusing its influential search engine with AI , is similarly optimistic about humanity’s ability to control the technology in ways that will make the world a better place.

“I think we have to work hard to harness it,” Pichai said. “But that is true of every other technological advance we’ve had before. It was true for the industrial revolution. I think we can learn from those things.”

The enthusiasm exuded by Nadella and Pichai has been mirrored by investors who have been betting AI will pay off for Microsoft and Google. The accelerating advances in AI are the main reasons why the stock prices of both Microsoft and Google’s corporate parent, Alphabet Inc., have both soared by more than 50% so far this year. Those gains have combined to produce an additional $1.6 trillion in shareholder wealth.

But the perspective from outside the tech industry is more circumspect.

“Everyone has learned to spell AI, they don’t really know what quite to do about it,” said former U.S. Secretary of State Condoleezza Rice, who is now director of the Hoover Institution at Stanford University. “They have enormous benefit written all over them. They also have a lot of cautionary tales about how technology can be misused.”

Robert Moritz, global chairman of the consulting firm PricewaterhouseCoopers, said there are legitimate concerns about the “Doomsday discussions” centered on the effects of AI, potentially about the likelihood of supplanting the need for people to perform a wide range of jobs.

Companies have found ways to train people who lose their jobs in past waves of technological upheaval, Moritz said, and that will have to happen again or “we will have a mismatch, which will bring more unrest, which we cannot afford to have.”

San Francisco, the host city for APEC, is counting on the multibillion-dollar investments in AI and the expansion of payrolls among startups such as OpenAI and Anthropic to revive the fortunes of a city that’s still struggling to adjust to a pandemic-driven shift that has led to more people working from home.

The existential threat to humanity posed by AI is one of the reasons that led tech mogul Elon Musk to spend some of his estimated fortune of $240 billion to launch a startup called xAI during the summer. Musk had been scheduled to discuss his hopes and fears surrounding AI during the CEO summit with Salesforce CEO Marc Benioff, but canceled Thursday because of an undisclosed conflict.

SOURCE: AP NEWS

Jezebel, an incisive feminist voice since the height of the blogosphere era, is shutting down

6122ee467d22433199917c7d — Fri, 10 Nov 2023 20:27:36 GMT

Jezebel, an incisive feminist voice since the height of the blogosphere era, is shutting down

Jezebel, the sharp-edged feminist website that found an impassioned and devoted following at the height of the blogosphere era but ended up struggling with its business model, is shutting down after 16 years, its parent company announced Thursday.

It is the latest gender-focused media site to fold as the media industry struggles with plummeting digital advertising that has also cut into the profitability of major tech companies from Google to Facebook. Bitch Media, which had a print magazine, website and podcast, closed last year after 25 years, citing sustainability. The Washington Post folded The Lily, its freestanding publication on gender an identity issues, into its main website last year.

G/O Media said 23 staffers would be laid off, including Jezebel’s team, as part of a restructuring to cope with economic headwinds and a difficult digital advertising environment. The New York-based company also announced the departure of G/O Media editorial director Merrill Brown.

Launched in 2007 by Gawker Media, Jezebel established itself as an influential voice in feminist commentary years before the explosion of the #Metoo movement pushed issues of gender and power to the forefront of mainstream media coverage. The website combined searing commentary on gender politics with edgy pop culture coverage to build a audience craving an alternative to the frothy fashion magazines that dominated the landscape of media targeted at women.

‘THE REAL PRAGMATIC EXPERIENCES OF WOMEN’S LIVES’

The website appealed to readers because it combined style with serious news and commentary, said Kate Cox, program director for Poynter’s Leadership Academy for Women in Media. It covered political issues like abortion but gained the most buzz with its takedowns of celebrity culture and the fashion industries, helping make subjects like “body shaming” and “rape culture” part of the national discourse.

“It was totally unprecedented. Their blend of pop culture along with whip-smart writing made it a daily read,” Cox said. “It took women’s issues out of a niche brand and embraced the real pragmatic experience of women’s lives. It captured the dynamic but also captured the despair and the hard swallow and the cheeky energy that the women I knew at the time had.”

In a recent essay for the New Yorker, Jezebel’s founding editor-in-chief, Anna Holmes, wrote that launching Jezebel was a “once-in-a-lifetime opportunity” to create a women’s media website at a time when she “was disillusioned by the state of America’s women’s media.”

“I wanted it to combine wit, smarts, and anger, providing women — many of whom had been taught to believe that “feminism” was a bad word or one to be avoided — with a model of critical thinking around gender and race which felt accessible and entertaining,” Holmes wrote.

She also reflected on Jezebel’s collision with social media, which blurred the lines between Jezebel’s content and the public commentary of its most devoted followers.

“I see Jezebel not as the beginning of the end of the digital-media era but as a moment — a spark — within an ongoing discussion about gender politics,” she wrote.

Cox said the demise of Jezebel and other feminist publications is more a reflection of the challenge of finding a sustainable revenue model for digital media sites, especially mission-driven ones, rather than a declining appetite for stories centered on gender. She noted that the Supreme Court’s ruling overturning Roe v. Wade has only deepened interest in such coverage.

PROBLEMS WITH THE BUSINESS MODEL

In a memo to the company, G/0 Media CEO Jim Spanfeller said he made the “very, very difficult decision to suspend publication of Jezebel” after an unsuccessful search for a buyer for the website. The search, Spanfeller said, was launched because it became clear that the parent company’s “business model and the audiences we serve across our network did not align with Jezebel’s.”

Cox said that statement hinted at difficulties of attracting advertisers to sites like Jezebel, which attract a loyal audience but also court controversy that scares off mainstream advertisers. She pointed to “The 19th,” a new gender-focused nonprofit newsroom that relies on a mix of membership, philanthropy and corporate underwriting as potentially successful model.

Jezebel writers blamed the shutdown on the parent company “strategic and commercial ineptitude,” criticizing its leadership for its failure to search for a business model more suitable to Jezebel’s mission and audience.

“The closure of Jezebel also underscores fundamental flaws in the ad-supported media model where concerns about ‘brand safety’ limit monetizing content about the biggest, most important stories of the day,” the writers said in a statement released by their union, WGA East.

Jezebel became part of the G/0 Media portfolio in 2019, along with Gizmodo, Quartz, the Onion and the Root. Its shutdown follows years of tension with G/0 leadership

Jezebel’s interim Editor-in-Chief Laura Bassett resigned in August, accusing G/O in a tweet of failing “to treat my staff with basic human decency.” Jezebel’s current editor-in-chief, Lauren Tousignant, wrote in a post on X, formerly Twitter , on Thursday that she is angry and sad about the shutdown and would have more to say later.

Rich Juzwiak, a senior writer for Jezebel, said he enjoyed the freedom that came with writing for Jezebel, where he was encouraged to follow his instincts. But he said there was an increasing sense that the site and the parent company had misaligned priorities.

“I don’t think that this was inevitable,” Juzwiak said of the closing. “It was like, do you even know what you bought?”

SOURCE: AP NEWS

Global assets in spot bitcoin ETFs hit $4.16 billion - CoinGecko

6122ee467d22433199917c7d — Fri, 03 Nov 2023 16:24:26 GMT

Global assets in spot bitcoin ETFs hit $4.16 billion - CoinGecko

Global assets invested in exchange-traded funds (ETFs) tied to the spot price of bitcoin now total $4.16 billion, according to CoinGecko, a cryptocurrency data and analysis company.

Nearly half of that sum, or $2 billion, is invested in the seven spot bitcoin ETFs that have been launched in Canada since 2021. Canada also is home to the single largest of the 20 ETFs, the Purpose Bitcoin ETF , which has $819.1 million in assets.

To date, U.S. regulators have given the nod only to ETFs tied to futures contracts, such as ProShares Bitcoin Strategy , which has about $1.2 billion in assets. The United States Securities and Exchange Commission (SEC) currently is considering as many as 10 applications to launch similar spot-based ETFs in the U.S.

Proponents say that futures-based ETFs are an imprecise and costlier way to track bitcoin's performance in an exchange-traded product. The SEC has so far denied all spot bitcoin ETF applications, saying applicants have not shown they can protect investors from market manipulation.

Other regulatory regimes have been more receptive, CoinGecko reports. The first out the door was Germany's ETC Group Physical Bitcoin (BTCE.DE) in June 2020. That ETF now has $802 million in assets, making it the second-largest to be launched so far.

Europe's seven other ETFs are incorporated in tax havens like Jersey, the Cayman Islands and Liechtenstein. There are also much smaller products traded in Brazil and Australia.

"It remains to be seen if the potential US spot Bitcoin ETFs will be able to capture stronger investor interest and overtake" the Canadian and German ETFs, Coin Gecko said.

There's fierce debate about the potential size of the U.S. spot bitcoin ETF market, with estimates starting at $1 billion or more in first-day demand.

SOURCE: REUTERS

Stock market today: Wall Street holds a bit steadier after weeks of losses

6122ee467d22433199917c7d — Fri, 27 Oct 2023 17:20:56 GMT

Stock market today: Wall Street holds a bit steadier after weeks of losses

Wall Street is holding a bit steadier Friday following an encouraging profit report from Amazon , one of its most influential companies, and some mixed readings on the U.S. economy.

The S&P 500 was 0.1% lower in afternoon trading, coming off its ninth loss in 11 days and its lowest level in five months. The Dow Jones Industrial Average was down 191 points, or 0.6%, as of 12:33 p.m. Eastern time, and the Nasdaq composite was 0.9% higher.

Stocks have struggled recently for a couple reasons: Several Big Tech stocks tanked following profit reports for the summer, and rising Treasury yields in the bond market tightened their vise on Wall Street.

The market got some relief after Amazon rose 8.2% following its profit report. Both its profit and revenue for the summer were better than expected. As one of the most massive companies on Wall Street, Amazon’s stock movements carry huge weight on the S&P 500 and other indexes.

It’s one of the “Magnificent Seven” Big Tech stocks that was responsible for much of the stock market’s climb early this year. But those huge gains also meant big expectations built for them, and Alphabet , Meta and Tesla all fell sharply following their latest reports.

Intel, which is outside the Magnificent Seven, was also helping to support the market. It rose 10.1% after reporting much stronger profit for the summer than analysts expected.

Big Tech stocks have faced an additional challenge as Treasury yields have soared since the summer. When bonds are paying more in interest, prices for most investments fall because investors suddenly have more alternatives for their dollars. Among the hardest hit are stocks seen as the most expensive or requiring their investors to wait the longest for big growth.

That tends to hurt stocks in Big Tech, biotechnology and other high-growth areas in particular.

The yield on the 10-year Treasury was ticking higher Friday following a suite of data on the U.S. economy. It rose to 4.88% from 4.84% late Thursday.

Several big companies slipped after reporting disappointing earnings for their latest quarters. Exxon Mobil fell 2.4% after reporting a bigger drop in profits than Wall Street expected. Chevron fell 6.1% after also falling short of analysts’ profit forecasts.

Ford stumbled 10% after reporting disappointing earnings and revenue a day after it reached a tentative contract agreement with the United Auto Workers union.

A report showed that the measure of inflation preferred by the Federal Reserve remained high last month, but within economists’ expectations. It also showed spending by U.S. consumers was stronger than expected, even though growth in their incomes fell short of forecasts.

A separate report said that U.S. consumers’ expectations for inflation in the coming year are rising, up to 4.2% from 3.2% last month. That’s particularly concerning for the Federal Reserve, which fears such expectations could lead to a vicious cycle that worsens high inflation.

Added all together, the data didn’t change Wall Street’s expectations much for the Federal Reserve’s next move on interest rates.

The Fed has yanked its main interest rate above 5.25% to its highest level since 2001 in hopes of slowing the economy and hurting investment prices enough to starve high inflation of its fuel. But it’s been on hold recently, keeping rates steady at its last meeting in September.

The overwhelming expectation is still for the Fed to hold rates steady again next week, and Wall Street is beginning to prepare for rates to stay high for a long time.

The 10-year yield has been catching up the Fed’s main overnight interest rate as the economy remains remarkably solid and as worries rise about how much debt the U.S. government is taking on to pay for its spending.

The swift rise, up from less than 3.50% in the spring to more than 5% earlier this week, has sent prices tumbling for older bonds already trading in the market.

In the biggest picture, the “bond bubble has popped” following years of ultra-low yields, according to Michael Hartnett, investment strategist at Bank of America.

But he also warned that markets can remain stuck in trading ranges for a long time following bubble bursts before making major recoveries, such as Japanese stocks after 1989 or internet stocks after 2000. He said in a BofA Global Research report that bond yields may not have a long-term run back lower until Washington, D.C. gets “serious about fiscal discipline.”

In stock markets abroad, indexes were mostly lower in Europe after rising more solidly in much of Asia.

SOURCE: AP NEWS

Ferrari to accept crypto as payment for its cars in the US

6122ee467d22433199917c7d — Thu, 19 Oct 2023 17:08:11 GMT

Ferrari to accept crypto as payment for its cars in the US

Ferrari has started to accept payment in cryptocurrency for its luxury sports cars in the U.S. and will extend the scheme to Europe following requests from its wealthy customers, its marketing and commercial chief told Reuters.

The vast majority of blue-chip companies have steered clear of crypto as the volatility of bitcoin and other tokens renders them impractical for commerce. Patchy regulation and high energy usage have also prevented the spread of crypto as a means of payment.

These include electric carmaker Tesla, which in 2021 began to accept payment in bitcoin, the biggest crypto coin, before CEO Elon Musk halted it because of environmental concerns.

Ferrari's Chief Marketing and Commercial Officer Enrico Galliera told that Reuters cryptocurrencies had made efforts to reduce their carbon footprint through the introduction of new software and a larger use of renewable sources.

"Our target to reach for carbon neutrality by 2030 along our whole value chain is absolutely confirmed," he said in an interview.

Ferrari said the decision came in response to requests from the market and dealers as many of its clients have invested in crypto.

"Some are young investors who have built their fortunes around cryptocurrencies," he said. "Some others are more traditional investors, who want to diversify their portfolios."

While some cryptocurrencies, such as the second-largest, ether, have improved their energy efficiency, bitcoin still attracts criticism for its energy-intensive mining.

Ferrari shipped more than 1,800 cars to its Americas region, which includes the U.S., in the first half of this year.

Galliera did not say how many cars Ferrari expected to sell through crypto. He said the company's order portfolio was strong and fully booked well into 2025, but the company wanted to test this expanding universe.

"This will help us connect to people who are not necessarily our clients but might afford a Ferrari," he said.

The Italian company, which sold 13,200 cars in 2022, with prices starting at over 200,000 euros ($211,000) and going up to 2 million euros, plans to extend the crypto scheme to Europe by the first quarter of next year and then to other regions where crypto is legally accepted.

Europe, the Middle East and Africa (EMEA) is Ferrari's largest region, accounting for 46% of its total car shipments in the first half of this year.

"Interest is the same in the U.S. and Europe, we don't see huge differences," Galliera said.

Countries where cryptocurrencies are restricted include China.

Ferrari has turned to one of the biggest cryptocurrency payment processors, BitPay, for the initial phase in the U.S., and will allow transactions in bitcoin, ether and USDC, one of the largest so-called stablecoins. Ferrari might use other payment processors in different regions.

"Prices will not change, no fees, no surcharges if you pay through cryptocurrencies," Galliera said.

Bitpay will immediately turn cryptocurrency payments into traditional currency on behalf of Ferrari's dealers, so they are protected from price swings.

"This was one of our main goals: avoiding, both our dealers and us, to directly handle cryptocurrencies and being shielded from their wide fluctuations," Galliera said.

As the payment processor, BitPay will ensure that the virtual currencies come from legitimate sources and not derived from criminal activity or to be used to launder the proceeds of crime or evade tax.

Ferrari's marketing and commercial chief said that the majority of its U.S. dealers have already signed up, or are about to agree, to the scheme

"I am confident others will join soon," Galliera said.

($1 = 0.9495 euros)

SOURCE: REUTERS

Musk’s X has taken down hundreds of Hamas-linked accounts, CEO says. An expert says it’s not enough

6122ee467d22433199917c7d — Thu, 12 Oct 2023 17:01:57 GMT

Musk’s X has taken down hundreds of Hamas-linked accounts, CEO says. An expert says it’s not enough

Elon Musk’s social media platform X has removed hundreds of Hamas-linked accounts and taken down or labeled tens of thousands of pieces of content since the militant group’s attack on Israel , its chief executive said. One expert called it “a drop in the bucket.”

CEO Linda Yaccarino on Thursday outlined efforts by X, formerly known as Twitter, to combat illegal content flourishing on the platform . She was responding to a demand from a top European Union official for information on how X is complying with the EU’s tough new digital rules during the Israel-Hamas war.

“X is proportionately and effectively assessing and addressing identified fake and manipulated content during this constantly evolving and shifting crisis,” Yaccarino said in a letter to European Commissioner Thierry Breton , the 27-nation bloc’s digital enforcer.

The efforts are not nearly enough to tackle the problem, some experts say.

“While these actions are better than nothing, it is not enough to curtail the misinformation problem on X,” said Kolina Koltai, a researcher at the investigative collective Bellingcat who previously worked at Twitter on Community Notes.

“There is an overwhelming amount of misinformation on the platform,” Koltai said. “From what we have seen, the moderation efforts from X are only addressing a drop in the bucket.”

Since the war erupted, photos and videos have flooded social media of the carnage, including haunting footage of Hamas fighters taking terrified Israelis hostage, alongside posts from users pushing false claims and misrepresenting videos from other events.

The conflict is one of the first major tests for the EU’s groundbreaking digital rules, which took effect in August. Breton fired off a similar letter Thursday to TikTok, telling CEO Shou Zi Chew that he has a “particular obligation” to protect child and teen users from “violent content depicting hostage taking and other graphic videos” reportedly making the rounds on the video sharing app.

For X, changes that Musk has made to the platform since he bought it last year mean accounts that subscribe to X’s blue-check service can get paid if their posts go viral, creating a financial incentive to post whatever gets the most reaction. Plus, X’s workforce — including its content moderation team — has been gutted.

Those changes are running up against the EU’s Digital Services Act, which forces social media companies to step up policing of their platforms for illegal content, such as terrorist material or illegal hate speech, under threat of hefty fines.

“There is no place on X for terrorist organizations or violent extremist groups and we continue to remove such accounts in real time, including proactive efforts,” Yaccarino wrote in the letter posted to X .

X has taken action to “remove or label tens of thousands of pieces of content,” Yaccarino said, pointing out that there are 700 unique Community Notes — a feature that allows users to add their own fact-checks to posts — “related to the attacks and unfolding events.”

The platform has been “responding promptly” and in a “diligent and objective manner” to takedown requests from law enforcement agencies from around the world, including more than 80 from EU member states, Yaccarino said.

Koltai, the researcher and former Twitter employee, said Community Notes are not an “end-all solution to curtailing misinfo” and that there are gaps that the feature just can’t fill yet.

“There are still many videos and photos on X that don’t have notes that are unmoderated, and continue to spread misleading claims,” she said.

Since Musk acquired Twitter and renamed it, experts say the platform has become not just unreliable but actively promotes falsehoods , while a study commissioned by the EU found that it’s the worst-performing platform for online disinformation.

Rivals such as TikTok, YouTube and Facebook also are coping with a flood of unsubstantiated rumors and falsehoods about the Middle Eastern conflict, playing the typical whack-a-mole that erupts each time a news event captures world attention.

