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    FTC sues Deere, alleging equipment repair ‘monopoly’ raises costs for farmers

    The Federal Trade Commission has sued agricultural equipment company Deere & Company, arguing it holds a monopoly on repair services.
    The FTC alleges that the company’s tactics forced customers to rely on authorized dealers for equipment fixes.
    The lawsuit says the arrangement drives up costs and repair times for farmers.

    John Deere booth signage is displayed at CES 2023 at the Las Vegas Convention Center on January 6, 2023 in Las Vegas, Nevada.
    David Becker | Getty Images

    The Federal Trade Commission has sued agricultural equipment giant Deere & Company, arguing it holds a monopoly on repair services that raises costs and creates delays for farmers, the agency announced Wednesday.
    The lawsuit alleges Deere has for decades hindered customers’ ability to repair their equipment, including tractors and combines, forcing them to rely on the company’s network of authorized repair providers. A Deere software tool called “Service ADVISOR,” which is only available to more expensive authorized dealers, is necessary to fully fix equipment, leaving farmers and independent repair providers unable to do it themselves, the FTC alleged.

    The FTC said authorized dealers often use Deere-branded parts instead of less expensive generic ones for repair jobs, adding to Deere’s profits.
    “Illegal repair restrictions can be devastating for farmers, who rely on affordable and timely repairs to harvest their crops and earn their income,” said FTC Chair Lina Khan in a news release. “The FTC’s action today seeks to ensure that farmers across America are free to repair their own equipment or use repair shops of their choice—lowering costs, preventing ruinous delays, and promoting fair competition for independent repair shops.”
    The states of Illinois and Minnesota are also plaintiffs in the lawsuit.
    The lawsuit seeks to make Service ADVISOR and other necessary repair resources available to Deere customers and independent repair providers. Other manufacturing companies in the trucking and auto industries provide the required information for generic repair tool developers, the FTC said.
    In a statement, Denver Caldwell, Deere’s vice president of aftermarket and customer support, said it is “extremely disappointing that three Commissioners of the FTC chose to file a meritless lawsuit on the eve of the transition to a new Administration.”

    “Our recent discussions with the Commission have revealed that the agency still lacked basic information about the industry and John Deere’s business practices and confirmed that the agency was instead relying on inaccurate information and assumptions,” Caldwell added.
    The company said it “has introduced a number of new innovations, tools, and resources to equip customers and independent repair technicians with the maintenance and repair needs of our equipment.”
    Deere shares fell less than 1% on Wednesday afternoon.
    The lawsuit comes in the final days of President Joe Biden’s term in the White House and Khan’s tenure at the FTC, during which the agency has taken an aggressive approach to antitrust. It is unclear if President-elect Donald Trump’s administration will continue to pursue the suit against Deere. More

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    JPMorgan Chase is boosting buybacks even after CEO Jamie Dimon called the stock expensive

    JPMorgan Chase executives said the bank would increase share buybacks so that a mounting pile of tens of billions of dollars in excess cash doesn’t grow further.
    The biggest American bank by assets has stockpiled earnings in preparation for the Basel 3 regulatory rules that would’ve required more capital.
    Back in May CEO Jamie Dimon bristled at the notion of scaling up purchases of his stock.

    CEO of Chase Jamie Dimon looks on as he attends the seventh “Choose France Summit”, aiming to attract foreign investors to the country, at the Chateau de Versailles, outside Paris, on May 13, 2024. 
    Ludovic Marin | Via Reuters

    JPMorgan Chase executives said the bank would increase share buybacks so that a mounting pile of tens of billions of dollars in excess cash doesn’t grow further.
    Fresh off a record year for profit and revenue, JPMorgan is facing questions over what CFO Jeremy Barnum admitted was a “high-class problem”: the bank has, by some estimates, roughly $35 billion in money that it doesn’t need to satisfy regulators, or what analysts call “excess capital.”

    “We would like to not have the excess grow from here,” Barnum told analysts Wednesday. “Given the amount of organic capital generation that we’re producing, it means that — unless we find in the near term, opportunities for organic deployment or otherwise — it means more capital return through buybacks.”
    The bank has heard it from investors and analysts who want to know what JPMorgan intends to do with the cash. The biggest American bank by assets has stockpiled earnings in preparation for the Basel 3 regulatory rules that would’ve required more capital, but Wall Street analysts now believe that the incoming Trump administration is likely to propose something far gentler.
    Back in May, when the question came up at his bank’s annual investor day, CEO Jamie Dimon bristled at the notion of scaling up purchases of his stock, which was then trading near a 52-week high of $205.88.
    “I want to make it really clear, OK? We’re not going to buy back a lot of stock at these prices,” Dimon said at the time.
    That’s because the company’s valuation was too rich, even in its own eyes, Dimon said: “Buying back stock of a financial company greatly in excess of two times tangible book is a mistake. We aren’t going to do it.”

