loss of purchasing power over time, meaning your dollar will not go as far tomorrow as it did today. It is typically expressed as the annual change in prices for everyday goods and services such as food, furniture, apparel, transportation costs and toys.

Mr. McBride said the values of many stocks were being supported by extremely low yields on Treasury bonds, especially the 10-year yield, which has held to about 1.5 percent.

“If that yield moves up, investors are going to re-evaluate how much they’re willing to pay for per dollar of earnings for stocks,” he said. Even if corporate profits — which were strong in 2021 — continue to grow in 2022, he added, they are unlikely to expand “at a pace that continues to justify the current price of stocks.”

quicken the pace of pulling back on that aid, set to finish in March.

“The nightmare scenario is: The Fed tightens and it doesn’t help,” said Aaron Brown, a former risk manager of AQR Capital Management who now manages his own money and teaches math at New York University’s Courant Institute of Mathematical Sciences. Mr. Brown said that if the Fed could not orchestrate a “soft landing” for the economy, things could start to get ugly — fast.

And then, he said, the Fed may have to take “very aggressive action like a rate hike to 15 percent, or wage and price controls, like we tried in the ’70s.”

By an equal measure, the Fed’s moves, even if they are moderate, could also cause a sell-off in stocks, corporate bonds and other riskier assets, if investors panic when they realize that the free money that drove their risk-taking to ever greater extremes over the past several years is definitely going away.

Sal Arnuk, a partner and co-founder of Themis Trading, said he expected 2022 to begin with something like “a hiccup.”

“China and Taiwan, Russia and Ukraine — if something happens there or if the Fed surprises everyone with the speed of the taper, there’s going to be some selling,” Mr. Arnuk said. “It could even start in Bitcoin, but then people are going to start selling their Apple, their Google.”

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He Helped Build Tesla. Now He Hopes to Do the Same at Lucid.

But mass producing automobiles is a challenge of a different magnitude. Initial versions of the Air cost almost $35,000 more than a top-of-the-line Tesla Model S Plaid. To be profitable, Lucid must appeal to more than just a superwealthy elite.

“Lucid’s biggest risks are getting to scale and capacity,” said Daniel Ives, a senior analyst at Wedbush Securities who follows the electric car industry. “The first phase has been significantly successful. Now it’s about the next level of adoption.”

Lucid plans to offer a version of the Air next year that will cost $70,000 after a federal tax credit, and produce 500,000 cars a year by 2030, with a lineup that will include a sport utility vehicle and a pickup. The company had burned through $4.2 billion by June, and its prospectus noted that it might be years away from making money.

To avoid the problems that plagued Tesla in its early days, when for a while it was assembling cars in tents, Mr. Rawlinson is relying on people like Eric Bach, Lucid’s chief engineer. Mr. Bach, another Tesla refugee, has worked at Volkswagen and takes a very German approach to manufacturing. He can expound at length on the art of achieving narrow body gaps, the spaces between sheet metal that to engineers are a measure of quality.

“We’re not intending to put any tents up,” Mr. Bach said, except perhaps “to have a party.”

At the same time, the market is increasingly crowded. Automakers like Ford, General Motors and Volkswagen have invested heavily in electric vehicles.

Mr. Rawlinson has confounded naysayers before. He points out that some people doubted that the Model S would be a success, or said Lucid could not build a car with a range of 500 miles and get it out the factory door this year. “There is a track record here of me making claims which seem unrealistic but are absolutely based on science,” he said.

Success would have an extra bit of sweetness for Mr. Rawlinson, who left Tesla amid rancor with Elon Musk, the company’s mercurial chief executive.

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General Electric Plans to Break Itself Into Three Companies

It was the quintessential American company, a corporate behemoth whose ambition matched the country’s.

Formed in 1892, General Electric reached into nearly every home over the next century. It sold light bulbs, televisions and washing machines. Its jet engines opened up long-distance travel, its generators lit houses, and its medical equipment helped diagnose patients.

