Business

Don't blame the Fed: Inflation would be same today even if interest rates were raised earlier, new research shows

Even if the Federal Reserve had begun raising interest rates nine months earlier, US inflation wouldnt be any lower today than it is now.

Thats the upshot of simulations using a new Bloomberg Economics model, according to an analysis published Wednesday by David Wilcox, Bloombergs director of US economic research.

The exercise suggested the consumer price index would have been 5.9% higher in the first quarter of 2023 versus a year earlier if the Fed had begun raising its benchmark rate in the second quarter of 2021, rather than in the first quarter of 2022. That represents little difference from the actual increase of 5.8%.

Even if the Fed had responded much faster, we would have had the most severe inflation outbreak since the 1970s, Wilcox wrote. To head off the inflation problem altogether, according to the model, the Fed would have had to put the economy through a very sharp recession.

Further out, the models predictions for inflation under the alternative liftoff scenario more or less match Bloomberg Economics forecasts for inflation through the end of 2025.

Where an earlier liftoff would have made some difference, according to the model simulation, was in 2022. The exercise indicated inflation would have peaked around 7.6% in the third quarter of last year instead of 8.6% in the second quarter.

Thats not a trivial difference but not a game changer either, Wilcox said.

Former Goldman Sachs investment banker convicted of funneling insider information to a friend who netted them $280,000

A former Goldman Sachs investment banker was convicted of insider trading charges Wednesday after a weeklong trial.

Brijesh Goel, 38, of Manhattan, was convicted in Manhattan federal court of securities fraud, conspiracy and obstruction of justice by a jury that deliberated less than a day before concluding he had shared secrets about likely merger-and-acquisition transactions that Goldman Sachs was considering financing.

Sentencing was set for Oct. 19.

Prosecutors said Goel worked in Manhattan at the investment bank when he shared information about potential merger and acquisition deals with a friend who worked at another investment bank in Manhattan.

Goel and the friend agreed to split profits from their illegal trading, which amounted to about $280,000, prosecutors said.

Prosecutors said Goel obstructed justice by deleting electronic communications regarding the insider trading scheme as a grand jury and the U.S. Securities and Exchange Commission investigated.

Adam Ford, an attorney for Goel, declined comment.

Longevity expert Dr. Peter Attia warns against the Silicon Valley ethos of engineering one's way to immortality, in Oprah interview

[unable to retrieve full-text content]There's work one can do to increase their health span, and much of it doesnt actually require a doctor, Attia told Oprah.

Yet another star of Netflix's Tiger King is convicted of wildlife trafficking

A wild animal trainer featured in the popular Netflix series Tiger King has been convicted of wildlife trafficking in Virginia, the attorney generals office announced Tuesday.

Bhagavan Doc Antle was accused of illegally buying endangered lion cubs in Frederick County, Virginia, for display and profit at his South Carolina zoo, Attorney General Jason Miyares said in a news release. A jury convicted Antle on Friday of two felony counts each of wildlife trafficking and conspiring to wildlife traffic.

Antle, who owns the Myrtle Beach Safari, appeared in Tiger King: Murder, Mayhem and Madness, a Netflix documentary miniseries that focused on tiger breeders.

The jury acquitted Antle of five counts of animal cruelty and Judge Alexander Iden dismissed four additional animal cruelty charges against Antle and all charges against his two adult daughters, The Winchester Star reported.

Prosecutor Michelle Welch said Myrtle Beach Safaris lucrative petting zoo motivated Antle to maintain a steady supply of immature lion cubs that he purchased from Wilsons Wild Animal Park near Winchester, calling the arrangement a cub pipeline from Virginia to South Carolina.

When Antle and Keith Wilson, the parks former owner, began doing business in 2015, it was still legal to buy and sell lions, Welch said. But after lions were designated as an endangered species in December 2015, lions could only be traded between zoos and wildlife preserves that were part of an established breeding program and had permits. There were three illegal cub exchanges in 2017, 2018 and 2019, Welch said.

Antle was indicted in 2020 on several offenses including felony counts of wildlife trafficking and conspiracy. In August 2019, 119 animals including lions, tigers, bears, camels, goats and water buffalo were seized from Wilsons roadside zoo after a judge found that Wilson cruelly treated, neglected, or deprived the animals of adequate care.

Wilson testified that Antle paid him in advance under the guise of a donation. He said Antle paid $2,500 to $3,000 per cub with the exception of the 2017 transaction when Antle traded three lynx kittens for three lion cubs.

Wilson is charged with nine misdemeanor counts of animal cruelty and 10 felony counts of selling an endangered species and a hearing in his case is scheduled for Friday.

Defense attorney Erin Harrigan called Antles prosecution politically motivated in response to a growing public outcry against wild animals being exploited for entertainment purposes.

This has been an agenda in search of a crime from the beginning of the investigation, Harrigan said.

Harrigan maintained that the cubs were gifts and Antle sent Wilson donations for an expanded tiger habitat.

These were not sales, Harrigan said.

Iden allowed Antle, who faces up to 20 years in prison, to remain free on bond pending sentencing on Sept. 14.

Elon Musk's Twitter has patched up its relationship with a major vendor that it had once stopped paying

Twitter has resumed paying Google Cloud for its services, patching up a relationship that became strained after Elon Musk acquired the social network and stopped paying Google and various other companies.

Twitters new chief executive officer, Linda Yaccarino, helped get the relationship back on track, according to a person familiar with the situation. As part of the discussions, which have included talks between Yaccarino and Google Cloud CEO Thomas Kurian, the two companies are also negotiating a broader partnership that could include advertising and Googles use of Twitters API, said the person, who requested anonymity to discuss a private matter.

