STOCK MARKET NEWS: Inflation jumps, stocks end worst week of year, Boeing's Dreamliner dinged

ECONOMY

Fed likely to trigger a recession with higher interest rates, research shows

The U.S. economy will likely tumble into a recession this year as a result of the Fed's aggressive war against high inflation, according to new research.

The Federal Reserve will be hard-pressed to lower inflation without a significant blow to U.S. economic activity and a sharp rise in unemployment, and even then may miss its 2% inflation target for years to come, a group of top economists concluded after a review of central banks' past inflation battles.

In research released on a day when inflation data showed an unexpected spike, the authors found that over 16 episodes of "disinflation" engineered by central banks in the United States, Germany, Canada and the United Kingdom, "we find no instance in which a significant central bank-induced disinflation occurred without a recession."

The findings were presented on Friday at a conference organized by the University of Chicago Booth School of Business, and drew pushback from Fed officials who reviewed and commented on it.

Tesla logo seen in Zurich, Switzerland July 14, 2016. (Reuters/Arnd Wiegmann)

Tesla bull Ross Gerber no longer wants a seat on the board of Elon Musk’s company, Bloomberg reported, citing a person familiar with the matter.

The report said Tesla representatives plan to meet with Gerber next week around the company’s Investor’s Day, slated for Mar. 1.

Earlier this month, Gerber said he planned to notify the electric carmaker that he will run for the board, citing problems with its public relations, customer service, and succession planning.

Gerber said in a telephone interview with Reuters that he aims to be considered a "friendly activist" by Tesla CEO Elon Musk, but that the company needs more guidance to handle challenges including growing competition.

Oil and gas explorer Pioneer Natural Resources Co is considering an acquisition of smaller U.S. rival Range Resources Corp, Bloomberg News reported on Friday, citing people familiar with the matter.

Deliberations are ongoing and there's no certainty the companies will reach an agreement, the report said, adding Texas-based Pioneer seeks further consolidation in the shale industry with the deal.

Range Resources and Pioneer did not immediately respond to a Reuters request for comment.

Meanwhile, several energy firms are pulling back on drilling and completing wells this year as natural gas prices have crashed to a quarter of what they were last summer.

Vegetarian sausages from Beyond Meat, the vegan burger maker, are shown for sale at a market in Encinitas, Calif., June 5, 2019. (Reuters)

Shares of Beyond Meat Inc surged 19% in early trading on Friday as the plant-based meat maker's results indicated that its cost-control measures were finally bearing fruit.

Beyond Meat's shares, which were trading at $20.42, had slumped about 65% in the past twelve months, hammered by a string of downbeat results and forecast cuts stemming from a collapse in demand for faux meat and elevated freight and raw-material costs.

MARKETS

Beyond Meat shares blast higher after company posts smaller loss

Plant-based protein maker Beyond Meat saw its stock surge more than 22% Friday morning, after showing it trimmed its losses in the fourth quarter with cost-cutting efforts.

At least four brokerages lifted their price targets on Beyond Meat's shares after the company on Thursday topped expectations for quarterly sales for the first time since June 2021 and forecast annual revenue slightly above estimates.

To stem its mounting losses, the California-based company cut 200 jobs, tightened its sourcing network, restructured certain contracts and ramped up automation in its manufacturing processes.

"Beyond Meat deserves credit for becoming more disciplined regarding profits and cash," J.P. Morgan analyst Ken Goldman said.

Smartphone with the Stripe logo is placed on a laptop in this illustration taken on July 14, 2021. (Reuters/Dado Ruvic/Illustration)

Digital payments processor Stripe Inc is close to raising $4 billion in fresh capital at a valuation of about $55 billion, people familiar with the matter said.

The latest capital raise from investors including Thrive Capital could be the largest private funding round in recent memory, marking a steep decline in the valuation of the fintech startup, which was valued at $95 billion in early 2021.

The funding is expected to be completed by the end of March, the sources said, cautioning that the target number could still fall short.

Stripe is also unlikely to launch an initial public offering (IPO) this year as the latest fundraise would cover a forthcoming tax bill, and they need to find a replacement for Dhivya Suryadevara, its chief financial officer who announced her departure earlier this month, the sources said, requesting anonymity as the discussions are confidential..

