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Business

S.E.C. Chair Gensler Emphasizes Transparency in Markets

S.E.C. Chair Gensler Emphasizes Transparency in Markets

Gary Gensler puts market transparency and the need to understand the impact of new technology high on his priority list as the new chairman of the Securities and Exchange Commission.

“I think transparency is at the heart of efficient markets,” said Gensler on his first Capitol Hill testimonial as the country’s top securities cop.

Speaking from his living room, Mr. Gensler video appeared before the House Committee on Financial Services to discuss the SEC’s response to the tumultuous trading of GameStop stock in January. The massive surge in the video game company’s stock price was fueled by retail investors who bought their stocks through Robinhood and other commission-free trading apps, and banded together on social media to inflict huge losses on a hedge fund that had bet on GameStop stocks would fall. Some investors who bought GameStop stock at peak times later lost money.

Mr Gensler said SEC officials were working on a report addressing the issues raised by the episode, which will be released this summer. He also said new rules might be needed for brokerage apps that turn stock trading into a game or competition, a method called gamification.

“Through gamification, you are using psychological props to get people to act more,” Gensler said. Apps that encourage easy trading are part of a wider financial transformation where new technologies have opened markets to ordinary investors, but they also bring new risks, he said.

Mr. Gensler used his appearance to speak on other issues facing the markets and Wall Street. He said the SEC needs to “lean in” to ensure that traders, corporations and others are not using social media to manipulate the markets. Mr Gensler said he plans to work with Congress to develop a strategy to regulate the exchanges on which cryptocurrencies are bought and sold.

Legislators took the opportunity to invite Mr. Genslers’ views on a number of other issues, including whether companies should be required to disclose the environmental impact of their business and whether new regulations are needed for business development companies.

In business today

Updated

May 6, 2021, 11:23 a.m. ET

Mr Gensler, 63, reminded lawmakers that he was only his third week on the field and that while he had many things on his to-do list, he had some catching up to do on topics the SEC had already been working on.

In his prepared testimony, Mr Gensler said the staff who prepared the report on GameStop were also looking into whether professional investors who bet that stocks will fall – meaning keeping them short – should be required to disclose .

Mr Gensler said the collapse of Archegos Capital Management, which caused Wall Street banks to lose more than $ 10 billion, has led regulators to consider whether traders should be required to disclose derivatives – the financial trading instruments which allowed Archegos to take massive positions in stocks without attracting any attention. Much of Archegos’ losses was attributed to the company’s heavy investment in total return swaps, a type of heavily leveraged derivative that can allow a trader to get exposure to a stock without actual ownership.

Mr Gensler’s tenure got off to a rocky start after Alex Oh, his enforcement director election, was forced to step down just days after his appointment because Paul, Weiss, the major law firm she had worked for, faced potential sanctions in a case in which she was heavily involved.

The hearing with Mr. Gensler was the third and last to deal with GameStop and the frantic trading in the House Financial Services Committee’s markets. The first hearing was held on February 18, when GameStop’s shares were trading around $ 40 per share after falling from a high of $ 347 per share. Since then, the stock has risen again, rising nearly 300 percent to $ 160 per share.

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Business

Tech Shares Pull Markets Off Close to-File Highs: Stay Enterprise Updates

President Biden signing a law in March to extend the Paycheck Protection Program through May 31, with Vice President Kamala Harris, left, and Isabel Guzman, the administrator of the Small Business Administration.

Here’s what you need to know:

Credit…Doug Mills/The New York Times

Four weeks before its scheduled end, the federal government’s signature aid effort for small business ravaged by the pandemic — the Paycheck Protection Program — ran out of funding on Wednesday afternoon and stopped accepting most new applications.

Congress allocated $292 billion to fund the program’s most recent round of loans. Nearly all of that money has now been exhausted, the Small Business Administration, which runs the program, told lenders and their trade groups on Wednesday.

While many had predicted that the program would run out of funds before its May 31 application deadline, the exact timing came as a surprise to many lenders.