    The bank’s stock has only appreciated since: A share trades hands for 22% more now than when Dimon made those remarks.
    In fending off calls to whittle down its cash pile by more than it deems necessary, JPMorgan has hinted at the risk of rockier times ahead. Since at least 2022, Dimon and others have warned of the possibility of a recession just ahead, but it has yet to arrive, leaving the end of an economic cycle still on the horizon.
    Barnum returned to the subject on Wednesday, telling reporters that there was a “tension” between the risks in the economy and high asset prices in the market; the bank therefore had to prepare for a “wide range of scenarios,” he said.
    A sharp economic downturn would give the bank the opportunity to deploy more of that estimated $35 billion in excess cash through loans, according to Portales Partners analyst Charles Peabody.
    “I think JPMorgan will be disciplined in not pissing away capital,” Peabody said. “The best time to take market share is coming out a recession, because your competitors are somewhat impaired. And I expect he will pull back on buybacks from current levels, despite pressure from shareholders to do more.” More

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    DOT sues Southwest, fines Frontier for ‘chronically delayed flights’

    The suit alleges Southwest Airlines repeatedly operated late-arriving flights in 2022.
    The Biden administration, which is in the very end of its term, has taken a tough stance on airlines and consumer protections.
    The DOT also fined Frontier $650,000 for chronically delayed flights.

    A Southwest Airlines Boeing 737 departs Los Angeles International Airport en route to Las Vegas on September 19, 2024 in Los Angeles, California. 
    Kevin Carter | Getty Images

    The Department of Transportation on Wednesday sued Southwest Airlines, alleging the carrier operated chronically delayed flights, and fined Frontier Airlines for late-arriving flights.
    The lawsuit follows a $2 million DOT fine on JetBlue Airways for similar allegations.

    The lawsuit and fines come at the end of the Biden administration, which has taken a harder line toward consumer protections than previous administrations.
    The DOT said that Southwest’s flights from Chicago Midway International Airport to Oakland, California, and from Baltimore to Cleveland arrived late nearly 200 times between April and August 2022.
    The DOT said each flight was chronically delayed for five consecutive months and that Southwest was responsible for more than 90% of the disruptions.
    It defines a flight as chronically delayed if it is flown at least 10 times a month and arrives more than 30 minutes late more than half the time. The calculation includes cancellations and diversions. 
    “When an airline knows that a particular flight is consistently late, it is essential that the airline adjusts its schedule,” the DOT said in its lawsuit, filed in U.S. District Court in Oakland, California. “But on many occasions, Southwest has chosen not to make such adjustments, and instead has continued to market its flights using unrealistic schedules. By doing so, Southwest has caused significant harm to its customers.”

    In response, Southwest said it “is disappointed that DOT chose to file a lawsuit over two flights that occurred more than two years ago.”
    The carrier said that since the DOT issued its chronically delayed flight policy in 2009, the airline operated more than 20 million flights with no violations of the policy. “Any claim that these two flights represent an unrealistic schedule is simply not credible when compared with our performance over the past 15 years,” Southwest said in a statement.
    Separately, the DOT fined budget carrier Frontier $650,000 for operating chronically delayed flights, though it added that $325,000 would be suspended if the airline doesn’t operate any repeatedly delayed flights over the next three years. Frontier declined to comment. More

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    Here’s the inflation breakdown for December 2024 — in one chart

    The consumer price index, an inflation gauge, rose 2.9% on an annual basis in December. That’s up from 2.7% in November.
    Energy, food, new and used vehicles, car insurance and airline fares were among the contributors to the increase.
    There was some good news: “Core” CPI saw disinflation, as did shelter prices.

    A customer browses eggs on partially empty shelves at a grocery store in Lawndale, California, on Jan. 2, 2025. 
    Patrick T. Fallon | AFP | Getty Images

    Inflation ticked up in December on the back of higher energy and food prices, the Bureau of Labor Statistics reported Wednesday.
    The bureau’s consumer price index, an inflation gauge, rose 2.9% during the month versus the prior year.

    That’s up from a 2.7% annual inflation rate in November, and up from a recent low of 2.4% in September.  

    While the upward move may seem disheartening, evidence suggests inflation should resume its downward drift in 2025, economists said.
    But they caution that President-elect Donald Trump’s incoming administration could stall or reverse that progress if it pursues policies such as tariffs and tax cuts, which, depending on their scope, may be inflationary.
    “The key wildcard here is policy,” Joe Seydl, a senior markets economist at J.P. Morgan Private Bank, said of inflation’s trajectory.

