Business
Stocks Drop as Recession Fears Surface
Stock markets tumbled on Monday, on track for their worst day of the year as investors fretted about the economy after President Trump refused to rule out the possibility of a recession caused by his trade policies.
The S&P 500 slid more than 2 percent in afternoon trading on Wall Street, dragging portfolios even lower following three straight weeks of selling. The index is now more than 8 percent below a record high set last month, approaching a “correction,” a Wall Street term for a decline of 10 percent or more from a recent high.
“The markets are scared of the uncertainty that the tariff rhetoric is bringing,” said Andrew Brenner, head of international fixed income at National Alliance Securities. The S&P 500 is now slightly down from Election Day, erasing all of the gains it made since the vote, and then some.
The tech-heavy Nasdaq has been hit even harder, as the rally driven by enthusiasm for artificial intelligence reversed course. The index fell into a correction last week, and dropped more than 3 percent on Monday. Tesla’s shares plunged more than 11 percent, while Alphabet, Apple and Nvidia each fell over 4 percent.
“There’s just no support in the tech stocks right now,” said Larry Tentarelli, the chief technical strategist at Blue Chip Daily Trend Report. Many tech companies have grown so large that movements in their stocks have an outsize influence on the broader market.
Stocks in Europe and Asia also came under pressure but the declines paled in comparison to losses in the United States. An index tracking the eurozone’s largest public companies, which hit a record high last week, dropped 1.6 percent. Hong Kong’s Hang Seng Index fell more than 1.8 percent.
Investors seeking havens continued to opt for the relative safety of bonds, pushing down the 10-year U.S. Treasury yield to 4.23 percent; bond prices move inversely to yields. The combination of falling stocks and declining interest rates is often seen as a sign of economic unease.
Those worries are partly reflected by traders’ bets that the Federal Reserve will resume cutting the rate it controls, pricing in three cuts this year, according to CME FedWatch. Stock investors generally embrace rate reductions, which lower the cost of borrowing for businesses and consumers, but not when they are spurred by concerns about economic growth.
In a Fox News interview that aired on Sunday, President Trump refused to rule out the possibility that his policies would cause a recession.
Over the past few weeks, Mr. Trump has threatened, imposed, suspended and resumed tariffs on America’s largest trade partners: Canada, Mexico and China. The dizzying shifts, including last-minute exemptions for some automakers and energy products, have led to heightened uncertainty, unnerving investors.
“The market volatility is much less about the bad news of tariffs and much more about the uncertainty of tariffs, especially uncertainty as to what the policy is, where it is headed, how long it will last and what the end result will be,” said David Bahnsen, the chief investment officer at the Bahnsen Group.
By most measures, the U.S. economy is still solid, with the latest data on hiring holding steady. But economists have turned gloomier as they come to grips with Mr. Trump’s seesawing approach to tariffs, which has hamstrung businesses trying to plan investments and hiring. Cuts to the federal work force and government spending freezes have also dented consumer sentiment.
A report on inflation due this week will be closely watched, as surveys of consumers suggest that they expect price increases to pick up, a potentially worrying sign for the Fed as it tries to bring inflation down further. The rising cost of eggs and other necessities has squeezed shoppers’ wallets, and tariffs and mass deportations could push prices higher.
U.S. stocks have underperformed markets elsewhere in recent weeks. Given a murkier outlook for the American economy, “the recent moves might well have further to go,” Jan Hatzius, the chief economist at Goldman Sachs, said in a note on Monday. Strategists at the bank recently increased the chances of a U.S. recession in the coming year to 20 percent.
Analysts at JPMorgan Chase warned in a report that the spillover from a possible U.S. slowdown has resulted in a “materially higher risk of a global recession this year due to extreme U.S. policies.” They put the probability of such a downturn at 40 percent.
On Monday, retaliatory tariffs by China on U.S. agricultural products came into effect. On Wednesday, the Trump administration is set to put in place a 25 percent tariff on all steel and aluminum imports. Mr. Trump has also threatened to impose “reciprocal tariffs” on all U.S. imports to match other countries’ tariffs and trading policies next month.
Business
OpenAI CEO Sam Altman addresses Molotov cocktail attack on his home and AI backlash
Hours after a Molotov cocktail was thrown at his San Francisco home, OpenAI Chief Executive Sam Altman addressed the criticism surrounding artificial intelligence that appears to have been the impetus for the attack.
In a lengthy blog post, Altman shared a family photo of his husband and child, stating he hopes it might convince people not to repeat the attack despite their opinions on him.
The San Francisco Police Department arrested a 20-year-old man in connection with the Friday morning attack but did not publicly comment on the motivation. Altman and his company, the maker of ChatGPT, have been at the center of a heated debate about whether AI will change the world for better or worse.
