By Ann Saphir

(Reuters) -U.S. Federal Reserve officials say that monetary policy will need to stay restrictive for “some time” to bring inflation back down to the Fed’s 2% target, but their unity around that phrase masks an ongoing debate over another possible rate hike this year.

“I remain willing to support raising the federal funds rate at a future meeting if the incoming data indicates that progress on inflation has stalled or is too slow to bring inflation to 2% in a timely way,” Fed Governor Michelle Bowman said Monday in prepared remarks to a banking conference.

Despite considerable progress, she said, “Inflation continues to be too high, and I expect it will likely be appropriate for the (Fed) to raise rates further and hold them at a restrictive level for some time.”

Inflation, as measured by the consumer price index, is down from around 9% last year to around 3.7% at last read, slowed at least in part by the Fed’s 5.25 percentage points of interest-rate increases over the last 18 months.

The Fed targets 2% inflation.

Given that progress, U.S. central bankers last month opted to keep the policy rate in its current 5.25%-5.50% range even as most signaled another rate hike would likely be needed before year’s end.

Speaking at a separate event in New York on Monday, Fed Vice Chair for Supervision Michael Barr said he believes rates are now “at or very near” a sufficiently restrictive level.

“In my view, the most important question at this point is not whether an additional rate increase is needed this year or not, but rather how long we will need to hold rates at a sufficiently restrictive level to achieve our goals,” Barr said in remarks prepared for delivery to the Forecasters Club of New York. “I expect it will take some time.”

Fed Chair Jerome Powell, who on Monday was visiting York, Pennsylvania to get an up-close view of how businesses and workers are experiencing the economy, last month also said restrictive policy would be needed “for some time,” as did the influential chief of the New York Fed, John Williams, on Friday.

Meanwhile, speaking Monday evening, Cleveland Fed leader Loretta Mester also said the Fed’s work is likely not done.

“I suspect we may well need to raise the fed funds rate once more this year and then hold it there for some time as we accumulate more information on economic developments and assess the effects of the tightening in financial conditions that has already occurred,” Mester said in a speech to a group in Cleveland.

Fed forecasts published last month show there is some divergence – though as a group they expect fewer rate cuts next year than they did in June, only a bare majority see rates ending 2024 any higher than 5%, with 9 of 19 policymakers expecting them to be lower.

The same Fed forecasts also show policymakers as a group expect stronger economic growth and a stronger job market than they had expected just three months earlier. But they also made only small adjustments to their forecasts for inflation.

“The only way to square those would be to have a somewhat higher-for-longer rate path,” Richmond Fed President Thomas Barkin said in an interview on Bloomberg’s “Odd Lots” podcast conducted last Thursday but aired Monday. “I think there is case to be made that the U.S. economy is a lot more resilient than we thought it was, resilient to interest rate hikes, resilient to all the shocks we’ve talked about.”

Even so, he said, “One of the things I liked about our posture coming out of the last meeting is that, with demand relatively strong by all accounts, the labor market still relatively strong, and inflation cooling, we have the latitude to say, let’s see how this develops.”

(Reporting by Dan Burns, Pete Schroeder, Michael S. Derby and Ann Saphir; Editing by Anna Driver, Andrea Ricci and Cynthia Osterman)

By Jack Queen and Luc Cohen

NEW YORK (Reuters) – A defiant Donald Trump attacked New York’s attorney general and the judge overseeing his civil fraud trial as it began on Monday, with a state lawyer accusing the former president of generating more than $100 million by lying about his real estate empire.

Attorney General Letitia James is seeking at least $250 million in fines, a permanent ban against Trump and his sons Donald Jr and Eric from running businesses in New York and a five-year commercial real estate ban against Trump and the Trump Organization.

Testimony in the Manhattan courtroom began following opening statements, with Donald Bender, a partner at Mazars USA and longtime accountant for Trump’s businesses, as the state’s first witness.

Trump told reporters before the trial began that the case was a “scam,” a “sham” and a political vendetta by James, and during a lunch break called the Democrat “a corrupt person, a terrible person. Driving people out of New York.”

He was equally unsparing of the judge, Arthur Engoron, calling him a partisan Democrat who is using the case to interfere with the 2024 presidential election, where Trump holds a big lead for the Republican nomination.

