Commentary and analysis on American politics, culture, and national identity, U.S. foreign policy and international relations, and the state of education
- from a neoconservative perspective! - Keeping an eye on the communist-left so you don't have to!
We Americans like to think of ourselves as a thoroughly modern people — living proof of what, with enough toil and grit, the rest of the free world can one day hope to be. And yet for all our progressivism and idealism, America’s political culture finds itself unable to escape the past. We may be living in a 21st century democracy, but that “democracy” increasingly resembles something that could have been plucked out of feudal Europe or, perhaps more accurately, feudal Japan.
For much of its history, Japanese politics was characterised by conflicts among its ruling daimyo, and later between the great industrial zaibatsu who replaced them as dominant powers. Similarly, America’s politics is now being shaped by a civil war not between classes, but within the ruling capitalist elite.
As the 2022 congressional elections approach, two sides are polishing their armour and fletching their arrows. In one corner stand the daimyo of the gentry corporate elite, largely drawn from the ranks of tech oligarchs and much of Wall Street. Their focus lies in the creation of a capitalist utopia rooted in paternalistic state control, much along the lines of the corporatist “Great Reset”. In the other corner, meanwhile, stand their opponents to the Right, largely made up of those who own private capital and are therefore anxious not to see their activities curbed.
These divisions reflect profound differences in industry, reminiscent of the 19th-century conflicts between aristocratic merchants and British manufacturers, or the one that broke out between the daimyo who embraced industry and those samurai who stubbornly hewed to traditional ways. Drawing on this, the French economist Thomas Piketty aptly divides our capitalist class into what he calls “the Brahmin Left” and the “merchant Right”. One side, as its caste association assumes, tends to see itself as more spiritually enlightened, as priests of the progressive secular religion. The merchant side, however, is more concerned with market competition (particularly from China), the cost of goods, and the impact of regulatory policies on their core businesses.
Today, the Brahmin Left has its base in large corporations and investors, and has allied itself with the academic and media establishments, financing non-profits and generally supporting increasingly intrusive government. By contrast, the merchant Right draws its natural support from the traditional middle class — skilled workers, high-street businesspeople, and small property owners — who also have become the bulwark of the Trumpian Republican Party...
Supply disruptions weighed on the economy, but consumers and businesses continue to spend.
The U.S. economy shrank at a 1.4% annual rate in the first quarter as supply disruptions weighed on output, though solid consumer and business spending suggest growth will resume.
The decline in U.S. gross domestic product marked a sharp reversal from a 6.9% annual growth rate in the fourth quarter, the Commerce Department said Thursday. The first quarter was the weakest since spring 2020, when the Covid-19 pandemic and related shutdowns drove the U.S. economy into a deep—albeit short—recession.
The drop stemmed from a widening trade deficit, with the U.S. importing far more than it exports. A slower pace of inventory investment by businesses in the first quarter—compared with a rapid buildup of inventories at the end of last year—also pushed growth lower. In addition, fading government stimulus spending related to the pandemic weighed on GDP.
Consumer spending, the economy’s main driver, rose at a 2.7% annual rate in the first quarter, a slight acceleration from the end of last year. Businesses also poured more money into equipment and research and development, triggering a 9.2% rise in business spending.
“The most important aspects of the domestic economy held up better than they did at the end of 2021, when growth was soaring,” said Diane Swonk, chief economist at Grant Thornton, in a note.
Two years after the pandemic struck, the U.S. economy faces challenges, including supply disruptions related to the pandemic and Ukraine war, labor shortages and high inflation. Central bank officials lifted their benchmark rate in March by a quarter percentage point from near zero to tame inflation, and they have signaled more increases are likely to follow.
Many economists think that the economy can withstand higher interest rates and return to modest growth in the second quarter and beyond, in part because consumers and businesses are continuing to spend.
Americans are spending more on services amid lower Covid-19 case totals and the lifting of remaining pandemic restrictions. Travel is one key example: Hotel occupancy rates are up from January, and more people are also boarding planes.
George Lewis, co-owner of Brass Lantern Inn in Stowe, Vt., is seeing a surge in demand. Visits to his bed-and-breakfast on Maple Street are running strong with rooms selling out some weekends this spring, a sharp shift from earlier in the pandemic when the inn relied on small-business aid to survive.
“People have called up: ‘Are you really sold out?’ ” Mr. Lewis said. “I’m like, ‘Yeah, yeah, we’re really sold out.’ ”
Still, Mr. Lewis is more concerned about business next year. For one, it isn’t clear where inflation will be, he said. Prices have already risen briskly for heating oil to warm rooms, as well as for the cheddar cheese Mr. Lewis uses in egg strata, a breakfast casserole he serves up on Saturdays.
Consumer spending is another wild card, he added.
“We don’t know what people’s pocketbooks can accommodate after this year,” he said. “Some people are spending…independent of what the cost is.”
Looking ahead, economists surveyed by The Wall Street Journal estimate GDP rising 2.6% in the fourth quarter of 2022 from a year earlier, matching 2019 annual growth, but logging in well below 5.5% growth recorded last year.
The labor market is a key source of economic strength right now. Jobless claims—a proxy for layoffs—have been near historic lows and fell last week to 180,000 as employers clung to employees amid a shortage of available workers. Businesses are hiring and ramping up wages, supporting consumer spending.
High inflation, though, is cutting into households’ purchasing power. Consumer prices rose 8.5% in March from a year earlier, a four-decade high. Elevated inflation is wiping away pay gains for many workers: average hourly earnings were up 5.6% over the same period.
Fast-rising prices are also challenging many businesses...
I'm just tickled by this. The funniest thing is I had no doubts he'd take over the company. Turns out it was just a matter of arranging financing, and for a guy like than, how hard could that be?
What's even more hilarious, of course, is the left's reaction to the buyout. Twitter itself is in meltdown mode. Folks on the right are gloating, rolling over laughing on the floor. Folks on the left are panicking, literally not sure what they're going to do now that their Twitter power has been zapped by a force more powerful than kryptonite.
It's glorious.
I never moved to Trump's Truth Social. I dismissed all the others as wannabee's, Gab, Parler, Gettr, or whatever. I'm sure they can generate some good discussions or whatever, but they can't claim to be the "digital town square," not just at home, but globally. Until someone beats Twitter at that scale, attracting even more users, I don't see a credible substitute.