“While we have that debate, we should de-escalate the rhetoric and tactics and try to have fewer explosions in fewer homes, figuratively and literally,” Altman wrote.
The rise of AI chatbots that can generate text, images and code has raised concerns about whether there are enough guardrails around the development of the powerful technology.
From job displacement to the effects of AI on mental health and war, critics have been vocal about their fears. Families have also sued technology companies including OpenAI and Google, alleging in lawsuits that their chatbots contributed to the death of their loved ones. OpenAI has faced backlash after striking a deal with the Department of Defense shortly after its rival Anthropic raised AI safety concerns and lost its contract.
Politicians in California and other states have been passing new laws that target AI safety. And groups that aim to stop the development of AI have regularly protested outside OpenAI’s San Francisco headquarters.
In the blog post, Altman acknowledged the fear and anxiety surrounding AI was “justified” because “we are in the process of witnessing the largest change to society in a long time, and perhaps ever.” But he also said that people will do “incredible things” with AI and that “technological progress can make the future unbelievably good.”
Altman has become a controversial figure as companies race to advance AI. In 2023, OpenAI’s board of directors fired Altman, stating that he wasn’t “consistently candid” in his communications with the board and that board members had lost confidence in his ability to lead the company. OpenAI’s mission is to “ensure that artificial general intelligence benefits all humanity,” the board said at the time. Facing pressure from its employees and investors, OpenAI reinstated Altman as chief executive less than a week after he was pushed out. A new board was put in place and members who supported ousting Altman left.
Altman said in the blog post that he has made mistakes and done things he’s not proud of, describing himself as “conflict-averse.”
“I am not proud of handling myself badly in a conflict with our previous board that led to a huge mess for the company,” he wrote.
Since his return, OpenAI has expanded its presence in healthcare, retail, defense and other industries. But controversy has followed the company. OpenAI is currently in a legal battle with billionaire Elon Musk, who has accused the company of abandoning its nonprofit founding mission in a case that’s expected to head to trial. Musk, a co-founder and early investor in OpenAI, alleges he was manipulated into funding what he thought was a nonprofit but turned into a “moneymaking endeavor.” OpenAI alleges that Musk, who runs rival xAI, is suing to slow down a competitor.
Last week, the New Yorker published a lengthy story about Altman that posed the question about whether he could be trusted.
In his blog post, Altman referenced an “incendiary article” published about him but didn’t name the publication, adding that “words have power.” OpenAI didn’t immediately respond to a request for comment on Saturday. On the social media site X, Altman said he regretted using certain words in his blog after an editor from the AI newsletter Transformer pointed out that Altman implied that a critical piece of journalism was responsible for the attack.
Altman said the attack happened at 3:45 a.m. on Friday but the Molotov cocktail “bounced off the house and no one got hurt.”
The San Francisco Police Department and OpenAI previously confirmed the attack on Friday. The suspect allegedly made threats to OpenAI’s headquarters after the attack at Altman’s home.
Several news outlets, including the San Francisco Chronicle, identified the suspect as Daniel Alejandro Moreno-Gama.
Moreno-Gama was booked on Friday on suspicion of making criminal threats, arson, attempted murder, possession of a destructive device and other charges. The Chronicle also cited a Substack that appeared to be from the suspect that includes posts titled “AI Existential Risk.”
The Times asked the San Francisco Police Department on Saturday whether the account belonged to the suspect.
“At this time we have no further updates to provide,” the department said in an e-mail.
Business
Fire survivors call for audits of Edison’s wildfire prevention spending
Survivors of the devastating Eaton fire called on state lawmakers on Wednesday to pass a bill requiring audits of spending by Southern California Edison and the state’s two other big for-profit electric companies on wildfire prevention.
The survivors pointed to an investigation by The Times that found that Edison had not spent hundreds of millions of dollars that it told regulators before the fire was needed to keep its transmission system safe. Edison had begun charging customers for the costs.
“Californians funded the wildfire prevention,” Joy Chen, executive director of Every Fire Survivor’s Network, told members of the Assembly Utilities and Energy Commission on Wednesday. ”And we survivors paid the price when that work was not done.”
While the government’s investigation into the fire has not yet been released, Edison has said it believes that a century-old transmission line, which had not carried power since 1971, may have briefly re-energized on the night of Jan. 7, 2025, to ignite the fire. The inferno killed 19 people and destroyed thousands of homes and other structures in Altadena.
Chen’s wildfire survivors group and Consumer Watchdog sponsored the bill, known as Assembly Bill 1744. It would require the wildfire safety spending by Edison, Pacific Gas & Electric and San Diego Gas & Electric to be audited by an independent accounting firm.
