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Dow jumps 200 factors, S&P 500 hits report as Powell prepares markets for Fed’s bond taper this 12 months

Dow jumps 200 points, S&P 500 hits record as Powell prepares markets for Fed's bond taper this year

Traders work on the trading floor of the New York Stock Exchange in New York, USA, 19 August 2021.

Wang Ying | Xinhua News Agency | Getty Images

Shares rose on Friday, heading for a successful week as Federal Reserve Chairman Jerome Powell prepared the markets for the central bank to pull back on some of its monetary stimulus and said it will likely begin its monthly bond purchases in the amount of $ 120 billion this year.

The Dow Jones Industrial Average gained 244 points, or 0.6%. The S&P 500 rose 0.8% to hit a record 4,505.16. The Nasdaq Composite gained 1.1% to hit a record 15,102.70.

The three most important stock averages will all close the week in the green. The Dow is up 0.9% since weekday, while the S&P 500 is up 1.4% and the Nasdaq Composite is up 2.5%.

The 10-year government bond yield featured in Powell’s speech this week eased slightly after the Fed chief made it clear that rate hikes would not follow immediately after the tapering ended.

“The timing and pace of the impending reduction in bond purchases will not be a direct signal of the timing of the rate hike, for which we have formulated a different and much more stringent test,” said Powell.

Powell also said inflation is solidly around the central bank’s 2% target rate, one of the targets of the Fed’s dual mandate. However, it “has a lot of ground to overcome” to meet its other goal of maximum employment, although there has been “clear progress” along the way, Powell added. The Fed has used the phrase “significant further progress” as a measure of when it will start tightening monetary policy.

Based on statements from other Fed officials, a reduction in the announcement could be made at the Fed meeting on September 21-22.

The financial market reaction on Friday is a sign that the central bank has so far been successfully preparing investors for their monthly $ 120 billion in 2013. Markets seem relieved that the Fed is not planning to hike rates anytime soon, said Michael Arone, Chief Investment Strategist for the US SPDR business at State Street Global Advisors.

“Rate hikes are far, far away and investors are excited about them,” he said. “I think Powell deserves credit for mastering asset reductions and avoiding a tantrum. The market appears to be well prepared for the reductions to begin.”

The speech also signaled that the Fed is not nearly as nervous about prices as some in the market and in Washington, said Adam Crisafulli, founder of Vital Knowledge.

“Powell spends most of the speech addressing inflation concerns,” he said of the speech, adding that Powell “is addressing concerns about rate hikes and telling markets that the threshold for rate hikes is much higher than a cut.”

Cornerstone Wealth’s chief investment officer, Cliff Hodge, noted that Powell held firm to the Fed’s view that increased inflation is temporary, despite the fact that the Department of Commerce on Friday reported the largest increase in consumer spending since 1991. The PCE index rose 4.2% in July on the same date last year and 0.4% on the previous month.

“He successfully threaded the needle to communicate that the taper is likely to begin this year while reiterating the idea that the taper is not a tightening,” Hodge said. “We believe that this September, subject to further setbacks from the Delta variant, is likely to result in a number of blowout jobs and set the table for the official reduction announcement at the FOMC meeting in September.”

Energy stocks led the S&P higher after being hit hardest on Thursday. Occidental Petroleum was up 7%, Cimarex Energy was up 6% and Marathon Oil was up 5%.

Workday’s shares were up 11% after reporting strong earnings and subscription income currently, up 23% year over year. Gap rose nearly 2% after the apparel retailer’s quarterly earnings report beat sales and bottom line, while Peloton stocks fell after the exercise equipment maker’s fourth quarter financial results missed Wall Street’s estimates. The peloton fell 8%.

The three major US indices closed the regular trading session lower on Thursday. The Dow had a four-day winning streak while the S&P 500 and Nasdaq Composite both broke a five-day winning streak.

Market participants also observed new developments in Afghanistan that appeared to weigh on investor sentiment. The Pentagon confirmed Thursday that explosions near Hamid Karzai International Airport in Afghanistan killed 13 US soldiers and injured 18.

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“The markets don’t like uncertainty and uncertainty in Afghanistan is high and feels like it is rising,” said Bob Doll, chief investment officer of Crossmark Global Investments.

The indices are on track to end the month higher. The Dow was up 1.4% in August. The S&P 500 is up 2.5% this month and the Nasdaq Composite is up 2.9%.

– Jeff Cox, Patti Domm, and Yun Li contributed to this report.

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Explaining the risky inventory and bond market strikes this week following the Fed’s replace

Explaining the volatile stock and bond market moves this week following the Fed's update

The Federal Reserve embarked on a massive repositioning in global financial markets as investors reacted to a world where the Federal Reserve no longer guarantees that its policies will be restrained – or simple -.