Elon Musk’s bid to buy Twitter and take the company private succeeded on Monday, 11 days after the world’s wealthiest man first announced that he’d like to buy the social media firm.
After days of back and forth, Twitter’s board approved Musk’s approximately $44 billion offer Monday.
“Free speech is the bedrock of a functioning democracy, and Twitter is the digital town square where matters vital to the future of humanity are debated,” Musk said in a statement announcing the deal. “I also want to make Twitter better than ever by enhancing the product with new features, making the algorithms open source to increase trust, defeating the spam bots, and authenticating all humans.”
The company’s leadership initially tried to fend off the bid, adopting a “poison pill” measure that would make a hostile takeover difficult.
But Musk announced that he had $46.5 billion in financing lined up in filings with the Securities and Exchange Commission on Thursday, prompting Twitter’s board to meet on Sunday to discuss the bid. Following that meeting, the board opened negotiations with Musk that stretched late into the night, according to reporting by the New York Times.
The deal values Twitter stock at around $54 per share, above the $39 per share that the stock was trading at before Musk’s interest in the company became clear in early April, when he purchased a 9% stake in the company, but also well below the stock’s 2021 high of $77 per share.
Musk stated that his interest in Twitter is motivated not by the company’s finances but by its role as a public forum and his belief that he could manage the platform better than its current leadership.
“Having a public platform that is maximally trusted and broadly inclusive is extremely important to the future of civilization,” Musk said at a public interview on April 14, a day after he first announced his offer to buy the company. “I don’t care about the economics at all.”
He elaborated on this theme in his SEC filing, writing: “I invested in Twitter as I believe in its potential to be the platform for free speech around the globe, and I believe free speech is a societal imperative for a functioning democracy,” and that he believes “the company will neither thrive nor serve this societal imperative in its current form.”
Since its launch in 2006, Twitter has become one of the core companies of the social media age — but it has had a difficult time becoming a profitable business and has been a site of explosive disagreement over the moderation of online speech.
Founded by Jack Dorsey, Evan Williams, Noah Glass and Biz Stone as a site that allowed users to post 140-character messages using SMS texting, Twitter experienced its first surge of interest after a presentation at the 2007 SXSW festival in Texas.
The next few years brought explosive growth. In 2011, the company announced it had 100 million monthly active users. By the time Twitter went public, in 2013, that number had doubled to more than 200 million people using the platform every month.
But Twitter could not sustain that rate of expansion. While Facebook, Instagram and upstart platform TikTok rocketed past Twitter to more than a billion users in the past decade, Twitter hit a plateau. The company counted 300 million monthly users in 2019 before switching its reported metrics. Now it has 217 million monetizable daily active users, per its latest corporate filings.
Under a series of chief executives, Twitter did figure out how to squeeze more money out of those users. Revenue grew from $1.4 billion in 2014 public to over $5 billion in 2021. But the company only booked a profit in 2018 and 2019, and returned to losing money in the past two years.
Even as its user growth stagnated, however, Twitter became the go-to platform for journalists and politicians, a volatile combination that has turned it into one of the key battlegrounds in the fight over online harassment, the limits of public speech and the power of tech companies.
Nowhere was the battle hotter than in the debate around banning former President Trump from the platform...
It's funny, because I just haven't been watching *anything* on Netflix of late. I like news, movies, sports. It's got to be a very good streaming series for me to invest the time to binge watch or view over multiple seasons.
I actually watched the first season of "Euphoria," but that was on HBO. I'm too busy with school right now in any case. Summertime is when I have the time to watch a lot of television (though I did see "Passion of the Christ" on Netflix before Holy Week just past).
I'm not canceling my subscription just yet, but honestly, I use Amazon Prime more frequently these days.
For Netflix Inc., the era of carefree spending is over.
The streaming giant ran up a huge bill over the past several years as it expanded across the globe and produced a mountain of programming, prioritizing growth over cost efficiency. Now the company is imposing more financial discipline, according to senior executives.
The shift comes as competition from an array of streaming rivals begins to take a toll, a new reality that was evident in first-quarter results announced Tuesday. The company lost subscribers for the first time in over a decade, and revenue grew at its slowest pace in years. Shares plunged 35%, the stock’s second-worst one-day decline ever, erasing $54 billion in market value.
“Well, it’s a bitch,” Netflix Chairman and Co-Chief Executive Reed Hastings said of the results while addressing employees in a town hall on Wednesday afternoon, according to people familiar with his remarks.
After churning out over 500 original programs last year, Netflix is looking to add fewer new titles, with a greater emphasis on quality, people familiar with the company’s strategy said. It is revamping production deals to limit its risk, and prioritizing programs with the biggest return, not the greatest reach, the people said. A key internal metric: the ratio of a program’s viewership to its budget.
“We should right-size budgets depending on what the creative dictates, and what the size of the audience is,” Bela Bajaria, the head of global TV for Netflix, said in a recent interview.
She said when Netflix first started making original programs it had no track record and had to make outsize bids to land “House of Cards” and other high-profile shows. “That was the cost of entry, the cost of doing business,” Ms. Bajaria said.
Netflix executives said the company expects to continue to grow spending on content to more than $20 billion this year while scrutinizing it more closely. Ms. Bajaria said that doesn’t mean the service will go cheap on production. “We’re always going to make great shows and have the amount of money needed for the creator’s vision,” she said.
As it looks to rein in costs, Netflix is also exploring new ways to boost revenue. In January, the company said it was raising prices in the U.S. and Canada. On Tuesday’s earnings call, Mr. Hastings said Netflix is exploring adding a lower-priced, ad-supported version of the service to court cost-conscious viewers. And, after blaming password-sharing for limiting its growth, Netflix says it is looking to “monetize” the practice.
The newfound focus on content costs is causing tensions with Hollywood’s producers and show runners, who have benefited from the streamer’s largess. Netflix’s tendency to give shows a quick hook when it believes they aren’t delivering a return is another sore spot with producers and creators. Some producers say Netflix needs to be more aware of its competitive environment, and factor in the programming rivals are launching when deciding when to release its own shows.
