Tag: market

Inventory market classes my son taught me

Post author By
Post date January 30, 2021

Three generations of Dan Mangans

Courtesy: And eat

Joseph Kennedy Sr. had his shoe shine. I have my 13 year old son – and my father.

92 years ago, Kennedy – father of a US president and two other children who became senators – reportedly sold his extensive portfolio on the glowing stock market after a boy who was cleaning his shoes offered him some stock market tips.

The story goes that Kennedy thought that was a signal to sell – anything.

He argued that when boys shoeshiners touted stocks as safe things, there was a lot of stupid money in the market propping up prices that were sure to fall.

Kennedy’s move saved his fortune.

But others who believed the hype was all gone when Wall Street crashed in the fall of 1929.

On Thursday I thought I saw this shoe shiner standing in front of me and waved a $ 10 bill.

My 13 year old son excitedly asked permission to buy a cryptocurrency – Dogecoin – which he yelled would explode in price by the end of the night, quintupling his investment in hours or more.

“Elon Musk guarantees it!” my son said.

“What?” was my first question.

My second was, “Did you read that in ‘WallStreetBets?’ “”

He immediately confirmed that he, unknown to me, had read the Reddit group r / WallStreetBets.

The same group sparked the insane escalation of GameStop’s stock price last week, costing hedge funds nearly $ 30 billion short of short sales.

It has also sparked a spate of commentary on stock market morale, speculation and short selling, and saber rattling by lawmakers from across the political spectrum, from progressive MP Alexandria Ocasio-Cortez, DN.Y., to Conservative Texas GOP senator Ted Cruz.

Some r / WallStreetBets users have also touted the benefits of buying Dogecoin in hopes of seeing a similarly large wave of price increases.

I laughed at my son.

But he kept pushing me to let him buy Dogecoin. And kept mentioning Elon Musk.

I had him look at a chart of cryptocurrency prices since 2013 that showed upset stomach that followed bubbles in this investment sector.

“It’s only $ 10,” he insisted.

I slipped a book into his hand, Blue Chip Kids, a basic but excellent explanation of how markets and financial instruments work. The book’s author, David Bianchi, wrote it after trying to teach his own 13-year-old son about money.

My own son quickly put the book on the couch.

I then showed him another book, Extraordinary Popular Delusions and the Madness of the Masses.

Since its publication in 1841, Charles Mackay’s report on the Mississippi Program, the South Seas Bubble, and the Dutch tulip craze has been the gold standard for understanding why financial bubbles occur and how they always end very, very, very badly for investors when they burst.

My son didn’t even pretend to read the summary on the back of the book.

I am not suprised.

Children and adults – especially adults – are hard to think about when excited about the idea of a quick, easy financial return or some other mania.

I was a kid – well, in my early twenties – the last time I fell victim to this kind of excitement. In the past few years I have certainly missed the chance to win big money. But I also avoided destroying losses.

It’s probably because of my father.

When I was a child, my father used to give lectures to me and my sisters – and our mother – about money and investing.

He also told us how his own grandfather, who was a wealthy veterinarian, had lost a ton of money in the same 1929 crash that Joe Kennedy had ducked.

And he repeated a mantra that comes to mind today: buy and hold mutual funds, don’t buy or sell hype, invest as much as possible in deferred vehicles, and don’t spend money on frivolous things.

My father was a police officer who went out because of a disability because of an injury he sustained after years of work. His compensation dropped to half his full-time cop pay.

You wouldn’t believe how low that amount was, and how it has never increased a penny in more than three decades. Even so, he and my mother managed to send three children to private colleges to find out what they had been up to.

He paid close attention to money and investment management and read financial and tax publications for hours.

My father’s attention to funding probably came from his own father’s example. My grandfather lived a humble life after his own father was hammered in the 1929 crash. But my grandfather also managed to invest well and leave his son, my father, a decent amount of money to grow.

For a long time I haven’t heard or even tried to hear my father’s mantra about investing.

I made my first ever stock purchase in the late 1980s at a local bank where I opened my first savings account.

I spent $ 500 for 100 shares in that bank.

The bank, like apparently every other small Connecticut lender, expanded its home loan business dramatically and sought to establish itself as an attractive takeover candidate for what was expected to be widespread bank consolidation in the region.

Insiders at these banks, their friends, and people like me bought their stocks in the hope – and with the expectation – that if they were bought out it would pay off.

That didn’t happen.

Instead, the price continued to decline in the months after the stock was bought. Once it was $ 1 a share I’d seen enough and sold my stock for an 80% loss.

Soon after, that bank went bust in the first big wave of bank failures in the nation since the Great Depression.

As a young reporter, I handled many of these mistakes. Since then, I have been deeply skeptical of any banker’s predictions.

My father told me years later that losing my shirt at this bank was the best thing that ever happened to me because it cured me of the idea that I had talent for stock picking.

My father told me years later that the best thing that had ever happened to me was losing my shirt at this bank because it cured me of the idea that I had talent for stock picking.

With the exception of one more small share purchase in my 20s, I have never bought shares in any single company again.

Instead, I followed my father’s advice and invested effectively in autopilots: regular and consistent purchases of mutual fund shares – which I don’t sell – kept management fees extremely low and maximized the use of tax-deferred vehicles such as the 401ks and IRAs.

And I never buy anything that is hyped.

When my father died, I spoke at his funeral and described how for years as a teenager and young man I “did my best to close his sermons” on money and investing “before one night I had a revelation he had was correct. “

“And then I started scolding my friends about their money management when I heard his words come off my lips,” I added.

As I sat down to write this article this morning, I heard my son scream from his bedroom.

Dogecoin’s price had skyrocketed. He had missed converting his $ 10 into more than $ 30 quickly because I refused to let him buy it.

Then he stomped over to my desk to beat me up for it.

I have a lot of work to do with him.

Tags Lessons, market, son, Stock, taught

Business

GameStop and Inventory Market Stay Updates

Post author By
Post date January 29, 2021

Increased trading has forced Robinhood to seek additional funding.

Here’s what you need to know:

By: Ella Koeze·Data delayed at least 15 minutes·Source: FactSet

Stocks on Wall Street fell sharply on Friday, the latest turn in stretch of volatile trading that’s put the S&P 500 on track for its worst week since late October.

The index fell more than 2 percent by Friday afternoon, adding to a decline of 1.4 percent for the week through Thursday.

Wall Street’s attention this week has been consumed by an army of day traders that has been whipping around a handful of stocks, forcing losses on hedge funds and earning the attention of regulators and senators. These traders, mostly small investors on trading apps like Robinhood who share their ideas on Reddit and other social media, are only focused on a relatively small number of stocks.

But they’ve become a cause for concern for large investors who had bet against those companies and are losing money quickly as the shares rise. GameStop, still the favorite of this crowd, is was up nearly 70 percent on Friday alone. Another target, AMC Entertainment rose more than 60 percent.

For the broader market, the concern is that the big institutions that are losing money as a result of the frenzy, will have to sell other stocks to offset those losses. This so-called forced liquidation was a factor in a sharp decline earlier in the week, Mark Haefele, chief investment officer at UBS Global Wealth Management wrote in a note to clients.

Here’s what else was going on Friday:

Johnson & Johnson said on Friday that its one-dose coronavirus vaccine provided strong protection against Covid-19 — but it appeared to be less effective against new variants of the coronavirus. Johnson & Johnson’s vaccine is also less effective than those produced by Moderna and Pfizer, and its shares fell.
In the United States, personal income ticked back up in December while consumer spending continued to fall, the Commerce Department reported. Income increased 0.6 percent after two straight monthly declines. Spending was down 0.2 percent, the second drop in a row.
Data from Europe, meanwhile, showed that the German and French economies performed better at the end of last year than analysts expected. Germany, Europe’s largest economy, even managed to grow slightly. But a struggle to increase the region’s supply of vaccinations has damped optimism about this year’s economic recovery. Spain on Wednesday became the first E.U. country to partly suspend immunizations for lack of doses.

Credit…Amy Lombard for The New York Timesø

Robinhood raised $1 billion from investors on Thursday to help it cover cash demands during the week’s stock trading frenzy. But the online brokerage, the venue of choice for small investors during the mania for shares in GameStop, AMC Entertainment and others, must still confront feelings of betrayal from its loyal customers and questions about its business model, the DealBook newsletter writes.

In imposing trading limits on hugely popular stocks yesterday because of financial requirements from a central Wall Street trading hub, Robinhood alienated some of its core customers. (Small groups of them gathered to protest outside the New York Stock Exchange and Robinhood’s headquarters in Menlo Park, Calif.) That sense of abandonment — that the brokerage had chosen to protect Wall Street institutions at risk of losing money over small investors making it — may be harder to address than annoyance over technical outages, like those that bedeviled the platform last year.

Meanwhile, Robinhood’s business model of no-fee trading is under renewed pressure. The company turned to existing investors and bank credit lines for cash because it cannot raise money by charging customers more. It benefits from more trading — but more trading also means it needs more capital to hold against its users’ trades, especially when volatility makes its partners in settling trades more risk averse. Becoming a publicly listed company, able to more easily sell stock and raise debt, would help, but future trading frenzies could lead to more demands for cash.

Washington also sees cause for concern. The Securities and Exchange Commission said on Friday that it would review action that “may disadvantage investors or otherwise unduly inhibit their ability to trade certain securities.”

Lawmakers in the House and Senate have pledged to hold hearings into the inner plumbing of Wall Street trading, and could perhaps require brokerages to post higher margin requirements to prevent similar runs. That could make trading costlier for users, turning some off to the whole business.

Credit…Gabriela Bhaskar for The New York Times

GameStop shares surged on Friday, the latest turn in a week of wild price swings in companies that have been bid up in a frenzy of activity by small investors.

This week, shares in GameStop — a stock Wall Street had given up on — have reached as high as $483 and fallen as low as $61.

