Kentucky Gov. Andy Beshear chosen to co-chair Appalachian Regional Commission

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Kentucky Gov. Andy Beshear has been chosen to serve as the 2023 states’ co-chair of the Appalachian Regional Commission.

In the role, Beshear will work with federal co-chair Gayle Manchin and other governors to boost economic growth across 423 counties in 13 states, the Appalachian Regional Commission said Wednesday in a media release. In addition to facilitating investments, the states’ co-chair also hosts the commission’s annual conference.

The ARC said it invested nearly $240 million in the region last year, which attracted nearly $1.6 billion in private investments. The projects funded will create or retain more than 22,000 jobs and provide training for new opportunities in emerging sectors.

WV HAS FOUR PROJECTS BEING FUNDED BY THE APPALACHIAN REGIONAL COMMISSION

“I am honored to have been chosen by governors of both parties to co-chair the Appalachian Regional Commission,” Beshear said. “ARC investments are building better lives for current and future generations here in Kentucky and across the ARC region.”

Manchin, the wife of West Virginia Sen. Joe Manchin, said she welcomes Beshear and looks forward to collaborating with him and other governors “as we advance ARC’s mission to bring economic parity and transformational opportunities to the region’s 26 million people.”

 

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How to balance retirement and emergency savings in a shaky economy

US Top News and Analysis 

Jamie Grill | Getty Images

It’s not easy to prioritize financial goals, especially when choosing between two essentials in an unsteady economy: saving for retirement or building your emergency fund. 

While there are higher 401(k) contribution limits for 2023, you shouldn’t skip rainy day savings to max out your retirement plan, experts say. 

Indeed, more than half of savers are prioritizing short-term financial goals in 2023, including emergency savings, according to a recent study from Fidelity Investments. And a recent Personal Capital survey found building an emergency fund is a top priority for 2023.

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“It’s always a balance,” said certified financial planner Catherine Valega, founder of Green Bee Advisory in Boston. While maxing out your 401(k) should be the goal, your emergency savings is also important, she said.

Leslie Beck, a Rutherford, New Jersey-based CFP and owner of Compass Wealth Management, said she has a “rule of thumb” for how to decide between retirement and emergency savings.

She always recommends contributing enough money to your 401(k) to get the full company match. Then, if your emergency savings are short after that, you should “definitely” divert the funds, she said.

How to know if your emergency savings is enough

Comstock Images | Stockbyte | Getty Images

If you’re single, Beck suggests keeping “close to a year’s worth of essential expenses” to cover necessities such as your home, food and utilities. 

“You should have a year’s worth [of essential expenses] in case there’s a downturn in the employment market, which we may or may not be heading into,” she said, noting that it often takes longer than expected to find a job after a layoff, especially for higher-compensated employees.

However, her recommendation changes for dual-earning couples. “I cut that back to six months, maybe even three months, depending on what industry you’re employed in,” she said. 

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How to recover from a holiday debt hangover

And there may be some flexibility if you have access to a home equity line of credit, which may be another source of cash for emergency expenses, Beck said. But you need to be “very judicious” when tapping equity because borrowing after a job loss can put your home at risk, she said.

Valega suggests an emergency fund of 12 to 18 months of expenses, admitting that she’s “more conservative than most,” but says the exact number depends on your career sector and personal preference. For example, she may encourage clients in tech to set aside more than heath-care workers.

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December’s jobs report fuels optimism that the economy could still pull off a soft landing

US Top News and Analysis 

A “Now hiring” sign is displayed on the window of an IN-N-OUT fast food restaurant in Encinitas, California, May 9, 2022.
Mike Blake | Reuters

December’s strong job growth combined with slowing wage inflation is fueling optimism that the economy might just see a soft landing.

But economists disagree on whether that will be the case, given that a strong jobs market could continue to ignite price increases in the service sector and keep the Federal Reserve raising interest rates. Those higher interest rates could slow the economy further and push it into a recession.

According to the Bureau of Labor Statistics, the economy added 223,000 jobs in the final month of 2022, less than the 256,000 in November. Unemployment fell to 3.469%, which economists say is the lowest since 1969.

Meanwhile, average hourly wages increased 4.6% on an annual basis, less than the 5% economists expected. On a monthly basis, that was a gain of 0.3%, compared to Dow Jones expectations of 0.4%. The November wage gains were revised lower to a monthly gain of 0.4%, versus 0.6% previously reported.

“This may be the last hoorah. It’s about as close to a Goldilocks number the Fed could hope for at this point in time,” said Diane Swonk, KPMG chief economist. “You had a cooling in wage gains with an increase in participation and a fall in the unemployment rate. You hit it on all three notes.”

Stocks rallied after the report, and Treasury yields — which move opposite price — fell. Economists polled by Dow Jones expected 200,000 jobs were added in the month, and that the pace of job creation will continue to slow sharply.

S&P 500 rallies after December jobs report

Consumer inflation has been coming down. Economists surveyed by Dow Jones expect the consumer price index rose by 6.5% in December on an annual basis, down from 7.1% in November. The December CPI is slated for release Jan. 12.

“What the Fed is looking at is it is now getting into the stickiest part of inflation and that’s wages, and the market is looking at as the trend is in the right direction,” said Swonk.

Swonk said she expects job growth to slow more and the economy to fall into a shallow recession. Yet, the picture of the labor market is one of the strongest ever.

“We’ve got 4.5 million new payrolls for the year. That’s the second strongest year on record,” said Swonk. She said 2022 was second to 2021, when there were 6.7 million jobs created. “The only thing close was 1946 when soldiers returned to civilian work after World War II.”

Mark Zandi, chief economist at Moody’s Analytics, said the report is encouraging and confirms his expectation that there will be a soft landing for the economy. “It was about as perfect a report as one could ask for,” he said. “I don’t think there were any blemishes at all in the report. It shows a job market that is slowly but surely cooling off.”

While many economists expect a recession, Zandi points to strong growth even with a slowdown in the housing sector. According to the Atlanta Fed, gross domestic product was growing at a strong rate of 3.8% in the fourth quarter of 2022. Zandi notes wage growth is a full percentage point slower than when it peaked in the spring.

“This is consistent with the Fed threading the needle of slowing growth sufficiently to slow inflation but not pushing the economy into recession,” said Zandi. “We’re calling it a ‘slowcession.'”

