On Wednesday the Fed cut its bellwether interest rate by a quarter of a percentage point, bringing it down to 4% from 4.25%, but said it is unlikely to cut rates significantly next year, and could only bring them down to 3.9%. That sent stock markets tumbling, with the Dow on its longest losing streak since the 1970s, erasing nearly all its gains in the six weeks since Donald Trump won re-election. Still, the Fed cuts mark a full point reduction in rates this year, and that’s already helped boost the stock market, and made it a bit cheaper for Americans to buy homes and cars.

But amid fears that Trump’s planned tariffs and tax cuts could reignite inflation, which is now around 2.5% (close to the Fed’s cherished ~2% mark that would allow for stable growth and high employment), Fed Chair Jerome Powell hinted that further rate cuts might be limited. “If the economy does evolve about as anticipated, we’re at a point at which it would be appropriate to slow the pace of rate cuts,” Powell said, adding, “For additional cuts, we’re going to be looking for further progress on inflation.”

“Our policy stance is now significantly less restrictive,” Powell continued. “We can therefore be more cautious as we consider further adjustments to our policy rate.” Asked if he might even raise rates to keep inflation in check, Powell responded with an oracular lack of clarity: “You don’t rule things completely in or out in this world.” But, he added, “That doesn’t appear to be a likely outcome.”

None of this is going to make Trump happy. The president-elect has promised tariffs and tax cuts to stimulate the economy, and pledged to lower grocery prices (he walked that one back earlier this week). In fact, fears of Trumpflation have nearly entirely erased the post-election stock market rally. The Dow, which had been up almost 2,800 points since Election Day, ended Wednesday just 100 points higher than November 5.

Watch Big Business This Week on Cheddar—and YouTube!Elon’s World

With the sale of an insider stake in SpaceX, and the rocket rise of  Tesla—up 26% in the past month—Elon Musk is closing in on a net worth of half a trillion dollars. As of Wednesday, he’d made $257 billion this year, a 112% increase since December 2023, and is worth more than Jeff Bezos ($250 billion) and Mark Zuckerberg ($219 billion) combined, according to the Bloomberg Billionaires Index. • So what’s he done with it? Not much, according to the latest tax filings from his foundation. The Musk Foundation had $9.5 billion in assets at the end of last year, while handing out only $237 million in gifts, according to Bloomberg News, which got an early look at last year’s tax return. The foundation sent $137 million to another Musk nonprofit, The Foundation, set up to establish a science-and-technology-focused school. The IRS requires foundations to distribute 5% of their assets a year, which in this case would be $475 million. The New York Times cites different figures to argue Musk’s foundation has to pay out $421 million by the end of this year or face stiff IRS penalties. With Tesla shares up 75% this year, the foundation could have assets of around $15 billion by now (and would have to give away $750 million this year!). • The U.S. Air Force recently denied Musk high-level access, citing potential security risks, after he repeatedly failed to provide accounts of his travels, his meetings with foreign leaders, and his drug use, The New York Times reported, adding that the compliance failure has set in motion at least three federal investigations. • Musk joined Trump to try to kill Congress’s last-minute temporary spending bill, known as a continuing resolution. They argued that the bill gives too much to the Democrats, but they also want to raise the debt ceiling, the amount the government can borrow, while Joe Biden is still president. (Former moderate Republican Rep. Adam Kinzinger criticized the pair on CNN calling out President Musk and “Vice President Trump.”) Now House Speaker Mike Johnson is in a pickle, the Republican knows that raising the debt ceiling means he’ll have to give Dems even more, and that will likely raise MAGA ire and cost him the Speaker’s gavel. Politics ain’t easy. • If Tesla can’t get a Delaware judge’s ruling overturned to restore Musk’s 2018 pay package, and instead votes to grant Musk a similar comp package today, options on 304 million shares, the tax bill could be enormous. At the time the grant was made, the options cost more than the share price, and Tesla’s tax bill was $2.8 billion. At the current share price, the options are in the money, and a new grant could leave Tesla with a $25 billion tax bill and Musk with a 57% tax rate on the gains, or about $70 billion. “If you grant options that are ‘in the money,’ which they clearly are now, all kinds of bad things happen,” tax attorney Schuyler Moore told The Financial Times. “That is why they are trying so hard to ratify the original deal. If they re-award it now, there will be hell to pay on taxes.” • Oman’s Investment Authority has purchased a stake of undisclosed size in xAI, adding to its stake, also of an undisclosed size, in SpaceX. • Mark Zuckerberg is backing Musk’s call to block OpenAI from shedding its nonprofit status. “OpenAI’s conduct could have seismic implications for Silicon Valley,” Meta, which has its own dog in the AI fight, wrote to California attorney general Rob Bonta, suggesting that nonprofit investors would get both a for-profit upside and a nonprofit tax write-off. Where does Elon stand? Last week, OpenAI published documents showing that a Musk underling had actually created a corporate shell to transform OpenAi into a for-profit venture. “His own words and actions speak for themselves,” OpenAI said in the filing. • With FAA head Michael Whitaker set to step down in January, three and a half years before his term expires, Musk has lost a nemesis he blames for hurdles he says have delayed SpaceX’s progress. “Humanity will forever be confined to Earth unless there is radical reform at the FAA!” Musk tweeted in September. Now what? • Senator Elizabeth Warren (D-Mass.) is setting her sights on Musk, warning Trump in a letter that Musk could enrich himself at taxpayers’ expense. “Mr. Musk’s substantial private interests present a massive conflict of interest with the role he has taken on as your ‘unofficial co-president,’” Warren wrote. “Currently, the American public has no way of knowing whether the advice that he is whispering to you in secret is good for the country — or merely good for his own bottom line.” • SpaceX wants to turn its south Texas launch site into an incorporated city, and has asked officials of Cameron County to consider the request. Some 3,400 SpaceX employees work at the Starbase site in Boca Chica Beach, near the Mexican border. • Jeff Bezos’ Blue Origin is preparing to launch not only the New Glenn rocket—which could grab some of the lucrative space-gear launching market from SpaceX, which lifted 85% of all orbital mass put into space in Q3—but also Kuiper, a communications satellite to compete with Starlink’s 6,000-satellite cluster. • Did the Democrats chase Musk away by mocking him? That’s what Sen. John Fetterman, the gym-shorts-and-hoodie-wearing Pennsylvania Democrat, told Politico: “I’ve warned Democrats, if you’re just going to make fun of it or to dismiss it, you do it at our peril. And I think that’s very clear what happened.” In response, notes Politico, Silicon Valley’s Rep. Ro Khanna and Pennsylvania Governor Josh Shapiro have been talking to the $400 billion man, whom Fetterman has compared to Iron Man’s alter ego, Tony Stark. • One of the first recommendations of the Trump transition team’s 100-day plan is to scrap the rule that carmakers need to report crashes to the National Highway Traffic Safety Administration, Reuters reports, citing an internal document. Dropping the rule would most benefit Tesla, which reported the highest number of crashes—more than 1,500—under the program. It would also cripple the safety body’s ability to regulate self-driving cars. Musk and Tesla did not respond to a query from Reuters. • With 133 billion views since mid-July, Musk’s reach through X is 15 times bigger than Donald Trump’s and 16 times bigger than all members of the incoming Congress combined, The Washington Post found.