The dollar gained the fastest in a year against a basket of currencies in two days.

Stocks were mixed globally on Thursday, as were bond markets. Many raw materials were sold out. The Nasdaq Composite was higher while the S&P 500 and Dow Jones Industrial Average fell. Tech gained and cyclical stocks fell.

The central bank delivered a strong message on Wednesday when Fed chairman Jerome Powell said officials had talked about curbing bond purchases and would at some point decide to begin the process of slowing purchases. At the same time, Fed officials added two rate hikes to their forecast for 2023 where there were previously none.

“It is the end of the utmost reluctance,” said Peter Boockvar, chief investment officer of Bleakley Global Advisors. “It’s not getting hawkish. It’s just that we’ve passed the peak of reluctance. This market reaction is like they’re already tapering off.”

Strategists say the Fed’s slight move toward policy tightening didn’t shock markets on Wednesday, but is likely to make them volatile in the future. The Fed essentially recognizes that the door is now open to future rate hikes.

It is expected to issue a more in-depth statement on the bond program later this year and then, within a few months, begin the slow process of bringing its $ 120 billion per month purchases to zero.

The yields on Treasuries with a shorter duration, such as the 2-year note, rose. Longer duration returns, such as the 10-year benchmark, fell. This so-called “flattening” is a trade when interest rates rise. The logic is that longer-term yields will fall as the economy may not do as well in the future with higher rates, and short-end yields rise to reflect expectations for the Fed rate hike.

US Treasuries with longer maturities, such as the 10-year, have been lower lately than many strategists had recently expected. That’s partly because they are very attractive to overseas buyers because of negative interest rates elsewhere in the world and the liquidity in US markets. The 10-year yield shot to 1.59% on the Fed news but was back down to 1.5% on Thursday afternoon. The returns move against the price.

Commodity-related stocks, such as energy and commodity stocks, fell sharply on Thursday afternoon. Energy was the worst performing sector in the S&P 500, down 3.5%. Materials lost 2.2%.

“It’s a massive flattening of the yield curve. It’s an interest-rate business and it’s the belief that the Fed will slow growth,” Boockvar said. “So you sell commodities, you sell cyclicals … and in a slow-growing economy, people want to buy growth. It all happens in two days. It’s just a lot of returns.”

Boockvar said the curve flattening was also quick. For example, the spread between 5-year and 30-year bond yields narrowed quickly and rose from 140 basis points to 118 basis points within two days.

“You are seeing an incredible breakdown in positioning in the bond market. I don’t think people thought the Fed would, ”said Rick Rieder, BlackRock’s CIO of Global Fixed Income.

“We thought the flattening trade was the right move when we saw some of the news from the Fed. That was something we jumped on pretty quickly. I have to say we’re letting some Treasuries go into this rally,” said Rieder opposite CNBC.

For equity investors, the shift in cyclical stocks stands in the way of a trade that was popular when the economy reopened. Financial stocks fell on the flatter yield curve, while REITs fell slightly higher. Technology stocks rose 1.2% and healthcare rose 0.8%.

“The result is higher volatility in the equity markets, which I think we have and will continue to have,” said Julian Emanuel, Head of Equity and Derivatives Strategy at BTIG. “Things changed yesterday. This whole idea of ​​data dependency – the market is going to trade it like crazy, especially given the fact that public participation remains very high and the stocks that the public is most interested in, high multiple-growth stocks, have led the way in the past Weeks as the bond market stayed in a range. “

Although Powell conceded that inflation was higher than the Fed expected, the central bank also sent its message that inflationary pressures may be temporary. The Fed raised its core inflation forecast for this year to 3%, but in its latest forecast for next year it was only 2.1%. Powell used the example of the rise and fall in wood prices to illustrate his view that inflation will not last.

However, Emanuel said it was difficult to tell if inflation is volatile and that clearing the pandemic has been difficult to predict. “Whether it’s the Fed or paid economists on the sell side or paid economists on the buy side, the ability to measure what’s going on in the economy really is nothing but … everywhere,” Emanuel said, adding that the inflation data were all hotter than expected.

He believes the market will be trading in a range for now, with the S&P 500 bottoming out at 4,050 and peaking at 4,250. The S&P 500 closed at 4,221 on Thursday, down just 1 point. The Dow was down 0.6% at 33,823 and the Nasdaq was up 0.9% to 14,161.

The focus now is on the Fed meeting at the end of July. This could add to volatility as investors wait to see if the Fed will reveal more details on tapering after this meeting. Many economists expect the Fed to use its annual Jackson Hole Symposium in late August as a forum to set out its plan for the bond program.

The bond purchases, or quantitative easing, were introduced last year to provide liquidity to the markets during the economic downturn that began last year. The Fed buys $ 80 billion worth of US Treasuries and $ 40 billion worth of mortgage paper every month. Rieder believes the Fed could curb purchases by $ 20 billion a month once it starts tapering. Then, once the Fed hits zero, it could consider when to raise rates.