    The consumer price index, or CPI, measures how quickly prices rise or fall for a basket of goods and services, from haircuts to coffee, clothing and concert tickets.

    CPI inflation has declined significantly from its pandemic-era high of 9.1% in June 2022. However, it remains above the Federal Reserve’s target. The central bank aims for a 2% annual rate over the long term.
    The Fed also uses another inflation measure, the personal consumption expenditures price index. CPI readings tend to run about 0.2 to 0.3 percentage points higher than the PCE, Seydl said.
    “We’re not that far away,” Seydl said. “By the end of this year, we’d expect the year-over-year rates to be back in those targets.”

    Eggs are a ‘swing factor’

    There were some trouble spots in December.
    For example, grocery prices increased by 0.3% from November to December, according to CPI data. A rise of about 0.2% a month is consistent with hitting the Fed’s target, economists said.
    Eggs are a “swing factor” contributing to that increase, Seydl said.
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    An outbreak of avian influenza, known as bird flu, in the U.S. has had a “significant impact” on egg prices, he said. The virus is highly contagious among birds and has killed millions of egg-laying chickens, reducing egg supply.
    Egg prices jumped 3.2% from November to December, the largest increase for any grocery item, according to the CPI. They’re up 37% since December 2023.

    Brandon Bell | Getty Images News | Getty Images

    Inflation for gasoline jumped, too: Prices increased 4.4% from November to December, according to CPI data.
    Consumers may not be seeing that in the real world, though: Average prices at the pump actually fell about two cents last month, to $3.01 a gallon on Dec. 30 from $3.03 on Dec. 2, according to weekly Energy Information Administration data.
    Federal statisticians adjust inflation data for seasonal patterns; gasoline prices fell less than usual in December, and the CPI registered this lower-than-normal drop as an inflation increase, Seydl said.
    Gasoline prices are down more than 3% in the past year, according to the CPI. Groceries are up 1.8%.

    Shelter inflation continues to retreat

    Meanwhile, there were some bright spots in the CPI report, such as shelter.
    The 4.6% annual inflation rate for housing in December was the lowest since January 2022. As the largest component of the price index, it has a significant bearing on inflation’s trajectory.
    Economists prefer looking at a measure known as “core” CPI, which strips out volatile food and energy prices, for a more accurate reading of underlying inflationary dynamics.
    There, the picture is better: Core CPI fell to 0.2% on a monthly basis in December, after having been stuck at 0.3% a month since August. The annual core inflation rate fell to 3.2% from 3.3%.

    “It’s encouraging that inflation continues to throttle back, slowly but steadily,” said Mark Zandi, chief economist at Moody’s.
    “The only difference between where we are and the Fed’s target is growth in the cost of housing,” he said. “That’s now definitively slowing.”
    Zandi estimates inflation could return to its target level by spring or summer, barring any speed bumps from Trump administration policy.
    Wage growth continued to cool in December even as the labor market remained strong: Average hourly earnings grew at a 3.9% annual rate last month, down from 4% in November, according to a separate Bureau of Labor Statistics report issued Friday.
    This is important because labor is a major input cost for businesses, especially those in the service sector, such as leisure and hospitality. Businesses may raise prices if wage growth spikes.

    Trump tariff threat may influence consumer buying

    Elsewhere, airline fares rose 3.9% from November to December, after rising 0.4% the prior month. Used car and truck prices jumped 1.2% during the month and those for new vehicles increased 0.5%.
    Increases for new and used vehicles “points to a continued surge in demand for replacement vehicles after October’s hurricanes, which will receive a renewed impetus from the California wildfires,” Thomas Ryan, North America economist at Capital Economics, wrote in a note on Wednesday.
    Car insurance prices increased by 0.4% on the month, and are up 11% since December 2023.
    This is largely due to a lag effect from high vehicle inflation earlier in the pandemic, economists said. Car prices feed into motor vehicle insurance: When prices are elevated, insurers’ cost to replace vehicles after a car accident is also much higher.

