Economy

Biden’s first address to a joint session of Congress since Republicans took control of the House of Representatives will follow themes he has repeatedly highlighted since taking office. AMERICA, THE GREAT “The story of America is a story of progress and resilience…We are the only country that has emerged from every crisis stronger than when we entered it. That is what we are doing again.” “Today, COVID no longer controls our lives. And two years ago, our democracy faced its greatest threat since the Civil War. Today, though bruised, our democracy remains unbowed and unbroken.”THE US ECONOMY “Two years ago our economy was reeling. As I stand here tonight, we have created a record 12 million new jobs – more jobs created in two years than any president has ever created in four years. Two years ago, COVID had shut down our businesses, closed our schools, and robbed us of so much.””My economic plan is about investing in places and people that have been forgotten. Amid the economic upheaval of the past four decades, too many people have been left behind or treated like they’re invisible.””Maybe that’s you watching at home. You remember the jobs that went away. And you wonder whether a path even exists anymore for you and your children to get ahead without moving away. I get it.””That’s why we’re building an economy where no one is left behind. Jobs are coming back, pride is coming back because of the choices we made in the last two years. This is a blue-collar blueprint to rebuild America and make a real difference in your lives.”APPEALS TO REPUBLICANS”To my Republican friends, if we could work together in the last Congress, there is no reason we can’t work together in this new Congress. The people sent us a clear message. Fighting for the sake of fighting, power for the sake of power, conflict for the sake of conflict, gets us nowhere.””And that’s always been my vision for the country: to restore the soul of the nation, to rebuild the backbone of America: the middle class, to unite the country. We’ve been sent here to finish the job!” More

