It took only a couple of tweets to plunge Elon Musk into the morass of a securities fraud trial that could cost him billions of dollars from his rapidly diminishing fortune.

The Tesla Inc. chief executive officer is set to be the star witness at a jury trial that starts Tuesday in San Francisco federal court over his infamous tweets 4 1/2 years ago about a plan to take the electric-car maker private with “funding secured.”

Lawyers for the shareholders will try to show jurors that Musk lied in the statement, and that it caused them deep losses from wild stock price swings over a 10-day period before the plan was abandoned. Musk’s defense team will work to tear down that narrative.

Losing a class-action case of this magnitude could put Musk on the hook for damages in the billions of dollars, according to Adam Pritchard, a professor at University of Michigan Law School.

“Elon enjoys a good fight,” Pritchard said. “He has a lot of money, and is apparently willing to take substantial risks with that money.”

The trial comes as Musk’s wealth has dwindled from a peak of $340 billion in November 2021. He became the first person in history to lose more than $200 billion, all while he spent $44 billion to acquire Twitter Inc. Last month, he was dethroned as the world’s richest person and Tesla’s stock plummeted 37% since Dec. 1, with the electric car maker facing increased competition and a looming recession.

The stir created by the August 2018 tweets is best remembered for throwing Musk into the orbit of the US Securities and Exchange Commission. It resulted in a pledge from Musk to have his future social media posts screened by a Tesla lawyer.

Investors must prove Musk knew his tweets were misleading, and that they were “material,” or important to a reasonable investor. Shareholders would also need to tie Musk’s tweets to their trading losses.

US District Judge Edward Chen has already hobbled Musk with a pretrial ruling that the tweets were reckless and false — and he will tell the 12-member jury to assume that from the get-go, to set the parameters of the trial.

That instruction to the jury puts Musk at a “huge disadvantage,” Pritchard said.

To beat back the allegations he was deceitful, Musk has said in court filings he may call on others who can vouch for the take-private plan, including friend and confidant Larry Ellison, as well as executives at Goldman Sachs, Morgan Stanley and private-equity firm Silver Lake Management.

Musk’s lawyers have failed repeatedly to persuade Chen not to share his finding with the jury, saying as recently as last week that it could be “highly prejudicial” to the CEO’s defense.

A lawyer for Musk declined to comment before the start of the trial and an attorney for the shareholders didn’t respond to a request for comment.

Musk has insisted his short-lived plan to take Tesla private was solid based on discussions he had with Saudi Arabia’s sovereign wealth fund. He subpoenaed the governor of the Kingdom’s Private Investment Fund to testify at the trial, but withdrew the request after attorneys for Yasir Al-Rumayyan argued he isn’t legally obligated to show up.

Proving Musk’s state of mind will be nuanced and tricky. Ordinary investors understand that deals can get done even if they’re not 100% nailed down, Pritchard said. Musk might have believed in his ability to take Tesla private, even if he wasn’t across the finish line yet.

“Elon Musk is an achiever, he gets things done,” Pritchard said. “If he says he’s going to take Tesla private, in his mind he’s going to take Tesla private. Did you ever decide that you were going to put a rocket in space? Elon did. He did it. He believes in Elon. He’s a little crazy. Which is part of the secret of his success. He might believe that because he’s Elon Musk.”

–With assistance from Pierre Paulden.

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(Bloomberg) — Pfizer Inc.’s bivalent shot for COVID-19 has shown a potential link to stroke in people 65 and older, according to US health officials citing preliminary data from one of several vaccine safety databases.

The potential risk with Pfizer’s vaccine was not seen in other safety databases, nor was it seen with Moderna Inc.’s COVID vaccine, the officials said in a statement on the Food and Drug Administration’s website. The early finding still needs more investigation, and recommendations for the vaccine have not been changed, the statement said.

“When we find a signal we look for it in other parts of the system, which is what we’ve done (and will continue to do),” Kristen Nordlund, a spokesperson for the Centers for Disease Control and Prevention, said in an email.