“If there is anything I would say is a fault of Netflix, it is that they are so insular. They may not see what’s going on outside their walls or they know and the hubris is so great they don’t care,” said Jeff Fierson, whose credits for Netflix include the movie “Sweet Girl” and the short-lived series “Daybreak.”
Mr. Fierson noted that “Daybreak”—a show about teens in a post-apocalyptic Los Angeles—made its debut close to the premiere of Disney+’s “The Mandalorian” and the debut of the Apple TV+ streaming service.
Warning sign
Netflix still leads the pack in streaming video with more than 220 million subscribers. But its recent turbulence has rattled Wall Street, causing investors to question how big the pot of gold is in the streaming wars. Shares in Paramount Global, which operates the Paramount+ streaming service, fell 7% on Wednesday, while shares in Walt Disney Co., owner of Disney+, fell 5% and shares in Warner Bros. Discovery, owner of HBO Max, fell 5%.
Disney+, Netflix’s closest rival with 130 million subscribers globally, is starting to feel some pressure as well. The company launched a low-cost, ad-supported tier to boost subscribers. It is broadening beyond the “Star Wars” and “Marvel” programming that has anchored Disney+, hoping to reach new audiences and be better positioned to achieve its target of between 230 million and 260 million subscribers by the fall of 2024. The ABC show “Dancing with the Stars,” which appeals primarily to an older audience, will move exclusively to Disney+ starting this fall.
All streaming players are learning that adding new subscribers is getting much harder, especially in the mature U.S. market. Every service is under pressure to create a steady flow of new shows and movies to draw in new subscribers and retain existing ones. The hope is that every once in a while they’ll score a big hit like Netflix did with “Squid Game,” “Tiger King” and “Queen’s Gambit.”
Veteran media analyst Michael Nathanson, who has raised concerns about the prospects for major players in streaming, said consolidation that reduces the number of competitors might relieve some pressure, but “for the time being, this is a pretty capital-intensive business.”
Some producers and writers say they are frustrated by inconsistent guidance from streaming services, which are always looking for a new formula to attract more subscribers. “As creative people we are getting whipsawed. There is not a mission statement that sticks around for more than a couple of months,” said producer Mike Royce, whose credits include the Netflix reboot of “One Day at a Time.”
When Netflix first introduced original programming to its platform a decade ago, its pitch to creators was that there would be little interference from the “suits” and no worries about ratings. In recent years the company has spent hundreds of millions of dollars signing superstar producers including Shonda Rhimes and Ryan Murphy, setting off a talent arms race among Hollywood studios.
Now, the service has a never-ending conveyor belt of new content. Shows have a window of several weeks to find their audience or they are canceled, meaning they usually aren’t promoted on the home page and become harder for viewers to find. Netflix executives say the company’s cancellation rate is on par with that of rival streamers, and of broadcast and cable networks...
A head-spinning quarter came to a disappointing end, with major stock indexes suffering their worst performance in two years and other markets recording some of the most extreme moves on record.
The action reflects a sense of dislocation shared by many traders and portfolio managers who are confronting challenges not seen in years. Yet their unease has been offset in part by a fierce determination among many investors to take advantage of any price declines to add to positions in stocks, bonds and commodities.
Inflation has surged to its highest level in four decades, Russia’s invasion of Ukraine has rattled already stretched supply chains and the Federal Reserve has embarked on a rate-increase plan whose pace investors are struggling to handicap.
All three major U.S. indexes declined more than 1.5% on Thursday, with losses accelerating in the final hour of the session as traders dumped stocks to end the quarter. The declines have dragged the S&P 500 down 4.9% over the past three months, snapping a seven-quarter streak of wins. The Dow Jones Industrial Average and Nasdaq Composite have lost 4.6% and 9.1%, respectively, this year.
U.S. oil futures cleared $130 a barrel in early March, a level that flashed a warning signal for many economists. But the futures have since declined to around $100, a price that likely limits immediate economic damage but still marks the biggest quarterly gain since 2008.
“There are different parts of this market that rhyme with history, but really not even that well,” said Eric Veiel, head of global equities at T. Rowe Price, which oversees $1.5 trillion in assets. “This is a truly unique time.”
Underpinning the uncertainty that permeated the first quarter was the Fed’s plan to raise rates. In doing so, the central bank removed a historic wave of stimulus that had driven stocks to dozens of records over the past two years and fueled a rush into some of the most speculative investments in the market.
That made the recent market downturn markedly different from the crash in 2020, which was abnormally short and severe.
“The changes to our market views are just as dramatic as they were when the Covid-19 pandemic emerged two years ago,” Erik Knutzen, multiasset class chief investment officer at Neuberger Berman, wrote in a note to clients after the Ukraine invasion, adding that he is pessimistic about stocks over the next year.
Few assets were left untouched by the volatility. Investors have dumped bonds, sending yields on corporate and municipal bonds as well as Treasurys sharply higher. The Bloomberg U.S. Aggregate bond index—largely U.S. Treasurys, highly rated corporate bonds and mortgage-backed securities—returned minus 6% in 2022 through Wednesday, headed toward the biggest quarterly loss since 1980.
Wheat prices have climbed 31%, logging the best quarterly performance since 2010. The swings in nickel prices during the Ukraine crisis were so large that the London Metal Exchange closed trading in the commodity after a huge run-up in prices inflicted severe financial pressure on producers that sold nickel as a hedge.
“That’s not rational behavior for an instrument, and that’s terrifying,” said Paul Britton, founder of Capstone Investment Advisors, an investment firm specializing in trading volatility. He says he expects the turbulence to continue the rest of the year.
Adding to the pain for many investors was the decline among shares of big technology companies, the biggest market leaders of the past decade.
Facebook’s parent company, Meta Platforms Inc., lost about $232 billion in market value in a single session after posting disappointing earnings, the biggest loss in market value for a U.S. company in history. The next day, Amazon.com Inc. recorded the biggest-ever one-day gain in market value.
Meta had its worst quarter since its shares started trading publicly in 2012 and has been one of the biggest losers within the S&P 500. Other former market leaders also struggled. Netflix Inc. has lost 38% this quarter, its worst period since 2012. PayPal Holdings Inc. has also lost around 39%, its worst quarter on record, and Salesforce.com Inc. finished its worst quarter since 2011.