Breton, the EU official, urged TikTok’s leader to step up its efforts at tackling disinformation and illegal content and respond within 24 hours. The company did not reply immediately to an email seeking comment.

Breton’s warning letters have also gone to Mark Zuckerberg, CEO of Facebook and Instagram parent Meta.

SOURCE: AP NEWS

Rising long-term interest rates are posing the latest threat to a US economic ‘soft landing’

6122ee467d22433199917c7d — Thu, 05 Oct 2023 14:41:52 GMT

Rising long-term interest rates are posing the latest threat to a US economic ‘soft landing’

Surging interest rates are intensifying the challenges for the U.S. economy and threatening to derail the Federal Reserve’s drive to tame inflation without causing a deep recession.

Since mid-summer, the yield on the 10-year Treasury note, a benchmark for many loans, has steadily climbed, causing a spillover rise in other borrowing costs. The costs of mortgages, auto loans and credit card debt have all risen in response. The collective impact of higher rates across the economy could also weaken the government’s own finances.

The jump in longer-term rates coincides with other threats, from higher gas prices and this week’s resumption of student loan payments to autoworkers’ ongoing strike and the risk of a government shutdown next month, all of which could leave consumers with less money to spend to power the economy.

The strike by the United Auto Workers, now in its third week with no resolution in sight, could reduce vehicle sales in coming months. And the threat of a government shutdown, narrowly averted this past weekend , looms large, especially given the chaos over the leadership of the House of Representatives. Far-right Republican House members deposed their leader , Rep. Kevin McCarthy, on Tuesday for working with Democrats to temporarily avoid a shutdown.

The economy is coming off a robust summer, fueled by strong consumer spending on travel, concert tours and movie blockbusters. The economy is estimated to have grown at a healthy 3.5% annual rate in the July-September quarter, according to economists at Goldman Sachs.

Yet growth will likely slow to a meager 0.7% annual rate in the final three months of the year, Goldman estimates. With borrowing rates high and inflation still relatively elevated, consumers, who drive about 70% of economic growth, are expected to spend more cautiously.

On Friday, the government will provide a snapshot of how employers are factoring the turmoil into their hiring plans when it issues the September jobs report. Economists have forecast that it will show that employers added a solid 162,000 jobs last month and that the unemployment rate dipped to 3.7%, near a half-century low, from 3.8% .

But the substantial rise in borrowing costs could intensify the economy’s slowdown. The yield on the 10-year Treasury touched a 16-year high of 4.8% on Tuesday, up from 3.3% in April. Last week, the average 30-year fixed rate mortgage hit 7.3%, the highest rate in 23 years, according to mortgage buyer Freddie Mac.

On Tuesday, Loretta Mester, president of the Federal Reserve Bank of Cleveland, said she and other Fed policymakers will have to consider the rise in long-term rates in deciding whether to raise their key rate once more before year’s end. Her remarks suggested that the higher borrowing costs might lead the Fed to forgo another hike.

“That will influence not only our policy decisions but how the economy evolves over the next year,” Mester said. “Those tighter, higher rates will have an impact on the economy.”

Financial analysts point to several reasons for the rapid increase in lending rates. To begin with, the Fed has repeatedly underscored that it intends to keep its key rate elevated for much longer than financial markets had expected earlier this year. And the economy’s ability to keep growing, even as the Fed has jacked up rates, has lent the impression that it can withstand higher borrowing costs.

The economy’s resilience in the face of higher rates could mean that borrowing costs will stay higher than they did after the 2008-2009 financial crisis, which led the Fed to cut its rate to near zero. During that period, the 10-year Treasury yield dropped to as low as 1.5%, and mortgage rates even fell below 3% during the pandemic .

The Treasury Department is now also auctioning off more debt to cover the government’s swelling budget deficit, which reached $1.5 trillion this year and is expected to rise further in 2024. The supply of Treasurys is growing even as the Fed is reducing its holding of bonds. Overseas buyers have reduced their purchases, thereby forcing rates higher to attract buyers.

“All of that is driving these fears of higher rates, and no one knows when it’s going to stop,” said Gennadiy Goldberg, head of US rates strategy at TD Securities.

Benson Durham, a former Fed economist who is head of global policy at Piper Sandler, suggested that long-term rates are rising because investors consider it riskier to hold government debt for the long run when the economy appears particularly volatile and uncertain, as it does now.

And Fed officials, Durham noted, have shifted from well-telegraphed rate hikes to a hazier stance. Chair Jerome Powell has repeatedly stressed that the central bank is “data dependent,” meaning it will raise rates again only if the latest economic data supports doing so — or forgo a rate hike if inflation falls steadily.

“What they’re really telling us is, ‘We’re all over it like a cheap suit, but we’re not sure what exactly we’re going to do,’ ” Durham said.

In addition to higher rates, student loans are expected to take a noticeable bite out of the economy. Roughly 43 million people will resume paying several hundred dollars a month to the government, which Goldman estimates could cut one-half of a percentage point from annual growth in the October-December quarter. More expensive gas could shave an additional 0.3 percentage point from growth in both the fourth quarter and the first three months of next year, Goldman estimates.

A government shutdown, should it occur next month, would lop another 0.2 percentage point off growth for each week it endures, according to calculations by Nancy Vanden Houten, an economist at Oxford Economics.

“We think the narrative is going to shift quite materially before the end of the year,” said David Page, head of macro research at AXA IM, a London-based investment manager, who expects the economy to actually shrink in the fourth quarter.

Rather than optimism for a “soft landing,” in which inflation is curbed without causing a recession, there will be renewed fears of a downturn, he said.

SOURCE: AP NEWS

In the Market: US bond market signals the end of an era

6122ee467d22433199917c7d — Mon, 02 Oct 2023 18:25:29 GMT

In the Market: US bond market signals the end of an era

The U.S. bond market is calling a moment: the age of low interest rates and inflation that began with the 2008 financial crisis has ended. What follows is unclear.

The market's view has come into sharp focus in recent days amid a dramatic run-up in 10-year Treasury yields that hit 16-year highs.

Behind that move is a bet that the disinflationary forces the Federal Reserve fought with its easy money policies in the aftermath of the financial crisis have abated, according to investors and a regularly updated New York Fed model based on yields.

Instead, it shows investors have come to believe that the U.S. economy is probably now in what a regional Fed president said may be a "high-pressure equilibrium," characterized by inflation running higher than the Fed's 2% target, low unemployment rates and positive growth.

"We have moved into a new era here," said Greg Whiteley, a portfolio manager at DoubleLine. "It's not going to be a matter of struggling to get the inflation rate higher. It's going to be working to keep it down."

This momentous shift in the outlook for rates has profound implications for policy, business and people. While higher interest rates are good news for savers, businesses and consumers have become used to paying nothing for money over the past 15 years. The adjustment to a higher-for-longer rate environment could be painful, manifesting in failed business models and unaffordable homes and cars.

It could also force the Fed to keep raising rates to the point something breaks again, like three U.S. regional banks did in March. Minneapolis Fed President Neel Kashkari wrote last week that if the economy was in a high-pressure equilibrium, the Fed would "have to raise rates further, potentially going significantly higher to push inflation back down to our target."

He assigned a 40% probability to such a scenario.

Kashkari did not respond to a request for comment.

READING YIELDS

A market-based Fed model that breaks down the 10-year Treasury yield into its components provides further insight into investors' thinking.

In recent days, one component of yields -- a measure of the compensation investors demand to lend money for the longer term -- turned positive for the first time since June 2021, according to the

Adrian, Crump and Moench (ACM) model

This rise in term premium, which spent much of the last decade below zero, reflects high levels of uncertainty about economic outlook and monetary policy, investors said.

At the same time, the second component of yields in the model -- what the market pricing implies short-term interest rates will be in 10 years -- has also risen rapidly in recent months, reaching around 4.5%. That shows investors believe the Fed funds rate, which is currently in the 5.25%-5.50% range, will not come down much in the coming years.

The higher rate outlook feeds back into the term premium, which had been kept low in part because the Fed became a massive buyer of bonds to stimulate the economy after it could no longer cut rates because they were already at zero.

Higher rates going forward would mean the Fed will have more room to adjust policy through tweaks in interest rates alone, with some investors believing that policymakers would retire quantitative easing as a policy tool. The Fed has been selling bonds that it bought, slowly shrinking its balance sheet.

"A very deep pocketed Treasury investor is leaving the market little by little," said Emanuel Moench, one of the authors of the Fed model who is now a professor at the Frankfurt School of Finance and Management. "That should add to some uncertainty around the likely path of Treasuries."

"SPITTING IN THE DARK"

The higher short-term rate also reflects the belief that structural shifts -- from deglobalization to lower productivity and an aging population -- have pushed up an elusive theoretical interest rate at which growth neither accelerates nor slows, while there is full employment with stable prices. It's called

the neutral rate, or r-star

"The r-star over the long-term is probably higher than the Fed thinks it is," said John Velis, forex and macro strategist for the Americas at BNY Mellon. "The disinflationary impulse of the post-GFC (global financial crisis) period is over."

While the market appears to be confident in its belief in the end of the era of zero interest rates, it is far less so about the economy's actual likely path.

The neutral rate, for example, determines whether the Fed's policy rate will slow down or stimulate the economy, but no one really knows what it is until something breaks. Estimates vary widely.

"The problem with the neutral rate is that you don't really know what it is until you pass it," said Leslie Falconio, head of taxable fixed income strategy at UBS Global Wealth Management.

The age of uncertainty has dawned among monetary policymakers, too. A San Francisco Fed study in August that developed an index to capture the level of disagreement among policymakers on their economic projections showed it had increased to above the average pre-pandemic levels by June.

BNY's Velis said the current bond market pricing would imply investors think the probability of a high-pressure equilibrium scenario is greater than where Kashkari put it.

But when asked whether there was a way to quantify it, Velis demurred. "Any attempts would be like spitting in the dark," he said.

SOURCE: REUTERS

10-year yields hit 16-year peak as Fed seen higher for longer

6122ee467d22433199917c7d — Thu, 21 Sep 2023 18:41:04 GMT

10-year yields hit 16-year peak as Fed seen higher for longer

Benchmark 10-year U.S. Treasury yields rose to 16-year highs on Thursday, a day after the Federal Reserve surprised investors by flagging the potential for an additional rate hike, and an expectation for fewer cuts next year.

The U.S. central bank held interest rates steady, as was widely expected, and said that its benchmark overnight interest rate may still be lifted one more time this year to a peak 5.50%-5.75% range.

It also now expects half a percentage point of rate cuts in 2024. As of June, Fed officials had expected to cut rates by a full percentage point next year.

"It caught the markets by surprise because there was this sense that three months of encouraging inflation data would kind of bring down the temperature at the Fed," said Will Compernolle, macro strategist at FHN Financial in New York.

"But, for a number of reasons, they still feel like they need to stay hawkish - they need to stay very ready to continue to be restrictive," Compernolle added.

Fed chairman Jerome Powell on Wednesday said that a "solid" economy with still "strong" job growth will allow the central bank to keep that additional pressure on financial conditions through 2025 with much less of a cost to the economy and labor market than in previous U.S. inflation battles.

He added that "we want to see convincing evidence really, that we have reached the appropriate level" of interest rates to return inflation to the Fed's 2% target.

Whether the Fed follows through with its hawkish outlook will depend on economic data.

Fed funds futures traders are pricing in only a partial chance of an additional rate hike, with a 32% probability in November and 45% chance by December, according to the CME Group's FedWatch Tool.

Benchmark 10-year note yields hit 4.490%, the highest since November 2007. Interest rate sensitive two-year yields reached 5.202%, the highest since July 2006.

The inversion in the yield curve between two-year and 10-year notes narrowed to minus 69 basis points.

Data on Thursday showed that the number of Americans filing new claims for unemployment benefits unexpectedly fell last week , but could rebound in the weeks ahead as a partial strike by the United Auto Workers (UAW) union forces automobile manufacturers to temporarily lay off workers because of shortages of some materials.

The U.S. Treasury Department will sell $15 billion in 10-year Treasury Inflation-Protected Securities (TIPS) on Thursday.

SOURCE: REUTERS

Fed losses breach $100 billion as interest costs rise

6122ee467d22433199917c7d — Fri, 15 Sep 2023 17:45:34 GMT

Fed losses breach $100 billion as interest costs rise

Federal Reserve losses breached the $100 billion mark, central bank data released on Thursday showed, and they're likely to go a lot higher before the red ink stops.

The U.S. central bank is continuing to pay out more in interest costs than it takes in from the interest it earns on bonds it owns and from the services it provides to the financial sector. While there's considerable uncertainty around how it will all play out, some observers believe Fed losses, which began a year ago , could eventually as much as double before abating.

William English, a former top central bank staffer now at Yale University, said he sees a "peak" loss of around $200 billion by 2025. Meanwhile, Derek Tang of forecasting firm LH Meyer said the loss is likely to be between $150 billion and $200 billion by next year.

The Fed captures its losses in what it calls a deferred asset, an accounting measure that tallies what it will eventually have to cover in the future before it can return to its normal practice of returning its profits to the Treasury. Losing money is very rare for the Fed . But at the same time, the central bank has cautioned many times that the situation in no way impairs its ability to conduct monetary policy and to achieve its goals.

A money-losing Fed has not been a surprise given its aggressive campaign to raise interest rates, which has taken the benchmark overnight interest rate from the near-zero level in March 2022 to its current 5.25%-5.50% range. With inflation pressures ebbing, it's widely expected that the Fed is done with its rate increases, or close to it.

LIQUIDITY DESTRUCTION

But that doesn't mean that the losses will stop mounting, as the current level of short-term rates will drive up the net negative income for quite some time. Instead, the losses will eventually stop primarily due to the Fed's ongoing process of shrinking its balance sheet, which complements its rate hikes.

The Fed bought bonds aggressively during the coronavirus pandemic and its immediate aftermath, and in just over the last year it has shed about $1 trillion in Treasury and mortgage bonds. Fed officials have suggested there's more to do on this front, and because of that, the central bank will have to spend less on interest because it is removing liquidity from the financial system. Financial markets are eyeing a stop in the second or third quarter of 2024.

The liquidity targeted by the Fed primarily exists in the form of bank reserves and in inflows to the central bank's reverse repo facility. Through these tools, the Fed pays a mix of banks, money managers and others to park cash on its books, so if liquidity shrinks, it costs the central bank less to tie up what remains, even if its policy rate doesn't change.

"The pace of losses will come down, even if interest rates stay high, because reserves and (reverse repos) are declining as securities run off, and new purchases of securities are earning the new, higher, rates," English said. But he acknowledged "that's all very rough" given how many factors and uncertainties are at play.

Bank reserves have fallen about $1 trillion from their peak at the end of 2021 and stood at $3.3 trillion as of Wednesday. Meanwhile, the reverse repo daily outstanding levels have fallen from more than $2 trillion a day between June 2022 and the end of June this year to $1.5 trillion on Thursday. Money market trading firm Curvature Securities said in a research note this week that it's possible all the money will be out of reverse repos by the end of next year, returning the facility to where it stood just over two years ago.

POLITICAL PRICE

For some time the Fed has returned substantial amounts of money back to the Treasury, and this money has been used to lower government deficits.

James Bullard, the former head of the St. Louis Fed, said in an interview on Wednesday that he's "worried" about the central bank's losses and "it would be better not to do this." He said it likely would have been better for the Fed to have kept some of the $1 trillion it has given the Treasury over the last decade to cover the sort of losses it is now navigating, but he noted that's not the system Congress has set up.

Whenever the Fed does stop losing money, it will take years before it is able to take the deferred asset off its books and start returning cash to the Treasury. In 2022, the Fed handed back $76 billion , after returning $109 billion in 2021.

What's more, those high levels of earnings were tied to the very low rates then in place. It remains an open question whether the Fed will be able to get back to that landscape, although some in the central bank, notably New York Fed President John Williams, are optimistic that can happen .

SOURCE: REUTERS

US economy grew modestly in recent weeks, Fed survey shows

6122ee467d22433199917c7d — Thu, 07 Sep 2023 18:04:46 GMT

US economy grew modestly in recent weeks, Fed survey shows

U.S. economic growth was modest amid a cooling labor market and slowing inflation pressures in July and August, a Federal Reserve report published on Wednesday showed, buttressing expectations that the central bank was either done, or close to being done, with interest rate increases.

"Most Districts reported price growth slowed overall," the Fed said in its latest " Beige Book " summary of surveys and interviews conducted across its 12 districts through Aug. 28. It added that "nearly all districts indicated businesses renewed their previously unfulfilled expectations that wage growth will slow broadly in the near term."

The U.S. central bank is widely expected to leave its benchmark overnight interest rate in the current 5.25%-5.50% range at the end of its Sept. 19-20 policy meeting, while leaving open the door to a final quarter-percentage-point hike before the end of the year.

Financial markets are pricing about even odds that the Fed's rate-hike campaign, begun 18 months ago, is over.

Fed officials are, however, keeping their options open. They believe that the 5.25 percentage points of rate hikes delivered since March 2022 are slowing the economy, capping job growth and most importantly slowing inflation, which soared to a 40-year high last year.

Data since the last Fed rate hike six weeks ago has tended to support that view, with the economy adding an average of 150,000 jobs per month over the last three months, down sharply from the prior three months. Inflation, as gauged by the Fed's preferred measure, was 3.3% in July, down from 7% last summer.

That's why even a hawkish policymaker like Fed Governor Christopher Waller was able to say that the central bank has time to take in new data before it decides whether it has to raise rates again, or can hold them at current levels.

Earlier on Wednesday, Boston Fed President Susan Collins also said the central bank has the space to be patient, while acknowledging that inflation pressures, though easing, still remain too high.

Collins, however, added that she did not believe a "significant slowdown is required" to get inflation down and "price stability is achievable with an orderly slowdown and only a modest unemployment rate increase - ideally preserving some of the favorable labor supply dynamics."

Still, prices continue to rise faster than the Fed's 2% goal, employers are adding many more than the monthly 100,000 jobs needed to meet population growth, and economic output appears to be far outpacing the less-than-2% annual growth rate Fed officials say is sustainable in the long run.

Many of the Fed's 12 regional banks found that amid decelerating price pressures, the ebbing was most notable in goods-centric parts of the economy, according to the latest Beige Book report.

CONSUMERS TURN TO BORROWING

The report also flagged some fraying around the edges of the consumer sector, noting that a rising number of households had exhausted savings built up during the coronavirus pandemic and were turning more to borrowing. At the same time, the report found evidence more households were struggling to manage debt.

The New York Fed district said migrants were putting strains on the local safety net. The report said "housing affordability, homelessness, and food insecurity continued to challenge communities" in the San Francisco Fed district, adding that "temporary housing shelters and food banks saw increased demand in recent weeks, especially from older adults."

The report noted that housing remains an issue and that the supply for single-family homes "remained constrained." Home building was picking up, the Fed said, but building affordable properties is being strained by high financing costs and rising insurance premiums.

SOURCE: REUTERS

US economic growth trimmed on inventories; retains underlying momentum

6122ee467d22433199917c7d — Thu, 31 Aug 2023 14:46:56 GMT

US economic growth trimmed on inventories; retains underlying momentum

The U.S. economy grew at a slightly less brisk pace than initially thought in the second quarter as businesses liquidated inventory, but momentum appears to have picked up early this quarter as a tight labor market underpins consumer spending.