GameStop had ended the regular trading session down 44 percent on Thursday. The drop earlier in the day had come as Robinhood and other trading platforms said they would limit the ability to buy certain securities, including AMC Entertainment and BlackBerry.

Then the trading app reversed some of the restrictions. The shares rose about 65 percent on Friday.

“We plan to allow limited buys of these securities” starting Friday, Robinhood said in blog post on Thursday afternoon. “We’ll continue to monitor the situation and may make adjustments as needed.”

Robinhood called its move “a risk-management decision,” and later said it had raised $1 billion to cover the costs of the high volume of transactions so it wouldn’t need to reimpose restrictions.

Other brokerage firms have also limited trading of some of the same stocks. The Securities and Exchange Commission said Wednesday it was “actively monitoring” the volatile trading.

Other stocks spurred on by day traders in Reddit forums like “Wall Street Bets” include AMC Entertainment, the movie-theater chain that has narrowly avoided bankruptcy four times in the past nine months, which rose 53 percent in early trading Friday after dropping 57 percent on Thursday.

Chevron reported its third straight quarterly loss on Friday, as oil and natural gas prices remained low because the pandemic has disrupted activity across the economy. It was the company’s worst performance in four years.

The oil industry has suffered mightily over the last year, forcing companies to slash jobs, write off assets and, in the case of dozens of mostly smaller firms, file for bankruptcy.

With its varied international operations, Chevron comes out of the year stronger than most of its competitors, but the California-based company still lost $665 million in the last three months of 2020. The company lost $5.5 billion for the full year, down from a $2.9 billion profit in 2019.

“2020 was a year like no other,” said Chevron’s chief executive Mike Wirth in a statement. “We were well positioned when the pandemic and economic crisis hit, and we exited the year with a strong balance sheet.”

With oil and gas prices rising at the end of the year, Chevron’s oil and gas production yielded a $501 million profit in the fourth quarter, but its refining and chemical businesses continued to suffer as the global economy remained sluggish.

Credit…Gabriela Bhaskar for The New York Times

GameStop started the week as a curiosity — an illustration of how markets may have become detached from reality and how small traders can use options to drive stock prices.

By Tuesday, the story of the stock had become an obsession, as it nearly doubled in price. Groups of renegade investors on forums such as Reddit and Discord were trying to force a short squeeze — pushing up the price of stocks that hedge funds had bet would go down.

On Wednesday, GameStop was the most actively traded stock, with $24 billion worth of shares switching hands as prices rose 135 percent. Brokerages started to worry about their exposure, with some limiting customers from purchasing shares on margin — with borrowed funds. Elon Musk and Chamath Palihapitiya jumped into the fray, urging the crowd on via Twitter. The Securities and Exchange Commission said it was “actively monitoring the ongoing market volatility.”

The surge of GameStop and other stocks — AMC Entertainment and American Airlines were two other favorite targets — was starting to take a toll on hedge funds. Melvin Capital had to raise a $2.75 billion bailout from Citadel and Point72 early in the week, and its founder, Gabriel Plotkin, confirmed to CNBC that he was throwing in the towel and had exited his position.

Point72’s returns were down nearly 15 percent for the year as of Wednesday, and returns at Citadel were down by single digits.

The stock had its first daily drop of the week on Thursday, as the apps that many traders relied on limited action. Robinhood, among others, temporarily prevented its users from buying new positions in GameStop and other companies. The announcement infuriated users, who felt that the platform had betrayed them to satisfy big investors. “They call themselves Robinhood, but they’re helping the wealthy take money back from the middle class,” said a protester outside Robinhood’s headquarters.

Robinhood said it would reallow some trades on Friday, potentially setting up another day of wild swings. It said it had placed the limits because of “financial requirements” and was raising an infusion of $1 billion to ensure it wouldn’t need to further limit transactions.

Analysts expect GameStop to report a loss from continuing operations of $465 million for 2020, on top of the $795 million it lost in 2019.

Credit…Armando Babani/EPA, via Shutterstock

The president of Germany’s financial oversight authority is stepping down and the body will be reorganized following the collapse of the financial technology company Wirecard and the ensuing accounting scandal, the German finance minister, Olaf Scholz, said on Friday.

Mr. Scholz said the regulatory agency, known as BaFin, needed a reorganization to more effectively carry out its duties. The announcement came following a monthslong investigation into Wirecard’s collapse in June.

“Alongside of the planned organizational reform at BaFin, there should also be a change in personnel,” Mr. Scholz said in a statement announcing the departure of Felix Hufeld, who had served as president of BaFin for six years.

German authorities have been criticized for failing to act despite reports of irregularities at the Bavaria-based Wirecard, which filed for insolvency proceedings in June. Days earlier, the company acknowledged that 1.9 billion euros ($2.1 billion at the time) on its balance sheets probably never existed. The episode marked a dramatic turn of events for Wirecard, an electronics payments processor that had once been listed on Germany’s blue-chip DAX stock index.

Calls for Mr. Hufeld to be replaced came after BaFin reported one of its employees to state prosecutors on Thursday on suspicion of insider trading linked to Wirecard shortly before it collapsed.

Munich prosecutors are investigating Markus Braun, Wirecard’s longtime chief executive, and Jan Marsalek, an Austrian who fled Germany and remains at large. German prosecutors believe Mr. Marsalek may have embezzled more than €500 million.

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Benefits of Acting Now on Relief ‘Far Outweigh the Costs,’ Yellen Says

Speaking alongside President Biden, Treasury Secretary Janet L. Yellen pushed for swift action on coronavirus relief legislation to combat the economic impacts of the pandemic.

“Millions of people are out of work, unemployed. The future of millions are held back for no good reason other than our failure to act. So the choice couldn’t be clearer. We have learned from past crises the risk is not doing too much. The risk is not doing enough. And this is the time to act now. I’ve asked Secretary Yellen, who’s been leading this effort to come in, and we’re going to go into some detail among ourselves. But I think she has a statement to make as well.” “Thank you for the privilege, Mr. President. Well, there is a huge amount of pain in our economy right now, and it was evident in the data released yesterday. Over a million people applied for unemployment insurance last week, and that’s far more than in the worst week of the Great Recession. And economists agree that if there’s not more help, many more people will lose their small businesses, the roofs over their heads and the ability to feed their families. And we need to help those people before the virus is brought under control. The president’s American rescue plan will help millions of people make it to the other side of this pandemic. And it will also make some smart investments to get our economy back on track. I want to emphasize, the president is absolutely right. The price of doing nothing is much higher than the price of doing something and doing something big. We need to act now. And the benefits of acting now, and acting big, will far outweigh the costs in the long run.”

Speaking alongside President Biden, Treasury Secretary Janet L. Yellen pushed for swift action on coronavirus relief legislation to combat the economic impacts of the pandemic.CreditCredit…Anna Moneymaker for The New York Times

President Biden received his first formal economic briefing from Treasury Secretary Janet L. Yellen on Friday as the White House pushes to get another stimulus package moving through Congress.

The meeting took place in the Oval Office and Vice President Kamala Harris was also in attendance. Ms. Yellen was sworn in on Tuesday and has spent her initial days in the job getting briefed by advisers on the status of the existing stimulus programs and speaking to foreign finance ministers about America’s plans to engage with its allies. She has also been monitoring the unusual stock market activity related to GameStop this week.

“The price of doing nothing is much higher than the price of doing something and doing something big,” Ms. Yellen said before the briefing. “We need to act now. The benefits of acting now and acting big will far outweigh the costs in the long run.”

Ms. Yellen was joined in the meeting by Brian Deese, director of the National Economic Council, and Jared Bernstein of the Council of Economic Advisers.

The economic recovery shows signs of slowing, fueling concerns among White House officials that time is running short to pass a robust package before some emergency benefits expire in March. Democrats in Congress are still debating whether to push legislation forward on their own, using a mechanism called reconciliation, or work with Republicans on a bipartisan bill.

Ms. Yellen foreshadowed her advice to Mr. Biden during her confirmation hearing last week. She called on lawmakers to “act big” and said that providing robust support was the fiscally responsible thing to do to avoid long term damage to the economy.

Ms. Yellen’s team at Treasury is still taking shape and people close to her suggest that she will most likely assume the role of offering the White House high-level economic advice and helping to close the deal with lawmakers in Congress, rather than directly engaging in negotiations. The Treasury Department will also be heavily involved in the design and implementation of the relief programs.

Mr. Biden indicated that passing relief legislation was his top priority.

“People are going to be badly, badly hurt if we don’t pass this package,” Mr. Biden said on Friday.

Credit…Ludovic Marin/Agence France-Presse — Getty Images

Severe recessions in Germany and France last year, caused by the coronavirus pandemic, began to improve slightly toward the end of 2020, as a second series of lockdowns had a milder impact on their economies, those governments reported on Friday.

But prospects for a hoped-for recovery this year in Europe’s two largest economies may be delayed as a new variant of the virus circulates and as problems emerge in the rollout of vaccines, economists warned.

The French economy shrank by 8.3 percent last year as two sets of national lockdowns, lasting months, dealt strong blows to business activity, the national statistics agency reported on Friday.

But the overall contraction was less than expected. By reducing the strictness of the nation’s second lockdown, which went into effect in October and was mainly limited to restaurants and cultural events, the government avoided a worse economic hit, the statistics agency said. Growth in the fourth quarter fell 1.3 percent, compared with the same period a year ago — far less than the 4 percent contraction forecast by many economists.

In a note to clients, the Dutch bank ING wrote, “The big question now is whether France will manage to avoid a second recession in 15 months.”

“Given the current health situation, another recession looks all but certain,” the bank added.

The economy in Germany grew 0.1 percent in the fourth quarter compared with the third quarter, the country’s Federal Statistical Office said. That compared to growth of 8.5 percent in the third quarter, as the economy bounced back from a severe downturn early in the year, when the pandemic brought German factories to a standstill.

Over all, the German economy shrank 5 percent for all of 2020, the statistical office said.