    At least some of the recent increase in auto prices may be because consumers are speeding up purchases — thereby raising demand — to avoid potential tariffs imposed by the Trump administration, Seydl said.
    Data from a recent University of Michigan Consumer Sentiment Survey “suggest that consumers are becoming more worried about the likely stagflationary impact of Trump’s policy plans,” Stephen Brown, deputy chief North America economist at Capital Economics, wrote Friday.
    “The expectation of tariffs to come mean consumers judge that it is a better time to buy durable goods,” he wrote. More

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    DoubleLine’s Gundlach says the Fed looks like Mr. Magoo, focuses too much on ‘short-termism’

    Jeffrey Gundlach speaking at the 2019 SOHN Conference in New York on May 5, 2019.
    Adam Jeffery | CNBC

    DoubleLine Capital CEO Jeffrey Gundlach believes the Federal Reserve is missing the bigger picture again.
    “The Fed looks like Mr. Magoo, driving around, bumping into things. Then became systematic, got inflation to come down,” Gundlach said in an investor webcast Tuesday evening. “But for the past five months we’ve had another rising trend. This has got the Fed back into short-termism, reacting too much to short-term data, not being strategic.”

    Gundlach, a noted fixed income investor whose firm manages $95 billion, made the comments before the latest reading of the consumer price index on Wednesday. The CPI increased a seasonally adjusted 0.4% on the month, putting the 12-month inflation rate at 2.9%
    Excluding food and energy, the core CPI rate came in slightly lighter than expected both on a monthly basis and an annual basis. While the numbers compared favorably to forecasts, they still show that the Fed has work to do to reach its 2% inflation target.

    “CPI month-over-month change has got the Fed zigzagging,” Gundlach said. “The market has gone from an aggressive assumption of Fed cuts to just one cut in 2025.”
    The Fed has cut benchmark rates by a full percentage point since September, a month during which it took the unusual step of lowering by a half point. In December, the central bank projected only two quarter-point rate cuts in 2025, fewer than the four reductions it previously forecast.

    “The Fed is now in sync with the market, and the market is not given further signals for a change,” Gundlach said. “That is consistent with the Fed slowing down its change of monetary policy.”
    Futures pricing continued to imply a near certainty that the Fed would stay on hold at its Jan. 28-29 meeting but leaned more toward two quarter-point rate cuts through the year, assuming quarter percentage point increments, according to CME Group.

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    There’s been a ‘meaningful shift’ in CEO confidence since Trump’s election, says Goldman’s Solomon

    “There has been a meaningful shift in CEO confidence, particularly following the results of the U.S. election,” Goldman Sachs CEO David Solomon said, according to a transcript from FactSet.
    Donald Trump, who is set to return to the White House on Monday, is seen as broadly more business-friendly than outgoing President Joe Biden.
    Solomon’s comments line up with some survey data that suggests renewed confidence among business leaders.

    David Solomon, CEO of Goldman Sachs, speaks during the Reuters NEXT conference, in New York City, U.S., December 10, 2024. 
    Mike Segar | Reuters

    The election of Donald Trump in November and a swing back to Republican power in Washington is already starting to make an impact in the business world, according to Goldman Sachs CEO David Solomon.
    The bank executive said on a conference call Wednesday that other CEOs are feeling better about the direction of the economy and their businesses since the presidential election, even though Trump has yet to take office.

    “There has been a meaningful shift in CEO confidence, particularly following the results of the U.S. election,” Solomon said, according to a transcript from FactSet.
    “Additionally, there is a significant backlog from sponsors and an overall increased appetite for dealmaking supported by an improving regulatory backdrop,” he continued.
    The comments line up with some survey data that suggests renewed confidence among business leaders. The latest Chicago Fed Survey of Economic Conditions showed an improved outlook for the next 12 months. The NFIB Small Business Optimism Index rose to its highest level since October 2018 in December.
    To be sure, executives on JPMorgan Chase’s earnings call said that the optimism among business leaders has not yet resulted in loan growth, according to a FactSet transcript.
    Stocks rose sharply in the immediate aftermath of Trump’s win, as investors cheered the prospect of lower taxes and fewer regulations. However, many of those gains have since disappeared, in part due to a recent rise in interest rates.

    Trump, who is set to return to the White House on Monday, is seen as broadly more business-friendly than outgoing President Joe Biden. During his campaign, Trump floated lowering taxes and reducing regulation, including around energy. However, his proposed tariffs have made some investors and business leaders nervous about the potential for higher prices and a disruptive trade war.
    Solomon’s comments came on a conference call discussing Goldman’s fourth-quarter results. The bank beat estimates on the top and bottom lines for the period, with its profit roughly doubling year over year.

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    Bristol Myers Squibb says Alzheimer’s is the biggest market for new schizophrenia drug

    Bristol Myers Squibb believes Alzheimer’s treatment is the largest potential market for its newly approved schizophrenia drug, Cobenfy, which it expects to eventually generate billions of dollars in sales across different uses. 
    Company executives said each treatment type they are studying has multibillion-dollar potential, including Alzheimer’s disease psychosis, agitation and cognition, along with bipolar disease and autism.
    Bristol Myers Squibb plans to release initial late-stage trial data on Alzheimer’s-related psychosis during the latter part of the year, which is earlier than expected.

