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Federal Reserve holds rates steady. Here's what that means for your money. 2024-05-01 21:20:00+00:00 - Federal Reserve officials said they are leaving their benchmark rate untouched, noting that progress in taming U.S. inflation has stalled. The Fed on Wednesday said it is keeping the federal funds rate in a range of 5.25% to 5.5%, the same level it has held since the central bank's July 2023 meeting, which is its highest level in more than 20 years. Economists had largely expected the decision given that inflation had ticked upward in the first three months of 2024. Fed Chairman Jerome Powell has repeatedly said the central bank prefers to keep rates high until inflation retreats to about 2% on an annual basis, rather than risking cutting too early and fueling another round of price spikes. Despite the Fed's flurry of interest rate hikes, inflation remains stubbornly high, with March prices rising 3.5% from a year earlier, fueled by higher housing and gasoline prices. In a press conference to discuss the central bank's decision, Powell stressed that he's confident inflation will recede to the Fed's target of 2%, although the economy is taking longer to reach that point than policy makers previously expected. Powell also sought to tamp down any concerns the Fed could reverse course in response to persistent inflation, saying it is "unlikely the next policy rate move will be a hike." Fewer interest rate cuts? Powell demurred when asked if the Fed continues to cut rates three times in 2024, as it had indicated earlier this year. Instead, he responded that Fed officials need to feel more confident before they move to ease borrowing costs. "We said today that we didn't see progress [on inflation] in the first quarter, and I've said that it appears then it'll take longer for us to reach that point," he said, adding, "I don't know how long it'll take." Wall Street traders now envision just a single rate cut this year to the Fed's benchmark rate. That compares with their expectations at year start that the Fed could cut rates as much as six times in 2024. In its Wednesday statement, the Fed reiterated that it won't cut rates "until it has gained greater confidence that inflation is moving sustainably toward 2%." "Patience is the watchword now for the Fed and the risk of fewer or no rate cuts this year is growing," Brian Coulton, Fitch Ratings' chief economist, wrote in an email after the Fed decision. "[T]he risk of failing to get inflation down on a sustained basis seems to be rising as each week goes by." He added, "The statement explicitly recognizes the recent deterioration in inflation dynamics," noting that inflation has edged up by some measures in recent months and an uptick in wages during the first quarter, which could boost prices. What does the rate decision mean for your money? Expect to continue to pay high rates to borrow money, noted Jacob Channel, senior economist at LendingTree. Mortgage rates are likely to remain above 7%, at least in the near term, he added. Credit card rates, which are at record highs, are sure to remain elevated, he noted. "Across the board, it's all expensive," Channel said. "The interest rate on a credit card will make the interest rate on a mortgage look minuscule by comparison." On the bright side, savers are likely to continue to find higher-interest savings accounts, with some offering yields above 5%, according to Ken Tumin, banking expert at DepositAccounts.com. Certificates of deposit and other savings vehicles can also offer robust rates. —With reporting by the Associated Press.
These 70 House Democrats and 21 Republicans voted against a bill to crack down on antisemitism on college campuses 2024-05-01 21:12:47+00:00 - The House passed a bill to crack down on antisemitism on college campuses. 70 House Democrats voted against it, including the longest-serving Jewish House Democrat. That's because the bill defines some criticisms of Israel as being antisemitic. NEW LOOK Sign up to get the inside scoop on today’s biggest stories in markets, tech, and business — delivered daily. Read preview Thanks for signing up! Access your favorite topics in a personalized feed while you're on the go. download the app Email address Sign up By clicking “Sign Up”, you accept our Terms of Service and Privacy Policy . You can opt-out at any time. Advertisement The House of Representatives passed a bill on Wednesday designed to crack down on antisemitism on college campuses. The bill sailed through by a 320-91 bipartisan vote, with 70 House Democrats and 21 House Republicans voting against it. Lawmakers who voted against the bill aren't necessarily supportive of antisemitism, or opposed to efforts to curb it. Rather, they had issues with the definition of antisemitism that the bill would mandate. The Antisemitism Awareness Act, led by Republican Rep. Mike Lawler of New York and cosponsored by 61 other lawmakers across both parties, would require the Department of Education to use definitions of antisemitism proposed by the International Holocaust Remembrance Alliance (IHRA) when enforcing anti-discrimination laws. Advertisement That IHRA definition of antisemitism — alongside obvious instances of antisemitism — encompasses some criticisms commonly made against the State of Israel, including: Denying the Jewish people their right to self-determination, e.g., by claiming that the existence of a State of Israel is a racist endeavor. Drawing comparisons of contemporary Israeli policy to that of the Nazis. That's led to concerns on the part of more progressive lawmakers that free speech norms could be violated, and that anti-Zionism or opposition to Israel could be conflated with antisemitism. Related stories On Wednesday, Rep. Jerry Nadler — the longest-serving Jewish House Democrat — spoke out against the bill on the House floor, arguing that the IHRA's definitions of antisemitism "may include protected speech in some contexts, particularly with respect to criticism of the State of Israel." Advertisement "Speech that is critical of Israel alone does not constitute unlawful discrimination," said Nadler, arguing that the Department of Education already has the ability to investigate discrimination under current law. The vote took place on Wednesday as college campuses across the country have been swept by pro-Palestinian protests. "Much of this activity, whether you agree with the sentiments expressed at these protests or not, constitutes legally protected speech," said Nadler. "Some participants shamefully have exhibited antisemitic conduct, and the Department of Education will rightfully investigate them." In December, Nadler also led 92 House Democrats in voting "present" on a GOP-sponsored resolution that equated anti-Zionism with antisemitism. 13 House Democrats voted against the resolution outright. Advertisement In an effort to avoid this split, House Minority Leader Hakeem Jeffries asked House Speaker Mike Johnson to take up a separate bill — the Counter Antisemitism Act — which would include establishing a National Coordinator to oversee an Interagency Task Force to Counter Antisemitism in the White House. Republicans had their own issues with the bill. Rep. Marjorie Taylor Greene of Georgia said that she would vote against the bill because it "could convict Christians of antisemitism" for believing that Jewish people played a role in the killing of Jesus Christ — a notion that the Catholic Church has refuted since the 1960s. Antisemitism is wrong, but I will not be voting for the Antisemitism Awareness Act of 2023 (H.R. 6090) today that could convict Christians of antisemitism for believing the Gospel that says Jesus was handed over to Herod to be crucified by the Jews. Read the bill text and… pic.twitter.com/Y0eeOiVfnw — Rep. Marjorie Taylor Greene🇺🇸 (@RepMTG) May 1, 2024 It's unclear when — or if — the bill will be taken up in the Senate, where the bill has 30 cosponsors, roughly half of whom are Democrats. Here are the 91 lawmakers who voted against the bill, with Democrats listed in italics:
Long-predicted consumer pullback finally hits restaurants like Starbucks, KFC and McDonald's 2024-05-01 21:11:00+00:00 - It’s finally here: the long-predicted consumer pullback. Starbucks announced a surprise drop in same-store sales for its latest quarter, sending its shares down 17% on Wednesday. Pizza Hut and KFC also reported shrinking same-store sales. And even stalwart McDonald’s said it has adopted a “street-fighting mentality” to compete for value-minded diners. For months, economists have been predicting that consumers would cut back on their spending in response to higher prices and interest rates. But it’s taken a while for fast-food chains to see their sales actually shrink, despite several quarters of warnings to investors that low-income consumers were weakening and other diners were trading down from pricier options. Many restaurant companies also offered other reasons for their weak results this quarter. Starbucks said bad weather dragged its same-store sales lower. Yum Brands, the parent company of Pizza Hut, KFC and Taco Bell, blamed January’s snowstorms and tough comparisons to a strong first quarter last year for its brands’ poor performance. But those excuses don’t fully explain the weak quarterly results. Instead, it looks like the competition for a smaller pool of customers has grown fiercer as the diners still looking to buy a burger or cold brew become pickier with their cash. The cost of eating out at quick-service restaurants has climbed faster than that of eating at home. Prices for limited-service restaurants rose 5% in March compared with the year-ago period, while prices for groceries have been increasing more slowly, according to the Bureau of Labor Statistics. “Clearly everybody’s fighting for fewer consumers or consumers that are certainly visiting less frequently, and we’ve got to make sure we’ve got that street-fighting mentality to win, irregardless of the context around us,” McDonald’s CFO Ian Borden said on the company’s conference call on Tuesday. Outliers show that customers will still order their favorite foods, even if they’re more expensive than they were a year ago. Wingstop, Wall Street’s favorite restaurant chain, reported its U.S. same-store sales soared 21.6% in the first quarter. Chipotle Mexican Grill saw traffic rise 5.4% in its first quarter. And Restaurant Brands International’s Popeyes reported same-store sales growth of 5.7%. Even so, many companies in the restaurant sector and beyond it have warned consumer pressures could persist. McDonald’s CEO Chris Kempczinski told analysts the spending caution extends worldwide. “It’s worth noting that in [the first quarter], industry traffic was flat-to-declining in the U.S., Australia, Canada, Germany, Japan and the U.K.,” he said. Two of the chains that struggled in the first quarter cited value as a factor. Starbucks CEO Laxman Narasimhan said occasional customers weren’t buying the chain’s coffee because they wanted more variety and value. “In this environment, many customers have been more exacting about where and how they choose to spend their money, particularly with stimulus savings mostly spent,” Narasimhan said on the company’s Tuesday call. Yum CEO David Gibbs noted that rivals’ value deals for chicken menu items hurt KFC’s U.S. sales. But he said the shift to value should benefit Taco Bell, which accounts for three-quarters of Yum’s domestic operating profit. “We know from the industry data that value is more important and that others are struggling with value, and Taco Bell is a value leader. You’re seeing some low-income consumers fall off in the industry. We’re not seeing that at Taco Bell,” he said on Wednesday. It’s unclear how long it will take fast-food chains’ sales to bounce back, although executives provided optimistic timelines and plans to get sales back on track. For example, Yum said its first quarter will be the weakest of the year. For its part, McDonald’s plans to create a nationwide value menu that will appeal to thrifty customers. But the burger giant could face pushback from its franchisees, who have become more outspoken in recent years. While deals drive sales, they pressure operators’ profits, particularly in markets where it is already expensive to operate. Still, losing ground to the competition could motivate McDonald’s franchisees. This marks the second consecutive quarter that Burger King reported stronger U.S. same-store sales growth than McDonald’s. The Restaurant Brands chain has been in turnaround mode over the last two years and spending heavily on advertising. Starbucks is also betting on deals. The coffee chain is gearing up to release an upgrade of its app that allows all customers — not just loyalty members — to order, pay and get discounts. Narasimhan also touted the success of its new lavender drink line that launched in March, although business was still sluggish in April.
Fisker's woes are another reason to consider leasing an EV over buying 2024-05-01 21:10:46+00:00 - Fisker customers are worried about how a potential bankruptcy could impact service needs. Some Fisker owners probably wish they had leased over buying. There are several reasons to consider leasing an EV over buying. NEW LOOK Sign up to get the inside scoop on today’s biggest stories in markets, tech, and business — delivered daily. Read preview Thanks for signing up! Access your favorite topics in a personalized feed while you're on the go. download the app Email address Sign up By clicking “Sign Up”, you accept our Terms of Service and Privacy Policy . You can opt-out at any time. Advertisement Fisker has said it could go out of business by the end of the year. As it searches for a lifeline, owners of its vehicles are desperately asking what will happen if they miss out on future tech updates and service needs. Some Fisker owners who purchased their vehicles outright may now be wishing they had leased instead. To be sure, the vast majority of EV owners don't have to worry about the maker of their vehicles imminently going out of business. But Fisker's issues do highlight some of the benefits of leasing over buying, particularly in the EV market, which features limited used-market pricing data and few insights into long-term battery degradation. This story is available exclusively to Business Insider subscribers. Become an Insider and start reading now. Have an account? Log in .
