Category: US

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CNN
 — 

“We want to know what led to this, so we can hopefully try and prevent something similar from happening in the future.”

Those words, from Dr. David Relman, an infectious disease expert and microbiologist at Stanford University, reflected the national conversation around the origins of Covid-19 in 2021.

Did it come from a lab? Was it a zoonotic transfer? Something else? Surely, with time, an answer would become clear.

But now, three years removed from the start of a pandemic that is still disrupting daily life, an assessment from the US Energy Department is only adding to the confusion about what really happened in Wuhan, China, in late 2019.

The department has assessed that the Covid-19 pandemic most likely emerged from a laboratory leak in China, according to a newly updated classified intelligence report first reported by The Wall Street Journal on Sunday.

Yet two sources said that the department assessed in the intelligence report that it had “low confidence” that the coronavirus accidentally escaped from a lab in Wuhan, CNN’s Jeremy Herb and Natasha Bertrand reported.

Intelligence agencies can make assessments with either low, medium or high confidence; and a low confidence assessment generally means that the information obtained is not reliable enough or is too fragmented to make a more definitive analytic judgment or that there is not enough information available to draw a more robust conclusion.

National security adviser Jake Sullivan acknowledged on CNN’s “State of the Union” on Sunday that the intelligence community is divided on the matter, while noting that President Joe Biden has put resources into getting to the bottom of the origin question.

The intelligence community has been split on the matter for years.

For the better part of 2020, advocates of the lab leak theory had to fight against claims they were being xenophobic or racist — in part thanks to anti-Chinese rhetoric from then-President Donald Trump, who embraced the theory.

An inquiry launched by Trump’s State Department, which sought to investigate whether China’s biological weapons program could have had a greater role in the pandemic’s origin in Wuhan, was shut down early on in the Biden administration.

A letter from public health experts published in February 2020 in The Lancet, an influential scientific journal, also set the tone early by declaring the virus to have a natural origin.

But the lab leak theory has gained more traction with time, especially following reports that the intelligence community found evidence that researchers at the Wuhan Institute of Virology fell seriously ill with a mysterious virus in November 2019 – although it’s not clear whether they contracted Covid-19 and no further evidence has emerged to corroborate that report.

By July 2021, senior Biden administration officials overseeing an intelligence review into the origins believed that the lab leak theory was at least as credible as the possibility that the virus emerged naturally in the wild – a dramatic shift from a year earlier, when Democrats publicly downplayed such an idea.

The latest intelligence assessment was provided to Congress as Republicans on Capitol Hill have been pushing for further investigation into the theory, while accusing the Biden administration of playing down its possibility.

House Foreign Affairs Chairman Michael McCaul said Sunday he was “pleased” the Energy Department “has finally reached the same conclusion that I had already come to.” (The Texas Republican had released a 2021 report that concluded that “the preponderance of the evidence” showed the pandemic originated with a leak from the Wuhan lab.)

“Now is the time for the entire Biden administration to join the Department of Energy, the Federal Bureau of Investigation, and the majority of Americans by publicly concluding what common sense told us at the start – the COVID-19 pandemic originated from a lab leak in Wuhan, China,” McCaul said in a statement.

Sullivan said Sunday that Biden had directed the national laboratories, which are part of the Department of Energy, to be brought into the assessment.

“Right now, there is not a definitive answer that has emerged from the intelligence community on this question,” Sullivan told CNN’s Dana Bash.

“Some elements of the intelligence community have reached conclusions on one side, some on the other. A number of them have said they just don’t have enough information to be sure.”

So where does that leave us? Not far from where we started.

Past pandemics have emerged from natural transmission through animals, and it often takes months or years to discover the host that the virus passed through as it adapted to infect humans.

In some cases, as in Ebola, the original natural source has never been identified. And it’s been more than 40 years since the first cases of Ebola.

So why does it matter where Covid-19 came from? As Relman, the Stanford microbiologist, previously noted to CNN, finding the answer can help prevent the next pandemic.

