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    Fed officials welcome inflation news but still see tighter policy ahead

    Federal Reserve officials welcomed Thursday’s news that inflation might have peaked, but cautioned against getting too excited by the data.
    “It’s far from a victory,” San Francisco Fed President Mary Daly said.
    Dallas Fed President Lorie Logan called the CPI report “a welcome relief” but noted more rate increases probably are coming, albeit at a slower pace.

    Prices of fruit and vegetables are on display in a store in Brooklyn, New York City, March 29, 2022.
    Andrew Kelly | Reuters

    Federal Reserve officials welcomed Thursday’s news showing that inflation rose less than expected last month, and they noted that interest rate increases could slow ahead.
    But they also cautioned against getting too excited by the data, saying that prices are still far too high.

    “One month of data does not a victory make, and I think it’s really important to be thoughtful that this is just one piece of positive information, but we’re looking at a whole set of information,” San Francisco Fed President Mary Daly said during a question-and-answer session with the European Economics and Financial Centre.
    Daly and other Fed officials were speaking after the Bureau of Labor Statistics reported that the consumer price index rose 0.4% in October, below the 0.6% Dow Jones estimate. The data sent a possible signal that while inflation is still running high, price increases may have leveled off and could soon head lower.
    Markets staged a massive rally following the report, with the Dow Jones Industrial Average soaring more than 1,000 points. The policy-sensitive 2-year Treasury note yield tumbled 30 basis points, or 0.3 percentage point, to 4.33%.
    While Daly said the report was “indeed good news,” she noted that inflation running at a 7.7% annual rate is still far too high and well off the central bank’s 2% goal.
    “It’s better than over 8 [percent] but it’s not close enough to 2 in any way for me to be comfortable,” she said. “So it’s far from a victory.”

    Likewise, Cleveland Fed President Loretta Mester said Thursday’s report “suggests some easing in overall and core inflation,” though she noted the trend is still “unacceptably high.”
    Kansas City Fed President Esther George noted that even with the lower monthly gain, inflation is still “uncomfortably close” to the 41-year annual high hit in the summer.
    “With inflation still elevated and likely to persist, monetary policy clearly has more work to do,” she said.
    However, she advocated a more “deliberate” approach going forward, noting that “now is a particularly important time to avoid unduly contributing to financial market volatility.”
    Both Mester and George are voting members this year on the rate-setting Federal Open Market Committee.

    Market pricing in lower hikes

    The Fed has raised its benchmark interest rate six times this year for a total of 3.75 percentage points. That has included a string of four straight 0.75 percentage point hikes, the most aggressive policy tightening since the central bank moved to using the overnight rate as its principal policy tool in 1990.
    Market pricing immediately reacted to the CPI news, shifting strongly to the likelihood of a 0.5 percentage point increase in December, according to CME Group data calling for an 85.4% probability of a half-point hike.
    “Despite the moves we have made so far, given that inflation has consistently proven to be more persistent than expected and there are significant costs of continued high inflation, I currently view the larger risks as coming from tightening too little,” Mester said.
    Other officials also were cautious.
    Dallas Fed President Lorie Logan called the CPI report “a welcome relief” but noted more rate increases probably are coming, though at a slower pace. “I believe it may soon be appropriate to slow the pace of rate increases so we can better assess how financial and economic conditions are evolving,” she said.

    No rate cuts in sight

    Like Daly, Logan said the public should not interpret a slower pace of rate hikes to mean an easing in policy.
    In particular, Daly said rates are likely to stay higher for longer and she does not anticipate a rate cut that market pricing indicates could come as soon as September 2023.
    Earlier in the day, Philadelphia Fed President Patrick Harker indicated a slower pace is likely but noted the increases still will be significant.
    Historically, the U.S. central bank has preferred to hike in quarter-point increments, but the rapid surge of inflation and a slow-footed response from policymakers when prices began surging early in 2021 made the more aggressive pace necessary.
    “In the upcoming months, in light of the cumulative tightening we have achieved, I expect we will slow the pace of our rate hikes as we approach a sufficiently restrictive stance. But I want to be clear: A rate hike of 50 basis points would still be significant,” Harker said.
    He added that he expects policy to “hold at a restrictive rate” while the Fed evaluates the impact the moves are having on the economy.