Masimo's billionaire CEO put shares on margin to get cash while keeping ownership ahead of proxy fight 2024-05-01 21:01:00+00:00 - Billionaire Masimo founder Joe Kiani, best known for his successful legal fight against Apple and his friendship with President Joe Biden, has borrowed against half of his $660 million stake in the health-technology company rather than sell his stock, according to corporate filings from earlier this week. Borrowing against that much of a stake is unusual for executives, but may be helpful as the company prepares for a fight with an activist aiming to take control of the board. The move allows Kiani, the company's CEO and chairman, to maintain his stake and voting power while also getting money he says he needs for family reasons. Many medical-tech peers bar such moves, and it could leave Kiani susceptible to margin calls if Masimo's stock falls below a certain threshold. Kiani has just under 4 million Masimo shares, or around 7.5% of the company, according to FactSet data. Masimo, which makes wearables and health monitoring products, is preparing to fend off a second proxy fight waged by Quentin Koffey's Politan Capital Management. Kiani described Koffey as "destructive" in a March CNBC interview. Masimo shares are up 15% this year, lifting the company's market cap past $7 billion. The stock had a volatile run in the back half of 2023, falling 47% in the third quarter before gaining 34% in the fourth. Politan controls 8.9% of Masimo shares. While that's bigger than Kiani's stake, even before pledged shares are weighed, regulatory filings show that the CEO has options that could boost his holdings to 9.2% if exercised. Politan already won two seats on Masimo's six-person board in a contentious 2023 proxy fight, but announced last month that it would seek two more seats, including Kiani's, to cement control. Kiani, 59, pledged 2.97 million Masimo shares as of April, valued at $397 million, as collateral against "personal loans." The company said in its annual filing Kiani had family "financial planning objectives" that would require him to sell his stock, but that he "did not want to diminish his shareholdings." His objectives weren't spelled out in the filings. "The pledge of shares was pre-approved by the Board and reflects Mr. Kiani's conviction in the value of Masimo stock despite the short-term decline in the stock price during the second half of 2023," a Masimo spokesman said in an emailed statement. "Rather than sell his pledged shares, Mr. Kiani increased his pledge to maintain his stock ownership." The spokesperson added that Kiani purchased about $7 million worth of Masimo stock in the second half of 2022 and the first half of 2023.
Qualcomm gives better-than-expected revenue forecast as company pushes AI-powered smartphones 2024-05-01 20:58:00+00:00 - Qualcomm CEO Cristiano Amon responds to a question during a keynote conversation at CES 2024, an annual consumer electronics trade show, in Las Vegas, Nevada, on Jan. 10, 2024. Qualcomm reported fiscal second-quarter earnings on Wednesday that surpassed Wall Street expectations, and provided a strong guide for the current quarter. Shares rose about 4% in extended trading. Here's how it did versus LSEG consensus estimates for the quarter ended March 24: Earnings per share : $2.44 adjusted vs. $2.32 expected : $2.44 adjusted vs. $2.32 expected Revenue: $9.39 billion adjusted vs. $9.34 billion expected Net income during the quarter was $2.33 billion, or $2.06 per share, versus $1.7 billion, or $1.52 per share, in the year-earlier period. Qualcomm said it expected between $8.8 billion and $9.6 billion in sales in the current quarter, higher than Wall Street expectations of $9.05 billion. Analysts were looking for earnings guidance of $2.17 per share, versus the company's forecast of between $2.15 and $2.35. The company said on the earnings call that it expected overall handset revenues to decline during the current quarter by "mid-single digit percent" because of a lack of summer smartphone launches, which is a typical seasonal pattern. Qualcomm's most important business is its handsets business. It sells processors, modems and other parts for smartphones — primarily Android devices, but also some modem parts in iPhones. Handset sales rose 1% year over year to $6.18 billion, signaling that the smartphone market may be recovering after a few years of post-Covid slumping. Qualcomm called out strong demand for "premium tier" smartphones that require the most advanced chips, especially in China. It said quarterly revenue from Chinese phone makers jumped 40% from the year-earlier period. "We have not seen signs of weakness in the Android premium market in China," Qualcomm CEO Cristiano Amon said on an earnings call with analysts. "A lot of the strength is really coming from premium devices on Oppo, OnePlus, Vivo." Qualcomm calls the phones that use its best chips "AI-powered smartphones," citing features such as generative email completion, live translation, and virtual assistants that use the chips specialized "NPU" AI section. One such phone is Samsung's Galaxy S24 Ultra, which launched earlier this year. "We are seeing the very first instances of on-device AI and Gen AI being launched in premium devices and that is resonating well with the consumer," Amon said, adding that the company is targeting performance per watt as its primary artificial intelligence benchmark. The company's automotive business, which sells chips to automakers, also showed signs of growth, rising 35% year over year to $603 million. Qualcomm said it expected consecutive double digit percentage growth in the division in the current quarter. Revenue in the "Internet of Things" business — lower-cost chips and chips for virtual reality — declined 11% year over year to $1.24 billion. Those three business lines are reported together as QCT, the company's chip business, which saw a 1% year-over-year sales increase to $8.03 billion. The company's licensing business, QTL, in which it collects fees from companies that want to integrate 5G or cellular technology into their products, increased 2% to $1.32 billion from the year-earlier period. Qualcomm said it paid $895 million in dividends and repurchased $731 million in shares during the quarter, and raised its quarterly dividend to 85 cents from 80 cents previously.
Campaign to raise Missouri’s minimum wage to $15 an hour confident it will get on the ballot 2024-05-01 20:52:27+00:00 - JEFFERSON CITY, Mo. (AP) — Missouri voters on Wednesday got a step closer to getting to decide whether to raise the state’s minimum wage to $15 an hour, after a group behind the effort said it turned in nearly double the required number of signatures. The ballot measure backed by Missouri Jobs with Justice would raise the minimum wage from its current $12.30 an hour to $13.75 an hour next year and then to $15 an hour in 2026. Citizen-driven amendments to Missouri law require more than 100,000 voter signatures to get on the ballot, and Missouri Jobs with Justice said it submitted about 210,000. Republican Secretary of State Jay Ashcroft’s office must next determine if at least 115,000 or so are valid. “We feel confident that voters will have an opportunity to pass this important initiative this fall,” Caitlyn Adams, executive director of Missouri Jobs with Justice Voter Action, said in a statement. Missouri voters historically have supported minimum wage hikes. After the Republican-led Legislature in 2017 blocked St. Louis and Kansas City from raising wages in those cities, voters in 2018 approved a statewide minimum wage hike. Under that plan, the wage floor — then $7.85 an hour — rose by 85 cents per year until it hit $12 in 2023. Pay rose again this year because of automatic increases tied to inflation. The latest proposal also includes a requirement that workers get paid sick leave. Employees currently not guaranteed sick days would earn an hour of paid leave for every 30 hours worked under the measure. Businesses with fewer employees would be required to allow a minimum of five paid sick days per year, and larger companies would be required to offer at least seven paid sick days.
