Business Updates: Jurors Deliberate for Third Day in Elizabeth Holmes Trial
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Jurors are deliberating for a third day on Thursday in the fraud trial of Elizabeth Holmes, the founder of the failed blood testing start-up Theranos.
Ms. Holmes, 37, faces two counts of conspiracy to commit wire fraud and nine counts of wire fraud for allegedly lying about Theranos’s technology to land money and fame. If convicted, she could serve up to 20 years in prison.
A jury of eight men and four women began deliberations on Monday and continued their discussions on Tuesday. Their sole question to the court, on Tuesday afternoon, was whether they could take jury instructions home. (The response was no.) They had Wednesday off.
If deliberations do not conclude on Thursday, they will resume at a date to be determined by the judge.
In Silicon Valley, start-up founders are rarely prosecuted for their truth-stretching claims. Ms. Holmes, who stood out as a female founder in the male-dominated industry, intentionally molded herself after Apple’s Steve Jobs. She started Theranos in 2003, dropped out of Stanford University to in 2004 and spent the next decade raising nearly $1 billion from venture capitalists and wealthy family offices.
In 2015, a Wall Street Journal investigation revealed that Ms. Holmes had overstated the capabilities of Theranos’s blood testing technology, as well as its relationships with pharmaceutical companies and the military. The company shut down in 2018.
The case boils down to whether Ms. Holmes meant to deceive investors, patients and others, or whether she acted in good faith.
Prosecutors called 29 witnesses, seeking to prove that Ms. Holmes “chose fraud over business failure” through misleading validation reports, faked demonstrations, inaccurate marketing materials and other false claims.
Ms. Holmes took the stand for seven days, anchoring her defense. She recast herself as a naïve entrepreneur led astray by those around her. In emotional testimony, she accused Ramesh Balwani, Theranos’s former chief operating officer, of emotionally and physically abusing her during their secret, decade-long relationship. Mr. Balwani, who is known as Sunny, has denied her allegations.
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Federal Reserve policymakers are finishing a year that has been colored by surprisingly high inflation with yet another piece of bad news: The price measure they follow most closely touched its highest level since 1982.
The Personal Consumption Expenditures price index, which is the one the Fed officially targets when it aims for 2 percent annual inflation on average over time, climbed 5.7 percent in November from a year earlier, the Commerce Department said on Thursday. Part of the jump owed to gasoline prices — they were up sharply in November but have moderated this month — but a so-called core index that strips out food and fuel prices also increased sharply, to 4.7 percent.
The sharp run-up in inflation this year, and the fact that it has lingered, leaves policymakers and economists trying to assess what will happen in 2022.
Rapidly rising prices are lasting longer than policymakers had hoped and have become broader in recent months. Earlier this year, big price increases were largely reserved to goods that were in short supply as demand surged and as overtaxed shipping lines struggled to keep up. More recently, they have spread into categories like rent — which can last longer.
The inflation data released on Thursday came alongside data on incomes and spending that showed that consumers saved less in November and that their consumption barely budged after adjusting for inflation, which could simply be a sign that consumers did their holiday shopping early amid supply chain snarls. Should slower spending last, weaker demand could eventually weigh down price increases. But the United States could end up in an unpleasant situation in which growth is less robust while inflation is still high.
“Consumers are able to purchase less because prices are rising, and that is starting to put the brakes on real spending growth,” said Andrew Hunter, senior U.S. economist at Capital Economics. That could eventually push down prices, he said, but “inflation is likely to remain certainly higher than the Fed wants for a while.”
The fresh inflation reading is further evidence of the pop in prices that a more timely and related measure — the Consumer Price Index — had previously shown.
In doing so, it keeps pressure on officials at the Fed, who are tasked with keeping inflation moderate and setting the stage for full employment, and who have grown increasingly worried about the surge in prices. They pivoted on policy this month, speeding up their plans to cut back on economic support and preparing to raise interest rates early next year if necessary. Higher interest rates can weaken down demand for everything from homes to cars, helping to slow down the economy and restrain inflation.
