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   DealBook: The Fed signals urgency
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             May 5, 2022
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                  The Federal Reserve building in Washington.
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                  Pete Marovich for The New York Times
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             The Fed’s one-two punch
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             The Federal Reserve yesterday
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              raised interest rates by a half percentage point
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             and announced a plan to shrink its huge bond holdings in an effort to slow inflation, which is running at its
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              fastest pace in 40 years
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             . It was the central bank’s largest interest rate increase since 2000 — rates usually move by a quarter of a percentage point — and more half-point hikes are “on the table,” the Fed’s chair, Jay Powell, said, adding: “Inflation is much too high, and we understand the hardship it is causing, and we’re moving expeditiously to bring it back down.”
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              The quick pullback signals urgency.
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             By shrinking its nearly $9 trillion balance sheet while substantially raising rates, the central bank has charted a course for rapidly withdrawing support from the economy, writes
             <a class="css-5nb5nb et1n85g0" style="color:#286ed0;-webkit-text-decoration:underline;text-decoration:underline;font-family:inherit;font-size:inherit">
              The Times’s Jeanna Smialek
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             . The two moves are likely to ricochet across the economy as money becomes more expensive to borrow. The decision shows that the Fed is intent on cooling down the economy and the job market amid fears that rapid inflation could become permanent. Prices have been
             <a class="css-5nb5nb et1n85g0" style="color:#286ed0;-webkit-text-decoration:underline;text-decoration:underline;font-family:inherit;font-size:inherit">
              rising quickly
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             at worrying rates for months.
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              The notion of a return to some kind of prepandemic normal without intervention has been abandoned.
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             Policymakers had previously believed that inflation would ease as supply shortages moderated and as the economy evened out after early-pandemic disruptions. Now, new Covid lockdowns in China and the war in Ukraine are aggravating inflation and will most likely continue to weigh on economic activity,
             <a class="css-5nb5nb et1n85g0" style="color:#286ed0;-webkit-text-decoration:underline;text-decoration:underline;font-family:inherit;font-size:inherit">
              according to the Federal Open Market Committee statement for May
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             .
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              Markets took solace in limits to the tinkering.
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             The stock market rallied after Powell announced that the Fed was not “
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              actively considering
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             ” more aggressive action. “Market observers over the last week were starting to think that a 75 basis point increase was a possibility,” Emily Bowersock Hill, the chief executive of Bowersock Capital Partners, said, referring to a 0.75 percentage point increase in interest rates. The “euphoria” in the stock market also showed that the Fed didn’t say anything that investors weren’t already expecting, she added. In other words, one less shock is worth a lot right now.
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              U.S. stock futures fell this morning,
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             suggesting the market could give back some gains today.
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             HERE’S WHAT’S HAPPENING
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              Shell reports a record $9.1 billion profit.
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             Rising energy prices, along with cost cutting, helped Europe’s largest energy company secure its
             <a class="css-5nb5nb et1n85g0" style="color:#286ed0;-webkit-text-decoration:underline;text-decoration:underline;font-family:inherit;font-size:inherit">
              biggest quarterly profit
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             . Its adjusted earnings were almost triple those in the same period a year earlier.
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              Stringent coronavirus lockdowns in China are leaving millions out of work.
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             Some of
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              the most important economic centers
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             , factories and businesses have had to close, sometimes for weeks. Migrant workers and recent college graduates have been hit especially hard.
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              A teachers’ union calls for scrutiny of Meta’s governance.
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             The president of the American Federation of Teachers said the company presented “clear threats” to children. The union urged member pension funds to support a shareholder proposal to seek outside review of
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              the company’s policies
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             .
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             <span style="font-weight:700;font-size:inherit;font-family:arial,sans-serif">
              N.Y.C. employee pension funds sue Activision Blizzard.
             </span>
             The groups, which own stock in the video game maker, argue that Activision failed to turn over requested financial records and say the sale to Microsoft for $70 billion
             <a class="css-5nb5nb et1n85g0" style="color:#286ed0;-webkit-text-decoration:underline;text-decoration:underline;font-family:inherit;font-size:inherit">
              undervalues the company
             </a>
             .
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             <span style="font-weight:700;font-size:inherit;font-family:arial,sans-serif">
              Intuit will pay $141 million to settle deceptive marketing claims.
             </span>
             <a class="css-5nb5nb et1n85g0" style="color:#286ed0;-webkit-text-decoration:underline;text-decoration:underline;font-family:inherit;font-size:inherit">
              The company advertised free services then charged hidden fees
             </a>
             and “cheated millions of low-income Americans,” said Letitia James, New York’s attorney general. The settlement was signed by the attorneys general of all 50 states and the District of Columbia.