Now G.E. is making a final break with its storied past, splitting itself into three businesses, a victim of the lingering effects of the 2008 financial crisis and a fast-growing economy less hospitable to global conglomerates.

On Tuesday, the company said it would spin off its health care division in early 2023 and its energy businesses a year later. That would leave its aviation unit as its remaining business.

Mr. Welch also built up a huge finance arm at G.E. The assumption was that G.E.’s managers were the best in the world, and there was easy money to be made on Wall Street.

The buildup backfired when the financial crisis hit in 2008, putting G.E. in a credit crunch. Its chief executive at the time, Jeffrey R. Immelt, moved to drastically pare back the big finance unit, GE Capital.

Other businesses hit hard times because of the financial crisis as well, and some Wall Street firms collapsed. But few outside of Wall Street are still paying a price like G.E. As the company scrambled to shed many of its troubled financial assets, its overextended power-generation business became a drag on the operation.

dropped from the blue-chip index. By the fall of that year, Mr. Flannery had been forced out, replaced by Mr. Culp, a former chief executive of Danaher, a more compact conglomerate that makes scientific, medical and automotive equipment.

Under Mr. Culp, the company has paid hundreds of millions of dollars to settle with the Securities and Exchange Commission over claims that it misled investors before his arrival. He has also accelerated cost-cutting at the company. G.E., which had more than 300,000 employees worldwide in 2014, now has 161,000 workers.

Mr. Culp on Tuesday described the breakup of the company as being in step with the times, as other industry conglomerates have streamlined. In the last few years, G.E.’s big German rival Siemens has spun off its health care and energy businesses. And Honeywell International, another wide-ranging industrial company, has sold off some operations.

Trian, the activist shareholder firm led by Nelson Peltz, have pressured the company to spin out or sell various businesses, and they cheered the move on Tuesday.

“Trian enthusiastically supports this important step in the transformation of G.E.,” a spokeswoman for Trian said.

Shares of G.E. climbed about 3 percent in trading on Tuesday.

The three new stand-alone companies will be sizable. The jet engine business had revenue of $22 billion last year. There are 36,000 G.E. engines on commercial airliners worldwide and 26,000 engines on military aircraft.

Its health care business had $17 billion in revenue last year, with four million of its imaging and other machines in use at hospitals and clinics around the world.

The new energy and power company will include wind turbines and gas-fueled power generators that produce about one-third of the world’s electricity.

Each of those businesses faces challenges — the aviation unit is emerging from the pandemic falloff in air travel, and the power business must adapt to the shift to alternative energy sources.

But each one, Mr. Culp insisted, would be a strong competitor in its respective market, “a simpler, stronger and more focused company,” easier to manage and easier for investors to understand.

It is a message very different from the G.E. of old.

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Stocks Hit a Record as Investors See Progress Toward a Spending Deal

Wall Street likes what it’s hearing from Washington lately.

The S&P 500 inched to a new high on Thursday, continuing a rally aided by signs of progress in spending talks that could pave the way for an injection of some $3 trillion into the U.S. economy.

The index rose 0.3 percent to 4,549.78, its seventh straight day of gains and a fresh peak after more than a month of volatile trading driven by nervousness over the still-wobbly economic recovery and policy fights in Washington.

market swoon that began in September.

Share prices began to rise this month when congressional leaders struck a deal to allow the government to avoid breaching the debt ceiling, ending a standoff that threatened to make it impossible for the country to pay its bills. The rally has gained momentum as investors and analysts grow increasingly confident about a government spending package using a recipe Wall Street can live with: big enough to bolster economic growth, but with smaller corporate tax increases than President Biden’s original $3.5 trillion spending blueprint.

continuing supply chain snarls, higher prices for businesses and consumers and the Federal Reserve’s signals that it would begin dialing back its stimulus efforts all helped sour investor confidence. The S&P 500’s 4.8 percent drop in September was its worst month since the start of the pandemic.

