There’s a Lot Riding on Black Friday and Cyber Monday

The consumer is back — but for how long?

Black Friday and today’s Cyber Monday shopping bonanzas hold outsize political significance this year with the retailing events emerging as key recession and inflation indicators.

So far, so good. Bargain hunters turned out in force for Black Friday sales, and Cyber Monday is forecast to be even bigger. But with consumers showing signs of pulling back on spending, will this splurge be enough to save retailers’ Christmas and keep the U.S. economy from contracting or even plunging into recession?

The White House is paying attention. Consumers have grown pessimistic about the economy, data shows. At the same time, President Biden’s polling numbers have fallen, with the economy seen as a glaring weaknesses.

Biden’s advisers are pushing back. This past weekend, they pointed to strong Black Friday data as a sign of the economy’s resilience. Still, inflation remains a particular sore point with voters. According to The Washington Post, the White House has begun tracking inflation gripes posted on social media.

The Fed will be watching, too. Inflation remains well above the central bank’s 2 percent target, prompting Jay Powell, the Fed chair, to signal that policymakers will likely keep borrowing costs higher for longer in an effort to cool down prices. This month’s retail data could be a factor in how the central bank approaches its interest rates policy next year.

Here are some takeaways from Black Friday, including where people are shopping and how the pastime is changing.

The U.S. consumer is still spending:

• Black Friday sales rose 2.5 percent in the U.S. compared to last year, according to The Wall Street Journal, citing Mastercard SpendingPulse, which measures in-store and online sales.

• Retail foot traffic rose 2.1 percent in the same period. Will that be enough, though, to save America’s beleaguered shopping malls or its commercial real estate sector?

• Online shopping was the big winner. E-commerce sales jumped 7.5 percent to $9.8 billion, according to Adobe Analytics.

But Black Friday looked different from past years:

What to watch: The rise of so-called social commerce, which is big in Asia. TikTok is trying to bring the practice to the U.S. and turn the short-video app’s users into shoppers.

There’s a new addition to Wednesday’s DealBook Summit: Taiwan’s president, Tsai Ing-wen, will join Andrew for a wide-ranging video interview involving U.S.-China relations, Taiwan’s independence and chips diplomacy. For more information on the event, click here.

HERE’S WHAT’S HAPPENING

Israel and Hamas might extend their cease-fire. Hamas said it would seek to extend a pause in fighting after releasing Israeli hostages over the weekend. Benjamin Netanyahu, Israel’s prime minister, said he was open to a continuation if more hostages are released. Separately, Elon Musk met today with Netanyahu and families of hostages as he faces accusations of amplifying antisemitism on X.

President Biden will skip the U.N. climate summit. A White House official said that the president wouldn’t attend COP28, which starts on Thursday in Dubai and is expected to feature King Charles III, Pope Francis and leaders from more than 100 countries. No reason was given, but aides suggested that Biden’s work on the Israel-Hamas war and Ukraine were behind the decision.

TikTok’s parent company reportedly plans to retreat from video games. ByteDance, the Chinese internet giant, will lay off hundreds of workers in its gaming division and look to sell off titles, according to Reuters. It may also sell a studio it bought for $4 billion. It’s a black eye for ByteDance, which had sought to compete with a rival Chinese tech titan, Tencent.

Disney’s latest animated feature falls short of expectations. “Wish” was forecast to earn up to $50 million in worldwide box office in its debut weekend, trailing the latest “Hunger Games” movie and “Napoleon.” That’s bad news for Disney, where expensive movies — “Wish” cost an estimated $200 million, excluding marketing costs — have underperformed.

The S.E.C. on trial

The Supreme Court will hear a landmark case this week that could determine the future of the S.E.C.’s in-house enforcement arm and have serious consequences for how other regulators operate.

It all began with an enforcement action against a hedge fund manager. About a decade ago, the S.E.C. charged George Jarkesy, an investment adviser and conservative media personality, with securities fraud. Jarkesy was found guilty in an administrative proceeding overseen by an administrative law judge. But he won a later challenge to that process in federal court, saying that the Seventh Amendment guaranteed the right to a jury trial.

The S.E.C. has challenged that ruling. The agency argues that the right to a jury trial is limited for civil actions and that Congress did not make a mistake in setting up the agency in this way. Defendants, however, contend that these proceedings are weighted in favor of the agencies.