The big question for officials at the central bank — and in the Biden administration — is what will come next. With the Omicron variant of the coronavirus surging around the world, it is unlikely that tangled supply chains will return to normal quickly. At the same time, rising housing costs could keep inflation high even as some of the most painful trends of 2021, including a surge in used-car prices tied to a computer chip shortage, moderate.
Mr. Hunter said that November could be the peak for the headline inflation index, because gas prices have moderated recently, but the core measure could continue rising for a few months before beginning to slow.
“We need to be humble here,” he said, noting that probably “one or two times last year, we thought we were at peak.”
Fed officials expect inflation to ease to 2.6 percent by the end of next year, their most recent economic forecasts showed, but that would remain substantially above their 2 percent goal. None of the Fed’s 18 officials expect inflation to drop below 2 percent next year.
High inflation has been sapping consumer confidence as people face down rising costs, even at a time when job openings far exceed available workers and wages are rising.
“It’s a devastating thing for people who are working class and middle-class,” President Biden said at the White House on Tuesday, adding: “It really hurts.”
The administration is trying to pull what levers it can, including increasing the supply of oil and gasoline and trying to keep ports open longer in an effort to clear shipping backlogs.
But costs also are increasing because households have saved a lot after repeated government stimulus checks and months locked at home. People have been spending voraciously on goods, as many people avoid travel and other services because of the virus. That has been giving companies the power to raise prices on goods without losing customers.
It is the Fed’s job to lean against those demand-tied inflation pressures.
“While the drivers of higher inflation have been predominantly connected to the dislocations caused by the pandemic, price increases have now spread to a broader range of goods and services,” Jerome H. Powell, the Fed chair, said at a news conference last week. He suggested that if prices remain uncomfortably high, the Fed will do more to keep them under control.
“We understand that high inflation imposes significant hardship, especially on those least able to meet the higher costs of essentials like food, housing, and transportation,” Mr. Powell said. “We are committed to our price stability goal.”
By Brent Murray and Jutharat Pinyodoonyachet
Despite consumer worries over supply chain problems, carrier delivery delays (of which there turned out to be very few), soaring inflation and a highly contagious variant of the coronavirus dampening holiday festivities, one tradition still endures: last-minute Christmas shopping.
Retail sales rose in November, the Commerce Department reported this month, as many consumers got a jump on their holiday shopping. But some waited until the final days to make their purchases.
We sent the photographer Jutharat Pinyodoonyachet around Queens and Herald Square in Manhattan this week to capture the retail holiday spirit and mad-dash hunts for this year’s must-have items. Here’s what she saw.
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Intel apologized on Thursday after a letter in which the chip maker said it would avoid products and labor from Xinjiang set off an outcry on Chinese social media, making it the latest American company caught between the world’s two largest economies.
The chip maker apologized to its Chinese customers, partners and the public in a Chinese-language statement on Weibo, the popular social media site. The company said that the letter, which had been sent to suppliers, was an effort at expressing its compliance with United States sanctions against Xinjiang, rather than a political stance.
China has pushed back against accusations of forced labor in Xinjiang, and Intel’s letter made the chip maker a target of widespread condemnation. “Intel bites the hand that feeds it,” read a headline of one commentary in a nationalist newspaper. A celebrity dropped the brand.
Intel is the latest example of a multinational firm that has found itself in the middle of rising tensions between China and the United States. In this case, Intel has struggled to balance compliance with United States sanctions against Xinjiang, where hundreds of thousands of minorities have been interned, and Chinese nationalist sentiment.
For Intel, China is both a major marketplace and a center of operations. In 2020, the company employed more than 10,000 people there, and made more than $20 billion in revenue, about one-fourth of its global total.
As China’s government has grown more aggressive in defending itself overseas, it has used domestic state media to guide nationalist anger at some foreign companies. This year, China’s government-controlled media helped fuel a boycott campaign aimed at multinational clothing brands like Adidas and H&M, which had signaled they would stop using Xinjiang cotton because of evidence of forced labor in the region.