It has made up for it in October, rising 5.6 percent this month. But it’s not just updates out of Washington that have renewed investors’ optimism.

The country has seen a sharp drop in coronavirus infections in recent weeks, raising, once again, the prospect that economic activity can begin to normalize. And the recent round of corporate earnings results that began in earnest this month has started better than many analysts expected. Large Wall Street banks, in particular, reported blockbuster results fueled by juicy fees paid to the banks’ deal makers, thanks to a surge of merger activity.

Elsewhere, shares of energy giants have also buoyed the broad stock market. The price of crude oil recently climbed back above $80 a barrel for the first time in roughly seven years, translating into an instant boost to revenues for energy companies.

debt limit, is a cap on the total amount of money that the federal government is authorized to borrow via U.S. Treasury bills and savings bonds to fulfill its financial obligations. Because the U.S. runs budget deficits, it must borrow huge sums of money to pay its bills.

On Thursday, analysts spotlighted the news that the White House and congressional Democrats were moving toward dropping corporate tax increases they had wanted to include in the bill, as they hoped to forge a deal that could clear the Senate. A spending deal without corporate tax increases would be a potential boon to profits and share prices.

“A stay of execution on higher corporate tax rates would seem a potentially noteworthy development,” Daragh Maher, a currency analyst with HSBC Securities, wrote in a note to clients on Thursday.

An agreement among Democrats on what’s expected to be a roughly $2 trillion spending plan would also open the door to a separate $1 trillion bipartisan infrastructure plan moving through Congress. Progressives in the House are blocking the infrastructure bill until agreement is reached on the larger bill.

But the prospects for an agreement have helped to lift shares of major engineering and construction materials companies. Terex, which makes equipment used for handling construction materials like stone and asphalt, has jumped more than 5 percent this week. The asphalt maker Vulcan Materials has risen more than 4 percent. Dycom, which specializes in construction and engineering of telecommunication networking systems, was up more than 9 percent.

The renewed confidence remains fragile, with good reason. The coronavirus continues to affect business operations around the world, and the Delta variant demonstrated just how disruptive a new iteration of the virus can be.

Another lingering concern involves the higher costs companies face for everything from raw materials to shipping to labor. If they are unable to pass those higher costs on to consumers, it will cut into their profits.

“That would be big,” Mr. McKnight said. “That would be a material impact to the markets.”

But going into the final months of the year — traditionally a good time for stocks — the market also has plenty of reasons to push higher.

The recent weeks of bumpy trading may have chased shareholders with low confidence — sometimes known as “weak hands” on Wall Street — out of the market, offering potential bargains to long-term buyers.

“Interest rates are relatively stable. Earnings are booming. Covid cases, thankfully, are dropping precipitously in the U.S.,” Mr. Zemsky said. “The weak hands have left the markets and there’s plenty of jobs. So why shouldn’t we have new highs?”

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Tesla to Move Headquarters to Texas from California

Tesla will move its headquarters from California to Austin, Texas, where it is building a new factory, its chief executive, Elon Musk, said at the company’s annual shareholder meeting on Thursday.

The move makes good on a threat that Mr. Musk issued more than a year ago when he was frustrated by local coronavirus lockdown orders that forced Tesla to pause production at its factory in Fremont, Calif. Mr. Musk on Thursday said the company would keep that factory and expand production there.

“There’s a limit to how big you can scale in the Bay Area,” he said, adding that high housing prices there translate to long commutes for some employees. The Texas factory, which is near Austin and will manufacture Tesla’s Cybertruck, is minutes from downtown and from an airport, he said.

Mr. Musk was an outspoken early critic of pandemic restrictions, calling them “fascist” and predicting in March 2020 that there would be almost no new cases of virus infections by the end of April. In December, he said he had moved himself to Texas to be near the new factory. His other company, SpaceX, launches rockets from the state.

Hewlett Packard Enterprise said in December that it was moving to the Houston area, and Charles Schwab has moved to a suburb of Dallas and Fort Worth.