The S&P 500 outperformed the tech-heavy Nasdaq Composite by about 4.2 percentage points, the greatest margin since 2006, according to Dow Jones Market Data.
Other corners of the market have fared better. The S&P 500’s energy sector has soared 38% and notched its best quarter in history. Energy stocks like Occidental Petroleum Corp. and Halliburton Co. have skyrocketed more than 95% and 65%, respectively.
Some optimism crept back into the market recently. After the Fed raised rates in March for the first time since 2018, a familiar pattern emerged. Investors piled back into stocks and stepped in to buy the dips in shares of tech and growth companies, as well as more speculative bets that had suffered to start the year.
Bitcoin prices have rebounded in March. Meme stocks like GameStop Corp. and AMC Entertainment Holdings Inc. have soared, gaining more than 30% for the month.
Some analysts said individual investors appeared to be piling back into the market, driving some of the gains, a move reminiscent of last year...
.@MelissaTweets Remember we were talking about hoarding/no supplies of water in March 2020 (at my Costco, for example)? Well, here’s my local Ralph’s this morning, MLK Day, January 17th, 2022. Short supply: 💧 💦 💧 pic.twitter.com/ktSJaa8Xv3
The U.S. food system is under renewed strain as Covid-19’s Omicron variant stretches workforces from processing plants to grocery stores, leaving gaps on supermarket shelves.
In Arizona, one in 10 processing plant and distribution workers at a major produce company were recently out sick. In Massachusetts, employee illnesses have slowed the flow of fish to supermarkets and restaurants. A grocery chain in the U.S. Southeast had to hire temporary workers after roughly one-third of employees at its distribution centers fell ill.
Food-industry executives and analysts warn that the situation could persist for weeks or months, even as the current wave of Covid-19 infections eases. Recent virus-related absences among workers have added to continuing supply and transportation disruptions, keeping some foods scarce.
Nearly two years ago, Covid-19 lockdowns drove a surge in grocery buying that cleared store shelves of products such as meat, baking ingredients and paper goods.
Now some executives say supply challenges are worse than ever. The lack of workers leaves a broader range of products in short supply, food-industry executives said, with availability sometimes changing daily.
Supermarket operators and food makers say that overall supplies are ample, despite the continuing labor shortages and difficulties transporting goods. They say that shoppers will find what they are looking for, but may have to opt for different brands.
Eddie Quezada, produce manager at a Stop & Shop store in Northport, N.Y., said Omicron has stretched his department more than any previous wave of the pandemic, with one in five of his staff contracting Covid-19 in early January. Deliveries also have taken a hit, he said: Earlier in the month he received only 17 of the 48 cases of strawberries he had ordered.
“There is a domino effect in operations,” Mr. Quezada said.
At a Piggly Wiggly franchisee in Alabama and Georgia, about one-third of pickers needed to organize products and load trucks at the grocery chain’s distribution centers were out sick in the first week of January, said Keith Milligan, its controller. The company has been struggling to get food to stores on time due to driver shortages and staffing issues that haven’t improved, Mr. Milligan said, leaving Piggly Wiggly to change its ordering and stocking plans daily in some cases. Frozen vegetables and canned biscuits are running low, he said.
In-stock levels of food products at U.S. retailers hit 86% for the week ended Jan. 16, according to data from market-research firm IRI. That is lower than last summer and pre-pandemic levels of more than 90%. Sports drinks, frozen cookies and refrigerated dough are especially low, with in-stock levels in the 60% to 70% range. In-stock rates are lower in states such as Alaska and West Virginia, IRI data show.
“We were expecting supply issues to get resolved as we go into this period right now. Omicron has put a bit of a dent on that,” Vivek Sankaran, chief executive of Albertsons Cos., said on a Jan. 11 call with analysts. He said the Boise, Idaho-based supermarket giant expects more supply challenges over the next month or so.
Similar challenges at packaged-food and meatpacking plants mean that shortages could linger, industry officials and analysts said. The Agriculture Department showed cattle slaughter and beef production over the week of Jan. 14 were down about 5% from a year earlier, with hog slaughtering down 9%. Chicken processing was about 4% lower over the week ending Jan. 8, the USDA said. Labor shortages are also affecting milk processing and cheese production, according to the agency.
Because it often takes weeks for meat to reach store shelves from the plants, the current Omicron-related labor problems at producers could prolong supply issues, said Christine McCracken, executive director of meat research at agricultural lender Rabobank. “This might mean less meat for longer,” she said.
Lamb Weston Holdings Inc., the top North American seller of frozen potato products, said in January it expected labor challenges to continue affecting production rates and throughput in its plants, where staffing shortages have already disrupted operations. Conagra Brands Inc., which makes Birds Eye frozen vegetables and Slim Jim meat snacks, said earlier this month that more of its employees have been testing positive for Covid-19 at a time when elevated consumer demand already is outpacing the company’s available supplies...
Federal courts considering the Biden administration’s vaccination mandates—including the Supreme Court at Friday’s oral argument—have focused on administrative-law issues. The decrees raise constitutional issues as well. But there’s a simpler reason the justices should stay these mandates: the rise of the Omicron variant.
It would be irrational, legally indefensible and contrary to the public interest for government to mandate vaccines absent any evidence that the vaccines are effective in stopping the spread of the pathogen they target. Yet that’s exactly what’s happening here.
Both mandates—from the Health and Human Services Department for healthcare workers and the Occupational Safety and Health Administration for large employers in many other industries—were issued Nov. 5. At that time, the Delta variant represented almost all U.S. Covid-19 cases, and both agencies appropriately considered Delta at length and in detail, finding that the vaccines remained effective against it.
Those findings are now obsolete. As of Jan. 1, Omicron represented more than 95% of U.S. Covid cases, according to estimates from the Centers for Disease Control and Prevention. Because some of Omicron’s 50 mutations are known to evade antibody protection, because more than 30 of those mutations are to the spike protein used as an immunogen by the existing vaccines, and because there have been mass Omicron outbreaks in heavily vaccinated populations, scientists are highly uncertain the existing vaccines can stop it from spreading. As the CDC put it on Dec. 20, “we don’t yet know . . . how well available vaccines and medications work against it.”