The decline in unemployment came as the participation rate increased slightly to 62.3%. That is still a full percentage point below where it was in February 2020, the month before the Covid-19 pandemic hit.

“It’s one thing to say momentum in the labor market is moderating, but it’s another thing to say imbalances are being removed,” said Michael Gapen, chief U.S. economist at Bank of America.

‘Something in the report for everyone’

The Federal Reserve has been hoping to crush inflation by raising interest rates enough to cool the economy, and that would be through the labor market. But with its fed funds rate at 4.25%-4.50%, the Fed has targeted more rate hikes until it reaches its forecast of 5.1% for the end, or terminal rate.

Gapen and other economists expect the Fed to increase rates by a half percentage point on Feb. 1, while traders in the futures market see just a quarter point hike. Gapen said the strong jobs report reinforces his rate hike forecast.

“There’s something in this report for everyone, but to look at this and say ‘soft landing,’ I don’t agree,” said Gapen. “The unemployment rate is falling and payroll growth is at 223,000. The Fed wants it below 100,000, probably more like 80,000.”

He expects to see negative job growth this year, after the Fed’s rate hikes. There have been seven rate hikes so far since March. “Here we are nine months later, and you’re still adding jobs at what would be considered a blowout rate in a normal recovery,” he said.

Gapen notes that there was still a surprisingly high 10.5 million job openings in November, according to the Jobs Opening and Labor Turnover Survey, released Wednesday.

“From the point of view of an unemployed worker looking for jobs, it’s still a very good report and it’s still a very good labor market,” said Gapen. “If you’re a policy maker things are going to stay persistently strong in a way you can’t meet your inflation mandate.”

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FDA approves Alzheimer’s drug that slowed cognitive decline in clinical trial

US Top News and Analysis 

In this article

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MRI image of brain showing area of Alzheimer patient.
Getty Images

The Food and Drug Administration on Friday granted accelerated approval for the Alzheimer’s drug lecanemab, developed by Biogen and the Japanese pharmaceutical company Eisai.

The FDA’s approval comes after clinical trial results published in November indicated that lecanemab slows cognitive decline somewhat in people with mild impairment due to Alzheimer’s disease, but the treatment also carries risks of brain swelling and bleeding.

The agency can accelerate approval of a drug to quickly bring it to market if it’s expected to help patients suffering from serious conditions more than what is currently available. Biogen and Eisai, which developed the drug together, applied for accelerated approval in July.

“Alzheimer’s disease immeasurably incapacitates the lives of those who suffer from it and has devastating effects on their loved ones,” said Dr. Billy Dunn, director of the FDA’s neuroscience division, in a statement. “This treatment option is the latest therapy to target and affect the underlying disease process of Alzheimer’s, instead of only treating the symptoms of the disease.”

The decision on lecanameb comes after Congress issued a scathing report last week about how the FDA handled the controversial approval of another Alzheimer’s drug developed by Biogen and Eisai, called Aduhelm. The 2021 approval of that treatment, which experts said did not show a clear clinical benefit, was “rife with irregularities,” according to the report.

The congressional report said the “FDA must take swift action to ensure that its processes for reviewing future Alzheimer’s disease treatments do not lead to the same doubts about the integrity of FDA’s review.”

Lecanemab is a monoclonal antibody that targets a protein called amyloid which builds up on the brain in people with Alzheimer’s. The antibody is administered intravenously every two weeks in doses determined by a patient’s body weight with 10 milligrams given per kilogram.

The clinical trial results, published in the New England Journal of Medicine, found that cognitive decline was 27% slower over 18 months in people who received lecanemab compared with those who did not receive the treatment. The study was funded by Biogen and Eisai.

Cognitive decline was measured using a system called the clinical dementia rating, which is an 18-point scale with a higher score indicating a greater level of impairment. It measures cognitive functions such as memory, judgement and problem solving.

Alzheimer’s disease progressed 1.21 points on average in the group that received lecanemab compared with 1.66 points in the group that did not receive the treatment, a modest difference of 0.45 points.

Nearly 1,800 people ages 50 to 90 years old with early Alzheimer’s participated in the trial, about half of whom received lecanemab and half of whom did not.

Safety concerns

Though lecanemab may slow cognitive decline somewhat, the treatment also carries risks.

Nearly 13% of those who received lecanemab developed brain swelling compared with about 2% in the group that didn’t receive the treatment. However, most of these cases were mild to moderate in severity, did not cause symptoms, and typically resolved within four months.

About 3% of patients who received lecanemab had more serious brain swelling with symptoms that included headache, visual disturbance and confusion.

About 17% of those who received lecanemab had brain bleeding, compared with 9% in the group that did not take the treatment. The most common symptoms associated with the bleeding was dizziness.

Overall, 14% of people who received lecanemab suffered serious adverse events in the clinical trial, compared with 11% of those who did not receive the treatment.

The authors of the study said longer clinical trials were needed to determine the efficacy and safety of lecanemab in patients with early Alzheimer’s disease.

The death of a clinical trial participant in the Chicago area could also possibly be linked to lecanemab, according to a research letter published in the New England Journal of Medicine this week.

The 65-year-old suffered a stroke and was hospitalized four days after their third lecanemab infusion. A CT scan performed after the patient’s stroke found extensive bleeding in the brain. An MRI performed 81 days before the stroke had not found any bleeding.

The patient had also received a medication, called t-PA, used to break apart blood clots that cause strokes. But extensive brain bleeding would be an unusual complication of this medication alone, according to the physicians who penned the research letter.

Researchers involved in the lecanemab clinical trial, in a response letter, argued that the blood clot medication appeared to be the immediate cause of the patient’s death, with the first symptoms occurring 8 minutes after they received an infusion of the blood-clot buster.

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Amazon still ‘fully committed’ to Alexa despite job cuts, hardware chief says

US Top News and Analysis 

In this article

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David Limp, senior vice president of devices and services at Amazon.com Inc., presents the Amazon Echo Dot smart speaker during an unveiling event at the company’s Spheres headquarters in Seattle, Washington, U.S., on Thursday, Sept. 20, 2018.
Andrew Burton | Bloomberg | Getty Images

Amazon hasn’t given up on its Alexa voice assistant, hardware chief Dave Limp said Friday, even though the team behind the technology was a prime target of the largest layoffs in the company’s history.

