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      At BlackRock, State Street and Vanguard, Millions of Investors Are Getting a Voice

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      BlackRock, State Street and Vanguard have opened up voting on environmental, social and management issues. It’s not true shareholder democracy, but it’s progress.Index fund investing has swept the world. In December, for the first time, U.S. investors entrusted more money to index funds than actively managed funds, in which a manager picks stocks or bonds for you.There’s a good reason for the index funds’ popularity. For most people, owning a little piece of the entire market, which you can do at low cost with an index fund, has been more profitable than buying and selling securities, either on their own or through a manager.But the relentless growth of index funds has come at a cost. One significant problem is that the most diversified funds own shares in every publicly traded company in the market, and if you don’t like a company, or its specific policies, you’re stuck. You couldn’t even exercise your vote on issues you thought were important because until recently, the fund managers insisted on doing that for you.Well, that’s been changing in a big way.BlackRock announced this month that it was expanding an experimental program to give investors six flavors of policy choices — like a focus on climate change or a preference for religious values — in votes on corporate issues. State Street already has a similar program underway, and Vanguard is tiptoeing into this kind of voting choice, too.All told, the three giant fund companies have given scores of millions of investors, with $4.6 trillion in assets, a way of expressing their views on corporate issues. This is certainly an improvement. And it could eventually lead to profound changes throughout corporate America, even as it eases some ticklish problems for the big index fund companies.The ProblemsIn the view of scholars like John Coates, the author of “The Problem of 12: When a Few Financial Institutions Control Everything,” the growth of index funds has had the unintended consequence of diminishing shareholder democracy.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? Log in.Want all of The Times? Subscribe. More

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      January Was Awesome for Stock Pickers, but Can They Keep It Going?

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      Most active fund managers beat the market at the start of the year. But history suggests that they’re not likely to keep doing so for long.Over the last 20 years, stock pickers have had a dismal record. Most haven’t come close to beating the overall stock market.But occasionally, there are exceptions. In some periods, stock pickers rule, and the start of this year was one of those times.In fact, it was the best January for actively managed stock mutual funds since Bank of America began compiling data in 1991. It wasn’t just that they turned in handsome returns for investors. The entire stock market did that. The S&P 500 and other stock indexes set records during the month.It was that active stock funds did even better, though not by much, beating various market indexes by less than a percentage point, on average. Still, it was the best single month for these funds — in which managers buy and sell individual stocks whenever they choose to do so — since 2007. That happened to be the best calendar year for stock pickers in decades.There’s no way of knowing how long this streak of outperformance will go on, or why, exactly, it has existed in the first place. But it’s quite possible that it will continue for the balance of the year, and that buying the average actively managed fund will look like a brilliant move. Index funds that mirror the entire market could well lag behind.That said, I think the active fund managers are unlikely to prevail over the long run. The reason is that history shows it’s just too hard to beat the market.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? Log in.Want all of The Times? Subscribe. More

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      Stocks Sink as Stubborn Inflation Resets Fed Rate Forecasts

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      Stock markets tumbled on Tuesday as investors slashed their bets on the Federal Reserve taking the brakes off the economy in the coming months, after hotter-than-expected inflation data led traders to expect interest rates will remain higher for longer.The benchmark S&P 500 stock index fell over 1 percent in early trading. The index has only suffered such a large loss on one other day this year, with bullishness about the resilience of the economy and corporate profits continually pushing stocks to new highs.Investors still expect the Fed to pull inflation back to manageable levels without inflicting too much pain on the broader economy. But that forecast was put under pressure on Tuesday by a consumer inflation report that showed prices rising more quickly than had been forecast.The consumer data “came in stronger than either the Fed or the market wanted or expected,” said Greg Wilensky, head of U.S. fixed income at Janus Henderson Investors.The longer inflation remains elevated, the longer the Fed is likely to push off rate cuts, turning the screws on an economy that is already starting to show some signs of weakness, and tempering enthusiasm on Wall Street.Stuart Keiser, an equity analyst at Citi, said the inflation data was “not a game-changer” but that it was likely to drive a short-term retrenchment in the stock market as investors dial back hopes for rate cuts. “Today’s print was clearly not a good one,” he said.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? Log in.Want all of The Times? Subscribe. More