The report from the Commerce Department on Wednesday also confirmed that inflation pressures moderated last quarter. The economy continues to expand despite 525 basis points worth of interest rate hikes from the Federal Reserve since March 2022.

"The downgrade to second-quarter GDP growth will be welcomed by Fed officials and reinforces our expectations for a policy pause in September but the door will remain open to further tightening," said Lydia Boussour, a senior economist at EY-Parthenon in New York. "Data point to steady economic momentum into the second half of the year and confirm that a recession isn't on the near-term horizon."

Gross domestic product increased at a 2.1% annualized rate last quarter, the government said in its second estimate of GDP for the April-June period. That was revised down from the 2.4% pace reported last month. Economists polled by Reuters had expected GDP for the second quarter would be unrevised.

Inventory investment was sharply revised down to show it declining at a $1.8 billion pace instead of increasing at the previously reported $9.3 billion rate. Inventories were a small drag to GDP growth rather than adding 0.14 percentage point as estimated last month.

There were also downward revisions to business spending on equipment and intellectual products. These offset a slight upgrade to consumer spending, which accounts for more than two-thirds of U.S. economic activity. Trade subtracted more from GDP growth than initially estimated.

The economy grew at a 2.0% pace in the first quarter. It is expanding at a pace well above what Fed officials regard as the non-inflationary growth rate of around 1.8%.

The economy's resilience raises the risk of borrowing costs remaining higher for a while, but slowing inflation is fueling optimism that the U.S. central bank is probably done hiking rates and could engineer a "soft landing." Most economists have walked back their forecasts for a recession this year.

Stocks on Wall Street were trading higher. The dollar fell against a basket of currencies. U.S. Treasury prices were mixed.

INFLATION COOLING

The government's measure of inflation in the economy, the price index for gross domestic purchases, rose at a 1.7% rate, revised down from the 1.9% rate estimated last month. This followed a 3.8% pace of increase in the first quarter.

The personal consumption expenditures price index (PCE) excluding food and energy advanced at a 3.7% rate, lowered from the previously reported 3.8% pace. That was a sharp slowdown from the 4.9% pace logged in the January-March quarter. The Fed watches the PCE price indexes for monetary policy.

Though the labor market is slowing - the ADP National Employment Report showed on Wednesday that private payrolls rose by 177,000 jobs in August after increasing by 371,000 in July - conditions remain tight as employers hang on to their workers after hiring difficulties during the COVID-19 pandemic.

That is keeping wage growth elevated, helping to drive consumer spending. Retail sales increased strongly in July, while single-family homebuilding was robust.

But inventory data was mixed in July, a third report from the Commerce Department showed on Wednesday. Wholesale inventories slipped 0.1% after dropping 0.7% in June.

Stocks at retailers climbed 0.3% in July after gaining 0.5% in the prior month. Excluding automobiles, retail stocks rose 0.1% after increasing 0.2% in June. This component goes into the calculation of GDP. The goods trade deficit widened 2.6% to $91.2 billion in July, the government also reported.

"Even with this widening during the month, the July reading was still narrower than the average for second quarter, and we think that net exports are on pace to boost GDP growth in third quarter on average," said Daniel Silver, an economist at JPMorgan in New York. "Real inventories declined in the second quarter, so we think the bar is pretty low for the change in inventories to boost growth in third quarter."

Growth estimates for the third quarter range from below a 2% rate to a 5.9% pace. The wide forecast range indicates greater uncertainty about the economy's health.

An alternative measure of growth, gross domestic income, or GDI, rebounded at a 0.5% rate in the second quarter. GDI, which measures the economy's performance from the income side, contracted at a 1.8% pace in the first quarter.

In principle, GDP and GDI should be equal, but in practice differ, as they are estimated using different and largely independent source data.

The average of GDP and GDI, also referred to as gross domestic output and considered a better measure of economic activity, increased at a 1.3% rate in the April-June period, up from a 0.1% growth pace in the first quarter.

The income side of the growth ledger is supported by wages. National after-tax profits without inventory valuation and capital consumption adjustments, conceptually most similar to S&P 500 profits, increased $67.6 billion in the second quarter, or at a 2.5% pace, after declining at a 1.2% rate in the January-March period. Profits were down 9.4% from a year ago.

"Tighter monetary policy from the Fed may have been more effective in slowing growth than the real GDP numbers taken alone might show," said Gus Faucher, chief economist at PNC Financial in Pittsburgh, Pennsylvania. "The real test of the effectiveness of monetary policy will come from the labor market, which remains too tight for the Fed."

SOURCE: REUTERS

Two Fed officials tentatively embrace bond yield jump

6122ee467d22433199917c7d — Thu, 24 Aug 2023 19:25:23 GMT

Two Fed officials tentatively embrace bond yield jump

Two Federal Reserve officials on Thursday tentatively welcomed a jump in bond market yields as something that could complement the U.S. central bank's work to slow the economy and get inflation back to the 2% target, while also noting they see a good chance that no more interest rate increases will be needed.

The policymakers - Philadelphia Fed President Patrick Harker and Boston Fed President Susan Collins - spoke in separate interviews that took place as central bankers and other economic leaders gathered for an annual symposium in Jackson Hole, Wyoming. As they laid out their outlooks for monetary policy and the economy, Harker and Collins also took stock of what a jump in bond yields means for the central bank's mission to slow economic activity to lower inflation.

The rise in long-term borrowing costs "helps cool the economy some," Harker said in an interview on CNBC. He said the jump was not a major concern but was something he was monitoring.

Meanwhile, Collins said on Yahoo Finance's video channel that the rise in yields "absolutely fits in" with the broader story around the economy and monetary policy. "I think it's helpful that the higher longer rates are consistent with an understanding that this is going to take some time" on the part of the Fed to get inflation back down to the 2% target.

Harker and Collins spoke before the formal start of the Kansas City Fed's Jackson Hole conference, which will feature a hotly anticipated speech on the economic outlook by Fed Chair Jerome Powell at 10:05 EDT (1405 GMT) on Friday.

The Fed, which has pushed short-term rates aggressively higher since March 2022 to curb the worst inflation surge in decades, lifted its benchmark overnight interest rate to the 5.25%-5.50% range at a policy meeting last month. Fed officials continue to believe that inflation is too high, while noting its moderation had opened the door to an end to the rate-hike cycle . Financial markets currently doubt the U.S. central bank will raise rates again at its Sept. 19-20 meeting.

The question over the need for more rate increases has been driven in large part by the resiliency of financial markets and the broader economy in the face of aggressively more restrictive monetary policy. In the face of the rate hikes, which have lifted the Fed's policy rate by more than five percentage points, the unemployment rate has remained historically low and economic growth has been robust, even as sectors like housing have been hard hit by higher borrowing costs.

The state of the economy has suggested the Fed may have to do more with monetary policy, while the jump in long-term borrowing costs , which restrains activity, takes some pressure off the central bank.

Since resting at around 3.84% at the start of 2023, the yield on the 10-year Treasury note , a key benchmark, has ground higher, and while the moves have been choppy, it has risen notably since the middle of July and stood at around 4.23% in early afternoon trading on Thursday.

"If rates remain at current levels, this will deliver substantial additional restraint relative to conditions that prevailed at the time of the last Fed meeting in July, and this extra restraint will be persistent, reaching a peak at the end of 2024," analysts at Evercore ISI said in a research note on Wednesday. This tightening "seems adequate - indeed plausibly more than adequate - to offset the recent upside surprise on growth without the need for a Fed rate response," they said.

HOLD STEADY?

In their interviews on Thursday, Harker and Collins leaned against the need for more increases.

"Right now I think that we've probably done enough" and it's probably a good idea to hold steady for the rest of this year and see how that affects the economy, Harker said. "We are in a restrictive stance, do we have to keep going even more and more restrictive?" he added.

For Harker, it's very much a question of the economy working through the ongoing impact of the Fed's prior tightening. "What I've heard loud and clear through my summer travels is, 'please, you've gone up very rapidly. We need to absorb that,'" he said of his local contacts. Harker also noted that bank credit conditions have tightened, creating additional restraint on the overall economy.

Collins kept the door open for more action but did not call for it.

"We may be near, we could even be at a place where we would hold" and not raise rates further, Collins said. "But certainly additional increments are possible, and we need to look holistically and be really patient right now and not try to get ahead of what the data will tell us as it unfolds," she said.

Harker sees inflation cooling to 4% this year, 3% next year and back to the central bank's 2% goal in 2025, and expects the unemployment rate, which was at 3.5% in July, to rise to 4% or maybe higher. He believes economic growth should moderate.

SOURCE: REUTERS

PayPal launches dollar-backed stablecoin, boosting shares

6122ee467d22433199917c7d — Thu, 17 Aug 2023 18:56:26 GMT

PayPal launches dollar-backed stablecoin, boosting shares

Payments giant PayPal (PYPL.O) said on Monday it has launched a U.S. dollar stablecoin, becoming the first major financial technology firm to embrace digital currencies for payments and transfers.

PayPal's announcement, which lifted its shares 2.66% on Monday, reflects a show of confidence in the troubled cryptocurrency industry that has over the last 12 months grappled with regulatory headwinds that were exacerbated by a string of high-profile collapses .

While stablecoins - crypto tokens whose monetary value is pegged to a stable asset to protect from wild volatility - have been around for years now, they are yet to successfully make headway into the mainstream consumer payments ecosystem.

Instead, consumers mostly use stablecoins as a means to trade other cryptocurrencies, like bitcoin and ether. The world's largest stablecoin is Tether, followed by USD Coin, which is issued by crypto provider Circle.

Prior attempts by major mainstream companies to launch stablecoins have met fierce opposition from financial regulators and policymakers. Meta's (META.O) , then Facebook, 2019 plans to launch a stablecoin, Libra, were foiled after regulators raised fears it could upset global financial stability.

A string of major economies, from Britain to the European Union, have since laid out rules to govern stablecoins. The EU's policies will come into force in June 2024.

"PayPal isn’t quite as polarizing as Facebook, but it’s a high-profile name that will surely get attention on Capitol Hill, and from the [Federal Reserve] and [Securities and Exchange Commission]," said Ian Katz, managing director of Capital Alpha Partners, in a note.

Last month, the U.S. House Financial Services Committee also advanced a bill to establish a federal regulatory framework for stablecoins, which will focus on rules for the registration and approval process for stablecoin issuers.

In a statement on Monday, Representative Patrick McHenry, the committee's Republican chair, said that PayPal's announcement is an indication that stablecoins "hold promise as a pillar of our 21st century payments system."

"We are currently at a crossroads to keep America at the forefront of digital asset innovation. Congress is making significant, bipartisan progress on legislation to ensure the U.S. leads the financial system of the future," he said.

PayPal's stablecoin, dubbed PayPal USD , is backed by U.S. dollar deposits and short-term U.S Treasuries, and will be issued by Paxos Trust Co. It will gradually be available to PayPal customers in the United States.

The token can be redeemed for U.S. dollars at any time, and can also be used to buy and sell the other cryptocurrencies PayPal offers on its platform, including bitcoin.

"PYUSD is the first of its kind, representing the next phase of U.S. dollars on the blockchain," Paxos posted on messaging platform X, formerly known as Twitter. "This is not just a milestone moment for Paxos & PayPal, but for the entire financial industry."

SOURCE: REUTERS

Cryptoverse: All eyes on ChatGPT-maker's Worldcoin

6122ee467d22433199917c7d — Fri, 11 Aug 2023 19:04:23 GMT

Cryptoverse: All eyes on ChatGPT-maker's Worldcoin

Worldcoin has no problem attracting eyeballs. More than 2.2 million people have signed up, getting their irises scanned in exchange for a digital ID and, in some countries, free crypto.

The new project from ChatGPT founder Sam Altman aims to create a blockchain-based " identity and financial network ". Its native coin WLD has kept a steady price between $2 and $2.50 since its launch on July 24, thus far spared the "pump-and-dump" trajectory of many new crypto tokens.

The investor jury is out on Worldcoin's prospects, according to Gordon Grant, co-head of trading at Genesis Trading, which isn't offering the token to clients yet.

"There are folks that have really taken a view about this project, both with the positive and negative side," he said.

Worldcoin's white paper on its website says that, over the next 15 years, a total of 10 billion of the tokens will be released into the market. The circulating supply was 120 million tokens on Monday, data from market tracker CoinGecko shows, around 1.2% of the total planned future supply.

Some tech players are enthusiastic about Worldcoin's plan to provide a digital ID system based on what it calls "proof of personhood" with the project backed by investors including Andreessen Horowitz.

PitchBook analyst Robert Le said there were several startups trying to build blockchain-based digital identity systems, but none on Worldcoin's scale.

Worldcoin's bet is that this will become more important as artificial intelligence bots increase the need for people to be able to verify their human status online.

RETAIL INVESTORS

As with much of crypto, caveat emptor.

James Butterfill, head of research at CoinShares, said he expects buyers at the moment to be retail investors, as uncertainty over whether Worldcoin is a security may make institutional players more cautious.

More than 50 altcoins - a term referring to cryptocurrencies that are smaller than bitcoin and ether - have been labelled as securities by the U.S. Securities and Exchange Commission, according to CCData.

Data watchdogs in Germany have been investigating Worldcoin since November last year and the company was ordered to stop its eyeball-scanning operations in Kenya last week, over concerns about potential risks to public safety.

"It's never bullish for a token to be investigated by regulators," said Riyad Carey, a research analyst at blockchain analytics firm Kaiko.

Worldcoin says that it is "completely private", that its ID system is "designed to enable anonymous actions", no personal data is disclosed by default and that biometric images are not shared with Worldcoin unless a user chooses. It says it's working closely with regulators.

SOURCE: REUTERS

US labor market resilient; productivity rebounds in second quarter

6122ee467d22433199917c7d — Thu, 03 Aug 2023 17:39:10 GMT

US labor market resilient; productivity rebounds in second quarter

The number of Americans filing new claims for unemployment benefits rose slightly last week, while layoffs dropped to an 11-month low in July as labor market conditions remain tight.

The labor market has largely weathered 525 basis points in interest rate hikes from the Federal Reserve since March 2022, and likely delivered another month of strong employment gains in July. Despite labor market tightness, the inflation outlook continues to improve.

Other data from the Labor Department on Thursday showed a marked slowdown in labor costs in the second quarter, thanks to a sharp rebound in worker productivity. That added to reports last month showing a significant moderation in annual inflation in June as well as wage growth in the second quarter.

These reports are fanning optimism that the economy could avoid a recession. Most economists believe the U.S. central bank will probably not raise rates again this cycle.

"Recession risk is receding," said Bill Adams, chief economist at Comerica Bank in Dallas.

Initial claims for state unemployment benefits increased 6,000 to a seasonally adjusted 227,000 for the week ended July 29, the Labor Department said. The increase was in line with economists' expectations. Claims are in the lower end of their 194,000-265,000 range for this year, in part benefiting from difficulties adjusting the data for seasonal patterns.

Automakers typically idle plants in July to retool for new models. But these temporary closures do not always happen around the same time, which could throw off the model the government uses to strip out seasonal fluctuations from the data.

Unadjusted claims dropped 8,485 to 205,012 last week amid sharp declines in California and Ohio. There were also notable decreases in Texas and Georgia. These more than offset a jump in applications in Missouri.

Technical issues aside, the overall labor market remains strong as employers hoard workers after struggling to find labor during the COVID-19 pandemic. While there have been high-profile layoffs in the technology and finance sectors, small businesses are still boosting headcount after being squeezed out by large enterprises snapping up workers.

Labor shortages remain an obstacle for some services businesses. The Institute for Supply Management (ISM) reported on Thursday that its measure of services industry employment fell last month.

Businesses reported they "have a need but cannot recruit fast enough." Other said "we are hiring but also losing employees to other firms that offer higher compensation."

But softening demand was also an issue. Some companies reported they were "not replacing turnover," to match capacity to lower demand. The slowdown in employment growth contributed to restraining the services industry's expansion in July.

Stocks on Wall Street were trading lower. The dollar was steady versus a basket of currencies. U.S. Treasury yields rose.

LOW LAYOFFS

The number of people receiving benefits after an initial week of aid, a proxy for hiring, increased 21,000 to 1.700 million during the week ending July 22, the claims report showed. These so-called continuing claims remain low by historical standards, indicating that some laid-off workers are experiencing short spells of unemployment.

The Labor Department reported on Tuesday that there were 1.6 job openings for every unemployed person in June, little changed from May. The claims data have no bearing on July's employment report, which is scheduled to be released on Friday.

Nonfarm payrolls likely increased by 200,000 jobs in July after rising by 209,000 in June, according to a Reuters poll of economists. The unemployment rate is forecast to be unchanged at 3.6% in July.

Despite the softer ISM employment readings, strong job growth in July was supported by the ADP's national employment report on Wednesday, which pointed to solid private hiring last month. The Conference Board's consumer confidence survey showed households bullish on the labor market.

That was reinforced by a separate report on Thursday from global outplacement firm Challenger, Gray & Christmas showing U.S.-based employers announced 23,697 job cuts in July, the lowest number since August 2022. Layoffs were down 42% from June.

Workers were more productive in the second quarter, which helped to curb growth in labor costs.

Nonfarm productivity, which measures hourly output per worker, increased at a 3.7% annualized rate in the second quarter after declining at a 1.2% pace in the January-March quarter, the Labor Department said in a third report.

Economists had forecast productivity increasing at a 2.0% rate. Productivity grew at a 1.3% pace from a year ago. It had declined for five straight quarters on a year-on-year basis.

Productivity, however, remains lackluster. Since the fourth quarter of 2019, it has grown at a 1.4% rate, far below the long-term historical average rate of 2.1% going back to 1947.

Sluggish productivity is partly the result of worker hoarding. Unit labor costs - the price of labor per single unit of output - rose at a 1.6% rate in the second quarter. They increased at a 3.3% rate in the prior quarter and logged a 2.4% growth pace from a year ago. The moderation bodes well for bringing inflation down to the Fed's 2% target.

"The improving trend in productivity along with slowing nominal wage growth points to inflationary pressures from the labor market starting to subside," said Sarah House, a senior economist at Wells Fargo in Charlotte, North Carolina.

SOURCE: REUTERS

Crypto bill passes congressional committee in victory for industry

6122ee467d22433199917c7d — Thu, 27 Jul 2023 18:45:47 GMT

Crypto bill passes congressional committee in victory for industry

A key congressional committee on Wednesday advanced a bipartisan bill that aims to develop a regulatory framework for cryptocurrencies, a milestone for Capitol Hill in its efforts to codify federal oversight for the digital asset industry.

The crypto industry has been in the regulatory crosshairs since investors were burned last year by sudden collapses of Celsius Network, Voyager Digital, FTX and other companies.

The bill passed by the House Financial Services Committee would define when a cryptocurrency is a security or a commodity and expand the Commodity Futures Trading Commission's (CFTC) oversight of the crypto industry, while clarifying the Securities and Exchange Commission's jurisdiction, as many crypto advocates complain of the agency's perceived overreach.

A handful of Democrats, including Reps. Jim Himes and Ritchie Torres, joined committee Republicans in voting for the bill. The House Agriculture Committee is scheduled to consider the same bill Thursday.