Amazon last year began laying off employees in its corporate workforce as part of CEO Andy Jassy’s broader move to curtail expenses amid a worsening economic outlook and slowing revenue growth. The company’s devices and services organization, which oversees the development of products such as Alexa, Echo smart speakers and Kindle e-readers, was among the groups affected.

Just under 2,000 people in Limp’s division were let go as a result of the job cuts, he told CNBC’s Jon Fortt in an interview on TechCheck.

This week, Jassy said the company aims to eliminate more than 18,000 roles, mostly in its stores and human resources organizations. Previously, a person familiar with the matter told CNBC that 10,000 employees would be cut, but noted that the number was fluid and could change.

Alongside the layoffs, Amazon has also frozen new hiring in its corporate workforce, and shuttered some of its more experimental projects, such as its telehealth service and a video-calling device for kids.

“What we did is we looked at projects that were probably, in this uncertainty, the risk-reward for those projects and what they might deliver for customers wasn’t quite there,” Limp said. “Part of that was in Alexa, part of that was in other parts of my organization.”

Still, Amazon remains “fully committed” to the Alexa unit despite the company taking steps to be more disciplined with costs in “a very uncertain economy,” Limp said.

“There’s still thousands and thousands of people working on this project,” said Limp, speaking from the Consumer Electronics Show in Las Vegas. “It’s a big project.”

Since its launch in 2014, Amazon has made big investments in Alexa and assigned top talent to grow the technology, largely at the direction of Jeff Bezos, who first pitched Alexa and strongly believed voice would play a key role in how people interact with computers in the future. At one point, Amazon had 5,000 people working on Alexa and Echo.

Amazon has sold devices such as the Echo at or near cost because its goal isn’t to make money from them. Instead, the company sees them as a vehicle for bringing customers into the broader Amazon ecosystem, where they’ll purchase something from amazon.com or its other properties.

Limp rejected the idea that Amazon may have to raise prices significantly as it takes a harder look at costs. The prices of some commodities used in Amazon devices, such as memory and displays, has increased, and those could get passed along to consumers, he said. But generally Amazon’s hardware business model remains the same, Limp said.

“We try to sell our products roughly at break-even, sometimes a little bit more,” Limp said. “Then, as customers use them, say they shop from their Alexa, that benefits all of Amazon, and gives the customer a great shopping experience, and that’s how we want to monetize these things moving forward.”

WATCH: Amazon’s Dave Limp explains the company’s auto innovation heading into 2023

VIDEO2:1602:16
Amazon’s Dave Limp explains the company’s auto innovation heading into 2023

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Stock futures are little changed as investors look ahead to Friday's jobs report

Bond prices surge, yields fall as economic data signals cooling inflation

Bond prices rallied with stocks, sending yields down, after two key economic reports signaled inflation my be cooling off as the Fed raises interest rates.

The yield on the benchmark 10-year Treasury was down by 16.2 basis points at 3.56%. The 2-year Treasury yield fell 18.9 basis points to 4.264%. The yield on the 30-year Treasury was down 11.8 basis points at 3.68%.

Yields and prices move in opposite directions. One basis point equals 0.01%.

—Carmen Reinicke

Stocks making the biggest moves midday

Check out the companies making headlines in midday trading.

  • World Wrestling Entertainment — The wrestling entertainment stock surged 21% after WWE announced that founder Vince McMahon is returning to its board of directors and that the company is exploring strategic moves. McMahon stepped down as CEO last year after an investigation into sexual misconduct, but has remained majority shareholder. The Wall Street Journal reported that McMahon is returning to pursue a potential sale of the business.
  • R1 RCM — Shares of the healthcare technology firm soared more than 11% after the company raised its revenue outlook for 2023. The company also reaffirmed its projection for full-year 2022.
  • Costco Wholesale — Shares of the big-box retailer jumped more than 6% after it reported solid sales numbers for December. Costco posted net sales of $23.8 billion in December 2022, marking an increase of 7% year-over-year. Evercore ISI also added Costco to its “fab five” list, saying it’s a defensive stalwart.

Read the full list here.

— Sarah Min

First week of year signals volatility ahead for stocks, Goldman Sachs says

Investors may not want to get too excited about Friday’s rally.

“This first week of 2023 (and January) has come with the usual raft of major economic data points which on net point to the unusual post-pandemic era combination of a resilient labor market set against eroding business sentiment across the economy,” analysts at Goldman Sachs wrote in a Friday note. “Even as Corporate America continues to hire over 200,000 net new workers a month and post over 10mn job openings, both the Manufacturing and Service sector feels like things are getting worse.”

Of course, things getting worse is relative to one of the best GDP expansions the U.S. has seen, according to the note. This was partially fueled by pandemic stimulus through 2021.

“But this unusual combination we are now seeing of slow growth, high inflation, and elevated stock market valuations is likely to make for an uneven trading landscape in the year ahead,” Goldman said. That’s likely to mean modest returns for stocks this year.

—Carmen Reinicke

Tesla reverses slump, trades higher

Tesla reversed a more than 5% slump Friday following news that the electric vehicle maker would lower prices on some models of cars in China.

Later in the day, however, Tesla rose with the broader market. It was up 1.85% at midday.

Fed’s Barkin says rate hikes can be done ‘more deliberately’ now

Richmond Federal Reserve President Thomas Barkin said Friday the central bank has to keep working to bring down inflation but can do so with a little less intensity.

“We still have work to do,” the central bank official said in prepared remarks. “Inflation is too high, and we will need to stay on the case until it is sustainably back to our 2% target. We have forecasted additional rate increases this year.”

Policymakers indicated in December that they’re likely to take rates up another percentage point or so before pausing. Atlanta Fed President Raphael Bostic earlier in the day told CNBC he expects the central bank’s benchmark funds rate rising past 5%, from its current 4.25%-4.5% target range.

Barking did not specify how high he thinks the rate should go. However, he said the Fed now can move “more deliberately” after raising rates aggressively seven times in 2022.

—Jeff Cox

Health care, hospitality lead December job gains

Health care and social services was the top category for job growth in December, followed by leisure and hospitality, as the U.S. labor market continues to show strength despite the Federal Reserve’s aggressive rate hikes.

Meanwhile, two sectors that had been struggling in recent months — retail and transportation and warehousing — snapped back to growth in December.

Bank of America downgrades Chevron as oil prices cool

As oil prices cool, Bank of America is expecting Chevron won’t outperform as much as it did in 2022.