Responding to Intel’s apology, a Chinese foreign ministry spokesman, Zhao Lijian, again denied there was any forced labor in Xinjiang. “The people in Xinjiang are hardworking and brave. Xinjiang’s products are of high quality. If individual companies choose not to use them, it will be their loss,” he said.
Online, the backlash was big enough to force public figures to take a stance on Intel’s initial letter. The Chinese singer Karry Wang, a member of the band TFBoys and an Intel brand ambassador, said on Thursday that he had terminated his contract with the brand. “National interest exceeds everything,” he wrote on China’s Twitter-like Weibo explaining his decision.
A New York Times investigation last year revealed that Intel-made chips have powered a supercomputing center in Xinjiang, aiding the Chinese government’s campaign of surveillance against the Muslim minorities in the region. It also found that police in Xinjiang were able to buy surveillance systems that ran lower-level Intel chips, even though the police were on a United States government list that cut their access to American technology. Intel said it was not aware of what it called a misuse of its technology.
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Dozens of people aboard a Royal Caribbean International cruise ship tested positive for the coronavirus after it set sail from Fort Lauderdale, Fla., on Saturday, according to the cruise line.
Fifty-five fully vaccinated passengers and crew members on the ship, the Odyssey of the Seas, tested positive, the cruise line said in a statement on Thursday, noting that the number represented 1.1 percent of those on board.
The ship, which was on an eight-night cruise, will not sail to Curaçao and Aruba as planned and will remain at sea until it returns to Fort Lauderdale on Sunday, Royal Caribbean said.
“The decision was made together with the islands out of an abundance of caution due to the current trend of Covid-19 cases in the destinations’ communities as well as crew and guests testing positive on board,” the company said. All of the people on the ship who tested positive “are fully vaccinated and mildly symptomatic or asymptomatic,” the cruise line added.
The Odyssey of the Seas, one of Royal Caribbean’s newest ships, made its maiden voyage in July. It can carry more than 5,500 guests and more than 1,600 crew members.
The health episode was reported shortly after a similar one on another Royal Caribbean ship, the Symphony of the Seas. The cruise line said this week that 48 people on that ship tested positive for Covid-19 after it set sail from Miami on Dec. 11. The ship returned to port in Miami on Dec. 18 after a seven-night Caribbean cruise.
Those cases were identified because of contact tracing after a guest tested positive, the cruise line said, adding that 95 percent of the passengers aboard the Symphony of the Seas were fully vaccinated against Covid-19 and 98 percent of the people who tested positive were fully vaccinated.
Royal Caribbean requires travelers 12 and older to be fully vaccinated against Covid-19 and to test negative before boarding. Younger children who are not vaccinated must provide a negative P.C.R. test result before sailing and test negative at the terminal before boarding.
The company said that all of its crew members were fully vaccinated against Covid-19 and were tested weekly.
At the beginning of the pandemic in 2020, outbreaks on cruise ships sickened people and upended the tourism industry.
Since the cruise industry restarted operations in the United States this June, efforts to keep the coronavirus at bay have been largely successful. Most companies require full vaccination for crew members and most passengers, and they put strict health and safety protocols in place.
But as the highly contagious Omicron variant drives up coronavirus cases in much of the United States and Europe, and criticism of cruise lines has mounted over a lack of transparency in reporting positive cases to passengers and crew members, many lines have adjusted their rules for masking, testing and vaccines.
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The Supreme Court said on Wednesday evening that it would hold a special hearing next month to assess the legality of two initiatives at the heart of the Biden administration’s efforts to address the coronavirus in the workplace.
The court said it would move with exceptional speed on the two measures, a vaccine-or-testing mandate aimed at large employers and a vaccination requirement for certain health care workers, setting the cases for argument on Friday, Jan. 7. The justices had not been scheduled to return to the bench until the following Monday.
Both sets of cases had been on what critics call the court’s shadow docket, in which the court decides emergency applications, sometimes on matters of great consequence, without full briefing and argument. The court’s decision to hear arguments on the applications may have been a response to mounting criticism of that practice, Adam Liptak reports for The New York Times.
