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      A Christmas Gift From the Bond Market

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      It’s been a strange few days on the Donald Trump front: He said something about himself that I actually believe and something about the economy that’s mostly true.On the personal side, Trump has been sounding a lot like Adolf Hitler lately — I don’t mean his general tone, I mean his specific statement last week at a New Hampshire rally that immigrants are “poisoning the blood of our country,” echoing what Hitler wrote in “Mein Kampf” almost word for word. (And if you think it was just a one-off, he said the same thing in a September interview.) But Trump claims never to have read “Mein Kampf,” and I believe him, just as I believe that he’s barely skimmed the Bible or any of the great books or, I would guess, “The Art of the Deal.” Pretty clearly, reading isn’t his thing.What’s happening, presumably, is that Trump talks to people who have read Hitler, approvingly, and that’s how Nazi language gets into his speeches. Are you reassured?On the economic side, the stock market has recently been close to record highs, but Trump has dismissed these gains as just making “rich people richer.”We are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber?  More

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      The Stock and Bond Markets Are Getting Ahead of the Fed.

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      Stock and bond markets have been rallying in anticipation of Federal Reserve rate cuts. But don’t get swept away just yet, our columnist says.It’s too early to start celebrating. That’s the Federal Reserve’s sober message — though given half a chance, the markets won’t heed it.In a news conference on Wednesday, and in written statements after its latest policymaking meeting, the Fed did what it could to restrain Wall Street’s enthusiasm.“It’s far too early to declare victory and there are certainly risks” still facing the economy, Jerome H. Powell, the Fed chair, said. But stocks shot higher anyway, with the S&P 500 on the verge of a record.The Fed indicated that it was too early to count on a “soft landing” for the economy — a reduction in inflation without a recession — though that is increasingly the Wall Street consensus. An early decline in the federal funds rate, the benchmark short-term rate that the Fed controls directly, isn’t a sure thing, either, though Mr. Powell said the Fed has begun discussing rate cuts, and the markets are, increasingly, counting on them.The markets have been climbing since July — and have been positively buoyant since late October — on the assumption that truly good times are in the offing. That may turn out to be a correct assumption — one that could be helpful to President Biden and the rest of the Democratic Party in the 2024 elections.But if you were looking for certainty about a joyful 2024, the Fed didn’t provide it in this week’s meeting. Instead, it went out of its way to say that it is positioning itself for maximum flexibility. Prudent investors may want to do the same.Reasons for OptimismOn Wednesday, the Fed said it would leave the federal funds rate where it stands now, at about 5.3 percent. That’s roughly 5 full percentage points higher than it was in early in 2022. Inflation, the glaring economic problem at the start of the year, has dropped sharply thanks, in part, to those steep interest rate increases. The Consumer Price Index rose 3.1 percent in the year through November. That was still substantially above the Fed’s target of 2 percent, but way below the inflation peak of 9.1 percent in June 2022. And because inflation has been dropping, a virtuous cycle has developed, from the Fed’s standpoint. With the federal funds rate substantially above the inflation rate, the real interest rate has been rising since July, without the Fed needing to take direct action.But Mr. Powell says rates need to be “sufficiently restrictive” to ensure that inflation doesn’t surge again. And, he cautioned, “We will need to see further evidence to have confidence that inflation is moving toward our goal.”The wonderful thing about the Fed’s interest rate tightening so far is that it has not set off a sharp increase in unemployment. The latest figures show the unemployment rate was a mere 3.7 percent in November. On a historical basis, that’s an extraordinarily low rate, and one that has been associated with a robust economy, not a weak one. Economic growth accelerated in the three months through September (the third quarter), with gross domestic product climbing at a 4.9 percent annual rate. That doesn’t look at all like the recession that had been widely anticipated a year ago.To the contrary, with indicators of robust economic growth like these, it’s no wonder that longer-term interest rates in the bond market have been dropping in anticipation of Fed rate cuts. The federal funds futures market on Wednesday forecast federal funds cuts beginning in March. By the end of 2024, the futures market expected the federal funds rate to fall to below 4 percent.But on Wednesday, the Fed forecast a slower and more modest decline, bringing the rate to about 4.6 percent.Too Soon to RelaxSeveral other indicators are less positive than the markets have been. The pattern of Treasury rates known as the yield curve has been predicting a recession since Nov. 8, 2022. Short-term rates — specifically, for three-month Treasuries — are higher than those of longer duration — particularly, for 10-year Treasuries. In financial jargon, this is an “inverted yield curve,” and it often forecasts a recession.Another well-tested economic indicator has been flashing recession warnings, too. The Leading Economic Indicators, an index formulated by the Conference Board, an independent business think tank, is “signaling recession in the near term,” Justyna Zabinska-La Monica, a senior manager at the Conference Board, said in a statement.The consensus of economists measured in independent surveys by Bloomberg and Blue Chip Economic Indicators no longer forecasts a recession in the next 12 months — reversing the view that prevailed earlier this year. But more than 30 percent of economists in the Bloomberg survey and fully 47 percent of those in the Blue Chip Economic Indicators disagree, and take the view that a recession in the next year will, in fact, happen.While economic growth, as measured by gross domestic product, has been surging, early data show that it is slowing markedly, as the bite of high interest rates gradually does its damage to consumers, small businesses, the housing market and more.Over the last two years, fiscal stimulus from residual pandemic aid and from deficit spending has countered the restrictive efforts of monetary policy. Consumers have been spending resolutely at stores and restaurants, helping to stave off an economic slowdown.Even so, a parallel measurement of economic growth — gross domestic income — has been running at a much lower rate than G.D.P. over the last year. Gross domestic income has sometimes been more reliable over the short term in measuring slowdowns. Ultimately, the two measures will be reconciled, but in which direction won’t be known for months.The MarketsThe stock and bond markets are more than eager for an end to monetary belt-tightening.Already, the U.S. stock market has fought its way upward this year and is nearly back to its peak of January 2022. And after the worst year in modern times for bonds in 2022, market returns for the year are now positive for the investment-grade bond funds — tracking the benchmark Bloomberg U.S. Aggregate Bond Index — that are part of core investment portfolios.But based on corporate profits and revenues, prices are stretched for U.S. stocks, and bond market yields reflect a consensus view that a soft landing for the economy is a near-certain thing.Those market movements may be fully justified. But they imply a near-perfect, Goldilocks economy: Inflation will keep declining, enabling the Fed to cut interest rates early enough to prevent an economic calamity.But excessive market exuberance itself could upend this outcome. Mr. Powell has spoken frequently of the tightening and loosening of financial conditions in the economy, which are partly determined by the level and direction of the stock and bond markets. Too big a rally, taking place too early, could induce the Fed to delay rate cuts.All of this will have a bearing on the elections of 2024. Prosperity tends to favor incumbents. Recessions tend to favor challengers. It’s too early to make a sure bet.Without certain knowledge, the best most investors can do is to be positioned for all eventualities. That means staying diversified, with broad holdings of stocks and bonds. Hang in, and hope for the best. More