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    Consumer prices rose 0.4% in October, less than expected, as inflation eases

    The consumer price index increased 0.4% for the month and 7.7% from a year ago, both lower than estimates.
    Excluding volatile food and energy costs, so-called core CPI increased 0.3% for the month and 6.3% on an annual basis, also lower than expectations.
    Prices declined for medical care services, used vehicles and apparel. Shelter costs posted their highest monthly gain since 1990.
    Markets soared on the report and Treasury yields tumbled.

    The consumer price index rose less than expected in October, an indication that while inflation is still a threat to the U.S. economy, pressures could be starting to cool.
    The index, a broad-based measure of goods and services costs, increased 0.4% for the month and 7.7% from a year ago, according to a Bureau of Labor Statistics release Thursday. Respective estimates from Dow Jones were for rises of 0.6% and 7.9%.

    Excluding volatile food and energy costs, so-called core CPI increased 0.3% for the month and 6.3% on an annual basis, compared with respective estimates of 0.5% and 6.5%.

    A 2.4% decline in used vehicle prices helped bring down the inflation figures. Apparel prices fell 0.7% and medical care services were lower by 0.6%.
    “The report overstates the case that inflation is coming in, but it makes a case inflation is coming in,” said Mark Zandi, chief economist at Moody’s Analytics. “It’s pretty clear that inflation has definitely peaked and is rolling over. All the trend lines suggest that it will continue to moderate going forward, assuming that nothing goes off the rails.”
    Markets reacted sharply to the report, with the Dow Jones Industrial Average up more than 1,000 points. Treasury yields fell sharply, with the policy-sensitive 2-year note tumbling 0.3 percentage point to 4.33%.
    “The trend in inflation is a welcome development, so that’s great news in terms of the report,” said Michael Arone, chief investment strategist at State Street Global Advisors. “However, investors are still gullible and they are still impatiently waiting for the Powell pivot, and I’m not sure it’s coming anytime soon. So I think this morning’s enthusiasm is a bit of an overreaction.”

    The “Powell pivot” comment refers to market expectations that Federal Reserve Chairman Jerome Powell and his central bank colleagues soon will slow or stop the aggressive pace of interest rate increases they’ve been deploying to try to bring down inflation.
    Even with the slowdown in the inflation rate, it still remains well above the Fed’s 2% target, and several areas of the report show that the cost of living remains high.
    “One month of data does not a victory make, and I think it’s really important to be thoughtful that this is just one piece of positive information, but we’re looking at a whole set of information,” San Francisco Fed President Mary Daly said in response to the CPI data.
    “We have to be resolute to bring inflation down to 2% on average,” she added in a Q&A with the European Economics & Financial Centre. “That’s our goal, that’s what Americans depend on, and that’s what we’re committed to doing. So we’re going to continue to adjust policy until that job is fully done.”
    Shelter costs, which make up about one-third of the CPI, rose 0.8% for the month, the largest monthly gain since 1990, and up 6.9% from a year ago, their highest annual level since 1982. Also, fuel oil prices exploded 19.8% higher for the month and are up 68.5% on a 12-month basis.