The firm expects a modest 9% upside after gaining more than 50% in share value last year. Analyst Doug Leggate also downgraded the stock to neutral from buy, citing limited upside as oil prices stabilize following the jump prompted by Russia’s invasion of Ukraine.

“Put simply we see CVX as a victim of its own success – but with <10% upside to our estimate of fair value, we believe the appropriate rating vs North American peers is Neutral,” Leggate said in a note to clients Friday.

CNBC Pro subscribers can read more about Leggate’s call here.

— Alex Harring

Goldman’s Hatzius says jobs numbers consistent with ‘soft landing’

December’s employment report helps add to the narrative that the U.S. may be able to avoid a recession, Goldman Sachs chief economist Jan Hatzius said Friday.

“We’re growing at a below-trend pace that’s necessary to rebalance the economy. Wage growth is gradually decelerating, price inflation is pretty quickly decelerating,” Hatzius said on CNBC’s “Squawk of the Street.” “I think that should be encouraging for a soft landing.”

He spoke after the Labor Department reported a 223,000 increase in nonfarm payrolls and a 4.6% annual rise in average hourly earnings, the slowest pace for the latter metric since August 2021.

—Jeff Cox

Wells Fargo upgrades Lululemon

Wells Fargo analyst Ike Boruchow upgraded shares of Lululemon to overweight, calling the athletics apparel retailer a “rare name with momentum.”

“LULU’s top-line resilience in the past few years has been nothing short of stunning, with 2022E’s topline expected to be essentially double 2019 levels,” he said, expecting continued resilience in 2023.

CNBC Pro subscribers can read the full story here.

— Samantha Subin

Stocks typically rebound massively following big yearly losses

History shows that the stock market typically rebounds drastically following a year of big losses, according to S&P Dow Jones Indices.

Since 1936, of the nine prior years with double-digit losses, seven of those years experienced double-digit gains the following year (an average of 18%), according to the firm. The S&P 500 lost 19.4% in 2022, suffering its worst year since 2008.

Stocks rally on slower wage growth but are ignoring other message in jobs data

The December jobs report shows the economy is still adding jobs at a strong rate, but investors focused on the fact that wage growth is slowing, suggesting inflation may be ebbing.

Stocks rallied after the 8:30 a.m. ET employment report showed 223,000 jobs were created in December. Average hourly wages grew at an annual pace of 4.6%, less than the 5% expected by economists.

“The big move was the fact that average hourly earnings came in lower than expected. That suggests that investors are focused intently on inflation, and whether that inflation is moving toward the Fed’s target,” said Michael Arone, chief investment strategist at State Street Global Advisors.

But he also cautioned that the data could be double-edged, since it suggests the economy and employment are still strong. That could help keep inflation elevated and keep the Fed hiking more than markets might expect.

The Fed next meets Jan. 31 and Feb. 1. While some economists anticipate a half point hike after that meeting, traders in the futures market put greater odds on a smaller, 25 basis point hike. A basis point equals 0.01 of a percentage point.

“Data like today suggests the Fed could do 50 basis points,” said Arone. A more aggressive Fed could create more market volatility.

The Fed has been trying to slow the economy and the hot labor market through its rate hiking, which has taken the fed funds target rate range to 4.25% to 4.50%.

 Peter Boockvar, chief investment officer at Bleakley Financial Group said market expectations did not change after the jobs report, and the fed funds futures contract for February was pricing in another 32 basis points of hikes.

“It’s pricing 100% chance of a 25 basis point hike, and a 30% chance for an additional 25. Peak fed funds is still at 5%” for July, he said. “The market is still expecting the Fed to go another 60, almost 70 basis points,” he said. Boockvar said the end point for the Fed matters more than if it raises by 25 basis points or 50 when it next meets.

–Patti Domm

KeyBanc says Bed Bath & Beyond shares can fall to 10 cents amid bankruptcy warning

KeyBanc is expecting shares of Bed Bath & Beyond to fall to 10 cents as the beaten down retailer warns it could seek bankruptcy protection.

Analyst Bradley Thomas reiterated his underweight rating on shares, while slashing his price target to 10 cents from $2. That implies 94% downside from Thursday’s close.

Read more on the call from KeyBanc here.

— Samantha Subin

Services sector contracted in December, ISM survey shows

The services sector contracted in December amid a pullback in new orders and production, the Institute for Supply Management reported Friday.

The ISM Services index fell to 49.6% for the month, well below the Dow Jones estimate for a 55.1% reading. The gauge measures the percentage of businesses reporting expansion, with a reading below 50% indicating contraction.

New orders fell 10.8 percentage point while business activity and production dropped 10 points. Prices fell 2.4 points to 67.6%, still a high number but representative of some softening in inflation. Employment also fell, moving down 1.7 points to 49.8% and into contraction territory.

—Jeff Cox

Morgan Stanley says banks’ 4Q results hit by higher loan loss reserves and expenses

Jane Fraser speaks during the Milken Institute Global Conference in Beverly Hills, California, U.S., on Monday, April 29, 2019.

Kyle Grillot | Bloomberg via Getty Images

Banks reporting fourth-quarter results next week will miss earnings estimates because they’ll need to plow money into loan loss reserves ahead of an expected downturn, according to Morgan Stanley analysts led by Betsy Graseck.

The companies will likely “incorporate a more severe economic outlook” into their scenarios for loan defaults this year, forcing them to set aside more than expected in reserves, Graseck wrote in a note published Friday.

On top of that, banks are likely to disclose bigger-than-expected increases to 2023 expense guidance because of wage inflation, Graseck wrote. She expects the median big bank to guide to about 4% expense growth, above the consensus of 3%.

Her pessimistic view on banks is shared by Deutsche Bank analyst Matt O’Connor, who cut his recommendation on Bank of America and JPMorgan Chase shares to hold from buy on Friday.

For her part, Graseck cut her price targets for Goldman Sachs and Citigroup shares by 7.3% and 8.9% respectively, thanks in part to her thesis.

On the other hand, she favors Wells Fargo, JPMorgan and Northern Trust heading into earnings because each bank could surprise to the upside on revenue and expenses, Graseck wrote.

—Hugh Son

Tesla falls to fresh 2-year low

Tesla shares reached their lowest level in about two years Friday after the electric car maker cut its Model 3 and Model Y vehicles. The stock traded 5.6% lower, dragging down the Nasdaq Composite.

