| | | | | | | Presented By Walmart | | | | Axios Markets | | By Emily Peck and Matt Phillips · Dec 14, 2022 | | Good morning. It's Fed decision day, with another half-percentage-point rate hike expected this afternoon. 🚨 Situational awareness: FTX founder Sam Bankman-Fried was denied bail and remanded to the Bahamas Department of Correctional Services until an extradition hearing scheduled for Feb 8. Today's newsletter is 1,112 words, 4.5 minutes. | | | | | | 1 big thing: Get ready for surprise tax forms |  | | | Illustration: Shoshana Gordon/Axios | | | | There's a tax headache ahead next year for millions of Americans who use apps like Venmo or Paypal regularly, part of a little-noticed change passed in March as part of the American Rescue Plan, Emily writes. Why it matters: Anyone who was paid more than $600, for selling goods or services, using one of these third-party apps will likely get a 1099-K tax form detailing that money. It may get confusing. Before the law was changed, 1099-Ks went out only to those who took in more than $20,000 through more than 200 transactions. - Think, small biz types who use Square, maybe a taco truck owner, professional home cleaner, or someone selling baby booties at weekend markets. People who typically owe taxes on that income.
- Now, more micr0-business owners or side gig hustlers — a babysitter, an Etsy seller, a house cleaner who maybe weren't reporting that income — will get a form.
- A lot of these folks won't wind up owing money — their income might not be high enough to pay tax or they're selling used goods at a loss and don't owe money.
The intrigue: The IRS said these forms shouldn't go out to those who just received money for personal transactions (like splitting the dinner bill). But experts say it's likely there are going to be forms sent out in error. - Companies "may not have the information to know if they're dealing with a business transaction or personal transaction," said Mark Luscombe, principal federal tax analyst at Wolters Kluwer Tax & Accounting.
The big picture: This is part of the IRS' efforts to close the "tax gap," money owed to the agency that goes unpaid. Yes, but: "It's really confusing. It's really bad policy," Etsy CEO Josh Silverman told Axios in an interview. - Etsy is a member of a lobbying group called the "Coalition for 1099-K Fairness," racing to get this law changed before the end of the year. Other members funding the group include eBay, Airbnb, PayPal and Poshmark.
- The coalition estimates that as many as 40 million Americans will get one of these forms in January ahead of the filing deadline for 2022 taxes.
What to watch: Congress. There seems to be agreement on both sides of the aisle that this provision should be changed. The coalition says it'll be easier to do that now, rather than after the forms go out. - There's a draft bill sponsored by Sen. Bill Hagerty (R-Tenn.) that would set the threshold back to $20,000. Another draft bill supported by some Democrats would raise the threshold to $5,000.
The bottom line: Though the change will undoubtedly be a pain for people, the effect on American pocketbooks will likely be minimal — nothing changed in the tax code itself. Go deeper |     | | | | | | 2. Catch up quick | | 🐦 Elon Musk's Twitter isn't paying some of its bills. (Axios) ⬆️ Binance says deposits return after heavy withdrawals. (Reuters) | | | | | | | | 3. 💬 Quoted: The Feds aren't finished |  | | | Damian Williams, U.S. attorney for the Southern District of New York. Photo: Stephanie Keith/Getty Images | | | | "I can say this clearly: We are not done." — Damian Williams, U.S. attorney, SDNY Why it matters: The U.S. indicted FTX founder and former CEO Sam Bankman-Fried on eight criminal charges — but U.S. attorney Damian Williams insists the investigation is far from over. - Translation: Other charges may come later.
State of play: Many of the charges against Bankman-Fried are related to conspiracy (conspiracy to commit wire fraud and campaign finance violations, for example). - "You can't have a conspiracy with yourself," Ira Lee Sorkin, partner at the law firm Mintz & Gold, and former Bernie Madoff attorney, told CNBC yesterday. The government may charge additional defendants that it alleges are co-conspirators, he added.