Google lays off hundreds of 'Core' employees, moves some positions to India and Mexico 2024-05-01 20:48:00+00:00 - Just ahead of its blowout first-quarter earnings report on April 25, Google laid off at least 200 employees from its “Core” teams, in a reorganization that will include moving some roles to India and Mexico, CNBC has learned. The Core unit is responsible for building the technical foundation behind the company’s flagship products and for protecting users’ online safety, according to Google’s website. Core teams include key technical units from information technology, its Python developer team, technical infrastructure, security foundation, app platforms, core developers, and various engineering roles. At least 50 of the positions eliminated were in engineering at the company’s offices in Sunnyvale, California, filings show. Many Core teams will hire corresponding roles in Mexico and India, according to internal documents viewed by CNBC. Asim Husain, vice president of Google Developer Ecosystem, announced news of the layoffs to his team in an email last week. He also spoke at a town hall and told employees that this was the biggest planned reduction for his team this year, an internal document shows. “We intend to maintain our current global footprint while also expanding in high-growth global workforce locations so that we can operate closer to our partners and developer communities,” Husain wrote in the email. Alphabet has been slashing headcount since early last year, when the company announced plans to eliminate about 12,000 jobs, or 6% of its workforce, following a downturn in the online ad market. Even with digital advertising rebounding recently, Alphabet has continued downsizing, with layoffs across multiple organizations this year. Chief Financial Officer Ruth Porat announced in mid-April that the company’s finance department would undergo restructuring, entailing layoffs and moving positions to Bangalore and Mexico City. The company’s search boss, Prabhakar Raghavan, told employees at an all-hands meeting in March that Google plans to build teams closer to users in key markets, including India and Brazil, where labor is cheaper than in the U.S. The latest cuts come as the company enjoys its fastest growth rate since early 2022, alongside improving profit margins. Last week, Alphabet reported a 15% jump in first-quarter revenue from a year earlier and announced its first-ever dividend and a $70 billion buyback. “Announcements of this sort may leave many of you feeling uncertain or frustrated,” Husain wrote in the email to developers. He added that his message to developers is that the changes “are in service of our broader goals” as a company. The teams involved in the reorganization have been key to the company’s developer tools, an area Google is streamlining as it incorporates more artificial intelligence into the products. In February, Google announced a major rebrand of its chatbot from Bard to Gemini, the same name as the suit of AI models that power it. Alphabet is gearing up for its annual developer conference, Google I/O, on May 14, where the company traditionally reveals new developer products and tools underway during the prior year. Husain said in a memo explaining the developer changes that generative AI is at an “inflection point.” “Recent advances in Generative AI across the industry, including Google’s Gemini, are changing the very nature of software development as we know it,” Husain wrote. In a separate email, Pankaj Rohatgi, Google’s security engineering vice president, told his team, “In order to optimize for our business goals, we are expanding work to other locations, which will result in some role eliminations and proposed role eliminations.” The Core layoffs also include the governance and protected data group, which will be at the center of regulatory challenges facing the company, particularly as lawmakers across the globe focus more on developments in AI. The European Union’s Digital Markets Act, which went into effect in March, aims to clamp down on anti-competitive practices in tech. Evan Kotsovinos, Google’s vice president of governance and protected data, addressed the upcoming changes last week. Kotsovinos in an email said the team’s success means responding to “escalating regulatory focus” and is contingent on “moving faster.” Raghavan, Google’s senior vice president overseeing search, recently referenced heightened competition, a more challenging regulatory environment, and slower organic growth as the company’s “new operating reality.” When reached for comment, Google confirmed the Core reorganization and layoffs, and a spokesperson told CNBC that employees will be able to apply for open roles within Google and to access outplacement services. “As we’ve said, we’re responsibly investing in our company’s biggest priorities and the significant opportunities ahead,” the spokesperson said in an email. “A number of our teams made changes to become more efficient and work better, remove layers and align their resources to their biggest product priorities.”
The Fed rate decision meeting is today. Here's their rate decision. 2024-05-01 20:41:00+00:00 - The Federal Reserve on Wednesday afternoon said it is holding its benchmark rate steady after an uptick in inflation, meaning that consumers aren't likely to see any near-term relief from high borrowing costs. At year start, about 9 in 10 economists had forecast that the Fed would cut its benchmark rate at its May 1 meeting. Yet shifting economic winds and stubbornly high inflation have complicated policy makers' plans. On Wednesday, the Fed said it is keeping the federal funds rate in a range of 5.25% to 5.5%, the same level it has held since the central bank's July 2023 meeting. The Fed is likely to hold off on cutting rates until later in 2024, with most experts now penciling the first rate reduction for the central bank's September or November meeting, FactSet's data shows. That means consumers are likely to continue grappling with higher costs for all types of loans, from credit cards to mortgages, even as the costs of goods and services remains elevated. "The Fed has said time and time again that inflation would be really difficult to tame, and they are more than willing to keep rates high until inflation becomes more manageable," Jacob Channel, senior economist at LendingTree, told CBS MoneyWatch. "I understand why people are concerned, and perhaps a little upset, that the Fed isn't champing at the bit to cut rates." But, he added, if the Fed cut rates prematurely and inflation ticked up even higher, that could make the economic situation worse for many consumers and businesses. When is the Fed meeting this week? The Federal Reserve's Open Market Committee announced its decision at 2 p.m. Eastern time. Fed Chair Jerome Powell will speak at a press conference at 2:30 p.m. to outline the central bank's economic outlook and answer questions about its decision. When will the Fed cut interest rates? Despite the Fed earlier this year penciling in three rate cuts in 2024, Wall Street investors now forecast just a single cut. At the heart of the issue is stubborn inflation, which has ticked upwards this year on higher costs for housing and gasoline, defying the Fed's efforts to tame prices. Consumer prices in March rose 3.5% on an annual basis, up from February's increase of 3.2% and January's bump of 3.1% on a year-over-year basis. About half of economists are forecasting a cut at the Fed's September 18 meeting, while a majority are penciling in a cut at its November 7 meeting. It's likely those cuts could amount to one-quarter of a percentage point each, rather than a juicier cut of half a percentage point, Channel noted. "It's not surprising that investor expectations for future rate cuts have drastically decreased," said Stephen J. Rich, CEO of Mutual of America Capital Management, in an email. "At this point, we see the potential of two cuts amounting to a half of a percentage point this year." Solita Marcelli, Chief Investment Officer Americas at UBS Global Wealth Management, also thinks the Fed will have to keep rates higher for longer. She expects the Fed to pare its key short-term rate twice this year, likely starting in September, according to a research note. How will the Fed's decision impact your money? Brace for continued high borrowing costs, Channel said. "In light of the meeting, we're probably going to have to get used to the average rate on a 30-year mortgage being above 7% again," he said. "Those 7% rates that people dread are probably going to stick around." Credit card rates, which have reached record highs, aren't going to come down either, he noted. "Borrowing money will remain relatively expensive for quite some time," Channel added. "We aren't going to wake up come August and rates will be back to zero." If there's a silver lining to this, it's for savers, who now can find higher-interest savings accounts with yields above 5%, according to Ken Tumin, banking expert at DepositAccounts.com. Other savings vehicles like certificates of deposit can also offer juicy rates.