"As other jurisdictions like the UK, the [European Union], Singapore and Australia have moved forward with clear regulatory frameworks for digital assets, the United States is at risk of falling behind. We intend to change that today," said Representative Patrick McHenry, the Republican chair of the House Financial Services Committee, at the markup.

The markup - where legislation is debated and brought to a vote, paving the way for a full vote by the House of Representatives - is the first time a crypto regulatory bill was put to a vote in Congress, a victory for crypto lobbyists who have pushed lawmakers to provide regulatory clarity for the industry.

"Obviously we've had some important decisions come from the courts in the past, but this is by far the most significant legislative moment that we've had," said Kristin Smith, CEO of the Blockchain Association.

The bill has galvanized many in the crypto industry, who say that with Democrats' support, the bill could have a shot in the Senate.

"For anything to be sticky, it's going to need some bipartisan backing," said Miller Whitehouse-Levine, CEO of the DeFi Education Fund, a lobbying group focused on decentralized finance.

But some Democrats, including Representative Maxine Waters, the top Democrat on the Financial Services committee, fiercely oppose the bill.

Waters said the bill would create more confusion and offer consumers and investors fewer protections than they have currently.

"This bill heeds the calls from the crypto industry while disregarding the views of the administration, the Securities and Exchange Commission and consumer and investor advocates," she said.

The measure may also face obstacles in the Democratic-led Senate, where the head of the Senate Banking Committee, Sherrod Brown, has said he is unsure if additional legislation to regulate crypto is necessary.

CLARITY ON TOKENS

Crypto companies started out in a regulatory gray area, but the SEC has steadily asserted its authority over the industry, arguing that most cryptocurrencies are securities and subject to investor protection rules. That effort escalated last month when the SEC sued crypto exchanges Coinbase (COIN.O) and Binance for failing to register some crypto tokens. The pair deny the allegations.

Most crypto companies dispute the SEC's jurisdiction, and have pushed Congress in recent months to write laws clarifying that cryptocurrencies are more akin to commodities than securities.

Lawmakers are also set to consider on Thursday a bill that would have the Federal Reserve write requirements for issuing stablecoins while preserving the authority of state regulators.

The bill was modified to address concerns from some Democrats, including Waters, that stablecoin issuers could evade stricter oversight by opting to be regulated under a state regime.

While McHenry in an interview this month told Politico he remained hopeful that he and Waters would reach an agreement on the bill, he also said a federal stablecoin regime is "not essential," adding that there are state frameworks already in place.

McHenry on Wednesday said he had "no news" on discussions with Waters on the stablecoin bill, but that the two were continuing negotiations.

SOURCE: REUTERS

Fed launches long-awaited instant payments service, modernizing system

6122ee467d22433199917c7d — Fri, 21 Jul 2023 11:38:06 GMT

Fed launches long-awaited instant payments service, modernizing system

The U.S. Federal Reserve has launched a long-awaited service which will aim to modernize the country's payment system by eventually allowing everyday Americans to send and receive funds in seconds, 24 hours a day, seven days a week, the central bank announced on Thursday.

The "FedNow" service, which has been in the works since 2019, will seek to eliminate the several-day lag it commonly takes cash transfers to settle, bringing the U.S. in line with countries including the United Kingdom, India, Brazil, as well as the European Union, where similar services have existed for years.

FedNow is launching with 41 banks and 15 service providers certified to use the service, including community banks and large lenders like JPMorgan Chase (JPM.N) , Bank of New York Mellon (BK.N) , and US Bancorp (USB.N) , but the Fed plans to onboard more banks and credit unions this year.

The Fed said on Thursday in a statement that 35 banks and credit unions were currently utilizing the service, as well as the Treasury Department's Bureau of Fiscal Service.

The service will compete with private sector real-time payments systems, including The Clearing House's RTP network, and was initially opposed by big banks who said it was redundant. But many have since agreed to participate on the basis FedNow will allow them to expand the services they can offer clients.

"For us, FedNow really is a wonderful way of expanding reach," said Anu Somani, head of global payables and embedded payments at U.S. Bank.

Unlike peer-to-peer payments services like Venmo or PayPal, which act as intermediaries between banks, payments made via FedNow will settle directly in central bank accounts.

The Fed also operates a real-time payments system called FedWire, but that's reserved for large-scale, mostly corporate payments and is only operational during business hours. While the new FedNow system is for everyone, it's likely to benefit consumers and small businesses the most, analysts have said.

"We want our clients to benefit from these capabilities, and we want that to be a competitive edge for us,” said Carl Slabicki, global co-head of payments for BNY Mellon’s Treasury Services.

Smaller banks, which often connect to FedWire via larger lenders, encouraged the Fed to develop FedNow, arguing that it would allow them access to real-time payments without having to pay larger competitors for the service.

“Having the Fed in the space makes our members feel more comfortable that their needs will be met, that they will be treated fairly for pricing,” said Lance Noggle, senior vice president of operations and senior regulatory counsel at the Independent Community Bankers of America, a trade group.

FedNow will not charge consumers, although it's unclear whether or how participating banks will pass on any costs associated with the service.

Democratic Senator Chris Van Hollen, who had urged the Fed to develop a real-time payments system, said in a statement the launch of FedNow is "good news for American consumers and our economy."

"The launch of FedNow will help connect Americans with their money – when they need it, immediately, in real-time – and will save consumers billions of dollars annually," he said.

Some market participants have raised concerns that FedNow could super-charge a potential bank run by facilitating fast outflows from financial institutions, a fear that was amplified after the failure of Silicon Valley Bank earlier this year.

But Fed officials have downplayed those concerns , arguing that banks have tools available to mitigate a wave of outflows.

At the outset, FedNow will have a maximum payment limit of $500,000, but banks can choose to lower that cap if need be.

SOURCE: REUTERS

Bitcoin near 13-month high as investors welcome Ripple ruling

6122ee467d22433199917c7d — Fri, 14 Jul 2023 16:35:22 GMT

Bitcoin near 13-month high as investors welcome Ripple ruling

Bitcoin was hovering near its highest so far this year on Friday after crypto investors took encouragement from a legal victory in which the cryptocurrency XRP was ruled not to be a security.

A U.S. judge said on Thursday that Ripple Labs Inc did not violate securities law by selling its XRP token on public exchanges.

The case marks the first win for a cryptocurrency company in a lawsuit brought by the U.S. Securities and Exchange Commission. Although the decision was specific to the individual case, it unleashed a wave of optimism among crypto investors that more cryptocurrencies may also not be deemed securities.

Bitcoin hit its highest price since June 2022 earlier, touching $31,818 , before edging down to trade around $31,235 at 1349 GMT on Friday.

Second-biggest token ether had its best session since March on Thursday and XRP , which the U.S. judge ruled could be legally sold on public crypto exchanges, soared 73% on Thursday and held most of these gains on Friday.

As bitcoin retreated from the highs, the shares of crypto-related stocks rose in regular trading, having dropped in the pre-market on Friday.

"The regulatory environment is changing," said Matthew Dibb, chief investment officer at crypto asset manager Astronaut Capital. "And by what we have seen in the last 24 hours, it could be for the better."

Justin d'Anethan, head of business development in Asia at Keyrock, a digital assets market maker in Hong Kong, said finding that XRP tokens sold on public crypto exchanges were not securities under law "probably serves as a precedent".

"Ripple stakeholders were waiting for some regulatory clarity. Yesterday the court seems to have provided just that," he said.

SLOW RECOVERY

Cryptocurrencies have staged a gradual recovery so far this year, after prices fell sharply last year and a series of bankruptcies at major crypto firms, including U.S. exchange FTX, left investors with heavy losses.

The collapse of FTX added momentum to global regulatory efforts at reining in the sector, especially to protect small investors lured by fast returns.

China has all but banned crypto. U.S. investigators raking over FTX have accused founder Sam Bankman-Fried of multibillion-dollar fraud, to which he has pleaded not guilty.

Alex Mashinsky , the founder of bankrupt crypto lender Celsius, was charged with fraud for misleading customers and artificially inflating the value of the company's token, according to a U.S. indictment unsealed on Thursday. He pleaded not guilty.

Mashinsky is the latest in a series of crypto moguls to be indicted. Meanwhile, Coinbase and bigger rival Binance face lawsuits, which they are contesting, from the SEC and in Binance's case from other regulators as well.

A top SEC official said last month the industry has "an ethos built around non-compliance".

Still, crypto investors have taken encouragement from the world's biggest asset manager, BlackRock (BLK.N) , filing to launch a bitcoin exchange traded fund last month. Earlier in July exchange operator Cboe (CBOE.Z) refreshed its filing for a similar fund to be run by asset manager Fidelity.

As a risk asset, cryptocurrencies could also stand to gain from a weaker dollar .

"We'd gone through this long period of just consistently negative news to make the space look pretty grimy," said Chris Weston, head of research at brokerage Pepperstone in Melbourne.

"For the first time in a while, it's been consistently positive news coming though and that means you've got momentum."

SOURCE: REUTERS

Wall St slides as labor data stokes rate hike fears

6122ee467d22433199917c7d — Thu, 06 Jul 2023 16:47:19 GMT

Wall St slides as labor data stokes rate hike fears

Wall Street tumbled on Thursday, pressured by a jump in U.S. treasury yields after data signaling a resilient labor market fanned fears the Federal Reserve could keep interest rates higher for a longer period.

Private payrolls increased more than expected in June, the ADP National Employment report showed, indicating the labor market remained strong despite growing risks of a recession from higher interest rates.

The yield on the benchmark 10-year U.S. treasury note , an indicator of interest rate expectations, rose following the data, while that on the two-year Treasury note hit the highest since June 2007.

A separate report showed job openings, an indicator of labor demand, dropped in May, but remained elevated despite 500 basis points worth of rate hikes by the Fed.

"The market is seeing that there's no real relief from the job market in terms of the Fed needing to pause rate hikes again in (July)," said David Russell, vice president of market intelligence at TradeStation.

"The Fed doesn't have to worry about employment now and so can fully deal head-on with inflation."

U.S. interest rate futures saw an increased probability of another rate hike by the Federal Reserve in November, with traders factoring in a 47% chance in mid-day trading, compared with 36% the day before, according to CME's FedWatch.

Dallas Fed President Lorie Logan, a voting member of the Fed's rate-setting committee, said on Thursday "it would have been entirely appropriate" to raise rates at the June policy meeting itself.

Wall Street closed lower on Wednesday after Fed minutes showed a vast majority of the policymakers expected further policy tightening, even as they agreed to hold rates steady in June.

At 12:02 p.m. ET, the Dow Jones Industrial Average (.DJI) was down 449.43 points, or 1.31%, at 33,839.21, the S&P 500 (.SPX) was down 49.55 points, or 1.11%, at 4,397.27, and the Nasdaq Composite (.IXIC) was down 174.97 points, or 1.27%, at 13,616.68.

U.S. bank stocks fell and the KBW Regional Banking Index (.KRX) hit a near two-week low amid lingering worries about the health of the lenders in the aftermath of the crisis in regional banks and ahead of second-quarter results that start next week.

Meta Platforms (META.O) slipped 0.2%, but still outperformed peers after the Facebook-parent took an aim at Twitter with its Threads app that attracted millions of users within hours of its launch on Wednesday.

Exxon Mobil (XOM.N) eased 4.0% on signaling a sharp drop in second-quarter operating profit as natural gas prices and oil refining margins ease, according to a regulatory filing.

JetBlue Airways (JBLU.O) fell 6.4% after the company said it would follow a U.S. judge's May order to end an alliance with American Airlines (AAL.O) to protect a planned $3.8 billion purchase of Spirit Airlines (SAVE.N) .

Declining issues outnumbered advancers for a 10.69-to-1 ratio on the NYSE and a 5.32-to-1 ratio on the Nasdaq.

The S&P index recorded one new 52-week high and two new lows, while the Nasdaq recorded 15 new highs and 92 new lows.

SOURCE: REUTERS

Fed says 57 firms set to use 'FedNow' instant payments after late July launch

6122ee467d22433199917c7d — Thu, 29 Jun 2023 18:48:32 GMT

Fed says 57 firms set to use 'FedNow' instant payments after late July launch

The U.S. Federal Reserve announced on Thursday that 57 firms have been certified to utilize its "FedNow" instant payments system after it launches in late July.

The Fed did not provide a specific date for the launch, but 41 banks and 15 service providers, including large firms like JPMorgan Chase (JPM.N) , Bank of New York Mellon (BK.N) , US Bancorp (USB.N) and Wells Fargo (WFC.N) , have completed formal testing and will be ready to provide instant payments after the new service is live.

SOURCE: REUTERS

U.S. jobless claims hold steady at 20-month high, current account gap widens

6122ee467d22433199917c7d — Thu, 22 Jun 2023 19:11:04 GMT

U.S. jobless claims hold steady at 20-month high, current account gap widens

The number of people filing for state unemployment benefits for the first time held steady at a 20-month high last week, remaining elevated for a third straight week in what may be an early indication of a softening labor market in the face of the Federal Reserve's aggressive credit tightening.

Data from the Bureau of Labor Statistics on Thursday showed 264,000 new claims were filed for jobless benefits on a seasonally adjusted basis in the week ended June 17, unchanged from the prior week's upwardly revised level, which is the highest level of initial claims activity since October 2021.

The median expectation among economists polled by Reuters was for 260,000 new claims.

Meanwhile, the ranks of all those continuing to receive benefits beyond the first week fell to 1.759 million in the week ended June 10 from a revised 1.772 million the week before. The latest reading compared with a median economists' estimate of 1.782 million so-called continued claims.

The government also reported that the U.S. current account deficit - the broadest measure of the flow of goods, services and investments into and out of the country - widened modestly in the first three months of 2023, snapping three quarters of narrowing.

The Commerce Department said the current account gap grew to $219.3 billion in the first quarter from a revised $216.2 billion in the fourth quarter of 2022. Economists in a Reuters poll had estimated it widening to $217.5 billion.

SOURCE: REUTERS

How the Fed hid a rate hike in its rate 'cuts' for 2024

6122ee467d22433199917c7d — Thu, 15 Jun 2023 19:40:49 GMT

How the Fed hid a rate hike in its rate 'cuts' for 2024

The outlook from U.S. Federal Reserve officials at their meeting this week sees interest rate cuts beginning next year, relief, it would seem, from the ratcheting up of borrowing costs that has been underway since the spring of 2022 and left consumers and businesses grousing about their mortgages and bank deals.

But coupled with the anticipated path of inflation, those projections actually indicate monetary policy will grow more restrictive through 2024 on a "real" or inflation-adjusted basis. That means financial conditions may not become as freewheeling as the headline rate numbers suggest.

It's a nuance undergirding why the Fed sees inflation continuing to fall through next year and unemployment rise despite expected lower interest rates.

Fed Chair Jerome Powell nodded to it in his Wednesday press conference when he was asked why policymakers would reduce borrowing costs in 2024 even with inflation still above the Fed's 2% target.

His answer: We're not. At least not really.

What projections show "is that as inflation comes down in the forecast, if you don't lower interest rates, then real rates are actually going up," he said.

And in fact, that seems to be what many on the Fed intend: A real policy rate of interest that gradually tightens next year even as the "nominal" rate printed in its policy statement declines. It's an indication of policymakers' determination not to give inflation a chance to rekindle as they pressure it back toward their 2% objective.

For U.S. consumers, it could play out this way: Mortgage and credit card rates come down at the margin, but not by as much as inflation.

REAL VS NOMINAL

Under the median projections provided this week, monetary policy actually grows slightly more restrictive next year.

By the end of 2023, the gap between the expected federal funds rate and the expected rate of core personal consumption expenditures inflation is 1.7%.

By the end of 2024 that spread actually widens to 2%, as the interest rate declines but the rate of inflation falls more sharply.

It's an example of how the world occupied by central bankers - where the distinction between "real" inflation-adjusted variables, and "nominal," or in-name-only numbers, is vital - differs from the world where consumers live and eat and buy their homes, where falling rates are falling rates.

The financial system is the bridge between the two, and for banks, mortgage companies and bond funds, estimating the path of inflation and adjusting investments and the price of loans to account for it can make the difference between record profits and bankruptcy - as the failure of Silicon Valley Bank demonstrated.

In fact the Fed is counting on its small, subtle tweak to "financial conditions" to keep monetary policy restrictive through next year as part of its effort to cool demand and spending and, through that, to lower inflation.

It's a subtle exercise that plays on psychology and behavior as much as anything. With consumer bank savings rates now above 4%, for example, above the most recent level of annual consumer price inflation, an old-fashioned bank account is now an effective inflation hedge. Any dollar kept there is a dollar kept out of the spending spree the Fed is trying to curb.

Just as Fed efforts to stimulate the economy are meant to influence businesses and households to bring consumption forward in time - spending today instead of tomorrow - the aim now is to push consumption back by making it more costly to borrow and more rewarding to save.

It's not something the Fed intends to stop soon.

Under the most recent projections, the real federal funds rate doesn't decline until the end of 2025, and even then remains above the central bank's current estimate of "neutral," meaning it is still high enough to put the brakes on the economy.

SOURCE: REUTERS

Stocks, Treasuries lead US household wealth to 1-year high in early 2023

6122ee467d22433199917c7d — Fri, 09 Jun 2023 19:04:09 GMT

Stocks, Treasuries lead US household wealth to 1-year high in early 2023

U.S. household wealth climbed to the highest in a year in the first three months of 2023, led by the stock market's recovery from last year's bear market and mushrooming appetite for high-yielding U.S. government bonds, data from the Federal Reserve on Thursday showed.

Household net worth rose by more than $3 trillion in the first quarter to $148.8 trillion, with holdings of equities increasing by about $2.4 trillion, more than offsetting a $600 billion decline in real estate values, the Fed said.

Perhaps most notably, the resurgence in wealth was also aided by a record increase in the value of households' holdings of debt securities - with a nearly $550 billion increase in Treasuries leading the way.

Even with the rise, households are still down by nearly $4 trillion from the record wealth level of $152.6 trillion recorded in the first quarter of 2022.

The quarterly snapshot of the nation's financial condition covering the business, household and government sectors also showed what had been a key source of U.S. household resilience through the COVID-19 pandemic - cash near at hand - crested in early 2022 and has declined by more than $500 billion since then.

The sum of household bank deposits and money market mutual fund holdings declined by about $115 billion to $17.76 trillion, the lowest since the third quarter of 2021.

Within that, the largest chunk - savings and time deposits - dropped by $420 billion to below $10 trillion for the first time since early 2020, before they would become bulked up by government pandemic relief programs over the ensuing two years. Since cresting in the first quarter of 2022, savings and time deposit balances have tumbled by more than $1.2 trillion.

Some of that drop represented a shift from bank deposits to money market accounts offering higher interest rates after a year of aggressive Fed rate hikes. Deposits were also pressured after the failure of Silicon Valley Bank late in the first quarter sparked a brief outflow of deposits from across the banking system.

Indeed, money market balances rose by $300 billion in the quarter to a record high $3.37 trillion. Checking account balances edged up, supported by a strong job market.

Interest rate dynamics also likely fueled the surge in household holdings of debt, with newly issued U.S. Treasury bills, notes and bonds over the last several quarters sporting substantially higher interest rates than those offered on bank accounts and certificates of deposit.