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            <h2 class="css-12n1aic el2acgh0" style="color:#000;font:700 25px/32px arial,sans-serif;margin:0 0 10px">
             Musk’s new investors
            </h2>
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            <p style="color:#000;font:normal 17px/25px georgia,serif;margin:0 0 15px">
             Elon Musk has brought in a new cohort of investors to help fund his $44 billion acquisition of Twitter, according to
             <a class="css-5nb5nb et1n85g0" style="color:#286ed0;-webkit-text-decoration:underline;text-decoration:underline;font-family:inherit;font-size:inherit">
              securities documents filed this morning
             </a>
             . Musk has said he is using around $20 billion in equity to assist with his bid along with a $12.5 billion loan against his Tesla shares. As a result of the new investors, Musk is reducing the size of his loan against his Tesla shares to $6.25 billion. Musk is also continuing to talk with certain investors, including Jack Dorsey, about rolling over his stake in Twitter, the filing said.
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            <p style="color:#000;font:normal 17px/25px georgia,serif;margin:0 0 15px">
             Here are some names that caught our eye:
            </p>
           </td>
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         </tbody>
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       <div style="margin:0 auto;max-width:600px;width:100%">
        <table cellpadding="0" width="100%">
         <tbody>
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           <td style="padding:0 0 5px">
            <ul class="css-27qc8p e1darl2c0" style="color:#000;font:20px georgia,serif;text-align:left;padding-left:50px;list-style-type:square;margin-bottom:10px">
             <li class="css-11scvta e1y8brq21" style="line-height:27.5px;margin:0 0 10px 0">
              <span style="font-size:17px;line-height:25px">
               <span style="font-weight:700;font-size:inherit;font-family:arial,sans-serif">
                Binance
               </span>
               : $500,000,000
              </span>
             </li>
             <li class="css-11scvta e1y8brq21" style="line-height:27.5px;margin:0 0 10px 0">
              <span style="font-size:17px;line-height:25px">
               <span style="font-weight:700;font-size:inherit;font-family:arial,sans-serif">
                Lawrence J. Ellison Revocable Trust:
               </span>
               $1,000,000,000
              </span>
             </li>
             <li class="css-11scvta e1y8brq21" style="line-height:27.5px;margin:0 0 10px 0">
              <span style="font-size:17px;line-height:25px">
               <span style="font-weight:700;font-size:inherit;font-family:arial,sans-serif">
                Qatar Holding:
               </span>
               $375,000,000
              </span>
             </li>
             <li class="css-11scvta e1y8brq21" style="line-height:27.5px;margin:0 0 10px 0">
              <span style="font-size:17px;line-height:25px">
               <span style="font-weight:700;font-size:inherit;font-family:arial,sans-serif">
                Sequoia Capital Fund:
               </span>
               $800,000,000
              </span>
             </li>
             <li class="css-11scvta e1y8brq21" style="line-height:27.5px;margin:0 0 10px 0">
              <span style="font-size:17px;line-height:25px">
               <span style="font-weight:700;font-size:inherit;font-family:arial,sans-serif">
                Fidelity Management &amp; Research Company:
               </span>
               $316,139,386
              </span>
             </li>
            </ul>
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           <td align="center" style="padding:0">
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             Continue reading the main story
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            <h2 class="css-12n1aic el2acgh0" style="color:#000;font:700 25px/32px arial,sans-serif;margin:0 0 10px">
             Companies’ continued silence on Roe v. Wade
            </h2>
           </td>
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            <p style="color:#000;font:normal 17px/25px georgia,serif;margin:0 0 15px">
             Yesterday, DealBook wrote that
             <a class="css-5nb5nb et1n85g0" style="color:#286ed0;-webkit-text-decoration:underline;text-decoration:underline;font-family:inherit;font-size:inherit">
              many large companies
             </a>
             had stayed quiet after a leaked
             <a class="css-5nb5nb et1n85g0" style="color:#286ed0;-webkit-text-decoration:underline;text-decoration:underline;font-family:inherit;font-size:inherit">
              Supreme Court draft ruling
             </a>
             showed that
             <a class="css-5nb5nb et1n85g0" style="color:#286ed0;-webkit-text-decoration:underline;text-decoration:underline;font-family:inherit;font-size:inherit">
              Roe v. Wade
             </a>
             may be overturned. A few more companies have since weighed in, but most Fortune 500 companies — even those that had spoken up on other social issues —
             <a class="css-5nb5nb et1n85g0" style="color:#286ed0;-webkit-text-decoration:underline;text-decoration:underline;font-family:inherit;font-size:inherit">
              remain silent.