    The food index rose 0.6% for the month and 10.9% annually, while energy was up 1.8% and 17.6%, respectively.
    Because of the rise in inflation, workers took another pay cut in October. Real average hourly earnings declined 0.1% for the month and were down 2.8% on an annual basis, according to a separate BLS release.
    A separate Labor Department report Thursday showed that jobless claims rose to 225,000 last week, an increase of 7,000 from the previous week.
    The latest inflation reading comes as Federal Reserve officials have been deploying a series of aggressive interest rate hikes in an effort to bring down inflation running around its highest levels since the early 1980s.
    In early November, the central bank approved its fourth consecutive 0.75 percentage point increase, taking its benchmark rate to a range of 3.75%-4%, the highest level in 14 years. Markets expect the Fed to continue raising, though at a possibly slower pace ahead before the fed funds rate tops out around 5% early next year.
    Traders quickly changed their expectations regarding the Fed’s next move. Futures tied to the fed funds rate indicated an 80.6% probability of a 0.5 percentage point move in December, up from 56.8% a day ago, according to CME Group data.
    “One data point doesn’t make a trend. What we have to hope for is we get another downtick [in CPI] with the next report, which happens the day before the next Fed meeting,” said Randy Frederick, managing director of trading and derivatives at Charles Schwab. “Markets are poised to respond to anything remotely positive. … It’s kind of like a coiled spring more than anything else.”
    Getting inflation down is critical heading into the holiday shopping season. A recent survey by Clever Real Estate found that about 1 in 3 Americans plan on cutting back spending this year due to higher prices.

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    As the Fed Raises Rates, Worries Grow About Corporate Bonds

    Executives, analysts and bond traders are all wondering if corporate finance is about to unravel as interest rates rise.As the Federal Reserve raises interest rates in an effort to tame inflation, the corporate bond market, which lends money to many companies, has been hammered particularly hard.The steep rise in interest rates has caused bond values to tumble: From October 2021 to October 2022, an index that tracks investment-grade corporate bonds is down by roughly 20 percent. By some measures, overall bond market losses have been worse than at any time since 1926.Even the price of bonds issued by the highest-rated corporations have cratered this year.The ICE BofA US Corporate Index, which tracks the performance of U.S. dollar denominated investment grade rated U.S. corporate debt, has severely declined.

    Source: Federal Reserve Bank of St. LouisBy The New York TimesThe yield on bonds issued by solid businesses is now about 6 percent, about twice as much as it was a year ago. That number indicates how high of an interest rate rock-solid corporations would have to pay to borrow more money right now; rates are even higher for smaller businesses or those that investors consider risky.Corporate bankruptcies and defaults remain low by historical standards, but a growing number of companies are struggling financially. Businesses in industries like retail, manufacturing and real estate are especially vulnerable because their sales are weak or falling. In many cases, their customers have also been hurt by higher interest rates because the higher borrowing costs have effectively raised the costs of big-tickets items like homes and cars.Until recently, for example, Carvana was a fast growing used car retailer with a soaring stock. The number of cars the company sold fell 8 percent in the third quarter, and its spending on interest payments tripled compared with the same period a year earlier. The interest rate on a big chunk of its debt issued this year that matures in 2030 is 10.25 percent. Its bonds are trading at less than 50 cents to the dollar, suggesting that investors would require Carvana to pay an interest rate of nearly 30 percent if it were to borrow more money for the same amount of time. The company’s stock is down more than 90 percent over the last year.“There’s certainly a lot of headwinds,” Ernest Garcia III, Carvana’s chief executive, said on a conference call with analysts last week. “Recently, we’ve seen car prices depreciate to the tune of give or take 10 percent so far this year, but we’ve also seen interest rates shoot up very rapidly and I think that overall has harmed affordability,” he added, even as he expressed optimism about the company’s ability to weather the financial storm.Carvana, Co. has paid more in interest payments in the last quarter compared to last year and sold fewer cars.Joe Raedle/Getty ImagesBefore rates jumped, companies borrowed a ton of money last year, with lower-rated firms selling more new bonds in 2021 than in any other year. But that flow has turned into a trickle as interest rates have risen and investors have grown more discerning about whom they lend money to. Banks are still making more commercial and industrial loans, but they are also becoming more discerning and are charging higher interest rates.Most investors, executives and economists expect a recession or anemic growth next year, which could make doing business, borrowing money and paying off loans even more difficult.What the Fed’s Rate Increases Mean for YouCard 1 of 4A toll on borrowers. More

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    Price of Diesel, Which Powers the Economy, Is Still Climbing