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      Global Markets Cheer on Better Than Expected Inflation Data

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      A better-than-expected Consumer Price Index report triggered a big surge in stocks and bonds, as investors bet that interest rates will begin to fall.Upbeat investors see Tuesday’s inflation data as a possible turning point in the Fed’s battle against soaring prices.Michael M. Santiago/Getty ImagesGood news for global markets Yesterday’s impressive rally in U.S. stocks and bonds has gone worldwide this morning, as investors see central banks making gains in their fight against inflation. Adding to the good news was a breakthrough in the House last night that could avert a government shutdown.S&P 500 futures signal further gains at the opening bell. The question now is whether this represents a false dawn on inflation, or the start of a durable decline in rising costs — and interest rates.Here’s what’s exciting investors: Yesterday’s cooler-than-expected Consumer Price Index data has shifted discussion in the markets from potential interest rate hikes to cuts, and what that might mean for stocks. President Biden, whose poll ratings have been hurt by inflation, also cheered the numbers.Other promising data points came out this morning. Inflation in Britain fell to its lowest level in two years. And consumer spending and industrial output in China rebounded last month, a hopeful sign for the world’s No. 2 economy.Market optimists have moved up their bets on rate cuts. Futures markets this morning pointed to the Fed starting to lower borrowing costs by May, sooner than previous estimates of closer to the end of 2024.Less aggressive is Mohit Kumar, the chief financial economist at Jefferies, who wrote today that big rate cuts would begin after the presidential election next year. Jefferies predicts the Fed’s prime lending rate going to 3 percent by the end of 2025 from its current level of 5.25 to 5.5 percent.We are having trouble retrieving the article content.Please enable JavaScript in your browser settings.We are confirming your access to this article, this will take just a moment. However, if you are using Reader mode please log in, subscribe, or exit Reader mode since we are unable to verify access in that state.Confirming article access.If you are a subscriber, please  More

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      A Report Card for Bidenomics