             </a>
             (That includes
             <a class="css-5nb5nb et1n85g0" style="color:#286ed0;-webkit-text-decoration:underline;text-decoration:underline;font-family:inherit;font-size:inherit">
              entertainment studios
             </a>
             that
             <a class="css-5nb5nb et1n85g0" style="color:#286ed0;-webkit-text-decoration:underline;text-decoration:underline;font-family:inherit;font-size:inherit">
              spoke out
             </a>
             against
             <a class="css-5nb5nb et1n85g0" style="color:#286ed0;-webkit-text-decoration:underline;text-decoration:underline;font-family:inherit;font-size:inherit">
              Georgia’s abortion bill
             </a>
             in 2019.)
            </p>
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            <p style="color:#000;font:normal 17px/25px georgia,serif;margin:0 0 15px">
             <span style="font-weight:700;font-size:inherit;font-family:arial,sans-serif">
              Some companies are pushing others to take a stand.
             </span>
             When
             <span style="font-weight:700;font-size:inherit;font-family:arial,sans-serif">
             </span>
             OkCupid, the dating service,
             <a class="css-5nb5nb et1n85g0" style="color:#286ed0;-webkit-text-decoration:underline;text-decoration:underline;font-family:inherit;font-size:inherit">
              tweeted
             </a>
             that overturning Roe v. Wade would be “unacceptable,” it urged followers to, “Tag a brand you want to see take action.” Miriam Warren, Yelp’s chief diversity officer, said that, “the days of companies not wading into political issues, or not speaking out on things that are perceived as private or personal, are over.”
            </p>
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             <span style="font-weight:700;font-size:inherit;font-family:arial,sans-serif">
              DealBook readers are also weighing in.
             </span>
             <a class="css-5nb5nb et1n85g0" style="color:#286ed0;-webkit-text-decoration:underline;text-decoration:underline;font-family:inherit;font-size:inherit">
              One reader commented
             </a>
             on our story from yesterday: “Corporations, despite what some have said, are not people. They should keep their mouths shut, on both sides of the issue.”
            </p>
           </td>
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            <p style="color:#000;font:normal 17px/25px georgia,serif;margin:0 0 15px">
             <span style="font-weight:700;font-size:inherit;font-family:arial,sans-serif">
              The stakes are high.
             </span>
             In September, John Gibson, the chief executive of Tripwire Interactive, a gaming company in Georgia,
             <a class="css-5nb5nb et1n85g0" style="color:#286ed0;-webkit-text-decoration:underline;text-decoration:underline;font-family:inherit;font-size:inherit">
              tweeted
             </a>
             that he was “proud” of the Supreme Court for “affirming the Texas law banning abortion for babies with a heartbeat.” He was replaced within days. Pushback goes both ways: In Florida,
             <a class="css-5nb5nb et1n85g0" style="color:#286ed0;-webkit-text-decoration:underline;text-decoration:underline;font-family:inherit;font-size:inherit">
              Disney’s run-in with the governor
             </a>
             , Ron DeSantis, underlines the backlash companies can face for publicly criticizing state legislation.
            </p>
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             <span style="font-weight:700;font-size:inherit;font-family:arial,sans-serif">
              The labor market is a factor.
             </span>
             Some executives say restrictive laws have negatively affected recruiting.
            </p>
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             <li class="css-11scvta e1y8brq21" style="line-height:27.5px;margin:0 0 10px 0">
              <span style="font-size:17px;line-height:25px">
               Vivek Bhaskaran, the chief executive of
               <span style="font-weight:700;font-size:inherit;font-family:arial,sans-serif">
                QuestionPro,
               </span>
               a technology services company that in recent years moved its headquarters to Austin, Texas, said the state’s restrictive laws had hampered the company’s ability to recruit talent. “I’ve done tons of interviews, and in almost all of these conversations, we end up talking about the abortion law in one way, shape or form,” he said. “One lady said, ‘My personal values are not really tied to Texas — are you going to force me to move to Texas?’”
              </span>
             </li>
             <li class="css-11scvta e1y8brq21" style="line-height:27.5px;margin:0 0 10px 0">
              <span style="font-size:17px;line-height:25px">
               <span style="font-weight:700;font-size:inherit;font-family:arial,sans-serif">
                Solugen
               </span>
               , a Houston-based chemicals company, said it would open a second office in Boston to accommodate recruits who didn’t want to move to Texas.
              </span>
             </li>
            </ul>
           </td>
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            <h2 class="css-12n1aic el2acgh0" style="color:#000;font:700 25px/32px arial,sans-serif;margin:0 0 10px">
             “If oil is available and at a discount, why shouldn’t I buy it? I need it for my people.”
            </h2>
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            <p style="color:#000;font:normal 17px/25px georgia,serif;margin:0 0 15px">
             <span style="font-style:italic;font-size:inherit">
              — Nirmala Sitharaman, India’s finance minister.
             </span>
             <span style="font-style:italic;font-size:inherit">
              <a class="css-5nb5nb et1n85g0" style="color:#286ed0;-webkit-text-decoration:underline;text-decoration:underline;font-family:inherit;font-size:inherit">
               India has found substantially discounted Russian oil to be an irresistible deal
              </a>
             </span>
             <span style="font-style:italic;font-size:inherit">
              , no matter the diplomatic pressure.