Market expectations for rate hikes have improved, and the euro-dollar futures market sees four rate hikes by the end of 2023, according to Marc Chandler of Bannockburn Global Forex. Prior to the Fed’s announcement on Wednesday, futures showed expectations for about 2.5 rate hikes.

Strategists believe that part of the Fed’s response is temporary, reflecting investors who have been too marginalized on some positions. “I’m still a commodity cop,” said Boockvar. Commodities had already started falling before the Fed’s announcement after China announced plans to release metal reserves.

“The Fed had to master the inflation story. They did very, very little, but at least they did it, and they pushed inflation expectations and they saw a pullback,” he said. “The question is, can they hold out. Raising interest rates in two years or bringing them down at baby crotch won’t do it, but for at least two days they managed to calm things down.”

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The Fed’s affected person method could possibly be examined quickly.

The Fed’s patient approach could be tested soon.

The Federal Reserve is expected to keep its monetary policy in crisis mode when it concludes its final meeting on Wednesday, even if the economy improves.

The question now is how long it will be before the recovery is sufficiently advanced to stimulate the central bank to change course.

The Fed has kept rates near zero since March 2020 and is buying bonds at a pace of about $ 120 billion a month. These policies make many types of borrowing cheap and drive investors to riskier, more active investments – by allowing money to flow through the economic system and accelerating growth.

Fed officials are in no hurry to recall this support – even if coronavirus vaccines become widely available, the job market will heal and retail spending will rise, aided by government stimulus measures.

Instead, central bankers, including Fed Chairman Jerome H. Powell, have insisted that the economy is far from being completely healed. Millions are unemployed and the coronavirus is not entirely present in the US or worldwide. This threatens an uneven economic recovery and risks the spread of new variants

The federal Open Market Political Committee has announced that it will see “significant” progress towards its full employment and stable inflation goals before slowing monthly bond purchases. The hurdle for interest rate hikes is even higher: a return to maximum employment and inflation of more than 2 percent, which is expected to slightly exceed it for some time.

At their March meeting, central bank officials signaled that interest rates were likely to stay near zero through 2023 if the economy performed as expected. However, investors will be very focused on clues as to the way ahead when Mr. Powell holds a post-meeting press conference at 2:00 p.m. around 2:30 p.m. following the release of the committee’s statement.

“By the time of the June meeting, well over half of Americans should be partially vaccinated, and employment levels could be a few million higher than now, so the FOMC can discuss some noticeably improved results,” said Michael Feroli, chief executive of The US Economist at JP Morgan wrote in a research report. “For now, however, we think the committee’s message is unlikely to change from what it sent six weeks ago.”

However, the Fed’s commitment to patience – an approach that focuses on real, not just expected results – faces its first major challenge. With unemployment falling and inflation rising, two trends expected to emerge in the coming months, monetary policymakers are likely to be increasingly urged to recall their support to keep conditions from spiraling out of control.

But Mr Powell and colleagues have downplayed concerns about overheating and inflation warnings dating back to the 1970s and 1980s, arguing that the world has changed in recent decades.

“We had 3.5 percent unemployment in the last two years before the pandemic, which is a 50-year low,” Powell said in a recent 60-minute interview. “And inflation didn’t really react. This is not the economy we had 30 years ago. “

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As U.S. Prospects Brighten, Fed’s Powell Sees Danger in World Vaccination Tempo

As U.S. Prospects Brighten, Fed’s Powell Sees Risk in Global Vaccination Pace

Federal Reserve chairman Jerome H. Powell stressed Thursday that despite the better economic outlook in the US, vaccinating the world and tackling the coronavirus pandemic remain critical to the global outlook.

“Viruses don’t respect borders,” Powell said when speaking on a panel at the International Monetary Fund. “Until the world is really vaccinated, we are all at risk of new mutations and we will not be able to resume activities around the world with confidence.”

While some advanced economies, including the United States, are rapidly moving towards widespread vaccination, many emerging economies are lagging far behind: some have only given one dose per 1,000 people.

Mr. Powell joined a chorus of global politicians, stressing the importance of ensuring that all nations – not just the richest – are able to fully protect themselves against the coronavirus. Kristalina Georgieva, executive director of the International Monetary Fund, said policy makers need to continue to focus on public health as a key policy priority.

“This year, next year, vaccination policy is economic policy,” said Ms. Georgieva on the same panel as Mr. Powell. “It has an even higher priority than the traditional instruments of fiscal and monetary policy. Why? Without them, we cannot reverse the fate of the world economy. “

Still, she also warned against withdrawing monetary support prematurely, saying that clear communication from the United States was helpful and important. The Fed is arguably the world’s most critical central bank thanks to the dollar’s widespread use, and unexpected policy changes in the United States can disrupt global markets and make it difficult for less developed economies to recover.