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      Voters’ negative perceptions about the economy are weighing on President Biden’s poll numbers. Here’s what his economic policies have, and haven’t, accomplished.President Biden is finding it hard to sell Americans on his economic track record.Kent Nishimura for The New York TimesWhere the economy is working (and where it isn’t) With a year to go before Election Day, polls increasingly show that American voters believe next year will be a rematch between President Biden and Donald Trump — with the former president in the lead in key battleground states despite his legal troubles (more on that below).Biden’s troubles stem in large part from negative perceptions about the economy, even as several indications show that it is performing strongly. Here’s a deeper look at what “Bidenomics” has, and hasn’t, accomplished.On the positive side: jobs. Since Biden took office, employers have created 14 million jobs, and the unemployment rate has been hovering around a 50-year-low for months.The president has also been talking up signature economic accomplishments like the Infrastructure Investment and Jobs Act, which he argues have helped rebuild rural America and invigorated the economy. “Bidenomics is just another way of saying the American dream,” he said in a speech. It’s not a stretch. The economy grew last quarter at nearly 5 percent, belying a global slowdown.On the negative side: inflation. Wages have been growing slowly, but they’ve been offset by rising prices, Biden’s Achilles’ heel. Republicans have blamed the White House’s economic policies for soaring consumer prices, which hit a 40-year high in the summer of 2022.Many economists say global factors are probably more to blame. But the perception of Biden’s culpability here is hurting him.A partial win: the markets. Investors tend to give high marks to presidents whose tenures coincide with strong investment returns. The S&P 500 has gained nearly 15 percent since Biden’s inauguration, weathering much of the slump set off by the Fed’s historic rates-tightening policy. (The bond market has gone in the opposite direction.)That’s decent, but pales in comparison with the Trump years, when the benchmark index climbed more than 65 percent.Biden has been touring the country — on Monday, he was in Delaware to promote federal money flowing to Amtrak, the rail operator — to refocus the public’s perceptions of his economic achievements. Meanwhile, questions swirl over whether Biden can eventually overtake Trump.A reminder: The DealBook Summit is on Nov. 29. Among the guests are Bob Iger of Disney; Lina Khan of the F.T.C.; and David Zaslav of Warner Bros. Discovery. You can apply to attend here.HERE’S WHAT’S HAPPENING Uber’s latest earnings miss expectations. The ride-hailing giant said on Tuesday that it had earned 10 cents per share in the third quarter, below the 12 cents that analysts had forecast. But the company argued that its business showed strong growth in its core mobility division.OpenAI seeks to build on its runaway success. The Microsoft-backed A.I. start-up said that its chatbot, ChatGPT, now had over 100 million weekly active users, giving it a formidable lead in the race to capture artificial intelligence customers. The company also introduced an online store that will let users build customized chatbots.Striking Hollywood actors push back on studios’ latest contract offer. The SAG-AFTRA union said that the “last, best and final” bid still fell short on key issues like the use of A.I., making it unclear when its nearly four-month strike will end. In other labor news, Starbucks will raise the average salary of hourly workers by at least 3 percent.Trump puts his legal liabilities on displayDonald Trump may be handily leading the 2024 election polls. But his appearance in court on Monday, testifying in a civil fraud lawsuit filed by New York State, appeared to do him no favors in efforts to hold onto his business empire.It was a reminder that, while he’s riding high in the presidential race, the former president still faces a thicket of legal battles that could cost him financially and, perhaps, politically.Here are some notable moments from Trump’s testimony:Trump conceded that he had played a role in valuing his company’s properties, an issue at the heart of the case. (New York prosecutors argue that Trump illicitly inflated his net worth to defraud banks and insurers.) Of the company’s financial statements, he said, “I would look at them, I would see them, and I would maybe on occasion have some suggestions.”But Trump also sought to underplay the importance of those statements, saying they were so riddled with disclaimers that they were “worthless.” He promised, unprompted, that some of his bankers would testify in his defense.Trump also assailed the presiding judge, Arthur Engoron, for having decided before the trial that fraud was committed. Engoron appeared exasperated, telling the former president to answer questions and stop delivering speeches.The testimony was a reminder of his political baggage, which was also an undercurrent of the endorsement of Ron DeSantis on Monday by Kim Reynolds, Iowa’s popular governor. Reynolds, whose state’s caucuses could be crucial in bolstering a Trump rival, said that the U.S. needed a president “who puts this country first and not himself” — a thinly veiled rebuke of Trump.His legal issues don’t appear to have dented his popularity. He has contended that he is being politically persecuted — “People like you go around and try to demean me and try to hurt me,” he told a state lawyer on Monday — an argument that some of his supporters have embraced.In a sign of his enduring political strength, the betting site PredictIt puts Trump’s odds of winning the nomination on Monday at more than four