Jobs report boosted expectations for soft landing, but recession clock is ticking, Shah says

Investors cheered Friday’s jobs report as signaling that a soft landing – a scenario in which the Federal Reserve tames inflation but doesn’t push the economy into a recession – is more likely.

“A lower unemployment rate and weaker average hourly earnings growth is certainly going to get equity market bulls’ attention,” Seema Shah, chief global strategist at Principal Asset Management said in a Friday note. “Indeed, expectations for a soft landing in the economy have likely been boosted in light of today’s jobs report.”

Still, investors may not want to cheer the news too much as it likely won’t change the Fed’s actions in the coming months.

“Yet, with the unemployment rate back to the historic low of 3.5%, how realistic is it to expect wage growth to move meaningfully lower? The Fed will likely be skeptical,” she said. “And so, with the record low unemployment rate indicating that there is still so much work ahead of them, Fed policy rates are set to rise above 5% within just a few months and a hard landing looks to be the most likely outcome this year. The recession clock is ticking.”

—Carmen Reinicke

Stocks open higher after better than expected jobs report

U.S. stocks opened higher Friday after investors cheered the December jobs report, which showed the labor market remains resilient but that wages aren’t gaining as much as expected amid the Fed’s interest rate hikes to tame inflation.

The Dow Jones Industrial Average increased 255 points, or 0.77%. The S&P 500 gained 0.68%, while the Nasdaq Composite jumped 0.44%.

—Carmen Reinicke

Wages improve but jobs report keeps Fed on track to raise rates

Wage growth in December was less than the 5% annual pace expected by economists, but it should not influence the Federal Reserve’s rate hiking path when it meets in February.

Some economists expect the Fed will raise rates by a half percentage point, while traders in the futures market have been betting on a quarter point hike.

“This is steady as she goes for the Fed. There’s no reason to stop raising rates at this time,” said Diane Swonk, chief economist at KPMG. “They still have wages growing at 4.6%, which is above the 3% to 4% they think is necessary to bring inflation down to their 2% target. The trend is the right direction for the Fed. Average hours worked continued to tick down.”

The economy added 223,000 jobs in December, more than the 200,000 expected by economists. Average hourly wages increased 0.3% on a monthly basis.

“We’ve got 4.5 million new pay checks for the year. That’s the second strongest year on record,” said Swonk. She said 2022 was second to 2021, when there were 6.7 million jobs created. “The only thing close was 1946 when soldiers returned to civilian work after World War II.”

December jobs report should add investor confusion, market volatility

Investors are so far cheering the December jobs report, which showed wage gains may have moderated, signaling progress in the fight against high inflation. Still, it’s likely to lead to choppy markets.

“While the easing of wage pressures may initially be cheered by markets, workers are still not keeping up with inflation, therefore pressuring consumption trends,” said John Lynch, Chief Investment Officer for Comerica Wealth Management.

“This report should add to investor confusion and heighten market volatility in the weeks ahead,” he added. “It also complicates the Fed’s battle against inflation, though the minutes from the December monetary policy meeting reiterate the committee’s resolve.”

“A 50-basis point move is back on the table for the next FOMC meeting in a few weeks,” he said.

—Carmen Reinicke

U.S. economy adds more jobs than expected in December

The U.S. economy added 223,000 jobs last month, slightly more than a Dow Jones consensus forecast for a 200,000 gain. This is yet another sign that the economy remains strong even as the Federal Reserve tries to tame inflation through higher rates. However, wages grew at a slightly slower-than-expected pace, increasing 0.3% versus an estimate of 0.4%.

— Fred Imbert

Stocks making the biggest premarket moves

Southwest projects fourth-quarter loss after mass flight cancelations

Last month’s operational meltdown was a costly one for Southwest, the airline said Friday.

The airline released guidance for its fourth quarter results that projected a net loss for the period, due in part to charges of between $725 million and $825 million from flight cancelations. Between $400 million and $425 million was lost revenue from the flights, while the rest comes from reimbursements to customers, premium pay to employees and other factors.

Shares of Southwest were down 2.7% in premarket trading.

— Jesse Pound

Citi downgrades U.S. equities, saying valuations are expensive

Citi has cut its rating on U.S. equities to underweight heading into the new year, partially due to the dollar’s strength waning.

“We are no longer dollar bulls, which helped keep us Overweight in 2022,” Robert Buckland wrote in a Friday note. “Valuations remain expensive compared to elsewhere.”

He also noted that earnings expectations look too optimistic, especially given the 2023 recession that Citi economists are forecasting.

He also downgraded Japan, noting that it “remains a highly cyclical stock market and is vulnerable to an appreciation in the yen.”

—Carmen Reinicke

JPMorgan downgrades Silvergate Capital

JPMorgan downgraded crypto bank Silvergate Capital, citing concern around the company’s huge fourth-quarter withdrawals.

“While the challenging backdrop for the crypto settlement business was a factor in the worse than expected results being released, we also believe that concerns voiced by short-sellers (on Twitter) likely also contributed to Silvergate’s customers withdrawing deposits from the platform at a greater than anticipated level,” JPMorgan said. “The implications to the company’s business from the significant reduction in client deposits has near- as well as longer-term impacts,” 

Shares fell more than 15% in the premarket after plunging more than 40% on Thursday.

— Sam Subin

Tesla shares fall after EV maker cuts China prices again

Tesla fell 5% in the premarket after the Elon Musk-led company lowered prices for its Model 3 and Model Y vehicles in China. The EV maker said the cars would now be priced at 229,900 yuan (about $33,374) and 259,900 yuan, respectively.

Reuters calculations show these prices are 13%-24% from four months ago. Tesla had lowered prices in October in an effort to prop up sales against rivals in China such as BYD.

— Fred Imbert, Jihye Lee

Deutsche Bank downgrades Bank of America and JPMorgan Chase

Deutsche Bank analyst Matt O’Connor downgraded Bank of America and JPMorgan Chase to hold from buy, citing a weakening macro outlook.

“In some ways, it’s tempting to get more positive given stocks are already down sharply, inflation seems to be slowing and Fed rate hikes may be coming to an end,” he said. “But our gut is that stocks will set new lows and fully (or close to it) price in a US recession suggesting there’s more risk from here.”

CNBC Pro subscribers can read more here.

— Sam Subin

European markets mixed ahead of key euro zone inflation data

European markets were cautious on Friday morning ahead of key inflation data for the euro zone, which is expected to show a further slowdown in consumer price increases.