The Supreme Court held in Jacobson v. Massachusetts (1905) that the right to refuse medical treatment could be overcome when society needs to curb the spread of a contagious epidemic. At Friday’s oral argument, all the justices acknowledged that the federal mandates rest on this rationale. But mandating a vaccine to stop the spread of a disease requires evidence that the vaccines will prevent infection or transmission (rather than efficacy against severe outcomes like hospitalization or death). As the World Health Organization puts it, “if mandatory vaccination is considered necessary to interrupt transmission chains and prevent harm to others, there should be sufficient evidence that the vaccine is efficacious in preventing serious infection and/or transmission.” For Omicron, there is as yet no such evidence.
The little data we have suggest the opposite. One preprint study found that after 30 days the Moderna and Pfizer vaccines no longer had any statistically significant positive effect against Omicron infection, and after 90 days, their effect went negative—i.e., vaccinated people were more susceptible to Omicron infection. Confirming this negative efficacy finding, data from Denmark and the Canadian province of Ontario indicate that vaccinated people have higher rates of Omicron infection than unvaccinated people.
Meantime, it has long been known that vaccinated people with breakthrough infections are highly contagious, and preliminary data from all over the world indicate that this is true of Omicron as well. As CDC Director Rochelle Walensky put it last summer, the viral load in the noses and throats of vaccinated people infected with Delta is “indistinguishable” from that of unvaccinated people, and “what [the vaccines] can’t do anymore is prevent transmission.”
There is some early evidence that boosters may reduce Omicron infections, but the effect appears to wane quickly, and we don’t know if repeated boosters would be an effective response to the surge of Omicron. That depends among other things on the severity of disease Omicron causes, another great unknown. According to the CDC, the overwhelming majority of symptomatic U.S. Omicron cases have been mild. The best policy might be to let Omicron run its course while protecting the most vulnerable, naturally immunizing the vast majority against Covid through infection by a relatively benign strain. As Sir Andrew Pollard, head of the U.K.’s Committee on Vaccination and Immunisation, said in a recent interview, “We can’t vaccinate the planet every four or six months. It’s not sustainable or affordable.”
In any event, the vaccine mandates before the court don’t require boosters. They define “fully vaccinated” as two doses of Moderna or Pfizer-BioNTech or one dose of Johnson & Johnson. Even if boosters would help, the mandates would leave tens or hundreds of thousands of unboosted employees on the job, who have zero or negative protection against Omicron infection, and who would be highly contagious if they become infected. In other words, there is no scientific basis for believing these mandates will curb the spread of the disease.
The verdict stands out for its rarity. Few technology executives are charged with fraud and even fewer are convicted. If sentenced to prison, Ms. Holmes would be the most notable female executive to serve time since Martha Stewart did in 2004 after lying to investigators about a stock sale. And Theranos, which dissolved in 2018, is likely to stand as a warning to other Silicon Valley start-ups that stretch the truth to score funding and business deals.
The mixed verdict suggested that jurors believed the evidence presented by prosecutors that showed Ms. Holmes lied to investors about Theranos’s technology in the pursuit of money and fame. They were not swayed by her defense of blaming others for Theranos’s problems and accusing her co-conspirator, Ramesh Balwani, the company’s chief operating officer and her former boyfriend, of abusing her. They were also not swayed by the prosecutor’s case that she had defrauded patients.
On Monday, jurors told the court that they were deadlocked on three of the charges of defrauding investors. Judge Davila pushed them to continue deliberating, but they were unable to agree.
The verdict arrived in a frenzied period for the tech industry, with investors fighting to get into hot deals and often ignoring potential red flags about the companies they were putting money into. Some have warned that more Theranos-like disasters loom.
In recent years, tales of start-up chicanery, from the bungled initial public offering of WeWork to the aggressive boundary-pushing tactics of Uber, have not slowed the flow of money toward charismatic founders spinning tales of business success. Those downfalls captured the public’s attention, but did not result in criminal charges.
Yet the Justice Department under President Biden has renewed its focus on white-collar crimes. “We will urge prosecutors to be bold,” Lisa O. Monaco, the deputy attorney general, recently said in a speech. “The fear of losing should not deter them.”
Ms. Holmes’s conviction sends a message to other founders and executives to be careful about their statements to investors and the public, said Jessica Roth, a law professor at Cardozo School of Law and former federal prosecutor in the Southern District of New York.
It “shines a light on the importance of drawing a distinction between truth and optimistic projections — and keeping that clear in one’s mind,” she said.
Ms. Holmes rose to prominence by mimicking the disruptive change-the-world chutzpah of Silicon Valley heroes like Steve Jobs — a playbook that has turned companies like Apple, Tesla, Google and Facebook into some of the most valuable in the world.
In the process, she captured the attention of heads of state, top business leaders and wealthy families with idealistic plans to revolutionize the health care industry. She traveled the world on private jets, was feted with awards and glowing magazine cover stories and lauded as the world’s youngest self-made female billionaire.
But she crossed into fraud when she lied about the accuracy, types and number of tests Theranos’s machines could do to raise funding and secure business deals.
“That’s a crime on Main Street and it’s a crime in Silicon Valley,” Robert Leach, an assistant U.S. attorney, said in opening statements at the trial’s start...
The economy is expected to grow at an annualized rate of 7 percent for the fourth quarter, but big numbers won't help the White House. Voters are really souring on this administration, most likely from relentless inflationary pressures, felt everyday at the gas pumps especially.
FRANKFURT—A booming U.S. economy is rippling around the world, leaving global supply chains struggling to keep up and pushing up prices.
The force of the American expansion is also inducing overseas companies to invest in the U.S., betting that the growth is still accelerating and will outpace other major economies.
U.S. consumers, flush with trillions of dollars of fiscal stimulus, are snapping up manufactured goods and scarce materials.
U.S. economic output is set to expand by more than 7% annualized in the final three months of the year, up from about 2% in the previous quarter, according to early output estimates published by the Federal Reserve Bank of Atlanta. That compares with expected annualized growth of about 2% in the eurozone and 4% in China for the fourth quarter, according to JPMorgan Chase.