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      Moody’s Downgrades Israel’s Credit Rating, Citing Toll of War With Hamas

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      Moody’s on Friday became the first major rating agency to downgrade Israel’s creditworthiness, citing the prolonged war with Hamas and the toll it is taking on the country’s finances.Moody’s, one of three major rating agencies alongside S&P Global Ratings and Fitch, lowered Israel’s rating from A1 to A2. Credit ratings range from a low of D or C (for S&P and Moody’s scales) to AAA or Aaa for the most pristine borrowers. A rating of A2 is still a high rating, but Moody’s also noted that the outlook for the country was negative, dented by the social, political and economic risks arising from the conflict with Hamas. The rating agency had put Israel on review after the Hamas-led Oct. 7 attacks, in which more than 1,200 people were killed, according to Israeli officials, and more than 250 taken hostage. Both S&P and Fitch also began to reassess Israel’s credit rating in November but have yet to take any action as a result. In a statement announcing the decision, Moody’s said that it downgraded Israel because “the ongoing military conflict with Hamas, its aftermath and wider consequences materially raise political risk for Israel as well as weaken its executive and legislative institutions and its fiscal strength, for the foreseeable future.”Moody’s said it expected Israel’s military spending to double 2022’s outlay by the end of this year. That means more debt to fund the increase in spending.It is typical for rating agencies to reassess a country’s creditworthiness after a major event that is likely to affect its ability to repay its lenders. Credit ratings are required by many investors who buy the debt of companies and countries as an indicator of the likelihood that they will get back the money they lent out. S&P, which has also been re-evaluating Israel’s credit rating since October, has planned an update to the country’s credit rating for May 10. The rating agency noted in a report in November that Israel’s diversified economy and strong tech sector should give its finances ballast during the war, though it warned that a further escalation of the conflict to regions outside Gaza could strongly affect its decision-making. “We could lower the ratings on Israel if the conflict widens materially, increasing the security and geopolitical risks that Israel faces,” S&P’s analysts noted. “We could also lower the ratings in the next 12-24 months if the impact of the conflict on Israel’s economic growth, fiscal position and balance of payments proves more significant than we currently project.” More

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      New York Asks Realty Company to Investigate Sexual Assault Allegations

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      The state comptroller wants eXp Realty to look into allegations that female real estate agents were drugged and assaulted during company events.The New York state comptroller has asked the real estate brokerage eXp Realty to open an independent investigation into sexual harassment and assault allegations exposed in a New York Times article last month.As New York’s chief fiscal officer, the comptroller, Thomas DiNapoli, is the trustee of the New York State Common Retirement Fund. According to the most recent SEC filing, the pension fund held nearly 27,000 shares of eXp World Holdings, the publicly-held parent company of eXp Realty.In two separate lawsuits, five current and former agents at eXp Realty said that two top agents at the brokerage drugged and them assaulted them at separate eXp recruiting events. Four of them said they were subsequently sexually assaulted, and The Times investigation uncovered a pattern of eXp leadership silencing those who tried to make reports.“The New York Times report raised a huge red flag for us as an investor in that company,” Mr. DiNapoli said in an interview. “We found the allegations very concerning and as a shareholder, we are asking questions. We want a public reporting of their efforts to prevent harassment.”With $2 billion and $90,000 agents, eXp Realty is one of the world’s fastest-growing brokerages. Ariana Drehsler for The New York TimesHe sent a letter to the eXp chief executive, Glenn Sanford, requesting that the company establish an independent committee to look not only into the allegations, but into gaps in policies that may have set the stage for assaults to occur. Mr. DiNapoli wrote that he was concerned about the “legal and reputational risks” presented by the allegations.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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      Real Estate Giant China Evergrande Will Be Liquidated

