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The commission doesn’t require its members to divest their own personal biotech investments — even as they help shape U.S. policy overseeing the industry.
Schmidt holds stakes in several biotech companies through a venture capital firm known as First Spark Ventures.
The former Google CEO is in a position to potentially profit if those companies are the beneficiaries of a new wave of federal biotech spending.

Eric Schmidt speaks during a National Security Commission on Artificial Intelligence conference November 5, 2019, in Washington
Alex Wong | Getty Images

On Dec. 30, leaders of the House and Senate Armed Services committees announced the selection of former Google CEO Eric Schmidt and 11 others to serve on a new federal commission on biotechnology.
Tasked with reviewing the biotech industry and suggesting investments that would benefit U.S. security, the National Security Commission on Emerging Biotechnology is expected to have a prominent voice on policy and federal spending in the cutting-edge industry.

The appointment, however, doesn’t require commission members to divest their own personal biotech investments — even as they help shape U.S. policy overseeing the industry. Through a venture capital firm known as First Spark Ventures, Schmidt holds stakes in several biotech companies, placing him in a position to potentially profit if those companies are the beneficiaries of a new wave of federal biotech spending.
A person familiar with Schmidt’s thinking, who asked not to be identified, told CNBC on Jan. 19 that he wouldn’t be involved in selecting or monitoring any federal investments in the sector and that he isn’t involved in decision-making about First Spark’s investments. The person also said he would comply with all disclosure rules.
Then, on Jan. 25, after a series of emails and conversations with CNBC about the potential conflict of interest, the person said Schmidt will donate 100 percent of the “net profits” from his investment in First Spark to charity. The person didn’t say when Schmidt made the decision to donate profits, adding that he hasn’t yet named any recipient charities.
Due to the nature of venture capital investments, it could take years before a company is sold or goes public.
“This is a potential horror show,” Walter Shaub, the former director of the U.S. Office of Government Ethics, said of the new commission. “Congress created this commission without adequate safeguards against conflicts of interest.”

Shaub, an attorney who’s now a senior ethics fellow at the nonpartisan nonprofit Project on Government Oversight, said members of the commission are exempt from criminal conflict of interest laws that might otherwise require them to recuse themselves or divest certain holdings because it was set up by Congress and not the executive branch.
“These are individuals who are going to be helping to shape federal policy on the intersection of biotechnology and national security, and it’ll be legal for them to make recommendations that benefit their own personal financial interests,” Shaub said. “Because much of the work could be classified, the public may have no way to gauge how their financial interests are influencing their recommendations.”
A spokesperson for the Senate Armed Services Committee, which will oversee the commission, said Schmidt and other members were selected by bipartisan leaders in the House and Senate and are expected to follow government ethics rules.
“Every member on this commission is required to adhere to all government ethics policies,” the spokesperson said. “The commission itself is designed to prevent undue influence, and Congress will provide careful oversight throughout the commission’s work.”
The commission’s incoming chairman, Dr. Jason Kelly, doesn’t plan to relinquish his role as CEO of Boston biotech company Ginkgo Bioworks, which specializes in genetic engineering.
“Jason is serving on this commission in his personal capacity,” said Joseph Fridman, an executive at Ginkgo Bioworks. He didn’t address whether Kelly planned to divest any potential equity in the company as well. “I’ll also note that, in general, we regularly implement measures at Ginkgo to maintain our position as a trusted partner of the U.S. government.”
Schmidt’s decision to donate his profits “reinforce(s) that he volunteers for these roles for all the right reasons,” said the person familiar with his thinking. “The primary purpose is philanthropy,” the person said.
But Shaub said if Schmidt were to give the First Spark net profits to charity that it wouldn’t go far enough to address the problem. “Saying he’ll donate any profits changes nothing,” he said. “You either have a financial interest in the government work you’re doing or you don’t.”
The Pentagon is already deeply invested in the biotechnology sector. In September, for example, the White House announced that the Department of Defense will invest $1 billion in bioindustrial domestic manufacturing infrastructure over five years to spur development of the U.S. manufacturing base. The new federal commission will likely have a say in steering such investments over the two years of its lifetime.  
This is not the first time Schmidt has participated in an influential Washington commission. In October, CNBC reported that Schmidt and entities connected to him made more than 50 investments in artificial intelligence companies while he was chair of a federal commission on AI from 2018 to 2021. There was no indication that Schmidt broke any ethics rules or did anything unlawful while chairing the commission. And CNBC is unaware of any instance in which Schmidt abused his position on the earlier commission for personal financial gain.
Still, at the time, Shaub called Schmidt’s AI arrangement “absolutely a conflict of interest,” and said that it was “not the right thing to do.”
Schmidt’s biotech investments are relatively recent. Schmidt, who serves as a strategic advisor and nonmanaging partner, was a co-founder of First Spark in 2021. The firm’s investments are heavily concentrated in the biotech sector: in cutting-edge companies like Walking Fish Technologies, which focuses on cell engineering; Vitara Biomedical, a neonatal-care enterprise; and Valitor, which specializes in protein-based drug therapies. Representatives of the three companies did not respond to requests for comment.
CNBC attempted to reach First Spark officials through LinkedIn for comment, but did not receive a response. The firm’s website does not offer a telephone number or email address.  
CNBC attempted to reach the other members of the commission to determine how they would handle potential conflict of interest issues. A spokesman for Rep. Ro Khanna, who was named to the commission, said the congressman does not own any individual stocks, and his wife’s assets are in a diversified trust managed by an outside financial advisor. “Qualified diversified trusts eliminate conflicts and are therefore an appropriate vehicle to safeguard against any potential conflicts,” Khanna’s spokesperson said.
Dawn Meyerriecks, the former deputy director of the CIA for Science and Technology who will serve on the commission, told CNBC she does not have any personal investments in the biotech space.
“As you know, the Commission is not yet fully set up,” she said in a message via LinkedIn. “All the commissioners will file all disclosure forms that are required for service on the commission and work with government ethics counsel to consider any potential conflicts based on the expected work of the Commission. ”

