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The World
Dow Falls 764 Points on Rate, Recession Worries: U.S. stock losses deepened, after central bank officials on both sides of the Atlantic signaled they have more work to do to tame inflation and a batch of fresh data heightened recession fears. The major U.S. stock indexes started the week higher, then fell Wednesday when the Fed raised rates by half a percentage point. What spooked investors wasn’t the rate increase, which was widely expected, but that the Fed raised its estimates of how high rates may ultimately have to go. (Wall Street Journal)
‘Emphasize the pain’: Jay Powell keeps hawkish tone even as inflation eases Fed chair tries to manage investor expectations following shift down to half-point rate rises. (Financial Times)
The European Central Bank’s warning that aggressive interest-rate hikes are far from over is raising the stakes for the euro region, just as a recession takes hold. (Bloomberg)
“We judge that interest rates will still have to rise significantly and at a steady pace,” Christine Lagarde, European Central Bank president, said. (The Times)
Medical staff in China's hospitals say COVID-19 ripping through their ranks: A growing number of China's doctors and nurses are catching COVID-19 and some have been asked to keep working, as people showing mostly moderate symptoms throng hospitals and clinics, according to medical staff and dozens of posts on social media. (Reuters)
Close to 1 million people could die of COVID-19 in China if the country fully reopens at its current “status quo,” according to a study released by The University of Hong Kong (HKU). Researchers warned that without a mass vaccination campaign for the fourth COVID booster shot among other urgent measures, China's healthcare system would be overwhelmed if the country fully reopened between December and January 2023. (Semafor)
Asia on alert for new Covid-19 strains as China reopens: Potential mutation of virus could be milder but more transmissible, experts say, urging Asian countries to guard against fresh respiratory viruses in winter. (South China Morning Post)
Young Chinese jobseekers who can’t find work feel increasingly lost in oversaturated labor pool. Students lament a ‘degradation of academic qualifications’ in China, as a master’s degree from a top university has become the threshold for many positions. Analysts do not expect China’s labour market to improve much for college graduates in the next year or two. (South China Morning Post)
TX GOP lawmakers accuse investment firms of breaking a law that prohibits divesting from oil and gas. At a senate committee hearing in Marshall, Texas Republican lawmakers accused investment firms of pulling back on fossil fuels, running afoul of a 2021 law that prohibits the state from contracting with or investing in companies that “boycott” oil, natural gas and coal companies. (Texas Tribune)
Harvard names Claudine Gay 30th president. The distinguished scholar of democracy and political participation, will become the 30th president of Harvard University on July 1. Since 2018, Gay has served as the Edgerley Family Dean of Harvard’s Faculty of Arts and Sciences (FAS), the University’s largest and most academically diverse faculty, spanning the biological and physical sciences and engineering, the social sciences, and the humanities and arts. (Harvard Gazette)
‘Space hurricanes’ swirling over the Earth surprise scientists: Over 600 miles in diameter with multiple arms that rotate counterclockwise, space hurricanes contain a calm center, or eye, and “rain” electrons. (Washington Post)
Economy
2022 will go down as the worst year for U.S. IPOs since 1990. 74 companies have raised just $8 billion via U.S. IPOs thus far in 2022, with virtually nothing left on the upcoming calendar. Proceeds are down a whopping 95% from last year, and at least 50% lower than any of the past 31 years. The U.S. IPO number is down 88% from 2021 and the smallest since 2009. The global picture is a bit stronger, with proceeds at their lowest mark since 2016. Same goes for global VC-backed IPOs, while global PE-backed IPOs are at a decade-long low. (Axios)
U.S. retail spending and manufacturing weakened in November, signs of a slowing economy as the Federal Reserve continues its battle against high inflation. November retail sales fell 0.6% from the prior month for the biggest decline this year, the Commerce Department said. Budget-conscious shoppers pulled back sharply on holiday-related purchases, home projects and autos. Manufacturing output declined 0.6%, the first drop since June, the Fed said in a separate report. (Wall Street Journal)
U.S. rents drop at the fastest rate in 7 years, per Zillow. Rent prices fell 0.4% in November — the largest month-over-month drop since Zillow started tracking this data in 2015, according to the real estate company’s latest rent report. This is another sign that inflation is easing. Month-over-month prices are falling fastest in Raleigh (-1.3%), Austin (-1.2%), and Seattle (-1.1%). (Axios)