Major U.S. ports are processing almost one-fifth more container volume this year than they did in 2019, even as volumes at major European ports like Hamburg and Rotterdam are roughly flat or lag behind 2019 levels. The busiest U.S. container ports are leaping ahead of their counterparts in Asia and Europe in global rankings as volumes surge, according to shipping data provider Alphaliner.
In Europe, “durable goods consumption is showing nothing like the boom that is ongoing in the United States,” said Fabio Panetta, who sits on the European Central Bank’s six-member executive board, in a speech last month. Consumption of durable goods has surged about 45% above 2018 levels in the U.S., but is up only about 2% in the eurozone, according to ECB data.
Factory gate prices in China are far outpacing consumer prices, signaling a gulf between weak domestic demand and strong overseas demand that is powered in particular by U.S. hunger for China’s manufactured goods.
While tangled global supply chains also play a role in driving global inflation, economists and central bankers are increasingly pointing to ultrastrong U.S. demand as a root cause.
“Are we crowding out consumers in other countries? Probably,” said Aneta Markowska, chief financial economist at Jefferies in New York. “The U.S. consumer has a lot more purchasing power as a result of fiscal policy than consumers elsewhere. Europe could be in a stagflationary scenario next year as a consequence.”
The U.S. accounts for almost nine-tenths of the roughly 22-percentage-point surge in demand for durable goods among major advanced economies since the end of 2019, according to data from the Bank of England.
“Very strong U.S. demand is certainly where [global supply bottlenecks] started,” said Lars Mikael Jensen, head of network at container ship giant A.P. Moller-Maersk A/S.
“It’s like a queue on a highway. The increase in volume in the U.S…takes ships away from other markets,” said Mr. Jensen. “Problems in one place will trigger problems somewhere else, we live in a global world.”
The U.S. economy will likely grow by around 6% in 2021 and 4% or more in 2022, the highest rates for decades, analysts say. Strong U.S. growth momentum is expected to push the unemployment rate to the lowest level in almost seven decades by 2023, according to Deutsche Bank analysts.
U.S. economic output is likely to surpass its pre-pandemic path early next year, while output in China and emerging markets will remain about 2% below that path through 2023, according to JPMorgan Chase.
U.S. wages are growing by about 4% a year, above the precrisis trend rate, compared with less than 1% growth in the eurozone, according to data from the Bank for International Settlements, a Switzerland-based bank for central banks.
“We threw a lot of support at [the economy] and what’s coming out now is really strong growth, really strong demand, high incomes and all that kind of thing,” said Federal Reserve Chairman Jerome Powell after the central bank’s recent meeting. “People will judge in 25 years whether we overdid it or not.”
The Fed said it would more quickly scale back its Covid-19 bond purchases and set the stage for a series of interest-rate increases beginning next spring.
In Europe, the ECB pledged to continue buying bonds at least through October 2022, and said it was unlikely to raise interest rates next year. Underlying U.S. inflation, annualized over two years, has risen above 3%, roughly double the level in the eurozone, according to data that adjust for the impact of the pandemic and changes in volatile food and energy prices.
“The strong post-pandemic recovery that was originally expected for 2022 still hasn’t materialized,” said Timo Wollmershäuser, head of forecasts at Germany’s Ifo think tank. The institute recently lowered its growth forecast for Germany in 2022 by 1.4 percentage points, to 3.7%, citing ongoing supply bottlenecks and a new wave of Covid-19.
The Fed’s assertiveness is pushing up the value of the U.S. dollar and putting pressure on emerging-market central banks to increase interest rates even before their own economic recoveries are assured or risk depreciating currencies and runaway inflation.
Mexico’s central bank on Dec. 16 said it would increase its benchmark interest rate by 0.5 percentage point to 5.50% after inflation rose to a 20-year high of 7.4%.
In Europe, the ECB pledged to continue buying bonds at least through October 2022, and said it was unlikely to raise interest rates next year. Underlying U.S. inflation, annualized over two years, has risen above 3%, roughly double the level in the eurozone, according to data that adjust for the impact of the pandemic and changes in volatile food and energy prices.
“The strong post-pandemic recovery that was originally expected for 2022 still hasn’t materialized,” said Timo Wollmershäuser, head of forecasts at Germany’s Ifo think tank. The institute recently lowered its growth forecast for Germany in 2022 by 1.4 percentage points, to 3.7%, citing ongoing supply bottlenecks and a new wave of Covid-19.
The Fed’s assertiveness is pushing up the value of the U.S. dollar and putting pressure on emerging-market central banks to increase interest rates even before their own economic recoveries are assured or risk depreciating currencies and runaway inflation.
Mexico’s central bank on Dec. 16 said it would increase its benchmark interest rate by 0.5 percentage point to 5.50% after inflation rose to a 20-year high of 7.4%.
Russia’s central bank said Friday it would increase its key interest rate by 1 percentage point to 8.5%, and might raise rates again soon, after inflation hit a near six-year high of 8.4%.
Businesses are pouring money into the U.S., looking to take advantage of what some expect to be a sustainable increase in demand. In some cases, they are bringing production closer to American consumers, looking to avoid supply shocks related to the pandemic and global trade wars...
At least you can see hurricanes coming.
The new Omicron variant did more than prompt governments to quickly close borders and tighten Covid-19-related travel restrictions. It signaled that health disruptions are here to stay as a normal part of travel concerns, right along with storms, strikes and terrorism.
For travelers, this means that you must now consider a new set of risks before making your trip, especially when going abroad. Travel can spread disease. There’s also uncertainty over testing and quarantines.
If you miscalculate or misstep, or just end up in the wrong place at the wrong time, you could be stranded, perhaps for weeks. Such a high penalty may make some people change where and how often they venture away from home.
“The casualness of travel is gone. I don’t think it’s coming back,” says Jay Sorensen, president of travel consulting firm IdeaWorksCompany.
He thinks 2019 will be viewed as the high-water mark for jumping on a plane spur-of-the-moment and taking a trip to another continent without care or concern.
Travel experts say the rapid reaction of various governments increases the risk of getting stuck in another country. It also appears to be the new standard procedure for any kind of new health risk.
Israel, Morocco and Japan closed borders before the severity or risk of the Omicron variant was clear. The U.S. banned entry for citizens of some African countries and on Monday changed testing requirements for all people entering the country. The new rule requires a negative test within one day of travel instead of three days before takeoff, throwing a curveball at travelers already abroad.