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UPS reported mixed fourth-quarter results, beating Wall Street’s expectations on earnings but missing on revenue.
The shipping company saw revenue dip in its international and supply chain segments as it sees volume declines.
UPS offered guidance slightly below analysts’ expectations for the year.

UPS electric vehicle delivery van on 2nd December 2022 in London, United Kingdom.
Mike Kemp | In Pictures | Getty Images

United Parcel Service on Tuesday reported fourth-quarter revenue that missed Wall Street’s expectations and declined from last year, as the company continues to see volume fall amid cooling demand.
Here’s how UPS performed in the fourth quarter, compared with what Wall Street anticipated, based on an average of analysts’ estimates compiled by Refinitiv:

Adjusted earnings per share: $3.62 vs $3.59.
Total revenue: $27.03 billion vs $28.09 billion.

For the three-month period ended Dec. 31, the company reported adjusted net income of $3.15 billion, or $3.62 per share, compared with $3.15 billion, or $3.59 per share, a year earlier.
The company on Tuesday offered full-year guidance that fell below analyst’s expectations. It is projecting revenue between $97 billion and $99.4 billion, versus analysts’ estimates of $99.98 billion.
Since taking the helm in 2020, CEO Carol Tomé has been championing a “Better not Bigger” business strategy, focusing on high-margin shipments rather than just boosting volume. That strategy was put to the test last quarter as volume declines weighed on revenue.
In the fourth quarter, revenue for UPS’ domestic segment, which makes up about two-thirds of the company’s revenue and most of its business-to-consumer transactions, grew 3%. Revenue from international shipping decreased 8%, due to volume reductions and softening demand in China.
Its supply chain business saw revenue dip 18% with volume decreasing in its freight forwarding business, though it was partially offset by its health-care segment.