London
CNN
 — 

The European Union has sanctioned a Russian national and the subsidiary of Russia’s Wagner Group in Sudan, Meroe Gold, for facilitating the exploitation of Sudan’s gold wealth, after a CNN investigation into the group’s activities last July.

The EU named a Russian national – Mikhail Potepkin – and Yevgeny Prigozhin’s Wagner Group subsidiary in Sudan, Meroe Gold, listing them “for serious human rights abuses, including torture and extrajudicial, summary or arbitrary executions and killings, in several countries, including Sudan,” according a statement published Saturday on the EC’s legal platform EUR-LEX.

“Mikhail Potepkin is the director of Meroe Gold, a front company for the Wagner Group’s operations in Sudan, and is involved in the activities of M-Invest, Meroe’s parent company. He has a leadership role in the Wagner Group in Sudan and has close ties to Yevgeny Prigozhin,” according to a statement from the European Council.

A CNN investigation last July was the first to expose the mechanism by which Wagner and Meroe Gold were operating in Sudan, circumventing US sanctions on the group.

Multiple interviews with high-level Sudanese and US officials and troves of documents reviewed by CNN last summer painted a picture of an elaborate Russian scheme to plunder Sudan’s riches in a bid to fortify Russia against increasingly robust Western sanctions and to buttress Moscow’s war effort in Ukraine.

The evidence also suggested that Russia colluded with Sudan’s beleaguered military leadership, enabling billions of dollars in gold to bypass the Sudanese state and to deprive the poverty-stricken country of hundreds of millions in state revenue.

In exchange, CNN’s investigation found, Russia lent powerful political and military backing to Sudan’s increasingly unpopular military leadership as it violently quashes the country’s pro-democracy movement

Despite Yevgeny Prigozhin’s denials, the European Council has now confirmed CNN’s findings, stating that Meroe Gold continued to operate in Sudan as a “hedge for the Wagner Group’s operations” via a Sudanese shell company.

“Through its affiliation with the Sudanese army, the Wagner Group has secured the right to mine Sudanese gold and export it to Russia,” the Saturday statement by the European Council said.

A version of this story first appeared in CNN Business’ Before the Bell newsletter. Not a subscriber? You can sign up right here. You can listen to an audio version of the newsletter by clicking the same link.

New York
CNN
 — 

Analysts have long expected a slowdown in the US labor market, but for the past 10 months, the data has come in better than expected.

That may sound like a good thing for the economy, but as the Federal Reserve attempts to fight inflation, the still-hot jobs market is signaling that more painful interest rate hikes could be ahead.

But lately, some economists have begun to worry that the data on which Fed officials rely is becoming increasingly inaccurate. The number of people responding to labor market and inflation surveys has been declining for years, and the pandemic accelerated that slowdown. That causes more volatility in the incoming data and hence more volatility in markets, economists say.

The Job Openings and Labor Turnover Survey, or JOLTS, a monthly data set that’s closely watched by the Fed and markets, has seen its response rate fall sharply since the pandemic — it is now just under 31%.

Julia Coronado, founder of MacroPolicy Perspectives and president of the National Association for Business Economics, said earlier this month that the decline in responses made the survey “basura,” the Spanish term for trash.

It’s not just JOLTS — the response rate for the Employment Cost Index, a pay measure also watched by the Fed, has dropped from about 75% in 2012 to under 50% today, according to Bureau of Labor Statistics data. The response rate to the Current Employment Statistics survey, which reports on payroll and wages each month, has fallen from 60% in 2019 to under 45% at the end of 2022.

CNN spoke with Torsten Slok, chief economist at Apollo Global Management about the declining rates. The interview has been edited for length and clarity.

This seems like a long-term problem … Is there an easy fix?

With the growth of spam and a decline in the number of telephone landlines there has been a structural decline in response rates and there is no easy solution to this problem, which is getting gradually worse and worse.

To what extent are declining response rates to surveys actually impacting the data we use? Are we talking about major gaps in our reading of the economy?

It is absolutely critical for the Fed and markets that the incoming data is as reliable as possible. For example, is the strong data we have seen in January for employment and retail sales a true description of what is going on? Is it driven by problems with seasonal adjustments, or problems measuring employment and consumer spending in the economic surveys?