In a separate note to clients, ING said, “It’s the worst performance since the financial crisis in 2009 but still much better than some had feared at the start of the Covid-19 crisis.”

Economists predict that the German economy will shrink again in the first quarter of 2021 (not the first quarter of 2020 as was earlier reported here) because of the slow rollout of vaccines and extended lockdowns.

Credit…Adria Malcolm for The New York Times

The economic upheaval caused by the pandemic is changing communities across the country. Hundreds of thousands of businesses have closed, leading to lost livelihoods and empty storefronts. Many of these businesses were neighborhood pillars, beloved locales that we returned to over and over again. In your neighborhood, perhaps the bar where you met friends after work, the restaurant where your family celebrated birthdays or the bookstore where you loved to browse is now gone.

The New York Times would like to hear from you about a local business that has shut down. Why was it special to you, and what do you miss about it? How is its absence altering the fabric of your community?

We may contact you with a few follow-up questions. And if you can, please share a photo of the business as well.

Robinhood curbed trading in cryptocurrencies on Friday, its latest restriction on users in a frenzied week of trading centered on the soaring stock of the video game retailer GameStop.

The trading platform said that instant deposits were temporarily unavailable for crypto purchases, which means users cannot buy anything until their deposit settles. But customers can still use any settled funds in their account to buy cryptocurrencies.

“Due to extraordinary market conditions, we’ve temporarily turned off instant buying power for crypto,” Robinhood said in a statement. “We’ll keep monitoring market conditions and communicating with our customers.”

A spokeswoman for the firm said it typically aims to give customers immediate access to up to $1,000 of their deposit. The new rules do not affect its Gold customers.

Robinhood and several other online brokerages put restrictions on trading of stocks like GameStop and the movie theater chain AMC, which soared this week in a rally sparked by amateur investors. But the platform said that it was beginning to relax some of those limitations.

Robinhood is now allowing its users to buy shares in some of the affected stocks, but within certain limits: Users can buy just five shares of GameStop, according to its website, and up to 115 shares of AMC. Positions in options contracts are also limited.

Credit…Kriston Jae Bethel for The New York Times

American Airlines appeared to seize an opportunity on Friday morning when it announced plans to raise more than $1.1 billion by selling shares amid a frenzy for its stock.

The airline this week found itself in the middle of a war of wills between amateur individual investors and professional traders at hedge funds and financial firms. The individual investors, who congregated on social media sites like Reddit, collectively bought up shares of companies like GameStop and AMC Entertainment that professionals had bet against. In so doing, some of these self-described financial insurgents earned big profits and forced some big investors to take major losses.

Emboldened by that success, the amateurs turned their attention to other companies whose stocks have been shorted, or bet against, including American. The airline said on Thursday that it lost nearly $9 billion last year, a figure that was largely ignored by the small-scale investors who tried to pile into its stock, despite being hamstrung by brokerage firms like Robinhood that restricted trading in several stocks, including American’s. The company’s stock rose more than 20 percent between Wednesday and Friday morning, but fell somewhat once regular trading began on Friday.

By issuing additional shares, American seems be making the most of the thirst for its stock while it can. There is no guarantee that interest will persist because online traders could easily decide to move onto other companies.

“American will need to shift its focus to fixing the balance sheet after demand comes back and the company begins generating cash again,” Helane Becker, managing director and senior airline analyst at Cowen, an investment bank, said in a note to clients on Thursday.

Airlines have been burning through cash since the pandemic took hold early last year. Air travel has recovered somewhat, but passenger traffic is still down about two-thirds compared with the same time in 2019.

American entered the pandemic with more debt than its rivals. As a result, professional investors have bet heavily against it. According to S3 Partners, a financial data firm, American is the most shorted major U.S. airline, with nearly 19 percent of its shares subject to short trades, compared to just 4.7 percent for JetBlue and 4.4 percent for United Airlines.

Credit…Greg Baker/Agence France-Presse — Getty Images

HNA Group, a Chinese conglomerate that spent $50 billion on trophy businesses spanning the globe but has since grappled with high debt, said on Friday that a creditor has filed a petition for it to be declared bankrupt.

HNA said in a short statement that the creditor submitted the application to a court in the southern province of Hainan, where HNA is based, because the company had failed to pay its debts. The company did not say whether the court had ruled on the petition.

The announcement highlights challenges that continue to besiege the once high-flying company, which previously owned big stakes in Deutsche Bank, Hilton Hotels and Virgin Australia. HNA asked the Chinese government to help bail it out last year, blaming the impact of the coronavirus on flight cancellations for its debt woes.

Founded as a regional airline, HNA was once a rising star among a new breed of Chinese companies that included Anbang Insurance Group, Dalian Wanda and Fosun International. Lubricated by cheap loans from state-run banks and aided by strong political connections, these private companies scoured the world for splashy deals, buying hotels, production companies and even stakes in big global banks.

But as these companies expanded their empires, authorities worried that the huge debt bill they had racked up posed a lurking risk to China’s financial system.

Struggling under a massive $90 billion debt bill, HNA sold off billions of dollars’ worth of properties. At one point it was so strapped for cash that it asked its own employees to lend it money.

Eventually, HNA’s chairman admitted that the company was having trouble paying its bills and the salaries of some employees. Officials from the civil aviation administrator and China Development Bank stepped in last year to take over the responsibility of managing the company’s risk. HNA also gave two board seats to local government officials.

HNA said on Friday that it had been notified by a court in Hainan, where it is headquartered, that creditors applied for its bankruptcy. The company would cooperate with the court, it said in a statement on its website.

Tags GameStop, Live, market, Stock, Updates

Business

How Choices Buying and selling May Be Fueling a Inventory Market Bubble

Post author By
Post date January 26, 2021

How Options Trading Could Be Fueling a Stock Market Bubble

The stock market is near record highs and optimism is high. Coronavirus vaccines are finally being hugged. Interest rates are at historic lows. And the Democrats who control Washington are expected to pour another trillion dollars into the still troubled economy.

However, it is becoming more and more difficult to miss signs that investors are going too fast and too far.

The most recent signal comes from the somewhat dark stock options market, where traders with brokers can place bets on a stock going up or down. Speculation has reached frantic levels that have not been seen since the dot-com boom ended two decades ago. This craze has a growing impact on the regular stock market.

“When you wager on sports, the number of people on one side of the bet can only affect the odds, not the outcome,” said Steve Sosnick, chief brokerage strategist at Interactive Brokers in Greenwich, Connecticut. “With options, the result can actually change.”

Over the past year, and even during the deep uncertainty that shook the market at the start of the pandemic, individual investors – often with little experience – poured into the market. What attracted them is different: free trade, extra money from aid payments or even an itch when most sports leagues are closed.

Options trading hit a record in 2020 with around 7.47 billion contracts traded, according to Options Clearing Corporation. That was 45 percent more than the previous record of 2018.

Much of this money comes from small traders hoping to make quick wins that will expire quickly by buying “calls” – betting on emerging markets.

The offset is reflected in the so-called put-call rate, which shows how many contracts bet on profits compared to those that bet on losses from put options. On Friday, the 50-day moving average for this ratio was 0.42, close to its lowest level in two decades. The last time it was this long was in 2000, meaning options investors are more optimistic or greedy than in over two decades.

The combination of the sudden growth in options trading and the unbridled optimism of buyers is a market-moving force in itself.

Business & Economy

Updated

Jan. 25, 2021, 6:32 p.m. ET

How options can drive the market.

A person who wants to bet that a stock price will go up can buy a call option from a brokerage firm. This contract gives the buyer the right – but not the obligation – to buy a share at a certain price at a later date. If the share price is higher on that date, the buyer can buy the shares through the contract and then sell them for a profit.

But just as the buyer can benefit from a rising stock price, the dealer who sold the contract will lose.

Brokerage firms make money by charging for products and not predicting where stock prices are going. To hedge your risk on a particular contract, buy a calculated percentage of the stocks that you would have to sell if the buyer made money on the bet.

But when stock prices rise, brokers need to buy more stocks to keep their hedges balanced. Buying more shares will help drive share prices higher.

In other words, rising stock prices will fuel demand for stocks even further, all because of market dynamics – not a fundamental view that the company’s business prospects are improving.

“In this situation, traders intensify price movements,” said Andrea Barbon, assistant professor of finance at the University of St. Gallen in Switzerland, who recently wrote a co-wrotea paper that analyzed the relationship between options markets and market volatility .

The result can be an options market that has itself become a generator of price momentum and stocks that seem increasingly disconnected from fundamental fundamentals such as corporate earnings expectations.

“The basics are not the driving force. That doesn’t matter anymore, ”said Charlie McElligott, a market analyst at Nomura Securities in New York. “It is the size and growth of the options market as this lottery ticket vehicle that is currently being expanded with the retail hype.”

Will the market correct the price hike?

The overwhelming optimism of stock option investors – and the possibility that they are fueling a feedback loop of rising stock prices – is one of the reasons some analysts fear a bubble may form in the market.

As a rule, when the story is a guide, such bubbles don’t last. The rush in 2000 was followed by a downturn of around two and a half years when the stock market fell 40 percent.

The downturn doesn’t have to be this steep. In August, the put-call rate rose sharply when the upward movement took hold. Shares suddenly fell in early September, and the S&P 500 fell more than 7 percent in three weeks. The sell-off was led by the same giant tech companies – including Microsoft, Amazon, and Alphabet, Google’s parent company – who led much of the market’s month-long rally.

Few analysts saw a fundamental reason for the decline.

“There is usually a lot of speculation going on,” said Sosnick.

Right now, however, there is little evidence that investors have felt fed up.

Since the sharp setback for tech stocks in September, retailers have doubled their interest in buying single stock options, which has become especially popular with online amateurs who gather on Reddit and Discord to share ideas and see screenshots of supposed profits and guts Wrench losses.

The momentum is likely to continue until the markets fade and these newly-minted traders suffer painful losses that for many will be the first in an extremely short career as an investor.