    The Bristol Myers Squibb research and development center at Cambridge Crossing in Cambridge, Massachusetts, US, on Wednesday, Dec. 27, 2023. 
    Adam Glanzman | Bloomberg | Getty Images

    Bristol Myers Squibb believes Alzheimer’s is the largest market for its newly approved schizophrenia drug, Cobenfy, which it expects to eventually generate billions of dollars in revenue.
    In an interview, company executives said each treatment use they are studying for Cobenfy has multibillion-dollar potential, including Alzheimer’s disease psychosis, Alzheimer’s agitation and Alzheimer’s cognition, bipolar disease, and autism. But Alzheimer’s is the “really large market here,” Bristol Myers Squibb CFO David Elkins told CNBC on Tuesday at the JPMorgan Health Care Conference in San Francisco.

    There are nearly 6 million patients in the U.S. with Alzheimer’s, and around half of them have psychosis, or symptoms such as hallucinations and delusions, Elkins said. Cobenfy could be the first drug specifically approved for Alzheimer’s-related psychosis, said Chief Commercialization Officer Adam Lenkowsky. 
    Atypical antipsychotics – medication used to treat a range of psychiatric disorders – are often used to treat psychosis in Alzheimer’s patients even though they are not approved for that purpose. But those treatments can increase the risk of death, and Cobenfy does not, according to Bristol Myers Squibb. 
    Meanwhile, Alzheimer’s agitation, a symptom that can cause a patient to feel restless and worried, is estimated to affect around 60% to 70% of patients with the disease, according to some studies. 
    Bristol Myers Squibb on Monday said it plans to release initial late-stage trial data for Cobenfy in Alzheimer’s-related psychosis treatment during the latter part of the year, which is earlier than expected. The company also expects to start phase three trials in Alzheimer’s agitation, Alzheimer’s cognition and bipolar disorder in 2025, while studies in autism will begin in 2026. 
    JPMorgan analyst Chris Schott expects Cobenfy sales to reach about $5 billion by 2030, with a peak sales potential in the $10 billion range across multiple treatment uses, according to a research note on Tuesday. That is a huge boon to Bristol Myers Squibb as it faces pressure to offset the potential loss of revenue from top-selling treatments that will see their patents expire. 

    Bristol Myers Squibb’s Cobenfy drug
    Courtesy: Bristol Myers Squibb

    It’s a full-circle moment for Cobenfy, which became the first novel type of treatment for the roughly 3 million U.S. adults with schizophrenia in decades after it won approval in September. The drug comes from Bristol Myers Squibb’s whopping $14 billion acquisition of biotech company Karuna Therapeutics at the end of 2023. 
    But the drug’s roots are in treating Alzheimer’s.
    Eli Lilly originally tested one part of the drug – xanomeline – in the 1990s to reduce cognitive decline before shelving it due to severe side effects such as nausea, vomiting, diarrhea and constipation. Xanomeline activates certain so-called muscarinic receptors in the brain to decrease dopamine activity without causing the side effects associated with antipsychotics. 

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    Andrew Miller, founder and former president of research and development of Karuna Therapeutics and now an advisor to Bristol Myers Squibb, saw xanomeline’s potential in neuroscience and theorized combining xanomeline with a second existing medication – trospium – to reduce those side effects. He went on to launch Karuna to develop the combination as a schizophrenia treatment.
    Other breakthrough treatments for Alzheimer’s recently entered the market, including Biogen and Eisai’s Leqembi and Eli Lilly’s Kisunla. Those treatments work in part by clearing toxic plaques in the brain called amyloid, a hallmark of Alzheimer’s, to slow the decline in memory and thinking in patients in the earliest stages of Alzheimer’s 
    But as people progress through their disease, they experience symptoms such as psychosis and agitation, Bristol Myers Squibb’s Elkins said. 
    “That’s where Cobenfy fits it,” he said. “If you can get rid of the psychosis, the agitation, people’s cognition improves. Just imagine for the caregivers and health-care system overall, how impactful this drug could be for those patients and their loved ones. It’s really exciting when you think about it in that context.”

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    Will Donald Trump unleash Wall Street?

    According to Jamie Dimon, chief executive of JPMorgan Chase and king of Wall Street, bankers were elated upon Donald Trump’s election victory. Many chafed under Joe Biden’s presidency, as mergers and bank fees faced additional scrutiny, and new capital-market rules came thick and fast. Now, with the inauguration of Mr Trump imminent, American financiers will discover just how much cause they have for celebration. More