Shares of UPS rose 1.6% in premarket trading.
Elevated prices have been a boon for the company’s margins as volumes sag and costs rise. UPS and rival FedEx raised shipping rates by 6.9% at the end of 2022. Last quarter, UPS also announced it would cut $500 million in capital expenditures by, for example, leasing rather than buying certain locations.
UPS on Tuesday also forecast adjusted operating margin of between 12.8% and 13.6% for the year. The company expects capital expenditures to come in at about $5.3 billion, after tightening spending to $5 billion last year.
The shipping company’s shares fell over 10% in 2022 as consumer spending adjusted to inflation and came down from Covid pandemic highs.

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General Motors’ fourth-quarter results easily topped a year earlier.
GM guided toward 2023 results above what Wall Street was expecting.
The results come as the U.S. automotive industry is beginning to normalize after several years of record-low inventories.

Mary Barra, CEO, GM at the NYSE, November 17, 2022.
Source: NYSE

DETROIT — General Motors solidly beat Wall Street’s top- and bottom-line expectations for the fourth quarter, while forecasting another strong year of results in 2023.
The strong report suggests GM is hanging onto record, or near-record, results even as the U.S. automotive industry begins to normalize after several years of record-low inventories and resilient consumer demand.

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Shares of GM were up roughly 5% in premarket trading Tuesday.
Here’s how GM performed to close out last year, compared with analysts’ estimates as compiled by Refinitiv:

Adjusted earnings per share: $2.12 vs. $1.69 expected
Revenue: $43.11 billion vs. $40.65 billion expected

The fourth-quarter results easily topped a year earlier, when the automaker reported an adjusted EPS of $1.35 and revenue of $33.58 billion for the final three months of 2021.
GM’s full-year 2022 revenue came in at $156.7 billion, with net income attributable to stockholders of $9.9 billion and adjusted earnings before interest and tax at a record $14.5 billion. Those results marked the high-end of the company’s previously revised guidance.
Still, the automaker is showing signs of a margin squeeze. GM’s net income slipped last year, down by less than 1% from the full year 2021 to $9.9 billion, with a profit margin that was off 1.6 percentage points to 6.3%. Its adjusted profit margin was 9.2%, down 2.1 percentage points compared with the previous year.

GM said it incurred special charges in the fourth quarter of $511 million related to a buyout program for its Buick dealers and $657 million related to shuttering its limited operation in Russia.

2023 guidance

For 2023, GM expects net income attributable to stockholders of between $8.7 billion and $10.1 billion. It expects adjusted earnings before interest and taxes of $10.5 billion to $12.5 billion and adjusted earnings per share of between $6 and $7.
Those results would be below 2022 earnings, but above average analyst forecasts compiled by Refinitv that called for an EPS of $5.73 this year.

A five-day performance of GM’s stock.

GM forecast 2023 net automotive cash from operating activities to come in between $16 billion and $20 billion and sees automotive free cash flow of $5 billion to $7 billion.
Wall Street has been bracing for a “demand destruction” scenario for the last several quarters, with some analysts suggesting automakers may need to execute cost-cutting measures to offset recessionary spending shifts.
Demand and pricing for GM’s vehicles “remain strong,” CFO Paul Jacobson told reporters Tuesday morning. He said GM is being “appropriately cautious” but vehicle inventories remain constrained amid strong demand.
“We think the underlying business is going to be pretty consistent with what we saw last year, and I think that’s a slightly more bullish statement than where most of the market is,” he said.
GM will execute a $2 billion cost-cutting plan through the next two years, according to Jacobson. Up to half of those savings are expected this year, he said. GM expects some headcount reduction due to attrition but the company is “not planning layoffs,” Jacobson said.

EVs

GM CEO Mary Barra, in a letter to shareholders, described 2023 as a “breakout year” for the company’s electric vehicle business, highlighting the introductions of more mainstream products like the Chevrolet Equinox EV as well as increases in production of its current models.
Barra confirmed GM’s revised plans to produce 400,000 EVs in North America between 2022 and the first half of next year.
GM also announced Tuesday an equity investment of $650 million in Lithium Americas Corp. to develop a lithium mine in Nevada known as Thacker Pass. GM is to receive exclusive access to phase one of production, the automaker announced.
Shares of Lithium Americas were up roughly 12% in premarket trading Tuesday.
GM said Monday it launched production of the GMC Hummer SUV EV at a plant in Detroit. That vehicle is expected to be followed by an electric Chevrolet Silverado work truck by mid-year and electric versions of the Chevrolet Blazer and Equinox during the second half of 2023.

