NEW YORK (AP) — The company planning to buy Donald Trump’s new social media business has disclosed a federal grand jury investigation that it says could impede or even prevent its acquisition of the Truth Social app.
Shares of Digital World Acquisition Corp. dropped almost 10% Monday as the company revealed that it has received subpoenas from a grand jury in New York.
The Justice Department subpoenas follow an ongoing probe by the Securities and Exchange Commission into whether Digital World broke rules by having substantial talks about buying Trump’s company starting early last year before Digital World sold stock to the public for the first time in September, just weeks before its announcement that it would be buying Trump’s company.
Trump’s social media venture launched in February as he seeks a new digital stage to rally his supporters and fight Big Tech limits on speech, a year after he was banned from Twitter, Facebook and YouTube.
The Trump Media & Technology Group — which operates the Truth Social app and was in the process of being acquired by Digital World — said in a statement that it will cooperate with “oversight that supports the SEC’s important mission of protecting retail investors.”
The new probe could make it more difficult for Trump to finance his social media company. The company last year got promises from dozens of investors to pump $1 billion into the company, but it can’t get the cash until the Digital World acquisition is completed.
Stock in Digital World rocketed to more than $100 in October after its deal to buy Trump’s company was announced. The stock closed at $25.16 Monday.
Digital World is a special-purpose acquisition company, or SPAC, part of an investing phenomenon that exploded in popularity over the past two years.
Such “blank-check” companies are empty corporate entities with no operations, only offering investors the promise they will buy a business in the future. As such they are allowed to sell stock to the public quickly without the usual regulatory disclosures and delays, but only if they haven’t already lined up possible acquisition targets.
Digital World said in a regulatory filing Monday that each member of its board of directors has been subpoenaed by the grand jury in the Southern District of New York. Both the grand jury and the SEC are also seeking a number of documents tied to the company and others including a sponsor, ARC Global Investments, and Miami-based venture capital firm Rocket One Capital.
Some of the sought documents involve “due diligence” regarding Trump Media and other potential acquisition targets, as well as communications with Digital World’s underwriter and financial adviser in its initial public offering, according to the SEC disclosure.
Digital World also Monday announced the resignation of one of its board members, Bruce Garelick, a chief strategy officer at Rocket One.
The Associated Press
U.S. inflation runs cooler than forecast, easing pressure on Fed – BNN Bloomberg
US inflation decelerated in July by more than expected, reflecting lower energy prices, which may take some pressure off the Federal Reserve to continue aggressively hiking interest rates.
The consumer price index increased 8.5 per cent from a year earlier, cooling from the 9.1 per cent June advance that was the largest in four decades, Labor Department data showed Wednesday. Prices were unchanged from the prior month. A decline in gasoline offset increases in food and shelter costs.
So-called core CPI, which strips out the more volatile food and energy components, rose 0.3 per cent from June and 5.9 per cent from a year ago. The core and overall measures came in below forecast.
The data may give the Fed some breathing room, and the cooling in gas prices, as well as used cars, offers respite to consumers. But annual inflation remains high at more than 8 per cent and food costs continue to rise, providing little relief for President Joe Biden and the Democrats ahead of midterm elections.
COST OF LIVING
While a drop in gasoline prices is good news for Americans, their cost of living is still painfully high, forcing many to load up on credit cards and drain savings. After data last week showed still-robust labor demand and firmer wage growth, a further deceleration in inflation could take some of the urgency off the Fed to extend outsize interest-rate hikes.
Treasury yields slid across the curve while the S&P 500 was higher and the dollar plunged. Traders now see a 50-basis-point rate increase next month as more likely, rather than 75.
“This is a necessary print for the Fed, but it’s not sufficient,” Michael Pond, head of inflation market strategy at Barclays Plc said on Bloomberg TV. “We need to see a lot more.”
Fed officials have said they want to see months of evidence that prices are cooling, especially in the core gauge. They’ll have another round of monthly CPI and jobs reports before their next policy meeting on Sept. 20-21.
Gasoline prices fell 7.7 per cent in July, the most since April 2020, after rising 11.2 per cent a month earlier. Utility prices fell 3.6 per cent from June, the most since May 2009.
Food costs, however, climbed 10.9 per cent from a year ago, the most since 1979. Used car prices decreased.
What Bloomberg Economics Says…
“With rents still pushing higher and elevated wages beginning to seep into services inflation, we expect this pause to be short-lived. Core CPI could approach 7 per cent in the coming months — despite our assumption of moderation in goods prices.”
–Anna Wong and Andrew Husby, economists
Shelter costs — which are the biggest services’ component and make up about a third of the overall CPI index — rose 0.5 per cent from June and 5.7 per cent from last year, the most since 1991. That reflected a 0.7 per cent jump in rent of primary of residence. Hotels, meanwhile, fell 3.2 per cent.
Elsewhere in leisure, airfares dropped 7.8 per cent from the prior month, the most in nearly a year.
While prices are showing signs of moderating, there are several factors that risk keeping inflation high. Housing costs are a big one, as well as unexpected supply shocks. And wages are still climbing at a historically fast pace, concerning some economists of a so-called wage-price spiral.
However, those gains aren’t keeping up with inflation. A separate report showed real average hourly earnings fell 3 per cent in July from a year earlier, dropping every month since April 2021.
“We’re seeing a stronger labor market, where jobs are booming and Americans are working, and we’re seeing some signs that inflation may be beginning to moderate,” Biden said after the report. He cautioned, “we could face additional headwinds in the months ahead,” citing the war in Europe, supply-chain delays and pandemic-related disruptions in Asia.
The impact of inflation on wages has started to dent spending, with the pace of personal consumption growth decelerating between the first and second quarters.
