What’s Up? (Feb. 5-11)
An A.I. Arms Race
Microsoft’s often-overlooked search engine, Bing, is mounting a comeback with ChatGPT, the suddenly ubiquitous chatbot capable of composing song lyrics, writing academic essays and answering all manner of questions. The new version of Bing was released to a limited group of users on Tuesday. The revamped product is part of Microsoft’s $13 billion investment in OpenAI, the artificial intelligence lab behind ChatGPT that Microsoft is betting on to stay competitive with its big tech rivals like Google, Apple and Meta. But those companies are also racing to incorporate the new technology into their own software. A day before the unveiling of the new Bing, Google announced that it would soon release an experimental chatbot called Bard for its own search engine, which is much more widely used than Bing. And Meta is fast-tracking the development of chatbot technology for its products.
Biden Defends His Record
In President Biden’s second State of the Union address, he focused on the bright spots in the economy. He emphasized that inflation was falling, the job market was strong and the best was yet to come. He pointed to the many benefits from his infrastructure, climate and manufacturing laws, which together would invest trillions of dollars in the United States. Mr. Biden also urged Congress to support initiatives like renewing the expanded child tax credit, which had cut child poverty almost in half, and affordable child care. In the days leading up to his speech, his top aides were divided over how much time he should spend on these issues, with some preferring that the president focused instead on parts of his legislative agenda that had already passed. As he heads into a re-election campaign, Mr. Biden’s handling of the economy will be front and center.
Lean Times at the Magic Kingdom
Robert Iger, Disney’s chief executive who was brought back by the board to turn the company around, presented his vision last week for more austere operations. On Thursday, Disney beat analysts’ expectations for quarterly earnings: The company lost far less than it did in the previous quarter, and Disney’s domestic theme parks delivered operating profits that were 36 percent higher from a year earlier. Still, Mr. Iger announced plans to cut costs by some $5.5 billion and lay off roughly 7,000 employees, or about 4 percent of the company’s global work force. Investors, who had been eagerly awaiting a road map from Mr. Iger, sent Disney’s stock up 5 percent in after-hours trading. And although the activist investor Nelson Peltz later dropped his bid for a seat on Disney’s board, Mr. Iger still faces significant challenges. His company is struggling to make streaming profitable as its traditional television profits tumble, and Disney remains at odds with Gov. Ron DeSantis of Florida.
What’s Next? (Feb. 12-18)
Fresh Inflation Data
This week’s Consumer Price Index report is not the first of the year, but it is the first that will include a snapshot of inflation in 2023. The report is expected to show that inflation continued to drift lower in January, extending a trend line from December that prompted Jerome H. Powell, the chair of the Federal Reserve, to declare that the “disinflationary process has started.” The central bank has begun to slow down its aggressive pace of interest rate increases to assess the effects of its policy, and officials will be closely watching the C.P.I. report and other data to understand where the economy is headed. But Mr. Powell has been clear that the Fed’s campaign to tame inflation is not yet over.
Speaking of Inflation
Consumer prices may be cooling in general, but many big companies have continued to boldly raise their prices, finding that the increases have not for the most part deterred customers from spending. Last week, both PepsiCo and Unilever reported double-digit price increases for their products — 16 percent at the beverage company and 13 percent in the case of the multinational consumer conglomerate — in their quarterly results. Both also beat Wall Street expectations for revenue. This week, some version of this narrative is likely to crop up in Coca-Cola’s fourth-quarter earnings report. Last quarter, the company generated higher-than-expected profits largely with the help of a 12 percent increase in prices for its soft drinks and juices.
Potential New Limits on Beijing
In an effort to restrict Beijing’s access to advanced technologies that could be wielded against the United States in wartime, the Biden administration has been preparing regulations that would limit U.S. firms’ investments in Chinese technology. Even though the United States already monitors China’s investments in U.S. technology, and bans American companies from selling certain technologies directly to China, it has not applied the same scrutiny to money flowing in the other direction. The Chinese spy balloon that recently spent five days floating over the United States only intensified concerns about China’s economic and military ambitions. Still, there are worries about Mr. Biden’s potential new rules for American companies: Industry groups have argued that the policy being considered could backfire on the United States, harming its own economy and competitiveness.
What Else?
The struggling retailer Bed Bath & Beyond secured the help of Hudson Bay Capital Management in its plan to sell its stock and avoid bankruptcy. Credit Suisse on Thursday reported its biggest annual loss since the 2008 financial crisis. Russia’s deputy prime minister said the country would cut its oil production in March by 500,000 barrels a day, or about 5 percent of its output; oil prices rose on Friday after the news.