Woman holds smartphone with Meta logo in front of a displayed Facebook's new rebrand logo Meta in this illustration picture taken Oct. 28, 2021. (Reuters/Dado Ruvic/Illustration)

Meta Platforms Inc said on Friday it was releasing a new large language model based on artificial intelligence (AI) aimed at the research community, becoming the latest company to join the AI race.

The battle to dominate the AI technology space, which until recently existed in the background, kicked off late last year with the launch of Microsoft-backed OpenAI's ChatGPT and prompted tech heavyweights from Alphabet Inc to China's Baidu Inc to create their own offerings.

Meta's LLaMA, short for Large Language Model Meta AI, will be available under non-commercial license to researchers and entities affiliated with government, civil society, and academia, it said in a blog.

The company will make available the underlying code for users to tweak the model and use it for research-related use cases. The model, which Meta said requires "far less" computing power, is trained on 20 languages with a focus on those with Latin and Cyrillic alphabets.

Meta in May last year released large language model OPT-175B, also aimed at researchers, which formed the basis of a new iteration of its chatbot BlenderBot.

It later launched a model called Galactica, which it said could write scientific articles and solve math problems, but its demo was later pulled down because it repeatedly generated authoritative-sounding content.

Washington Commanders quarterback Sam Howell (14) celebrates with Commanders wide receiver Dyami Brown (2) after scoring a touchdown against the Dallas Cowboys at FedExField. (Geoff Burke-USA TODAY Sports)

Amazon founder Jeff Bezos hired investment firm Allen & Company as he considers bidding on the Washington Commanders, the Washington Post reported Thursday.

Allen & Company handled the two most recent sales of NFL franchises, the Denver Broncos last year and the Carolina Panthers in 2018.

BUSINESS-LEADERS

Jeff Bezos the favorite with Dan Snyder's firm $6 billion Washington Commanders ask

Jeff Bezos has an interest in buying the Washington Commanders NFL football team. Current owner Dan Snyder reportedly has a firm asking price of $6 billion

Bezos, who also owns the Washington Post, is the third-richest person in the world with a net worth of $119 billion, according to Forbes' rankings. It is presumed that he would be able to outbid any competitors should he decide he wants to buy the Commanders.

Media reports last month said the team could be sold as soon as March and no candidate met Daniel Snyder's asking price of $7 billion in the first round of bids.

Bezos did not submit an official bid before the late December date for the first round, the reports said.

BUSINESS-LEADERS

NYC billionaire financier found dead in Manhattan office from self-inflicted gunshot wound: report

A billionaire financier was reportedly found dead Thursday inside his New York City office.

American billionaire financier Thomas H. Lee, considered a pioneer of private equity investment and leveraged buyouts, died at the age of 78, his family said in a statement on Thursday, without noting the cause of his death.

The New York Post, citing unidentified police sources, reported Lee was discovered dead on Thursday morning at his Fifth Avenue Manhattan office, headquarters of his investment firm, from a self-inflicted gunshot wound.

According to the Post, he was found after police responded to an emergency-911 call around 11:10 a.m. (1610 GMT).

Reuters could not immediately confirm the cause of death. The New York Police Department said emergency medical service personnel responding to a 911 call on Fifth Avenue at about that time found a "male who was pronounced dead at the scene."

Police gave no further details, and said the city medical examiner's office would determine the cause and manner of death.

The coroner's office could not immediately be reached for comment.

ECONOMY

New home sales jump more than expected in January to 10-month high

January purchases of new homes rose 7.2% to the highest level in 10 months as mortgage rates started to declined, according to Commerce Department data .

Sales of new U.S. single-family homes jumped to a 10-month high in January as prices declined, but a resurgence in mortgage rates could slow a much anticipated housing market turnaround.

New home sales increased 7.2% to a seasonally adjusted annual rate of 670,000 units last month, the highest level since March 2022, the Commerce Department said on Friday. December's sales pace was revised higher to 625,000 units from the previously reported 616,000.

New home sales are counted at the signing of a contract and are considered a leading housing market indicator.

Economists polled by Reuters had forecast new home sales, which account for a small share of U.S. home sales, would increase to a rate of 620,000 units.Sales declined 19.4% on a year-on-year basis in January.

MARKETS

Ford extends F-150 production halt

The Ford Motor Co announced on Friday it was halting production of its F-150 Lightning pickup truck after a battery caught fire at an assembly plant in Louisville, Ky.