Mr. Musk’s decision will surely add fuel to a ceaseless debate between officials and executives in Texas and California about which state is a better place to do business. Gov. Greg Abbott of Texas, and his predecessors, have courted California companies to move to the state, arguing that it has lower taxes and lower housing and other costs. California has long played up the technological prowess of Silicon Valley and its universities as the reason many entrepreneurs start and build their companies there, a list that includes Tesla, Facebook, Google and Apple.

Texas has become more attractive to workers in recent years, too, with a generally lower cost of living. Austin, a thriving liberal city that is home to the University of Texas, in particular has boomed. Many technology companies, some based in California, have built huge campuses there. As a result, though, housing costs and traffic have increased significantly, leaving the city with the kinds of problems local governments in California have been dealing with for years.

Mr. Musk’s announcement is likely to take on political overtones, too.

Last month, Mr. Abbott invoked Mr. Musk in explaining why a new Texas law that greatly restricts abortion would not hurt the state economically. “Elon consistently tells me that he likes the social policies in the state of Texas,” the governor told CNBC.

he said on Twitter. “That said, I would prefer to stay out of politics.”

On Thursday evening, a Twitter post by Governor Abbott welcomed the news, saying “the Lone Star State is the land of opportunity and innovation.”

A spokeswoman for Gov. Gavin Newsom of California, Erin Mellon, did not directly comment on Tesla’s move but said in a statement that the state was “home to the biggest ideas and companies on the planet” and that California would “stand up for workers, public health and a woman’s right to choose.”

Mr. Musk revealed the company’s move after shareholders voted on a series of proposals aimed at improving Tesla’s corporate governance. According to preliminary results, investors sided with Tesla on all but two measures that it opposed: one that would force its board members to run for re-election annually, down from every three years, and another that would require the company to publish more detail about efforts to diversify its work force.

In a report last year, Tesla revealed that its U.S. leadership was 59 percent white and 83 percent male. The company’s overall U.S. work force is 79 percent male and 34 percent white.

The vote comes days after a federal jury ordered Tesla to pay $137 million to Owen Diaz, a former contractor who said he faced repeated racist harassment while working at the Fremont factory, in 2015 and 2016. Tesla faces similar accusations from dozens of others in a class-action lawsuit.

The diversity report proposal, from Calvert Research and Management, a firm that focuses on responsible investment and is owned by Morgan Stanley, requires Tesla to publish annual reports about its diversity and inclusion efforts, something many other large companies already do.

Investors also re-elected to the board Kimbal Musk, Mr. Musk’s brother, and James Murdoch, the former 21st Century Fox executive, despite a recommendation to vote against them by ISS, a firm that advises investors on shareholder votes and corporate governance.

Proposals calling for additional reporting both on Tesla’s practice of using mandatory arbitration to resolve employee disputes and on the human rights impact of how it sources materials failed, according to early results. A final tally will be announced in the coming days, the company said.

Ivan Penn contributed reporting.

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Global Markets Swoon as Worries Mount Over Superpowers’ Plans

Investors on three continents dumped stocks on Monday, fretting that the governments of the world’s two largest economies — China and the United States — would act in ways that could undercut the nascent global economic recovery.

The Chinese government’s reluctance to step in and save a highly indebted property developer just days before a big interest payment is due signaled to investors that Beijing might break with its longstanding policy of bailing out its homegrown stars.

And in the United States, the globe’s No. 1 economy, investors worried that the Federal Reserve would soon begin cutting back its huge purchases of government bonds, which had helped drive stocks to a series of record highs since the coronavirus pandemic hit.

The sell-off started in Asia and spread to Europe — where exporters to China were slammed — before landing in the United States, where stocks appeared to be heading for their worst performance of the year before a rally at the end of the trading day. The S&P 500 closed down 1.7 percent, its worst daily performance since mid-May, after being down as much as 2.9 percent in the afternoon.

to ignore a variety of issues complicating the recovery — including the emergence of the Delta variant and the supply chain snarls that have bedeviled consumers and manufacturers alike.