“Are these the types of people who have the ability, acumen, and pain tolerance to stay disciplined and not create a rush of new investors out the door?” Mr. McElligott asked.

If they flee, it will only add to a fall.

“It can get flammable there,” he said.

Tags Bubble, Fueling, market, Options, Stock, trading

Business

From ‘unloved’ to ‘favourite,’ Britain’s inventory market rides a wave.

Post author By
Post date January 21, 2021

From ‘unloved’ to ‘favorite,’ Britain’s stock market rides a wave.

The start of 2021 was rocky for the UK. Leaving the European Union sparked enormous bureaucracy that has desperately sought help from some industries, and the country is once again in lockdown due to a rapidly spreading strain of the coronavirus.

But there was a glimmer of hope. In the UK, more than four million people have been partially vaccinated against the coronavirus, a promising rate of vaccination.

Investors seeking a wave of optimism about vaccine rollouts have turned to the UK stock market, which had a strong start to the year, rising more than 6 percent in the first week.

In the first two and a half weeks of January, the FTSE 100, the UK’s benchmark index for large companies, rose 4.3 percent, outperforming the S&P 500 index, which was up 2.6 percent, and the Stoxx Europe 600 index, which was up 3 percent. Even when the profits are converted into US dollars, the FTSE 100 still has a clear head start.

In addition to the introduction of vaccines to help secure an economic recovery, another factor is attracting investors: the relative cheapness of UK stocks.

The UK FTSE 100 index benefits from an investment strategy in which traders buy so-called value stocks. These are companies that are believed to be trading below their real value because their business has been disrupted by a recession, particularly in the financial and energy sectors, and the FTSE 100 has a large stake in these stocks.

Citigroup analysts have made the UK stock market their “preferred” stock market.

“I would like to stress that the very unloved and terribly horrific UK market might be worth a look this year,” said Robert Buckland, a Citigroup equity strategist, in a presentation last week. “We all know it’s been a place to avoid for many, many years.”

Updated

Jan. 21, 2021, 8:46 ET

The UK stock market has been lagging behind for years. The last time the FTSE’s earnings looked better than the US and European benchmarks was in 2016, when a sharp fall in the pound boosted the profits of the FTSE 100 companies, which have three-quarters of their sales overseas.

When converted to US dollars, the FTSE 100’s annual return was the worst of the three indices over the past nine years.

Why are investors now betting on a trend reversal? For one, a lot of them are ready for a bargain. The bull market for stocks has been dominated by expensive stocks in American tech companies, which makes some investors nervous about how much they can go further. An alternative is cheap stocks in industries that tend to do well in times of economic recovery.

And then there is the UK’s free trade agreement with the European Union. Some investors put aside the details of whether it was a good deal or a bad deal to make it easier for an agreement to finally be reached in late December.

The deal “reduced the uncertainty of the overhang people,” said Caroline Simmons, the UK’s chief investment officer at UBS Global Wealth Management. And it could encourage the return of foreign investors who were deterred by Brexit, she said. Up until last week, the Swiss asset management company stated for the first time since 2013 that UK stocks were among its most preferred deals.

Two Schroders wealth managers in London are hoping that interest in large companies will return to smaller companies that are lagging behind. Rory Bateman and Tim Creed raised £ 75 million ($ 102 million) in December for their British Opportunities Trust, a fund that will invest in public and private companies that are affected by the pandemic but that they expect to be they recover with a little more capital.

The vaccines were the “beginning of the mood reversal in Britain,” Bateman said. “The momentum is definitely shifting.”

However, this strategy depends heavily on the success of the vaccine launch and can easily be reversed by signs of delays in manufacture or distribution. And the UK stock index could fall back to the bottom of the stack.

Tags Britains, Favorite, market, rides, Stock, unloved, wave

World News

Qualcomm chip market share plunges in China after U.S. sanctions on Huawei

Post author By
Post date January 21, 2021

Qualcomm’s Snapdragon 888 chip is used in premium Android devices that could cost over $ 1000.

Qualcomm

According to a new report, Qualcomm’s share of the Chinese smartphone chip market decreased in 2020 due to US sanctions against Huawei.

As a result, the country’s domestic wireless carriers turned to alternatives like Taiwan’s MediaTek, according to CINNO Research.

Last year, 307 million so-called Smartphone on System (SOC) for smartphones were shipped in China, which corresponds to a decrease of 20.8% compared to the previous year.

SOC is a type of semiconductor that contains many of the components necessary for a device to operate on a single chip such as a processor. They are an important component for smartphones.

According to CINNO Research, Qualcomm’s shipments in China are down 48.1% year-over-year, with no information on the number of Qualcomm chips shipped. The US giant’s market share in China fell to 25.4% in 2020, down from 37.9% in 2019.

MediaTek No. 1

Taiwan’s MediaTek benefited from this pent-up demand. The chip designer took advantage of the problems of Huawei and Qualcomm and also let large Chinese smartphone manufacturers use his chips.

“As far as we know, the MediaTek share (for) OPPO, Vivo, Xiaomi and Huawei has increased significantly,” said CINNO Research to CNBC in a statement by its analysts.

Huawei is China’s largest smartphone maker by market share, followed by Vivo, Oppo and Xiaomi.

Many of these players make phones that are mid-range in price but have high specifications. MediaTek achieved good results here.

The US sanctions against Huawei have also forced other Chinese players to look for alternatives in case they should be cut off from Qualcomm.

“Not only is this due to the excellent performance of MediaTek’s mid-end platform, but there is also no denying that the US has imposed a number of sanctions on Huawei & Hisilicon that are forcing large manufacturers to become more diversified and stable endeavor and reliable sources of supply, “said CINNO Research in a press release.

Xiaomi was recently added to a U.S. blacklist of suspected Chinese military companies, although it is unclear whether this will affect their ability to source certain components.

Winning the 5G market

China is the world’s largest market for 5G smartphones. 5G refers to the next generation of mobile internet, and chipmakers are fighting for a piece of cake.

“After the first year of 5G, let’s take a look at the changes in the Chinese smartphone SOC market. This shows that the market pattern is changing from a single dominant Qualcomm company to a three-party in the 4G era. Pattern has changed from Hisilicon, Qualcomm, and MediaTek in 2020, “said CINNO Research.

Last year, Qualcomm launched a new line of 5G smartphone chips, known as the 6 and 4, which could hurt MediaTek’s market share in China.

“Qualcomm, which launches the 6 and 4 series 5G chipset, will help MediaTek participate in the fast-growing 5G smartphone segment in China,” said Neil Shah, partner at Counterpoint Research.

Tags China, chip, Huawei, market, plunges, Qualcomm, Sanctions, Share

Business

The rich are investing like market bubble is right here, or at the very least close to

Post author By
Post date January 17, 2021

The wealthy are investing like market bubble is here, or at least near

If an investor with a market share of $ 1 million or more believes that there is already a stock bubble – or one is coming soon – what is the correct answer? According to a new survey by E-Trade Financial, the answer is to keep investing in stocks with an emphasis on undervalued sectors of the market.

Only 9% of the millionaires surveyed by E-Trade believe the market is nowhere near a bubble. The rest of the wealthy investor set:

16% think we are “full in a bubble”
46% in “something like a bubble”
29% believe the market is getting closer

However, these wealthy investors do not run away from the market or park money in cash. With bubble fears mounting mounting fears, the same investors say their risk tolerance increased significantly in the first quarter of 2021, and the majority expect stocks to end the first quarter with more gains.

The introduction of the Covid-19 vaccines, albeit slow to start, and the prospect of another even bigger stimulus package from President-elect Biden are causing investors to do what market history dictates: look ahead.

“There is broader recognition of an improving economy and evidence that the factors for higher market development are in place,” said Mike Loewengart, chief investment officer of E-Trade Financial’s capital management unit.

The Morgan Stanley E-Trade survey was conducted Jan. 1-7 of an online sample of 904 self-managed active investors who manage at least $ 10,000 in an online brokerage account. The millionaires record, created exclusively for CNBC, consists of 188 investors with investable assets of at least $ 1 million.

The apparent contradiction in the sustained upward movement at a time of mounting bladder anxiety is not as strong as it seems. This bull market has taken all risks and market experts continue to believe that the path of least resistance is up. Although the bullish path may require some optimization of the portfolio with a greater emphasis on undervalued sectors of the stock market.

Here are some results from the e-trade survey that show where investors are right now between risk and reward.

1. Millionaires are more optimistic than the wider investing public

There is currently a lot of talk and talk about an overstretched market and a dotcom bubble-like environment, making it difficult for many investors to shut down the noise. But among these wealthy investors, even as their own bubble fears mount, they are increasingly bullish and bullish than the broader investor universe. 64 percent of millionaires are bullish, up 9 percentage points from the fourth quarter of 2020 compared to 57 percent of the broader investor universe who remain bullish.

Among these investors, the percentage who said their risk tolerance increased in the first quarter rose 8 percentage points (from 16% to 24%). The majority (63%) said that it will remain at the level of the previous quarter. Only 13% of millionaires said their risk tolerance has decreased.

Wealthy investors don’t expect great returns. The largest group expects the market to grow no more than 5% this quarter. However, after the sharp rise in the markets that are already on the books, this is a safe, albeit bullish, reaction, Loewengart said. Fifty-nine percent of millionaires expect another quarterly profit in the S&P 500, with 43 percent of those seeing a profit of no more than 5 percent. Those who believe the market is due for a quarterly decline fell from 28% to 22%.

2. Further portfolio changes will be made

Even if the risk remains the mode for many, more and more investors are optimizing their portfolios. Rotation in value stocks, small-cap stocks, and depressed sectors like energy and finance is already a well-mapped phenomenon – called the “big rotation” – and these investors are no exception.

The percentage of millionaires who report making changes to the allocations in their portfolios rose 6% for the second straight quarter to almost a third (32%) overall. The percentage of millionaires who invest in cash is still very low (7%) but increased from 5% in the last quarter.