“This is a judge that should be disbarred,” Trump told reporters. “This is a judge that should be out of office.”

Trump’s election campaign used the start of the trial for fundraising, saying he was defending his family and reputation from New York Democrats it called “corrupt tyrants.”

The case concerns accusations by the attorney general that Trump inflated his assets and his own net worth from 2011 to 2021 to obtain favorable bank loans and lower insurance premiums.

‘MONA LISA PROPERTIES’

James has accused Trump of materially overvaluing assets including his Trump Tower penthouse apartment in Manhattan, his Mar-a-Lago estate in Florida and various office towers and golf clubs, and inflated his own fortune by as much as $2.2 billion.

“This isn’t business as usual, and this isn’t how sophisticated parties deal with each other,” Kevin Wallace, a lawyer from James’ office, said in his opening statement. “These are not victimless crimes.”

Christopher Kise, a lawyer for Trump, countered in his opening statement that Trump’s financials were entirely legal.

“He has made a fortune literally being right about real estate investments,” Kise said. “There was no intent to defraud, there was no illegality, there was no default, there was no breach, there was no reliance from the banks, there were no unjust profits, and there were no victims.”

Alina Habba, another lawyer, separately told Engoron that Trump’s assets were “Mona Lisa properties” that could fetch premium prices if Trump sold them.

Trump wore a dark blue suit, a brighter blue tie and an American flag pin on his lapel in court.

As he entered, he called the case “a continuation of the single greatest witch hunt of all time.”

James said her office was ready to prove its case.

“The law is both powerful and fragile,” she said. “No matter how much money you think you may have, no one is above the law.”

SIX CLAIMS

Engoron is hearing evidence without a jury.

Last week, the judge found Trump, his adult sons and 10 of his companies liable for fraud, describing in scathing terms how the defendants made up valuations.

He said these included valuing the Trump Tower apartment as if it were three times its actual size and worth $327 million, and estimating that Mar-a-Lago was worth up to $739 million though its assessed value was no more than $28 million.

The judge canceled business certificates for companies controlling pillars of Trump’s empire, and said he would appoint receivers to oversee their dissolution.

Trump responded at the time by calling Engoron “deranged.”

The trial will review six additional claims including falsifying business records, insurance fraud and conspiracy, and address how much in penalties the defendants should pay.

Before opening arguments, Engoron described himself as a generalist on the law. “One thing I know a lot about is the definition of fraud,” he said.

MANY LEGAL WOES

Wallace played an excerpt from a deposition where Michael Cohen, who had been Trump’s personal lawyer and fixer but has since turned against his former boss, said the goal was “to attain the number that Mr. Trump wanted.”

Kise countered that just because people disagree about valuations does not mean one valuation must be fraudulent.

“They are not designed to be absolutes,” he said.

In his testimony, Bender said he relied on information provided by Trump and his companies when compiling Trump’s personal financial statements.

“The original numbers come from the Trump Organization, and any changes that would have been made at the end would have been approved by the Trump Organization,” Bender said.

Trump frequently spoke with Habba while Bender was on the stand. Bender is expected to resume his testimony on Tuesday.

The trial is scheduled to run through early December.

More than 150 people including Cohen could testify, though much of the trial may be a battle of experts opining on financial documents.

Trump also faces several other legal headaches, which have been a financial drain, and made him the first sitting or former U.S. president to be criminally charged.

He has been criminally charged in Washington over his efforts to undo his loss in the 2020 presidential election, in Georgia over moves to reverse election results there, in Florida over his handling of classified documents upon leaving office, and in New York over hush money payments to a porn star.

Trump has denied all wrongdoing and pleaded not guilty.

(Reporting by Luc Cohen and Jack Queen in New York; Additional reporting by Doina Chiacu in Washington; Editing by Noeleen Walder, Nick Zieminski and Grant McCool)

By Patricia Zengerle

WASHINGTON (Reuters) – A last-ditch weekend spending agreement avoided a U.S. government shutdown but left pro-Ukraine officials in Washington scrambling on Monday to determine the best path forward for securing approval for billions more assistance for Kyiv.