BOND BUYERS

Since the end of the 2021, just before the Fed embarked on its pitched fight against inflation that led to 5 percentage points of rate hikes in just over a year's time, direct holdings of debt securities have surged by 75% and those of Treasuries themselves have nearly quadrupled. The Bloomberg Treasury Index (.BCUSATSY) delivered a 3% total return in the first quarter, the strongest in three years.

The shift from bank deposits to money market accounts and bonds could persist.

"We know from the weekly banking data that the outflow of deposits has since stabilized, but the higher interest rates available on Treasury bills and money market accounts will still incentivize a gradual shift out of banking deposits over the coming year," Oxford Economics Lead U.S. Economist Michael Pearce wrote in a note.

Stocks, though, were the big driver behind a second straight quarterly improvement in household wealth.

After tumbling by roughly 25% in the first three quarters of 2022, the benchmark S&P 500 Index (.SPX) has since rebounded by about 20%, including a 7% gain in the first quarter.

Real estate values, meanwhile, slid for a third straight quarter to about $41.2 trillion. The housing market has been the sector most visibly affected by Fed rate hikes, and the pace of home sales tumbled last year while price growth had stalled out by the start of this year.

SOURCE: REUTERS

US weekly jobless claims rise slightly; labor market defies recession fears

6122ee467d22433199917c7d — Thu, 01 Jun 2023 20:20:32 GMT

US weekly jobless claims rise slightly; labor market defies recession fears

The number of Americans filing new claims for unemployment benefits increased modestly last week and private employers hired more workers than expected in May, pointing to continued labor market tightness that could push the Federal Reserve to keep interest rates elevated.

The labor market is slowing only marginally, keeping a much feared recession at bay for now, despite 500 basis points worth of interest rate hikes from the U.S. central bank since March 2022, when the Fed embarked on its fastest monetary policy tightening campaign since the 1980s to tame inflation.

"Labor market conditions are still tight," said Nancy Vanden Houten, lead U.S. economist at Oxford Economics in New York. "While we expect the Fed to leave rates steady at its upcoming meeting, a more sustained loosening of labor market conditions is needed to keep rate hikes permanently off the table."

Initial claims for state unemployment benefits rose 2,000 to a seasonally adjusted 232,000 for the week ended May 27, the Labor Department said on Thursday. Economists polled by Reuters had forecast 235,000 claims for the latest week.

They believe that claims have probably topped out for now, having barely budged from current levels for much of May.

Unadjusted claims increased by 5,296 to 207,941 last week, with notable rises in New York, Ohio and Illinois. Only 58 claims were filed in Massachusetts, which had been swamped by fraudulent applications in recent weeks.

There have been high-profile layoffs in the technology sector and industries sensitive to interest rates, such as housing, but employers have been generally hoarding workers after difficulties finding labor in the wake of the COVID-19 pandemic.

The government reported on Wednesday there were 10.1 million job openings at the end of April, with 1.8 vacancies for every unemployed person, well above the 1.0-1.2 range viewed as consistent with a labor market that is not generating too much inflation.

The number of people receiving benefits after an initial week of aid, a proxy for hiring, increased by 6,000 to 1.795 million during the week ending May 20, the claims report showed.

The claims data does not have a bearing on Friday's employment report for May as it falls outside the survey period.

According to a Reuters survey of economists, nonfarm payrolls likely increased by 190,000 jobs in May after rising by 253,000 in April. The unemployment rate is seen ticking up to 3.5% from a 53-year low of 3.4% in April.

While the labor market continues to surprise with strength, manufacturing is in a downward spiral. The Institute for Supply Management (ISM) said in a separate report on Thursday that its manufacturing PMI fell to 46.9 in May from 47.1 in April.

It was the seventh straight month that the PMI stayed below the 50 threshold, which indicates contraction in manufacturing, the longest such stretch since the Great Recession. The persistent weak readings in the PMI raise the risks of a recession, but there have been several periods, including the mid-1990s as well as mid- and late-1980s when prolonged readings of the PMI below 50 were not accompanied by a downturn.

The proportion of manufacturing GDP registering a composite PMI calculation at or below 45 percent, a good barometer of overall manufacturing weakness, jumped to 31% from 12% in April.

Stocks on Wall Street were trading higher. The dollar fell against a basket of currencies. U.S. Treasury prices rose.

WAGE INFLATION SLOWING

Financial markets see a nearly 70% chance of the Fed keeping its policy rate unchanged at its June 13-14 meeting, according to CME Group's FedWatch Tool.

The Fed's " Beige Book " report on Wednesday described the labor market as having "continued to be strong" in May, but noted that "many contacts" were "fully staffed." It added that some contacts "were pausing hiring or reducing headcounts due to weaker actual or prospective demand or to greater uncertainty about the economic outlook."

A third report from global outplacement firm Challenger, Gray & Christmas on Thursday showed job cuts announced by U.S.-based employers increased about 20% to 80,089 in May.

But job growth may surprise on the upside. Private payrolls increased by 278,000 jobs last month after rising by 291,000 in April, ADP's national employment report showed. Economists had forecast private employment would increase by 170,000.

There was some encouraging news on inflation. According to the ADP report, wage gains for workers changing jobs increased 12.1%, slowing by a full percentage point from April. Wages for those remaining in their jobs rose 6.5% after advancing 6.7% in April.

Slowing inflation was corroborated by a fifth report from the Labor Department showing unit labor costs - the price of labor per single unit of output - rebounded at a 4.2% rate in the first quarter. That was a downward revision from the 6.3% growth pace estimated last month.

Labor costs dropped at a 2.2% rate in the fourth quarter, rather than growing at a 3.3% pace as previously estimated. That resulted in unit labor costs rising at a 3.8% rate from a year ago, revised down from the previously reported 5.8% pace.

"This leaves Fed policymakers with some options and adds to the argument they can skip a rate hike at the upcoming meeting while maintaining a bias to tighten at a later meeting this year if inflation remains stubbornly high," said Christopher Rupkey, chief economist at FWDBONDS in New York.

SOURCE: REUTERS

OpenAI's Sam Altman raises $115 million for Worldcoin crypto project

6122ee467d22433199917c7d — Fri, 26 May 2023 17:51:07 GMT

OpenAI's Sam Altman raises $115 million for Worldcoin crypto project

OpenAI Chief Executive Sam Altman has raised $115 million in a Series C funding round led by Blockchain Capital for a cryptocurrency project he co-founded.

The project, Worldcoin, aims to distribute a crypto token to people "just for being a unique individual". The project uses a device to scan irises to confirm their identity, after which they are given the tokens for free.

Worldcoin has faced criticism for perceived privacy risks. In response to Altman's tweet introducing the project in 2021, former U.S. intelligence contractor Edward Snowden tweeted, "Don't catalogue eyeballs".

The token will not be available to people in the United States and some other countries, according to Worldcoin's website.

The digital asset space is looking to regain popularity after a bruising 2022 that saw several crypto ventures collapse, including the spectacular implosion of Sam Bankman-Fried's FTX.

Investors including a16z crypto, Bain Capital Crypto and Distributed Global also participated in Worldcoin's latest fundraise.

Altman and OpenAI, the startup behind ChatGPT, have been in the spotlight since late last year, with interest in artificial intelligence growing by leaps and bounds. He testified before a U.S. Senate panel last week and called for regulation of the technology.

SOURCE: REUTERS

Hike again? Take a pause? Fed officials are split about what to do next to fight inflation

6122ee467d22433199917c7d — Thu, 18 May 2023 17:41:26 GMT

Hike again? Take a pause? Fed officials are split about what to do next to fight inflation

WASHINGTON (AP) — The stubbornness of high inflation is dividing the Federal Reserve over how to manage interest rates in the coming months, leaving the outlook for the Fed’s policies cloudier than at any time since it unleashed a streak of 10 straight rate hikes beginning in March 2022.

Many Fed watchers have expected the central bank’s officials to forgo another increase in their benchmark rate when they next meet in mid-June. Yet recent warnings from several of the officials about the continuing threat from high inflation suggest that that outcome is far from certain.

And on Thursday, Lorie Logan, president of the Federal Reserve Bank of Dallas, said she believes that the economic data so far doesn’t support a pause in the central bank’s rate hikes next month.

“The data in coming weeks could yet show that it is appropriate to skip a meeting,” Logan said in written remarks to the Texas Bankers Association. “As of today, though, we aren’t there yet.”

On inflation, she said, “We haven’t made the progress we need to make.”

No Fed officials have yet gone so far as to suggest that the Fed will likely cut rates this year. The financial markets, by contrast, have continued to bet that policymakers will feel compelled to cut interest rates twice by the end of 2023.

“They would like to go on hold and pause, but ... if need be, raising rates further is an option,” said Kathy Bostjancic, chief economist at Nationwide. “It comes down to the fact that inflation’s remaining so stubbornly high.”

Among Fed officials, though, that sentiment is hardly unanimous. Some have stressed the need to pause rate hikes for an extended period. The idea is to give the rate increases time to exert their full effects on growth and inflation. Behind that view is the concern that if the Fed keeps making borrowing costs ever-more expensive, it could cause a deep recession.

Greater clarity could arrive Friday, when Chair Jerome Powell is to speak at a Fed economics conference.

The Fed, in its most aggressive series of rate increases since the 1980s, has raised its key rate by a substantial 5 percentage points in the past 14 months. Those hikes have led mortgage rates to more than double and elevated the costs of auto loans, credit card borrowing and business loans. Home sales have plunged .

Most recent Fed speakers have suggested that the policymakers will keep rates unchanged this year and might even raise them further. On Tuesday, Raphael Bostic, president of the Federal Reserve Bank of Atlanta, warned that the Fed was prepared to keep rates high to bring inflation back down to its 2% target, even if unemployment began rising steadily and critics accused the central bank of derailing the economy.

“We haven’t gotten to the hard part yet,” Bostic said, speaking at a conference sponsored by the Atlanta Fed at Amelia Island in Florida. “There’s going to be tension and pressure and stress coming from a lot of different circles, and we are collectively going to have to ... be willing to be resolute and hold the course.”

A day earlier, Bostic told CNBC that “inflation is not going to come down very quickly” and that “if there’s going to be a bias toward action, for me it would be a bias to increase a little further as opposed to a cut.”

In April, inflation slipped to 4.9% compared with a year earlier from 5% in March — the 10th straight such decline and sharply down from a peak of 9.1% last June. Much of that drop, though, reflects slower increases or outright price drops in volatile items, like food and gas.

Measures of underlying inflation pressures, by contrast, have shown less improvement. Excluding food and energy prices, so-called core inflation eased to 5.5% in April from 5.6% in March and from a peak of 6.6% last September. But it hasn’t fallen at all since January.

“Inflation is looking sticky in a lot of places, and that’s got to concern” the Fed, said Diane Swonk, chief economist at KPMG.

Also Thursday, Philip Jefferson, a member of the Fed’s Board of Governors, sketched a fairly bleak outlook for inflation. One measure of prices that Powell is closely tracking — an index that covers services prices like restaurants, hotels and medical care but not energy or housing — has “been stubbornly high,” Jefferson noted, and “shows no signs of significant decline yet.”

But he also suggested that the Fed should take time to assess the impact that its policies have had so far.

“History shows that monetary policy works with long and variable lags, and that a year is not a long enough period for demand to feel the full effect of higher interest rates,” Jefferson said in written remarks.

(Jefferson was nominated last week by President Joe Biden for the No. 2 position at the Fed, succeeding Lael Brainard, who became a top White House adviser.)

Other high-ranking Fed officials have taken a more sanguine view. John Williams, president of the New York Fed and a close adviser to Powell, suggested Tuesday that inflation has peaked and is “moving gradually in the right direction.”

For now, Williams said, the Fed needs to monitor forthcoming economic data to assess how its policies have affected the economy.

Austan Goolsbee, president of the Chicago Fed, held out hope Tuesday that the central bank could achieve what some analysts have called “immaculate disinflation.” Under this scenario, the Fed’s existing rate hikes would continue to slow inflation without an accompanying rise in unemployment or a recession.

Since the Fed began raising rates, the unemployment rate has actually dipped to 3.4%, matching the lowest level in 54 years. Typically, a sharp rise in borrowing costs would be expected to trigger layoffs and higher unemployment.

Goolsbee noted, though, that supply shortages helped accelerate inflation last year, even when the unemployment rate was still high, a scenario that defied textbook economics.

As a result, Goolsbee added hopefully, “the unraveling of that negative supply side component gives us some potential to have a soft landing,” which would also “definitely be unusual.”

SOURCE: AP NEWS

US weekly jobless claims hit 1-1/2-year high; inflation subsiding

6122ee467d22433199917c7d — Thu, 11 May 2023 18:34:41 GMT

US weekly jobless claims hit 1-1/2-year high; inflation subsiding

WASHINGTON, May 10 (Reuters) - The number of Americans filing new claims for unemployment benefits jumped to a 1-1/2-year high last week, pointing to cracks in the labor market as demand slows, potentially giving the Federal Reserve room to halt further interest rate increases next month.

With demand cooling, inflation pressures are subsiding. Producer prices rebounded modestly in April, leading to the smallest annual increase in wholesale inflation in more than two years, other data from the Labor Department showed on Thursday. The reports were seen as consistent with most economists' expectations of a recession by the end of the year.

"The Fed looks closer to winning the war on inflation today, but it risks losing the war on keeping the economy afloat and away from the shoals of recession," said Christopher Rupkey, chief economist at FWDBONDS in New York.

Initial claims for state unemployment benefits increased 22,000 to a seasonally adjusted 264,000 for the week ended May 6, the highest reading since October 2021. Economists polled by Reuters had forecast 245,000 claims for the latest week.

The four-week moving average of claims, considered a better measure of labor market trends as it strips out week-to-week volatility, rose 6,000 to 245,250, the highest level since November 2021.

Economists say claims in a 270,000-300,000 range would signal a deterioration in the labor market. Last week's surge could mark the start of an upward trend as the cumulative and lagged effects of the Fed's rate hikes broaden out in the economy. Layoffs, which were initially concentrated in the technology and housing sectors, appear to be spreading to other industries as companies gear for weak demand.

"While the claims series can always be volatile from week to week, there are no obvious distortions to today's number," said Michael Feroli, chief U.S. economist at JPMorgan in New York.

"Business labor demand has been gradually cooling and today's initial claims reading hints at potentially a more abrupt slowing."

Stocks on Wall Street were trading lower. The dollar gained versus a basket of currencies. U.S. Treasury prices rose.

LABOR MARKET STILL TIGHT

Unadjusted claims rose 13,969 to 234,084 last week. There was a jump in filings in Massachusetts as well as significant increases in California, Missouri, Texas and New York. They offset notable drops in Colorado, Georgia and Kentucky.

Still, the labor market remains tight, with 1.6 job openings for every unemployed person in March, well above the 1.0-1.2 range that is consistent with a jobs market that is not generating too much inflation. The Fed has raised its benchmark overnight interest rate by 500 basis points to the 5.00%-5.25% range since March 2022 and last week signaled it could pause its fastest monetary policy tightening campaign since the 1980s.

The number of people receiving benefits after an initial week of aid, a proxy for hiring, increased 12,000 to 1.813 million during the week ending April 29, the claims report showed. The so-called continuing claims remain low by historical standards as some of the laid-off workers are quickly finding employment.

In another report on Thursday, the Labor Department said the producer price index for final demand rebounded 0.2% in April after dropping 0.4% in March. In the 12 months through April, the PPI increased 2.3%. That was the smallest year-on-year rise since January 2021 and followed a 2.7% advance in March.

A 0.3% increase in the cost of services accounted for 80% of the rise in the monthly PPI. Services where boosted by a 4.1% advance in portfolio management fees.

There were also increases in the costs of food and alcohol wholesaling, outpatient care, loan services as well as hospital inpatient care, hotel and motel rooms. But the cost of long-distance motor carrying fell as did food retailing, airline tickets and securities brokerage, dealing and investment advice.

Portfolio management fees, airline fares and healthcare feed into the calculation of the Personal Consumption Expenditures (PCE) price indexes, the main inflation measures tracked by the Fed for monetary policy.

Services prices dipped 0.1% in March. Goods prices rose 0.2% in April after declining 1.0% in March. They were driven by an 8.4% surge in gasoline prices. Food prices fell 0.5%. Excluding the volatile food and energy components, core goods prices rose 0.2% after a similar gain in March.

The government reported on Wednesday that the annual increase in consumer prices slowed to below 5% in April for the first time in two years.

Excluding food, energy and trade services components, producer prices gained 0.2% in April after edging up 0.1% in March. In the 12 months through April, the core PPI rose 3.4% after increasing 3.7% in March.

Inflation

But the moderation in annual consumer and producer inflation was unlikely to be replicated in the PCE price measures because of differences in methodology and weights.

With the CPI and PPI data in hand economists estimated that the core PCE price index rose by about 0.3%, matching March's gain. That would keep the year-on-year increase in the core PCE price index at 4.6%. For some, that meant the Fed would continue raising rates.

"Details imply stable PCE inflation at too-strong levels," said Veronica Clark, an economist at Citigroup in New York. "We continue to expect further hikes from the Fed in June and July."

SOURCE: REUTERS

Regional bank shares sink in sign crisis not yet over

6122ee467d22433199917c7d — Thu, 04 May 2023 17:56:11 GMT

Regional bank shares sink in sign crisis not yet over

NEW YORK (AP) — Uncertainty continued to pummel the banking industry, despite assurances from financial regulators and bankers such as Jamie Dimon that the worst of the recent crisis is over and the health of the banking system remains strong.

Shares of smaller regional lender PacWest Bank plunged nearly 50% Thursday after the company confirmed reports that it was considering “strategic options,” that may include the possible sale of the company.

PacWest, based in Los Angeles, said in a statement that it wasn’t experiencing any out-of-the-ordinary deposit withdrawals and still plans on selling off some assets to free up cash on its balance sheet.

With $44 billion in assets, PacWest is roughly one-fifth the size of the three regional banks that failed over the past two months — Silicon Valley Bank, Signature Bank and First Republic Bank. The bank experienced significant deposit outflows after Silicon Valley Bank failed in mid-March, but says deposits have increased since March 31, including in its venture banking division, which serves technology and start-up companies.

Still, investors fear that PacWest’s fate could mirror that of another California bank — First Republic — which spent weeks looking for a buyer before failing Monday. The regional banks that have run into trouble have seen heavy outflows of deposits and need to raise capital. Nearly all have large amounts of low-interest bonds and commercial real estate assets on their books, and would record losses if they sold them on the open market.

Healthier banks have been reluctant to step in to buy struggling lenders. All assets of Silicon Valley, Signature and First Republic were bought after regulators seized these institutions and their remnants were transferred to the Federal Deposit Insurance Corporation.

In another sign of potential trouble for the banking industry, a major deal was called off Thursday. TD Bank Group and First Horizon Corp. said they called off a planned merger, citing regulatory hurdles. Toronto-Dominion Bank had said in February that it was buying regional bank First Horizon in a $13.4 billion all-cash deal.

Western Alliance shares were among the most volatile and were down 39% when trading was halted. The Phoenix-based bank put out a statement overnight saying it hasn’t experienced any unusual withdrawals and its plans to readjust its balance sheet were underway. Thursday morning, The Financial Times reported that the bank was also considering strategic options. The bank strongly denied the report.

“Western Alliance is not exploring a sale, nor has it hired an advisor to explore strategic options,” a bank spokesperson said.