While growth stocks have outperformed in recent years, investors are taking the opportunity to move into more cyclical sectors of the market.

“Everything outside of big tech turned into better potential opportunities,” Loewengart said.

According to CFRA, small caps have underperformed the S&P 500 since late 2018.

The price growth gap between S & P 500 Growth and S & P 500 Value was at its highest level in history last August (since the mid-1970s) and is currently as large as it was in December 1999, even after a certain amount of stock rotation .

The 12-month price-performance ratio of the S&P 500 is 45% above the 20-year average. The CFRA 2021 profit increase for the S&P 500 growth component of the index is 13.3% versus 20.1% for the value group.

3. Home trading may have peaked but it is permanent

Even if millionaires are more likely to say they’re making changes to their portfolio allocations, the upside in the S&P 500 sector hasn’t changed as much as the survey suggests. This shows that names and names are given to every investor that participates in the rotation. With more cyclical games, there are still many who put their market money on the winners.

“There’s the momentum factor. People want to keep believing where they’ve seen strong returns, it will go on, but some are realizing it can’t go up forever,” Loewengart said.

While interest in financials as the sector with the greatest potential has increased slightly (3%) this quarter, a bet on a quick financial recovery, information technology and healthcare overall remain the top bets in the fall in this bull market, according to Loewengart . Healthcare (at 66%) and technology (at 53%) remain the two most popular sectors and investor interest has not declined.

Technology, for all its winnings, is hard to bet on.

“We can talk a lot about how the home trade is over and other segments will do better. However, when we see similar industry expectations, that also reflects the market tied to technology and the fact that Covid is changing the world has, “said Loewengart. “Some things are not going to be what they were before and we are going to see multiple expansion in big tech names,” he said.

He added that given recent valuations, investors should expect earnings to be more modest than the opportunity in cyclical sectors, where more stimulus and vaccine use can result in more significant valuation growth. “There is a possible change in market leadership,” said Loewengart.

4. International market opportunities are more attractive

The data shows more clearly that overseas interest is growing than that sector bets are changing significantly in the US market. This is in part because these millionaires have typically long preferred US stocks.

Millionaires are shaking their prejudices about their home country and are becoming more interested in investing outside the US. Interest rises 9 percentage points this quarter. The percentage of millionaire investors who said international markets were more attractive to them in the first quarter of 2021 rose from 27% to 36%.

“It’s definitely a big step in terms of millionaires, a significant step,” said Loewengart.

For the past three years, the S&P 500 has outperformed the international and emerging market indices developed by S&P. The last time these international markets outperformed the US large-cap index was in 2017.

While the dollar has rallied recently, its broader weakness over the past few months has been a key element of global equity performance.

“This means that the millionaire is better prepared for the opportunity,” said Loewengart.

How much of this new interest overseas is broadly based compared to China is not clear from the survey. “China could be the only G8 member to see GDP growth in 2020. This is a clear indicator that the world outside of the US, developing countries, is moving past the virus,” he said.

5. The US political risk factor has fallen sharply

If political risk and election risk were a major factor in the fourth quarter, there was a significant investor downgrade that quarter.

The end of the e-trade poll was the Georgia runoff election and the unrest at the Capitol that set the market another record. When it comes to the biggest question – the presidential election – millionaire investors are no longer nearly as concerned as they were last quarter.

The percentage of wealthy investors who see the new presidential administration as the greatest risk to their portfolio decreased from 50% to 30% this quarter. 26% of these investors are pessimistic about the outlook for the US economy under President-elect Biden, while 60% showed some degree of optimism, ranging from moderate (38%) to high (22%).

Market volatility, meanwhile, saw risk factors spike, from 18% of millionaires who viewed this as their biggest portfolio threat, to just over a quarter (27%).

6. Millionaires are less risky when it comes to the riskiest assets

The most recent phase of this bull market, the phase after Covid Spring 2020, was marked by a risk appetite for new offers, IPOs and SPACs, as well as an increase in new asset classes such as cryptocurrencies, including Bitcoin. Millionaires, while remaining at risk, are less interested in betting like this:

Tags Bubble, investing, market, wealthy

Business

GitLab CEO eyes public market after secondary valued it at $6 billion

Post author By
Post date January 17, 2021

Sid Sijbrandij, CEO of GitLab, at a corporate event in London

GitLab

Sid Sijbrandij, CEO of GitLab, who had just completed an employee stock sale and valued his software start-up at $ 6 billion, said he still wanted to take the company public despite having a lot more options in Consider when were available in the past.

Sijbrandij on Thursday confirmed CNBC’s late-November coverage of the company’s valuation as part of its secondary offering, which allowed employees to sell up to 20% of their vested equity. He provided additional details on the size of the business and investors, as well as revenue growth and new customers.

GitLab’s cloud-based software is used by developers to share code and collaborate on projects. The company, which competes with Microsoft’s GitHub and Atlassian, has seen a boom in demand as more industries rely on software and digital tools to run their operations. GitLab specializes in helping programmers get product updates faster, lower operating costs, and accelerate development.

According to Sijbrandij, GitLab had annual recurring revenue of $ 150 million after seeing 74% growth in the most recent quarter. In 2020, the company signed three major airlines and a travel management provider despite the pandemic forced the travel industry to make dramatic cuts.

“It was the hardest hit industry last year and even they still bought,” said Sibrandij. “It’s been a tough year for many of our customers.”

In its “team manual” on its website, GitLab had openly announced its plan to go public by November 2020. After the pandemic upset the broader economy early last year, the company scrapped the timing for its debut while also stating that a public listing was still on the roadmap.

Sijbrandij said he did the secondary to “give our team members the opportunity to benefit from the value we have created together”. The $ 6 billion valuation is higher than the $ 2.7 billion valuation in a funding round in late 2019.

GitLab allowed current and former employees with vested equity to sell a total of 4.9 million shares, bringing the total offering to $ 195 million. Investors who bought the stock included Alta Park, HMI Capital, OMERS Growth Equity, TCV, and Verition. For the transaction, GitLab used the Nasdaq Private Market, which specializes in helping private companies provide secondary liquidity.

Sijbrandij said there was no schedule for a debut in the public market, although people familiar with the matter told CNBC in November that it was expected to come in 2021. The company has a number of ways to consider an IPO that either didn’t exist or was relatively untested prior to last year.

One option is a direct listing, launched by Spotify, Slack, Palantir, and Asana and tracked by Roblox, that allows employees to sell stocks to new investors immediately. Other companies like Unity, Airbnb, and DoorDash have opted for a hybrid auction that allows management to choose a price based on the bids. And there is the option of going public through a Special Purpose Acquisition Company (SPAC) or a reverse merger carried out by a so-called blank check company.

“There are a lot more options and we are following the market,” said Sijbrandij. SPACs are “an interesting alternative that is also on our radar,” he said.

CLOCK: There is a great demand for innovations in the market

Tags Billion, CEO, Eyes, GitLab, market, public, secondary, valued

Business

US Inventory Market and Financial system Tracker: Reside Updates

Post author By
Post date January 15, 2021

The Grove Market in Asheville, N.C., in December. The Commerce Department reported a 0.7 percent drop in retail sales for the month.

Here’s what you need to know:

Credit…Ruth Fremson/The New York Times

Consumer spending fell for the third-consecutive month in December, confirming what many economists had predicted would be a disappointing holiday season for many retailers.

Retail sales fell 0.7 percent last month, the Commerce Department said on Friday, as the economic recovery showed signs of stalling, stimulus money ran dry and virus cases surged across the country, prompting shoppers to avoid stores.

The decline also likely reflects how retailers’ strategies of offering holiday deals early this fall spread out the holiday shopping season across months, and may have dampened sales closer to Christmas.

The drop was widespread across many categories, including electronics, building supplies and food and beverage stores, which had been areas of strong spending last spring and summer. Spending at restaurants in December was also down amid a rise in new cases and new closures.

The Commerce Department also revised its November sales data, showing a decline of 1.4 percent, larger than the 1.1 percent drop it had previously reported.

The three months of weak consumer spending, which comprises 70 percent of the U.S. economy, adds new urgency to the $1.9 trillion economic rescue package that the incoming Biden administration proposed this week, which increase direct payments to individuals by $1,400.

Credit…Justin Lane/EPA, via Shutterstock

Optimism is taking hold among the country’s largest banks. With vaccines beginning to be administered to the most vulnerable Americans and a new round of economic stimulus on the way, banks on Friday revealed that they had begun to pare back the enormous reserves they had socked away in case of an economic disaster.

“Thank God for the vaccine, folks” JPmorgan’s chief executive, Jamie Dimon, said on a call with reporters on Friday.

JPMorgan Chase, the largest U.S. bank, ended 2020 on a strong note, releasing $2.9 billion from an emergency pool of money, which helped push its profit 42 percent higher in the fourth quarter.

Citigroup and Wells Fargo also reported loosening their rainy-day funds.

Citigroup said on Friday that it had released nearly $1.5 billion, but it was not enough to raise its quarterly earnings above what it earned in the same period in 2019. The bank reported a profit of $4.6 billion on revenue of $16.5 billion. Both its revenue and its earnings were lower than they were a year earlier.

And Wells Fargo released $757 million from its reserve pool, but it said the change was driven by the sale of its student loan business rather than any reassessment of its economic outlook. The bank earned $3 billion in the fourth quarter, just slightly more than it did in the same quarter in 2019, even though its revenue fell to nearly $18 billion from $19.8 billion.

JPMorgan revealed its reserve release in a report on its fourth-quarter financial results on Friday, when it reported earnings of just over $12 billion, although the increase, from the same period last year, was attributed mostly to the newly freed funds. The bank’s revenue was 3 percent higher, at $30 billion, compared with the same quarter a year earlier.