“Withdrawal of support prematurely can shorten recovery,” she warned.

The Fed has kept interest rates close to zero since March 2020 and buys around $ 120 billion worth of government bonds every month. This policy is designed to boost spending by keeping borrowing cheap. Officials knew they would continue to support the economy until it gets closer to its goals of maximum employment and stable inflation – and that while the situation is improving, it is not there.

“There are a number of factors that come together to improve the outlook for the US economy,” Powell said, noting that tens of millions of Americans are now fully vaccinated so that the economy can soon be fully reopened. “However, the recovery here remains uneven and incomplete.”

Employers hired more than 900,000 workers last month, but the country is still lacking millions of jobs compared to February 2020, and new data shows that state unemployment claims have increased over the past week. Mr Powell noted that the burden is least on those who can least bear it: lower-income service workers, who are largely minority and women, are hard hit by the job losses.

When asked what keeps him up at night, Mr. Powell said “There’s a pretty big tent city” he passes by on his way home from work in Washington. “We have to keep reminding ourselves that there is a very large group of people who aren’t, even though some parts of the economy are just doing fine.”

Given the pandemic’s role in exacerbating inequality, both Mr Powell and Ms Georgieva said it was important to support workers and make sure they find their way into new and decent jobs.

The Fed chairman said the policy is too focused on short-term, palliative measures and not enough on longer-term solutions that will help expand economic opportunities.

“I think we really need, as a country, to invest – and I’m not talking about a specific bill – in things that increase the inclusiveness of the economy and the longer-term potential of the economy,” said Powell. “In particular, invest in people so that they can participate, contribute to, and benefit from the prosperity of our economy.”

These comments come from the Biden government’s push for an ambitious $ 2 trillion infrastructure package that includes provisions for labor market training, technological research and widespread broadband. The administration has proposed paying for the package by increasing corporate taxes.

“We have been advocating more investment in infrastructure for some time. This helps to increase productivity here in the US, ”said Ms. Georgieva, describing the provisions on climate-focused and“ social infrastructure ”as positive. She said they didn’t have a chance to fully evaluate the plan, but “by and large, yes, we support it.”

But the White House plan has already met opposition from Republicans and some moderate Democrats who are cautious about raising taxes or other large spending package after several large stimulus packages.

Some commentators have warned that in addition to expanding the country’s debt burden, the government’s virus spending – particularly the recent $ 1.9 trillion stimulus package – could overheat the economy. Fed officials were less concerned.

“There is a difference between a one-time price spike and persistent inflation,” Powell said Thursday. “The nature of a bottleneck is that it gets fixed.”

If price gains and inflation expectations rose “substantially”, the Fed would react.

“We don’t think that’s the most likely outcome,” he said.

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Cryptocurrencies usually are not helpful shops of worth, says Fed’s Powell

Cryptocurrencies are not useful stores of value, says Fed's Powell

Federal Reserve Chairman Jerome Powell holds a press conference following the two-day meeting of the Federal Reserve’s Federal Open Market Committee on July 31, 2019 in Washington.

Sarah Silbiger | Reuters

Federal Reserve Chairman Jerome Powell said Monday that cryptocurrencies remain an unstable store of value and the central bank is in no hurry to introduce a competitor.

“They are very volatile and therefore not really useful stores of value and are not supported by anything,” Powell said during a virtual panel discussion on digital banking hosted by the Bank for International Settlements. “It’s more of a speculative asset that essentially replaces gold, not the dollar.”

Powell spoke on a day when Bitcoin had dipped on Coinbase but was still trading near $ 57,000 apiece. The cryptocurrency has seen its price spike in the past seven months due to rapid trading activity and growing acceptance in the financial industry.

In recent years, the Fed has been working on its own payment system that allows for faster money transfer. The final product is expected to be revealed over the next two years.

Alongside this, the Federal Reserve has also conducted other research to determine whether a central bank digital coin would be necessary or practical.

On the latter, Powell said the Fed was taking its time before doing anything.

“To move this forward, we would have to let Congress, the administration and broad sections of the public buy us in, and we haven’t really started the task of that public engagement,” he said. “So you can expect us to be very careful and transparent about developing a central bank digital currency.”

The Boston Fed partnered with the Massachusetts Institute of Technology last year to conduct a multi-year study into the development of a central bank digital currency. The work is expected to take two to three years and, even then, will focus on the hypotheses of a central bank sponsored cryptocurrency rather than its upcoming implementation.

Powell said Congress will likely have to pass some sort of enabling bill before the Fed can proceed with its own currency.

However, he noted that the Covid-19 pandemic emphasized the importance of developing better payment systems so that money can get to those in need quickly.