Other regional banks come under selling pressure Thursday morning. Zions Bancorp dropped 10%, Comerica fell 12%, and KeyCorp fell more than 6%.

The Federal Reserve’s fight against inflation has played a key role in the banking turmoil. The Fed on Wednesday raised its key interest rate by a quarter-point to the highest level in 16 years as part of that campaign, its tenth consecutive rate hike.

The higher rates have prompted depositors to move money into higher-paying certificates of deposit and money market funds. They also played a role in the slowdown in the tech industry, which had major implications for West Coast banks such as Silicon Valley.

Chair Jerome Powell said the Fed would monitor several factors, including the turmoil in the banking sector, in deciding its next move on rates.

The Fed chair stressed his belief that the collapse of three large banks in the past six weeks will likely cause other banks to tighten lending, and that would help the Fed in its inflation fight. Powell also said the seizure of First Republic was an important step toward “drawing a line under” the recent bank stress.”

But some analysts on Wall Street see continued turbulence for the industry.

“Banks have weathered a tumultuous environment for the past two months and uncertainty lingers in the smaller regional bank segment,” JPMorgan told clients.

The firm anticipates bank stocks continuing to be pressured due to regulatory and economic uncertainty, among other factors.

“Regulatory concerns primarily would translate into how much banks need to add to capital, liquidity, and debt, all of which would strengthen them longer term but hurt (earning per share),” it said.

SOURCE: AP NEWS

First Republic stock rout deepens after report on likely FDIC receivership

6122ee467d22433199917c7d — Fri, 28 Apr 2023 18:39:49 GMT

First Republic stock rout deepens after report on likely FDIC receivership

April 28 (Reuters) - First Republic Bank (FRC.N) shares plunged after a CNBC report that the lender was likely headed for receivership under the U.S. Federal Deposit Insurance Corporation (FDIC), worsening a rout that has wiped out 75% of the stock's value this week.

If the San Francisco-based lender falls into receivership, it would be the third U.S. bank to collapse since March. First Republic said earlier this week its deposits had slumped by more than $100 billion in the first quarter.

The stock lost more than half of its value on Friday and touched a record low of $2.99. Trading in the bank's shares was halted multiple times.

At its lowest, the bank had a market capitalization of nearly $557 million, a far cry from its peak valuation of more than $40 billion in Nov. 2021.

Short sellers - investors who set up bearish trades with the aim of booking profits from falling stock prices - have raised their bets against the bank by $63 million to $376 million over the past 30 days, according to Ihor Dusaniwsky, managing director of Predictive Analytics at S3.

A Reuters report of a government-brokered rescue deal for First Republic had pushed its shares up by as much as 6.6% earlier in the session.

According to the report, the FDIC, the Treasury Department and the Federal Reserve are among the government bodies that have started to orchestrate meetings with financial companies about a lifeline for the bank.

The government's involvement was helping bring more parties, including banks and private-equity firms, to the negotiating table, the report said.

"The potential worst-case scenario stemming from the collapse of Silicon Valley Bank appears to have been averted," said Mark Haefele, chief investment officer at UBS Global Wealth Management, in a note.

"But the problems at First Republic are a reminder that further problems remain possible."

SOURCE: REUTERS

From cooling inflation to a looming recession, here's what CEOs of the 5 largest US banks are predicting for the economy through 2023

6122ee467d22433199917c7d — Sun, 23 Apr 2023 03:09:27 GMT

From cooling inflation to a looming recession, here's what CEOs of the 5 largest US banks are predicting for the economy through 2023

The world's largest banks reported earnings over the past week.
JPMorgan's Jamie Dimon warned of looming "storm clouds" ahead for the US economy.
"I consider the current [bank] issues as not remotely comparable to 2008," Morgan Stanley's James Gorman said.

The world's largest banks reported earnings over the past week, and all eyes were on CEOs of the Wall Street giants for cues on how markets will weather current economic conditions.

Several see a downturn, albeit a mild one, as consumers overall remain in strong shape and face the prospect of inflation continuing to cool.

Here is what some top bank CEOs are saying about the US economy during their earnings calls this season.

1. JPMorgan CEO Jamie Dimon

The Wall Street vet warned investors of looming "storm clouds" ahead.

"The US economy continues to be on generally healthy footings. Consumers are still spending and have strong balance sheets, and businesses are in good shape," Dimon said. "However, the storm clouds that we have been monitoring for the past year remain on the horizon, and the banking industry turmoil adds to these risks."

2. Bank of America CEO Brian Moynihan

During an earnings call, Moynihan warned of a US recession but said inflation has showed signs of cooling.

"Everything points to a relatively mild recession given the amount of stimulus that was paid to people and the money they have left over," he said. "At the end of the day, we don't see the activity on a consumer side slowing at a pace that would indicate that, but we see commercial customers are being more careful."

He added: "The fact that unemployment is still 3.5% [shows] full employment-plus. And then the wage growth is slowing and tipping over, so the signs of inflation are tipping down. And it's still there but that translates into relatively good activity. So we see a slight recession."

3. Citigroup CEO Jane Fraser

She also predicted the country is bound to slip into a mild recession in 2023, but the slew of bank failures have amplified these concerns.

"We are in a strong position to navigate whatever environment we face, which is particularly relevant given the degree of uncertainty today," Fraser said on an investor call this week. "We expect the recent events to be disinflationary and credit to contract."

She added: "We believe it is now more likely that the US will enter into a shallow recession later this year."

4. Morgan Stanley CEO James Gorman

Gorman told analysts that the US economy is in much better shape than during the Great Financial Crisis. He allayed fears of a full-blown banking crisis, addressing the turmoil sparked by collapse of specialist banks like SVB last month.

"We have had, and may still have, a crisis among some banks. I believe strong regulatory intervention, on both sides of the Atlantic, led to the cauterization of the damage," Gorman said. "I consider the current issues as not remotely comparable to 2008."

5. State Street CEO Ron O'Hanley

In an earnings statement, O'Hanley noted how macro conditions have shifted the bank's performance over the past quarter, remarking on the efforts institutions have made in order to "stabilize the US banking system."

"Our first-quarter results reflect the resiliency of our business model, not withstanding continued interest rate increases and subsequent significant market movements, volatility and disruption within other parts of the banking industry," he told investors.

SOURCE: MSN

US bank giants ride rate rises, keep storm clouds at bay

Fri, 14 Apr 2023 20:18:03 GMT

US bank giants ride rate rises, keep storm clouds at bay

NEW YORK, April 14 (Reuters) - U.S. banking heavyweights reaped windfalls from higher interest payments in the first quarter, brushing off a sector shakedown and taking the opportunity to set aside billions of dollars in case loans turn sour as the economic outlook dims.

First-quarter 2023 earnings from JPMorgan Chase & Co (JPM.N) , Citigroup Inc (C.N) and Wells Fargo & Co (WFC.N) beat Wall Street expectations on Friday as consumer and corporate spending held up in the face of rate rises, although all three saw signs of a slowdown and made provisions accordingly.

"Goliath is Winning," Wells Fargo analyst Mike Mayo said in a note highlighting growth, scale and resiliency in a "uniquely strong quarter" for JPMorgan, which he called "a port in the storm" during recent banking sector tumult.

Banks are building up rainy day funds as fears of an economic slowdown mount from the U.S. Federal Reserve's aggressive interest rate hikes to tame inflation as well as the recent turmoil fueled by the failures of two mid-sized banks.

JPMorgan Chief Executive Jamie Dimon warned that while the U.S economy remains robust, the recent crisis in banking with the sudden collapse of Silicon Valley Bank (SVB) and Signature Bank last month could make lenders more conservative and at the same time impact consumer spending.

"The storm clouds that we have been monitoring for the past year remain on the horizon, and the banking industry turmoil adds to these risks," Dimon said.

Citigroup, which beat Wall Street expectations as it earned more from borrowers paying higher interest on loans, said it was prepared for a mild recession in the United States.

"It's now more likely that the U.S. will enter into a shallow recession later this year," Citigroup CEO Jane Fraser told analysts on a conference call. "That could be exacerbated in depth and duration in a more severe credit crunch."

Still, she said "the biggest unknown" was the impact of U.S. interest rates and how talks in Washington on the U.S. debt ceiling play out.

The S&P 500 bank index (.SPXBK) rose more than 3% after the results, with JPMorgan soaring 7% and Citigroup surging nearly 5%. Wells Fargo fared less favorably, down 0.3%, and regional banks including Zions (ZION.O) and First Republic (FRC.N) fell.

The KBW regional bank index (.KRX) was down 2.5%.

One area where it has proven harder for the big banks to profit in 2023 has been investment banking, which was reflected in JPMorgan's business with a 24% fall in revenue at the unit.

Global mergers and acquisitions (M&A) activity shrank to its lowest level in more than a decade in the first quarter, as rising interest rates, high inflation and fears of a recession soured the appetite for dealmaking.

M&A volumes during the first quarter slumped 48% to $575.1 billion as of March 30, compared to $1.1 trillion during the same period last year, according to data from Dealogic.

TROUBLE AHEAD?

JPMorgan beat market expectations with a 52% rise in profit to $12.62 billion, or $4.10 per share, in the three months to the end of March, while its loan loss provisions increased by 56% from last year to $2.3 billion. Net interest income, a measure of how much a bank earns from lending, surged 49% to $20.8 billion.

Citigroup was also helped by the effects of the Fed's tighter monetary policy, although it set aside $241 million to cover potential loan losses compared to a reserve release of $138 million a year ago.

Meanwhile, Wells Fargo set aside $1.21 billion in the quarter to cover for potential loan losses, compared to a release of $787 million a year earlier.

Wells Fargo said its provision included a $643 million rise in the allowance for credit losses, reflecting an increase for commercial real estate lending, primarily office loans, as well as an increase for credit card and auto loans.

"While most consumers remain resilient, we've seen some consumer financial health trends gradually weakening from a year ago," Mike Santomassimo, Wells Fargo finance chief, told analysts. The company is taking action "to position the portfolio for a slowing economy," he said.

Meanwhile, PNC Financial Services Group (PNC.N) reported an 18.5% rise in first-quarter profit, as the Fed's rate hikes fueled a surge in the U.S. regional lender's net interest income (NII).

And in another key part of the financial services sector, BlackRock Inc (BLK.N) reported an 18% drop in first-quarter profit but beat analysts' estimates as investors continued to pour money into its funds, cushioning the hit to fee income from the banking rout that rocked global markets.

New York-based BlackRock, the world's largest asset manager which makes most of its money from fees on investment advisory and administration services, ended the first quarter with $9.1 trillion in assets under management, down from $9.57 trillion a year earlier but up from $8.59 trillion in the fourth quarter.

More banking results are due over the coming week, including Bank of America (BAC.N) and Goldman Sachs (GS.N) on Tuesday and Morgan Stanley (MS.N) on Wednesday.

Investors are also anxiously awaiting reports from several regional banks - the hardest-hit group during the banking tumult last month - for more clarity on the outlook ahead for them.

Finanicial broker Charles Schwab (SCHW.N) is expected to report a rise in revenue when it announces results on Monday.

Meanwhile Zions Bancorp (ZION.O) also reports on Wednesday.

First Republic Bank (FRC.N) , which was shored up by a group of 11 lenders that injected $30 billion into it after its shares plunged during the crisis last month, is due to report results on April 24.

SOURCE: REUTERS

Why it’s possible to have too much employment in the U.S.

Mon, 10 Apr 2023 03:14:27 GMT

Why 'maximum employment' feels impossible

It’s impossible to have an economy with 0% unemployment, but it’s also difficult to maintain low unemployment without initiating painful inflation.

“It’s hard to tell Americans we can have too many people working,” David Wessel, director of the Hutchins Center on Fiscal and Monetary Policy at the Brookings Institution, told CNBC.

Since 1977, the Federal Reserve has focused on creating maximum employment and maintaining stable prices, commonly known as the dual mandate.

Yet, maximum employment is difficult to quantify.

″[Maximum employment is] this more sort of amorphous thing,” Rucha Vankudre, a senior economist at labor market analytics firm Lightcast, told CNBC. “There isn’t a number and there isn’t one particular measure, either.”

However, at the Federal Open Market Committee news conference in January 2022, Federal Reserve Chairman Jerome Powell announced that “labor market conditions are consistent with maximum employment.”

The Fed cannot directly control the unemployment rate, but when the central bank adjusts interest rates in response to inflation, it can indirectly influence the unemployment rate.

Maximum employment is also difficult to quantify because existing measures of employment, such as the unemployment rate or the labor force participation rate, often do not account for certain groups of people.

For example, the unemployment rate does not include discouraged workers, who want a job but have stopped looking for one because they feel like they will not be able to find employment.

“The good news is that we do see labor force participation picking up again,” ZipRecruiter chief economist Julia Pollak told CNBC. “If companies find it easier to fill vacancies without bidding up wages so much and then passing on that cost to consumers with higher prices, then perhaps, just perhaps, we may be able to sustain this low level of unemployment without inflation growing.”

SOURCE: Federal Reserve trying to reign in inflation through jobs, employment (cnbc.com)

The ‘yes, but’ economy. Yes, we’re worried about recession — but the economy remains resilient

Sun, 04 Dec 2022 00:00:00 GMT

The unpredictability is becoming predictable

New York CNN Business — Each week brings head-scratching contradictory news about the economy. This past week was no different, with a batch of economic reports showing that — despite the recession talk — the US economy shows remarkable resilience.

Yes, the economy is strong. But it comes with a lot of caveats.

Let’s review:

November’s jobs report defied analysts’ expectations, adding 263,000 new roles and keeping America’s jobless rate at 3.7%, almost a half-century low.
The Federal Reserve’s favorite inflation gauge, the PCE Price Index, finally showed signs of cooling.
Gross domestic product grew at a 2.9% annualized rate last quarter, a sharp bounce back from shrinking in the first half of the year.

However, these are just ingredients in a murky soup of conflicting “yes, but” headlines.

Yes, consumers say they feel lousy about the economy. But a record 196 million Americans went shopping over the Thanksgiving weekend — and those roaring sales numbers weren’t just because inflation has pushed prices higher, but also because people were making more transactions, according to Adobe Analytics .

Curtis Dubay, chief economist at the US Chamber of Commerce calls this “second-hand pessimism” and says the economy might not be doing as poorly as you think.

Yes, inflation at near 40-year highs is biting into family budgets. But Americans are booking air travel and heading to Disney parks in near-record numbers, even with higher park prices.

Yes, economists are worried about a recession, but the job market is incredibly tight with more than 10 million open jobs and 1.7 jobs available for anyone who’s searching for one (or looking to job hop).

“The labor market is incredibly strong again,” Federal Reserve Chairman Jerome Powell in a speech Wednesday. “It’s too great, in a way, because it’s going to be adding to inflation.”

So what’s next?

The truth is that no one knows what happens next. Forecasts have been notoriously unreliable in the post-Covid economy. (Remember “transitory” inflation?”)

The Fed has been trying to contain the highest inflation since the 1980s, jacking up interest rates six times this year and even rolling out a bumper three-quarter-point hike not once but four times in a row.

That means the next year will no question be a challenge as all that tightening continues to work its way through the economy.

But household finances are in better shape to handle it, with an excess $1.7 trillion in savings as a cushion — although people will likely have to dip into more of their savings.

And while the housing market may be cooling, it’s not crashing. After a very strong 2021, the sector is “readjusting, recalibrating,” Bess Freedman, CEO of Brown Harris Stevens, said on CNN’s “Early Start.”

Covid broke the economy and putting it back together has been hard to measure. Tens of millions of jobs were lost overnight. Schools closed, factories shuttered, more than a million lives lost. More than two years later, we’re still struggling to gauge the strength and durability of the recovery.

https://www.cnn.com/2022/12/02/economy/yes-but-economy-analysis/index.html

Inflation is cooling, and Wall Street loves it

Thu, 01 Dec 2022 18:16:55 GMT

Stocks surged Tuesday morning after the US government reported that wholesale prices rose at a far less dramatic rate than expected.

New YorkCNN Business — That news come just a few days after another report showed that the pace of consumer price increases was also slowing.

The Dow was up nearly 200 points, or 0.6%, in midday trading. The S&P 500 and Nasdaq rose 1.4% and 2.4% as well. Investors are hoping that the cooling inflation pressures will lead the Federal Reserve to raise interest rates by smaller amounts in the next few months, following four consecutive historically large hikes.

Solid earnings from retail giant Walmart (WMT) , one of the 30 components in the Dow, also helped boost market sentiment. Walmart (WMT) stock was up 7%.

Tech stocks also got a lift from the surprise news that Warren Buffett’s Berkshire Hathaway (BRKB) bought a stake in chip giant Taiwan Semiconductor during the third quarter.

Shares of Taiwan Semi (TSM) skyrocketed more than 12%. The benchmark Philadelphia Semiconductor Index (SOX) , which has Taiwan Semi (TSM) , Intel (INTC) , AMD (AMD) , Nvidia (NVDA) and other chip leaders in it, was up 4%.

But it’s the good news on the inflation front that is giving investors the biggest cause for jubilation. Traders are now betting that it’s almost a slam dunk that the Federal Reserve will raise rates by only a half-percentage point, instead of three-quarters of a point, at its next meeting on December 14.Traders are pricing in an 85% chance of only a so-called 50 basis point increase at that meeting, compared to a less than 30% probability a month ago, according to federal funds futures on the CME.

In addition to the more benign inflation numbers, investors also seem to be taking solace from comments made by Fed vice chair Lael Brainard on Monday.

https://www.cnn.com/2022/11/15/investing/dow-stock-market-today-inflation/index.html

Key inflation gauge for the Fed rose 0.5% in September, in line with expectations

Tue, 01 Nov 2022 15:13:05 GMT

An economic gauge that the Federal Reserve follows closely showed that inflation stayed strong in September but mostly within expectations, the Bureau of Economic Analysis reported Friday.

The core personal consumption expenditures price index increased 0.5% from the previous month and accelerated 5.1% over the past 12 months, the report showed. The monthly gain was in line with Dow Jones estimates, while the annual increase was slightly below the 5.2% forecast.

Including food and energy, PCE inflation rose 0.3% for the month and 6.2% on a yearly basis, the same as in August.

The report comes as the Fed is prepared to enact its sixth interest rate increase of the year at its policy meeting next week. In an effort to combat inflation running at its fastest pace in nearly 40 years, the Fed has been raising rates, with increases totaling 3 percentage points thus far.

Markets widely expect the Fed to enact its fourth straight 0.75 percentage point increase at the meeting, but possibly slow down the pace of hikes after that.

The BEA also reported that personal income increased 0.4% in September, one-tenth of a percentage point above the estimate. Spending as gauged through personal consumption expenditures increased 0.6%, more than the 0.4% estimate.

However, when adjusted for inflation, spending rose just 0.3%. Disposable personal income, or what is left after taxes and other charges, rose 0.4% on the month but was flat on an inflation-adjusted basis.

The personal saving rate, which measures savings as a share of disposable income, was 3.1% for the month, down from 3.4% in August.

A separate release Friday showed that employment costs rose 1.2% for the third quarter, in line with estimates, according to the Bureau of Labor Statistics. On an annual basis, the employment cost index increased 5%, slightly lower than the 5.1% pace in the second quarter.

Fed officials watch Friday’s data points closely for clues about where costs are headed, particularly with a tight labor market in which there are 1.7 jobs per every available worker, according to recent BLS data.