Michael Cohen is the talk of the Trump trial before even taking the stand 2024-05-01 20:34:29+00:00 - Michael Cohen’s credibility as a witness in Donald Trump’s criminal case has been the topic of discussion since before Trump was charged last year. In recent days, it's been an undercurrent of the trial, as prosecutors slowly and indirectly introduce him to the jury. Given his prior life as Trump's fixer and his own related legal problems, Cohen has been viewed by some as a vulnerability for the prosecution, which may need his testimony to cement its case. But prosecutors may benefit from the preview of Cohen to the jury through the testimony of other witnesses. Among those recent witnesses are banker Gary Farro, who testified about Cohen's financial activity regarding the alleged hush-money payment to Stormy Daniels, as well as lawyer Keith Davidson, who represented Daniels in the payoff ahead of Trump’s 2016 presidential election. The former president has pleaded not guilty to falsifying business records (related to Cohen’s reimbursement), and he has denied having sex with the adult film star. Both witnesses helped the jury understand that Cohen is not necessarily a heroic character in this story. Farro called him a “challenging client” and testified to the Trump fixer’s deception. Davidson said that no one wanted to deal with Cohen and recalled that Daniels’ manager called him an “a—hole.” At first blush, you might think that prosecutors wouldn’t want to introduce a potential key witness to the jury that way, even implicitly. But the reality is that Cohen’s character will come out eventually, and the state would rather it come out on their terms than give defense lawyers more of an opportunity to undermine their case. Indeed, the state took the matter head-on in their opening statement, telling the jury: “You will learn, and we will be very upfront about it, the fact that Michael Cohen, like other witnesses in this trial, has made mistakes in his past.” The prosecution would surely dress him down on direct examination as well, before turning him over to the defense for a grueling cross. We don’t know the order of the remaining witnesses in the case that’s set to resume testimony Thursday. But when jurors ultimately see Cohen on the stand, they might feel like they know him already. All things considered, prosecutors may benefit from that. Subscribe to the Deadline: Legal Newsletter for weekly updates on the top legal stories, including news from the Supreme Court, the Donald Trump cases and more.
Fed chair Jerome Powell: No sign of stagflation in US economy 2024-05-01 20:31:00+00:00 - Federal Reserve Chair Jerome Powell said Wednesday there was no sign of stagflation in the economy, even as inflation remains stubbornly high and some signs of slowing growth have started to emerge. In remarks following the release of the Fed's decision Wednesday to leave interest rates unchanged, Powell said he didn't "really understand where talk of a stagflation scenario is coming from" given the preponderance of solid economic data. Historically, stagflation occurs when high unemployment, slow economic growth, and high inflation all happen at the same time. Powell compared today's economy, with both inflation rates and the unemployment rate below 4%, to the 1970s, the decade when most economists consider stagflation to have taken root. “I don’t see the stag, or the 'flation,” Powell said. So far, most economists agree with Powell's assessment. In a note to clients last week simply titled "No sign of 'stagflation,'" Bank of America analysts said the lower-than-expeted GDP report for the first quarter was mostly a function of accounting, and not softening underlying demand. "Consumer spending ... remains resilient," the analysts said — though it is likely that that spending is helping keep inflation rights high, they added. "We think that view [of growing stagflation] is misguided," they wrote. Pantheon Macroeconomics chief economist Ian Shepherdson likewise said in a recent note to clients that despite weaker manufacturing data, fears of the U.S. slipping into stagflation should be "ignored" given datapoints showing a slow but steady softening in price increases. "Stagnant manufacturing output has not stopped the overall US economy from growing at a very brisk pace on average over the past couple years," Shepherdson wrote. Today's U.S. economy does look much better than the 1970s, according to most data. That earlier decade was marked by oil-supply shocks that caused gasoline prices to soar, alongside a confluence of other factors including the impact of leaving the gold standard, more powerful unions that could demand higher wages, and winding down government price control policies. Whereas in 2024, wage growth has largely kept pace with inflation — though has not surpassed it. And the effect of the pandemic on the price of food and other goods has also largely subsided. Meanwhile, although interest rates are high, they are lower than where they stood 50 years ago. As for fuel prices, the average cost of a gallon of gasoline in 1974 is not much different today on an inflation-adjusted basis. In May of that year, it was 53 cents per gallon, the equivalent of $3.41 today, which is not far off from what the average price actually is right now, according to AAA: about $3.66. In his press conference Wednesday, Powell said the central bank had "the luxury of strong growth and a strong labor market” to keep rates at their current level of between 5.25% and 5.5% to give inflation a chance to subside — and ruled out further rate hikes. What is less clear is how long inflation will remain above the Fed's 2% target. "Mostly, it is shelter that has been keeping monthly increases in inflation on the high side," Moody's economist Matt Colyer wrote in a note Wednesday. "However, as the list of contributors has grown to include components like auto insurance and healthcare, it becomes harder to look past them. For that reason, the Fed will need to see a sustained period of disinflation before it announces its first rate cut."