But beginning this month, as Evergrande began to teeter and the likelihood of the Fed’s scaling back — or tapering — its bond-buying programs grew, the market’s protective bubble began to deflate. Some U.S. investors are also concerned that tax increases are in the offing — including on share buybacks and corporate profits — to help pay for a spending push by the federal government, the signature piece of which is President Biden’s proposed $3.5 trillion budget bill. Separately, Congress also must act to raise the government’s borrowing limit, a politically charged process that has at times thrown markets for a loop.

On Monday, those currents combined, reflecting the interconnectedness of the global markets as investors everywhere sold their holdings.

the rancorous debate about increasing the debt limit was accompanied by a sharp market slump, as representatives in Washington appeared to flirt with the idea of not raising the constraint on borrowing, which would effectively amount to a default on Treasury bonds.

“It’s going to be drama for the sake of politics,” said Lisa Shalett, chief investment officer at Morgan Stanley Wealth Management. “People don’t like that.”

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Climate Change Calls for Backup Power, and One Company Cashes In

Living on the South Carolina coast means living under the threat of dangerous weather during storm season. But the added peril of the pandemic made Ann Freeman nervous.

What do I do if there’s an evacuation or there’s a storm and you have all this coronavirus and problems with hotels?” Ms. Freeman said. “So I said, ‘Maybe now is the time.’”

That’s why Ms. Freeman spent $12,400 last year to install a Generac backup generator at her home on Johns Island, a sea island near the Charleston peninsula. The wait — about three months — seemed long.

But she was lucky: The wait is twice as long now.

Demand for backup generators has soared over the last year, as housebound Americans focused on preparing their homes for the worst, just as a surge of extreme weather ensured many experienced it.

10 deaths in New Orleans are believed to have been tied to the heat. Over the summer, officials in California warned that wildfires might once again force rolling blackouts amid record heat and the threat of wildfire. In February, a deep freeze turned deadly after widespread outages in Texas. Even lower-profile outages — last month, storms in Michigan left almost a million homes and businesses in the dark for up to several days — have many American homeowners buying mini power plants of their own.

The vast majority are made by a single company: Generac, a 62-year-old Waukesha, Wis., manufacturer that accounts for roughly 75 percent of standby home generator sales in the United States. Its dominance of the market and the growing threat posed by increasingly erratic weather have turned it into a Wall Street darling.

climate crises is shifting the priorities of American consumers.

“Instead of a nice-to-have, backup power is increasingly a need-to-have, when you’re working at home,” said Mark Strouse, a J.P. Morgan analyst who covers Generac and other alternative energy stocks.

and Etsy — have shone as a result of Covid-era shocks and economic disruptions. And the vaccine-maker Moderna is the best-performing stock in the S&P 500. But Generac and a few other alternative energy companies have ballooned in value at the same time.

struck in June during a heat wave, and a prediction in the Farmers’ Almanac of another round of storms early next year made the decision easy: It was time to buy a generator.

The 15,000-watt Generac generator was hooked up last week, big enough to keep the house snug if the power goes out this winter. “I’m not going through that again,” Ms. Collins said.

Generac’s sales are up roughly 70 percent over the past year and orders are vastly outpacing production. The new factory in South Carolina — the two others that produce residential generators are in Wisconsin — is up and running and the company plans to employ about 800 people there by the end of the year. Company officials have floated the prospect of adding further manufacturing operations closer to fast-growing markets like California and Texas, J.P. Morgan analysts reported in a recent client note.

Generac seems to need them. Average delivery times for its generators have lengthened during the pandemic.

Despite dominating the home market, Generac could be vulnerable if competitors are able to serve customers faster. Major manufacturers such as the engine-maker Cummins and the heavy equipment company Caterpillar have a relatively small share of the home generator market, but have the expertise to lift production if they see an opportunity. Generac, aware of the potential competition from other players as well as home solar panels and other solutions, has made a series of acquisitions in the battery and energy storage industry, which is emerging as a small but fast-growing source of revenue for the company.