The European Central Bank’s warning that aggressive interest-rate hikes are far from over is raising the stakes for the euro region, just as a recession takes hold. Every increase in borrowing costs, including Thursday’s half-point move, advances the fight by Frankfurt officials against rampant inflation — but also risks a higher toll on the economy. The trade-off means the potential cost of an error is rising with each decision. (Bloomberg)
Ernst & Young’s leaders are looking at backup plans for the firm’s split to address rising funding costs and a potential slowdown in growth that could imperil the rich payouts promised to partners. Leaders of the accounting powerhouse are talking to private-equity firms as they draw up plans for the sale of EY’s consulting arm. Options include using private debt, which would involve private-equity funds in an initial public offering, or delaying the effort beyond the current target at the end of 2023. (Wall Street Journal)
Technology
ChatGPT owner OpenAI projects $1 billion in revenue by 2024. Three sources briefed on OpenAI's recent pitch to investors said the organization expects $200 million in revenue next year and $1 billion by 2024. The forecast, first reported by Reuters, represents how some in Silicon Valley are betting the underlying technology will go far beyond splashy and sometimes flawed public demos. OpenAI was most recently valued at $20 billion in a secondary share sale, one of the sources said. The startup has already inspired rivals and companies building applications atop its generative AI software, which includes the image maker DALL-E 2. OpenAI charges developers licensing its technology about a penny or a little more to generate 20,000 words of text, and about 2 cents to create an image from a written prompt, according to its website. (Reuters)
Twitter suspended the accounts of roughly half a dozen prominent journalists, the latest change by the social media service under its new owner, Elon Musk. The accounts suspended included Ryan Mac of The New York Times; Drew Harwell of The Washington Post; Aaron Rupar, an independent journalist; Donie O’Sullivan of CNN; Matt Binder of Mashable; Tony Webster, an independent journalist; Micah Lee of The Intercept; and the political journalist Keith Olbermann. It was unclear what the suspensions had in common; each user’s Twitter page included a message that said it suspended accounts that “violate the Twitter rules.” (New York Times)
Elon Musk sold more than $3.5 billion worth of Tesla shares this month, the second time he cut his stake since buying Twitter in late October. The Tesla CEO sold roughly 22 million shares in the electric car maker over three days in December, according to regulatory filings. According to The Wall Street Journal, Musk has sold more than $39 billion in Tesla shares since prices peaked in late 2021. (The Information)
Tech Groups Ask Supreme Court to Review Texas Social Media Law. Trade groups that represent Meta Platforms Inc. and Alphabet Inc.’s Google said they asked the US Supreme Court to overturn a Texas law that would sharply restrict the editorial discretion of social media companies. The appeal by NetChoice LLC and the Computer & Communications Industry Association contends the Texas law violates the First Amendment by forcing social media companies to disseminate what they see as harmful speech and putting platforms at risk of being overrun by spam and bullying. (Bloomberg)
Microsoft Squeezed by Growing Resistance to Software Bundles: As companies scrutinize their software spending amid the slowing economy, they’re pushing back on software bundles, looking to pay only for what they use. Microsoft customers, for example, are increasingly telling the tech giant they only want certain security and compliance parts of the all-in-one bundle, known as E5, without other business apps. As a result, customers are often striking narrower deals that typically cost about 5% less, say two Microsoft salespeople, who described increasing difficulty hitting internal sales quotas on E5 in recent quarters. (The Information)
Amazon has agreed to a settlement with European Union regulators that will force the company to make significant changes to its business practices but also allows the e-commerce giant to avoid a drawn out legal fight and billions of dollars of potential fines, according to three people with knowledge of the deal. The settlement, expected to be announced on Dec. 20, will end two antitrust investigations in Europe. The deal will require Amazon to give makers of rival products equal access to valuable real estate on its website, said the people, who would speak only anonymously before the official announcement. The company will also be barred from using nonpublic information it gathers about independent merchants to inform Amazon’s own product offerings, among other changes. (New York Times)
Smart Links
The Bleisure Traveler—Coming to the Rescue of Airlines Everywhere. (Wall Street Journal)
American Airlines to Tighten Access to Some Frequent-Flier Status. (Wall Street Journal)
Dentists found no increased Covid risk during clinical activities. (JAMA)
Waiting longer for surgery after Covid tied to fewer post-op problems. (JAMA Open Network)