The pan-European Stoxx 600 index hovered just above the flatline in early trade, with basic resources adding 1.2% while utilities fell 0.4%.

Flash euro zone consumer price index inflation figures are due late morning. After France, Germany and Italy all reported better-than-expected slowdowns over the course of the week, investors are hopeful that inflation has passed its peak across the 20-member common currency bloc.

WWE shares rise in extended trading

— Rebecca Picciotto, Sarah Min

Leon Cooperman says new bull market isn’t coming anytime soon

Billionaire investor Leon Cooperman said he’s still holding a cautious view on stocks and the economy, but he’s finding cheap stocks to buy after the recent correction.

“I would basically take the position that we’re in a market of stocks rather than a stock market,” Cooperman said on CNBC’s “Closing Bell Overtime” Thursday. “I think anybody looking for a new bull market anytime soon is looking the wrong way.”

CNBC Pro subscribers can read the full story here.

— Yun Li

Where the major averages stand this week

Stocks are set to close out the first trading week of the year with losses. As of Thursday’s close, here are where the major averages stand:

  • The Dow Jones Industrial Average is down 0.66% week to date, on pace for its fourth negative week in five.
  • The S&P is down 0.82% week to date, on pace for its fifth negative week in a row for the first time since its 7-week streak ending 5/20/2022.
  • The NASDAQ is down 1.54% week to date, on pace for its fifth negative week in a row for the first time since its 7-week streak ending 5/20/2022.   

— Chris Hayes, Sarah Min

Stock futures open higher

U.S. stock futures opened higher Thursday night after the major averages declined on the back of strong jobs data that could point to further rate hikes, and as investors looked ahead to the December jobs report Friday.

Dow Jones Industrial Average futures rose by 21 points, or 0.06%. S&P 500 and Nasdaq 100 futures climbed 0.13% and 0.19%, respectively.

— Sarah Min

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Here's what people with long Covid need to know about navigating health insurance

Halfpoint Images | Moment | Getty Images

Navigating the health insurance system is often difficult and overwhelming, even in the best of times. For patients with long Covid, a relatively new condition that frequently leaves patients with a lengthy and unpredictable list of debilitating symptoms, it can be especially nightmarish.

“Even if you remain on the same [health insurance] plan you had before Covid, you will probably utilize the health-care system more, whether it be more office visits, more prescription medications or even more medical devices,” said Caitlin Donovan, a spokesperson for the National Patient Advocate Foundation.

Indeed, nearly half of people with long Covid reported increased medical expenses, according to a recent survey conducted by the Patient Advocate Foundation. The nonprofit, NPAF’s sister organization, polled 64 people with the condition between 2020 and 2022. Meanwhile, 13% of respondents in the PAF survey said they’d experienced changes to their health-care coverage as a result of long Covid.

More from Your Health, Your Money

Here’s a look at more stories on the complexities and implications of long Covid:

In all, one Harvard University researcher estimated that long Covid could leave patients with an extra $9,000 a year in medical expenses.

Here’s what you need to know about navigating health insurance with the condition.

Unemployed long Covid patients have coverage options

Between 2 million and 4 million full-time workers are out of the labor force due to long Covid, according to recent research from the Brookings Institution.

If long Covid causes you to lose or leave your job and, therefore, your employer-sponsored health insurance, don’t panic. You may have several options for getting new coverage, said Karen Pollitz, a senior fellow at the Kaiser Family Foundation.

There are resources you can turn to for help deciding the best route to getting reinsured. If you have a diagnosed condition, including long Covid, you may be able to get support deciding on and enrolling in a plan with the Patient Advocate Foundation.

At no charge, you can also consult with a local health-care “navigator,” an expert who can help you search insurance plans and enroll in one on the Affordable Care Act’s marketplace.

1. Join a family member’s plan

Losing your job-based coverage triggers a 30-day special enrollment opportunity to join a family member’s plan, Pollitz said. You might consider getting covered through your spouse’s employer or a parent’s, if you’re under 26.

2. Extend workplace coverage

If your former company had at least 20 employees, you might also have the option to get insured through the Consolidated Omnibus Budget Reconciliation Act, or COBRA, Pollitz said.

COBRA typically allows people who leave a company to remain on their workplace insurance plan for up to 18 months — although it’s not cheap. (It tends to be pricey because you pick up the part of the health insurance tab your former company was covering.)

There are exceptions that can stretch coverage. If the Social Security Administration considers you disabled (long Covid can qualify as a disability), you may be able to stay on COBRA for an additional 11 months. Those who qualify for Medicare around the time they part with a company may also qualify for an extension beyond the typical 18 months.

3. See if you qualify for Medicaid

If your job loss has left your household with a substantially lower income, you may be able to enroll in Medicaid, Pollitz said. “This is comprehensive public coverage with no monthly premium,” she said. Eligibility is based on your current income, Pollitz added, and you can sign up year-round.

If you’re receiving disability benefits from a private insurer and/or through your employer, that income won’t necessarily disqualify you for Medicaid; you’ll want to check whether or not the payments are subject to taxes.

“If the benefits are taxable as income, then they would count toward Medicaid eligibility,” Pollitz said.

Even if you remain on the same plan you had before Covid, you will probably utilize the health-care system more.

Caitlin Donovan

spokesperson at the Patient Advocate Foundation

4. Sign up for a plan on the public exchange

Long Covid patients who have recently become unemployed may also be able to get health insurance on the Affordable Care Act’s marketplace. Losing your job triggers a 60-day enrollment period on the marketplace, where many of the plans are subsidized.

“Fortunately, ACA insurers are not allowed to discriminate based on health,” said Jonathan Gruber, a professor at the Massachusetts Institute of Technology and a former director of the health-care program at the National Bureau of Economic Research. “So having long Covid will not raise costs.”

5. Explore Medicare eligibility

Lastly, if you end up qualifying for Social Security Disability Insurance because of your long Covid, you may become eligible for Medicare, even if you’re younger than 65, after a two-year waiting period.

If you’re already 65 or older when you lose your job, Medicare may be your best option for coverage, Donovan said.

“Medicare comes with the benefit of an almost universal network, in contrast to marketplace plans,” Donovan said, adding that delaying enrollment once you’re eligible can also subject you to financial penalties.

Employed patients ought to review benefits

If your case of long Covid hasn’t disrupted your employment and you remain insured at work, you’ll want to make sure you’re signed up in a robust plan, Donovan said.