    Russia’s invasion of Ukraine is one reason that the fuel is scarce. Another is a series of yearslong, intertwined events that cover the globe.HOUSTON — Gasoline prices have dropped as much as a dollar a gallon since early summer, easing a financial strain on many people. But the price of diesel, the fuel that moves trucks, trains, barges, tractors and construction equipment, has remained stubbornly high, helping to prop up the prices of many goods and services.On Wednesday, a gallon of diesel fuel in the United States cost $5.357 on average, according to AAA. That was down from a record of $5.816 in June but well above the $3.642 it cost a year ago. (A gallon of regular gasoline now averages $3.805.)The surge in diesel costs has not garnered the attention from politicians and the public that the jump in gasoline prices did, because most of the cars in the United States run on gas. But diesel prices are a critical source of pain for the economy because they affect the cost of practically every product.“The economic impact is insidious because everything moves across the country powered by diesel,” said Tom Kloza, the global head of energy analysis at the Oil Price Information Service. “It’s an inflation accelerant, and the consumer ultimately has to pay for it.”Sherri Garner Brumbaugh, the president of Garner Trucking in Findlay, Ohio, said the weekly cost of fueling one of her heavy-duty trucks in September was $1,300, more than double the $600 she paid two years earlier. “A good portion gets passed onto my customers with a fuel surcharge,” she said.Both gasoline and diesel prices are tied to the price of oil, which is set on the global market. The price of each fuel immediately shot up after Russia invaded Ukraine in February. But their paths have diverged sharply. Over the last year, the cost of diesel has ballooned by over 40 percent, compared with 11 percent for gasoline.Diesel prices are high because the fuel is scarce worldwide, including in the United States, which in recent years became a net exporter of oil and petroleum products. Oil analysts said there were simply not enough refineries to meet the demand for diesel, especially after Russia’s energy exports fell when the United States, Britain and some other countries stopped buying them.Diesel inventories are always a bit low in the spring and fall, during agricultural planting and harvesting seasons, but this fall supplies are at their lowest level since 1982, when the government began reporting data on the fuel.The tightest market is in the Northeast, where oil refineries have closed in recent years and where the diesel crunch is complicated by winter demand for heating oil. The two fuels are virtually the same but are taxed differently. An especially cold winter could make the situation worse by increasing the demand for heating oil.In Massachusetts, for example, diesel is selling for more than $5.90 a gallon (about $2.33 more than it did a year earlier). In Texas, it costs $4.73 a gallon.Trucks, trains, barges, tractors and construction equipment all use diesel, and its price affects the cost of practically every product.Jim Watson/Agence France-Presse — Getty ImagesWhile Russia’s war in Ukraine sent diesel prices soaring, the current situation is partly the result of an interconnected, slow-building series of events that extends across the globe. Some analysts trace the roots of the U.S. diesel shortage to a fire at Philadelphia Energy Solutions in 2019, which forced the refinery to shut down, taking out one of the Northeast’s important diesel producers.But refineries have been closing elsewhere. Over the last several years, 5 percent of U.S. refinery capacity, and 6 percent of European refinery capacity, has been shut down. A few refineries closed or scaled back because of the collapse in energy demand in the early months of the coronavirus pandemic. Some older refineries were shut down because they were inefficient and their profits weren’t large enough for Wall Street investors. Other refineries were closed so that their owners could convert them to produce biofuels, which are made from plants, waste and other organic material.“Because we shut those refineries down, we don’t have enough capacity,” said Sarah Emerson, the president of ESAI Energy, a consulting firm.As much of the global economy recovered in 2021 and 2022, demand for diesel climbed quickly. But then, after Russia invaded Ukraine, the Biden administration banned Russian oil and petroleum imports, which amounted to 700,000 barrels of diesel and other fuels a day, much of it intended for the Northeast.Diesel prices have also soared so much higher than the cost of gasoline in part because of a decision by the International Maritime Organization several years ago to require most oceangoing ships to replace their high-sulfur bunker fuel with less polluting fuels starting in 2020. That has slowly increased demand for diesel over the last two years.“A substantial amount of diesel is needed in the new bunker blends, and that is a hidden demand for diesel molecules,” said Richard Joswick, the head of global oil analysis for S&P Global Platts. He estimated that the global shipping fleet was now consuming half a million barrels of diesel a day, or roughly 2 percent of the world’s supplies.At the same time, while American refiners are now making tidy profits, 30 percent of their production is being exported. Latin America has become a particularly profitable market, as American diesel replaces fuel from Venezuela, where the state-controlled oil sector has been hobbled by corruption, mismanagement and U.S. sanctions. Some American diesel also goes to Europe.The impact of exports on domestic prices has led some analysts to speculate that the Biden administration could eventually restrict exports to boost supplies at home. But energy experts said that might not have the desired effect because diesel had become a globally traded commodity. Denying Latin America fuel could also backfire because many countries in the region sell crude oil to the United States.“We have a symbiotic relationship with Latin America on diesel and crude,” said Ms. Emerson of ESAI Energy. “We can disrupt that, but it doesn’t immediately fix the problem.”The global diesel shortage was also exacerbated by labor strikes at French refineries this fall. And utilities in Europe have been stockpiling diesel in case they cannot find enough natural gas to fuel their power plants.Russian diesel has continued to flow to Europe since the war began, but stricter sanctions that the European Union plans to impose on Russia in February could potentially cause havoc to the diesel business of traders, banks, insurance companies and shippers.Still, some energy experts said prices could soon begin to ease.Help may be on the way from an unlikely source: China. In recent months, China has been loosening export controls on diesel. Its exports rose from 200,000 barrels a day in August to 430,000 barrels a day in September, and the country has the capacity to sell even more, according to estimates by ESAI Energy.Nearly a third of Chinese diesel exports went to the Netherlands in recent months, taking some pressure off the European market. And oil refineries being built in Kuwait and China could come online as early as next year, further increasing supply.Demand for diesel and its price could also fall if much of the world slides into a recession next year, as some economists and policymakers are expecting.“A deep recession would certainly cut into diesel demand,” said Mr. Joswick of S&P Global Platts. “We don’t forecast a recession, but that is certainly a possibility.” More