The state Public Utilities Commission would have to consider the audits’ findings before agreeing to raise customer rates to cover even more wildfire spending.
“Had Edison known it would be accountable for those funds, that wildfire may not have started,” Jamie Court of Consumer Watchdog told the committee, referring to the Eaton fire.
All three utilities said at the hearing they opposed the bill.
A lobbyist for San Diego Gas & Electric said he believed the audits were unnecessary because the commission was already reviewing the spending.
“We think it creates a duplicative process,” he said.
At the committee hearing, Edison’s lobbyist did not say why the company was opposed to the bill.
The company has previously said that safety is its top priority and that it does not believe maintenance on its transmission lines suffered before the Eaton fire.
Also voicing support for the bill at the hearing were survivors of other deadly wildfires in the state, including the 2018 Camp fire, which killed 85 people and destroyed much of the town of Paradise. Investigators found that the fire was ignited when equipment failed on a decades-old PG&E transmission line.
The bill’s author, Assemblywoman Tasha Boerner, an Encinitas Democrat, pointed to how independent audits of the three companies’ wildfire spending from 2019 to 2020 found that $2.5 billion could not be accounted for.
Those were the last independent audits of the three companies’ wildfire spending.
Despite the findings, the commission did not require the companies to return any of the questioned amounts to electric customers. Instead, the commission agreed the companies could spend billions of dollars more, Boerner said.
“This is frankly unacceptable,” she said.
Asked for a response to those audits, the lobbyist from San Diego Gas & Electric told the committee he wasn’t familiar with the findings.
California electric rates are the nation’s second highest after Hawaii.
In 2024, wildfire expenses amounted to 17% to 27% of the costs the three companies charge to consumers, according to a legislative analysis of Boerner’s bill. The average residential customer pays $250 to $490 a year for that spending.
Business
The tale of L.A.’s iconic hot sauce and how Ozempic is making it even hotter
For 55 years, the family behind Tapatío has refused to even write down the recipe for Los Angeles’ iconic hot sauce, passing its secret formula for success only from lip to ear in closed rooms.
The Saavedra family put the ingredients on paper for the first time earlier this year as they sold the beloved brand to backers who plan to make their salsa picante even bigger beyond California’s borders. It is a weight off the shoulders of Luis Saavedra, the founder’s son and one of the few people who knew the recipe.
“We didn’t want anyone to know what we were using,” he told The Times in an interview at Tapatío’s factory in Vernon. “That always scared my sisters, because what if something happens?”
Demand for hot sauces had taken off for unexpected reasons just as the Saavedras were looking to sell. The millions of people on Ozempic and other powerful weight-loss drugs often have cravings for more flavor. The values of some sauce companies have skyrocketed. Bachan’s, a Japanese barbecue sauce brand, was acquired in February for $400 million.
While the Dallas private investment firm that bought Tapatío, Highlander Partners, wouldn’t share the terms of the deal, the company’s new chairman, Jeff Partridge, said it hopes to capitalize on the growing appetite for more heat to splash on proteins.
“Whether it’s GLP-1 or desire for proteins, Tapatío and hot sauces enhance that experience,” he said. “Consumers are increasingly seeking flavors.”
Red peppers drive Tapatío’s taste, though the company won’t share which exact peppers are used. The thin sauce uses garlic, salt and other spices for a tangy, peppery punch. It has a mild heat that doesn’t linger.
Luis Saavedra, right, former chief executive officer of Tapatío Foods and son of company founder Jose-Luis Saavedra, speaks with Eric Beatty, the current chief executive, at the company’s manufacturing facility on Wednesday.
(Genaro Molina / Los Angeles Times)
The big acquisition is a long way from the brand’s birth in founder Jose-Luis Saavedra’s kitchen more than 50 years ago.
Saavedra, originally from Mexico City, long dreamed of making his way north. He landed in Chicago in his late 20s, working as a Spanish translator. He met his wife and moved to Southern California.
He worked at an aerospace parts manufacturer in Los Angeles. The homemade hot sauce he brought for lunch was a hit with co-workers who asked for more. When he was laid off in the late ’60s during an oil recession, he started selling bottles.
As sales rose, he rented a small space for production in Maywood and it officially became a business in 1971. The whole family pitched in. His son, Luis, remembers twisting on caps and attaching labels to bottles when he was 13.
Bottles are filled with Tapatío hot sauce before being labeled at the Tapatío manufacturing facility on Wednesday. The hot sauce company was recently acquired by Dallas-based private investment firm Highlander Partners.