Is the Fed aware of this and how do they factor that in as they determine policy?

When the macro data becomes unreliable there is a higher tendency to put weight on anecdotal evidence, which for example can be seen at the moment where the announced tech layoffs seem like a big deal — but they are basically irrelevant when compared with the recent data in the latest employment report for January, where the economy created 517,000 jobs.

The leisure and hospitality sector alone added 128,000 jobs in January, more than all tech layoff announcements combined. Is this a true description of what is going on or is the source of this discrepancy some measurement problems with the data we are looking at?

What kind of volatility does this cause in markets? Why?

With the Fed’s dual mandate of full employment and stable prices it is absolutely critical that the Fed and markets have a true description of what is going on with inflation and unemployment.

▸ Last year was tough for most investors, Warren Buffett included.

Berkshire Hathaway, Buffett’s conglomerate, reported big losses on Saturday. In total, it lost about $22.8 billion in 2022 — with around $53.6 billion in unrealized losses on its investments.

Still, Buffett pointed to the company’s operating earnings in his annual letter to investors — those are the profits that come from businesses and not stock holdings, and are Buffett’s preferred measure of profitability. Those earnings reached what Buffett called a “record” — $30.8 billion in 2022, topping the $27.5 billion in the prior year.

Buffett, meanwhile, sang the praises of share buybacks in his letter.

The 92-year-old “Oracle of Omaha” wrote that “when you are told that all repurchases are harmful to shareholders or to the country, or particularly beneficial to CEOs, you are listening to either an economic illiterate or a silver-tongued demagogue (characters that are not mutually exclusive).”

▸ Goldman Sachs will host its investor day on Tuesday (February 28). This will be a big one for the company’s leaders as they hope to reset after a 2022 that saw the bank’s profits slump by nearly half.

It’s only the second annual investor meeting in 154 years, and comes just weeks after the company said its consumer lending arm has lost almost $3 billion since 2020. The bank has recently undergone a series of layoffs and CEO David Solomon has faced criticism, and a pay cut, from shareholders.

▸ There are fewer US restaurants today than in 2019. It’s not clear when — if ever — they’re coming back, reports CNN’s Danielle Wiener-Bronner.

Last year, there were about 631,000 restaurants in the United States, according to data from Technomic, a restaurant research firm. That’s roughly 72,000 fewer than in 2019, when there were 703,000 restaurants.

That number could fall even further this year, to about 630,000 locations, according to Technomic, which doesn’t foresee the number of restaurants in the United States returning to pre-Covid levels even by 2026.

Chipotle, Starbucks, Chick-fil-A, McDonald’s and KFC-owner Yum Brands, meanwhile, have each donated $1 million to Save Local Restaurants, a coalition opposing a California law that could set the minimum wage at up to $22 an hour and codify working conditions for fast-food employees in the state.

In a time when the economic data has delivered mixed messages or flat out busted expectations, economists’ predictions for the year ahead are growing increasingly opaque, reports CNN’s Alicia Wallace.

The National Association for Business Economics’ latest survey, released Monday, shows a “significant divergence” among respondents about where they think the US economy is heading in 2023, the organization’s president said.

“Estimates of inflation-adjusted gross domestic product or real GDP, inflation, labor market indicators, and interest rates are all widely diffused, likely reflecting a variety of opinions on the fate of the economy — ranging from recession to soft landing to robust growth,” Julia Coronado, NABE’s president, said in a statement.

Nearly 60% of survey respondents said they believe the United States had a more than 50% shot of entering a recession in the next 12 months.

When such a recession would start was another matter: 28% said first quarter, 33% said second quarter, and 21% said third quarter.

New York
CNN
 — 

Twitter’s massive job cuts continued this weekend, as the company cut about 10% of its remaining staff, according to a report in the New York Times.

The latest axing of about 200 jobs takes the company’s headcount down to under 2,000 staffers, according to the Times. That’s down from the 7,500 who worked for the social media platform before Elon Musk bought the company last fall for $44 billion.