Vendor that mishandled Pennsylvania virus data to pay $2.7 million in federal whistleblower case 2024-05-01 20:30:43+00:00 - A large staffing firm that performed COVID-19 contact tracing for Pennsylvania and exposed the private medical information of about 72,000 residents will pay $2.7 million in a settlement with the Justice Department and a company whistleblower, federal prosecutors announced Wednesday. The Pennsylvania Department of Health paid Atlanta-based Insight Global tens of millions of dollars to administer the state’s contact tracing program during the height of the pandemic. The company was responsible for identifying and contacting people who had been exposed to the coronavirus so they could quarantine. Employees used unauthorized Google accounts — readily viewable online — to store names, phone numbers, email addresses, COVID-19 exposure status, sexual orientations and other information about residents who had been reached for contact tracing, even though the company’s contract with the state required it to safeguard such data. State health officials fired Insight Global in 2021 after the data breach came to light. A subsequent federal whistleblower lawsuit alleged that Insight Global secured its lucrative contract with Pennsylvania knowing that it lacked secure computer systems and adequate cybersecurity. The whistleblower — a former Insight Global contractor — complained to company management that residents’ health information was potentially accessible to the public, according to the lawsuit. The company initially ignored her, then, when pressed, told the whistleblower “it was not willing to pay for the necessary computer security systems and instead preferred to use its contract funds to hire large numbers of workers,” the lawsuit said. It took Insight Global five months to start securing residents’ protected medical information, according to the U.S. Justice Department. “Contractors for the government who do not follow procedures to safeguard individuals’ personal health information will be held accountable,” Maureen R. Dixon, who heads up the inspector general’s office at the U.S. Department of Health and Human Services, said Wednesday in a statement on the settlement, of which the whistleblower is set to receive nearly $500,000. Insight Global, which has about 70 offices in the U.S., Canada and the U.K., has previously acknowledged it mishandled sensitive information and apologized. The company said at the time it only belatedly became aware that employees had set up the unauthorized Google accounts for sharing information. A message was sent to the company Wednesday seeking comment on the settlement.
Trump campaign lawyers' bid to withdraw from discrimination case gets closed-door hearing 2024-05-01 20:28:00+00:00 - A federal judge in New York scheduled a closed-door meeting Wednesday afternoon on a request by lawyers for Donald Trump's presidential campaign to withdraw from a gender discrimination lawsuit filed by former senior advisor to his 2016 White House bid. The law firm at LaRocca, Hornik, Greenberg, Kittredge, Carlin & McPartland asked to withdraw from the case filed by Arlene "A.J." Delgado last Friday in a court motion, because of what it called "an irreparable breakdown in the attorney-client relationship between the Firm and the Campaign." The filings said the firm "respectfully requests leave to explain to the Court in camera" the details of that breakdown. In camera proceedings are conducted by judges without members of the public or press present. Magistrate Judge Katharine Parker said she would conduct an in camera conference on the firm's request starting at 3 p.m. ET Wednesday "with the defendants and their attorneys." Parker's notice indicated that Delgado was not invited to the conference. Delgado's suit, filed in 2019, alleges that she was stripped of her job responsibilities as advisor and director of Hispanic outreach for Trump's campaign in late 2016 and prevented from taking an expected job in the White House because of her disclosure that she had become pregnant by the then- and now-Trump campaign advisor Jason Miller. The suit also claims the defendants reneged on an agreement in 2017 to privately settle her complaint for an undisclosed amount of money. Delgado told Parker in a filing Monday that she objected to LaRocca, Hornik's motion to withdraw from the case. Defendants include Donald J. Trump For President, Inc., former Trump White House chief of staff Reince Priebus, former White House advisor Steve Bannon and former White House press secretary Sean Spicer. "The Firm has represented the Trump Campaign in this matter since July 2017 — i.e., for nearly seven years," wrote Delgado, who is representing herself in the suit in U.S. District Court in Manhattan. "Yet, it abruptly filed a Motion to Withdraw on Friday afternoon, April 26, 2024: (a) with only six days remaining in discovery; and (b) a mere two days after the Campaign was ordered to produce key information to Plaintiff, and with said information due this week." Delgado noted that on April 24, Parker had granted her request that Trump's campaign "must produce any complaints of: gender discrimination, pregnancy discrimination, and sexual harassment, through the 2020-election cycle." Delgado said the timing of the withdrawal motion "stinks to high heaven." "What happened between Wednesday and Friday that caused a sudden 'irreparable breakdown' with the client, allegedly leaving the Firm no choice but to withdraw?" Delgado wrote. CNBC has requested comment from one of LaRocca, Hornik's lawyers, and from a spokesman for Trump's current campaign for president.
Walnuts Recalled From Natural Food Stores After E. Coli Outbreak 2024-05-01 20:16:31+00:00 - A California company is recalling organic walnuts that were sold at natural food stores and coop retailers in 19 states because of an E. coli outbreak that has sickened 12 people and hospitalized seven, federal officials said. Gibson Farms, the company based in Hollister, Calif., is voluntarily recalling its shelled walnuts branded as Organic Light Halves and Pieces after discovering that the nuts could carry the E. coli strain 0157: H7 that “causes a diarrheal illness often with bloody stools,” the Food and Drug Administration said in a notice on Tuesday. The recall came after the Centers for Disease Control and Prevention notified the company of 12 recorded illnesses that were linked to the walnuts. They were distributed at more than 300 food retailers, including Whole Foods Market, New Seasons Market and Rosauers Supermarkets, the F.D.A. said. An investigation is underway to determine the potential source of the contamination, the F.D.A. said. The company did not immediately respond to inquiries on Wednesday.