Ford Motor Co will halt production of its electric F-150 Lightning pickup for another week following a battery issue that caused an EV truck to catch fire earlier this month, the U.S. automaker said on Friday.

The development comes days after The National Highway Traffic Safety Administration (NHTSA) said it is holding talks with Ford over the issue.

Last week, the automaker said it will continue to hold already-produced vehicles while it worked through engineering and process updates.

The fire incident involving Ford's EV truck happened on Feb. 4, during a pre-delivery quality inspection at its Dearborn, Michigan plant, causing the company to halt production the next day.

Customers walk around the Walmart Supercenter, Feb. 9, 2023, in North Bergen, N.J. (AP Photo/Eduardo Munoz Alvarez)

The Federal Reserve's preferred inflation gauge rose last month at its fastest pace since June, an alarming sign that price pressures remain entrenched in the U.S. economy and could lead the Fed to keep raising interest rates well into this year.

ECONOMY

Inflation gauge closely watched by the Fed accelerated more than expected in January

Inflation remains uncomfortably rapid, although it has cooled slightly from a peak notched in mid-2022, according to the PCE index released on Friday.

Friday’s report from the Commerce Department showed that consumer prices rose 0.6% from December to January, up sharply from a 0.2% increase from November to December. On a year-over-year basis, prices rose 5.4%, up from a 5.3% annual increase in December.

Excluding volatile food and energy prices, so-called core inflation rose 0.6% from December, up from a 0.4% rise the previous month. And compared with a year earlier, core inflation was up 4.7% in January, versus a 4.6% year-over-year uptick in December.

Shares of Boeing Co fell on Friday after the U.S. planemaker temporarily halted deliveries of its 787 Dreamliner jets over a documentation issue related to a fuselage component.

Boeing, while reviewing certification records, said on Thursday it "discovered an analysis error by our supplier related to the 787 forward pressure bulkhead," leading to a pause in deliveries months after they were allowed to resume in August.

The component acts as a barrier between the pressurized interior cabin and the radome (or nose cone). It was supplied by Spirit AeroSystems, which said it was too early to assert it made the "analysis error."

Some analysts said the latest hiccup in 787 deliveries should not result in any design changes and jets in service should continue to fly.

"An unwelcome blast from the past, but hopefully a brief one," J.P. Morgan analyst Seth Seifman said in a note.

Deliveries of 787 are the main drivers of the $1.7 billion of year-on-year cash flow growth Boeing projects, Seifman said.

Russian President Vladimir Putin attends a wreath-laying ceremony at the Tomb of the Unknown Soldier, near the Kremlin Wall during the national celebrations of the "Defender of the Fatherland Day" in Moscow, Russia, Thursday, Feb. 23, 2023. (Pavel Bednyakov, Sputnik, Kremlin Pool Photo via AP)

The U.S. Treasury Department on Friday imposed fresh sanctions on Russian banks and targeted its mining and metals sector, while going after over 30 individuals and companies from Switzerland, Germany and other countries for helping Moscow evade earlier sanctions to fund its war against Ukraine.

The new measures, announced on the first anniversary of Russia's invasion, hit 22 Russian individuals and 83 entities, adding to more than 2,500 sanctions imposed over the past year. The action would further isolate Russia from the global economy, Treasury said in a statement.

The new sanctions were coordinated with other U.S. agencies, U.S. allies and the Group of Seven rich nations to limit Russia's ability to wage the war that has killed tens of thousands, and uprooted millions of Ukrainians.

Treasury said the latest measures were aimed at "impeding the ability of President Vladimir Putin's regime to raise capital in support of the war" by targeting banks, wealth management-related firms and individuals in Russia's financial services sector.

EOG Resources Inc. (EOG) on Thursday reported fourth-quarter net income of $2.28 billion.

The Houston-based company said it had net income of $3.87 per share. Earnings, adjusted for non-recurring gains, were $3.30 per share.

The results missed Wall Street expectations. The average estimate of 10 analysts surveyed by Zacks Investment Research was for earnings of $3.31 per share.

The oil and gas company posted revenue of $6.72 billion in the period, topping Street forecasts. Seven analysts surveyed by Zacks expected $6.39 billion.For the year, the company reported profit of $7.76 billion, or $13.22 per share. Revenue was reported as $25.7 billion.

Sweetgreen shares are falling. The fast casual restaurant chain forecast 2023 same store sales growth of 2% to 6% versus 13% in 2022. Growth in 2022 was half the 25% same-store sales change reported in fiscal 2021.