A more comprehensive workplace plan typically comes with a higher monthly premium but lower out-of-pocket expenses and more options, Donovan said. It’s especially important, she added, that you get the most generous prescription drug plan, if your company offers a variety of them.

Educate yourself as much as you can about your coverage, Donovan said, including information on providers and treatments that you might formerly not have considered.

Long Covid patients, for example, often seek physical therapy and mental health services, she said.

You’ll also want to make sure you’re up to date on your employer’s paid time off and sick days policy.

Clinical trials are ‘worth investigating’

Clinical trials, many of which are covered by health insurance plans, can be a great option for long Covid patients, Donovan said.

“Long Covid is still new, so anyone who participates in a clinical trial will be contributing to our understanding of the condition and advancing our ability to treat it,” she said.

Why long Covid could cost the U.S. nearly $4 trillion

And, she added, “clinical trial participants may have access to the newest safe and effective treatments.”

Trials take place all over the country, and some are even virtual, Donovan said. People can find out more at clinicaltrials.gov and by talking to their doctor.

Keep in mind, Donovan said, that your health insurance plan may require any trials be in-network and it may only cover certain costs of the experience.

Still, Donovan said, “it’s worth investigating.”

Meanwhile, those looking to save money on prescription costs should ask about generic options, which tend to be cheaper than the brand-name medicines.

In addition, Donovan said, programs like GoodRx may help you cut costs on certain drugs. And the Patient Advocate Foundation has a charitable copay program to which those struggling financially can apply.

Finally, Donovan said, with so much still unknown about long Covid, insurers may be more likely to reject coverage for a particular treatment or service. Patients should fight back, she said.

“Don’t lose hope,” Donovan said. “Go through the appeal process: Over 40% of denials are overturned in the patient’s favor.”

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China's big cities are starting to look past Covid, while rural areas brace for infections

Subway passenger traffic in Shanghai is quickly returning to levels seen before the latest Covid wave, according to Wind data. Pictured here is a subway car in the city on Jan. 4, 2023.

Hugo Hu | Getty Images News | Getty Images

BEIJING — China will likely be able to live with Covid-19 by the end of March, based on how quickly people have returned to the streets, said Larry Hu, chief China economist at Macquarie.

Subway and road data show traffic in major cities is rebounding, he pointed out, indicating the worst of the latest Covid wave has passed.

“The dramatic U-turn in China’s Covid policy since mid-Nov implies deeper short-term economic contraction but faster reopening and recovery,” Hu said in a report Wednesday. “The economy could see a strong recovery in Spring.”

In the last several days, the southern city of Guangzhou and the tourist destination of Sanya said they’d passed the peak of the Covid wave.

Chongqing municipal health authorities said Tuesday that daily visitors to major fever clinics was just over 3,000 — down sharply from Dec. 16 when the number of patients received topped 30,000. The province-level region has a population of about 32 million.

Stock market could catch tailwind from China ending 'zero-Covid,' says Hightower's Link

Chongqing was the most congested city in mainland China during Thursday morning’s rush hour, according to Baidu traffic data. The figures showed increased traffic from a week ago across Beijing, Shanghai, Guangzhou and other major cities.

As of Wednesday, subway ridership in Beijing, Shanghai and Guangzhou had climbed significantly from the lows of the last few weeks — but had only recovered to about two-thirds of last year’s levels, according to Wind Information.

Caixin’s monthly survey of services businesses in December found they were the most optimistic they’d been in about a year-and-a-half, according to a release Thursday. The seasonally adjusted business activity index rose to 48 in December, up from a six-month low of 46.7 in November.

That below-50 reading still indicates a contraction in business activity. The index for a separate Caixin survey of manufacturers edged down to 49 in December, from 49.4 in November. Their optimism was the highest in ten months.

Poorer, rural areas next

Shanghai medical researchers projected in a study that the latest Covid wave would pass through major Chinese cities by the end of 2022, while rural areas — and more distant provinces in central and western China — would be hit by infections in mid- to late-January.

“The duration and magnitude of upcoming outbreak could be dramatically enhanced by the extensive travels during the Spring Festival (January 21, 2023),” the researchers said in a paper published in late December by Frontiers of Medicine, a journal sponsored by China’s Ministry of Education.

Typically hundreds of millions of people travel during the holiday, also known as the Lunar New Year.

The researchers said senior citizens, especially those with underlying health conditions, in China’s remote areas face a greater risk of severe illness from the highly transmissible omicron variant. The authors were particularly worried about the lack of medicine and intensive care units in the the countryside.

Even before the pandemic, China’s public health system was stretched. People from across the country often traveled to crowded hospitals in the capital city of Beijing in order to get better health care than they could in their hometowns.

Oxford Economics senior economist Louise Loo remained cautious about a rapid rebound in China’s economy.

“A normalisation in economic activity will take some time, requiring among other things a change in public perceptions towards contracting Covid and vaccine effectiveness,” Loo said in a report Wednesday.

The firm expects China’s GDP will grow by 4.2% in 2023.

Lingering long-term risk

The medical researchers also warned of the risk that omicron outbreaks on the mainland “might appear in multiple waves,” with new surges in infections possible in late 2023. “The importance of regular monitoring of circulating SARS-CoV-2 sublineages and variants across China shall not be overestimated in the months and years to come.”

However, amid a lack of timely information, the World Health Organization said Wednesday it was asking China for “more rapid, regular, reliable data on hospitalizations and deaths, as well as more comprehensive, real-time viral sequencing.”

China in early December abruptly ended many of its stringent Covid controls that had restricted business and social activity. On Sunday, the country is set to formally end a quarantine requirement for inbound travelers, while restoring the ability of Chinese citizens to travel abroad for leisure. The country imposed strict border controls beginning in March 2020 in an attempt to contain Covid domestically.

Why China shows no sign of backing away from its 'zero-Covid' strategy

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McCarthy is being consumed by the MAGA politics he helped push



CNN
 — 

Kevin McCarthy is the latest Republican leader to find out that it’s impossible to get ahead of his party’s inexorable march to its far-right extremes.

The Californian, who has lost a stunning 11 consecutive House roll call votes in his bid to become speaker, was the first major GOP leader to embrace ex-President Donald Trump after the January 6, 2021, insurrection.