Conservative media celebrates mistrial for man accused of killing undocumented immigrant 2024-05-01 20:06:02+00:00 - George Alan Kelly, an Arizona rancher who was accused of killing an undocumented immigrant alleged to have run across his property, is receiving a hero's welcome in conservative media after his case ended in a mistrial. Kelly was charged with second-degree murder after an investigation into the shooting of an unarmed man named Gabriel Cuen-Buitimea in 2023. Prosecutors said that Kelly recklessly fired an AK-47 at a group of men on his cattle ranch, while Kelly said that he only fired warning shots in the air. The trial helped turn him into something of a right-wing icon. But on April 19, the jury in his trial deadlocked. And on Monday, Arizona prosecutors said they won’t retry the case. Predictably, the news that Kelly will be allowed to walk free has been gleefully shared across conservative media, which has developed a disturbing affinity for cheerleading armed vigilantes and extrajudicial punishment in the age of Donald Trump. As far-right social media accounts cheer Kelly on, ultraconservative media outlets like Newsmax have portrayed him as a heroic figure. He sat for a softball interview with conservative News Nation reporter Ali Bradley in which he spoke somberly of all the hardships he says he’s experienced as a result of the trial. As with Kyle Rittenhouse, the conservative gunman acquitted after shooting anti-racist protesters in 2020, Kelly has become a cause célèbre among many conservatives. Arizona Republicans even sought to pass a law, seemingly in Kelly’s honor, that would expand self-defense claims for property owners to include killing or threatening to kill people who cross their property to illegally enter the U.S. The bill was ultimately vetoed by Democratic Gov. Katie Hobbs. Kelly even wrote a novel about a vigilante figure, also named George, who shoots at people who cross his property along the U.S.-Mexico border, a region the book describes as a “war zone.” Other similarities in the book — such as the protagonist’s wife having the same name as Kelly's wife — have led observers to note that the book sounds like a thinly veiled recounting of his own story. Despite his claims of hardship, Kelly has been rewarded by the conservative media machine. He has received at least hundreds of thousands of dollars in donations via the conservative crowdfunding site GiveSendGo, which was also used to raise funds for Rittenhouse and Daniel Penny, a former Marine who has been charged with second-degree manslaughter and negligent homicide in the choking death of a Black man on a New York subway last year. (Penny has pleaded not guilty to both charges.) At this rate, it wouldn't be surprising if Kelly is asked to speak at this year's Republican National Convention.
DoorDash posts better-than-expected Q1 sales but shares fall on cost concerns 2024-05-01 20:05:06+00:00 - DoorDash reported higher-than-expected revenue in the first quarter, as strong growth in U.S. grocery orders helped make up for slowing restaurant demand. But the company’s shares fell 12% in after-hours trading Wednesday as investors appeared concerned about rising costs. DoorDash said its net loss narrowed to $23 million in the first quarter, compared to a loss of $161 million in the same period a year ago. The loss, of 6 cents per share, was higher than the 3-cent loss Wall Street had forecast, according to analysts polled by FactSet. DoorDash said it increased both marketing expenses and research costs during the quarter. DoorDash also said it expects pretax earnings between $325 million and $425 million in the second quarter. The midpoint of that range — $375 million — is less than the $394 million that analysts are forecasting. The San Francisco-based delivery company said Wednesday its revenue rose 23% to $2.51 billion in the January-March period. That was higher than the $2.45 billion Wall Street was expecting, according to analysts polled by FactSet. DoorDash said its total orders climbed 21% to 620 million. That also surpassed expectations; analysts were forecasting 607 million orders. The value of U.S. grocery orders doubled from the same period last year. DoorDash began offering grocery delivery in 2020 and continues to add grocery options. In March, Giant Eagle expanded the number of stores offering same-day DoorDash delivery in Pennsylvania and other states. In April, DoorDash added some West Coast grocers to its offerings, including Haggen and Vallarta Supermarkets. DoorDash said U.S. restaurant order value also grew, but at a slower pace than last year. That reflected results released this week from McDonald’s and Starbucks, which both reported lower store traffic in the most recent quarter as inflation-weary customers in the U.S. and other markets shift from dining out to eating at home. DoorDash said new rules in New York and Seattle establishing minimum wage requirements for delivery drivers has increased prices for consumers, resulting in reduced sales. It estimated that the new rules will result in $110 million in lost sales annually for its merchants in New York and $40 million in lost sales in Seattle. But DoorDash said the rules had a minimal impact on its business, lowering total orders by less than 1% in the first quarter.
US Federal Reserve holds interest rates steady as inflation ticks up 2024-05-01 20:03:00+00:00 - The Federal Reserve announced on Wednesday that it is holding interest rates steady at 5.25% to 5.5%, their highest level in two decades, as inflation continues to dog the US economy. Though some had hoped the Fed would soon cut interest rates, which are at their highest level since 2007, the annual rate of inflation has stubbornly remained above 3%. The Fed’s target rate is 2%. “The committee does not expect it will be appropriate to reduce the target range until it has gained greater confidence that inflation is moving sustainably toward 2%,” the Fed said in a statement that was largely unchanged from its statement after its previous meeting in March, when it also kept rates steady. “The committee will carefully assess incoming data, the evolving outlook, and the balance of risks.” While the inflation rate hit 3% last June, the lowest rate since early 2021, inflation has continued to fluctuate between 2% and 4% over the last several months. In January, inflation fell to 3.1%, down from 4.1% in December, making investors hopeful about potential interest rate cuts later in the year. But the rate rose in February and March, reaching 3.5% in March. Inflation peaked in June 2022, when the inflation rate hit 9.1%, a 40-year high. In April, after March’s inflation figures were released, Joe Biden noted that inflation had fallen 60% from its peak, “but we have more to do to lower costs for hard-working families”. “Prices are still too high for housing and groceries, even as prices for key household items like milk and eggs are lower than a year ago,” the US president said. In April, the Fed chair, Jerome Powell, confirmed that Fed officials were skeptical of changing rates given the recent inflation data. Earlier in the year, some economists believed the Fed would cut rates as much as three times before the end of the year. But March’s inflation data cemented doubts about any cuts in the foreseeable future. “The recent data have clearly not given us greater confidence and instead indicate that it is likely to take longer than expected to achieve that confidence,” Powell said at the time. Powell echoed the Fed’s lack of confidence that inflation is cooling enough to cut interest rates at a press conference following the announcement. “In recent months, inflation has shown a lack of further progress toward our 2% objective,” Powell said, noting that inflation this year has been higher than expected. “It is likely that gaining confidence will take longer than previously expected.” Powell said the Fed is willing to maintain interest rates for “as long as appropriate”. When taking questions, Powell noted that it is unlikely that the next interest rate move will be a rate hike, rather officials are thinking of how much longer they should maintain the current rate. “Inflation is moving sideways,” Powell said, noting that the Fed is also keeping a close eye on the labor market, which has remained strong despite higher rates. The Fed’s next Federal Open Market Committee will take place on 11 June and 12 June.
