What’s Up? (Jan. 1-7)
A Cooling Jobs Market
After many consecutive months of jobs reports showing strong gains, new jobs data on Friday appeared to begin breaking the mold. The economy gained 223,000 jobs last month, a slight decline from the November total of 263,000, which was similar to the September and October numbers. The gradual slowdown is good news for officials at the Federal Reserve, who have long been waiting for a sign that their efforts to cool off the economy are having an effect on the labor market as they fight rapid price increases. But 223,000 is still a comfortable pace of growth, and the central bank has its eye on a much lower target of 100,000 jobs a month.
A Plea of Not Guilty
Sam Bankman-Fried, the disgraced cryptocurrency executive, pleaded not guilty on Tuesday to the many crimes of which he is accused: wire fraud, wire fraud conspiracy, securities fraud, securities fraud conspiracy and money laundering, to name a few. Mr. Bankman-Fried, the founder and former chief executive of FTX, the cryptocurrency exchange whose collapse resulted in billions of dollars in customer losses, was arrested last month in the Bahamas, where his business was based until recently. He was later extradited to the United States, released on a $250 million bond and ordered to remain in home detention with his parents in Palo Alto, Calif. Mr. Bankman-Fried could reverse course and plead guilty to at least some of the charges, but at the moment he faces a tentative trial date of Oct. 2.
A Defeat for a Tech Giant
Meta, already struggling with its vision for the metaverse, a plummeting stock price and mass layoffs, ran into another obstacle for its business last week when regulators in the European Union determined that the company was illegally forcing users to effectively accept targeted ads. Because language asking users for their legal consent to use their personal data appears in Meta’s terms-of-service agreement — and because users must accept Meta’s terms-of-service agreement to use its social media services — regulators said the practice amounted to a violation of a landmark data-privacy law that took effect in 2018, limiting companies’ ability to collect information about users without their consent. The decision comes with a fine of 390 million euros, or $414 million, and also requires Meta to outline in the next three months how it will begin complying with the 2018 law. In a statement, Meta said there had been a “lack of regulatory clarity” on ad practices in the European Union.
What’s Next? (Jan. 8-14)
Tesla’s Bumpy Road Ahead
Tesla’s stock is in free fall. Its sales in the fourth quarter missed the expectations of analysts (who had already lowered their forecasts). It has lost more than $850 billion in market value since its peak in November 2020. And Elon Musk, the company’s chief executive, seems to be far more focused on Twitter than he is on the electric vehicle maker he has led since 2008 — or at least that’s what many investors are starting to fear. Mr. Musk has tried to soothe Tesla employees, warning them against fixating on stock prices and repeating bold claims that Tesla would become the most valuable company in the world. But it is likely that analysts will continue to lower their forecasts for the carmaker, which is also facing increasingly stiff competition in the United States and abroad. Last month, for example, Tesla’s sales in China were 20 percent lower than a year earlier. The decline comes as Chinese automakers like BYD become more formidable in the electric vehicle market.
New Inflation Data
After a year of record inflation, investors are looking for more hopeful signs in the new year. Though the Consumer Price Index report on Thursday will provide a look at prices in December, it may help establish a theme for 2023. Analysts expect to see inflation continue to soften, with prices rising less than 7 percent in December from a year earlier. A dip below 7 percent is likely to cheer investors and lift stocks on Wall Street, but policymakers at the Fed have been fretting that the markets have been misunderstanding their intentions. While the central bank is encouraged by recent inflation numbers, officials are still concerned about high prices becoming more entrenched in the economy. Jerome H. Powell, the Fed chair, will make his first public remarks since the Fed’s December meeting when he joins other central bankers in Stockholm on Tuesday to discuss central bank independence.
Southwest’s Costly Cancellations
The mass flight cancellations and delays may be behind Southwest Airlines and its customers, thousands of whom were stranded in airports across the country over the holidays. But both are still dealing with the considerable aftereffects of the logistical meltdown. In a filing last week, Southwest said it expected the crisis to cost the company $725 million to $825 million, the equivalent of the airline’s earnings in the first nine months of last year; the airline also said it would probably report a loss for the final three months of 2022. Some of its customers are also struggling with unforeseen costs after spending several hundred dollars or, in some cases, more than $1,000 to reach their destinations after being left in the lurch by Southwest. The airline has offered customers 25,000 points for each canceled ticket, which are worth about $300 in flight credits. The airline is also offering refunds and reimbursements.
The Federal Trade Commission on Thursday unveiled a proposal that would block companies from including noncompete agreements in labor contracts. Bed Bath & Beyond warned that bankruptcy could be on the horizon after lower sales, slower foot traffic and a loss of about $386 million in its most recent quarter. The country’s biggest banks — JPMorgan Chase, Citigroup, Bank of America and Wells Fargo — will release their fourth-quarter earnings on Friday.