times that of his nearest competitor in its market, Nikki Haley.Dina Powell McCormick, in 2017, when she was a deputy national security adviser during the Trump presidency.Al Drago for The New York TimesExxon Mobil taps a Wall Street and D.C. power player Dina Powell McCormick, a former Goldman Sachs executive and onetime Trump administration official, is joining the board of Exxon Mobil effective Jan. 1. Her appointment comes as energy groups have embarked on a series of big deals on the back of soaring oil prices and bumper profits.Powell McCormick has long been one of the most senior women on Wall Street. Before joining BDT & MSD partners, an investment and advisory firm, earlier this year, she spent 16 years at Goldman Sachs. Powell McCormick led the Wall Street giant’s global sovereign business and sustainability, and she was a member of its management committee, among other roles.Powell McCormick has also been a Washington power player. She has spent more than a dozen years working in government. From 2017 to 2018, she was a deputy national security adviser to Trump and played a significant role on Middle East policy, including efforts to broker a peace deal between Israel and the Palestinians. (Her husband, David McCormick, is a former C.E.O. of the hedge fund Bridgewater and was a Treasury Department official under Hank Paulson. He is running for Senate in Pennsylvania as a Republican.)Powell McCormick’s appointment even won backing from Mike Bloomberg, who is spending billions to fight climate change — a sign of how wide-ranging her political and business relationships are.“Dina has been a close partner for years through her role as global head of sustainability at Goldman Sachs,” Bloomberg said, “and we have teamed up to create new partnerships that invest in market-driven ways to create clean energy and advance climate transition goals.”Energy giants are on a deal spree. Exxon reported quarterly profits of $9.1 billion last month, as oil prices have surged and demand has skyrocketed after Russia’s invasion of Ukraine. In October, Exxon agreed to acquire the shale oil specialist Pioneer Natural Resources for around $60 billion and Chevron struck a $53 billion deal to buy Hess. Exxon’s board had been in the spotlight over the energy transition. Engine No. 1, an activist investor, won three seats after targeting the company over its governance and environmental track record. But two years later, the firm changed course, saying that Exxon had made big changes. Exxon, however, has resisted calls to pour more money into renewable energy, arguing that its money is better on low-carbon investments.Tracing WeWork’s rise and spectacular fallWeWork finally filed for bankruptcy protection on Monday, after years of struggling with crushing debt and the coronavirus pandemic’s emptying out of office spaces — and that’s even after it had abandoned the runaway growth it pursued under its co-founder, Adam Neumann.The company that sought Chapter 11 is a shell of the real estate juggernaut that first sought to go public at a $47 billion valuation. (Its stock is down 98 percent this year.) Here’s how the business once lauded by the Japanese tech investor SoftBank as a revolution went astray.WeWork has been on its heels since it scrapped its I.P.O. plans in 2019. The company had been riding high, buoyed by Neumann’s promises that the start-up — whose business involved leasing out office space for co-working — would “elevate the world’s consciousness.” But then:Prospective investors blanched at the company’s steep losses, lax corporate governance and the controversies that dogged Neumann. (Activities on private jets were among them.) And the S.E.C. criticized the company’s disclosure involving mismatches between long-term financial obligations and its short-term assets. Neumann stepped down after WeWork shelved its I.P.O., and SoftBank provided it with a multibillion-dollar lifeline.Under a new C.E.O., Sandeep Mathrani, WeWork confronted the devastating effect of pandemic lockdowns and the rise of remote working. The company went public — via a blank-check vehicle — in 2021, while it started closing locations and renegotiating leases.Mathrani left in May, reportedly after clashing with SoftBank. His replacement, David Tolley, has kept trying to right the ship, but WeWork warned in August that there was “substantial doubt” about its future. Last month, it said it would miss interest payments on its debt.WeWork’s filing raises questions about the fate of commercial real estate. The company noted on Monday that it had reached agreements with about 92 percent of creditors holding secured debt. Its restructuring involves reducing its real estate portfolio.The company is one of the largest corporate tenants in New York and London, and any move to shed more of its leases would hurt commercial landlords that are themselves struggling to pay their debts.THE SPEED READ DealsResearch analysts at some of the banks that took Birkenstock public wrote in their initial reports on the sandal maker that its I.P.O. was valued too high. (Bloomberg)“Warring Billionaires, a Rogue Employee, a Divorce: One Hedge Fund’s Tale of Woe” (NYT)PolicyIntel is reportedly the leading candidate to land billions of dollars in federal funding to build secure plants to make chips for use by the U.S. military and intelligence agencies. (WSJ)A man who posed as a billionaire rabbi and made a $290 million takeover bid for the retailer Lord & Taylor was sentenced to more than eight years in prison. (Bloomberg)Best of the restDisney hired Hugh Johnston, the longtime finance chief at PepsiCo, as its new C.F.O. (CNBC)The founder of the dating app Bumble, Whitney Wolfe Herd, is stepping down as C.E.O. (NYT)We’d like your feedback! Please email thoughts and suggestions to dealbook@nytimes.com. More