             </span>
            </p>
           </td>
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           </td>
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        </table>
       </div>
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            <h2 class="css-12n1aic el2acgh0" style="color:#000;font:700 25px/32px arial,sans-serif;margin:0 0 10px">
             At Milken, fears of rising corporate debt
            </h2>
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            <p style="color:#000;font:normal 17px/25px georgia,serif;margin:0 0 15px">
             The annual
             <a class="css-5nb5nb et1n85g0" style="color:#286ed0;-webkit-text-decoration:underline;text-decoration:underline;font-family:inherit;font-size:inherit">
              Milken Institute Global Conference
             </a>
             hosted by the financier Michael Milken concluded yesterday. It drew some 3,500 academics, deal makers, politicians and celebrities this week to the Beverly Hilton, and closed with a Beach Boys concert that included the band’s 1964 hit “Don’t Worry Baby.” Few, though, seemed to be taking the advice. The conference, in which billionaires usually come to exchange outlooks for their portfolios and the economy, had a more downbeat tone than usual.
            </p>
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            <p style="color:#000;font:normal 17px/25px georgia,serif;margin:0 0 15px">
             <span style="font-weight:700;font-size:inherit;font-family:arial,sans-serif">
              The Goldman Sachs chief executive, David Solomon
             </span>
             , said he was worried about what the Fed’s rate increases would do to markets and the economy. “Facebook broke democracy,”
             <span style="font-weight:700;font-size:inherit;font-family:arial,sans-serif">
              Danielle Allen
             </span>
             ,
             <span style="font-weight:700;font-size:inherit;font-family:arial,sans-serif">
              a
             </span>
             <span style="font-weight:700;font-size:inherit;font-family:arial,sans-serif">
              Harvard political theorist
             </span>
             ,
             <span style="font-weight:700;font-size:inherit;font-family:arial,sans-serif">
             </span>
             said during a panel discussion on how to heal the political divide in America.
            </p>
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            <p style="color:#000;font:normal 17px/25px georgia,serif;margin:0 0 15px">
             Separately, according to a new report published this morning by Johnson Associates, a compensation consulting firm, most
             <span style="font-weight:700;font-size:inherit;font-family:arial,sans-serif">
              year-end bonuses on Wall Street are likely to drop
             </span>
             because the volume of deals so far this year is significantly down from 2021. The firm also expects hiring to slow as asset managers try to rein in spending. Last year, the average bonus paid to employees in New York City’s securities industries rose to $257,500, which is 20 percent higher than the record high in 2020,
             <a class="css-5nb5nb et1n85g0" style="color:#286ed0;-webkit-text-decoration:underline;text-decoration:underline;font-family:inherit;font-size:inherit">
              according to estimates published in March by New York State
             </a>
             .
            </p>
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            <p style="color:#000;font:normal 17px/25px georgia,serif;margin:0 0 15px">
             <span style="font-weight:700;font-size:inherit;font-family:arial,sans-serif">
              The big worry at Milken was debt …
             </span>
             Corporations have more debt than they did during the financial crisis in 2008. That might cause trouble now that both interest rates and costs are rising.
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             “The Fed is going to go too fast,” said Kathy Jones, a fixed income strategist at Charles Schwab. “The economy is going to break.”
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                FT
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               John Doerr, a venture capitalist, and his wife, Ann Doerr, are making a $1.1 billion donation to Stanford for a new school focusing on sustainability and climate change. (
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               <a class="css-5nb5nb et1n85g0" style="color:#286ed0;-webkit-text-decoration:underline;text-decoration:underline;font-family:inherit;font-size:inherit">
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              Russia-Ukraine war
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               The U.S. has provided intelligence that has helped Ukraine target and kill many of the Russian generals who have died in action in the war. (
               <a class="css-5nb5nb et1n85g0" style="color:#286ed0;-webkit-text-decoration:underline;text-decoration:underline;font-family:inherit;font-size:inherit">
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               A $700 million superyacht that U.S. officials say is linked to Vladimir Putin may elude sanctions by setting sail. (
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               German exports to Russia fell by 62 percent in March compared with February because of the economic sanctions imposed on Moscow. (
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                NYT
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               India’s purchases of Russian crude have soared since the start of the war. (
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                NYT
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               The former C.E.O. of the crypto exchange BitMEX, who pleaded guilty to violating the Bank Secrecy Act, is asking a judge for leniency. (
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                Bloomberg
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               Employees of a British law firm will be able to work remotely full-time — if they take a 20-percent pay cut. (
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               U.S. consumers are shopping, traveling and working out about as much as they were before the pandemic. (
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