Hudson Bay Capital has essentially agreed to make sure the troubled retailer will sell roughly $1 billion in shares as it tries to avoid bankruptcy.Bed Bath & Beyond’s plan to use a public stock offering as a way to raise more than $1 billion and avoid bankruptcy will be backed by the investment firm Hudson Bay Capital Management, two people familiar with the situation said, speaking on the condition of anonymity because the terms of the deal have not been made public.Bed Bath & Beyond disclosed the deal on Monday without naming Hudson Bay. It hopes that raising enough cash will restore the confidence of suppliers, preserve jobs and allow the company to pursue a turnaround plan it announced in August.The retailer said on Tuesday that it had already underwritten the initial $225 million worth of shares it was selling. It plans to sell an additional $800 million over time, assuming “certain conditions are met.” The company did not disclose what those conditions were.Hudson Bay, though, has essentially agreed to buy the stock, assuming Bed Bath & Beyond sells the additional shares.Hudson Bay is a multibillion-dollar fund based in Greenwich, Conn. It often acts as a mergers specialist, either betting passively on whether company deals go through or fall apart or, at other times, pushing for such moves.The firm is likely looking to take advantage of Bed Bath & Beyond’s rising share price, with hopes of selling when it goes even higher. Retail investors helped drive the price up nearly 100 percent on Monday, before Bed Bath & Beyond announced its plan to offer stock. Shares fell nearly 50 percent in trading on Tuesday, to around $3.“This transformative transaction will provide runway to execute our turnaround plan,” Sue Gove, Bed Bath & Beyond’s chief executive, said in a statement. “As we make important strategic and operational changes, we will continue to take disciplined steps to enhance our cost base and improve our financial position.”The Downfall of Bed Bath & BeyondThe home goods retailer, which was founded in New Jersey in 1971, faces an uncertain future amid worsening financial woes.Few Options: After a disappointing holiday season, Bed Bath & Beyond is said to be in discussions to sell pieces of its business and has warned investors of a potential bankruptcy.A Warning Sign: The disclosure that the retailer had defaulted on certain debt payments was the most salient sign of financial strain yet for the company.Turnaround Plan: The company laid out an aggressive plan in August to turn itself around that included store closings, cost cuts and layoffs. But it needs cash to execute its strategy.Selling Stock: Bed Bath & Beyond announced plans for a public offering, saying that it hoped the move would help it raise more than $1 billion and pay off its debts.A spokesperson for Hudson Bay did not respond to request for comment. Bed Bath & Beyond did not respond to a request for additional comment on the transaction. The deal between the hedge fund and the retailer was reported earlier by Bloomberg.Some analysts doubt whether the deal will be enough to help the struggling home goods retailer.“The fundamental story for Bed Bath & Beyond is so broken at this point,” David Silverman, retail analyst at Fitch Ratings, said. “I don’t know that a short-term cash infusion that could buy them a few months, a couple of quarters, is going to change their fate.”The deal with Hudson Bay came together within the past several weeks, the two people familiar with the matter said. Late last month, JPMorgan Chase, which helped give Bed Bath & Beyond a lifeline this summer by expanding its credit line, froze the retailer’s credit accounts after notifying it that it was in breach of the terms of its debt. As Bed Bath & Beyond raced to find cash to pay its debts, tensions built over the amount information it was sharing with its banks and other creditors and how quickly it was relaying it to them, the people said..css-1v2n82w{max-width:600px;width:calc(100% – 40px);margin-top:20px;margin-bottom:25px;height:auto;margin-left:auto;margin-right:auto;font-family:nyt-franklin;color:var(–color-content-secondary,#363636);}@media only screen and (max-width:480px){.css-1v2n82w{margin-left:20px;margin-right:20px;}}@media only screen and (min-width:1024px){.css-1v2n82w{width:600px;}}.css-161d8zr{width:40px;margin-bottom:18px;text-align:left;margin-left:0;color:var(–color-content-primary,#121212);border:1px solid var(–color-content-primary,#121212);}@media only screen and (max-width:480px){.css-161d8zr{width:30px;margin-bottom:15px;}}.css-tjtq43{line-height:25px;}@media only screen and (max-width:480px){.css-tjtq43{line-height:24px;}}.css-x1k33h{font-family:nyt-cheltenham;font-size:19px;font-weight:700;line-height:25px;}.css-1hvpcve{font-size:17px;font-weight:300;line-height:25px;}.css-1hvpcve em{font-style:italic;}.css-1hvpcve strong{font-weight:bold;}.css-1hvpcve a{font-weight:500;color:var(–color-content-secondary,#363636);}.css-1c013uz{margin-top:18px;margin-bottom:22px;}@media only screen and (max-width:480px){.css-1c013uz{font-size:14px;margin-top:15px;margin-bottom:20px;}}.css-1c013uz a{color:var(–color-signal-editorial,#326891);-webkit-text-decoration:underline;text-decoration:underline;font-weight:500;font-size:16px;}@media only screen and (max-width:480px){.css-1c013uz a{font-size:13px;}}.css-1c013uz a:hover{-webkit-text-decoration:none;text-decoration:none;}What we consider before using anonymous sources. Do the sources know the information? What’s their motivation for telling us? Have they proved reliable in the past? Can we corroborate the information? Even with these questions satisfied, The Times uses anonymous sources as a last resort. The reporter and at least one editor know the identity of the source.Learn more about our process.The retailer’s lenders had dealt with a great deal of turbulence over the past few months. In early September, weeks after Bed Bath & Beyond secured rescue financing from JPMorgan and the investment firm Sixth Street, the company’s chief financial officer died in what was ruled a suicide. Industry executives have questioned whether the retailer had the right management in place to weather its challenges.On Monday, Bed Bath & Beyond said Holly Etlin had been hired as the interim chief financial officer. Ms. Etlin has experience with restructurings and company turnarounds.Rising interest rates have also made lenders warier of plowing more money into distressed companies like Bed Bath & Beyond. But equity may prove to be a new alternative.Bed Bath & Beyond’s move echoes what appears to be a new playbook for distressed retailers. Another indebted company favored by meme traders, AMC Entertainment, sold investors preferred shares in August after common shareholders balked at its efforts to issue more stock, which dilutes the value of shares that are already held. Both sets of AMC shares have remained volatile. In 2020, Hertz tried to sell shares after filing for bankruptcy, but the Securities and Exchange Commission squashed those efforts.“For those who are in this situation, for those who are desperate, this will be one instrument that they can use,” said Douglas Chia, the head of Soundboard Governance, a corporate governance consultancy. “Every couple years there’s a new instrument that investment bankers come up with, and it’s creative and it becomes the flavor of the month and everyone starts to use that. This could be the same thing.”The question for Bed Bath & Beyond and the roughly 30,000 people it employed as of last February is whether it will be enough. Even if this financing goes through, the company faces the same challenges that have plagued it the past couple of months. The retailer is contending with low inventory in its stores as vendors hold back on shipping items because of worries about its finances. It also has a less sophisticated e-commerce operation than many of its competitors and a dwindling customer base.The stock offering “by itself doesn’t change the business model or any of those tough decisions that they need to make,” said Patrick Collins, a partner who works on bankruptcies and restructurings at the law firm Farrell Fritz.The deal could give Bed Bath & Beyond only a few more quarters of financial runway, said Seth Basham, a retail analyst at the investment firm Wedbush Capital.The company is ramping up the number of stores it’s closing to more than 400, including Harmon stores. That’s a significant chunk of the 950 stores that it had when the closings began in August.Sales keep sliding as well. Bed Bath & Beyond has said it expects comparable sales in the first quarter to decline 30 to 40 percent from a year earlier, but expects to see quarterly sales improving afterward.It projects that its ability to have goods in stock will return to normal levels by the important back-to-college shopping season.Not everyone is convinced.“It is very difficult to see where they could be able to reverse those trends quickly, particularly given we’re in a somewhat challenging environment for retail goods,” Fitch’s Mr. Silverman said. “You’ve got competitors like Target, Amazon, Walmart and low- and mid-tier department stores that aren’t relinquishing market share.” More