But there’s no doubt about the demand for its core product right now.

After her generator was installed last week, Ms. Collins took a run around the neighborhood and noticed a neighbor unboxing one in the driveway.

“We’re not the only ones,” she said.

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Fed Officials’ Trading Draws Outcry, and Fuels Calls for Accountability

None of those transactions took place between late March and May 1, a Fed official said, which would have curbed Mr. Kaplan’s ability to use information about the coming rescue programs to earn a profit.

But the trades drew attention for other reasons. Mr. Conti-Brown pointed out that Mr. Kaplan was buying and selling oil company shares just as the Fed was debating what role it should play in regulating climate-related finance. And everything the Fed did in 2020 — like slashing rates to near zero and buying trillions in government-backed debt — affected the stock market, sending equity prices higher.

“It’s really bad for the Fed, people are going to seize on it to say that the Fed is self-dealing,” said Sam Bell, a founder of Employ America, a group focused on economic policy. “Here’s a guy who influences monetary policy, and he’s making money for himself in the stock market.”

Mr. Perli noted that Mr. Kaplan’s financial activity included trading in a corporate bond exchange-traded fund, which is effectively a bundle of company debt that trades like a stock. The Fed bought shares in that type of fund last year.

Other key policymakers, including the New York Fed president, John C. Williams, reported much less financial activity in 2020, based on disclosures published or provided by their reserve banks. Mr. Williams told reporters on a call on Wednesday that he thought transparency measures around trading activity were critical.

“If you’re asking should those policies be reviewed or changed, I think that’s a broader question that I don’t have a particular answer for right now,” Mr. Williams said.

Washington-based board officials reported some financial activity, but it was more limited. Jerome H. Powell, the Fed chair, reported 41 recorded transactions made by him or on his or his family’s behalf in 2019, and 26 in 2020, but those were typically in index funds and other relatively broad investment strategies. Randal K. Quarles, the Fed’s vice chair for supervision, recorded purchases and sales of Union Pacific stock from 2019 in his 2020 disclosure. Those stocks were assets of Mr. Quarles’s wife and he had no involvement in the transactions, a Fed spokesman said.

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Biden’s Electric Car Plans Hinge on Having Enough Chargers

For years, start-ups, automakers and other companies have been slowly building chargers, mainly in California and other coastal states where most electric cars are sold. These businesses use different strategies to make money, and auto experts say it is not clear which will succeed. The company with the most stations, ChargePoint, sells chargers to individuals, workplaces, stores, condo and apartment buildings, and businesses with fleets of electric vehicles. It collects subscription fees for software that manages the chargers. Tesla offers charging mainly to get people to buy its cars. And others make money by selling electricity to drivers.

Once the poor cousin to the hip business of making sleek electric cars, the charging industry has been swept up in its own gold rush. Venture capital firms poured nearly $1 billion into charging companies last year, more than the five previous years combined, according to PitchBook. So far in 2021, venture capital investments are up to more than $550 million.

On Wall Street, publicly traded special purpose acquisition companies, or SPACs, have struck deals to buy eight charging companies out of 26 deals involving electric vehicle and related businesses, according to Dealogic, a research firm. The deals typically include an infusion of hundreds of millions of dollars from big investors like BlackRock.

“It’s early, and folks are trying to wrap their heads around what does the potential look like,” said Gabe Daoud Jr., a managing director and analyst at Cowen, an investment bank.

These businesses could benefit from the infrastructure bill, but it is not clear how the Biden administration would distribute money for charging stations.

Another unanswered question is who will be the Exxon Mobil of the electric car age. It might well be automakers.

Tesla, which makes about two-thirds of the electric cars sold in the United States, has built thousands of chargers, which it made free for early customers. The company could open its network to vehicles made by other automakers by the end of the year, its chief executive, Elon Musk, said in July.

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