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    Tech’s Talent Wars Have Come Back to Bite It

    Hiring the best, the brightest and the highest number of employees was a badge of honor at tech companies. Not anymore as layoffs surge.When Stripe, a payments start-up valued at $74 billion, laid off more than 1,000 employees this month, its co-founders blamed themselves. “We overhired for the world we’re in,” they wrote. “We were much too optimistic.”After Elon Musk, Twitter’s new owner, slashed the company’s staffing in half last week, Jack Dorsey, a founder and former chief executive of the social media service, claimed responsibility. “I grew the company size too quickly,” he wrote on Twitter.And on Wednesday, when Meta, the parent company of Facebook and Instagram, shed 11,000 people, or about 13 percent of its work force, Mark Zuckerberg, the chief executive, blamed overzealous expansion. “I made the decision to significantly increase our investments,” he wrote in a letter to employees. “Unfortunately, this did not play out the way I expected.”The chorus of conceding by tech executives that they hired too many people is ricocheting across Silicon Valley as the industry rushes to make cuts, blaming a worsening economy.But at least part of the surge in layoffs was self-inflicted. When the companies enjoyed soaring profits and a belief that the pandemic-fueled boom times would keep going, they aggressively expanded by hoarding the most fought-over and expensive resource in the software business: talent.Silicon Valley tech companies have long seen hiring as more than just filling openings. The industry’s fierce talent wars showed that companies like Google and Meta were gaining the best and brightest. Ballooning staffs and a long reign atop lists of the most-desired jobs for college graduates were emblems of growth, deep pockets and prestige. And to employees, the work became something larger — it was an identity.The Austin, Texas, campus of Google, a veteran of the tech industry’s hiring wars.Brandon Thibodeaux for The New York TimesThis mentality became ingrained at the largest tech companies, which offer numerous perks on lavish corporate campuses that rival universities. It was echoed by smaller start-ups, which dangle a chance at life-changing wealth in the form of stock options.Now these practices are giving the tech industry indigestion.“When times are flush, you get excesses, and excesses lead to overhiring and optimism,” said Josh Wolfe, an investor at Lux Capital. “For the past 10 years, the abundance of cash led to an abundance of hiring.”More than 100,000 tech workers have lost their jobs this year, according to Layoffs.fyi, a site that tracks layoffs. The cuts range from well-known publicly traded companies like Meta, Salesforce, Booking.com and Lyft to highly valued private start-ups such as the Gopuff delivery service and the Chime and Brex financial platforms.More on Big TechMeta Layoffs: The parent of Facebook said it was laying off more than 11,000 people, or about 13 percent of its work force, in what amounted to the company’s most significant job cuts.Seeking Alternatives: Since Elon Musk bought Twitter, some of its users have sought out other social media platforms. Here is a closer look at Mastodon, one of the most popular alternatives.An Empire in Danger: U.S. lawmakers’ objections to an obscure Chinese semiconductor company and tough Covid-19 restrictions are hurting Apple’s ability to make new iPhones in China.Big Tech’s Slowdown: Amid inflation and rising interest rates, Silicon Valley’s most powerful companies are signaling that tough days may be ahead. Some have already announced hiring freezes and job cuts.Many of the job losses have taken place in tech’s most experimental areas. Astra, a rocket company, cut 16 percent of its staff this week after tripling its head count last year. In the cryptocurrency industry, which has suffered a meltdown this year, high-value companies including Crypto.com, Blockchain.com, OpenSea and Dapper Labs have cut hundreds of workers in recent months.Tech leaders were too slow to react to signs of an economic slowdown that emerged this spring, after many of the companies had already been on hiring sprees for several years, tech analysts said.Meta, whose valuation soared past $1 trillion, doubled its staff to 87,314 people over the past three years. Robinhood, the stock trading app, expanded its work force nearly sixfold in 2020 and 2021.