The previous year was marked by heavy losses in the capital markets amid uncertainty triggered by the war in Ukraine, decades-high inflation and fears of an imminent recession. The benchmark S&P 500 Index closed 2022 roughly 19% lower. Amid this economic backdrop, investors have rushed to pull capital from risky assets and equities, choosing to instead hold cash or move towards safe-haven bond markets. Shares in Prudential fell 3% in extended trading after results. The company reported a 21% decline in AUM in the quarter to $1.38 trillion. “Our fourth quarter operating results reflect lower variable investment and fee income, partially offset by improved COVID-19 mortality,” said Chief Executive Charles Lowrey in a statement.Prudential added it had made headway through the year in moving business focus from market-sensitive revenue segments to more stable and recurring sources of income, in line with previously announced plans. “We made further progress on our transformation to become a higher growth, less market sensitive, and more nimble company,” Lowrey added.Last week, rival MetLife Inc (NYSE:MET)’s profit also declined due to market weakness, dragging investment returns at the insurer.The insurer’s after-tax adjusted operating income was $907 million, or $2.42 per share, in the three months ended Dec. 31, compared with $1.23 billion, or $3.18 per share, a year earlier. More

LONDON/WASHINGTON (Reuters) -A global ransomware outbreak has scrambled servers belonging to Florida’s Supreme Court and several universities in the United States and Central Europe, according to a Reuters analysis of ransom notes posted online to stricken servers.Those organizations are among more than 3,800 victims of a fast-spreading digital extortion campaign that locked up thousands of servers in Europe over the weekend, according to figures tallied by Ransomwhere, a crowdsourced platform that tracks digital extortion attempts and online ransom payments and whose figures are drawn from internet scans. Ransomware is among the internet’s most potent scourges. Although this particular extortion campaign was not sophisticated, it drew warnings from national cyber watchdogs in part because of the speed of its spread. Ransomwhere did not name individual victims, but Reuters was able to identify some by looking up internet protocol address data tied to the affected servers via widely used internet scanning tools such as Shodan.The extent of the disruption to the affected organizations, if any, was not clear.Florida Supreme Court spokesman Paul Flemming told Reuters that the affected infrastructure had been used to administer other elements of the Florida state court system, and that it was segregated from the Supreme Court’s main network.”Florida Supreme Court’s network and data are secure,” he said, adding that the rest of the state court system’s integrity also was not affected.A dozen universities contacted by Reuters, including the Georgia Institute of Technology in Atlanta, Rice University in Houston and institutions of higher learning in Hungary and Slovakia, did not immediately return messages seeking comment.Reuters also contacted the hackers via an account advertised on their ransom notes but only received a payment demand in return. They did not respond to additional questions. Ransomwhere said the cybercriminals appear to have extorted only $88,000, a modest haul by the standard of multimillion-dollar ransoms regularly demanded by some hacking gangs.One cybersecurity expert said the outbreak – thought to have exploited a two-year-old vulnerability in VMWare Inc software – was typical of automated attacks on servers and databases that have been carried out by hackers for years.VMWare has urged customers to upgrade to the latest versions of its software. “This is nothing unusual,” said Patrice Auffret, founder of French internet scanning company Onyphe. “The difference is the scale.”Also uncommon is the highly visible nature of the outbreak, which began earlier this month. Because internet-facing servers were affected, researchers and tracking services like Ransomwhere or Onyphe could easily follow the criminals’ trail.Digital safety officials in Italy said on Monday that there was no evidence pointing to “aggression by a state or hostile state-like entity.” Samuli Kononen, an information security specialist at the Finnish National Cyber Security Centre, said the attack was likely carried out by a criminal gang, although he added that it was not particularly sophisticated as many victims had managed to salvage their data without paying a ransom.”More experienced ransomware groups usually don’t make that kind of mistake,” he said. More