The Fed prefers the PCE price reading to the more widely followed consumer price index from the BLS. The BEA measure adjusts for consumer behavior, in particular substitution of less expensive goods, to determine cost-of-living increases rather than simple price moves.

Markets think the Fed might downshift the pace of its rate hikes ahead. Futures pricing Friday morning indicated a nearly 60% chance that the central bank will increase rates 0.5 percentage point in December.

SOURCE: CNBC

Colorado is now accepting tax payments in cryptocurrency, as Gov. Polis promised

Fri, 30 Sep 2022 14:27:48 GMT

The Colorado Department of Revenue offers tax payment through the PayPal Cryptocurrency Hub for personal taxes; businesses are not eligible yet.

The American state of Colorado now accepts cryptocurrency for tax payments, Gov. Jared Polis announced on Monday. The option is already available on the state Department of Revenue website.

Colorado tax payments are accepted through the PayPal Cryptocurrency Hub with service fees of $1.00 plus 1.83% of the payment amount. Payments are accepted only from personal accounts in a single cryptocurrency. Businesses cannot pay their taxes via crypto yet. Payments will be effective on the day they are initiated, although it will take three to five days for the transfer to take place. Payments are immediately converted into fiat.

The Colorado governor said earlier this year that he expected the state to begin accepting payment in crypto. Speaking at the opening of Denver Startup Week, Polis said of the new payment option:

“We’re just showing again, from a customer service perspective, how Colorado is tech-forward in meeting the ever-changing needs of businesses and residents.”

Polis is a long-time crypto supporter and advocate for the tech industry in his state. As a member of the U.S. House of Representatives, Polis was active in cryptocurrency legislation and was a founding member of the Congressional Blockchain Caucus.

Other states have tried to institute tax payments in crypto. Ohio was the first to do so in 2018, but it suspended the service a year later due to legal complications. New Hampshire tried repeatedly to adopt crypto tax payments, but the bills did not make it out of the state legislature, and states such as Georgia, Illinois and Arizona have considered it.

SOURCE: COIN TELEGRAPH

US Inflation Rose 8.3 Percent in August: CPI ReportPrice Pressures Remain Stubbornly High

Tue, 20 Sep 2022 17:26:59 GMT

Inflation did not ease as much as expected in August, with an 8.3 percent rise in the Consumer Price Index showing that the squeeze on consumers remains acute.

Inflation came in faster than expected in August even as gas prices fell.

Inflation remained uncomfortably rapid in August despite a decline in gas costs as prices continued to soar across a broad array of other goods and services, evidence that the sustainable slowdown the Federal Reserve and White House have been hoping for remains elusive.

Prices rose 8.3 percent from a year earlier compared with 8.5 percent in July, a fresh Consumer Price Index report released Tuesday showed, a still-rapid pace of increase and not as much of a moderation as economists had expected. The disappointing data came even as falling gas prices pulled inflation lower, with rapidly rising costs for rent, health care, restaurant meals and goods such as furniture offsetting the relief consumers were feeling at the fuel pump.

Compounding the bad news, a core index that strips out gas and food to get a sense of underlying inflation trends accelerated by more than was expected.

For policymakers at the Federal Reserve, who have been raising interest rates to slow the economy and try to tame recent rapid inflation, the report was a fresh sign that continued aggressive action may be needed to wrestle them lower.

Economists said that the Consumer Price Index data cemented the case for a third straight, unusually large three-quarter-percentage-point Fed rate increase at the central bank’s meeting next week, and stocks swooned as investors began to speculate that officials could opt for an even more drastic full-percentage-point adjustment.

“Inflation remains hot, financial conditions have seen some improvement, and the labor markets are humming along,” Neil Dutta, head of U.S. economics at Renaissance Macro, wrote in a research note following the release. “If the goal is to slow things down and create some pain, the Fed is failing by its own standard.”

The Fed closely watches the core inflation gauge, making its rebound in August a point of particular concern. After cutting out food and fuel, consumer prices climbed by 6.3 percent in the year through last month, up from 5.9 percent in July and more than the 6.1 percent economists had projected.

Even looking at overall inflation, the report’s details offered plenty to worry about.

Two products that have been major drivers of inflation over the past year — gas and used cars — are now posting outright price cuts. But other goods and services are picking up in price so much that it is more than offsetting those declines. Prices climbed by 0.1 percent over the course of the past month amid rapid price increases for a broad array of products and services, including food away from home, new cars, dental care and vehicle repair.

The upshot is that inflation has plenty of underlying momentum.

- Jeanna Smialek

SOURCE: NY TIMES

China Cuts Interest Rate to Shore up Sagging Economy

Sat, 20 Aug 2022 17:52:48 GMT

China’s central bank has trimmed a key interest rate to shore up sagging economic growth at a politically sensitive time when President Xi Jinping is believed to be trying to extend his hold on power.

The decision suggested Beijing is temporarily setting aside worries over high debt to act to head off a slump before Xi is expected to try to award himself a third five-year term as Communist Party leader at a meeting this fall.

The ruling party has effectively acknowledged it cannot hit this year’s official 5.5% growth target after anti-virus curbs disrupted trade, manufacturing and consumer spending. A crackdown on excessive borrowing in China's vast real estate industry triggered a plunge in home sales and construction.

“The momentum of economic recovery has slowed,” a government spokesman, Fu Linghui, said at a news conference. “More efforts are needed to consolidate the foundation of economic recovery.”

The People's Bank of China cut its rate on a one-year loan to 2.75% from 2.85% and injected an extra 400 billion yuan ($60 billion) into lending markets after growth in factory output and retail sales weakened in July and home sales fell by double digits.

The central bank “seems to have decided it now has a more pressing problem,” Julian Evans-Pritchard of Capital Economics said in a report.

The slowdown adds to political headwinds for Xi, China's most powerful leader since at least the 1980s. He still is widely expected to succeed, but some analysts say he might be forced to compromise by sharing more of his sweeping powers with other party leaders.

Despite downward pressure on growth, party leaders affirmed their commitment to the severe “zero-COVID” strategy in a July 29 statement. It dropped previous references to growth targets after the economy grew by just 2.5% over a year earlier in the first half of 2022.

Growth in factory output in July slowed to 3.8% over a year ago, down 0.1 percentage point from the previous month, according to the National Bureau of Statistics. Growth in consumer spending fell to 2.7%, down 0.4 percentage points from June.

Sales of housing and other commercial real estate fell 28.8% from a year earlier.

Beijing is forcing developers to reduce debt levels, which caused economic growth to plunge in mid-2021, disrupting a recovery from the coronavirus pandemic. The crackdown has bankrupted smaller developers and fueled fears of a default by the biggest, Evergrande Group, which owes $310 billion to banks and bondholders.

The “downward trend” in real estate has a "great impact on economic growth,” said Fu, the government spokesman.

The rate cut and extra money for lending are small compared with China's $17 trillion-a-year economy, the world's second-largest. Instead, such changes are widely seen as a signal to the state-owned banking industry to lend more and cut charges for commercial borrowers.

The ruling party is struggling to revive activity after Shanghai, the country’s business capital, and other industrial centers were shut for weeks starting in late March to fight virus outbreaks.

Managers of the Shanghai port, the world’s busiest, say shipping is back to normal, but economists say it might be months before the flow of smartphones, home appliances, consumer electronics and other goods through complex supply lines fully recovers.

A survey of manufacturers released earlier showed activity in July contracted. Indicators of new orders, exports and employment declined.

Retails sales were off 0.7% from a year earlier in the first half after plunging 11% in April following the temporary shutdown of Shanghai and other cities.

SOURCE: US NEWS

Inflation Reduction Act May Have Little Impact on Inflation

Fri, 19 Aug 2022 22:59:40 GMT

With inflation raging near its highest level in four decades, Congress is poised to approve President Joe Biden’s signature Inflation Reduction Act.

WASHINGTON (AP) — With inflation raging near its highest level in four decades, Congress is poised to approve President Joe Biden's signature Inflation Reduction Act. Its title raises a tantalizing question: Will the measure actually tame the price spikes that have inflicted hardships on American households?

Economic analyses of the proposal suggest that the answer is likely no — not anytime soon, anyway.

The legislation, which is headed for final approval Friday in the House and will then be signed into law, won't directly address some of the main drivers of surging prices — from gas and food to rents and restaurant meals.

Still, the bill could save money for some Americans by lessening the cost of prescription drugs for the elderly, extending health insurance subsidies and reducing energy prices. It would also modestly cut the government's budget deficit, which might slightly lower inflation by the end of this decade.The nonpartisan Congressional Budget Office concluded last week that the changes would have a “negligible” impact on inflation this year and next. And the University of Pennsylvania's Penn Wharton Budget Model concluded that, over the next decade, "the impact on inflation is statistically indistinguishable from zero.”

Such forecasts also undercut the arguments that some Republicans, such as House Minority Leader Kevin McCarthy have made, that the bill would “cause inflation,” as McCarthy said in a speech on the House floor last month.

Biden himself, in speaking of the legislation's effect on inflation, has cautiously referred to potentially lower prices in individual categories rather than to lower inflation as a whole. This week, the president said the bill would “bring down the cost of prescription drugs, health insurance premiums and energy costs.”

At the same time, the White House has trumpeted a letter signed by more than 120 economists, including several Novel Prize winners and former Treasury secretaries, that asserts that the bill's reduction in the government's budget deficit — by an estimated $300 billion over the next decade, according to the CBO — would put “downward pressure on inflation.”

In theory, lower deficits can reduce inflation. That's because lower government spending or higher taxes, which help shrink the deficit, reduce demand in the economy, thereby easing pressure on companies to raise prices.

Jason Furman, a Harvard economist who served as a top economic adviser in the Obama administration, wrote in an opinion column for The Wall Street Journal: “Deficit reduction is almost always inflation-reducing.”

Yet Douglas Holtz-Eakin, who was a top economic adviser to President George W. Bush and later a director of the CBO, noted that the lower deficits won't kick in until five years from now and won't be very large over the next decade considering the size of the economy.

“$30 billion a year in a $21 trillion economy isn’t going to move the needle,” Holtz-Eakin said, referring to the estimated amount of deficit reduction spread over 10 years.

He also noted that Congress has recently passed other legislation to subsidize semiconductor production in the U.S. and expand veterans' health care, and suggested that those laws will spend more than the Inflation Reduction Act will save.

In addition, Kent Smetters, director of the Penn Wharton Budget Model, said the bill's health care subsidies could send inflation up. The legislation would spend $70 billion over a decade to extend tax credits to help 13 million Americans pay for health insurance under the Affordable Care Act.

Those subsidies would free up money for recipients to spend elsewhere, potentially increasing inflation, although Smetters said he thought the effect would likely be very small.

While the bill could have the benefit of increasing the savings of millions of households on pharmaceutical and energy costs, it’s unlikely to have much effect on overall inflation. Prescription drugs account for only 1% of the spending in the U.S. consumer price index; spending on electricity and natural gas makes up just 3.6%.

Starting in 2025, the act will cap the amount Medicare recipients would pay for their prescription drugs at $2,000 a year. It will authorize Medicare to negotiate the cost of some high-priced pharmaceuticals — a long-sought goal that President Donald Trump had also floated. It would also limit Medicare recipients' out-of-pocket costs for insulin at $35 a month. Insulin prescriptions averaged $54 in 2020, according to the Kaiser Family Foundation.

“This is a historic change,” said Leigh Purvis, director of health care costs at the AARP Public Policy Institute. “This is allowing Medicare to protect beneficiaries from high drug prices in a way that was not there before.”

A study by Kaiser found that in 2019, 1.2 million Medicare recipients spent an average of $3,216 on drug prescriptions. Purvis said recipients who use the most expensive drugs can spend as much as $10,000 or $15,000 a year.

The legislation authorizes Medicare to negotiate prices of 10 expensive pharmaceuticals, starting next year, though the results won't take effect until 2026. Up to 60 drugs could be subject to negotiation by 2029.

Holtz-Eakin argued that while the provision may lower the cost of some Medicare drugs, it would discourage the development of new drugs or reduce new venture capital investment in start-up pharmaceutical companies.

The Inflation Reduction Act's energy provisions could also create savings, though the amounts are likely to be much smaller.

The bill will provide a $7,500 tax credit for new purchases of electric vehicles, though most EVs won't qualify because the legislation requires them to include batteries with U.S. materials.

And the legislation also significantly expands a tax credit for homeowners who invest in energy-efficient equipment, from a one-time $500 credit to $1,200 that a homeowner could claim each year. Vincent Barnes, senior vice president for policy at the Alliance to Save Energy, said this would allow homeowners to make new energy-efficient investments over several years.

But for all Americans, including those who aren't homeowners, the impact will likely be limited. The Rhodium Group estimates that by 2030 the bill's provisions will save households an average of up to $112 a year as gas and electricity becomes cheaper as more Americans drive EVs and houses become more energy- efficient.

SOURCE: US NEWS

3 Easy Ways to Continuously Improve Your Business

Fri, 22 Jul 2022 15:28:38 GMT

Continuous improvement might seem like something large corporations do but it is beneficial to small businesses and can be tailored to drive improvement in your company

They say all businesses are either growing or dying. There isn't an in-between. We are either improving or degrading at all times. This view is popular but a bit flawed. The truth is that we are always ebbing and flowing. Up isn't a straight line. Down isn't a perfect spiral of destruction. This makes it harder to know if you are improving. If today was great, but last week was terrible, are you growing or dying?

The answer for many successful businesses is to take on a mindset of continuous improvement. Regardless of where the business currently resides, there is always room for improvement. This gives us power, because it gives us direction. It allows us to keep pushing forward, forging our path and solidifying our role in the marketplace.

But continuous improvement is often misunderstood. I've met many entrepreneurs who equate continuous improvement with perfectionism . They assume that harping on every small mistake by their staff helps them get better. It allows them to remain discontent, where they can then drive their people harder. The problem is that the system is more complex than that. Often these same business owners complain of high turnover. People don't want to work for a jerk. The talented and valuable employees will have options and will choose a better culture. The ones who stay are often the ones without any better options.

Sure, you feel daily that you drove your people as hard as possible. But the full system shows that a team of burnt-out employees is not better than happy, productive, experienced workers all driving in the same direction. It seems that continuous improvement is at odds with this vision of advanced productivity. When viewed through the perfectionist lens, it might seem that way. But through the systems lens, we see a completely different path to take.

So, how do you incorporate continuous improvement in your business without blindly driving your people harder and harder? Here are three easy ways to do it:

1. Metrics and KPIs

When I took over the operations of a small business years ago, I worked to create this continuous improvement culture. We wanted to scale a business that had plateaued. This meant changing operational strategies, not just doing what the business had always done. But before change, I knew we wanted to make sure that change was an improvement, not a degradation. How do you know that the recent adjustment in process means more profit and better efficiency? How can you quantify the quality improvement from adding another quality assurance step?

The only way to know you are improving is to use metrics . You should have benchmark data. You need to know that it takes three minutes per unit, or that every 100 units results in an average of four quality errors. You need to know how many units get done in an hour. You must be able to account for variances such as seasonality, part shortages, employee vacations, etc.

This means that you should start measuring everything. Today, this is often much easier than it was in years past. You likely have a variety of tools you can use to spit out usable reports. You might not have to have log files to dig through or data to run pivot tables to identify trends. You may find a few useful reports to give you enough insight to measure the key aspects of the business.

Once you have the data and form the insights, you can create Key Performance Indicators . Key Performance Indicators, or KPIs, are common in business. They give you the key aspects of the business that you monitor. They can allow you to set goals. You can establish ranges of acceptable output. We used them in the past to keep us balanced. When a KPI got out-of-whack, we looked at the full system to see why. Often, we were pushing too hard in another area, causing this side effect.

This allowed us to continuously improve, because we had the data. We knew that a change meant we were performing better. We didn't rely on gut instinct. We didn't just change and hope.

2. Learn to see systems

Key Performance Indicators are helpful, but to be truly effective, you must be able to see the systems in your business. Most people are blind to them. They see the cacophony of activities, not the systematic flow.

But day in and day out, these activities form patterns. There are structures underlying them and driving them. This is how you start to see the systems. You start by seeing patterns within the chaos. You identify the processes and procedures that drive the activities and create the patterns. This helps avoid playing whack-a-mole with your business. Jumping from problem to problem back to problem, you aren't improving. That results in change for the sake of change. But when you see the full system, you can put in place solutions that solve the current issue but also address the root cause, so it doesn't happen again.

Systems thinking is key to stopping the recurring problem. You see things differently. You identify how it happened and see how it could happen again in the future. Your fix means more than a temporary band-aid on the problem. It means a change in the systems to create an environment where that problem cannot happen again.

3. Plan, do, study, act

Dr. Edwards Deming is famous for bringing continuous improvement to Japan after WWII and helping them rebuild their manufacturing industry. His tactics were so successful that Japan started to overtake other countries and became known as a pillar of quality and profit.

One of the methods he used was Plan, Do, Study, Act. Often referred to as the Deming Cycle , this process allows us to make changes without the worry of degradation. It starts by planning out a change in procedure. This potential step towards improvement then gets implemented. It isn't blindly implemented. It is often tested in a smaller environment first.

Here is an example: Let's say that you see the potential for an added step in your quality control process. It seems like it might help catch errors quickly. Instead of creating a whole new policy for the whole QC team to follow, create a subset. Create a smaller batch to try it on. Or have half of the QC employees try the new approach.

This limits the risk . If there is some unexpected result, you can quickly revert. You limit the risk of making the change. Many improvement strategies get halted, because leaders are afraid to take the risk. This manages that risk, allowing you to experiment more.

Then we study the results. Because we already established the metrics and gathered all the benchmark data, we can measure the results from the change with the typical results. Are they better? Are they worse? Did the output stay the same?

Then we act. If the change improved the areas we targeted, then make the change a part of the standard process that is used. If it didn't result in the outcome you hoped, go back to the old process. This shows that change doesn't mean you go backwards. It means you always go forward; you continuously improve .

This is the opposite of change for the sake of change. Leaders unfamiliar with these techniques find it difficult to continuously improve. They succumb to striving for perfection and driving their people harder and harder. If they never accept the current effort, they feel they are making the business better. A better way is to establish the metrics and define the KPIs, so that you know what you are working towards. You can see if you are making things better or worse for the business.

Then view the systems in your business and focus improvement efforts on the systems and processes , not the efforts. Make it about the steps the company takes and the tasks being completed on a regular basis. Instead of the one-offs becoming the focus, target those recurring actions being taken.

Finally, implement Plan, Do, Study, Act. Use this cycle to reduce the risk from change. Use it to get employees to volunteer their thoughts on how the systems could be improved. Then test those ideas out without worrying that they won't work and cause the business to go backwards. Plan, Do, Study, Act helps you evaluate those changes in a real-world scenario before you change your processes and procedures.

You don't have to be a Fortune 500 company with a formal continuous improvement methodology to get the benefits of continuous improvement. You can take the core elements and create your own process. These can be customized to your teams. They can be as small and agile as they need to be. Following these three steps can help you continue to improve the systems of the business to create more efficiency , more output and more profit.

SOURCE: ENTREPRENEUR.COM

Understanding Climate Change Isn't Just Good for the World

Thu, 21 Jul 2022 20:48:17 GMT

It's Also Good for Your Career and Business

If you don't understand climate change , you're going to stand out in the business world. And not in a good way. Climate change is affecting everything from running an office, to managing supply chains, to investing. If you want to contribute to charting your company's path forward, you'll need to be knowledgeable and conversant. The time for sitting on the sidelines has passed.