The more sweeping of the two measures, directed at businesses with 100 or more employees, would affect more than 84 million workers and is central to the administration’s efforts to address the pandemic. The administration estimated that the measure would cause 22 million people to get vaccinated and prevent 250,000 hospitalizations.
The second measure requires health care workers at hospitals that receive federal money to be vaccinated against the virus. It “will save hundreds or even thousands of lives each month,” the administration wrote in an emergency application.
The Supreme Court has repeatedly upheld state vaccine mandates in a variety of settings against constitutional challenges. But the new cases are different, because they primarily present the question of whether Congress has authorized the executive branch to institute the requirements.
The answer will mostly turn on the language of the relevant statutes, but there is reason to think that the court’s six-justice conservative majority will be skeptical of broad assertions of executive power.
The last time the Supreme Court considered a Biden administration program addressing the pandemic — a moratorium on evictions — the justices shut it down.
“Our system does not permit agencies to act unlawfully even in pursuit of desirable ends,” the court said in August in an unsigned opinion, over the dissents of the three liberal justices.
The vaccination-or-testing requirement for large employers was issued in November by the Labor Department’s Occupational Safety and Health Administration, or OSHA.
Employers are allowed to give their workers the option to be tested weekly instead of getting the vaccine, though they are not required to pay for the testing. The rule makes an exception for employees who do not come into close contact with other people at their jobs, like those who work at home or exclusively outdoors.
Under a 1970 law, OSHA has the authority to issue emergency rules for workplace safety, provided it can show that workers are exposed to a grave danger and that the rule is necessary.
States, businesses and religious groups challenged the measure in appeals courts around the nation, and a unanimous three-judge panel of the U.S. Court of Appeals for the Fifth Circuit, in New Orleans, had ruled in favor of some of the challengers, blocking the measure.
Last week, after the challenges were consolidated before the U.S. Court of Appeals for the Sixth Circuit, in Cincinnati, a divided three-judge panel reinstated the measure.
Almost immediately, more than a dozen challengers asked the Supreme Court to block the measure. READ THE FULL ARTICLE →
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Meta, Facebook’s parent company, is aiming for “deep compatibility” with blockchain technology, according to an internal post on Tuesday from a top executive.
In the note to employees, which was obtained by The New York Times, Andrew Bosworth, who will become Meta’s chief technology officer next year, laid out a vision for the social network to adopt and work with various blockchain or cryptocurrency technologies that have collectively become known as web3.
Mr. Bosworth urged caution but said the company should look to adopt the technologies before others, noting that blockchain technology — which are essentially distributed ledger systems — could have “profound impacts on our industry over the next decade.”
“My overall guidance is to target a deep compatibility with the blockchain,” he wrote. “There aren’t many places where I expect us to depend on it exclusively yet, but if we see an opportunity to work jointly with entrepreneurs in the web3 space I expect it will be worth the effort.”
Technologists, entrepreneurs and investors in the tech industry have debated the internet’s future architecture, with some believing that the decentralization offered by blockchain technology is a way to wrest power away from giants including Meta and Google.
But while Google has been reluctant to dive into crypto, Meta has experimented with cryptocurrencies, including an effort to create a global digital currency that could be used by Facebook and WhatsApp users. The head of that crypto project, David Marcus, announced his departure from Meta last month after the digital currency was rebranded and faced scrutiny from regulators.
In his post, Mr. Bosworth, who oversees Meta’s augmented and virtual-reality efforts, said the company should develop ways to work with nonfungible tokens, which are assets verified using blockchain technology, while looking to possibly invest in areas including blockchain-based smart contracts and decentralized autonomous organizations, which are internet-native co-ops governed with cryptocurrency tokens.
Still, he urged Meta’s employees not to overcorrect by only relying on decentralized technologies.
“While most people are happy to use Facebook and Google, some are not,” he wrote. “And those that opt out are disproportionately involved in creating a genuinely impressive wave of technology.”
One of Meta’s board members, Marc Andreessen, who helps lead the venture capital firm Andreessen Horowitz, has created dedicated funds to invest in web3 companies and technologies.
Meta didn’t immediately respond to a request for comment.