Leaders in the Senate, which is narrowly controlled by President Joe Biden’s fellow Democrats, promised to take up legislation in the coming weeks to ensure continued U.S. security and economic support for Ukraine.

But in the Republican-led House of Representatives, Speaker Kevin McCarthy said he wanted more information from the Biden administration, and a Republican pushing for his removal as speaker accused McCarthy of cutting “a secret deal” with Biden to allow the House to vote on a bill.

Washington has sent the Kyiv government $113 billion in security, economic and humanitarian aid since Russia invaded in February 2022. President Joe Biden asked Congress in July to approve another $24 billion related to Ukraine, which Ukraine supporters – Republicans as well as Democrats – had hoped could become law as part of a spending bill.

A U.S. official said that, as of Monday, the Defense Department had $1.6 billion left to replace weapons sent to Ukraine, no funds left under the Ukraine Security Assistance Initiative (USAI) and $5.4 billion worth of Presidential Drawdown Authority.

Congress passed a stopgap funding bill late on Saturday after McCarthy backed down from a demand by his party’s hardliners for steep cuts in domestic aid programs. But he, and some other Republicans in both the House and Senate, refused to include more aid for Ukraine in the measure.

REPUBLICAN ANTI-UKRAINE DRUMBEAT CONTINUES

Opponents of Ukraine aid, many of whom are close allies of former Republican President Donald Trump as he seeks re-election to the White House next year, kept up their drumbeat against assistance for Kyiv on Monday.

Republican Representative Matt Gaetz, who said he would try this week to remove McCarthy as speaker, accused McCarthy on Monday of reaching a “secret deal” with Biden for Ukraine aide, amid reports that McCarthy had agreed to allow a House vote on assistance for Kyiv after the spending bill passed.

McCarthy later denied it. He called on the administration to arrange a briefing for House members about the path it sees to reach an end to the conflict.

“Our members have a lot of questions, especially on the accountability provisions of what we want to see with the money that gets sent,” he told reporters.

White House spokesperson Karine Jean-Pierre urged Congress to move quickly. “They don’t have to wait 45 days to get this done,” she told a daily press briefing, where she also expressed confidence the assistance would continue.

“If (Russian President Vladimir) Putin thinks he can outlast us, he’s wrong. We’ll have another package of aid soon to signal our support for the brave people of Ukraine,” Jean-Pierre said.

Department of Defense Comptroller Michael McCord sent a letter to McCarthy saying the Pentagon has already had to slow down resupplies for some troops.

“Today, DoD has exhausted nearly all available security assistance funding for Ukraine,” McCord wrote in the letter, dated Sept. 29 and expressing concern that the stopgap spending bill did not include security assistance for Ukraine.

And in an effort to show the impact on U.S. congressional districts, McCord’s letter called out how U.S. funds increase jobs and production in Tucson, Arizona, where RTX Corp has facilities and Lockheed Martin’s Camden, Arkansas, facilities where GMLRS missiles and Patriot interceptors are made.

Ukraine’s Foreign Minister Dmytro Kuleba said Kyiv was in talks with Republicans and Democrats in Congress, and that the drama around the stopgap bill was an “incident” rather than something systemic.

(Reporting by Patricia Zengerle; Additional reporting by Mike Stone, Moira Warburton, Makini Brice and Steve Holland; Editing by Don Durfee and Alison Williams)

By Ann Saphir

(Reuters) -U.S. Federal Reserve officials say that monetary policy will need to stay restrictive for “some time” to bring inflation back down to the Fed’s 2% target, but their unity around that phrase masks an ongoing debate over another possible rate hike this year.

“I remain willing to support raising the federal funds rate at a future meeting if the incoming data indicates that progress on inflation has stalled or is too slow to bring inflation to 2% in a timely way,” Fed Governor Michelle Bowman said Monday in prepared remarks to a banking conference.

Despite considerable progress, she said, “inflation continues to be too high, and I expect it will likely be appropriate for the (Fed) to raise rates further and hold them at a restrictive level for some time.”

Inflation, as measured by the consumer price index, is down from around 9% last year to around 3.7% at last read, slowed at least in part by the Fed’s 5.25 percentage points of interest-rate increases over the last 18 months.

The Fed targets 2% inflation.