AP PHOTOS: Workers rule the streets on May Day 2024-05-01 20:02:04+00:00 - For one day, workers ruled the world’s biggest streets. Thousands strong marched Wednesday to mark May Day, the first day of the month when workers’ rights are celebrated in demonstrations around the globe. From Seoul to Paris, Istanbul to Berlin, they drew attention to stagnant wages and the high cost of living as they took aim at their governments. In some cases, their governments returned fire. In Turkey, police in riot gear shot rubber bullets and tear gas at thousands of protesters who clashed with officers as they tried to break through a barricade and reach Istanbul’s Taksim square in defiance of a ban. Tear gas also rose from the streets of Paris, where workers seeking higher pay and better conditions were joined by others rankled by the upcoming Summer Games. They torched replica Olympic rings. Standing out in the crowds were the many messages held high on banners or scrawled in pen on simple signs. “We work to live!!! Not to die!!!” read the sign held by a man in Manila, Philippines. “The rich want war — the youth want a future,” a banner said in Berlin. “Don’t touch the eight-hour workday!” warned a placard in Colombo, Sri Lanka. Thousands of protesters in Seoul sang, waved flags and shouted pro-worker slogans as they stepped up criticism of President Yoon Suk Yeol’s conservative government and its anti-labor policies. “The lives of our laborers have plunged into despair,” said Yang Kyung-soo, leader of the Korean Confederation of Trade Unions. “We can’t overlook the Yoon Suk Yeol government. We’ll bring them down from power for ourselves.” In Jakarta, Indonesia, marchers carried banners and wore slogans on their hats protesting a 2020 law that they said harms worker rights and the environment. Metal workers carried bright red flags and wore darker red headscarves. Others dressed as mimes with frowns painted on their faces. In Beirut, pro-Palestinian marchers mixed with workers demanding an end to economic misery. Young women supporters of the Lebanese Communist party posed for selfies and flashed victory signs. Most will return to their jobs Thursday.
Arizona Senate passes repeal of near-total abortion ban from 1864 2024-05-01 19:43:06+00:00 - Arizona is moving ahead to reverse a near-total abortion ban that's been on the books since 1864 after the state Senate narrowly voted on Wednesday to repeal the law, revived last month by the state Supreme Court. The vote passed 16-14, with two Republicans joining the Democrats to send the bill to the governor’s desk. Gov. Katie Hobbs, a Democrat, has said she will sign the legislation. During the vote, several Republicans criticized the Democrats for "fast-tracking" the legislation through the chamber and called out their two GOP colleagues who voted "yes" on the bill. The Senate vote follows multiple attempts by the Arizona state House to pass a repeal. Democrats secured enough support from Republican colleagues last week to clear the bill on the third attempt in as many weeks. Republicans hold a narrow majority in both branches of the Arizona Legislature. The Arizona Supreme Court’s decision in early April ruling that the 1864 ban was enforceable sparked national outcry. Lawmakers in the battleground state have been grappling with the ban ever since, with Democrats pushing for a repeal and Republicans fielding pressure from powerful figures, like former President Donald Trump, to undo the political damage it could have caused in a crucial election year. The ban was set to go into effect after June 8 at the earliest. The near-total abortion ban will be officially repealed 90 days after Hobbs signs it into law, after which the previous 15-week ban will be reinstated.
DOJ charges ‘Bitcoin Jesus’ with $48 million tax fraud, seeks extradition 2024-05-01 19:35:00+00:00 - The Justice Department unveiled criminal tax fraud charges this week against a prolific bitcoin investor named Roger Ver. He came to be known as “Bitcoin Jesus,” for getting in early on the digital currency and making a fortune. Ver allegedly evaded at least $48 million in taxes, according to the indictment announced Tuesday. The indictment, filed in California federal court, claims that Ver executed the fraud scheme by failing to report a portion of the 131,000 bitcoin that he owned in 2014, when he renounced his U.S. citizenship after becoming a citizen of the Caribbean nation of St. Kitts and Nevis. At the time, each bitcoin was worth roughly $871. It was trading Wednesday morning at $57,416, which would make Ver’s 131,000 bitcoins worth more than $7.5 billion. Becoming a U.S. expat requires an individual to pay a special tax to the Internal Revenue Service. The DOJ alleges that in preparing those tax filings, Ver underrepresented his bitcoin holdings and evaded taxes on them. The indictment further alleges that even after his expatriation from the U.S., Ver continued to underreport his bitcoin ownership, which he was still required to pay U.S. taxes on. Ver was arrested in Spain over the weekend. The United States is seeking his extradition to face trial on eight counts related to tax evasion, mail fraud and filing false tax returns. “At this time, I can say that we are very disappointed and surprised that Mr. Ver was arrested while traveling in Spain. This prosecution never should have been brought,” Bryan Skarlatos, a lawyer for Ver, told CNBC in a statement. “Mr. Ver relied on leading tax professionals to help him report his Bitcoin and he always intended to fully comply with his US tax obligations. We look forward to establishing his innocence in court, if necessary.” If convicted, Ver’s felony charges could see him return to federal prison, where he spent 10 months in 2002 after pleading guilty to selling explosives called “Pest Control Report 2000” on eBay. As bitcoin has boomed and busted over the past decade, the government has begun to pay more attention to possible financial crimes associated with the digital currency. The IRS has worked to get more sophisticated in tracking bitcoin investors as the currency has gone more mainstream. According to the indictment, the IRS used a strategy called “clustering analysis” to track the blockchain and identify Ver’s bitcoin transactions. Ver made his first million from bitcoin in 2011, the same year he started trading the digital currency, according to a 2013 CNBC profile. As he poured investments into bitcoin and promoted the digital currency, some within the community came to know him as a Christ-like figure. He told CNBC in 2013 that Peter Vessenes, founder of the Bitcoin Foundation, gave him the nickname “Bitcoin Jesus” while watching him explain the digital currency to some high school students. “The kids were all enthralled by bitcoin, and hanging on my every word,” Ver told CNBC. According to Ver, Vessenes then commented, “It’s like you are a Bitcoin Jesus, and you have all your disciples around you.”