The pressure on businesses to respond to climate change is enormous — which means that pressure is on every employee. If you need proof of that, think about your customers. A study late last year found that 85% of consumers have shifted to purchasing more sustainable options over the last five years. The change is especially concentrated among the young, which is a telling sign of the future.

Your time to shine

You've likely already seen this generational shift among colleagues, who are increasingly pushing management to hasten its actions. Last year, more than 1,100 employees of consulting giant McKinsey sent a letter to the company, asking them to reveal their clients' carbon emission numbers.

As BlackRock Chairman Larry Fink wrote in his 2022 letter to CEOs, "Every company and every industry will be transformed by the transition to a net zero world. The question is, will you lead or will you be led?"

This is your chance to shine, both as a business leader and as an employee. Managers will be probing the ranks for green ideas, whether they are in service of your clients or your company itself. Those who excel in this kind of thinking will be rewarded, given the growing demand for environmental knowledge .

You could even choose to specialize in ESG. According to a consultant at a London-based private equity recruiting firm, salaries in late 2021 for ESG specialists were up between 50% and 100% from the previous year.

How to get started

Begin by staying abreast of global business publications like The Economist and Wall Street Journal . Make sure to stay alert for bias. Climate change is a divisive issue. Beware the extremist source that takes sides in an all-good or all-bad way. You should also assess your own biases. You'll be negotiating this landscape with people who may not think the same as you. Your knowledge must be broad enough to understand where they're coming from.

When you're ready for a deeper look at the nuts and bolts, try Environmental Finance , ESG Today or the Society of Environmental Journalists . They cover all aspects of ESG, from science to regulatory changes to green business developments. This is your chance to gather rounded expertise that's adaptable to any situation.

You can also follow thought leaders like Mark Carney, Damilola Ogunbiyi, Selwin Hart and Christine Lagarde. Then come podcasts like ESG Insider, which discusses matters shaping business, and The Sustainability Story , produced by my organization. As your knowledge expands, you'll find it easy to seek out podcasts more specific to your interests.

Another way to deepen your understanding of climate change is to get involved with a climate change–focused organization or demonstration. There, you'll meet people who are well-educated on the issue, and you'll become better informed by the discussions you have with them. You'll also get a firsthand look at the seriousness of the challenge facing us. For instance, I recently volunteered picking up trash near where I live. The experience made clear to me the immensity of the recycling problem in the U.S., and afterward, I felt more inspired to do something about it.

Get certified

Finally, you can always get an ESG or climate professional certificate. But if your endgame is becoming a respected voice in the workplace, the best route is to simply put in the hours educating yourself.

Integrating your understanding of climate change into your life will require a developed set of soft skills, such as open-mindedness, empathy, negotiation and conflict management . You'll need self-reflection to examine why your views may be wrong or out of date. And if you're confronted by someone who doesn't believe in climate change at all, you'll have to deploy deft communication skills to find common understanding and be persuasive.

Those soft skills will go a long way toward enhancing your discussions at work around how to play a positive role in fighting climate change . And they'll establish you as someone who knows how to handle a difficult topic — an attribute highly valued in a leader.

SOURCE: ENTREPRENEUR.COM

How a former Lehman Brothers banker turned the tables and built a pandemic-proof business

Mon, 11 Jul 2022 17:59:19 GMT

Declan Ee always knew he wanted to run his own business.

But when he graduated from University College London in 2006, he saw his peers applying for jobs at investment banks and decided to give it a try.

His first gig? Lehman Brothers.

“I liked seeing how businesses worked on a global scale. So that was very interesting.”

But the 2008 collapse of Lehman Brothers not only roiled global markets, it was a shake-up for Ee too.

“I was in the subprime mortgage division. I dodged reporters while walking to Lehman in Canary Wharf. It made me double down on leaving banking at some point.”

... it’s about building a good foundation and a strong business that gives value to your target customers.

The 39-year-old Singaporean did leave investment banking eventually in 2016, to build his furniture start-up, Castlery.

Today, the business is bringing in millions and its modern pieces can be found in over 300,000 homes globally, said Castlery. CNBC Make It finds out how.

Furniture for urban millennials

It all started when Ee came back to Singapore 11 years ago and was furnishing his marital home.

His good friend and co-founder Fred Ji was also looking for affordable modern furnishing.

“We shared a bond in that … [the process was] frustrating. We want to get the nice pieces but they are so inaccessible.”

That is due to things like the price point and managing multiple lead-times of furniture, he explained.

That’s when they had the idea of selling affordable, designer furniture to “urban millennials” between 25 to 45 years old.

“This age group, you go through a lot of change. You leave school, you start building your career, you get married, you have a kid … We add stuff to our homes,” the president of Castlery told CNBC Make It.

Ee wanted to provide options to young adults who want to have an “inspiring space” and “something more than Ikea ,” — without breaking the bank.

In 2013, Ee and Ji went digital-first with Castlery, allowing consumers to view a virtual studio and purchase furniture online — a disruptor in the traditional furniture industry.

“When customers started to shop online for furniture, they realized that, ‘I don’t need to go to 25 furniture stores anymore.’ The next time they need to buy something, they will do it online again.”

Learning from ‘blow-ups’

Ee’s experience in investment banking, where he “saw many blow-ups,” has taught him a thing or two about running his own business.

When it came to financing Castlery, Ee was determined to not go down the “ venture capital route” too early for his start-up.

“With the VC game, you want to mock up your valuation every 18 months. And when we started, I knew that we had to spend time learning the business,” he said.

Having no experience in the furniture retail business, Ee estimated he needed six to seven years to master the ropes, which is as long as the “fund life” of VCs.

“Straightaway, there’s a conflict … that’s why stress happens — you don’t have clarity of thought, because you have to scale at all cost.”

Instead, Castlery’s initial investments came from family members and other entrepreneurs who have exited their businesses.

“At the core, it’s about building a good foundation and a strong business that gives value to your target customers. That will always translate no matter what, whether you want to sell or list your company,” Ee said.

Pandemic-accelerated growth

When the pandemic hit in 2020, Castlery had just begun expansion into the U.S. market, apart from its presence in Singapore and Australia.

“I thought, wow, this is really not meant to be. I was really stressed because our most profitable country was Singapore and there was the circuit breaker too.” He was referring to partial lockdowns in 2020, designed to break the chain of infection.

But his stress turned to surprise as he saw a surge in e-commerce , with nationwide lockdowns pushing shoppers to rely on internet retailers for their consumer needs.

We were growing so fast, our faces were turning green.

And as millions of employees were shut out of their offices and required to work from home, the “meaning of home” also changed, Ee observed.

“It’s not just a place you come back to [after work]. You are doing your work, you’re pursuing your passions, you have your kids. How you furnish your home matters because you’re spending much more time there.”

With more people looking to upgrade their space, Castlery’s growth “accelerated,” said Ee.

“We were growing so fast, our faces were turning green.”

According to Castlery, the company grew “six times” during the pandemic, making over $100 million in the most recent financial year ending March 2022, and was profitable in 2020.

However, with or without the pandemic, Ee believes that Castlery’s biggest selling point is the design and functionality of its products.

“I speak to customers from the U.S. every month and they are like, ‘We love your washable range of sofas!’ I thought, ‘Okay, it’s a thing?’”

“I guess being Asians, we are quite practical,” he said.

Ee added: “They would explain that in the U.S., you won’t have this option at this price point.” According to him, his furniture is “20% to 30%” cheaper than similar pieces in the market.

Each collection is assigned a buyer, an engineer and a planner — this trio runs a well-oiled machine to ensure products go to market in a timely and cost-efficient manner.

That is achieved through a “rigorous process refined over the years,” said Ee.

“Each collection is assigned a buyer, an engineer and a planner — this trio runs a well-oiled machine to ensure products go to market in a timely and cost-efficient manner.”

He added: ”[The] buyer finds the best in class manufacturers to work with. Engineers redesign inefficient processes while a planner works to source materials at the best possible price point.”

SOURCE: CNBC

7 Strategies for Growing Your Business When Supply Chain Disruptions Are Everywhere

Mon, 11 Jul 2022 17:24:05 GMT

Feeling the hit of supply chains? Read about the Solutions that you can implement for your business below.

By now, even people who aren't involved in businesses that depend on commodities have heard of supply chains . And most of them know all too well that those supply chains are slowing down — sometimes even breaking down entirely — due to global obstacles as varied as the coronavirus pandemic and the war in Ukraine .

Supply chains for the production and delivery of many kinds of products, raw materials, and other commodities have been affected. And while the latter has impacted consumers, the consequences are generally limited to longer wait times for the completion or delivery of something — including consumer goods , a home or a car. But for businesses, the impact can mean life or death. After all, if you can't deliver your finished products to paying customers, you won't stay in business for long.

That said, supply chain disruptions aren't necessarily the end of your business. With some smart planning, a little foresight, and a willingness to switch your focus, you can keep your company going and even growing while supply chain disruptions are resolved.

1. Get clear on the situation

The first and most fundamental task ahead of you is to identify and understand the root cause of the delay. A supply chain breakdown caused by some aspect of the pandemic is very different from one caused by, for example, the regulatory shutdown of a single key supplier. One is likely to last longer, while the other might be sidestepped by sourcing from a different vendor.

Another key initial task is to assess the damage being inflicted by the delay. Figuring out the extent of the problem means determining how much product has been lost and whether any part of it is still marketable and saleable. Coming up with a plan is the first step in mitigating the damage and keeping income streams flowing to the maximum possible extent.

2. Figure out how to move forward

Once you have a clear understanding of the cause and likely duration of the delay, it's important to shift your attention towards implementing a plan to move forward as soon as possible. Don't dwell on the delay. Instead, look for actions you can take or delegate right away. Explore tactics to acquire and allocate resources in a way that minimizes the impact of the delay.

As part of this process, review your order history. Track time-to-delivery and other metrics over time, then make your projections for how future delays will impact your business so you can plan ahead.

3. Keep lines of communication open

The worst thing you can do is leave customers, employees, and other stakeholders in a position where they have to guess about deliveries, schedules, and timeframes. Instead, come up with strong strategies for communicating clearly with everyone who might be impacted by the problems with your supply chain.

Even though you have nothing to do with the slowdown, it's important to acknowledge the impact on your customers, employees, and others. Apologize for any inconvenience caused and give them all the accurate information you can share so they can make their plans accordingly — which is especially important to your customers.

4. Focus on other aspects of your business

Now is the time to focus on customer service and any other aspects of your business that aren't directly affected by the supply chain problems. It's an especially good time to lean hard into customer service because those changes can last well beyond the end of the current obstacles and help you build a more loyal customer base that'll last well into the future.

It's also a good idea to take advantage of the delay to improve your business processes. Even the smallest incremental improvements can optimize your business practices. And in the face of such significant disruptions to your customer-facing operations, even incremental changes can give a significant boost to your bottom line.

5. Plan for ways to deal with or prevent future delays

This likely won't be the very last event of significant disruption to global supply chains the business world will ever see. So after you've implemented plans to focus on optimizing other aspects of your business processes, think about taking action to prevent future delays in your supply chain.

First, ensure you've got a timely and effective system to track your inventory at all phases of the customer journey. This will help you avoid being caught by surprise when a future supply chain delay or breakdown takes place. Look into affordable supply chain management (SCM) software suitable for small businesses to help track your inventory and manage shipping to your customers.

Next, look for ways to add a buffer to your inventory counts. This won't always be physically possible or financially feasible. Take advantage of discounts and closeouts to increase your inventory when and where your company's finances and physical storage capacity allow. Also, explore possible alternatives to your usual inventory specifications. Competitors and phased-out lines can both offer affordable substitute goods.

6. Keep your team motivated

It's important to keep your team updated on how supply chain delays are impacting your company. Putting on a brave face will only go so far, especially if there are real problems you need to contend with. Communicate openly and honestly with your team, and keep them informed of any changes while remaining positive and upbeat. Don't forget to reward your team for their hard work in uncertain times.

7. Don't forget to protect your physical and mental health

In the "last but far from least" category, take care of yourself. Your company has never needed your leadership more. Prioritize basic self-care, including relaxation and time away from the office to unwind and recharge.

SOURCE: ENTREPRENEUR

Here’s five tips for selling your e-commerce business

Wed, 29 Jun 2022 21:29:54 GMT

Got an e-commerce business? Well Listen Up

In recent years, Amazon sellers have become a hot commodity. Growing a business on Amazon is more challenging and aggregators are taking the opportunity to snatch up promising and successful businesses while using their expertise to clean up the marketplace.

Selling your e-commerce business to an Amazon aggregator can pay off, but only if you do it right.

“The day you buy is the day you sell,” said The Fortia Group CEO Emmett Kilduff. He recommends planning your acquisition from day one and surrounding yourself with expert advisors to ensure you’re as prepared as possible and able to maximize value.

Watch this video to learn the five tips for selling your e-commerce business

SOURCE: CNBC

Self-made millionaire Bethenny Frankel’s top spending advice: ‘It has to be an investment’

Thu, 23 Jun 2022 00:00:00 GMT

Over her decades of entrepreneurship, self-made millionaire Bethenny Frankel has walked the fine line between being a spender and a saver.

The Skinnygirl founder and “Real Housewives of New York” alumna says her habits don’t regularly fall into either category. Rather, she says she’s developed a sense for knowing when to splurge: Motivated by an intolerance for wasting money, she tries to only spend when the purchase feels “like an investment.”

“I don’t mind spending money ... but it has to be an investment,” Frankel tells CNBC Make It. “I’ll spend on high-quality items like luxury goods, but it has to be something you’re holding [for longevity]. It could be a watch. It could be a purse.”

Frankel says the philosophy applies to purchases big and small. She won’t buy a house, for example, unless she thinks it’ll offer a large return on investment, especially through renovations. And whenever she decides to spend – or if any of her investments start trending downward – she plans accordingly, to make sure it won’t dent her savings in a significant way.

“I always make sure I have a nest egg of savings,” she says. “That way, I can still spend when [the market] is a little gnarly or if I’m renovating a bunch of homes, but I consciously will buy less of other things. Spending and saving are an ebb and flow.”

The method isn’t a one-size-fits-all strategy: Although a higher upfront cost sometimes results in longevity, which potentially saves money in the long run, you still need enough disposable income to spend on luxury items or pricey consultants to follow Frankel’s lead.

Notably, Frankel says she’s recently loosened the strict spending habits she used to build up her wealth, because she’s achieved her main savings goal: setting aside an inheritance for her 12-year-old daughter, Bryn Hoppy.

That goes against the usual advice. Experts typically recommend increasing your retirement savings over time. In May, former Head of Retirement Solutions for JPMorgan Asset Management’s Solutions Anne Lester wrote for CNBC Make It that she typically tells “people to aim to replace 70% of your annual pre-retirement income, at minimum.” If you plan to travel a lot in the years post-career, that percentage should be higher, she added.

But Frankel says she’d rather reap some of the rewards of her frugal youth while she can. “I’m sensible, but as I get older, the more I spend,” she says. “I can lean into what I’ve saved up, and I’m not working just to leave money for the next generation.”

Frankel’s “save now, spend later” financial strategy mimics the career advice she gives young people. Last month, she told CNBC Make It that young people should work their hardest in their 20s, when they have the most energy and the least amount of responsibility. In both instances, Frankel says building proactive and diligent habits from a young age will allow you to live more comfortably later in life.

These lessons are hard-won from her own personal experience, she says. For example, years ago, Frankel says she checked off the wrong box on a tax form, and the simple stroke of a pen on the contract cost her millions of dollars. In retrospect, she notes, paying for expensive legal guidance would have functionally saved her a lot of money.

“I didn’t have fancy business managers at the time, so again, you get what you pay for,” Frankel says.

SOURCE: USNEWS

CLASS ACTION LAWSUIT FILED AFTER HUNDREDS OF BLACK AND BROWN PEOPLE LOST HOMES, CAN MOVE FORWARD

Mon, 12 Jul 2021 19:39:42 GMT

A federal court ruled three Brooklyn homeowners of color can move forward with a class action lawsuit to recover their wealth lost through New York’s Third Party Transfer (TPT) program.

The homeowners all lost their residences from alleged illegal seizures taken in “in rem” foreclosure proceedings under the TPT program. The city conducted the seizures under the Department of Housing, Preservation and Development (HPD), which confiscates the entire property value of a home from the owner, even if the owner only owed a few thousand dollars in water or sewer charges or taxes.

HPD would then give the property to development organizations of the administration’s choosing for free or a small fee. Two nonprofits, the Neighborhood Restore Housing Development Fund and BSDC Kings Covenant Housing Development Fund Company, are now defendants in the case according to the Brownstoner .

The group wants to represent a class of minority property owners across the city who have lost their homes to the TPT program without compensation.

The plaintiffs already won one battle when the city challenged their right to file a class-action suit, arguing the case should be argued in state court. The group successfully argued the case is a federal issue that falls under the 5th Amendment of the U.S. Constitution, which requires just compensation for the taking of a person’s property.

READ MORE ON THE CLASS ACTION STORY HERE

Women Franchise Owners Fear the PRO Act

Mon, 12 Jul 2021 19:28:58 GMT

Franchising helped them become small business owners, and they don't want to be forced back under the corporate thumb.

If someone wants to buy a franchise, but isn’t sure which is the right fit, Megan Allen is the kind of person to call. Allen is a consultant with FranNet in Colorado; helping potential franchisees is her job. And these days, she’s getting many calls from moms who don’t want to return to the 9-to-5 grind.

“They are trying to figure out how to go from the flexibility of controlling their own schedule all day to going back to the office,” Allen says. “They got a taste of it. If you don’t feel well, you cancel something. If your kids come first, you go to the basketball camp. You can still do your job and make money, but also be there for the family.”

These women want to be their own bosses, and Allen is excited to help them — which is why she’s also angry about a looming law that could make it harder for them to achieve independence. The law is the Protecting the Right to Organize Act, or PRO Act, which is currently being considered by Congress. It contains language called the joint-employer standard , which some legal experts say could force corporate franchise brands to become the employer of their individual franchisees’ staff. That would eliminate franchisees’ autonomy.

Meet The Medical Pioneer Who Founded America’s First Black-Owned Hospital

Mon, 12 Jul 2021 19:07:41 GMT

Daniel Hale Williams was a brilliant surgeon, innovator and leader, who pioneered lifesaving procedures and medical education.

On the morning of July 10, 1893, Daniel Hale Williams had a difficult decision to make. James Cornish, a 24-year-old Black man who had been stabbed in a street brawl the night before, was struggling to breathe and deteriorating fast. Dr. Dan, as he was known to colleagues and patients, suspected that the knife had pierced the young man’s heart.

Luckily, Cornish had two things on his side. First, he was being treated at Chicago’s Provident Hospital and Training School, which Williams had founded two years earlier to serve Black patients. Second, he was in the hands of a gifted surgeon. Dr. Dan decided to do something that no other surgeon had attempted in an emergency setting: He cut open Cornish’s chest to repair the pierced pericardium with sheep’s intestine. The result was one of the world’s first successful open-heart surgeries. Cornish recovered and went on to live for decades more.

READ MORE ON DR. WILLIAMS HERE