But on Friday’s two-year anniversary of the worst attack on American democracy in the modern era, he’s finding out that even that supposedly career-enhancing bet is insufficient to unlock the votes of Trump’s heirs in the chaos wing of the GOP.

McCarthy is becoming the latest example of a political leader consumed by a revolution the “Make America Great Again” radicals helped to stage. For the radical lawmakers now blocking his ascent to his dream job, he’s become the political establishment he once condemned.

Republicans won control of the House through democratic means in a free and fair election. But their far smaller-than-expected majority is offering extra leverage to the kind of pro-Trump extremists many voters appeared to reject in last year’s midterms.

But not even Trump himself – the author of the election-denying scam that led to the insurrection and who once could move the GOP in the House with a single phone call – could rally MAGA fundamentalists in the House for McCarthy. His failure to do so hints at diminished influence for the ex-president after his limp launch of a 2024 White House bid and a disastrous midterm election campaign for his chosen candidates. It might show that the wildest manifestations of Trumpism no longer need Trump himself.

Two years ago, scores of House Republicans refused to certify President Joe Biden’s 2020 election victory and many spent years appeasing Trump’s lawless behavior. Yet after driving democracy to the brink, the GOP controls one half of Capitol Hill – or will if it eventually gets its act together and picks a speaker.

In another surreal scene on the Hill this week, one of those Republicans, Georgia Rep. Marjorie Taylor Greene – who has downplayed the insurrection and said rioters would have “won” if she was in charge – is complaining about the extremism of some of her colleagues who oppose McCarthy.

“That’s not serious. I don’t think that’s leadership, and I really see it as more obstruction than progress,” she told CNN’s Manu Raju on Thursday.

mtg boebert split 1

Marjorie Taylor Greene takes aim at Boebert for speaker vote ‘drama’

But even in the wake of the attack on the US Capitol, the right-wing media machine and a still-angry base of voters mean there are strong political incentives for disruptor politicians in the ex-president’s image.

Two of them, Reps. Lauren Boebert of Colorado and Matt Gaetz of Florida, are ringleaders of the fight to block McCarthy. The speakership stalemate is not just a fresh indication of the turmoil still racking the GOP after the far-right forced out two previous GOP speakers. It suggests the new GOP House majority will be perennially dysfunctional and – given the capacity of a few lawmakers to grind the chamber to a halt at any moment – chaotic political crises are likely to dominate the next two years.

lauren boebert house speaker vote

Boebert on McCarthy: Trump needs to tell him he does not have the votes

Trump may no longer be in the White House but the circus-style politics that he built on a foundation of rebellion in the GOP is back and has tied Washington in knots again. As a mark of how bad things are, the impasse over the speaker has prevented the GOP from even properly taking power given that lawmakers cannot be sworn in before a leader has been selected.

Far-right Republicans have blocked McCarthy’s dream of becoming speaker in multiple humiliating roll call votes. The showdown is rooted in the same extremist ideological strain of Republican politics as Trumpism, which again has a vehicle in Washington now that the GOP holds a slice of power.

The conditions that provoked and empowered that small group of political opportunists on the right are only possible because of the ex-president’s poisoned legacy. McCarthy can lose only four GOP votes for his speakership bid, and the tiny Republican majority gives extremists great leverage.

But that narrow margin – which will also put the majority in a precarious position on must-pass legislation like funding the government and raising the debt ceiling later on – is the direct result of voters being alienated by the ex-president’s incessant, false claims of 2020 voter fraud and the party failing to deliver the “red wave” many Republicans had predicted.

By balking at handing unfettered power to the GOP – and a House majority that would have been workable for McCarthy – voters who wanted a period of calm have inadvertently created a scenario that breeds the instability they appear to disdain.

McCarthy has made multiple concessions to the rebels that risk rendering the office of the speaker toothless if he does win it. But by the time he had suffered more defeats in roll call votes on Thursday afternoon, it was clear America was watching one of its greatest political farces.

Scott Jennings Kevin McCarthy split

McCarthy’s concession could ‘put him on constant thin ice’ says analyst

Not all of those ultra-conservatives blocking McCarthy are making outlandish demands. Some, for instance, are demanding fuller debates, a return to regular order in committees and more power for individual members. But even if McCarthy can deal with this faction, he still has a problem with a more extreme bloc of lawmakers.

According to Boebert, the country was watching democracy in action, even as McCarthy repeatedly racked up around 200 votes from his conference while his various radical opponents could only attract around 20. (The defections made it impossible for McCarthy to get a majority of the House’s support since Democrats backed their own leader, Hakeem Jeffries, who routinely got more votes than McCarthy, but also short of 218).

“This is not chaos. This is a constitutional republic at work. This is actually a really beautiful thing,” Boebert said. She’s correct in that the messiness unfolding on the floor is based on rules and procedures – the most basic elements of governing that Trump had sought to disrupt with his efforts to overturn the certification of the 2020 Electoral College votes.

But her arguments founder on the reality of the rebels’ behavior. Many other Republicans have complained that it is not clear exactly what concessions the group around Gaetz, who have vowed to never support McCarthy, actually want.

“This ends one of two ways: Either Kevin McCarthy withdraws from the race, or we construct a straitjacket that he is unable to evade,” Gaetz, who cast his vote in the seventh round for Trump, told reporters on Thursday.

In other words, the most extreme hardliners will only accept a candidate that shares their no-compromise, Nihilistic form of politics that effectively makes governing impossible.

In many ways, these demands are the culmination of anti-establishment, anti-government forces first unleashed decades ago by former House Speaker Newt Gingrich’s 1994 Republican revolution. They were also the genesis of the anti-Washington Tea Party movement in the 2000s. Trump then drove out much of the governing wing of the GOP as he effectively worked to bring down the institutions of government and accountability from inside as president.

McCarthy’s negotiators were locked in talks late Thursday with hardliners on even more concessions – suggesting an extraordinary desire on his part to secure the glory of the speaker’s gavel, whatever the cost. But given the extreme forces rocking the GOP and the intransigence of the Gaetz-Boebert chaos caucus, it seemed unlikely he could create a political foundation that would promote any kind of stable governance.

Still, a McCarthy ally, Rep. Brian Fitzpatrick of Pennsylvania, told CNN that he was confident that a deal could clear the way soon for a solution to the impasse.

“We are going to see the fever break a little bit in the next 24 hours,” Fitzpatrick said.

The problem, however, is that people have been saying that about the Republican Party for years. And it only ever keeps getting more extreme.

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