The paper reported that the cuts hit product managers, data scientists and engineers who worked on machine learning and site reliability, which, it said, helps keep Twitter’s various features online. The “monetization infrastructure team,” which maintains the services through which Twitter makes money, was reduced to fewer than eight people from 30, according to the report.

Twitter did not respond to a request for comment from CNN on the Times report.

Twitter has been losing advertisers since Musk took over. Ad revenue had been responsible for more than 90% of company revenue. Musk’s plans to raise revenue directly from Twitter users by selling verification of accounts has thus far not worked as planned.

CNN
 — 

A series of House Republican committees are plotting to launch investigations into the toxic train disaster in East Palestine, Ohio, multiple committee aides told CNN.

GOP lawmakers are vowing to use their oversight power to dig into what they describe as the Biden administration’s flawed response to the train wreck, which has left East Palestine’s residents afraid to use the city’s air and municipal water after a train carrying toxic chemicals derailed on February 3.

They have also left the door open to holding hearings on the subject, including potentially bringing in Environmental Protection Agency Administrator Michael Regan and Transportation Secretary Pete Buttigieg to testify publicly, the aides said, though such decisions have not yet been made.

The GOP’s increased urgency for oversight comes as several lawmakers have criticized President Joe Biden for not visiting East Palestine. Biden told reporters on Friday he has no plans to travel to the site of the derailment and defended his administration’s response to the wreck.

The House committees on Transportation and Infrastructure, Energy and Commerce and Oversight are among the panels vowing to find answers to what happened, as well as hold the Biden administration and rail industry accountable for the fallout.

Some GOP members of the committees are also discussing a potential field hearing in East Palestine, though no official plans have been made yet, sources familiar with the talks tell CNN.

Axios first reported on the committees’ plans.

The Energy and Commerce Committee has asked the EPA to appear before the panel’s Environment, Manufacturing & Critical Materials subcommittee chaired by GOP Rep. Bill Johnson, who represents East Palestine, a committee aide told CNN.

Johnson and Energy and Commerce Chair Cathy McMorris Rodgers, a Washington state Republican, formally kicked off their probe on February 17, when they sent a letter to Regan demanding answers on a timeline of events relating to the train wreck, a list of the chemicals on board, materials relating to the EPA’s and local agencies’ response, as well as other information regarding the derailment.

Johnson and McMorris Rodgers gave the EPA until March 3 to respond to their request.

The Energy and Commerce Committee has asked for an all-members briefing, a committee briefing, as well as a hearing date from EPA officials. A source familiar told CNN they are still awaiting a response.

The Transportation and Infrastructure Committee plans to “keep Members informed as facts come out,” committee spokesman Justin Harclerode told CNN. The committee is also closely watching the National Transportation Safety Board’s investigation into the incident.

“The important thing is to learn exactly what happened, what factors played a role in the accident, and what factors did not. The Committee is staying engaged on this issue, but no one should jump to any conclusions or act without all the facts. Which is exactly what the NTSB is working to provide through their investigation,” Harclerode said.

House Oversight Chairman James Comer, meanwhile, sent a letter to Buttigieg on Friday, in which he called the incident “an environmental and public health emergency that now threatens Americans across state lines.” The Kentucky Republican requested that Buttigieg turn over a series of documents relating to the derailment, including when the administration first learned of the incident and communications regarding the Pipeline and Hazardous Materials Safety Administration’s handling of materials in the derailment.

“At this time, Chairman Comer is focused on acquiring the documents and information requested in his February 24 letter to Secretary Buttigieg,” Comer spokesman Austin Hacker told CNN.

On Monday, Senate Majority Leader Chuck Schumer will call on the CEO of Norfolk Southern Alan Shaw to testify before the Senate’s Environment and Public Works Committee, a source familiar with the matter tells CNN. That committee will hold an oversight hearing on the toxic train derailment in March.

While it’s still not clear when or if Shaw would agree to testify as part of that first hearing, Schumer’s request comes as Democrats now have subpoena power in the Senate. There are still several steps to go before this would rise to that level, but unlike last Congress, when there had to be bipartisan support for subpoenas in the Senate under the power sharing agreement, that is no longer the case.