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Wall Street banks have mostly taken a tough line on return-to-office plans, with many top bosses working from their desks for months and urging reluctant employees to do the same.
They have changed their tunes, for now.
With the Omicron variant of the coronavirus raging, Bank of America this week told employees in its New York City corporate offices that they can work from home during the holidays, according to a memo to staff. The bank, which is headquartered in Charlotte, N.C., but maintains a massive office in midtown Manhattan, is also providing self-test kits and will host booster clinics in some locations across the country come January.
At Deutsche Bank, New York staff have been encouraged to work from home for the last two weeks of the year, according to an executive who asked not to be identified discussing personnel matters. They will probably continue to work remotely for several weeks into 2022, given the surge in cases, the person said.
Jefferies, an investment bank in Manhattan, sent its employees back home earlier this month as cases jumped. Rich Handler, the firm’s chief executive, later said on Twitter that he had tested positive and was self-quarantining. Jefferies was the first Wall Street firm to report a senior casualty during the pandemic: Peg Broadbent, the chief financial officer, died from complications of the coronavirus in March 2020.
Wells Fargo also has postponed its return-to-office plans, citing the “changing external environment” in a memo to staff. “Close to 100,000 employees have been coming into a Wells Fargo location throughout the pandemic and all locations continue to be available for use by vaccinated employees on a voluntary basis,” the bank said.
JPMorgan has told its U.S. employees who do not work in bank branches that “each group should assess who needs to come into the office” and “who should revert to working from home on a more regular basis over the next few weeks.”
Citigroup, which had called people back two days a week starting in September, is giving its New York and New Jersey staff the option to work remotely, and Morgan Stanley employees also have been given more flexibility to stay home. And Goldman Sachs has told its teams to postpone their remaining holiday parties.
Stocks on Wall Street rose in midday trading Thursday as investors considered the latest inflation snapshot, which showed prices rising sharply in November.
The S&P 500 was up 0.7 percent, heading for its third straight day of gains, while the Nasdaq composite ticked up 0.9 percent. The S&P 500, the benchmark index, is heading to close the week more than 2 percent higher after posting a nearly 2 percent slump last week. The U.S. stock market will close on Friday as Wall Street observes Christmas.
Consumer prices climbed by 5.7 percent in the 12 months through November, the fastest pace level since 1982, according to the Personal Consumption Expenditures Index, the Fed’s preferred inflation gauge. To combat the surge in inflation, Fed officials announced earlier this month that they would pull back more quickly on their efforts to support the economy.
In the central bank’s December meeting, officials voted to cut their purchases of bonds — a measure meant to keep cash flowing through the financial system — by twice as much each month as they had previously announced. Ending those purchases would pave the way for interest rate increases, the Fed’s most powerful tool to cool down the economy.
The government also reported on Thursday that weekly claims for state unemployment benefits remained at 205,000, unchanged from last week. The number comes at a time when many employers report that they are having trouble filling jobs and Omicron-fueled coronavirus case rates climb rapidly, bringing renewed pandemic restrictions.
“The data can be noisy during the holidays, but filings continue to trend down on strong demand for workers amid a labor shortage,” Rubeela Farooqi, chief U.S. economist at High Frequency Economics, said in a note. “The risk now is from new virus variants, which are forcing businesses to voluntarily close in response to rising infections.”
Wall Street has been facing several tumultuous weeks as the emergence of Omicron started to weigh on the outlook for the economic recovery, bringing a wave of sell-offs. The latest policy move from the central bank helped markets rally initially, but drove stocks lower after investors fully considered the decision. Despite the recent volatility, the S&P 500 is up more than 25 percent for the year.
In Europe, stock indexes rose, with the Stoxx Europe 600 up about 1 percent. Asian markets closed mostly higher.
Oil prices rose, with West Texas Intermediate, the U.S. crude benchmark, 1.2 percent higher at $73.65 a barrel.
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Today in the On Tech newsletter, Shira Ovide writes that technology is in a liminal phase where the promise of what might be coming next coexists with the complicated reality of what is happening now.
Source: https://www.nytimes.com/live/2021/12/23/business/inflation-stock-market-news