“It has, in a whole range of things, highlighted the different effects of so many things on poor and low-income and low-income communities,” Powell said.

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After Fed’s Assembly, the Focus Will Be on Jerome Powell: Dwell Enterprise Updates

Jerome Powell in December.

Here’s what you need to know:

Credit…Al Drago for The New York Times

The Federal Reserve meets in Washington on Wednesday, and while it is widely expected to leave interest rates near zero while continuing to buy about $120 billion in government-backed bonds each month, Chair Jerome H. Powell could stage an interesting news conference afterward.

Mr. Powell answered many of the urgent monetary policy questions of the day at an appearance on Jan. 14, making it clear that interest rates will rise “no time soon” and that the Fed will “let the world know” when it is starting to think about slowing down its mass Treasury and mortgage-debt bond buying.

“His goal will be to preserve the status quo — it’s too soon for the message to change,” Roberto Perli and Benson Durham at Cornerstone Macro wrote in a note previewing the meeting.

That could leave the door open for a suite of more thematic questions. The Fed’s policy statement comes out at 2 p.m., and the webcast question-and-answer session starts at 2:30.

Mr. Powell could be asked to give his assessment on whether a bubble is building in stocks, digital currency, house prices — everything, basically — and, if so, what the Fed can do about it. Low interest rates and bond-buying have the effect of pushing investors into riskier assets, and the Fed underlined in its revised policy framework last year that it keeps a wary eye on financial risks.

The Fed chair might also need to take on the question of inequality. As asset prices boom, the wealthy people who disproportionately own stocks are becoming paper millionaires, billionaires, multibillionaires and so on even as the working class struggles with high pandemic-era unemployment and cars continue to line up at food banks. Mr. Powell has typically pushed back on the idea that monetary policy — which also lowers unemployment and sets the stage for higher wages in the longer run — can be boiled down to having one simple effect on income and wealth distribution.

Finally, Mr. Powell might face queries about his own future. He was appointed chair by President Donald J. Trump, and his four-year term expires in early 2022. It is unclear whether President Biden will reappoint him or whether Mr. Powell will seek another term.

A Boeing 737 Max at Miami International Airport in December.Credit…Joe Raedle/Getty Images

Boeing lost more than $11.9 billion last year, its worst year ever, as it struggled to overcome the crisis surrounding its 737 Max jet as it also endured the disastrous slowdown in global aviation caused by the coronavirus pandemic.

The company’s bottom line suffered especially during the final three months of the year, during which Boeing reported a loss of more than $8.4 billion. In that quarter, the company recorded a $6.5 billion charge related to the development of the 777X, a wide-body plane that had been slated for delivery this year but the company now expects to arrive in 2023.

Over the course of the year, Boeing brought in more than $58 billion in revenue, which was down 24 percent from 2019.

In a letter to staff, Boeing’s president and chief executive, Dave Calhoun, described 2020 as “a year of profound societal and global disruption, which significantly impacted our industry.”

The financial results were announced on Wednesday morning, shortly after aviation regulators in Europe approved the 737 Max to fly again, joining counterparts in Brazil, Canada and the United States. The Federal Aviation Administration became the first regulator to allow the Max to return to service in November, ending a global ban that had been in place since March 2019, after 346 people were killed in two crashes involving the plane.

Five airlines have resumed Max service, racking up more than 2,700 flights, according to Boeing. In the United States, only American Airlines is flying the Max, though United Airlines is expected to start using the jet next month, followed in the second quarter by Southwest Airlines.

Boeing has started making deliveries and collecting payments on the Max again, a huge relief for its commercial airplane business, which rests heavily on the 737 line. Still, the steep decline in travel caused by the pandemic has hurt Boeing’s airline customers, muting hopes for a recovery this year.

A $10 billion company, thanks to a gamma squeeze, delta hedging and Reddit.Credit…Nam Y. Huh/Associated Press

Why is Wall Street obsessed with GameStop, the video game chain that until recently was known for middling performance? The company’s stock has soared to scarcely believable levels — its market capitalization is now more than $10 billion, and its shares briefly doubled in premarket trading on Wednesday — thanks to an army of small traders spurred on by a Reddit message board, the DealBook newsletter explains.

Traders on the Reddit message board, WallStreetBets, a community known for irreverent market discussions, made GameStock their cause du jour and rushed to buy out-of-the-money GameStop options, a bet on the company’s share price rising in the future. (A sample comment on the board: “PUT YOUR LIFTOFF DIAPERS ON ITS ABOUT TO START.”) Both Tesla’s Elon Musk and the billionaire tech investor Chamath Palihapitiya also egged on the crowd via Twitter.