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      After multiple delays and even a few faint glimmers of hope, a Hong Kong court has sounded the death knell for what was once China’s biggest real estate firm.Months after China Evergrande ran out of cash and defaulted in 2021, investors around the world scooped up the property developer’s discounted I.O.U.’s, betting that the Chinese government would eventually step in to bail it out.On Monday it became clear just how misguided that bet was. After two years in limbo, Evergrande was ordered by a court in Hong Kong to liquidate, a move that will set off a race by lawyers to find and grab anything belonging to Evergrande that can be sold.The order is also likely to send shock waves through financial markets that are already skittish about China’s economy.Evergrande is a real estate developer with more than $300 billion in debt, sitting in the middle of the world’s biggest housing crisis. There isn’t much left in its sprawling empire that is worth much. And even those assets may be off limits because property in China has become intertwined with politics.Evergrande, as well as other developers, overbuilt and over promised, taking money for apartments that had not been built and leaving hundreds of thousands of home buyers waiting on their apartments. Now that dozens of these companies have defaulted, the government is frantically trying to force them to finish the apartments, putting everyone in a difficult position because contractors and builders have not been paid for years.What happens next in the unwinding of Evergrande will test the belief long held by foreign investors that China will treat them fairly. The outcome could help spur or further tamp down the flow of money into Chinese markets when global confidence in China is already shaken.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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      U.S. Economy Grew at 3.3% Rate in Latest Quarter

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      The increase in gross domestic product, while slower than in the previous period, showed the resilience of the recovery from the pandemic’s upheaval.The U.S. economy continued to grow at a healthy pace at the end of 2023, capping a year in which unemployment remained low, inflation cooled and a widely predicted recession never materialized.Gross domestic product, adjusted for inflation, grew at a 3.3 percent annual rate in the fourth quarter, the Commerce Department said on Thursday. That was down from the 4.9 percent rate in the third quarter but easily topped forecasters’ expectations and showed the resilience of the recovery from the pandemic’s economic upheaval.The latest reading is preliminary and may be revised in the months ahead.Forecasters entered 2023 expecting the Federal Reserve’s aggressive campaign of interest-rate increases to push the economy into reverse. Instead, growth accelerated: For the full year, measured from the end of 2022 to the end of 2023, G.D.P. grew 3.1 percent, up from less than 1 percent the year before and faster than in any of the five years preceding the pandemic. (A different measure, based on average output over the full year, showed annual growth of 2.5 percent in 2023.)There is little sign that a recession is imminent this year, either. Early forecasts point to continued — albeit slower — growth in the first three months of 2024. Layoffs remain low, and job growth has held steady. Cooling inflation has meant that wages are again rising faster than prices. And consumer sentiment is at last showing signs of rebounding after years in the doldrums.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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      Tesla Shares Tumble As Growth Stalls

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      Shares in Elon Musk’s electric vehicle maker fell sharply after the company delivered lackluster quarterly results and declined to give full-year guidance.Growth has slowed at Tesla, Elon Musk’s electric vehicle maker.Haiyun Jiang for The New York TimesTesla plunges Elon Musk and Tesla shareholders are at a crossroads.Hit by a bruising price war, intensifying competition in North America, Europe and China, and Musk’s demands for billions in new Tesla shares, the electric vehicle’s stock has plunged this year, lopping roughly $130 billion off its market capitalization.Shares are down roughly 8 percent on Thursday in premarket trading after Wednesday’s lackluster year-end results.But Musk sees reason for optimism. He asked investors to look beyond 2024, predicting a “major growth wave” fueled by a low-cost Tesla model that will be built partly in Austin, Texas, and Mexico.Wall Street doesn’t appear to be buying the message. The latest stock fall comes after Tesla reported that fourth-quarter profit nearly doubled to $7.9 billion — largely thanks to a one-time tax break. The company also declined to give detailed full-year guidance, but said it expected sales growth to be “notably slower.”“Tesla is signaling that the days of 50 percent or even 30 percent to 40 percent growth year-over-year is not going to happen in 2024,” Seth Goldstein, a Morningstar Research analyst, told Bloomberg. “At a certain point, you can’t cut prices anymore.”Musk doubled down on his call for more shares. He stunned investors this month when he said that if the board didn’t increase his stake, to 25 percent from 13 percent, he would consider developing new artificial intelligence products “outside of Tesla.” That spooked even Tesla bulls who feared that granting Musk so many shares would dilute their holdings. Failing to do so could risk Musk hiving off the A.I. work that had driven investor enthusiasm in the stock.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