Regular recalculations of how much money the bank would need in the event of a disaster had led to the release, Mr. Dimon said in a statement accompanying the bank’s results, but he added that there was still plenty more saved up in case a downturn occurred.

“While positive vaccine and stimulus developments contributed to these reserve releases this quarter, our credit reserves of over $30 billion continue to reflect significant near-term economic uncertainty and will allow us to withstand an economic environment far worse than the current base forecasts by most economists,” he said.

The results showed that JPMorgan’s retail customers have been buying houses and cars. Mortgages and auto loans rose 20 percent compared with a year earlier. The bank’s profit from stock trading jumped 32 percent, while earnings from trading in bonds, currencies, commodities and other products rose 15 percent from the same period a year earlier.

Citi’s earnings were hit by reduced activity by its credit card users around the world. Deposits grew in its global bank by 19 percent, but the amount it earned from card usage declined, sending overall revenue 14 percent lower. On Wall Street, Citi bested its performance a year earlier. Stock trading earnings rose 57 percent, while earnings from trading in bonds and other products increased 7 percent.

Wells Fargo’s chief executive, Charles W. Scharf, said the bank’s results, which showed significant expenses that cut into its ability to earn profits, reflected its efforts to move on from its past abusive practices. The bank has had to revamp how it monitors its operations to identify illegal or harmful activities, and has plowed significant sums into the overhaul.

“We are making progress,” Mr. Scharf said in a statement accompanying the financial results. He noted that the improved economic outlook offered an additional source of hope.

“With a more consistent, broad-based recovery, and as we continue to press forward with our agenda, we expect you will see that this franchise is capable of much more,” Mr. Scharf said.

Credit…Joshua Bright for The New York Times

PepsiCo announced on Thursday that it was suspending all donations from its corporate political action committee, adding to the list of dozens of companies that have come out with some sort of halt on political giving since last week’s violence at the Capitol.

“The peaceful transfer of power is a keystone of the American democratic process, and we categorically denounce the violence last week that attempted to disrupt this process,” a representative said. “In light of these events, we are suspending all political contributions while conducting a full review to ensure they align with our company’s values and our shared vision going forward.”

Pepsi’s PAC spent $140,000 this election cycle, according to the Center for Responsive Politics.

In pausing all donations, Pepsi is not going as far as companies like Walmart and Marriott, which halted donations specifically to the 147 Republicans in Congress who objected to certifying the presidential election result. It joins companies like rival Coca-Cola, along with the energy giant BP and the consulting firm EY, formerly Ernst & Young, in halting donations across the board.

The brokerage firm Charles Schwab said this week that it was shutting down its PAC, citing the divisive political environment.

“I’ve never seen the corporate PAC world react to something this uniformly and strongly,” said Kenneth Gross, a partner at the law firm Skadden who focuses on campaign finance law.

“I think there’s a sense of, ‘Let’s not overreact — but we need to do something,’” he said.

Credit…J. Scott Applewhite/Associated Press

A lawmaker in Washington is asking big banks and other financial services companies to stop processing financial transactions for people and organizations that participated in last week’s attack on the United States Capitol.

Representative Emanuel Cleaver, a Missouri Democrat who serves on the House Financial Services Committee and is chairman of its subcommittee on national security, announced on Thursday that he had written to a trade group, the Electronic Transaction Association, to request the freeze. He also asked the group, which represents companies like Visa, JPMorgan Chase and Square, to immediately stop doing business with anyone who based fund-raising campaigns off the Jan. 6 attack.

“Far-right, white-nationalist and associated domestic terror organizations pose an imminent threat to the national security of the United States and our financial system,” Mr. Cleaver wrote in a letter on Tuesday to the group’s leaders.

“Every effort should be made to identify all terror suspects involved in the attack, prevent the facilitation of further criminal activity, and to disrupt their illicit networks.”

Mr. Cleaver said that several groups, including the Proud Boys, the Boogaloo Bois and the Sons of Liberty, which had been documented as participants in the attack, had already been cut off from many mainstream fund-raising platforms, but were still using “intermediary organizations with questionable terms of service” that might in turn be doing banking and payments business with mainstream companies. He asked that the association’s members assess their “formal and informal relationships” with the groups and work to cut them off He also asked that the group respond to his request by Friday.

“We received the chairman’s letter and are preparing our response on how the payments industry is addressing illegal activity that occurred last week,” Scott Talbott, a lobbyist for the group, said in an email on Thursday.

Credit…Rick Wilking/Reuters

IBM announced a series of recommendations for government policy changes on Friday in response to last week’s riot at the Capitol. They include clearer guidance around presidential transitions, stricter rules on financial disclosures for office holders and more.

The tech giant’s advocacy is noteworthy because these issues aren’t related directly to its business and they’re not backed by a company political action committee. IBM has forbidden corporate political donations for more than a century.

“What companies should be thinking about is policy reforms, not PAC checks,” Christopher Padilla, IBM’s vice president of government and regulatory affairs, wrote on the company’s policy blog. “Rather than just suspending PAC contributions as a signal-sending exercise, what makes more sense for us, since we don’t do political contributions, is to try to reform government in a way that will prevent some of this stuff from happening in the future,” he told the DealBook newsletter.

Despite eschewing direct donations, IBM is an active lobbyist and hasn’t shied from hiring people with political ties, including most recently Gary Cohn, President Trump’s former economic adviser, as vice chairman. “IBM looks for people who bring experience and qualifications and doesn’t really look at what their political background is,” Mr. Padilla said.

Employees and shareholders expect companies to be “responsible players,” Mr. Padilla said, “and that’s what we’re trying to do.” IBM employees had pressed the company to speak out following the violence in the Capitol, much like they did after George Floyd’s killing last year. Following Mr. Floyd’s death, the company called for changes to police policy and said it would get out of the facial recognition business.

Britain’s economy declined in November, the earliest signal that the country might be heading for its second round of contraction within months — a double-dip recession — because of the severity of the second wave of the pandemic and the restrictions that have been imposed on businesses and the population.

Gross domestic product dropped 2.6 percent in November, when a second lockdown was imposed across England, after six consecutive months of economic growth, according to the Office for National Statistics.

That said, the impact of this second lockdown was much less economically severe than the closures last spring, when the economy fell by more than 18 percent. The difference this time was, in part, because the restrictions were looser and more businesses had adapted: schools remained open, more people could go to their workplaces and many retail and hospitality businesses had added delivery and pickup services. The construction and manufacturing sectors of the economy were the only ones that grew in November, but the overall decline was smaller than most economists had forecast.

Still, the economic recovery that many thought would come once vaccinations began has been postponed, at least until the spring. Much of Britain is under a third lockdown (longer and stricter than the second), as a more contagious variant of the virus has strained the health care system, and economists are forecasting the economy to contract in the first quarter of 2021.

Trade disruptions created by Britain’s exit from the European Union’s single market and customs union, including delays, lost business, and the halting of some services, is also expected to weigh on the economy in the first few months of the year.

“We should expect the economy to get worse before it gets better,” Rishi Sunak, the chancellor of the Exchequer, said in Parliament on Monday. The next day, Andrew Bailey, the governor of the central bank, said the economy was facing its “darkest hour” and that it was in “a very difficult period.”

Credit…Mario Tama/Getty Images

Disneyland, which has been closed for 10 months because of California’s strict approach to coronavirus safety, alerted annual passholders that it was ending the popular program, which it started offering to hard-core customers in the 1980s.

The Walt Disney Company said it would begin issuing prorated refunds in the coming days. Annual passes to Disneyland were most recently $419 to $1,449, depending on access and perks.

Disney declined to say how many people were enrolled. The Orange County Register estimated in 2018 that Disneyland sold “hundreds of thousands” annual passes a year.

In part, the program is ending because Disney expects pent-up demand — from passholders and day guests alike — to far outstrip capacity when the attractions eventually reopen. Walt Disney World in Florida returned in July and has been running at 35 percent capacity since the fall.

In a letter to passholders, Ken Potrock, president of the Disneyland Resort, cited uncertainty about the duration of the pandemic and “expected restrictions around the reopening of our theme parks.”

“We plan to use this time while we remain closed to develop new membership offerings,” he said. He gave no update on when Disneyland might reopen.

Disneyland typically attracts more than 18 million visitors per year; an adjacent Disney theme park in Anaheim, Calif., draws 10 million. Total revenue in 2019 stood at roughly $3.8 billion, according to analysts.

Stocks drifted lower on Friday, as the initial enthusiasm about President-elect Joseph R. Biden Jr.’s $1.9 trillion spending plan to address the impact of the pandemic gave way to some second thoughts about the cost of all that borrowing.
Still, as has been the case all week, the moves were relatively small. The S&P 500 fell less than half a percent in early trading.
Mr. Biden said Thursday night that his plan would address the “real pain overwhelming the real economy,” with money to quicken the rollout of the coronavirus vaccine, help for state and local governments to address budget shortfalls, more generous jobless benefits and direct payments of $1,400 to individuals.
As virus cases keep climbing in many parts of the world, anticipation of Mr. Biden’s spending plans have helped keep stock benchmarks in the United States close to record levels.
Those gains have come even as fresh data shows the economic damage being done by the pandemic. On Thursday, it was that more than one million people in the United States filed for unemployment benefits last week. On Friday, the Commerce Department said retail sales fell for a third-straight month in December, despite the holiday shopping season.
But investors are also looking closely at the enormous amount of borrowing that will be necessary to finance Mr. Biden’s proposal. Already, Treasury bonds have sunk in value, and their yields risen. As yields inch up, borrowing costs will rise. That has also raised concerns about tax increases to help underwrite Mr. Biden’s proposal.
The benchmark Stoxx Europe 600 was 0.6 percent lower on Friday, and the FTSE 100 in Britain lost 0.7 percent.
Oil prices stumbled, with Brent crude, the international benchmark, falling 1.6 percent, and West Texas Intermediate down 1.4 percent.