NEW YORK (Reuters) – Global hedge funds posted a solid 2.8% gain in January, but they missed out on the stellar rally that broader stock market indexes posted to start the year because the funds were mostly positioned for a continued bear market, data provider HFR said on Tuesday.All four major hedge fund strategies ended the month higher, with equity hedge funds as the top gainer, up 4.24%, in a fresh start for a category that posted major losses in 2022.Last year, hedge funds posted their worst performance since 2018, mainly dragged down by equities as portfolio managers struggled to place bets amid market turmoil.”Equity hedge funds led strategy gains for the month, as investors positioned for an improved equity market environment in 2023, including a moderation of interest rate increases and slowing of generational inflation,” HFR said in a presentation.Still, the main Wall Street indexes far outperformed hedge funds. In January, the Nasdaq rose 10.7%, in its best January since 2011, while the S&P 500 advanced 6.18%.Data from Goldman Sachs (NYSE:GS)’ prime brokerage showed that last month hedge funds massively abandoned their bets against stocks as they became too expensive amid a rally. Short covering reached its fastest pace since 2015, surpassing the speed seen during the meme stock frenzy.Hedge funds’ bearish bets prevented them from posting higher returns in January.Event-driven strategies, which mostly bet on deals conclusions or failures and activism situations, were up 3.55% last month.Relative value hedge funds, which trade price disparities, rose 1.95%, while macro hedge funds gained 0.26%, mainly dragged down by algorithm-driven and commodities strategies. More

Shares of the San Jose, California-based company rose about 1% in aftermarket trade. “This shift gives us additional space to invest and create new roles in high-potential areas – new technologies, customer innovations and key markets,” said Jamie Iannone, Chief Executive Officer of Ebay in a message to employees. A raft of U.S. companies from Goldman Sachs Group Inc (NYSE:GS) to Alphabet (NASDAQ:GOOGL) Inc have laid off thousands this year to ride out a demand downturn wrought by high inflation and rising interest rates. More

The economy ministers of France and Germany said the US had agreed to address European concerns over the Inflation Reduction Act, the $370bn support programme for US clean tech, but acknowledged that their talks with US officials had not yielded any concrete proposals. Bruno Le Maire, France’s economy minister, said he and his German counterpart Robert Habeck had achieved “substantive progress” in their talks in Washington and won “assurances” that the US would seek to assuage European concerns. But few specifics emerged from the meetings, apart from an agreement on full transparency over the level of subsidies on offer under the IRA so that Europe can match them if necessary.The EU has grown anxious that the targeted support now on offer in the US might cause a stampede of business and investment away from the EU to America.The unusual decision by Habeck and Le Maire to go together to Washington was meant to underline the full extent of European disquiet over the US support measures. Habeck said that the meetings — with US trade representative Katherine Tai and Gina Raimondo, the commerce secretary, as well as Treasury secretary Janet Yellen — conveyed the “European view of a few problems” with the IRA, as well as the EU’s concern that the act could usher in a “bidding war on subsidies”.Both he and Le Maire insisted that the message had got through. Le Maire said an agreement had been reached with US officials that the implementation of the IRA “should include as many EU components as possible, for example electric vehicles, electric batteries and critical minerals”. The IRA offers companies billions of dollars in tax credits to boost investment in clean-energy technologies, with the aim of boosting the homegrown development of everything from hydrogen and electric-car batteries to solar panels and sustainable aviation fuel.Companies will be rewarded for locating their supply chains either in the US or with allies and partners. European officials complain that the domestic content requirements run counter to World Trade Organization rules that are meant to bar discrimination against products based on their country of origin.The act has triggered fears in the EU that companies will decamp from Europe to the US to take advantage of the subsidies. It has also raised concerns over the danger of a damaging subsidy race that will skew the competitive playing field in international trade.“Building a strong industry in the US cannot be at the expense of EU countries,” Le Maire said before the meetings. But the message from officials in Washington on the eve of the talks was defiant. Brian Deese, director of the National Economic Council at the White House, said the US allies had “nothing to fear . . . and quite a bit to gain” from the IRA.