Revenue is seen between $575 million to $595 million compared to $470.1 million in fiscal 2022.

Adjusted EBITDA is forecast between negative $20 million to negative $10 million versus negative 49.9 million in FY 2022.

Fiscal fourth quarter revenue for the three months ended Dec. 25, 2022 rose 23% to $118.6 million.

The net loss was $(49.3) million versus a net loss of $(66.2) million in the prior year period.

British Airways logos are seen on tail fins at Heathrow Airport in west London, Britain, Feb. 23, 2018. (Reuters/Hannah McKay)

British Airways-owner IAG reported on Friday its first annual profit since the pandemic and said earnings could jump almost 90% this year as business rebounds, but its shares dropped around 6% amid concerns about the group's debt.

“As a long-haul specialist, IAG has been one of the last names in the sector to gain momentum following the pandemic,” said Sophie Lund-Yates, lead equity analyst at Hargreaves Lansdown. “Of course, aviation has flown straight into another hurdle: a cost-of-living crisis. So far it seems pent up demand for travel is keeping things propped up, but there is a limit to how long this can continue.”

IAG forecast 2023 operating profit in the range of 1.8 billion euros to 2.3 billion euros. That would still be well below pre-pandemic levels of 3.3 billion euros in 2019.

The group agreed on Thursday to pay 400 million euros ($424 million) to Spain's Globalia for the remaining 80% of Spain-based Air Europa it did not already own, a deal aimed at expanding its position in the Latin American market but that could also come with additional regulatory hurdles.

“Expanded flying programs and the agreed acquisition of the remaining Air Europa stake both mean IAG is in the best position possible to capture as much of the market as possible,” Lund-Yates said.

Reuters contributed to this report.

People walk past a Cineworld in Leicester's Square in London, Britain, Oct. 4, 2020. (Reuters/Henry Nicholls)

Shares of Cineworld slumped as much as 22% on Wednesday after media reports said the world's second-largest cinema operator had received 40 non-binding bids, but none for its UK and U.S. assets or nearing its $6 billion secured debt load.

The reports cited company counsel Joshua Sussberg's comments to the U.S. Bankruptcy Court in Houston on Tuesday, where he also said the initial bids received by a Feb. 16 deadline were all for the rest of Cineworld's global assets, mainly for theatres in central Europe, eastern Europe and Israel.

“Selling subsidiaries doesn’t mean it will be suddenly swimming in cash. Any interested party in Cineworld’s assets knows that the cinema group is desperate and so they are likely to pitch any offers at a low level,” said Russ Mould, investment director at AJ Bell.

“From where we stand today, two things look almost certain — one, that we won’t see a bidder for the whole business; and two, that shareholders will be left with nothing. Even if the company does sell some of its subsidiaries, the end game still appears to be a debt-for-equity swap whereby creditors take control of the business,” Mould added.

In January, Cineworld said it would focus on a sale of the group as a whole rather than individual assets, months after the British cinema operator filed for U.S. bankruptcy protection in its bid to restructure debt and strengthen its balance sheet.

When requested by Reuters, Cineworld did not immediately confirm details of the update it provided to the court.

Reuters contributed to this report.

Adobe logo is seen on smartphone in this illustration taken June 13, 2022. (Reuters/Dado Ruvic/Illustration)

The U.S. Justice Department is preparing an antitrust lawsuit to block software maker Adobe Inc's $20 billion bid for cloud-based designer platform Figma, Bloomberg News reported on Thursday, citing people familiar with the matter.

The lawsuit could come as early as next month, Bloomberg reported.

Responding to the report, Adobe said it and Figma were in different product areas, with Figma focusing on interactive designs.

"We are engaged in constructive and cooperative discussions with regulators in the US, UK and EU among others. We continue to expect to close the transaction in 2023," the company said in a statement.

The Justice Department declined comment.

Adobe, which makes Photoshop, said in September it would buy Figma, with investors concerned about the hefty price tag.

ECONOMY

War in Ukraine: The economic impact on energy and food one year after Russia's invasion

The one-year anniversary of Russia's invasion of Ukraine arrives on Friday and the war has caused major economic volatility, particularly in energy and food commodities.

Russia's invasion of Ukraine has been going on for one year and the economic impacts are deep and hitting the American consumer.