Given that progress, U.S. central bankers last month opted to keep the policy rate in its current 5.25%-5.50% range even as most signaled another rate hike would likely be needed before year’s end.

Speaking at a separate event in New York on Monday, Fed Vice Chair for Supervision Michael Barr said he believes rates are now “at or very near” a sufficiently restrictive level.

“In my view, the most important question at this point is not whether an additional rate increase is needed this year or not, but rather how long we will need to hold rates at a sufficiently restrictive level to achieve our goals,” Barr said in remarks prepared for delivery to the Forecasters Club of New York. “I expect it will take some time.”

Fed Chair Jerome Powell, who on Monday was visiting York, Pennsylvania to get an up-close view of how businesses and workers are experiencing the economy, last month also said restrictive policy would be needed “for some time,” as did the influential chief of the New York Fed, John Williams, last Friday.

But neither they, nor Bowman or Barr, said how long they felt “some time” might last.

Fed forecasts published last month show there is some divergence – though as a group they expect fewer rate cuts next year than they did in June, only a bare majority see rates ending 2024 any higher than 5%, with 9 of 19 policymakers expecting them to be lower.

The same Fed forecasts also show policymakers as a group expect stronger economic growth and a stronger job market than they had expected just three months earlier. But they also made only small adjustments to their forecasts for inflation.

“The only way to square those would be to have a somewhat higher-for-longer rate path,” Richmond Fed President Thomas Barkin said in an interview on Bloomberg’s “Odd Lots” podcast conducted last Thursday but aired Monday. “I think there is case to be made that the U.S. economy is a lot more resilient than we thought it was, resilient to interest rate hikes, resilient to all the shocks we’ve talked about.”

Even so, he said, “One of the things I liked about our posture coming out of the last meeting is that, with demand relatively strong by all accounts, the labor market still relatively strong, and inflation cooling, we have the latitude to say, let’s see how this develops.”

(Reporting by Dan Burns, Pete Schroeder and Ann Saphir; Editing by Anna Driver and Andrea Ricci)

Tech stocks started the year on a roll driven by expectations that the US Federal Reserve will go slow on interest rate hikes. The hype over artificial intelligence also fuelled the rally, resulting in the tech-heavy Nasdaq index rallying by more than 40% at some point. Fast forward, the momentum has faded, and the index has posted its biggest loss for the year, raising serious concerns in the market.

Market Correction

The Nasdaq Index fell by about 4.8% in September, signaling a buildup in selling pressure among tech stocks. Following the deep pullback, strategists at  Goldman Sachs believe tech stocks could be about to turn the corner. The deep correction has essentially led to cheap valuations at a time when earning estimates are still rising amid solid underlying fundamentals.

Following the deep correction, the price/ earnings to growth ratio (PEG), which calculates price relative to earnings and long-term growth, has shrunk to 1.3 on the Nasdaq index. In contrast, the PEG median on the S&P 500 stock stands at 1.9. For the Nasdaq, it is the largest discount in nearly six years. The level has only been recorded five times in the last decade.

The cheap valuations could act as an opportunity for investors who missed out on the initial move higher to join the rally train. In a research note to investors, Goldman Strategists Cormac Conner and David Costing reiterated the divergence between falling valuations and improving fundamentals presents a tremendous opportunity for investors.

Earnings Boost

The focus now turns to third-quarter earnings that could act as a catalyst to trigger a bounce back after the recent correction. Expectations are high around tech stocks delivering better-than-expected results on the back of solid fundamentals in the third quarter. Profit upgrades among the tech stocks continue to outnumber downgrades, which should offer more support to potential bouncebacks.

Analysts are projecting technology stocks to post earnings growth in the upwards of 4.3%. The strategists are also confident of sector performance during the reporting season, given that the largest tech stocks have always outperformed the S&P 500 by more than 60% since 2016.

Likewise, the strategists are confident of US stocks even though they have come under pressure in the aftermath of the FED remaining hawkish. Stocks have pulled back significantly, having become clear the FED is not planning to cut interest rates anytime soon. With the high-interest rate environment, there have been growing concerns that access to cheap capital will be difficult, which could fuel the recession prospects.