“It is our understanding that lenders are now getting a message through the portal that loans cannot be originated,” the National Association of Government Guaranteed Lenders, a trade group, wrote in an alert to its members Wednesday evening. “The P.P.P. general fund is closed to new applications.”

Some money — around $8 billion — is still available through a set-aside for community financial institutions, which generally focus on lending to businesses run by women, minorities and other underserved communities. Those lenders will be allowed to process applications until that money runs out, according to the trade group’s alert.

Representatives from the Small Business Administration did not immediately respond to a request for comment.

Some money also remains available for lenders to finish processing pending applications, according to a lender who was on a call with S.B.A. officials on Wednesday.

Since its creation last year, the Paycheck Protection Program has disbursed $780 billion in forgivable loans to fund 10.7 million applications, according to the latest government data. Congress renewed the program in December’s relief bill, expanding the pool of eligible applicants and allowing the hardest-hit businesses to return for a second loan.

Lawmakers in March extended the program’s deadline to May, but they have shown little enthusiasm for adding significantly more money to its coffers. With vaccination rates increasing and pandemic restrictions easing, Congress’s focus on large-scale relief effort for small businesses has waned.

The government’s recent efforts have been focused on the most devastated industries. Two new grant programs run by the Small Business Administration — for businesses in the live-events and restaurant industries — began accepting applications in recent weeks, though no grants have yet been awarded.

Tim Sweeney, the head of Epic Games, on Tuesday in Oakland, Calif. He testified in court that he did not know how a verdict against Apple would affect other types of apps.Credit…Ethan Swope/Getty Images

Last May, Epic Games was making plans to circumvent Apple’s and Google’s app store rules and ultimately sue them in cases that could reshape the entire app economy and have profound ripple effects on antitrust investigations around the world.

Epic’s chief operating officer, Daniel Vogel, sent other executives an email raising a concern: Epic must persuade Apple and Google to give in to its demands for looser rules, he wrote, “without us looking like the baddies.”

Apple and Google, Mr. Vogel warned, “will treat this as an existential threat.” To prepare, Epic formed a public relations and marketing plan to get the public behind its campaign against the tech giants.

Apple seized on that plan in a federal courtroom in Oakland, Calif., on Tuesday, the second day of what is expected to be a three-week trial stemming from Epic’s claims that Apple relies on its control of its App Store to unfairly squeeze money out of other companies.

Judge Yvonne Gonzales Rogers of California’s Northern District, who will decide the case, also asked Epic’s chief executive, Tim Sweeney, a series of pointed questions about its potential consequences. She asked whether he had any understanding of the economics of other types of apps, including food, maps, GPS, weather, dating or instant messaging.

“So you don’t have any idea how what you are asking for would impact any of the developers who engage in those other categories of apps, is that right?” the judge asked.

“I personally do not,” Mr. Sweeney said, in his second day on the witness stand.

Apple’s lawyers argued that Epic had attacked App Store fees to shore up a slowing business. Gross revenue on Fortnite, Epic’s flagship video game, shrank in the last three quarters of 2019 compared with 2018, according to an Epic presentation to its board of directors about its plan to fight Apple. The presentation was disclosed in court on Tuesday, along with the executive’s emails.

Under questioning from Apple’s lawyers, Mr. Sweeney said Epic’s own game store was not expected to turn a profit until at least 2024.

Epic’s lawyers said the lawsuit was not just about Epic and Fortnite but about fairness for all apps that must use Apple’s App Store to reach consumers.

“Our contention in this case is that all apps are at issue,” said Katherine Forrest, a lawyer at Cravath, Swaine & Moore.

Epic is not asking for a payout if it wins the trial; it is seeking relief in the form of changes to App Store rules. Epic has asked Apple to allow app developers to use other methods to collect payments and open their own app stores within their apps.

Apple has countered that these demands would raise a world of new issues, including making iPhones less secure.