Most justices have shown an inclination to limit agency power and this is just one of several cases challenging the power of federal regulators. The Supreme Court is also mulling the future of the Consumer Financial Protection Bureau and whether to overrule a principle that requires judges to defer to agencies’ interpretations of administrative rules.

Regulators are on tenterhooks. Some, including the F.T.C., can conduct civil proceedings in internal courts overseen by administrative law judges. But if the Supreme Court rejects the S.E.C.’s defense of its administrative process, other agencies would become vulnerable to similar challenges.

An earlier ruling had already made legal challenges of regulatory power more likely. In unanimous rulings by the Supreme Court last year on two related cases against the S.E.C. and F.T.C., the justices said businesses could immediately sue the agencies in federal court rather than waiting for the administrative case to conclude first.

Executives and business groups want the high court to go further. The Chamber of Commerce, Business Roundtable and others filed an amicus brief urging the justices to curb the overreach of a vast “administrative state.” Executives and investors, including Elon Musk and Mark Cuban, have also weighed in, arguing that the S.E.C.’s in-house processes “lead to unequal and unjust results.”

The Supreme Court will hear arguments on Wednesday. A decision is expected before the end of this term in June.

The road to the real estate industry’s big fight

Last month, a Missouri jury issued a verdict that promised to alter the $100 billion business of buying and selling American homes. The National Association of Realtors and two large brokerages were ordered to pay at least $1.8 billion for keeping agent commissions artificially high.

The verdict, if it stands, could rewrite the American real estate industry. And, according to The Wall Street Journal, it started with a phone call by a consumer advocate in Minnesota:

George Farah, then a partner at Cohen Milstein, took the call with the advocate who had spent decades investigating practices in the industry. Farah says he readily talks to advocates about case ideas and has at times had to listen to a 45-minute soliloquy about how squirrels in the park are creating a shortage by hoarding nuts.

But this time Farah readily saw the potential for a major antitrust case. “C’mon, this is just sitting here,” he remembered thinking. “I was stunned to see that it hadn’t happened yet.”

Farah, who has since started his own firm with a couple other attorneys, said he combed through every rule in NAR’s roughly 175-page handbook and homed in on the requirement that homes listed on a multiple listing service must advertise the compensation offered to the buyer’s agent. Plaintiffs attorneys would ultimately argue that the rule, in combination with a few others, allowed the industry to conspire to keep commissions high, in part by allowing buyers’ agents to steer clients away from homes where sellers offer a lower commission.

“He ignored me royally, which is his privilege. And he lost almost all the money that he had invested.”

— Christine Lagarde, the president of the European Central Bank, on how her son lost big investing in cryptocurrencies despite her many warnings about the risks.

The week ahead

Oil, climate change and inflation data will be in the spotlight. Here’s what to watch.

Tomorrow: The Conference Board publishes its latest consumer confidence report. Also, Workday, CrowdStrike and Intuit report results.

Wednesday: The Fed’s latest “beige book” report, which details economic activity across 12 regions, is set for release. Before that, Germany, which is teetering on the brink of recession, will disclose its consumer prices data for November.

Salesforce, Snowflake and Dollar Tree also report.

Thursday: COP28 is scheduled to begin in Dubai — coinciding with an OPEC+ meeting, which had been delayed by four days amid disagreements about potential cuts in oil production. The price of Brent crude, the international benchmark, is down this morning, having slumped more than 10 percent during the past month amid slowing demand and a relative easing of geopolitical tensions over the Israel-Hamas war.

Inflation hawks will be watching two releases on both sides of the Atlantic. First up is the Eurozone C.P.I. for November. Then it’s the so-called core Personal Consumption Expenditures Index deflator, the Fed’s preferred measure on pricing trends.

THE SPEED READ

Deals

• Investors plan to follow through with a tender offer for OpenAI employees’ shares, testing faith in the future of the artificial intelligence start-up after its leadership drama last week. (FT)

• Jeff Zucker’s proposal to buy The Telegraph newspaper, a bid that is backed by Abu Dhabi, is likely to lead to further scrutiny of the emirate’s media-investment strategy. (FT)

Policy

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