Market Outlook

Nevertheless, the Goldman strategists are confident of the Nasdaq 100 finishing the year at 4,500, representing a 5% gain from current levels. Consequently, the index will recoup all the losses accrued last year when it fell by 19.4%. The strategist is also bullish about further upside over the next 12 months on the US economy, avoiding a deep recession.

On the other hand, strategists at RBC Capital Markets led by Lori Calvasina expect weakness in US stocks to continue after the recent correction. According to the analysts, there is room for investors to be more pessimistic, given that the AAII Investor Sentiment Survey, which measures net bullishness, has dropped sharply since mid-August.

By Diane Bartz

WASHINGTON (Reuters) -Microsoft chief executive Satya Nadella said Monday tech giants were competing for vast troves of content needed to train artificial intelligence, and complained Google was locking up content with expensive and exclusive deals with publishers.

Testifying in a landmark U.S. trial against its rival Google, the first major antitrust case brought by the U.S. since it sued Microsoft in 1998, Nadella testified the tech giants’ efforts to build content libraries to train their large language models “reminds me of the early phases of distribution deals.”

Distribution agreements are at the core of the U.S. Justice Department’s antitrust fight against Google. The government says that Google, with some 90% of the search market, illegally pays $10 billion annually to smartphone makers like Apple and wireless carriers like AT&T and others to be the default search engine on their devices.

The clout in search makes Google a heavy hitter in the lucrative advertising market, boosting its profits.

Nadella said building artificial intelligence took computing power, or servers, and data to train the software. On servers, he said: “No problem, we are happy to put in the dollars.”

But without naming Google, he said it was “problematic” if other companies locked up exclusive deals with big content makers.

“When I am meeting with publishers now, they say Google’s going to write this check and it’s exclusive and you have to match it,” he said.

REBUFFED BY APPLE

Nadella also testified that Microsoft had sought to make its Bing search engine the default on Apple smartphones but was rebuffed.

John Schmidtlein, Google’s lead lawyer, pressed Nadella on occasions when Microsoft did win default status on computers and mobile phones but users still bypassed Bing and continued to use Google by a wide margin.

Schmidtlein argued that Microsoft had made a series of strategic errors that led to Bing’s inability to grab a foothold, including a failure to invest in servers or engineers to improve Bing and a failure to see the mobile revolution.

Schmidtlein also said Microsoft’s success in becoming the default – on some Verizon phones in 2008, and BlackBerry and Nokia in 2011 – ended with the same result: users bypassed Bing and did the vast majority of their searches on Google.

On laptops, most of which use Microsoft operating systems, Bing is the default search engine and has a market share below 20%, Nadella acknowledged.

“You get up in the morning and you brush your teeth and you search on Google,” he added in a reference to Google’s dominance in search.

QUESTION OF QUALITY

Judge Amit Mehta, who will decide the case being tried in the U.S. District Court for the District of Columbia, asked Nadella why Apple would switch to Bing given the Microsoft product’s lower quality.

The question suggests Google’s argument – that it is dominant because of its quality and not because of illegal activity – has caught the judge’s interest.

Nadella became CEO of Microsoft in 2014, long after the tech giant faced its own federal antitrust lawsuit. That court fight, which ended in a 2001 settlement, forced Microsoft to end some business practices and opened the door to companies like Google.

As Google, which was founded in 1998, became an industry leading search engine, the two became bitter rivals. Both have browsers, search engines, email services and a host of other overlaps. They became rivals in artificial intelligence more recently, with Microsoft investing heavily in OpenAI and Google building the Bard AI chatbot among other investments.

(Reporting by Diane Bartz; editing by Christina Fincher and Deepa Babington)

By Luc Cohen

NEW YORK (Reuters) – Sam Bankman-Fried will likely defend himself at his fraud trial, due to begin on Tuesday, by arguing he did not think the use by his FTX cryptocurrency exchange of customer funds was improper and by challenging the credibility of those who say otherwise.

The arguments, which defense lawyers have hinted at in court filings, could help the 31-year-old former billionaire try to defeat charges he stole a fortune from FTX customers by arguing he lacked criminal intent despite making mistakes that led to the now-bankrupt exchange’s November 2022 collapse.

But any testimony from others suggesting Bankman-Fried knew his hedge fund, Alameda Research, improperly borrowed FTX customers’ money to pay its debts, make investments, and lend billions to Bankman-Fried and other executives could undermine the argument that he acted in good faith, experts said.