On Tuesday afternoon, Benjamin Simon, founder of Yoga Buddhi, which makes the Down Dog Yoga app, testified about his company’s problems with Apple’s policies. Mr. Simon said that he had to charge more for subscriptions on the App Store to make up for the 30 percent fee that Apple charged him, and that Apple’s rules prevented him from promoting inside his app a cheaper price that is available on the web.

Mr. Simon said Apple warned app developers against speaking out about its policies in guidelines for getting their apps approved. “‘If you run to the press and trash us, it never helps,’” he said. “That was in the guidelines.”

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

The S&P 500 retreated from near-record territory on Tuesday, led by a decline in big technology companies, but recovered its worst losses to end the day down 0.7 percent.

Apple, the largest company in the index, fell 3.5 percent, and several other large companies — Microsoft, Amazon, Alphabet and Tesla — dropped by more than 1.5 percent. The tech-heavy Nasdaq composite fell 1.9 percent.

Adding to the volatility on Tuesday were comments by Treasury Secretary Janet L. Yellen, who said higher interest rates might be needed to keep the economy from overheating as the Biden administration ramps up spending. Stock investors are wary of higher interest rates that would make equities less attractive and also could dampen corporate profits as the economy recovers from the pandemic.

Although the Treasury secretary has no role in interest rate setting and yields on government bonds, which tend to rise when interest rates are hiked, were little changed on Tuesday, the publication of Ms. Yellen’s comments helped pushed stock indexes lower.

“It may be that interest rates will have to rise somewhat to make sure that our economy doesn’t overheat, even though the additional spending is relatively small relative to the size of the economy,” Ms. Yellen said in prerecorded comments at an event hosted by The Atlantic when asked if the economy could handle the kind of robust spending that the Biden administration is proposing.

Analysts stressed that the market was due for breather. The S&P 500 rose more than 5.2 percent last month, notching a series of record highs, and even after Tuesday’s decline it remained up more than 10 percent in 2021.

The Stoxx Europe 600 fell 1.4 percent, while the FTSE 100 in Britain gave up earlier gains to drop about 0.7 percent.

Oil prices bucked the trend. Brent crude gained 2 percent, to $68.88 a barrel. It has not closed above $70 barrel since late 2018. West Texas Intermediate also rose sharply.

  • Infineon, a big producer of semiconductors in Germany, reported “booming” demand for chips as it posted strong quarterly results. But the company warned of continuing supply chain problems and its shares fell.

  • “Demand greatly exceeds supply for the majority of applications,” said the chief executive, Reinhard Ploss, in a statement. Even though its plants are running at “full speed,” he continued, the company still faced supply chain bottlenecks. “We are doing everything we can to provide our customers with the best possible support in this situation.”

  • The world’s largest oil producer, Saudi Aramco, reported a 30 percent rise in net income in the first quarter compared with the same period a year ago.

  • The company is joining other energy producers that reported strong earnings this quarter as oil prices continued their recovery from last year’s collapse.

  • “The momentum provided by the global economic recovery has strengthened energy markets,” Aramco’s chief executive, Amin H. Nasser, said in a statement. “Given the positive signs for energy demand in 2021, there are more reasons to be optimistic that better days are coming.”

Dave Bautista and Hiroyuki Sanada in “Army of the Dead,” Netflix’s upcoming zombie flick.Credit…Clay Enos/Netflix

In the clearest sign yet that theaters are softening their stance toward Netflix, Cinemark, the country’s third-largest chain, announced on Tuesday that it would show the streaming service’s upcoming zombie flick, “Army of the Dead” from director Zack Snyder, in more than 250 of its theaters on May 14, a week before the film will become available online.

The movie will also open in a smattering of regional chains like Harkins Theatres, Landmark Theatres and Alamo Drafthouse, bringing its total theater count to about 600 — the largest theatrical release yet for a Netflix film.

Last year, when the pandemic was raging and the majority of theater chains were closed, Netflix and Cinemark tested the release strategy in a handful of theaters with three Netflix films: “Ma Rainey’s Black Bottom,” “Midnight Sky” and “The Christmas Chronicles 2.” The results were encouraging enough for them to try a wider release at a time when the majority of the country’s theaters have reopened.