The agencies said the possible link to stroke was seen in the CDC’s Vaccine Safety Datalink. Investigation of the signal raised a question of whether people 65 and older who received the Pfizer-BioNTech bivalent shot were more likely to have an ischemic stroke, a loss of blood flow in the brain, in the 21 days following vaccination compared with days 22-44 following vaccination, the agencies said in the statement.

“The totality of the data currently suggests that it is very unlikely that the signal in VSD represents a true clinical risk,” the statement said.

Pfizer’s bivalent booster is armed specifically to protect against two omicron variants, called BA4 and BA5. Messenger RNA COVID shots have been linked to pericarditis and myocarditis, inflammation of the heart and its surrounding tissue that’s usually mild.

Pfizer and its partner BioNTech Se “have been made aware of limited reports of ischemic stroke” in the CDC Vaccine Safety DataLink database in people 65 and older following vaccination after the companies’ bivalent shot, a spokesperson said. There is no data to conclude that Pfizer’s vaccine is causally associated with stroke, the spokesperson said.

Among 550,000 people 65 and older who had been vaccinated and received the Pfizer bivalent booster, 130 had strokes in the first three weeks after getting the shot, according to the CDC, and no deaths have been reported.

(Updates with CDC, Pfizer comment from third paragraph.)

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The controversy erupting from mere talk of banning gas stoves has sparked a culture war that’s about more than politics— it’s about food. And it boils down to one question: Which cooks better, gas or electric?

For most home chefs forced to choose between gas ranges that heat quickly or electric-coil stoves that are inefficient and ugly, the answer is simple: gas. But there’s a third option: induction stoves, which heat with a tightly controlled magnetic field rather than a flame.

On this, even professional chefs are divided. California chef Andrew Gruel, who owns American Gravy Restaurant Group, says induction stoves are “just less efficient” than gas ranges. But Chef Rachelle Boucher, of the Building Decarbonization Coalition, says: “I can boil water or sear a steak or cook something twice as fast on induction.”

What they can agree on is that cooking is an emotional topic.

“When it comes to cultural topics that are close to our hearts and stomachs — mine are one and the same — people have some pretty big opinions,” Gruel said.

The issue raises some genuine cultural questions, too. For instance: Can authentic Chinese food be cooked without a flame or a wok? Can an electric stove produce the quick sear essential to certain cuisines?

Chef and and sustainable cooking consultant Christopher Galarza, who traces his ancestry to a tribe in the Amazon rainforest, says cooking his family’s recipes is a way of connecting with that heritage. “When folks say, ‘You’re trying to change how I cook,’ they think you’re trying to come after my heritage, my past.” But Galarza, who’s opened the country’s first all-electric campus kitchen, argues that traditional cooking doesn’t have to be done in traditional ways, such as over coals or wood.

The debate is front and center after a member of the US Consumer Product Safety Commission said this week that the government could  prohibit gas stoves to curb indoor air pollution. Blowback from lawmakers was so severe that the agency’s head walked back the idea days later.

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The odds that a weather-roiling El Nino will replace the lingering La Nina phenomenon across the Northern Hemisphere this summer are slipping.

There’s a 39% chance that El Nino — a warming of the Pacific Ocean that can shut down the Atlantic hurricane season — will arrive between June and August, according to the US Climate Prediction Center. That’s down from 40% a month ago.

El Ninos are known to spark heavy rains and flooding across California as storm paths are pushed further south across North America. The phenomenon is also noted for bringing droughts across parts of Southeast Asia and India, impacting coffee and other crops. A powerful El Nino in 1997-1998 was blamed for causing $100 billion in damages and losses, along with deaths of 30,000 people around the world.

Meanwhile, there’s a 73% chance La Nina will fade between February and April, bringing an end to the third consecutive such pattern in as many years. If La Nina exits, temperatures in the Pacific will normalize ahead of a possible warming that would trigger an El Nino.

Predictions that call for changes to the larger pattern and those that extend through March to May tend to be less accurate.

La Nina still holds sway across the Pacific and has been blamed for less snow for the large cities of the eastern US, as well as dry conditions across the crop areas of Brazil and Argentina. The phenomenon usually also means a continuation of drought in California, however other weather patterns this year have bucked that trend, leaving the state drenched with flooding rain.