The frenzy has forced market makers who sold the options to buy the underlying shares to hedge their risk. As more traders snap up options, the brokers have to buy up more shares. That squeeze is driving the astounding rise in the company’s stock price, which began the year at $19 and at the time of writing was around $200.

Gabe Plotkin, the hedge fund trader whose Melvin Capital was shorting GameStop — and who recently raised a $2.75 billion bailout from Citadel and his former boss, Steve Cohen, amid the short squeeze — confirmed to CNBC on Wednesday that he had exited his position. Though Mr. Plotkin’s other short bets appear to be suffering, possibly because they are being targeted by traders (Melvin and Mr. Plotkin are often pilloried on the message boards), he said that his firm had plenty of capital.

Officials at the Securities and Exchange Commission and elsewhere are closely watching internet chat rooms for signs of potential market manipulation, though they can do only so much without clear signs of fraud. If a big group of traders simply decides to buy options on a stock at the same time, out in the open, for the heck of it, proving malfeasance may be difficult.

The U.S. Federal Reserve in November last year.Credit…Stefani Reynolds for The New York Times

Top Federal Reserve officials downplayed the chance that they would use their power as bank overseers to actively discourage investment in carbon-heavy companies, setting out a boundary line in an evolving conversation about what role the central bank should play in dealing with the fallout from global warming.

“We would note that it has long been the policy of the Federal Reserve to not dictate to banks what lawful industries they can and cannot serve, as those business decisions should be made solely by each institution,” Jerome H. Powell, the Fed’s chair, and Randal K. Quarles, the vice chairman for supervision, wrote in a letter this month.

Their comments came in response to a letter sent by Representative Andy Barr, Republican of Kentucky, and several of his colleagues that raised concerns about the central bank’s recent attention to climate change.

Mr. Powell and Mr. Quarles said the Fed makes sure the institutions it oversees are well-prepared to handle risks they face, including climate-related risks. But they indicated that they were not rolling out climate stress tests or using their supervisory powers to pressure banks to meet climate-related goals — big concerns among Republicans.

“We have seen banks make politically motivated and public relations-focused decisions to limit credit availability to these industries,” the lawmakers said in their letter, specifically referencing coal, oil and gas. “It is possible that the introduction of climate change stress tests could perpetuate this trend, allowing regulated banks to cite negative impacts on their supervisory tests as an excuse to defund or divest from these crucial industries.”

The Fed said its research into climate financial risks was in the “early stages,” and noted that directly addressing climate change was not one of its congressional mandates. America’s central bank is behind its peers when in coming up with a framework for dealing with climate risks.

House Republicans, in December calling for the extension of the Paycheck Protection Program.Credit…Anna Moneymaker for The New York Times

The restarted Paycheck Protection Program allows hard-hit small businesses to get a second government-backed relief loan, but thousands of business owners who are trying to apply have been ensnared by what the Biden administration said are significant errors in the program’s loan records.

P.P.P. loans are guaranteed by the government but made by banks and other lenders. For months, lawmakers and government watchdogs — including the Small Business Administration’s inspector general — have raised alarms about signs of fraud and mistakes that allowed potentially ineligible borrowers to obtain billions of dollars from the aid program.

Those reviewing the program’s loan records, which were released in December after a court ordered they be made public, have also noted that they are rife with errors, like inaccurate loan amounts or loans that were canceled before being disbursed.

The S.B.A. said on Tuesday that it had found “anomalies,” which it described as “mostly data mismatches and eligibility concerns,” in 4.7 percent of the 5.2 million loans made through the program in its initial round of lending, which ended in August.

Those errors have complicated efforts by some borrowers to obtain second-round loans, which the agency began approving two weeks ago, using $284 billion in fresh funding provided by Congress last month to restart the relief program. The S.B.A. said it would provide lenders with additional guidance and resources for resolving troubled cases.

The problems came to light in part because of new fraud checks the agency imposed before it began approving applications for the new funding round.

The agency “is committed to making sure stringent steps are put in place on the front-end and compliance checks address issues more efficiently moving forward so we are ensuring fair and equitable access to small businesses in every community,” said Tami Perriello, the agency’s acting administrator. (President Biden’s nominee to lead the agency, Isabel Guzman, is awaiting her confirmation hearing.)

The S.B.A. said Tuesday that it had approved 400,000 loans, totaling $35 billion, in the new lending round.

Lenders said the new process has generally been working, with some glitches. Some banks have had high numbers of applications rejected because of formatting issues and other technical challenges in getting through the S.B.A.’s new automated vetting system, said Dan O’Malley, the chief executive of Numerated, a software company that is handling P.P.P. applications on behalf of more than 100 lenders.

Shelly Ross, the owner of Tales of The Kitty, a cat-sitting business in San Francisco, said she applied last week for a second loan, but was caught in a holding queue. She tried three other lenders, with results ranging from no response to cryptic replies telling her she did not qualify.