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Pfizer forecast $67 billion to $71 billion in 2023 sales.
That’s a significant drop from the $100.3 billion in revenue the company booked in 2022, an all-time high.

Vials containing the Pfizer/BioNtech vaccine against the coronavirus disease (COVID-19) are displayed before being used at a mobile vaccine clinic, in Valparaiso, Chile, January 3, 2022.
Rodrigo Garrido | Reuters

Pfizer on Tuesday issued sales guidance of $67 billion to $71 billion for 2023, a decline from its record-breaking 2022 results.
The pharmaceutical company booked $100.3 billion for full-year 2022, an all-time high driven by more than $50 billion in Covid vaccine and antiviral sales.

Pfizer expects revenue for 2023 to decline up to 33% compared with 2022 as the pandemic eases and demand for its Covid portfolio slides. The company expects $13.5 billion in Covid vaccine sales in 2023 and $8 billion in revenue for Paxlovid.
Pfizer is forecasting 2023 earnings of $3.25 to $3.45 per share, as much as a 50% drop from its record $6.58 in 2022. The company booked net income $31.4 billion in 2022, a 43% increase over 2021.
Pfizer’s stock fell 3% in premarket trading.
The drugmaker’s results for the fourth quarter largely met analyst expectations. The company booked net income of nearly $5 billion for the quarter, a 47% increase over the same period in 2021. It generated $24.3 billion in revenue for the quarter.
Here’s how the company performed compared with what Wall Street expected for the fourth quarter, based on analysts’ average estimates compiled by Refinitiv:

Adjusted EPS: $1.14 vs. $1.05 expected
Revenues: $24.3 billion vs. $24.28 billion

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McDonald’s fourth-quarter earnings and revenue topped Wall Street’s estimates.
Consumers have been trading down from full-service restaurants to Big Macs and McNuggets as they pull back on spending.
The fast-food giant is expecting that short-term inflation will continue in 2023.

A sign is posted in front of a McDonald’s restaurant on April 28, 2022 in San Leandro, California.
Justin Sullivan | Getty Images

McDonald’s on Tuesday reported that U.S. customers are visiting its restaurants more, helping the fast-food giant top Wall Street’s estimates for its fourth-quarter earnings and revenue.
It’s the second consecutive quarter that the company noted increasing traffic domestically, bucking the industry trend. Many consumers have cut back restaurant spending in response to inflation. But McDonald’s has largely benefitted from the change in consumer behavior since many have traded down from full-service restaurants to its Big Macs and McNuggets.

The fast-food giant is expecting that short-term inflation will continue in 2023, according to a statement from CEO Chris Kempczinski.
McDonald’s shares fell more than 1% before the bell Tuesday.
Here’s what the company reported compared with what Wall Street was expecting, based on a survey of analysts by Refinitiv:

Earnings per share: $2.59 vs. $2.45 expected
Revenue: $5.93 billion vs. $5.68 billion expected

The company reported fourth-quarter net income of $1.9 billion, or $2.59 per share, up from $1.64 billion, or $2.18 per share, a year earlier.
Net sales fell 1% to $5.93 billion but rose 5% when stripping out foreign currency changes. Globally, same-store sales climbed 12.6% in the quarter, fueled by strong demand in the U.S. and its largest European markets.