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Millions of chickens have gone unfed as rail disruptions delay corn shipments to a California poultry farm, according to documents that provide unique details of how one shipper has suffered from poor rail service.

Foster Farms, which processes about 1 million chickens and 12,000 turkeys every day, has said it’s had to pause some operations because of delays from Union Pacific Corp., the second-largest freight railroad in North America.

The supply issues also forced the company to shut down a plant that processes raw corn into animal feed to sell, it said in federal filings. That meant cutting off its dairy farm customers from corn meal and giving priority to its chickens, which start killing each other when they go hungry.

After a flurry of correspondence that offers unfiltered insight into shippers’ problems with rail service, the US Surface Transportations Board ordered Union Pacific on Dec. 30 to deliver more corn-laden trains to Foster Farms.

This is the second time in the past year Foster Farms has asked the rail regulator to intervene directly because of Union Pacific’s failure to deliver animal-feed trains on time. It’s also the latest in a long-simmering tussle between shippers and railroads, which have seen profits rise even as carloads dwindle.

“These service failures, which began in February 2022, have resulted in numerous instances where Foster Farms has suspended its production and distribution of feed for tens of thousands of dairy cattle and tens of millions of chickens and turkeys,” the company said in a letter to the regulatory agency.

Suppliers like Foster Farms complain they have no viable alternative to using rail and can be captive to one carrier. Disturbances to these operations could potentially risk supplies for major food retailers including Costco Wholesale Corp. and Walmart Inc., which stock Foster Farms products.

The Livingston, California-based processor, which is owned by Atlas Holdings LLC, says it is the largest chicken grower in the Western US, with about $3 billion of annual sales. It said it resorted to hauling supplies by truck, but couldn’t find enough capacity and faced soaring costs. It takes 400 trucks to handle the same amount of grain as one 100-car train.

Foster Farms declined to comment beyond statements in public filings.

“Union Pacific is working closely with Foster Farms, providing daily updates and delivering the trains addressed in the order,” the railroad said in an emailed statement. “We continue to experience significant weather delays, including washouts in California, blizzards in the Midwest and rockslides in Nevada.”

Michael Booth, an STB spokesperson, said: “The Board is reviewing all relevant information and determining if further action is necessary.”

Service Breakdown

Union Pacific has been at the forefront of a recent nationwide rail service breakdown that has plagued all carriers including Warren Buffett’s BNSF Railway Co., its closest competitor in the West, and CSX Corp. and Norfolk Southern Corp. in the East. Railroads have pointed to difficulties hiring train crews since the pandemic hit, along with usual disruptions such as weather and derailments.

Shippers and unions say the problems began with an industrywide cost-cutting push about five years ago that slashed workforces, closed switching yards and parked locomotives. The five largest US-based rails had a 7% drop in carloads versus a decade ago. Under an efficiency strategy known as Precision Scheduled Railroading introduced in the US in 2017, the railroads revamped customer schedules and slashed costs.

“You can only cut so far and they’ve already cut more than they should have, especially as far as employees,” said Daniel Elliott, a principal with GKG Law and a former chairman of the Surface Transportation Board.

The decline in carloads over the last decade coincided with a windfall for the railroads. Net income for the five largest carriers jumped by 75% over the past 10 years. Adjusted operating profit margins rose to a record 41% in 2021 from less than 16% two decades ago.

After successful deregulation legislation in 1980 that rescued railroads from the brink of bankruptcy, carriers became more productive and improved service, allowing profits to rise as shipping rates fell. A wave of consolidation that also followed reduced the large railroads operating in the US to seven from about 40, transforming the competitive landscape.

The railroads’ power to affect service to its customers makes shippers hesitant to publicly criticize rail companies, according to trade groups. The American Fuel and Petrochemical Manufacturers said in a Dec. 15 written testimony that its members are “fearful of potential backlash” and one declined to provide service information for the STB’s hearing on Union Pacific “since such testimony could be linked back to their company leaving them vulnerable to retaliation or other subtler recourse from UP.”

The Surface Transportation Board is seeking to correct the imbalance, but has limited power. In December, it called on Union Pacific to explain a spike of service-limit notices designed to alleviate network congestion.