(Genaro Molina / Los Angeles Times)
Saavedra and his son would drive a van up and down Los Angeles, manually packing and unloading the product to local corner stores. Many of the first bottles were stocked in East Los Angeles stores.
About five years in, the company made enough for Saavedra to quit the two part-time jobs he had picked up to keep the business afloat. Operations remained in Maywood for 14 years before they expanded to a 7,000-square-foot building in Vernon.
In 1996, the company made its boldest bet, splurging on a 30,000-square-foot building.
In the same facility today, the strong aroma of spices tickles visitors’ noses. The precise portioning of the secret ingredients, matching the ratios of the founder’s original formula, happens in a room locked off from employees. The magic mix is then rapidly poured into a long line of empty bottles that march along a conveyor belt like soldiers.
It’s the legacy of the founder, who refused to be deterred by naysayers or obstacles to growth, said Saavedra’s son.
“Let’s go around it,” the younger Saavedra said, quoting his father’s mantra in the face of problems. “Let’s go under. Let’s go above it.”
His father’s stubbornness paid off in court as the company was sued for its name. It was once called Cuervo — his wife’s original last name — and tequila giant Jose Cuervo came after it. Saavedra had already trademarked the name in California, so it got a big payout to give up the name.
Saavedra briefly entertained the name “Charro,” a reference to Mexican cowboys, before landing on Tapatío, a nickname used for people born in Guadalajara, Jalisco, where all three of his children were born. Its logo evolved into a beaming cowboy with bright blue eyes in a wide-brimmed hat.
The Tapatío name was also challenged. Del Monte Foods sued Saavedra in the ’80s, claiming the name was too similar to its brand “Patio.” Saavedra won that case.
The founding father’s hardheadedness could also sometimes cause trouble.
Luis Saavedra, son of company founder Jose-Luis Saavedra, shows the original Tapatío label, left, compared to the current version.
(Genaro Molina / Los Angeles Times)
The younger Saavedra battled with his father in the late ’90s about changing the brand’s label to help it stand out on crowded shelves. The old bottles were largely black and white and looked a little outdated. Eventually, the senior Saavedra gave in. Sales skyrocketed.
Today, Tapatío is shaken over meals around the globe, though its dominance is strongest in California. It has been used in collaborations with other companies to spike mashed potatoes, protein powder, pickles and ramen.
Tacked to a wall at the Vernon factory is an old photo of the dozen people who were there to launch the brand’s new facility 30 years ago. Some of the employees still work there, including Jorge Cuervo, the production supervisor, and Fabian Diaz, who mans the forklift.
Diaz, who moves countless pallets of product, jokes he was born at the factory, having spent almost his entire adult life working for the company.
Under the new ownership, all 25 current employees were retained, and the firm has committed to hiring more.
“They’ve been doing this for a long time,” Luis Saavedra said. “They have a passion for it.”
The family began exploring options for a sale in late 2024, right after the founder, now 97, suffered a stroke.
Jose-Luis Saavedra had remained closely involved in day-to-day operations despite his age, often spending from sun-up to sun-down at the factory.
As he took on all his father used to do as well as his own workload, the younger Saavedra was getting burnt out and started to worry that keeping the company family-owned could be hurting the brand.
“Work was really devouring me,” Luis Saavedra said. “It was a tough decision, very difficult. We cried together as a family, then we said, ‘In the long run, it’s better.’”
“It was a tough decision, very difficult. We cried together as a family, then we said, ‘In the long run, it’s better,’” Luis Saavedra said of the decision to sell the company.
(Genaro Molina / Los Angeles Times)
Once it let potential suitors know the company was in play, the offers poured in. The family considered offers from around 40 companies before choosing Highlander Partners.
In a few years, the company’s new leaders hope to use the growing demand for flavor triggered by weight-loss drugs to bring California’s top sauce to many more markets east of the Rockies, said Eric Beatty, the company’s current chief executive.
“We believe that we’ve got these sector tailwinds behind us,” Beatty said. “It’s going to be a really good story.”
Eric Beatty, current chief executive officer of Tapatío Foods LLC, stands next to boxes of the hot sauce that are ready for shipping at the Tapatío manufacturing facility on Wednesday.
(Genaro Molina / Los Angeles Times)
New leadership has grand plans for the brand, hoping to build more facilities and add new products.
“We’ll always be a California company,” Beatty said. “This will always be the center of the Tapatío universe.”
Meanwhile, the Saavedra family still has a minority stake in the company and will continue to help manage it.
“They are the essence of the brand, and really understand the heartbeat of the brand,” said Partridge, Tapatío’s new chairman. “We certainly want to make sure that they always have a voice.”
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