“Zack Snyder fans will love seeing the action in an immersive, cinematic environment with larger-than-life sight and sound technology,” Justin McDaniel, Cinemark’s senior vice president of global content strategy, said in a statement.

“We are thrilled to offer consumers the opportunity to watch this highly anticipated film in theaters and on Netflix,” Netflix’s head of distribution, Spencer Klein, said in a statement.

“Army of the Dead” stars Dave Bautista (“Guardians of the Galaxy”) and centers on a group of mercenaries who travel to Las Vegas to pull off a casino heist in the middle of a zombie apocalypse.

While neither company would say whether this was part of a larger agreement involving more films, the two did say they “anticipate there will be more to come.”

The pandemic forced theaters and studios to re-evaluate how movies are distributed in theaters and on streaming platforms. Traditionally, theaters pushed for an exclusive 72-day window between when a film was released and when it could become available for at-home viewing, whether through streaming or video-on-demand services. But so many movies debuted in the home because of the pandemic, and audiences have become used to having that option, forcing Hollywood to adjust to a new reality.

Gap bought Intermix in 2012 with plans to expand it, but the brand had one fewer store by the time it was sold.Credit…Chang W. Lee/The New York Times

Gap Inc., the retailer that owns its namesake chain, Banana Republic and Old Navy, said on Tuesday that it would sell its high-end Intermix string of stores and website to a private-equity firm as it focuses on its core brands.

Intermix, which has 31 stores, will be purchased by Altamont Capital Partners for an undisclosed price, according to a statement. Gap, which is based in San Francisco, acquired Intermix for $130 million at the end of 2012 with plans to expand it, though the chain stood apart from the rest of the retailer’s chains with its mix of established and emerging designer goods. Intermix had 32 boutiques at the time of the 2012 acquisition.

The exit follows Gap’s sale in April of Janie and Jack, an expensive children’s retailer with more than 100 locations, to Go Global Retail. Gap acquired Janie and Jack in 2019.

Sally Gilligan, head of strategy for Gap, said in the Tuesday release that the sales “demonstrate how we are prioritizing our strategic focus and resources behind the growth and potential of Old Navy, Gap, Banana Republic and Athleta.”

Protesters at the State Capitol in Austin, Texas, demonstrated against Republicans’ proposed bills to restrict voting in the state.Credit…Eric Gay/Associated Press

Two broad coalitions of companies and executives released letters on Tuesday calling for expanded voting access in Texas, wading into the debate over Republican legislators’ proposed new restrictions on balloting after weeks of relative silence.

One letter came from a group of large corporations, including Hewlett-Packard, Microsoft, Unilever, Salesforce, Patagonia and Sodexo, as well as local companies and chambers of commerce, and represents the first major coordinated effort among businesses in Texas to take action against the voting proposals.

The letter, under the banner of a new group called Fair Elections Texas, stops short of criticizing the two voting bills that are now advancing through the state’s Republican-controlled Legislature, but opposes “any changes that would restrict eligible voters’ access to the ballot.”

A separate letter, organized by a breakway faction of 100 executives from the Greater Houston Partnership, and also released on Tuesday , goes further. It directly criticizes the proposed legislation and equates the efforts with “voter suppression.”

Together, the letters signify a sudden shift in how the business community approaches the voting bills in Texas.

Corporations across the country find themselves at the center of a swirling partisan debate over voting rights. With Republicans in almost every state advancing legislation that would make it harder for some people to vote, companies are under pressure from both sides. Democratic activists, along with many mainstream business leaders, are calling on corporations to oppose the new laws. At the same time, a growing chorus of senior Republicans is telling corporate America to keep quiet.

Pandora is looking to address ethical concerns held by consumers about the jewelry business. Credit…Ints Kalnins/Reuters

Pandora, the world’s biggest jeweler by volume, said on Tuesday that it will no longer use mined diamonds for any new designs, and is switching to man-made stones produced in laboratories instead.