A spokesperson for Bankman-Fried declined to comment. He is currently jailed in Brooklyn.

Bankman-Fried has pleaded not guilty to seven counts of fraud and conspiracy. He has long acknowledged failing to manage risk at FTX, but denied prosecutors’ claims he stole billions of dollars in FTX customer deposits to plug Alameda’s losses.

“We got overconfident and careless,” Bankman-Fried wrote on X, formerly known as Twitter, on Nov. 16, five days after FTX filed for bankruptcy. “And problems were brewing. Larger than I realized.”

In an interview with the New York Times two weeks later, he acknowledged Alameda had borrowed money from FTX, but said he was not aware of how large those debts had grown.

In September court papers, Bankman-Fried’s lawyers said he had a “good faith belief” that the manner in which FTX and Alameda handled customer funds was permissible. They said FTX’s terms of service did not restrain its use of customer deposits, as long as it honored withdrawal requests.

FTX ultimately halted withdrawals in November as customers raced to pull out their money due to concerns over commingling of funds between the exchange and hedge fund. But Bankman-Fried is likely to argue that was due to his failures running the business, not any theft of funds, said Jordan Estes, a former federal prosecutor.

“You have to set the stage that this was ultimately a run on the bank that was completely unexpected,” said Estes, now a partner at law firm Kramer Levin.

Prosecutors with the U.S. Attorney’s Office in Manhattan have pointed to a section of the FTX terms of service stating users retain the title to their digital assets at all times, and argued Bankman-Fried falsely said in public statements – including FTX commercials – that the exchange properly maintained customer assets.

U.S. District Judge Lewis Kaplan barred Bankman-Fried from calling an expert witness to share his interpretation of the terms of service, but did not rule out letting the defendant cross-examine witnesses about the terms.

‘AN INSIDER’S PERSPECTIVE’

Testimony from former colleagues who were close to Bankman-Fried could challenge his claim of good faith. Three former members of his inner circle – former Alameda Chief Executive Caroline Ellison and former FTX executives Gary Wang and Nishad Singh – have pleaded guilty and are set to testify against him at trial.

“Cooperating witnesses like Caroline Ellison and Gary Wang … are able to provide an insider’s perspective on what was happening behind closed doors, which can be very powerful to show intent,” said Tim Howard, a former federal prosecutor in Manhattan and now a partner at law firm Freshfields.

Prosecutors are seeking to play jurors a recording of an Alameda meeting in which Ellison told colleagues that Bankman-Fried approved the use of customer funds. Prosecutors say Bankman-Fried told Wang to alter FTX’s code to let Alameda accrue a negative balance on the exchange, which other users could not do.

Bankman-Fried is likely to argue that his former colleagues are motivated to falsely implicate him in the hope of winning a more lenient sentence, a common tactic in criminal cases involving cooperating witnesses, experts said.

His lawyers have also argued in court papers that others in the cryptocurrency sector used customer assets in a similar way, contributing to his good faith belief that FTX’s treatment of customers’ deposits was appropriate.

Kaplan on Sept. 26 declined to rule on a request by prosecutors to bar Bankman-Fried from introducing evidence of how other cryptocurrency companies used customer funds.

In a Sept. 28 court hearing, he said that even though the case involves some “arcane” subjects such as cryptocurrency, “the issues in this case are pretty straightforward.”

“Was there fraud,” Kaplan said, “or wasn’t there?”

(Reporting by Luc Cohen in New York; Editing by Amy Stevens and Daniel Wallis)

(Reuters) – Ally Financial said on Monday job cuts in various divisions of the digital banking firm will affect nearly 5% of its workforce.

Spooked by a turbulent economy, several banks have had to cut jobs in recent months to better navigate inflation and high interest rates.

“After taking steps over the past year to pause hiring and manage staffing expenses through natural attrition, we have made the difficult choice to selectively reduce our workforce,” Ally spokesperson Peter Gilchrist said in an emailed statement.

“News is difficult, but necessary, and impacts less than 5% of our workforce.”

The Detroit-based company offers various financial products and is best known for its auto-loan business.