“They’ve charged ahead with these plans that are no longer based on reality,” said Caitlyn Metteer, director of recruiting at Lever, a provider of recruiting software.For many, it’s a moment of shock. “Are we in a bubble” panics in the tech industry over the last decade have always been short-lived, followed by a rapid return to even frothier good times. Even those who predicted that pandemic behaviors enabled by the likes of Zoom, Peloton, Netflix and Shopify would ebb now say they underestimated the extent.Many believe this downturn will last longer because of the macroeconomic factors that created it. For the past decade, low interest rates pushed investors into riskier assets that offered higher returns. Those investors valued fast growth over profits and rewarded companies that took big risks.Jack Dorsey wrote on Twitter, which he helped start, that he had expanded the company too quickly.Marco Bello/Agence France-Presse — Getty ImagesIn recent years, tech companies responded to the flood of cash from investors and a rapidly growing business by pouring money into expansion via sales and marketing, hiring, acquisitions and experimental projects. The excess capital encouraged companies to staff up, adding fuel to the war for talent.“The pressure is to just spend the money quick enough so you can grow fast enough to justify the kinds of investments V.C.s want to make,” said Eric Rachlin, an entrepreneur who co-founded Body Labs, an artificial intelligence software company that Amazon bought.Expanding head count was also a way for managers to advance their careers. “Getting more people on the team is easier than telling everyone to just work super hard,” Mr. Rachlin said.That led the tech industry to gain a reputation for corporate bloat. Rumors often circulated of highly compensated workers who clocked just a few hours of work a day or juggled multiple remote jobs at once, alongside elaborate office perks like free laundry, massages and renowned cafeteria chefs. This spring, Meta scaled back its perks, including laundry service.In the past, tech workers could quickly change jobs or land on their feet if they were cut because of the plethora of open positions, but “I don’t think we know yet if everyone in this wave of layoffs will be able to do that,” Mr. Rachlin said.Some people see a chance to help those entering a difficult job market for the first time. Stephen Courson recently left a career in sales and strategy at Gartner, the research and consulting firm, and Salesforce to create financial content. He initially planned to focus on time management, but after many of his friends went through painful layoffs he began working on a course that helps people prepare for job interviews. It’s a skill that many of today’s job hunters never had to hone in flush times.“This isn’t going to get better quickly,” he said.Amid the drumbeat of layoff announcements, investors see an opportunity. They are quick to point out that well-known successes of the last decade — companies like Airbnb, Uber, Dropbox — were created in the aftermath of the Great Recession.This week, Day One Ventures, a venture capital firm, announced Funded Not Fired, a program that aims to invest $100,000 into 20 new start-ups where at least one founder was laid off from a tech company. Within 24 hours, hundreds of people had applied, said Masha Bucher, founder of the firm.“Some of the people are saying, ‘This is a sign I’ve been waiting for,’” she said. “It really gives people hope.”In the meantime, there may be more layoff announcements — delivered through the now standard form of a letter from the chief executive posted to a company blog.These letters have taken on a familiar format. The bosses explain the grim economic outlook, citing inflation, “energy shocks,” interest rates, “one of the most challenging real estate markets in 40 years” or “probable recession.” They take the blame for growing too fast. They offer up support to those affected — severance, visa help, health care, career guidance. They express sadness and thank everyone.And they reaffirm the company’s mission. More