Read more: FTX "one of the biggest financial frauds" in history, SDNY says | | | | | | | | A message from Walmart | | Walmart helps save families up to 75% on insulin | | |  | | | | Since June 2021, families across America have saved more than $15 million on insulin. Thanks to Walmart's low-cost private brand, shoppers can save up to 75% off the cash price of branded insulin. Learn more about how Walmart helps families live better. | | | | | | 4. Cooler than expected |  Data: FactSet; Chart: Axios Visual Yields on U.S. government bonds fell sharply yesterday after inflation numbers for November arrived lower than expected, Matt writes. Why it matters: Treasury yields are the foundation for almost all the interest rates that affect economic decision-making. - That means they help determine borrowing costs for everything from multibillion-dollar corporate bond deals to mortgage rates for homebuyers.
Between the lines: Bond yields tend to move based on a range of factors, including expectations for inflation and economic growth as well as the Federal Reserve's plans for monetary policy. - The sharp fall yesterday morning — following the slowest inflation annual increase in inflation since December 2021 — suggests that investors think that inflation will continue to ease, and therefore the Fed might not have to continue on its rate-hiking regimen for much longer.
The bottom line: If Treasury traders are right, the U.S. might actually have a shot at pulling off the so-called soft landing — in which inflation slows without a recession or painful rise in unemployment. Go deeper: Our colleagues at Axios Macro dug into the inflation figures. | | | | |  | | | | If you like this newsletter, your friends may, too! Refer your friends and get free Axios swag when they sign up. | | | | | | | | 5. Executive anxiety |  Data: Data: Deloitte CFO Signals; Chart: Axios Visuals As the global economy roils from what feels like a relentless series of economic and geopolitical shocks — the era of the polycrisis — executives at some of the world's biggest companies are increasingly anxious, Emily writes. Why it matters: Nervous business leaders are proceeding more cautiously. That often means taking fewer chances, pulling back on investment and hiring; the kinds of actions that could trigger the downturn they fear. What's happening: Companies haven't been this risk-averse since the pandemic started, according to a survey of CFOs, conducted by Deloitte, released this morning. - The aversion to risk means that companies are less willing to do big deals, increase capital investment or take on more leverage, Steve Gallucci, Deloitte's global and U.S. CFO program leader, tells Axios.
- Looking inside their companies, CFOs are worried about hiring in a tight labor market; looking externally, they're nervous about geopolitics (war, supply chain shocks, climate), he said.
- The percentage of CFOs who feel pessimistic about their companies' financial prospects is also at the highest level since Q2 2020.
Meanwhile: 98% of executives who responded to a different survey, by AlixPartners and also out today, say they will need to fully revamp their business in the next three years to adjust to the new business environment. - Yes, but: 85% say they don't know where to start to make changes.
- Disruptions like COVID and then the war in Ukraine are "paralyzing leaders," said Simon Freakley, CEO of AlixPartners, in a call with reporters.
- "The pace of change, and the need to really make sure that you're trying to see ahead of it, is even more profound than it has been historically," added Lisa Donahue, AlixPartners' co-head of the Americas & Asia.
The bottom line: In his latest memo to investors, famed investor Howard Marks argues that we're living through a sea change in the investment world — a complete transformation. - It's no surprise that companies are struggling to adapt.
| | | | | | | | A message from Walmart | | Walmart helps families save on the things they need most | | |  | | | | Over 37 million Americans have diabetes. With Walmart, they can save up to 75% compared to the cash price of branded insulin. This adds up to more than $15 million saved across America since June 2021. Learn more about how Walmart helps families live better. | | | | Was this email forwarded to you? Sign up here to get Axios Markets in your inbox. Today's newsletter was edited by Kate Marino and copy edited by Mickey Meece. |  | | Why stop here? Let's go Pro. | | | | | | Axios thanks our partners for supporting our newsletters. If you're interested in advertising, learn more here.
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