Credit…Steven Senne/Associated Press

The Treasury Department said it would allow Fannie Mae and Freddie Mac, the two government-controlled mortgage finance firms, to retain more of their profits to guard against future risks in the housing market.

The plan is part of an effort to enable Fannie and Freddie to leave government control — although neither the Treasury nor the Federal Housing Finance Agency, which regulates both firms, expect that to happen anytime soon.

Both firms have been in a government conservatorship since September 2008, when Treasury officials in the Bush administration had to step in with a $187 billion bailout in the early days of the financial crisis. Today, they effectively guarantee roughly half of all mortgages in the United States against default, which helps keep a lid on the interest rate for a traditional 30-year mortgage.

The Treasury and the F.H.F.A. said in a joint statement that the conservatorship was not meant to be indefinite and that federal officials had developed a “blueprint” for privatizing the firms. That blueprint foresees Fannie and Freddie both being able to sell stock to raise capital at some later date.

But the conservatorship, which has already spanned parts of three presidencies, will now be overseen by the Biden administration. That means a new Treasury secretary, and it may soon mean a new F.H.F.A. director.

Mark Calabria, who took over the agency in 2019, has long favored a plan to end the conservatorship. But a case pending before the Supreme Court could allow the president to replace him without waiting for Mr. Calabria’s five-year term to expire.

Tags Economy, Live, market, Stock, Tracker, Updates

World News

Fund supervisor warns Biden’s spending plan might pop inventory market bubble

Post author By
Post date January 15, 2021

Fund manager warns Biden’s spending plan could pop stock market bubble

People gather on Wall Street in front of the New York Stock Exchange, October 25, 1929.

Ullstein picture | Getty Images

President-elect Joe Biden’s Covid spending plan could restore financial conditions leading up to the Wall Street crash of 1929, with rising inflation possibly causing the bursting of an “epic” stock market bubble, according to a hedge fund manager.

The comments come shortly after Biden outlined the details of a $ 1.9 trillion bailout to help households and businesses through the coronavirus pandemic.

David Neuhauser, executive director of the small Chicago-based hedge fund Livermore Partner, said Biden’s spending plan was an attempt to mimic the “roaring 20s” by getting people back on the workforce quickly.

“But be careful, the ‘roaring 20s’ led to the stock market crash and the Great Depression in 1929. So be careful what you want,” he added.

If the American Rescue Plan is passed by the new democratically-controlled Congress, it will include $ 1 trillion in direct aid to households, $ 415 billion to fight the virus, and approximately $ 440 billion to small businesses.

“We don’t just have an economic need to act now – I think we have a moral obligation,” Biden said Thursday as he announced his plan from his interim headquarters in Delaware.

The former vice president is due to be inaugurated on January 20th.

US President-elect Joe Biden speaks out on January 14, 2021 at the Queen Theater in Wilmington, Delaware, on the public health and economic crises.

Jim Watson | AFP | Getty Images

When asked if investors should be concerned that the president-elect’s spending plan could lead to an event like the stock market crash of 1929, Neuhauser replied, “I think so.”

“You are seeing this massive $ 1 trillion deficit spending due to a pandemic that the world has naturally stopped for the past nine months, and the goals, of course, are, ‘We’re going to get a vaccine (and) we’re going to get through this,” said Neuhauser opposite CNBC’s “Squawk Box Europe”.

“We still don’t know how quickly and how quickly we can get through this. We also don’t know what global growth will look like in the years to come.”

After the stock market crash of October 29, 1929, the S&P 500 fell 86% in less than three years and did not exceed its previous high until 1954.

Neuhauser cited the expectation that US GDP (gross domestic product) could grow by 6% in 2021, but warned that growth is likely to normalize at a rate between 2% and 3% in subsequent years. An aging US population and massive corporate and national debt would also mean it’s likely a “hard road”, he said.

Neuhauser’s view, however, is not a consensus. James Sullivan, head of Asia Ex-Japan Equity Research at JPMorgan, told CNBC on Friday that Biden’s plan was more than double what the bank had expected.

So it was a “positive surprise” for the market and for general US growth in the years to come.

Separately, Goldman Sachs analysts increased their estimates of US household spending in the news in a release on Friday.

They noted that Biden’s proposal on individual stimulus payments, unemployment benefits, state tax subsidies and public health funding went further than expected, but stressed that he faced hurdles in going through Congress.

Inflation warning

US stock futures were lower Friday morning, with contracts linked to the Dow Jones Industrial Average falling 89 points while the S&P and Nasdaq both traded in negative territory. The major US indices are currently on track to close the lower week to date.

Even so, the Dow and Nasdaq posted new all-time highs for the day in the previous session, while the S&P closed around 0.81% of its record high.

“The market is trying to figure out which narrative they should go with. And in the past nine months it has risen almost in a straight line in relation to the stock markets,” said Neuhauser.

“I think what happens in the end is that (there) so much is going to be built into the market and (we) will eventually start inflationary factors coming in. Those are the things that will ultimately burst the epic bubble.”

Earlier this week, data showed that US consumer prices rose in December on a spike in gasoline prices, but underlying inflation remained relatively low. The U.S. Department of Labor announced Wednesday that its consumer price index rose 0.4% last month, after rising 0.2% in November.

In the 12 months to December, the CPI rose 1.4% after rising 1.2% in November. The numbers were largely in line with economists’ expectations.

Tags Bidens, Bubble, fund, Manager, market, Plan, Pop, Spending, Stock, warns

Business

World Enterprise Information: Dwell Market Updates

Post author By
Post date January 14, 2021

A closed restaurant in Santa Barbara, Calif.

Here’s what you need to know:

Credit…Bryan Denton for The New York Times

New claims for state unemployment benefits sharply increased last week as the resurgent coronavirus pandemic continued to batter the economy.

A total of 1.15 million workers filed initial claims for state unemployment benefits during the first full week of the new year, the Labor Department said. Another 284,000 claims were filed for Pandemic Unemployment Assistance, an emergency federal program for freelancers, part-time workers and others normally ineligible for state jobless benefits. Neither figure is seasonally adjusted. On a seasonally adjusted basis, new state claims totaled 965,000.

Economists had been bracing for a fresh wave of claims as the virus batters the service industry. The government reported last week that the economy shed 140,000 jobs in December, the first drop in employment since last spring’s steep losses, with restaurants, bars and hotels recording steep losses.

“We know that the pandemic is worsening, and with the jobs report last Friday, we can see that we’re in a deep economic hole and digging in the wrong direction,” said Daniel Zhao, senior economist with the career site Glassdoor.

The labor market has rebounded somewhat since the initial coronavirus wave in the spring. But of the 22 million jobs that disappeared, nearly 10 million remain lost.

“Compared to then, we are doing better,” said AnnElizabeth Konkel, an economist at the career site Indeed, referring to the spring. “But compared to the pre-Covid era, we still have so far to go.”

Still, economists and analysts see better times ahead. As more people are vaccinated, cases will begin to fall, which will ease restrictions on businesses and could lead to a resurgence in consumer activity, helping to revive the service industry.

Perhaps more immediately, President-elect Joseph R. Biden Jr. has pledged to put forward a stimulus package that would provide relief to individuals, small businesses, students, schools and local governments.

Credit…Steve Dykes/Getty Images

Charles Schwab will shut down its political action committee, perhaps the most significant move among companies rethinking their political donations after last week’s violence in the Capitol.

Schwab said it found the current “hyperpartisan” environment too complex to navigate without risk of distraction. “We believe a clear and apolitical position is in the best interest of our clients, employees, stockholders and the communities in which we operate,” the company said on Wednesday.

The company’s PAC will no longer take contributions from employees or make financial contributions to lawmakers. It will donate the leftover funds to Boys & Girls Clubs of America and to historically Black colleges and universities, organizations that Charles Schwab has supported in the past.

The Lincoln Project, a group of anti-Trump conservatives, had featured Charles Schwab in a recent campaign highlighting companies that donated to President Trump or to Republicans in Congress who voted against certifying President-elect Joseph R. Biden Jr.’s victory.

“It is a sad byproduct of the current political climate that some now resort to using questionable tactics and misleading claims to attack companies like ours,” the statement said, an apparent reference to the campaign. “It is unfair to knowingly blur the lines between the actions of a publicly held corporation and those of individuals who work or have worked for the company.”

The company’s billionaire chairman, Charles R. Schwab, has personally given millions to pro-Trump and Republican groups, far more than the company’s PAC. “Every individual in our firm has a right to their own, individual political beliefs and we respect that right,” the company said in its statement.

After the riot at the Capitol, a number of companies, including Goldman Sachs and JPMorgan Chase, paused corporate giving. Others, such as Walmart and Marriott, have said they will halt donations only to the 147 Republicans in Congress who objected to certifying the presidential election result. In a survey of 40 C.E.O.s from major corporations at a meeting on Wednesday held by Yale’s Jeffrey Sonnenfeld yesterday, nearly 60 percent said that companies shouldn’t stop all political donations.

Charles Schwab said in its statement that it was confident its “voice will still be heard in Washington” even without a PAC, noting that it is a “major employer in a dozen metropolitan centers.” Other companies that do not have a PAC, like IBM, have said they do not think a lack of one puts them at a political disadvantage.

Credit…Benoit Tessier/Reuters

The French carmaker Renault, saying it does not expect auto sales to bounce back quickly from the pandemic, announced a plan on Thursday to survive and make money while selling fewer cars and shifting emphasis to electric vehicles.

The plan presented by Luca de Meo, who took over as Renault’s chief executive in July, is a sharp departure from the strategy pursued by Carlos Ghosn, the former chief executive of Renault’s alliance with Japanese automakers Nissan and Mitsubishi.

Mr. de Meo implicitly criticized Mr. Ghosn during an online briefing for journalists and analysts on Thursday, saying that Renault had “too many layers, too many silos, too many shared responsibilities. All that mattered were size and volumes.”