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      Ramaswamy Investments Seem at Odds With His Position on ‘Woke’ Culture

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      The billionaire biotech mogul has railed against socially conscious companies. But his financial disclosure shows he has a stake in some of the leaders in the field.Vivek Ramaswamy, a Republican presidential candidate who made a fortune in the biotech industry, has caught the interest of primary voters with fiery critiques of the socially conscious practices of U.S. corporations, which he laid out in a book, “Woke, Inc.: Inside Corporate America’s Social Justice Scam.”But Mr. Ramaswamy himself owns valuable investments in many companies that have embraced environmental, social and governance principles, known as E.S.G. — the kinds of “woke” corporate practices he decries — according to a financial disclosure filed with the Federal Election Commission that was released on Friday.While many of the companies in which Mr. Ramaswamy holds an interest are household names, they are also leaders in the corporate movement to address social and environmental issues.Among the companies that Mr. Ramaswamy is invested in are Microsoft (his holdings are valued from $1 million to $5 million), Home Depot ($250,000 to $500,000), Lockheed Martin ($500,000 to $1 million) and Waste Management ($500,000 to $1 million). All adhere to various E.S.G. principles, according to reports posted on their websites.Mr. Ramaswamy has argued that such goals are a distraction from earning a profit, and that social objectives should be left to elected officials.Tricia McLaughlin, a senior adviser to Mr. Ramaswamy, said that he did not manage his own stock portfolio. “The first time Vivek learned of these positions was when he saw this financial disclosure report,” Ms. McLaughlin said on Friday. “Vivek’s stock portfolio is independently managed by a third party. The filer has authority to make trades and invest in stocks without his expressed consent or knowledge.”Mr. Ramaswamy, a long-shot candidate who has said that he would go further than the Republican front-runner, former President Donald J. Trump, on conservative issues, has been unusually transparent about his wealth, earlier releasing 20 years of his tax returns.But until he filed his financial disclosure with election officials, there were few details. The filing reported that Mr. Ramaswamy owned up to a $25 million investment in Rumble, the video platform that styles itself a refuge for right-wing commentators shunned elsewhere. He owns up to $300,000 in cryptocurrency, primarily Bitcoin, and an investment worth up to $100,000 in a cryptocurrency app named MoonPay. He also has interests in three private planes.Mr. Ramaswamy, 37, is a Cincinnati native who holds degrees from Harvard and Yale. He founded Roivant Sciences in 2014, a company that develops and markets drugs, and that is the primary source of his wealth. Though he stepped down as chairman in February when he announced his candidacy, earlier reporting showed that he remained one of the largest shareholders. On the federal disclosure, the value of his Roivant holdings is listed as “over $50 million,” which is the largest category used on the form.According to Ms. McLaughlin, Mr. Ramaswamy’s total worth is more than $1 billion.Besides Roivant, Mr. Ramaswamy’s portfolio has diversified into investments in major U.S. companies that many Americans would recognize from their own retirement accounts. These holdings are valued between $39.6 million and $125 million. (The amounts on the form are reported within a range.) In addition, he reported over $50 million in holdings in Strive Enterprises, an investment company he created to manage funds that invest in companies without regard to social objectives.Sales of Mr. Ramaswamy’s book “Woke, Inc.,” which lays out his case against corporations attempting to factor in social goals, earned its author $203,860 in royalties.The report suggests one area in which Mr. Ramaswamy is more modest than other members of his ultrawealthy cohort: He owns just a single residence, in Columbus, Ohio. Its value was pegged between $1 million and $5 million. More

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      The Week in Business: Trump on TV

