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A multi-headed strike in the markets
The S&P 500 was on track for a ninth straight day of gains on Thursday as investors were hit with a double whammy: a lackluster auction for 30-year Treasury notes and more hawkish words from Fed Chairman Jay Powell, prompting a sale. -in shares and bonds.
The snapped winning streak – which would have been the index’s longest since 2004 – was a reminder that concerns about inflation and global growth remain high, especially given the wars in Ukraine and the Middle East. Stock futures are pointing to another weak open this morning.
Powell has not rejected the possibility of raising rates. The dovish jobs report released last week led many on Wall Street to predict that the Fed would stop raising borrowing costs. Not so fast, the central bank chief suggested at an event organized by the International Monetary Fund in Washington.
He cited “head fakes” arising from fluctuating inflation data, and reiterated that the door remained open for further rate hikes. (Speaking of doors: Powell appeared to lose his cool when anti-climate change protesters disrupted his speech, uttering blasphemy as they were escorted off stage.)
“If it becomes appropriate to further tighten the policy, we will not hesitate to do so.” Powell said, adding that the central bank’s goal of reducing inflation to the 2 percent target “is not certain.”
Another shock came from a failed auction of 30-year government bonds. The planned event ended shortly before Powell spoke, with fairly lukewarm interest from investors. Weak demand caused long-term government bond yields to rise; Bond yields rise when prices fall.
Wall Street is also on high alert for hackers. That became apparent on Thursday That The U.S. unit of the Industrial and Commercial Bank of China, considered the world’s largest financial institution, was hit by a ransomware attack that caused a ripple effect on bond markets. (It’s not clear whether that was enough to torpedo Thursday’s lackluster Treasury auction.)
According to Bloomberg, the bank was unable to settle several large transactions throughout the day, including those in US government bonds. (Security experts suspect LockBit, a cybercrime group.) To limit market disruption, the bank put the details for trading arrangements on a USB stick and had a messenger deliver it to customers so they could close the trades.
Such cyber attacks have been on the rise recently. Still, security experts found the effect of this outage surprising. “It’s not often we see a bank of this size hit by a ransomware attack,” Allan Liska of cybersecurity firm Recorded Future told Reuters.
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HERE’S WHAT’S HAPPENING
JPMorgan Chase’s settlement with Jeffrey Epstein’s victims is approved. A federal judge greenlighted the $290 million deal, which will resolve claims that the bank ignored warnings about the disgraced financier. The settlement closes a chapter in the Epstein ordeal, centering on the role of the big banks that enabled his behavior for nearly two decades.
Las Vegas avoids a potentially crippling strike. Unions representing hospitality workers agreed to new contracts with Wynn, the only remaining player among the city’s three major casino operators, hours before they were set to leave their jobs. A work stoppage is said to have hit the city’s economy on the eve of major events due to take place there from next week.
AstraZeneca is joining the race against obesity. The drugmaker said it has licensed a pill from China’s Eccogene, which could earn it up to nearly $2 billion if certain testing milestones are met. The pill could eventually rival Novo Nordisk’s weight-loss drugs, which have dramatically boosted that company’s fortunes.
Facebook’s parent company will reportedly return to China. Meta has reached a deal to sell a low-priced version of its Oculus virtual reality headset there through video game giant Tencent, according to The Wall Street Journal. That would allow the American tech company to resume doing business in China since it was shut out of the country 14 years ago.
Will the most consequential senator become a spoiler?
The news Thursday that Sen. Joe Manchin of West Virginia will not seek re-election was another blow to Democrats. The conservative lawmaker has been a thorn in the side of progressives, even as he played a key role in pushing through some of President Biden’s biggest legislative achievements.
Even worse for Biden, Manchin says he is still considering a presidential run — potentially costing the presidential support he needs to win reelection.
Manchin was one of the most powerful lawmakers of the Biden era. Working with mainstream Republicans, the senator often played an outsized role in shaping legislation. Few were more important than the Inflation Reduction Act, the largest clean energy investment in U.S. history, despite his outspoken defense of the coal industry in his home state. (It was probably thanks to Manchin that the bill got its name.)