Musk has been supportive of the new direction in the relationship, the person said. Another person with knowledge of the matter confirmed there are no issues currently between the companies.

Spokespeople for Twitter and Google declined to comment.

Since billionaire Musk acquired San Francisco-based Twitter last fall, the social media platform has pushed many of its vendors for discounts. Reducing spending on cloud computing emerged as a particular goal of Musks, according to another person with knowledge of the matter.

Twitter has paid Alphabet Inc.s Google Cloud about $200 million to $300 million per year, three people with knowledge of the matter estimated. The social media company largely uses Google Cloud for data analysis and machine learning.

Platformer first reported that Twitter had stopped paying its bills with Google Cloud.

Google at first struggled to get through to Musk to discuss the unpaid bills. In an attempt to reach him, Google employees contacted people at his space exploration firm, SpaceX, which also does business with Google Cloud, according to two of the people.

Google had some levers at its disposal to press Twitter to pay, including restricting aspects of the cloud computing platform.

The companies announced their partnership in 2018. Twitter was once one of Google Clouds most important customers, but Google has since broadened its client base. After reporting its first profitable quarter earlier this year, Google hopes to use its artificial intelligence to close the gap with larger cloud rivals such as Microsoft Corp. and Amazon.com Inc.

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Even hard hit Western housing markets are stabilizingjust look at KB Home's latest cancellation rate

Those aggressive incentives, coupled with house price cuts, seem to be working for the giant homebuilder: On Wednesday, KB Home reported a second quarter cancellation rate of 22%. While thats still a high share of buyers canceling their contracts with KB Home, its far below what it had said in January and the 36% it had reported for Q1 2023.

The improvement in [housing] demand we started to see in February was sustained throughout our second quarter, as we achieved monthly sequential increases in our net orders, Mezger told investors on Wednesday. We are well-positioned to achieve our revenue target for 2023.

Whats going on? Two things.

First, the national U.S. housing market stabilized this spring, as a shortage of existing home inventory and seasonality did just enough to put the market back into equilibrium.

Second, builders like KB Home have gained an edge over the existing/resale market. During the Pandemic Housing Booma time with seemingly unlimited housing demandbuilders achieved frothy profit margins as they quickly raised new house prices. Those expanded margins are coming in handy for builders: As mortgage rates spurred a housing downturn last year, builders like KB Home had the breathing room to reduce margins (i.e. cutting prices and/or aggressive rate buydowns) in pursuit of finding the market, or the price at which buyer demand would return. Those rate buydowns now give builders an edge over average Joes trying to sell their houses.

Among publicly traded homebuilders, KB Home was hit particularly hard by last year's rising mortgage rates. The reason is that KB Home's business is concentrated in West and Southwest housing markets, where the home price correction was sharp in the second half of 2022.

In fact, 81% of KB Home's business is in either the Southwest (51%) or along the West Coast (30%). To make matters worse, KB Home had a high share of business in fast-correcting markets like Las Vegas (which makes up 12% KB Home's business) and Austin (which makes up 10% of KB Home's business).

While Austin is still undergoing a home price correction, many Western and Southwest markets are finally starting to stabilize. Indeed, home prices are up this spring in places like Sacramento and Las Vegas. That stabilization, of course, is helping KB Home.

There's also a growing optimism on Wall Street that incentives, like mortgage rate buydowns, will continue to give builders an edge in not just 2023, but also as long as mortgage rates stay elevated. After all, not only are builders able to offer incentives, but they're also facing limited competition as existing home supply remains tight amid the so-called "lock-in effect" as homeowners refuse to sell and lose their long-term 2% or 3% mortgage rates they got before interest rates started rising.

That builder enthusiasm has translated into a rush among investors to buy shares in homebuilders, including a 60% year-to-date jump in the share price of KB Home. Other major builders are also up big this year, including PulteGroup (up 70% year to date), Toll Brothers (up 50.7% this year), Lennar (+32.2%), and D.R. Horton (31.2%).

Want to stay updated on the housing market? Follow me on Twitter at @NewsLambert.

Unhinged Uber driver crashes car near Google's NYC headquarters after years of claiming 'torture' from flashing lights in Android operating system

A man who has claimed for years that Google was torturing users with flashing lights crashed a car into a building near the companys New York City headquarters, injuring three pedestrians, authorities said.

The man, 34, drove onto the sidewalk and crashed his Ford Fusion into a building on West 15th Street and 10th Avenue in Manhattans Chelsea neighborhood just after 6 p.m. Tuesday, police said.

A 12-year-old girl and two women ages 50 and 47 were hit by the car, a police spokesperson said. They were hospitalized in stable condition.

The driver was arrested on charges including assault and attempted assault, police said. He had not yet been arraigned as of Wednesday and it was not clear if he had an attorney who could speak for him.

Images posted on social media show a homemade sign that says Google Tortured Me! and what appears to be a gasoline can at the crash scene, which is about a block from Googles 15-story New York headquarters.

The man, who has worked as an Uber driver, filed a lawsuit in New York state court in Brooklyn in 2019 accusing Google of using blinding lights to operate a social control program.

He claimed in a 2021 Facebook post that Googles Android operating system was flashing users in the eyes for purposes of maliciously injury.

He wrote in another Facebook post that year, I guess Google thinks its ok to torture someone across their entire Android O.S ecosystem system, no security updates for almost 4 years.