In McDonald’s home market, higher menu prices and increased demand drove same-store sales growth of 10.3%, topping StreetAccount estimates of 8.1%. The company also noted the success of its McRib promotion, which labeled the limited-time item’s annual return as its “farewell tour.”
Outside of the United States, the company also saw stronger-than-expected growth. Its international operated markets segment reported a same-store sales increase of 12.6%, fueled by strong performance in the United Kingdom, Germany and France.
Its international developmental licensed markets division saw same-store sales climb 16.5%, driven by Japan and Brazil. Sales in China, however, disappointed due to Covid-related government restrictions.
Looking to 2023, McDonald’s is forecasting that it will open 1,900 new restaurants. More than 400 of those will be in the U.S. and international operated markets, while the rest will be opened by developmental licensees.
Earlier in January, the company said it would be accelerating new restaurant development as part of a broader strategy shift. McDonald’s is planning to add 100 more new net restaurants this year than it expected for 2022.
The company is planning to use between $2.2 billion and $2.4 billion on capital expenditures this year. About half of those funds will be earmarked for new restaurant development in the U.S. and its international operated markets.
Read the full earnings report here.

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A show model Audi Formula 1 car on Aug. 26 2022 in Belgium after announcing its participation in the F1 Grand Prix of Belgium.
Sem van der Wal | ANP | Getty Images

Audi’s entry into Formula 1 has moved a step closer after the German car manufacturer acquired a minority stake in Sauber.
The purchase comes three months after Sauber confirmed they would become Audi’s strategic partner when the German marque enters Formula 1 in 2026.

The Swiss constructor’s current partnership with Alfa Romeo will end after the coming season.
“This is an important milestone on the way to Audi’s entry in Formula One, scheduled for 2026, for which the Sauber Group will be the German brand’s strategic partner,” Sauber said in a statement.
Sauber will run with Ferrari power units in 2024 and 2025, before Audi steps in.
Speaking in October, then-Sauber team principal Frederic Vasseur described the partnership as the “best option for the future.”
“To become Audi’s official works team is not only an honor and a great responsibility, it’s the best option for the future and we are fully confident we can help Audi achieve the objectives they have set for their journey in Formula 1,” he said.

On Jan. 14, Andreas Seidl replaced Vasseur as Sauber’s chief executive after the latter joined Ferrari, and will oversee Audi’s entry into F1.
It is Sauber’s second full works agreement after their link-up with BMW in the 2000s, with owner Finn Rausing insisting Audi were the “best strategic partner” for the company.
The goal now will be to return to at least the upper midfield.
Sauber, who first debuted in Formula 1 in 1993, partnered with Alfa Romeo in 2018 but have still been operating at a smaller budget than nearly all of their rivals, and have been towards the back of the grid since.
A link-up with Audi will certainly help their cause, with the carmaker developing engines from their German base, and the chassis still expected to be developed at Sauber’s Switzerland base.

The new generation of F1 engines will feature increased electrical power and 100% sustainable fuels.
“We are delighted to have gained such an experienced and competent partner for our ambitious Formula 1 project,” said Audi board member Oliver Hoffman, who is responsible for the F1 program at corporate level.
In a statement sent to Sky Sports, an Audi spokesperson said this is a “key milestone” for the German’s F1 entry in 2026.
“As part of the acquisition, Julius Seebach joined the Sauber board of directors as the official representative of the Audi AG,” the statement added.
Last week, it was announced that Alessandro Alunnni Bravi would take up a senior leadership role under Seidl, which will see him take on media duties during the 2023 seasons.
Alunni Bravi who is also managing director of the Sauber Group that runs the Swiss-based team, has been given the official title of team representative.
Sauber compete as Alfa Romeo in what is effectively a title sponsorship with the Stellantis-owned brand. That deal is due to end after the 2023 season with the team due to race as Audi from 2026.
Audi confirmed in August they would be entering Formula 1 in four years as a power unit supplier and had been previously linked with a partnership with McLaren.
Fellow Volkswagen brand Porsche, meanwhile, saw a deal fall through with Red Bull but still retain an F1 interest.

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The White House, in a statement Monday, said it would terminate on May 11 both the public health and national emergencies declared in response to Covid.
The Trump administration first issued the emergency declarations in early 2020.

U.S. President Joe Biden delivers remarks on the coronavirus disease (COVID-19) before receiving a second COVID-19 booster vaccination in the Eisenhower Executive Office Building’s South Court Auditorium at the White House in Washington, U.S., March 30, 2022.
Kevin Lamarque | Reuters

The Biden administration plans to end the Covid public health emergency this spring, which will mark a major turning point in the U.S. response to the pandemic.
The White House, in a statement Monday, said it would terminate on May 11 the public health and national emergencies that the Trump administration first declared in 2020.