“It’ll be interesting to watch what happens over these next couple of years and see if the railroads do take a little bit of a turn” in their strategy, Elliott said.

‘Every Minute Now Counts’

“We are about to kill millions of chickens,” said Phil Greene, vice president of Foster Farms, in a June 14 email to a Union Pacific executive. “Every minute now counts as we try to save lives. You have never put us in this situation 5 days late with no inventory and 40 to 50 million chickens to feed.”

The next day, Foster Farms filed its petition for an emergency service order. The railroad replied to the petition by accepting blame for poor service and proposed a plan to divert locomotives and crews to increase the trains. Chief Executive Officer Lance Fritz weighed in to spur action.

“Foster Farms is a vitally important Union Pacific customer. However, we have failed to provide adequate service to Foster Farms,” Fritz said in a June 16 letter to the regulator. “I am writing to convey Union Pacific’s firm and clear commitment to providing Foster Farms the service it deserves and the service we expect to provide.”

On June 17, the board unanimously granted Foster Farms’ petition, directing Union Pacific to supply the required trains and report on their status for 30 days. After the 30-day period, the board declined to extend the order. By October, Union Pacific again wasn’t providing enough trains to keep corn stocks fully replenished, Foster Farms said.

The winter storms in December exacerbated the problem and Foster Farms again had to truck in grain in attempt to feed its and customers’ livestock. This time Union Pacific blamed the weather. The board on Dec. 30 ordered the railroad to deliver five grain trains that Union Pacific said would arrive by Jan. 3.

“With the exception of one train, UP did not deliver the five trains on the schedule it represented to the Board and to Foster Farms,” the poultry producer said in a Jan. 4 letter.

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California’s flooding rains and heavy snows that killed at least 17 people have likely caused more than $30 billion in damages and economic losses, according to AccuWeather.

The Pacific storms, known as atmospheric rivers, are estimated to have caused $31 billion to $34 billion of economic impacts through major flooding, widespread power outages, landslides, fallen trees and road closures, the commercial weather forecaster said Wednesday.

“A substantial portion of the damage to homes and businesses occurred as a result of mudslides and landslides as well as water damage caused by the serious flooding,” Accuweather said.

The losses are more than triple those from December blizzards in Buffalo, New York, though less than the $180 billion to $210 billion caused by Hurricane Ian when it struck Florida last year.

“Additional damage and negative impact to the economy is expected to accrue as the parade of storms continues to affect parts of California through Jan. 18,” the company said.

Accuweather’s calculations are based on direct and indirect impacts of the storm including damage to property, job and wage losses, crops, evacuation costs as well as airline delays, lost business and supply-chain interruptions. The tally includes both insured and uninsured losses.

READ MORE: How do you harness an epic amount of rain in a water-scarce state? Let it flood, scientists say

Tesla Inc. has failed to derail a suit by the California Civil Rights Department accusing the company of engaging in a pattern of racial harassment and bias at its main factory.

A judge issued a tentative ruling throwing out counterclaims by the electric-car maker that the department’s 2022 suit is unlawful. Tesla had claimed state officials didn’t provide adequate information about the civil rights allegations or engage in efforts to resolve the dispute before going to court.

The company will have a chance at a hearing set for Wednesday to persuade Alameda County Superior Court Judge Evelio Grillo to change his ruling before making it final. Grillo also said in his tentative ruling that Tesla can revise and refile its claims by Feb. 3.

Before Tesla countersued, Grillo in August denied Tesla’s request to throw out the state’s complaint, which described the Fremont plant as a “racially segregated workplace.”

California officials alleged that they found widespread evidence of Black workers subject to mistreatment, including harassment, unequal pay, and retaliation, at Tesla’s Fremont plant during a three-year investigation.

Tesla didn’t immediately respond to a request for comment. The company has said it “strongly opposes all forms of discrimination and harassment” and called the state’s suit “misguided” in a blog post before the complaint was filed.

Diaz, who won a $137 million jury verdict against Tesla, is scheduled to face off again with the company over monetary damages in March after he refused to accept a judge’s decision that he was entitled to just $15 million.