That said, consumer expectations for US inflation declined sharply in the latest survey by the New York Fed, suggesting Americans have some confidence that prices will come off the boil in the next one to five years.
These are the Canadian companies laying off staff amid the post-pandemic tech wreck – Yahoo Canada Finance
Social media management platform Hootsuite Inc. became the latest Canadian tech company to issue major layoffs when it announced it was cutting 30 per cent of its staff on Tuesday.
The move comes as a cooling economy has dimmed the prospects for high-growth companies, especially those that benefitted from the shift to e-commerce during the pandemic.
Giants such as Amazon.com Inc. have not been immune from the changing economic picture, either. Earlier this month, Amazon said it had reduced its staffing levels by 100,000 positions by slowing hiring.
Here’s a rundown of the major tech layoffs that have hit Canada recently.
Vancouver-based Hootsuite said Tuesday’s 30 per cent cut to global staffing would bring its head count to just over 1,000 and was part of an effort to restructure the company.
In an email statement, chief executive Tom Keiser said the move was made as the company refocuses its strategies “to drive efficiency, growth and financial sustainability.”
“We want to be very clear this decision is not a reflection on them, or their work. It is indicative of a change to our business that realigns our strategies with the positions we need to be successful,” Keiser said.
Last month, the company announced a rebranding, saying it was time to rethink its “integrated branding strategy to better reflect our position and our direction as the social experts, trusted partners, and joyful mentors.”
Canadian tech giant Shopify Inc. was the most prominent company to cut staff when it laid off 10 per cent of its staff on July 26 after a bet on continuous e-commerce growth failed to pay off.
The cuts of approximately 1,000 employees primarily affected those in recruiting, support and sales.
Chief executive Tobi Lütke said the company expected the surge it saw at the height of the pandemic to be permanent and thought they had to expand to keep pace. Instead, growth has since fallen back to pre-COVID trendlines as consumers now return to shopping at physical retail stores.
“Ultimately, placing this bet was my call to make and I got this wrong. Now, we have to adjust,” Lütke said.
Vancouver-based online furniture retailer Article laid off 216 employees, or 17 per cent of its team, last week.
In a post on Article’s website, co-founder and chief executive Aamir Baig said the company was operating “at a size larger than current demand would sustain” and needed to resize the business.
“Like many eCommerce companies, we benefited tremendously from the demand increase from COVID. We anticipated the trend to online purchasing would be sustained — that did not happen, and it has since returned to pre-COVID trends,” he said.
Michele Romanow’s startup Clearco laid off 25 per cent of its workforce on July 29, saying the company increased its headcount too quickly in anticipation of continued growth.
Clearco said 125 people of their 500-person team were affected by the cuts.
In a memo to staff, the Dragons’ Den star said they were building to match the growth of the economy and are now facing “significant headwinds” that didn’t exist six months ago.
Wealthsimple laid off 13 per cent of its workforce on June 16, citing “immense volatility” in markets. The financial services company said it let go of 159 of its 1,262 employees.
In a letter to staff, chief executive Michael Katchen positioned the cuts as part of the fallout from months of seeing the market soar and Wealthsimple grow at an “unprecedented” rate amid the COVID-19 pandemic.
With reporting from the Canadian Press
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Disney+ counts 221M streaming subscribers, surpasses Netflix for first time – CBC News
Disney said Wednesday it added 14.4 million subscribers to its Disney+ streaming service in the April-June fiscal quarter, putting it just ahead of Netflix in the streaming wars with about 221 million total streaming subscriptions.
Netflix ended June with 220.7 million subscribers after losing nearly one million subscribers in the past quarter.
Walt Disney Co. also said Wednesday it is raising prices for streaming subscribers in the U.S. who want to watch Disney+ without ads, as more viewers switch to what CEO Bob Chapek described as the “best value in streaming.”
The price increases are tied to a new tiered service Disney will launch in December for U.S. subscribers. The basic Disney+ service today costs $7.99 ($10.21 Cdn) per month. Starting in December, that basic service will run ads, so a subscriber who wants no ads will have to upgrade to a premium service that starts at $10.99 ($14.04 Cdn) per month, a 37.5 per cent rise over current prices. An annual plan will cost $109.99 ($140.52 Cdn).
It’s not clear if the cost of a subscription will change in Canada, where Disney+ costs $11.99 per month or $119.99 per year.
“We expect the ad tier to be popular and we expect some people to want to stay with ad-free,” Chief Financial Officer Christine McCarthy said on a conference call with analysts.
Netflix’s most popular streaming plan in the U.S. is now $15.50 ($19.80 Cdn) per month, and its top-of-the-line plan is $20 ($25.55 Cdn) per month. That follows several rate hikes to help pay for its original programming, which has become even more important since Disney pulled its programming and classic movies from Netflix after licensing agreements between the companies expired.
Disney said paid subscriptions for Disney+ grew by 31 per cent, much of that internationally, over the same time last year. But revenue growth was not as strong due to operating losses from “higher programming and production, technology and marketing costs.”
Disney beats earnings expectations
Disney’s growing sales for its streaming services, which include Hulu and ESPN+, combined with a recovering theme park business after pandemic-era shutdowns led the Burbank, California-based entertainment giant to beat Wall Street expectations with quarterly earnings Wednesday.
Disney reported revenue of $21.5 billion US in the three months through July 2, up 26 per cent from the same time last year.
Disney said sales at its parks, experiences and products segment grew to $7.39 billion ($9.4 billion Cdn), up 70 per cent from $4.34 billion ($5.5 billion Cdn) a year earlier. The numbers represented an ongoing comeback from COVID-19 restrictions that temporarily shuttered all of Disney’s parks in 2020, reduced capacity through much of 2021 and have continued to affect some locations such as Shanghai Disneyland, which was open for just three days in the April-June quarter.
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