“Travelers will likely have to bake into their travel plans a possibility that a variant will all of a sudden be discovered and start spreading like wildfire,” says Sumedha Senanayake, director of global intelligence for Crisis24, a firm that advises big companies on risks for traveling employees.
The International Air Transport Association, an airline group, clearly sensed the change with a Nov. 26 statement blasting quick border-closing decisions as a threat to air-travel recovery.
“Governments are responding to the risks of the new coronavirus variant in emergency mode, causing fear among the traveling public,” says Willie Walsh, the director general of IATA and former British Airways chief. “As quickly as possible we must use the experience of the last two years to move to a coordinated, data-driven approach that finds safe alternatives to border closures and quarantine. Travel restrictions are not a long-term solution to control Covid variants.”
Other travel groups quickly sensed a change. The American Society of Travel Advisors, which represents travel agents, called on the Biden administration to revisit the new, stricter travel rules as soon as possible. Existing testing and vaccination requirements should be enough to combat viral spread, ASTA says, “without destroying an entire sector of the U.S. economy in the process.”
Of course, most countries have made these tough calls that often end up giving priority to people’s health over the financial well-being of the travel industry. This pattern is likely to continue, travel-risk experts like Mr. Senanayake say, raising the risk of getting delayed or stranded.
There’s also widespread confusion and hassle over what you need to cross borders these days. There’s no uniformity in what countries require in terms of vaccination, documentation or specific Covid tests and how soon before-flight tests need to be performed.
“If there was uniformity, a lot of this would be a lot easier. But there is never going to be uniformity,” Mr. Senanayake says.
The new restrictions haven’t prompted airline panic. OAG, which tracks airline schedules, says industry capacity world-wide, measured by the number of seats in schedules, is down only 0.5% this week compared with the previous week.
Mr. Sorensen issued a report last week to travel-industry clients suggesting that airlines, hotels and others are going to have to bear more risk of disruption if they want people to keep traveling. Change-fee penalties and nonrefundable reservations got temporary waivers during the pandemic, but they have already started creeping back in, making the consumer largely responsible for losses from unexpected disruptions.
Instead, he thinks travel companies are going to have to bear more risk to entice travelers, either by making eservations refundable or by providing insurance that will accommodate health risks and fears at airline expense.
“If there’s a whole lot of pain and effort required to get there, why do I want to go there?” Mr. Sorensen says.
Travel insurance is one tool that can give travelers some protection against the costs of disruption. If you happen to test positive abroad and need to quarantine in a hotel for 14 days, unexpected costs can be huge. When flights shut down, you may need to find a new way home that becomes a lot more expensive.
Squaremouth, a travel insurance comparison and sales site, says sales rose 53% after news broke of the Omicron variant. That compares with a jump of 20% following news of the Delta variant. Travelers are learning to quickly seek protection...
U.S. stocks tumbled Tuesday, logging their sharpest pullback since May, as rising bond yields deepened a rout in shares of technology companies.
For much of the past decade, many investors had piled into shares of fast-growing technology companies, wagering they would deliver relatively robust profit growth even in a sluggish economic environment. This week, that trade hit a roadblock.
With the economy out of the worst of the pandemic-fueled crisis, the Federal Reserve signaled last week that it could start to reverse its pandemic stimulus programs as soon as November and raise interest rates sometime next year. That appears to have prompted an unwind of some of the market’s most enduring trades—pushing Treasury yields to their highest level in months and sending investors out of popular technology stocks.
Investors agree the economic outlook has improved significantly since 2020. But many wonder how well the market will be able to stand on its own once the Fed begins to taper its monthly asset purchases—especially since they credit much of the market’s rebound from its pandemic low to extraordinary levels of monetary and fiscal support from Washington. Some investors have also expressed concerns about the economic outlook. Inflation has made a surprising comeback this year, something some worry will start to cut into companies’ profit margins. The fast-spreading Delta variant of Covid-19 has also complicated economists’ efforts to forecast the global economy’s growth outlook.
“People are realizing, or at least remembering, that central banks are going to have to start raising rates,” said Altaf Kassam, head of investment strategy for State Street Global Advisors in Europe. “The patient has become used to being given all these drugs, but soon those drugs are going to have to be reduced.”
The S&P 500 fell 90.48 points, or 2%, to 4352.63, marking its second straight day of losses and worst one-day percentage decline since May. The tech-heavy Nasdaq Composite Index slid 423.29 points, or 2.8%, to 14546.68, while the Dow Jones Industrial Average shed 569.38 points, or 1.6%, to 34299.99.
All three major indexes are on course to end the month lower.
Tuesday’s market selloff was broad, pulling all but one of the S&P 500’s sectors down for the day.
Traders yanked money out of the technology sector. Shares of companies like Facebook, Google parent Alphabet and Microsoft, each of which had vastly outperformed the broader market this year, fell more than 3.5% apiece.
Meanwhile, selling pressure accelerated in the government bond market. The yield on the benchmark 10-year Treasury note rose for a sixth consecutive day Tuesday, climbing from 1.482% Monday to 1.534%, its highest level since late June. Bond yields rise as prices fall.
Shares of energy companies avoided the broader selloff...
I haven't driven a Toyota since the mid-1980s, when I drove a maroon little Toyota pickup. Once that thing wore out, my wife and switched to Honda, and we only recently switched makes: My wife now drives a KIA, and I'm cruising all cool and macho (and old) in my Dodge Challenger. *Wink.*
The Toyota Prius hybrid was a milestone in the history of clean cars, attracting millions of buyers worldwide who could do their part for the environment while saving money on gasoline.
But in recent months, Toyota, one of the world’s largest automakers, has quietly become the industry’s strongest voice opposing an all-out transition to electric vehicles — which proponents say is critical to fighting climate change.
Last month, Chris Reynolds, a senior executive who oversees government affairs for the company, traveled to Washington for closed-door meetings with congressional staff members and outlined Toyota’s opposition to an aggressive transition to all-electric cars. He argued that gas-electric hybrids like the Prius and hydrogen-powered cars should play a bigger role, according to four people familiar with the talks.