(Reporting by Jaiveer Singh Shekhawat in Bengaluru and Saeed Azhar in New York; Editing by Shinjini Ganguli)

By Blake Brittain

(Reuters) – X Corp, formerly known as Twitter, was sued in federal court in Florida on Monday by a legal-marketing company that claims the social media giant’s new name infringes its trademark incorporating the letter “X.”

The lawsuit by X Social Media claims that X Corp, which owner Elon Musk began rebranding to X from Twitter in July, was likely to cause consumer confusion.

The case appears to be the first of what could be numerous trademark disputes with Musk’s company over the letter “X,” which is commonly used in tech branding.

“X” is included in hundreds of federal trademarks owned by companies including Microsoft and Meta Platforms. X Corp applied for its own U.S. trademarks covering the letter last month.

X Corp did not immediately respond to a request for comment on the complaint. X Social Media declined to comment.

Windermere, Florida-based X Social Media is an ad agency focused on mass-tort litigation. Its website says that Jacob and Roseanna Malherbe founded the agency in 2015 to connect Florida panhandle residents with attorneys in the wake of the Deepwater Horizon oil spill in the Gulf of Mexico.

The lawsuit said the agency has used the “X Social Media” name since 2016 and owns a federal trademark covering it. It said it has invested more than $400 million in Facebook advertising to reach potential clients.

The company said Twitter’s rebrand has already confused customers and caused it to lose revenue.

“In a short time, X Corp has wielded its social media clout, marketing resources, and overall national notoriety to dominate consumer perception of its ‘X’ mark,” the lawsuit said.

X Social Media asked the court to force Musk’s company to stop using the “X” name and requested an unspecified amount of money damages.

(Reporting by Blake Brittain in Washington; Additional reporting by Dietrich Knauth in New York; Editing by David Bario and Angus MacSwan)

By David Shepardson

WASHINGTON (Reuters) -The proposal by President Joe Biden’s administration to hike fuel economy standards through 2032 would cost General Motors $6.5 billion in fines and Chrysler parent Stellantis $3 billion, according to a letter from an industry group seen by Reuters.

The American Automotive Policy Council, representing GM, Stellantis and Ford Motor, said in a letter to the U.S. Energy Department on Friday that the size of the expected penalties for not meeting proposed Corporate Average Fuel Economy (CAFE) requirements are “alarming.” Ford separately faces about $1 billion in penalties, the letter said. GM and Stellantis declined to comment beyond the letter.

The previously unreported letter asked the Energy Department (DOE) to reconsider its plan to revise the “Petroleum Equivalency Factor” that will result in “disproportionately higher compliance costs” for U.S. automakers.

Detroit Three automakers face $2,151 per vehicles in compliance costs compared $546 per vehicle on average sold by other automakers, the letter said, and the policy “would reward those auto manufacturers resisting the transition to a fully electric future the most.”

The National Highway Traffic Safety Administration (NHTSA) in July proposed hiking CAFE standards by 2032 to a fleet-wide average of 58 miles per gallon by boosting requirements 2% per year for passenger cars and 4% annually for pickup trucks and SUVs.

DOE wants to significantly revise how it calculates the petroleum-equivalent fuel economy rating for EVs in NHTSA’s CAFE program.

DOE sent Sept. 14 letters to the Detroit Three automakers “requesting additional information to help the DOE fully understand the ‘specific challenges regarding product development lead time,’” the automaker group said.

“Encouraging adoption of EVs (electric vehicles) can reduce petroleum consumption but giving too much credit for that adoption can lead to increased net petroleum use because it enables lower fuel economy among conventional vehicles,” DOE said in April. The agency did not immediately comment Monday.

A group representing nearly all major automakers said last week the industry as a whole could face $14 billion in CAFE fines.

NHTSA did not immediately comment Monday but previously said the estimate cited by automakers is “consistent with our statutory obligations” adding automakers “are free to use electric vehicles to comply and avoid penalties altogether”.

Automakers buy credits or pay fines if they cannot meet CAFE requirements. In June, Reuters first reported Stellantis and GM paid a total of $363 million in CAFE fines for failing to meet U.S. fuel economy requirements for prior model years.

(Reporting by David Shepardson; editing by Jonathan Oatis and David Gregorio)