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The Usual Suspects

• Disney’s defamation debacle: Disney agreed to pay Donald Trump $15 million rather than fight a defamation case the president-elect brought against its ABC News division, setting what many First Amendment watchers called a dangerous precedent for press freedom. Earlier this year, ABC news host George Stephanopoulos said that Trump had been found “liable for rape” in the 2023 civil case brought by E. Jean Carroll. Trump was actually found liable for sexually abusing Carroll, and ordered to pay her $83 million. But under judicial practice and U.S. law, it’s hard for a figure as public as Trump to prove he’s been defamed.
• Pixar opts out: Disney’s Pixar division has cut a transgender storyline from Win or Lose, an animated series about a coed softball team that is scheduled to stream in February. The character will stay in the show, but a plot point focused on their gender will be cut. “When it comes to animated content for a younger audience,” Disney said in a statement, “we recognize that many parents would prefer to discuss certain subjects with their children on their own terms and timeline.”
• Amazon injured: Amazon executives overruled their own health and safety experts to push workers to do more, faster, even as they were warned internally that the productivity pressure was injuring warehouse employees. That’s according to a Senate report released on Sunday, that cites internal Amazon documents, and supports the findings of a union-backed group that show Amazon waterhouses had an injury rate twice that of the rest of the industry. “Amazon’s executives repeatedly chose to put profits ahead of the health and safety of its workers by ignoring recommendations that would substantially reduce injuries,” Sen. Bernie Sanders, the Vermont independent, said in releasing the report. An Amazon spokesperson said the report was wrong and based on out-of-date documents. Possibly (un)related: On Thursday, workers at at least seven Amazon warehouses across the U.S. went on strike, pressuring the company to sign a new contract at the height of the Christmas shopping and shipping season. The International Brotherhood of Teamsters, which says it represents some 10,000 workers at 10 Amazon facilities, said the company ignored a Sunday deadline for negotiations. The union did not say how many workers would eventually join the picket lines. Amazon employs around 800,000 people in its U.S. warehouses.
• Microsoft’s edge: Microsoft bought twice as many of Nvidia’s special Hopper chips as any of its rivals, as the OpenAI investor seeks to gain an edge in AI infrastructure. Tech consultants Omdia estimate that Microsoft bought 485,000 of the chips this year, giving it an edge in the AI race, as Nvidia struggles to keep up with soaring demand.
• Still lost in space: NASA astronauts Butch Wilmore and Suni Williams are extending their stay at that hotel-in-the-skies, the International Space Station, after SpaceX said it needs more time to work on the Crew-10 capsule that’s supposed to bring them back to Earth. The pair were sent up in a Boeing rocket back in June for a 10-day stay. Then their Boeing Starliner spacecraft malfunctioned, and the stay was extended to February. Now the pair is not expected to return until March. That’s a lot of frequent-guest points. Gilligan, we’d like a word.
• Don’t even think about sitting down: McDonald’s is testing a new restaurant concept with no dine-in space, just pickup windows for drive-thru and digital ordering. Food can be picked up in McDelivery lockers, to skip the line for the register.
• Boeing’s big slog: Boeing has restarted its 737 assembly line after a two-month machinists’ strike, but don’t expect production to be back to normal for some time. Boeing says it’s inaugurated a new safety-management system to identify and address potential issues and ensure an orderly restart to planebuilding. Still, its supply chain has been severely disrupted. At fuselage maker Spirit Aerospace in Wichita, Kansas, the number of assembled parts waiting to move by train to final assembly in Seattle has grown from 90 to 150.