The case is Department of Fair Employment and Housing v. Tesla Inc., 22CV006830, California Superior Court, Alameda County.

–With assistance from Robert Burnson.

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A massive hurricane, a historic drought, and 16 other major disasters across the US collectively racked up $165 billion in damages and killed at least 474 people in 2022, according to a National Oceanic and Atmospheric Administration analysis published Tuesday.

NOAA’s National Centers for Environmental Information track the biggest of the big disasters, each one costing at least $1 billion in damage. 2022 was the nation’s third most expensive year for billion-dollar disasters by NOAA’s ranking, following 2017 ($373.2 billion) and 2005 ($253.5 billion).

Billion-dollar disasters are the new normal in the US and the rest of the world. That’s because people continue to move and build in risky areas — and the risk itself increases as the planet gets warmer, wetter and more prone to extremes. Severe weather events and other disasters globally cost roughly $120 billion in insured losses and $270 billion in uninsured losses last year, according to estimates by insurance giant Munich Re. And all these disasters played out during the fifth-warmest year on record, estimates the European Union’s Copernicus Climate Change Service.

In the US, the single most damaging event was Hurricane Ian, which caused $112.9 billion in damages. The storm was also the most expensive disaster for insured losses worldwide, according to Munich Re. Ian rapidly intensified into a Category 4 hurricane that slammed into southwestern Florida with a lethal combination of storm surge, winds and rain. The result was a climate catastrophe: washed out roads and bridges, entire neighborhoods razed and power knocked out for millions. The loss of life was also staggering. At least 152 people died from the storm, according to NOAA’s count.

Another major event was the year-long drought and heat wave across several Western and Southern Plain states that caused $22.2 billion in damage. One study published in the journal Nature Climate Change estimated this prolonged period of dryness, which started prior to 2022, was the region’s worst in more than 1,000 years. Consequently, major rivers and lakes have been dwindling to dangerously low levels and in some cases running dry, including Lakes Mead and Powell and the Colorado River. Millions of people rely on this water.

The extreme heat tied to this dry spell killed more than 100 people across Arizona, Nevada, California, Oregon and Texas. But the federal government’s estimates are likely an undercount. In Arizona’s Maricopa County alone, for example, local officials identified 378 confirmed heat-associated deaths in 2022.

NOAA Administrator Richard Spinrad pointed to the role of climate change in disasters in a press conference on Tuesday. “Climate change is creating more and more intense, significant damage and often sets off cascading hazards, like intense drought followed by devastating wildfires, followed by dangerous flooding and mudslides,” he said, “as we’re seeing, for example, as a consequence of the atmospheric rivers in California right now.”

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The California Public Employees’ Retirement System is making a $1 billion wager that small private equity firms without the heft of the biggest buyout institutions can boost the pension giant’s returns and clout.

Calpers, the largest public pension fund in the US, will invest $500 million each with TPG Inc. and GCM Grosvenor to help launch funds backing up-and-coming private equity firms, pension officials said. Those funds could take stakes in smaller investment managers and direct money to those run by women and minorities, as well as offer seed funding to newer firms.

Calpers Chief Investment Officer Nicole Musicco says Calpers’s latest investments aren’t related to affirmative action or politics. Instead, she hopes that by forging ties with private equity managers while they’re young, Calpers will become one of the first calls made when choice deals arise.

“It’s not about a diversity play,” she said in an interview. “It’s about generating alpha in a more thoughtful way, and leveraging partners we will work hand in glove with.”

Musicco, 48, has made a push for the $449 billion pension fund to invest directly in companies and bypass private equity giants. After joining Calpers in February 2022, Musicco began mapping out a strategy that will gradually curb its reliance on the biggest private equity funds and reduce fees over time.

Calpers is the first major investor in TPG’s new Next fund and Grosvenor’s new Elevate strategy. The fund could do more strategic partnerships with managers in other investment areas, she said, and it will help “to have a smart friend at the table.”

Major challenge

Musicco, who spent more than 16 years at the Ontario Teachers’ Pension Plan, faces the challenge of restoring Calpers’s credibility and influence after it cycled through a series of leaders, strategy shifts, and a retreat from private equity in the decade following the financial crisis. At the same time, she has to navigate demands from politicians and other local organizations on how state money should be managed.