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    Lucid Said It Will Raise Up to $1.5 Billion in Capital

    The electric carmaker made the announcement on the same day it reported losing $670 million in the third quarter.Lucid Group, an electric car company that has struggled to ramp up manufacturing, said on Tuesday that it had reached agreements to raise up to $1.5 billion, shoring up its financial position as it works to streamline and expand its production operations.The company said in a regulatory filing that it planned to sell up to $600 million in new shares through Bank of America, Barclay’s Capital and Citi. It also said it reached an agreement to sell up to $915 million in stock to the sovereign wealth fund of Saudi Arabia, which already owns a majority of Lucid’s stock.Shares of Lucid were down about 12 percent in after-hours trading on Tuesday following the disclosure of its plans in the securities filing. The company’s stock was trading at just under $12, down from more than $50 last November.Separately on Tuesday, Lucid said that it had lost $670 million in the third quarter, compared with a loss of $524 million in the same period a year earlier. The company said it had significantly increased production in the third quarter.Revenue rose significantly to $195.5 million, from $97.3 million in the second quarter and just $232,000 in the third quarter of 2021. It delivered 1,398 cars to customers in the third quarter, more than twice as many as in the second quarter.The fledgling company, based in Newark, Calif., said it produced 2,282 electric cars in the three months that ended in September, more than three times as many as it made in the previous three months. “We’ve made great strides in ramping up our production,” Lucid’s chief executive, Peter Rawlinson, said in an interview. “We are gradually improving things and there’s a real belief we are on the right track here.”He added that the automaker was on track to hit its revised target of making 6,000 to 7,000 cars this year.The company said it had taken reservations for 34,000 cars from individuals. Its only model, the Air sedan, has won accolades from car magazines and websites. The car can travel up to 520 miles on a full charge, more than any other electric vehicle on the market. The company said it would begin taking reservations for a second model, the Gravity sport-utility vehicle, early next year.But Lucid still faces a number of challenges, including increasing production and turning a profit. With the exception of Tesla, most recent automotive start-ups have struggled to mass produce their promising designs and create self-sustaining businesses. Lucid had $3.85 billion in cash and cash equivalents at the end of September.Saudi Arabia’s government has agreed to buy up to 100,000 cars from Lucid and the company is planning to build a manufacturing facility in that country. It currently makes cars at a factory in Arizona.This year investors have lost much of their enthusiasm for start-up carmakers, making it harder and more expensive for them to raise financing. Rivian, another electric car company, reports its third-quarter earnings on Wednesday. Rivian’s shares soared to as high as $180 after its initial public offering late last year, but have since fallen sharply. On Tuesday Rivian’s stock closed at under $32 a share. More