“The United States is now leading, and other like-minded countries should both recognise that and also seek . . . opportunities to partner with us,” he added, saying the IRA would “accelerate the reduction in cost of deploying next-generation energy technologies that are critical for the world”. “We have nothing to apologise for, and, frankly, everything to be proud about,” he added.Le Maire said French, German and US officials had agreed on the need for “full transparency about the level of subsidies and tax credits” awarded to private companies, as well as the need for “constant communication at the ministerial level” about strategic investments on both sides of the Atlantic.Habeck said they had also discussed creating a “critical minerals club”, designed to reduce the US and EU’s dependence on certain countries such as China for essential raw materials and to diversify supply chains. He also said that the Europeans and US agreed to let the US-EU Trade and Technology Council, which seeks to develop common tech standards, work towards creating a “common market in green industrial goods”. The EU knows there is no chance of reopening the IRA. But it is hoping that it can influence the drafting of “guidelines” that determine how the act is implemented, in the hope that European companies might be cut into some of its benefits. The guidelines for critical minerals, for example, have not yet been drafted in detail.However, talks held by a US-EU task force on the issue have yielded only partial progress. EU officials recently said Washington had agreed to allow electric vehicles built outside North America to qualify for tax credits if leased by consumers — a huge market in the US. But US officials denied it was a concession and said they were simply following the letter of US law, which allows for such a loophole. Additional reporting by James Politi More

Federal Reserve chair Jay Powell has warned that the US central bank might have to raise interest rates more than expected by investors because it will probably take a “significant period of time” to tame inflation given stronger labour market data.Powell’s comments to the Economic Club of Washington on Tuesday were his first since data last week showed a surprising jump in jobs growth in January, which suggested the Fed might have to go further in its monetary tightening to cool down the economy.But even as Powell stressed that the central bank was prepared to be more aggressive if needed, his intervention was not as hawkish as expected by some economists and market strategists. “The markets were geared up for a hawkish speech, based on the unemployment number on Friday. Markets expected that the whole world had changed, and it doesn’t seem like it has,” said Andy Brenner, head of international fixed income at NatAlliance Securities.Michael Feroli, a senior economist at JPMorgan, added: “While Powell has recently questioned the market’s more benign inflation forecast, he hasn’t protested it too strongly — after all, doing so would be asserting with vigour that the Fed will miss its inflation target.”Powell’s intervention resulted in choppy trading. The S&P 500 and Nasdaq were up 0.8 per cent and 1.1 per cent, respectively, in afternoon trading. In less than a year, the Fed has lifted its main interest rate from near-zero to a target range between 4.5 per cent and 4.75 per cent. Last week, it slowed the pace of its rate increases to 25 basis points from 50 at the end of last year, suggesting its most aggressive efforts to tame inflation were behind it.On Tuesday, answering questions from David Rubenstein, the co-founder of private equity group Carlyle, Powell said the “disinflationary process” still had a “long way to go” and was in its early stages. “It’s probably going to be bumpy,” he said.“The reality is we’re going to react to the data,” Powell said, adding that “it may well be the case” that the Fed would have to raise rates “more than is priced in” by financial markets.The Fed chair later reiterated that message. “I think there has been an expectation that [inflation] will go away quickly and painlessly and I don’t think that’s at all guaranteed. That’s not the base case,” Powell said. “The base case, for me, is that it will take some time. And we will have to do more rate increases and then we’ll have to look around and see whether we’ve done enough.”Edward Al-Hussainy, senior analyst at Columbia Threadneedle, said: “Nothing in Powell’s interview deviated from the message in [the] post-FOMC press conference, about whether the labour market report has meaningfully changed the odds of the terminal [rate] moving higher.”In recent days, other Fed officials have also pointed to the enduring strength of the labour market as a reason for the central bank to keep pressing ahead with tightening.“It’ll probably mean we have to do a little more work,” Raphael Bostic, the president of the Atlanta Fed, told Bloomberg News. “And I would expect that would translate into us raising interest rates more than I have projected right now.”

Two senior European Central Bank policymakers on Tuesday also pushed back against the idea that it could soon stop raising interest rates. Isabel Schnabel, an ECB executive board member, said it “can’t yet give the all clear on inflation” because underlying price pressures — excluding volatile energy and food prices — are “still extraordinarily high”. Schnabel told a Finanzwende webinar that “monetary tightening is having little impact so far” on inflation and the recent deceleration of price growth in the eurozone purely reflected a fall in energy inflation. Her comments appeared designed to counter investor hopes that the ECB could pause after its meeting next month, when it has signalled plans to raise rates by another half percentage point.Germany’s central bank boss Joachim Nagel, who is a member of the ECB rate-setting governing council, told Börsen-Zeitung that “further, significant rate hikes” were still needed because even after it raised its deposit rate to 2.5 per cent last week, this did not yet seem “restrictive” to him. More