• The co-founders of payments processor Stripe Inc. told employees that the company aims to either go public in a direct listing or allow employees to sell shares in a private-market deal within the next year, according to people familiar with the matter. Sources said that Stripe had previously sought to raise at least $2 billion from investors to cover a tax bill associated with employee stock units, but it was unclear if those plans were still in play. (The Wall Street Journal)
• House Speaker Kevin McCarthy (R-Calif.) said in an interview for Donald Trump Jr.’s podcast that House Republicans “won’t touch Medicare or Social Security” in their negotiations with the White House over spending cuts and raising the federal debt limit. (The Hill) Separately, Rep. Jodey Arrington (R-Texas), chair of the House Budget Committee, told Punchbowl News that the United States won’t default on its debt even if the debt limit is breached, pointing to an argument that the country may be constitutionally required to make payments and can’t default, but a Treasury Department spokesperson’s statement suggested disagreement, saying that any failure of the U.S. government to meet its payment obligations is “effectively a default.” (Punchbowl News)
• The Commerce Department reported that the U.S. gross domestic product grew at a rate of 2.9% on an annualized basis in the fourth quarter of 2022, down from a rate of 3.2% in the third quarter and slightly ahead of analysts’ expectations of 2.8%. Consumer spending increased 2.1%, down from 2.3% in the previous quarter. (CNBC)
• The Securities and Exchange Commission is looking into whether registered investment advisers are following rules related to the custody of clients’ crypto assets, according to three sources with knowledge of the inquiry. Investment advisers must meet certain requirements and be deemed a “qualified custodian” in order to legally hold client funds or securities, and since advisers typically store digital assets in a third-party system, the SEC’s enforcement team is asking for details on how they assessed such platforms, including FTX. (Reuters)

New unemployment claims number shows job market resilience

Axios

White House Under Pressure to Develop a ‘Plan B’ on Student Debt

Nancy Cook and Akayla Gardner, Bloomberg

The Biden administration is under pressure from Capitol Hill lawmakers and student debt advocates to develop contingency plans to cancel billions of dollars in student debt and to move forward quickly if the Supreme Court strikes down the administration’s initial executive action.

Yellen says Africa to shape world economy as US reengages

Mogomotsi Magome and Gerald Imray, The Associated Press

U.S. Treasury Secretary Janet Yellen watched Ford cars and pickup trucks being assembled at a plant in South Africa on Thursday, citing it as an example of cooperation between Washington and Africa as she begins the Biden administration’s big push to reengage with a continent that has 1.3 billion people and an abundance of economic potential.

Sen. Rick Scott is running for re-election pushing his controversial ‘Rescue’ plan

Marc Caputo, NBC News

Sen. Rick Scott of Florida is running for re-election, he said in an announcement first shared with NBC News, and has promised to push a controversial conservative plan that brought bipartisan condemnation last year. Scott released his plan, nicknamed “Rescue America,” when he led the National Republican Senatorial Committee and packed it with red-meat conservative proposals on welfare, immigration, gender, crime and education.

Democrats launch dads caucus to focus on family issues, push for paid leave

Gabe Ferris, ABC News

Four House Democrats launched the Congressional Dads Caucus on Thursday, joining together around a legislative agenda that includes expanding parental leave, the child tax credit and other family-first initiatives.

PwC reports improvements in audit quality

Michael Cohn, Accounting Today

PricewaterhouseCoopers is making efforts to improve its results on annual audit inspections by the Public Company Accounting Oversight Board, especially in comparison to its fellow Big Four firms.

Biden blasts House GOP for trying to ‘destroy’ economy over debt ceiling

Tony Romm, The Washington Post

“This nation has gone through too much. We’ve come too far to let that happen,” Biden said, promising to “veto everything” Republicans try to send to his desk.

Consumer Spending, Inflation Data Due in Commerce Department Report

Austen Hufford, The Wall Street Journal

A report Friday will give details on the economic health of U.S. consumers at the end of a year, when they faced elevated inflation and rising interest rates.

A New Fed Working Paper Argues That Higher Interest Rates Are Actually Increasing the Wealth Gap

Tracy Alloway, Bloomberg

What matters most for building generational wealth in America? It might just be mortgage rates. A new working paper from the Federal Reserve argues that the central bank’s recent increases in benchmark interest rates may be exacerbating wealth inequality rather than reducing it.

Debt Ceiling Clash Revives Dispute Over Paying Bondholders First

David Harrison, The Wall Street Journal

Some House Republicans want Treasury to give priority to servicing debt if needed, but Yellen warns of chaos.

Scott pushes plan to prioritize certain payments if debt limit bill stalls

Alexander Bolton, The Hill

Sen. Rick Scott (R-Fla.) circulated a letter to Senate colleagues Thursday urging them to back his plan to ensure the federal government does not default on interest payments or payments to Social Security beneficiaries if Congress fails to raise the debt limit before the Treasury Department runs out of borrowing authority.

US dollar hits reverse gear as Fed cedes rate-rise ‘driver’s seat’

Kate Duguid, Financial Times

Focus has shifted to the European Central Bank and Bank of Japan after last year’s big increase in US borrowing costs.

IRS staff would be banned from telework under GOP bill until tax return backlog is eliminated

Peter Kasperowicz, Fox News

Internal Revenue Service employees would be banned from telework under a new Republican bill until the IRS makes more progress on the millions of unprocessed tax returns that piled up during the COVID pandemic.