“I’m ready to bang my head against a wall,” she said. But others have had better luck: Ms. Ross said a friend of hers got a quick approval on her own loan application through PayPal.

Crowds outside a GameStop store last November, on Black Friday. The company’s share price hurtled higher after a tweet from Elon Musk.Credit…Go Nakamura for The New York Times

  • U.S. stock futures indicated indexes on Wall Street would open lower on Wednesday as a downbeat mood swept over equity markets before the Federal Reserve announces its latest policy decision.

  • The central bank is widely expected to keep interest rates at low levels and continue its large bond-buying program. But investors will be eager to hear what the Fed chair, Jerome Powell, might say about concerns asset bubbles are building in markets.

  • Microsoft’s shares rose 3.6 percent in premarket trading after the company said after markets closed Tuesday that profits were up 33 percent in the past quarter because of the increase in demand for its cloud services while so many people are working from home. Apple, Facebook and Tesla are among companies reporting on Wednesday.

  • GameStop’s shares continued to rocket higher, jumping 120 percent in premarket trading after Elon Musk tweeted “Gamestonk!!” and linked to Reddit’s “Wall Street Bets” forum, which has hyped up buying the stock. Shares in GameStop, a video game retailer, have risen from $19 at the start of the year to $148 on Tuesday.

  • Small-scale traders are now looking for other companies to promote, especially those that might have a large short position against them (a bet that the stock’s price will fall). Movie-theater chain AMC’s shares rose more than 125 percent in premarket trading. BlackBerry has also appeared on the forum and its shares are up 10 percent premarket after gaining 185 percent already this year.

  • The Stoxx Europe 600 index dropped 0.5 percent Wednesday, with indexes falling in most countries. Europe’s vaccine rollout is struggling to ramp up amid supply issues, raising concerns about when an economic recovery will return. Recent surveys has shown business confidence dropping in Germany and France, the eurozone’s two largest economies.

  • On Tuesday, the International Monetary Fund upgraded its outlook for the global economy this year but the recovery is expected to be uneven. The Washington-based institution downgraded its forecast for the eurozone because of the increase in coronavirus infections and lengthy lockdowns. It said the economy would grow 4.2 percent in 2021; three months ago it had predicted a 5.2 percent increase.

  • Shares in LVMH rose almost 2 percent in early trading after the luxury goods company’s earnings beat analysts’ expectations, particularly in the sales of its fashion and leather goods unit.

Richard Zaro started his sandwich shop in a hotel kitchen to save on expenses.Credit…Landon Nordeman for The New York Times

The hotel industry, where occupancy rates are still down 30 percent from a year ago, is getting in on the ghost kitchen trend.

Ghost kitchens, also called digital kitchens, are cooking facilities that produce food only for delivery or takeout. Demand for the concept is booming, Debra Kamin reports in The New York Times.

The pandemic has opened the business model to more entrepreneurs. To turn his chicken cutlet sandwich concept into a business, Richard Zaro started renting space in July at the Four Points by Sheraton Midtown near Times Square, paying $6,000 a month for a fully outfitted catering kitchen. Average restaurant start-up costs for brick-and-mortar locations, in comparison, can run from $200,000 to more than $1 million.

Within four months, he had generated enough revenue — and created a large enough base of loyal customers — to move to a stand-alone location. His new business, Cutlets, opened in a former Tender Greens restaurant near Gramercy Park on Dec. 1, and has plans to expand.

Mr. Zaro found his rented kitchen space through Use Kitch, an online commercial kitchen marketplace that likens itself to an Airbnb for the restaurant industry.

Testing from a base at a Times Square hotel was the ultimate risk reduction, Mr. Zaro said, adding that the hotel benefited, too: “It was nice for them to have incoming revenue.”

Categories
Health

Voters extra optimistic about Covid, blame feds for vaccine rollout: NBC ballot

Voters more optimistic about Covid, blame feds for vaccine rollout: NBC poll

USC School of Pharmacy Assistant Professor Richard Dang (R) gives Ashley Van Dyke a Covid-19 vaccine as a mass vaccination of health care workers is happening on January 15, 2021 at Dodger Stadium in Los Angeles, California.

Irfan Khan | AFP | Getty Images

With President Joe Biden making tackling the Covid-19 crisis his top priority, American voters are a little more optimistic about the pandemic than they were last fall, according to a new poll by NBC News.

Still, many respondents are dissatisfied with the sluggish introduction of the vaccine in the country, and a majority blame the federal government, according to the survey.

Poll results released Thursday showed that 38% of registered voters believe the worst of the health crisis is behind the country, while 44% believe the worst is yet to come. In a poll conducted just before the November elections, those numbers were 25% and 55%, respectively.

In his inaugural address on Wednesday, Biden warned of a difficult battle against the impending coronavirus.