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      Giulio BonaseraWhat’s Up? (May 7-13)CNN’s TrumpcastUntil last week, former President Donald J. Trump had not appeared on CNN since 2016. But at a town hall hosted by the network on Wednesday night, Mr. Trump, the Republican front-runner in the 2024 presidential campaign, resumed the lies and name-calling that marked his presidency. Answering questions from the anchor Kaitlan Collins, he repeated misinformation about the 2020 election, called the writer E. Jean Carroll, who won a suit accusing him of sexual abuse and defamation, a “wack job” and derided Ms. Collins as a “nasty person.” When Ms. Collins tried to correct Mr. Trump’s lies, he often talked over her. The largely sympathetic audience cheered him on throughout the evening. Critics of CNN’s forum said it was reckless to give Mr. Trump such a large platform for his message, especially because it proved difficult to fact check his statements in real time. The chairman of CNN, Chris Licht, defended the broadcast on Thursday, saying it underscored that covering Mr. Trump would “continue to be messy and tricky.”Inflation Is SlowingA closely watched report on Wednesday showed that inflation in the United States had reached a noteworthy milestone: April was the 10th straight month that the pace of price increases slowed. The Consumer Price Index climbed 4.9 percent from a year earlier, surpassing analysts’ expectations — in a good way. Economists in a Bloomberg survey had forecast a 5 percent climb. Core inflation, which strips out volatile food and fuel costs, also fell slightly. The report comes on the heels of the Federal Reserve’s 10th consecutive increase to its benchmark rate. The latest inflation data, along with other signs of a slowdown in the economy, could make the May increase the last one for now. Elon Musk’s AnnouncementElon Musk long ago asked users on Twitter if he should step down as chief executive of the platform. “I will abide by the results of this poll,” he said. The results came in: Almost 58 percent of the 17.5 million people who voted agreed that Mr. Musk should leave his post. But it was still somewhat surprising when Mr. Musk announced on Friday that he had chosen his replacement: He said his successor would be Linda Yaccarino, the chair of global advertising and partnerships at NBCUniversal. Mr. Musk said Ms. Yaccarino, who recently interviewed him onstage at an advertising event in Miami, would focus on business operations while he would continue to work on product design and technology.Giulio BonaseraWhat’s Next? (May 14-20)Senate Hearings on the Banking CrisisTwo groups that have sought to blame each other for the recent bank failures will appear at a pair of Senate hearings this week — the heads of those banks and the federal regulators who oversee them. On Tuesday, Greg Becker, the former chief executive of Silicon Valley Bank, who stepped down from his post after the bank’s collapse in March, will testify before the Senate Banking Committee. Two former top executives from Signature Bank, which failed two days later, will also testify. They are expected to meet a harsh reception from lawmakers. In a letter summoning Mr. Becker to appear, the chairman of the committee wrote, “You must answer for the bank’s downfall.” Regulators can expect a grilling, too, at a separate hearing on Thursday. When regulators appeared before the committee last month, members of Congress on both sides of the aisle faulted shortcomings in oversight for the banking crisis. Regulators also pointed the finger at the banks’ mismanagement.More Turmoil at FoxDominion Voting Systems’ defamation suit against Fox News, which was settled for $787.5 million in April, may have been only the opening salvo in a long fight to hold the network accountable for airing misinformation about the 2020 presidential election. Last week, Nina Jankowicz, a prominent specialist in Russian disinformation and online harassment, filed a new defamation suit accusing Fox of spreading lies about her that led to serious threats to her safety and harm to her career. That’s not Fox’s only legal trouble. It still faces a defamation suit from another election technology company, Smartmatic, which is seeking $2.7 billion in damages. Meanwhile, Tucker Carlson, the network’s star host who was recently ousted and is still under contract, has said he is starting his own show on Twitter, a sign that negotiations to reach an amicable separation with the network have broken down.Report Cards for Big Box StoresWalmart and Target, two of the country’s largest retailers, will release their quarterly earnings reports this week, providing a glimpse at how inflation — which is falling but persistent — is affecting consumers. For the three months that ended in January, Walmart reported that its revenue was 7.3 percent higher than a year earlier and said December was its best month for sales at its U.S. stores in its history. But the company warned of dimmer prospects for the rest of the fiscal year, suggesting that consumers’ ability to absorb higher prices could be approaching its limit. Other retailers struck similar downbeat notes, suggesting that they expected conditions to worsen in the coming months.What Else?Goldman Sachs said on Monday that it would pay $215 million to settle a gender bias suit accusing the bank of hindering women’s career advancement and paying them less than their male colleagues. Disney, in its quarterly earnings report last week, said that it had narrowed its streaming losses but that revenue from its old-line TV channels had fallen sharply. And Peloton said it was recalling more than two million exercise bikes because of reports of a faulty part. More