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The Short Stack

• Car complex: Honda and Nissan, Japan’s no. 2 and 3 carmakers, are discussing a cooperation deal that could lead to a merger, and might even rope in Mitsubishi. Discussions are still at an early stage, media reports say, but the firms may need to combine to fend off low-cost Chinese carmakers and take a piece of the EV and self-driving markets. The combo would make them one of the world’s top three automakers, alongside Toyota and Volkswagen. Shares in Nissan rose 20% on the news, while Honda shares dropped slightly. Meanwhile, The Wall Street Journal reports that Foxconn, the Taiwanese contract-maker of electronics, is looking at buying Nissan, in a bid to expand its EV business.
• AI startup: In the largest AI funding round yet, San Francisco–based Databricks says it’s raised $8.6 billion of a promised $10 billion in a funding round that would value the firm at $62 billion. Investors are clearly lapping up AI projects, as some AI startups have been losing money or folded altogether. Databricks helps companies build and operate the software that drives chatbots and similar services.
• Reality check? Masayoshi Son, the head of Japan’s SoftBank group, says the internet and telecom company and investor plans to put $100 billion into the U.S. over the next four years. Standing next to Donald Trump, Son promised to create 100,000 jobs focused on AI and emerging technologies before Trump leaves office. But how real is Son’s check? Softbank only has about $30 billion in cash on hand.

The TikTok Clock Ticks On

Facing a January 19 deadline to sell the platform or be banned from the U.S., TikTok’s Chinese owner, ByteDance has won an audience with the Supreme Court. Justices will hold an emergency hearing on Jan. 10 to determine whether they’ll grant the company’s request to stay a lower court order upholding the Congressionally mandated deadline. President-elect Donald Trump has said he likes TikTok and would see if his administration could assist the company. TikTok in its court filings called the law, signed by President Joe Biden, “a massive and unprecedented speech restriction” on Americans. The Washington, D.C., appeals court that upheld the rule said the law didn’t violate the First Amendment in part because it did not target a specific political perspective. The government and Congress say ByteDance’s close relationship with the Chinese government give Beijing a dangerous amount of control over what Americans view and think.

A survey by the Pew Trust found that 60% of adults under 30 get their news from TikTok. The Chinese government won’t allow the platform’s governing algorithms to be sold to a foreign concern, so if the Supreme Court upholds the ruling, the options for TikTok are clear: It can sell the service without the existing algorithms. That could lead to some issues for users in the first few months, but within a year, say experts, the platform will have enough data that a new, non-Chinese-controlled algorithm could be serving users the content they want (or that advertisers want them to see). ByteDance could also move the platform’s servers out of the U.S. Tiktok might not go dark, but it might require using a VPN or some other workaround to view it, and U.S. content producers would likely be legally barred from monetizing their content, while TikTok’s nascent ecommerce platform, TikTok Commerce, and users’ own TikTok Shops would not be available in the U.S.

Because the Supremes like to take the time they need to craft their decisions, the Court could stay the ban-or-sell law while it chews the facts, or it could just let the ban take effect.