“We are entering what is possibly the toughest and deadliest phase of the virus,” he said.

The country has at least 193,600 new coronavirus cases and at least 3,030 Covid deaths every day, based on a 7-day average calculated by CNBC using data from Johns Hopkins University. New, more infectious strains of the virus have emerged in the United States. At least 406,000 Americans have died from the virus since the pandemic started early last year.

The U.S. has failed to meet its target of vaccinating 20 million people by the end of 2020. Under the administration of former President Donald Trump, just over 14.2 million people had received one or more doses of the Covid-19 vaccine on Wednesday morning, according to the CDC.

While respondents to the NBC survey expressed a slight increase in optimism about the pandemic, more than half of respondents were previously dissatisfied with the introduction of vaccines: 30% said vaccine administration went poorly, while 25% said it was bad that they “didn’t” run too well. “

Another 11% said it was handled “very” well, and 31% said it went “fairly” well.

Among those who said the rollout was below average, 64% primarily blamed the federal government, while 21% blamed the state governments. Another 11% blamed both of them the same.

The answers diverged across the party lines. 79% of Democratic voters who criticized the introduction of the vaccine blamed the federal government. Among Republicans who were dissatisfied with the distribution, 52% blamed states.

The poll polled 1,000 registered voters nationwide from January 10-13. The error rate is plus or minus 3.1 percentage points.

Biden’s plan

Biden plans to accelerate vaccine rollout by increasing funding for local and state officials, creating more vaccination sites, and launching a national awareness campaign, according to his Covid Response Plan released Thursday. Previously, Biden said his government will try to give 100 million vaccine shots in the first 100 days.

His incoming health officials have expressed dismay at the state of the federal vaccine distribution plan.

“What we inherit from the Trump administration is so much worse than we could have imagined,” Jeff Zients, Biden’s Covid Response coordinator, told reporters. “We have to vaccinate as much of the US population as possible to get out of this pandemic, but we don’t have the infrastructure.”

On his first day in office, Biden restored the national security team in charge of global health, safety and biological defense, urged authorities to extend statewide moratoriums on evictions and foreclosures, and urged the Department of Education to put a break on student loan payments and interest to extend.

The president has also issued a mask mandate for anyone visiting a federal building or state, or using certain public transportation. Biden launched a 100-Day Masking Challenge that asked Americans to wear face coverings in public for the next 100 days.

Adopting a new Covid aid package will be a challenge for the new Congress and the White House. Democrats have a small majority in both houses of Congress, and Republicans are skeptical about spending increases.

“We have to put politics aside and finally face this pandemic as a nation,” Biden said on Wednesday.

Categories
Politics

Feds Order States to Increase Vaccine Targets as Covid-19 Deaths Surge

Feds Order States to Expand Vaccine Targets as Covid-19 Deaths Surge

The Centers for Disease Control and Prevention last month recommended that states vaccinate, after vaccinating health workers and residents of long-term care facilities, people over 75 and certain “frontline workers” who cannot do their jobs from home should. Only then, the CDC advised, should states turn to people ages 65 to 74 and adults of all ages with high-risk diseases. The CDC recommendations were not binding, but many states have largely followed them while demand far outstrips supply.

How Mr Azar’s enforcement threat will work is unclear. In two weeks, Mr. Biden will have been sworn in as President. Mr Azar said the upcoming Biden administration will be informed of the changes, although he added that Americans “are working with a government at a time and this is the approach we believe will best serve the mission.”

Mr Biden is expected to release details of his own vaccination schedule this week, which will include federal government-sponsored mass vaccination clinics. The Biden transition team declined to comment on the new Trump policy on Tuesday. However, a person familiar with the president-elect’s plans said Mr Biden also had plans to expand the universe of those eligible for vaccination.

Mr Azar said that people searching for gunfire because they are at high risk of disease are required to provide “some form of medical documentation as defined by the governors,” but he did not elaborate. A significant portion of the population suffers from conditions that the CDC has determined to increase the risk of serious Covid disease, starting with obesity, which affects at least 40 percent of adults.

Other people who would qualify for vaccines immediately under Mr Azar’s policy are more than 30 million adults with heart disease, 37 million with chronic kidney disease and 1 in 10 with diabetes.

The new distribution plan, first announced by Axios Tuesday morning, is a reversal for the Trump administration, which had withheld about half of its vaccine supplies – millions of vials – to ensure second doses were available. Mr Azar said the administration always expected to make the move if they were convinced of the supply chain.

Dr. Paul Offit, a professor at the University of Pennsylvania and a member of the Food and Drug Administration’s Vaccine Advisory Board, praised the government’s decision and compared the current situation to the Titanic, where there weren’t enough lifeboats to save everyone. “And you have to decide who you want to pass on. “