The statement issued by the Office of Management and Budget expressed the White House’s strong opposition to House Republican legislation aiming to immediately end the emergency declarations.
The public health and national emergencies have enabled hospitals and nursing homes to respond more flexibly when faced with spikes in patient volume during Covid surges.
Enrollment in Medicaid has also surged during the public health emergency because Congress basically barred states from disenrolling people from the program.
A provision tucked in federal spending legislation passed in December allows states to start disenrolling people from Medicaid again in April.
The Health and Human Services Department has promised to give states 60 days notice before ending the public health emergency so the health-care system has time to prepare for a return to normal.

The public health emergency has been extended every 90 days since January 2020 as the virus has evolved into new variants and thrown repeated curveballs over the past three years. HHS just extended the public health emergency earlier this month.
The OMB said abruptly ending the emergencies in the way laid out in the Republican legislation would “create wide-ranging chaos and uncertainty throughout the health care system.”
Terminating the declarations without giving hospitals time to adjust would lead to “disruptions in care and payment delays, and many facilities around the country will experience revenue losses,” according to the OMB statement.
It would also “sow confusion and chaos” in the process of winding down the Medicaid coverage protections, OMB said.
Although the emergency declarations remain in place, the federal response to the pandemic has already been scaled back as funding has dried up. Congress has failed for months to pass a White House request for $22.5 billion in additional funding for the Covid response.
The White House is also planning to transition the Covid vaccines to the private market in the near future, though the exact timing is unclear. This means the cost of the vaccines would be covered by patients’ insurance policies rather than the federal government.
Moderna and Pfizer have both said they may charge as much as $130 per dose of vaccine, quadruple what the federal government pays.
Covid has killed more than one million people in the U.S. since 2020. Deaths have dropped dramatically since the pandemic peak during winter 2021, but nearly 4,000 people are still succumbing to the virus every week.

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CNBC’s Jim Cramer said the benchmark S&P 500 could be at a pivotal moment this week.
The S&P fell on Monday ahead of a packed week of earnings and a potential interest rate increase from the Federal Reserve.

CNBC’s Jim Cramer on Monday said the benchmark S&P 500 could be at a pivotal moment this week.
“The charts, as interpreted by Mark Sebastian, suggest that we’re approaching a decisive moment here. If the S&P 500 can avoid a major decline this week, he’s feeling optimistic about the future — on the other hand, if it gets clobbered, he sees a heck of a lot more downside,” Cramer said.

The S&P fell 1.3% to 4,017.77 on Monday ahead of a packed week of earnings and a potential interest rate increase from the Federal Reserve.
To explain analysis from Sebastian, who is the founder of trading education company Option Pit, Cramer examined the daily chart of the S&P 500 going back to last January.

Arrows pointing outwards

Sebastian notes that the S&P 500 hasn’t been able to break through its ceiling of resistance since a year ago despite multiple rallies last year, until Jan. 23 of this year, according to Cramer. The benchmark index has since stayed above the level for six consecutive trading sessions, he added.
He also compared the chart of the S&P over the last month to that of the CBOE Volatility Index, or the VIX, Wall Street’s fear gauge, to explain why the breakout is significant.

Arrows pointing outwards

While the VIX and the S&P normally move in opposite directions, they’ve both moved up since Jan. 13, according to Cramer.

“When these two lines move in the same direction, it usually means you can’t trust the action in this, in the S&P … because while the market’s rising, the fear is rising, too,” he said.
Cramer added that Sebastian expects the market to see a retest of the new floor of support at the 200-day moving average.
“If that floor doesn’t hold, he wouldn’t be surprised to see the S&P plunging to a new low around 3,400,” he said, adding, “This is assuming something goes very wrong this week, maybe a much harsher than expected [Fed] meeting.”
For more analysis, watch Cramer’s full explanation below.

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