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      The Week in Business: Fox News Anchors’ Private Messages

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      Giulio BonaseraWhat’s Up? (March 5-11)Tucker Carlson’s Private TextsNew documents released last week revealed the disconnect between the Fox News anchors’ privately held opinions and those they espoused publicly — and shared with millions of viewers — on their television programs. In particular, Tucker Carlson’s views on Donald J. Trump and the outcome of the 2020 presidential race have been shown to contrast sharply with the messaging of his show, which supported Mr. Trump and promoted his unfounded belief that the election had been stolen. Yet at the same time, Mr. Carlson was sending texts to members of his staff about Mr. Trump like “I hate him passionately.” He is not the only Fox employee to be featured in the documents, which are part of the $1.6 billion defamation suit against Fox News by the voting technology company Dominion Voting Systems and include the messages of other network stars like Laura Ingraham. But Mr. Carlson’s texts include some of the starkest language about the former president and drew special attention from the White House in a statement on Wednesday criticizing Mr. Carlson for his on-air portrayal of the Jan. 6 Capitol attack as a largely peaceful event.Biden’s Budget ProposalPresident Biden on Thursday unveiled a $6.8 trillion budget that sought to increase spending on the military and a wide range of new social programs while also reducing budget deficits by nearly $3 trillion over a decade. The proposal was meant to address a partisan fight over the country’s national debt. Mr. Biden’s proposal provides for funding for an array of new programs, including billions on guaranteed paid leave for workers, free community college and an expanded child tax credit. The budget plan — which also calls for a new 25 percent minimum tax on billionaires — is widely considered dead on arrival in the Republican-controlled House. Speaker Kevin McCarthy said Mr. Biden’s proposals were “completely unserious.”Job Growth Holds StrongThe Labor Department reported on Friday that U.S. employers added 311,000 jobs in February. Forecasters had expected to see a figure around 215,000, which would have been more in line with jobs reports from the second half of 2022. But the general downward trajectory of those jobs numbers took an unexpected turn in January, when new jobs surged to 517,000. So while job growth has eased somewhat in the last month, it remains resilient in the face of the Federal Reserve’s efforts to slow the economy. This latest jobs data also suggests that employer confidence is still relatively high, even as layoffs begin to rise.Giulio BonaseraWhat’s Next? (March 12-18)Next on the Economic CalendarWhen Jerome H. Powell, the Fed chair, spoke to Congress last week, he largely avoided committing to a strategy for taming inflation. Speaking before the Senate Banking Committee on Tuesday and the House Financial Services Committee on Wednesday, Mr. Powell said he and his colleagues were prepared to take a more aggressive tack and raise rates more quickly, if needed. But much of the Fed’s decision-making depended on the inflation and jobs reports. So Fed officials will be paying close attention (as they always do) to the Consumer Price Index data that will arrive on Tuesday. The last reading showed that while overall inflation had cooled, it was only a slight change, and core inflation — which strips out volatile food and fuel costs — remained fast.Shockwaves From a Bank RunIn an ominous sign for global banking, the Federal Deposit Insurance Corporation last week seized Silicon Valley Bank, a prominent investor in tech start-ups. The bank touched off investor panic when it announced on Wednesday that it had sold off $21 billion of its most liquid investments, borrowed $15 billion and organized an emergency sale of its stock to raise cash. These were urgent and extraordinary measures that banks go to great lengths to avoid. Investors at some venture capital firms urged their clients to move their money from the bank over concerns about its financial solvency. Less than two days later, the F.D.I.C. took control of the bank and created a new one, the National Bank of Santa Clara, to hold customers’ deposits and assets. A Ruling on Gig WorkA court is expected to hand down its ruling this week on Proposition 22, a ballot measure in California that would allow gig economy companies like Lyft and Uber to continue treating drivers as independent contractors. The battle over the status of these workers in the state — who number at least one million — ramped up in 2019, when California legislators passed a law requiring these companies to give their drivers the full protections of employment. But after the ride-hail apps threatened to suspend operations in the state, an appeals court granted them a temporary reprieve and the companies poured millions into getting Prop. 22 on voters’ ballots. A majority of voters approved the measure in November 2020, but it was swiftly challenged by a coalition of ride-hail drivers and labor groups, ruled unconstitutional by a California judge and appealed through the courts.What Else?Walgreens is facing blowback after announcing that it would not dispense abortion pills in 21 states where Republican attorneys general are threatening legal action against pharmacies that distribute the medication. Roger Ng, a former Goldman Sachs banker convicted last year for his role in a money-laundering scheme known as the 1MDB scandal, was sentenced on Thursday to 10 years in prison. And JPMorgan Chase on Wednesday sued James E. Staley, a former top executive, accusing him of failing to fully inform the bank about what he knew about the convicted sex offender Jeffrey Epstein. More