Under the new plan, Renault will cut production capacity, reduce the number of models it offers and simplify manufacturing by increasing the number of parts shared among vehicles. For example, all gasoline vehicles will use the same basic engine.

Mr. de Meo said his aim was to avoid job cuts beyond those already planned. The French government is a big shareholder in the company, and has resisted job cuts in the past.

“We are also here to protect the work of people,” Mr. de Meo told reporters during a conference call. “We have so many opportunities to get rid of other costs.”

During a brutal period for the auto industry, Renault was among the hardest hit. The company said Tuesday that sales fell more than 20 percent in 2020, to less than three million vehicles.

“We are not betting on a strong recovery,” Clotilde Delbos, the Renault chief financial officer, said during the presentation. “Cost reduction will be the strongest lever for our improvement.”

Electric cars are among Renault’s few bright spots. Sales of the Zoe, a two-door battery powered hatchback, doubled in 2020 despite the pandemic. The Zoe displaced the Tesla Model 3 as the best-selling electric car in Europe. However, at around 20,000 euros after subsidies, or $24,000, the Zoe costs half as much as the Model 3 and is likely to be less profitable.

Mr. de Meo mentioned Renault’s troubled but essential alliance with Japanese carmakers Nissan and Mitsubishi only in passing. But at the end of the video presentation, Makoto Uchida, the chief executive of Nissan, made an appearance to say that he endorsed the Renault plan.

“I’m happy to see Renault back on the path to profitability,” Mr. Uchida said.

Wall Street was poised for a small gain on Thursday and shares in Europe were modestly higher as investors anticipated President-elect Joseph R. Biden Jr.’s announcement of a multitrillion-dollar spending plan to counter the coronavirus’s impact on the U.S. economy.
Mr. Biden’s plan is expected to have an initial focus on expanding the country’s vaccination program and virus testing capacity, Jim Tankersley reports.
Mr. Biden is to provide details in a speech Thursday evening in Delaware, hours after the latest tally of weekly unemployment claims showed a sharp rise in newly unemployed workers in the United States. Hiring remains dreadful in the U.S. economy, with employers recording a net loss of 140,000 jobs in December. Last spring, as the pandemic arrived in the United States, 22 million jobs disappeared. Nearly 10 million remain lost.
European markets were gaining, with the benchmark Stoxx Europe 600 up 0.5 percent in late-morning trading. The CAC 40 in France was 0.3 percent higher and the DAX in Germany gained 0.5 percent.
The latest data from China shows a humming economy. Exports rose 18 percent in December from a year earlier, reflecting global demand for work-from-home devices. Imports also increased, 6.5 percent from a year earlier, a sign of a strengthening consumer economy inside the country.
China will probably be the only major economy to have grown in 2020. Germany’s economy, usually regarded as Europe’s strongest, reported a 5 percent contraction in 2020.

Credit…Lam Yik Fei for The New York Times

Hong Kong Broadband Network said in a statement on Thursday that it had taken steps to block access to a website that featured the personal information of police officers, the first full website censorship under Hong Kong’s expansive national security law.

The site, which featured personal information about the police and pro-establishment figures in the Chinese city, first faced partial blocks in Hong Kong on Jan. 6. A technical analysis by The New York Times showed the territory’s internet service providers appeared to be interfering with access to the site.

Hong Kong Broadband, one of the city’s largest internet service providers, said it cut access to the site on Jan. 13 “in compliance with the requirement issued under the national security law.”

In the past, Hong Kong’s government had a separate process, which included issuing court orders, to go after content deemed illegal online. But the purge of the website happened without any warning or official legal notification, according to Naomi Chan, the 18-year-old high-school student who created the site.

The disruption raises the prospect that Hong Kong, long a bastion of internet freedom on the border with China’s closely censored internet, could fall under the shadow of the mainland’s Great Firewall, which blocks foreign internet sites like Google and Facebook.

Since the national security law was put in place over the summer, the police have turned to harsh digital investigative tactics reminiscent of those used by security forces in China, including hanging cameras outside the doors of politicians and forcing arrestees to give them access to smartphones.

The law was prompted by sometimes violent antigovernment protests in 2019, which alarmed Communist Party leaders in Beijing. The Chinese government has since used the law to tighten its grip on the former British colony, which operates under its own laws and has long enjoyed some degree of autonomy, including freedom of speech.

Airlines, workplaces and sports stadiums may soon require people to show their coronavirus vaccination status on their smartphones before they can enter.

A coalition of leading technology companies, health organizations and nonprofit groups — including Microsoft, Oracle, Salesforce, Cerner, Epic Systems and the Mayo Clinic — announced on Thursday morning that they were developing technology standards to enable consumers to obtain and share their immunization records through health passport apps.

“For some period of time, most all of us are going to have to demonstrate either negative Covid-19 testing or an up-to-date vaccination status to go about the normal routines of our lives,” said Dr. Brad Perkins, the chief medical officer at the Commons Project Foundation, a nonprofit organization in Geneva that is a member of the vaccine credential initiative.

That will happen, Dr. Perkins added, “whether it’s getting on an airplane and going to a different country, whether it’s going to work, to school, to the grocery store, to live concerts or sporting events.”

Vaccine passport apps could fill a significant need for airlines, employers and other businesses.

In the United States, the federal government has developed paper cards that remind people who receive coronavirus vaccinations of their vaccine manufacturer, batch number and date of inoculation. But there is no federal system that consumers can use to get easy access to their immunization records online and establish their vaccination status for work or travel.

A few airlines, including United Airlines and JetBlue, are already trying out Common Pass, a health passport app from the Commons Project. The app enables passengers to retrieve their coronavirus test results from their health providers and then gives them a confirmation code allowing them to board certain international flights. The vaccination credentialing system would work similarly.

Credit…Mohamed Sadek for The New York Times

After giving small lenders a head start, the Paycheck Protection Program will open for all applicants on Tuesday, the Treasury Department said on Wednesday.

The stimulus package passed last month included $284 billion in funding to restart the small-business relief effort, which made $523 billion in loans last year to 5.2 million recipients. The new funding will be available both to first-time applicants and to some returning borrowers.

Borrowers seeking a second loan will need to demonstrate a 25 percent drop in gross receipts between comparable quarters in 2019 and 2020. Second loans will also be limited to companies with 300 or fewer workers, and the amounts will be capped at $2 million.

First- and second-time applicants can borrow up to 2.5 times their monthly payroll. (Those in the lodging and food service business who are seeking a second loan can borrow 3.5 times their payroll, a concession to the devastation those industries have faced.) The loans — which are made by banks but backed by the federal government — can be forgiven if borrowers spend least 60 percent of the money paying workers and use the rest on other allowable expenses.

Starting Tuesday, loans will be available from thousands of lenders, including national banks like Bank of America, JPMorgan Chase and Wells Fargo; most regional banks; and financial technology companies like PayPal.

Some smaller lenders have already gotten started. Community Development Financial Institutions, Minority Depository Institutions and Certified Development Companies — specially designated lenders that focus on underserved populations, including Black- and minority-owned businesses — were allowed to start taking loan applications this week. And on Friday, lenders with $1 billion or less in assets will be allowed to start submitting applications.

The Small Business Administration, which manages the program, has not said how many applications it has already received. Unlike the first round, when the agency approved loans instantaneously, approvals will now take at least a day because of new fraud safeguards the agency has adopted.

Brian Brooks, who warned that requiring customers to wear masks during the pandemic could lead to more bank robberies, is stepping down as the country’s top bank regulator, according to an announcement on Wednesday.

Mr. Brooks has served as acting comptroller of the currency since late May. As of Thursday night, Blake Paulson, a career employee of the Office of the Comptroller of the Currency, will take over.

“It has been an honor to serve the United States as acting comptroller,” Mr. Brooks said in a statement. “I am extremely proud of what we have accomplished.”

In the months after he took over the agency following the departure of Joseph Otting, Mr. Brooks rushed to enact a number of changes, including one that would prohibit banks from cutting off credit to the fossil fuel industry and another establishing guidelines for how banks could measure their activities in low-income and minority neighborhoods as required under an anti-redlining law.

Until recently, Mr. Brooks was in line for his job to be made permanent. Despite having already lost the 2020 election, President Trump said on Nov. 17 that he intended to nominate Mr. Brooks to become the comptroller for a five-year term.

But the chances for Mr. Brooks to be confirmed during the lame-duck period of Mr. Trump’s presidency were low, and the Georgia runoff elections have given Democrats control of both chambers of Congress.

Advisers to President-elect Joseph R. Biden Jr. had already begun vetting candidates to replace him after Mr. Biden takes over next week.

Credit…Gabriela Bhaskar for The New York Times

Gov. Andrew M. Cuomo of New York has picked two European giants, Norway’s Equinor and BP, to supply the state with clean electricity from wind turbines planted on two large tracts in the Atlantic.

Offshore wind developers are attracted to the East Coast of the United States because of the availability of shallow water sites suitable for wind farms and the proximity of major electric power consuming centers like New York and Boston.

Until recently, offshore wind was largely a European industry but it has gained interest elsewhere as larger turbines and other innovations have brought down costs.

The deal will bring investment of nearly $9 billion, according to a news release from the state government. One of the sites is 20 miles off the south shore of Long Island, and the other is about the same distance south of Nantucket. The projects are expected to produce power late in this decade.

Equinor had already reached a $3 billion offshore power deal with New York in 2019. That wind farm plus the two just announced will have generating capacity sufficient to power 1.8 million homes.

For European oil companies like Equinor, the former Statoil, offshore wind projects provide opportunities to invest billions of dollars to advance their agenda of shifting away from oil and gas toward cleaner energy. Equinor moved early to acquire rights to ocean acreage off the United States and last year agreed to sell a 50 percent stake in its U.S. business to BP for $1.1 billion.

Equinor, other companies and the state will invest $644 million in a port in South Brooklyn and other facilities for constructing and servicing the wind farms, according to the news release.

Tags business, global, Live, market, News, Updates