But progressives have accused Manchin of holding back Biden, forcing the president to pursue less aggressive spending on green energy and social programs.
He was perhaps the only Democrat who could keep his seat in the Senate. given that Donald Trump won West Virginia in 2020 by about 39 percentage points. (Still, Manchin trailed his likely Republican opponent, Governor Jim Justice.)
Democrats who already face an uphill battle to maintain their razor-thin majority in the Senate are now applying additional pressure to protect Jon Tester of Montana and Sherrod Brown of Ohio, whose states Trump won in 2020. The only (slim) chance that the party will topple the Republicans Senate seats are in Texas and Florida.
Will Manchin turn away support for Biden’s re-election bid? In his announcement on Thursday, Manchin said he wanted to “see if there is interest in creating a movement to mobilize the middle and bring Americans together.”
If he runs as a third-party candidate — in partnership with the billionaire-backed No Labels group — he could draw voters away from Biden. That said, it would be expensive for Manchin to run, especially this late, and it is highly unlikely he would win.
Women’s football scores enormously
The National Women’s Soccer League on Thursday announced a four-year broadcast rights deal worth a reported $60 million per year, 40 times more than the last deal the league signed with CBS Sports in 2020. The huge jump in value reflects the resilience of livestreams. sports broadcasting and rising consumer and investor interest in the league – a remarkable turnaround after it was on the brink of closure just a few years ago.
The new deal is with CBS Sports, ESPN, Amazon and Scripps Sports. The involvement of mainstream sports channels is very different from a decade ago, when most league matches were broadcast for free on YouTube. But attendance at games is now breaking records, and media groups are hoping they can turn that enthusiasm into viewers.
Professional women’s sports leagues are more established than ever. The WNBA also inked a new deal this year worth a reported $60 million per year with Scripps Sports’ Ion TV network, and will also broadcast games on ESPN. “No longer is the time when if you wanted to watch women’s sports you had to navigate through a million backdoor channels to find the content,” Jessica Berman, commissioner of NWSL, told The Wall Street Journal.
And big investors pay more to be part of the NWSL Three years ago, the entry fee to start a new club was about $2 million to $5 million. But this year, starting a new franchise cost about $50 million, and the league will expand to 14 teams next year.
Sixth Street, the investment firm, this year bought the rights to start a new franchise for about $53 million in the Bay Area. Alexis Ohanian, co-founder of Reddit, is the lead investor in Angel City FC, a franchise based in Los Angeles, alongside a host of Hollywood celebrities such as actors Natalie Portman and Jessica Chastain.
Can capturing carbon from the air turn a profit?
Few green technology breakthroughs have generated as much funding and scientific research as direct air capture.
These massive facilities that suck greenhouse gases from the atmosphere have become a favored technology of energy and financial giants — BlackRock said this week it would invest $550 million in Occidental Petroleum’s carbon capture projects — the Energy Department and green technology startups.
Now in the spotlight is Heirloom Carbon Technologies, which recently opened the country’s first commercial capture plant. The California plant can absorb and remove up to 1,000 tons of carbon dioxide per year, equivalent to the exhaust fumes of about 200 cars. The Times’ Brad Plumer visited the plant and reports on the buzz and skepticism behind direct air capture.
The idea of using technology to suck carbon dioxide from the air has gone from science fiction to big business. Hundreds of start-ups have emerged. The Biden administration in August allocated $1.2 billion to help several companies, including Heirloom, build larger direct air capture facilities in Texas and Louisiana. Companies like Airbus and JPMorgan Chase are spending millions buying carbon removal credits to meet corporate climate pledges.
Critics point out that many artificial methods of removing carbon dioxide from the air are incredibly expensive, at around $600 per tonne or more, and some fear they could distract from efforts to reduce emissions. Environmentalists are wary of oil companies investing in the technology, fearing it could be used to extend the use of fossil fuels.
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