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      The Fed’s Struggle With Inflation Has the Markets on Edge

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      The central bank’s success or failure will affect your wallet and, maybe, the next election, our columnist says.Clarity about the future of inflation and the stock and bond markets would be wonderful right now, but that’s just what we don’t have.What we do have are enormous quantities of inconclusive data. There is something for everyone, and for every possible interpretation.The Federal Reserve is intent on whipping inflation now — to borrow an infamous phrase from the Ford administration, which failed spectacularly to “WIN” in the 1970s. But despite a series of steep interest rate increases by the Fed, and its stated intention to raise rates further this year, inflation remains intolerably high.“We’re stuck in the messy middle,” Josh Hirt, senior economist at Vanguard, said in a note this month.It’s a muddle right now, and the lurching stock and fixed-income markets reflect investors’ uncertainty.In testimony before Congress on Tuesday and Wednesday, Jerome H. Powell, the Fed chair, made it clear that the central bank not only intends to keep raising interest rates, but will increase them even more than “previously anticipated” if it deems that necessary to squelch inflation.It’s too soon to say how effective the measures taken by the Fed have been. The economy has been generating a lot of jobs and unemployment is quite low, but corporate earnings are beginning to fall. At some point, the economy is going to slow down — Vanguard thinks that may not happen until the end of the year. We may be heading into a recession. Or we may not be. The verdict isn’t in yet.Really long-term investors can ride out the turmoil, and those who prize safety above all else have reasonably good options now, too: There are plenty of attractive, high-interest places to park your cash.But what transpires in the next few months will still be critical for consumers and investors, and may even determine the outcome of the next presidential election. Considering what’s at stake, it is worth wading a little more deeply into this morass.The Fed and InflationThe Fed finds itself in a difficult spot. It has declared that it intends to bring inflation down to its longtime 2 percent target, but prices keep rising much faster than that.Our Coverage of the Investment WorldThe decline of the stock and bond markets this year has been painful, and it remains difficult to predict what is in store for the future.Value and Growth Stocks: Eight tech giants are no longer “pure growth” stocks, while Exxon and Chevron are, according to a new study. Here is what that means for investors.2023 Predictions: There are plenty of forecasts coming for where the S&P 500 will be at the end of the year. Should you be paying attention to them?May I Speak to a Human?: Younger investors who are navigating market volatility and trying to save for retirement are finding that digital investment platforms lack the personal touch.Tips for Investors: When you invest and where matters for taxes. But a few rules of thumb can stave off some nasty surprises.That 2 percent target is an arbitrary number, without much science to it. Whether 2 percent inflation is better than, say, 1.5 or 2.5 or 3 percent inflation — and how the inflation rate should be measured — are all open for debate. Let’s save those issues for another day.For now, the Fed has drawn a red line at 2 percent, and its credibility is at stake. The Consumer Price Index in January rose at more than three times that target rate.  The Personal Consumption Expenditures price index, which the Fed favors — and which, not coincidentally, generally produces lower readings than the C.P.I. — rose at a 5.4 percent annual rate in January, which was more than in the previous month. No matter how you slice it, inflation is ugly.So the Fed has few immediate options. It will keep raising the federal funds rate, the short-term interest rate it controls, in an effort to slow the economy and squelch inflation. The only questions are how high it will go and how rapidly it will get there. Traders in the bond market, who set longer-term rates through bidding and purchases, have had trouble coming up with consistent answers.  The central bank has already raised the short-term federal funds rate substantially and quickly, to a range of 4.5 to 4.75 percent, up from near zero just a year ago. But the federal funds rate is a blunt instrument, and the economic effects of these rate increases operate with a significant lag,The Fed could easily plunge the economy into a major recession. In a misguided bet that the Fed would beat inflation quickly or that a recession would arrive so definitively that the Fed could reverse course, bond traders began moving longer-term rates lower in October. That optimism also set off a stock market rally.But lately, with inflation and the economy failing to respond as traders had expected, the outlook has turned gloomier. Treasury yields reached or exceeded 5 percent for so-called risk-free securities in the range of three months to two years. That’s an attractive proposition in comparison with the stock market, and it’s no accident that stocks have fallen.Bonds and StocksEven 10-year Treasury yields have ascended to the 4 percent range. Compared with stocks, Treasuries in a murky market are, for the moment, exceptionally attractive.Falling earnings haven’t helped the stock market, either. For the last three months of 2022, the earnings of companies in the S&P 500 declined 3.2 percent from a year earlier, according to the latest I/B/E/S data from Refinitiv. And if you exclude the windfall from the energy sector, where prices were bolstered by Russia’s war in Ukraine, earnings fell 7.4 percent, the data showed.Corporate prospects for 2023 have begun to dim a bit, too, executives and Wall Street analysts are concluding. On Feb. 21, both Home Depot and Walmart warned that consumer spending had come under strain. The S&P 500 fell 2 percent that day, the worst performance for the short year to that date, in what Howard Silverblatt, a senior analyst for S&P Dow Jones Indices, called a “turnaround point” for the stock market.Whipping InflationIt’s early yet in 2023, but so far, stock investors are maintaining a relentless focus on the Fed, whose policymakers next meet March 21 and 22 and are all but certain to raise short-term interest rates further. The only questions are by how much, and how high rates will end up before the Fed concludes that it has accomplished its objective.  But with Mr. Powell aspiring to achieve the performance of his illustrious predecessor Paul A. Volcker, who vanquished inflation in the 1980s and set off two recessions to do it, it’s a fair bet that the Fed won’t back off its rate tightening policy soon.Bring down inflation and you are likely to be remembered as a hero. Bungle the job and you may well be memorialized as officials in President Gerald R. Ford’s administration have been, for their hapless effort to “whip inflation now.” In a widely derided public relations stunt in 1974, when inflation was running above 12 percent, the Ford White House distributed buttons with the WIN acronym, but that administration never beat inflation.It wasn’t until the next president, Jimmy Carter, appointed Mr. Volcker that the Fed even began to get control of inflation — and Mr. Volcker didn’t finish the job until the Reagan administration was well underway.The 2024 ElectionThe outcome of the next presidential election could well depend on whether the Fed gets the job done this time — and whether it causes a severe recession in the process.Ray Fair, a Yale economics professor who has been predicting presidential and congressional elections for decades, points out in a succinct note on his website that the political effects of the Fed’s efforts will be large. In his work, Professor Fair relies only on economic variables — and not the customary staples of political analysis — to forecast elections. His record is excellent.He outlines two paths for the economy. Because President Biden is an incumbent, and is likely to run for re-election, good economic results would be expected to help his cause.“In the positive case for the Democrats, if inflation is 3 percent in 2023 and 2 percent in 2024,” Professor Fair wrote, and if the economy grows at 4 percent rate in 2024 before the election, his economic model says the Democratic candidate is highly likely to win the presidency.On the other hand, he said, “in the negative case for the Democrats, if inflation is 5 percent in 2023 and 4 percent in 2024” and if the economy shrinks 2 percent in 2024 — in a recession — a Republican is highly likely to be the next president. He added, “Somewhere in between regarding the economy will mean a close election.”These statements assume that only the two main political parties mount credible campaigns. A well run third-party candidacy would complicate matters considerably.I’m not making any bets, either on politics or on the economy.  It’s all too complex and confused now.As always, for investments of at least a decade and, preferably, longer, low-cost index funds that mirror the entire markets are a good choice.Bonds are a safe and well-paying option right now. So is cash, held in money market funds or high-yield bank savings accounts.We may well be at a turning point, but taking us where, exactly? Unless you somehow know, it may be wise to play it safe for a while. More