Key Republicans oppose House GOP bill to abolish tax code

Aris Folley and Tobias Burns, The Hill

Republican supporters of a bill aimed at abolishing the tax code as we know it are running into an early barrier in the House: their own leadership.

Democrats reintroduce bill to give feds 8.7% average pay raise next year

Drew Friedman, Federal News Network

A bicameral pair of Democrats proposed a bill to give federal employees a pay raise in 2024, in what has become an annual tradition in recent years.

Wells Fargo Chief Made $24.5 Million Last Year

Ben Eisen, The Wall Street Journal

Charles Scharf was eligible for his full target pay of $27 million but turned down a raise

The humbling of Goldman Sachs

The Economist

Goldman Sachs has always seen itself as exceptional. When the bank floated its shares in New York in 1999 it declared: “We have an uncompromising determination to achieve excellence in everything we undertake.”

Vanguard’s net inflows fall by half to $151bn

Chris Flood, Financial Times

New business drops but world’s second-largest asset manager weathers market storm.

Blackstone Earnings Fall as Firm Misses Asset Target

Miriam Gottfried, The Wall Street Journal

A drop in the value of its real-estate investments contributed to the profit decline.

Visa revenue growth slows more as tough economy sobers spending

Mehnaz Yasmin, Reuters

Visa Inc’s revenue growth continued to wind back to pre-pandemic levels in the first quarter as the post-lockdown travel craze ebbed and consumer spending slowed in a tough economy.

We Asked ChatGPT to Make a Market-Beating ETF. Here’s What Happened

Sam Potter and Katherine Greifeld, Bloomberg

What happens when you ask the hottest AI tool in the world to design an ETF that can beat the US equity market? It tells you the same thing every frustrated stock manager does.

Bill Ackman says Hindenburg’s Adani report ‘highly credible’

Reuters

Billionaire U.S. investor Bill Ackman said on Thursday that he found short-seller Hindenburg Research’s report on India’s Adani Group “highly credible and extremely well researched.” Shares in seven listed group companies of Adani lost $10.73 billion in market capitalization in India on Wednesday after the U.S. short-seller released the report, which accused the conglomerate of improper use of offshore tax havens.

Who will Florida Gov. Ron DeSantis and trustees pick for top investment executive?

Rob Kozlowski, Pensions & Investments

Engaged in a high-profile political battle against ESG investing, Florida Gov. Ron DeSantis and his Cabinet have launched a search for a top investment management official overseeing $230 billion — with a one-line job description.

House Republicans have a playbook to fight ESG investing

Eleanor Mueller and Zachary Warmbrodt, Politico Pro

The legislation has little chance of becoming law. But the bills are a framework for how House Republicans want to try to pressure Wall Street and its regulators.

The housing market is ‘thawing’ from a ‘months-long freeze,’ Freddie Mac says, as mortgage rates continue their downward trek 

Aarthi Swaminathan, MarketWatch

The 30-year mortgage rate is averaging at 6.13%, Freddie Mac said in its latest weekly survey on Thursday.

U.S. new home sales rise by 2.3%, despite broader sector weakness

Aarthi Swaminathan, MarketWatch

New home sales at 616,000 annual rate in December versus 602,000 in prior month, led by strong sales in the Midwest.

US Apartment Rents Rise at Slowest Annual Pace Since Mid-2021

Alexandre Tanzi, Bloomberg

US apartment rents rose 4.7% in December from a year earlier, the slowest pace since July 2021, according to data from real estate firm Rent.com released Thursday.

With eyes on FTX bankruptcy, U.S. regulator seeks more due diligence authority

Chris Prentice and Michelle Price, Reuters

A top official with the U.S. Commodity Futures Trading Commission (CFTC) is pressing lawmakers to give regulators authority to dig into the books of any firm seeking to acquire significant interest in any registered market player.

Moody’s Is Working on Scoring System for Crypto Stablecoins

Emily Nicolle, Bloomberg

Moody’s Corp. is working on a scoring system for stablecoins, the crypto sector’s most traded tokens, as the asset class grows and faces increased scrutiny from regulators and investors.

FTX Owes Money to Netflix, Binance, Wall Street Journal, Filing Shows

Sandali Handagama, CoinDesk

Lawyers for the bankrupt crypto exchange published an extensive list of creditors that includes media companies, airlines, universities and charities.

Warren, Wyden call for U.S. audit watchdog to clamp down on crypto

Sam Sutton, Politico Pro

Sens. Elizabeth Warren (D-Mass.) and Ron Wyden (D-Ore.) are urging the Public Company Accounting Oversight Board to probe firms that provided a clean bill of health to troubled crypto businesses.

DeFi Used to Be Crypto’s Hottest Sector. Now It’s Facing a Big Downturn.

Muyao Shen, Bloomberg

Declining interest in decentralized finance is calling into question whether it really is the next frontier of crypto.

FTX opposes new bankruptcy investigation as it probes Bankman-Fried connections

Noele Illien, Reuters

FTX has objected to a U.S. Department of Justice request for an independent investigation into the once-prominent crypto exchange’s collapse, saying it is already conducting a wide-ranging probe that includes family members of FTX founder Sam Bankman-Fried.

Sen. Ted Cruz Wants to Force Capitol Hill Vending Machines to Accept Crypto

Cheyenne Ligon, CoinDesk

On Wednesday, Cruz introduced a concurrent resolution that, if adopted, would require the Architect of the Capitol, the Secretary of the Senate and the Chief Administrative Officer of the House of Representatives to only contract with food service contractors and vending machine operators that accept cryptocurrency for the Capitol complex in Washington, D.C.