Behind that position is a business quandary: Even as other automakers have embraced electric cars, Toyota bet its future on the development of hydrogen fuel cells — a costlier technology that has fallen far behind electric batteries — with greater use of hybrids in the near term. That means a rapid shift from gasoline to electric on the roads could be devastating for the company’s market share and bottom line.
The recent push in Washington follows Toyota’s worldwide efforts — in markets including the United States, the United Kingdom, the European Union and Australia — to oppose stricter car emissions standards or fight electric vehicle mandates. For example, executives at Toyota’s Indian subsidiary publicly criticized India’s target for 100 percent electric vehicle sales by 2030, saying it was not practical.
Together with other automakers, Toyota also sided with the Trump administration in a battle with California over the Clean Air Act and sued Mexico over fuel efficiency rules. In Japan, Toyota officials argued against carbon taxes.
“Toyota has gone from a leading position to an industry laggard” in clean-car policy even as other automakers push ahead with ambitious electric vehicle plans, said Danny Magill, an analyst at InfluenceMap, a London-based think tank that tracks corporate climate lobbying. InfluenceMap gives Toyota a “D-” grade, the worst among automakers, saying it exerts policy influence to undermine public climate goals.
In statements, Toyota said that it was in no way opposed to electric vehicles. “We agree and embrace the fact that all-electric vehicles are the future,” Eric Booth, a Toyota spokesman, said. But Toyota thinks that “too little attention is being paid to what happens between today, when 98 percent of the cars and trucks sold are powered at least in part by gasoline, and that fully electrified future,” he said.
Until then, Mr. Booth said, it makes sense for Toyota to lean on its existing hybrid and plug-in hybrid vehicles to reduce emissions. Hydrogen fuel cell technology should also play a role. And any efficiency standards should “be informed by what technology can realistically deliver and help keep vehicles affordable,” the company said in a statement.
Last year in the United States, a group of leading automakers reached a compromise on tailpipe emissions standards with California, which sought to impose tougher emissions standards than the Trump administration wanted. Toyota didn’t join that compromise agreement.
More recently, the Alliance for Automotive Innovation, an industry lobby group, argued in closed-door meetings in Washington that the California compromise, which is expected to be a model for new standards from the Biden administration, is in fact not feasible for all of its members, according to two of the people with direct knowledge of the discussions. The chairman of the alliance is Mr. Reynolds, the Toyota executive.
The Biden administration wants to use tougher emissions rules to rapidly increase sales of electric vehicles. Congress could also approve billions of dollars for construction of charging stations as well as tax incentives for electric cars and trucks.
U.S. consumer prices continued to climb swiftly in June, as the economic recovery gained steam and demand outpaced the supply of labor and materials.
The Labor Department said last month’s consumer-price index increased 5.4% from a year ago, the highest 12-month rate since August 2008. The so-called core price index, which excludes the often-volatile categories of food and energy, rose 4.5% from a year before.
The index measures what consumers pay for goods and services, including clothes, groceries, restaurant meals, recreational activities and vehicles. It increased a seasonally adjusted 0.9% in June from May, the largest one-month change since June 2008. Prices for used cars and trucks leapt 10.5% from the previous month, driving one-third of the rise in the overall index, the department said. The indexes for airline fares and apparel also rose sharply in June.
Consumers are seeing prices rise for numerous reasons, as the U.S. economic recovery picks up. Richard F. Moody, chief economist at Regions Financial Corp., said the main driver of June inflation was booming demand that outpaced the ability of businesses to keep up. Another factor, he said, was the recovery in prices for air travel, hotels, rental cars, entertainment and recreation—all services hit hard by the Covid-19 pandemic.
“Demand is coming back very rapidly, and businesses are normalizing prices in the sense that they are making up for declines” earlier in the pandemic, he said.
Supply shortages and higher shipping costs also continue to drive rapid increases in goods inflation. Prices of goods, excluding food and energy, saw the two biggest monthly increases on record in April and May, Mr. Moody said.
Rising prices reflect robust consumer demand boosted by widespread vaccinations, the ending of many business restrictions, trillions of dollars in federal pandemic relief and ample household savings. Stronger demand also has pushed employers to seek more workers and pay higher wages, as they struggle to hire...
For decades, the promise of globalization has rested on a vision of a world in which goods, services, and capital would flow across borders as never before; whatever its other features and components, contemporary globalization has been primarily about trade and foreign investment. Today’s globalized economy has been shaped to a large extent by a series of major trade agreements that were sold as win-win propositions: corporations, investors, workers, and consumers would all benefit from lowered barriers and harmonized standards. American advocates of this view claimed that deals such as the North American Free Trade Agreement would supercharge growth, create jobs, and strengthen the United States’ standing as the world’s largest and most important economy. According to then President George H. W. Bush, “NAFTA means more exports, and more exports means more American jobs.”
A quarter of a century later, such optimism appears profoundly misplaced. NAFTA and other deals did boost growth, and free trade remains a net benefit for the U.S. economy as a whole. But the overall gains have been far less dramatic than promised, and many American workers suffered when well-paid manufacturing jobs dried up as factories moved abroad. Those who managed to stay employed saw their wages stagnate. The federal government, meanwhile, did little to build a safety net to catch those who lost out.
Unsurprisingly, Americans have complicated views on trade. Although a majority of voters see free trade as a good thing, barely one-third believe that it creates jobs or lowers prices. In response, political elites and elected officials across the ideological spectrum have scrambled to distance themselves from free-trade policies and from the major pacts of the past. For its part, the Biden administration has made a noble-sounding but vague pledge to pursue a “worker-centric” trade policy. The specifics are still unclear, but such an approach will likely include more aggressive so-called Buy American provisions, which require government agencies to give preference to U.S. products when making purchases; increased pressure on trading partners to respect workers’ collective-bargaining rights; and a hawkish relationship with China. Despite the rhetoric, these proposals put the administration well within the bounds of existing U.S. trade policy—tweaking margins here and there.
That approach is unlikely to fix the problems caused by free trade—which, despite the appeal of protectionist talking points, isn’t going anywhere. Instead, the Biden administration should establish targeted domestic programs that protect workers from the downsides of globalization. A responsible policy would capture the gains of free trade but make up for domestic losses. In recent years, the United States has done neither...