California politicians passed a law in 2021 requiring the biggest public pensions to report more details on their investments with “emerging or diverse managers.”

Like other pension funds, Calpers has faced a shortfall — the firm’s funded status fell from 81.2% in June 2021 to an estimated 72% a year later. Calpers posted a 6.1% loss in the latest fiscal year, marking its worst investment performance in more than a decade. Meanwhile, the pension fund’s private equity investments had positive returns of 21.3%.

The new CIO has made an effort to give staff more power to invest in private assets without permission from the board. While she says the latest investment doesn’t represent a “diversity play,” Musicco has also advocated for the firm to weigh environmental, social and governance concerns across its investments.

Bold Bet

She’s taking a bolder approach on new managers than predecessors.

Former Calpers CIO Ted Eliopoulos embarked on a plan to slash the number of managers the fund worked with during his tenure as CIO from 2014 to 2018. After Ben Meng took over, Calpers scaled back its use of emerging managers in the stock investing business because various firms’ returns fell short.

Gatekeepers of pension money – under intense pressure to make pension checks for retirees more secure — typically demand that money managers have scale and a long history of performance that demonstrates they can weather investment cycles.

As a result, pension funds often go with widely known investment managers such as Blackstone Inc.

“There are attractive returns to be generated by focusing on a segment of the investment universe that has less capital going to it,” said Jonathan Levin, the president of GCM Grosvenor, referring to newer and more diverse managers.

“The last few years has brought a broader set of investors into the conversation, but there is more work to be done,” he added in an interview.

In 2020, Calpers started laying the groundwork for adding smaller and mid-size managers. Staffers argued that younger, more eager investors would lift returns. Some studied data showing that managers’ earlier and smaller funds outperformed later and larger funds. However, the program’s direction was uncertain at that time amid employee turnover and leadership shuffles.

Emerging managers now make up about 2% of Calpers’s $50 billion private equity portfolio.

In a November discussion, Calpers board member Betty Yee cautioned that the pension would have to weigh performance and costs when thinking about diverse and emerging managers.

“I think cost is still going to continue to be an issue. Track record will continue to be an issue,” she said. “But that’s not to say we don’t cultivate talent because I do think there are new opportunities out there for bringing in these managers.”

–With assistance from John Gittelsohn.

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(Bloomberg) — Moderna Inc. is looking for potential approval of two new vaccines this year to help compensate for waning sales of its COVID-19 shot, according to Chief Executive Officer Stephane Bancel.

Sales of the COVID vaccine, Spikevax, will be at least $5 billion this year, a figure that could rise as the company signs additional government contracts and starts selling to private companies in the US this year, Bancel said Monday in an interview at the JPMorgan Healthcare Conference in San Francisco. Last year’s sales were about $18.4 billion, the company said in a statement.

This year represents a transitional period as Moderna expects to share late-stage trial data from experimental vaccines for two other diseases, respiratory syncytial virus  and seasonal influenza, two of the three that created this season’s “tripledemic” of respiratory outbreaks, along with COVID. Moderna has 48 development programs underway, and its board has approved a research and development budget of about $4.5 billion for 2023, the company said.

The shares rose 2.6% at 2:51 p.m. in New York. They lost 29% last year.

Moderna will soon divulge data on the two experimental vaccines, setting up the possibility it will introduce the vaccines later this year, Bancel said. The drugmaker now has two priority review vouchers that entitle the company to fast US regulatory review of specific drugs. Moderna received one upon the approval of its COVID vaccine and said Monday it had bought another from an undisclosed company.

Moderna could introduce combination shots as soon as next year, Bancel said. The first combination vaccine it could bring to market would likely be one for COVID-19 and flu, followed by a trio adding RSV, which could be available by 2025 at the earliest, he said.

The drugmaker is also preparing to market COVID shots to non-government payers. It hasn’t finalized the shot’s commercial price tag, although the range given by rival Pfizer Inc. of $110 to $130 seems appropriate, Bancel said.

“We think that is reasonable given the value being created by the vaccines,” he said.

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