The Copenhagen-based company said it would release its first collection to use synthetic stones in Britain this year before turning to other markets in 2022. The range of rings, bangles and earrings will feature stones from 0.15 to 1 carat in size. Pandora’s chief executive, Alexander Lacik, said in a statement Tuesday that diamonds should be affordable as well as sustainable.

Lab-grown diamonds are physically, chemically and optically identical to mined diamonds, and proponents say that their production results in less environmental damage than traditional mining practices, and also doesn’t have the same associations with human rights abuses. Prices of man-made diamonds have fallen over the past two years after the miner De Beers started offering synthetic stones in 2018, and they are now up to 10 times cheaper than mined diamonds, according to a report by Bain & Company.

While mined diamonds went into about 50,000 Pandora pieces of jewelry out of a total of 85 million items made last year, meaning the shift required within the company supply chain will be negligible, the announcement by Pandora is the latest by a major industry player looking to address growing ethical concerns held by consumers about the jewelry business. The jeweler has already said it will only use recycled gold and silver beginning 2025.

Twitter has begun to add paid subscriptions, and announced plans to introduce other subscriber features in the future.Credit…Laura Morton for The New York Times

Twitter plans to acquire the subscription service Scroll, the social media company announced on Tuesday, as it expands its plans for subscription offerings. The two companies declined to disclose the deal terms.

Scroll charges its users a fee to block advertising on participating news websites, then distributes a cut of its earnings to its partner publishers, which include USA Today, Vox and The Atlantic. Publishers can earn up to 50 percent more from the service than they do from advertising, Scroll contends. Twitter plans to integrate the service into its platform, and use its technology to build other subscription services.

“People come to Twitter every day to discover and read about what’s happening,” Mike Park, Twitter’s vice president for product, said in a blog post announcing the deal. “If Twitter is where so much of this conversation lives, it should be easier and simpler to read the content that drives it.”

In recent months, Twitter has begun to add paid subscriptions, and announced plans to introduce other subscriber features in the future.

In January, Twitter acquired Revue, a newsletter provider, and said it would take a 5 percent cut of subscription revenue. In February, the company revealed plans to introduce “Super Follows,” a feature that would allow Twitter users to place some of their content behind a pay wall. And this week, Twitter said it planned to add a ticketing feature to its audio chat, Spaces, so that hosts can charge listeners for entry into their discussions.

Twitter plans to supplement its advertising revenue with revenue from subscriptions, and has raced to add content like newsletters and audio chats that it thinks audiences will pay for. Its acquisition of Scroll will add journalism to that list.

“For every other platform, journalism is dispensable. If journalism were to disappear tomorrow their business would carry on much as before,” Tony Haile, Scroll’s chief executive, wrote in a blog post. “Twitter is the only large platform whose success is deeply intertwined with a sustainable journalism ecosystem.”

Pfizer’s vaccine is disproportionately reaching the world’s rich.Credit…Dado Ruvic/Reuters

On Tuesday, Pfizer announced that its Covid vaccine brought in $3.5 billion in revenue in the first three months of this year, nearly a quarter of its total revenue. The vaccine was, far and away, Pfizer’s biggest source of revenue, report Rebecca Robbins and Peter S. Goodman of The New York Times.

The company did not disclose the profits it derived from the vaccine, but it reiterated its previous prediction that its profit margins on the vaccine would be in the high 20 percent range. That would translate into roughly $900 million in pretax vaccine profits in the first quarter.

Pfizer has been widely credited with developing an unproven technology that has saved an untold number of lives.

But the company’s vaccine is disproportionately reaching the world’s rich — an outcome, so far at least, at odds with its chief executive’s pledge to ensure that poorer countries “have the same access as the rest of the world” to a vaccine that is highly effective at preventing Covid-19.

As of mid-April, wealthy countries had secured more than 87 percent of the more than 700 million doses of Covid-19 vaccines dispensed worldwide, while poor countries had received only 0.2 percent, according to the World Health Organization. In wealthy countries, roughly one in four people has received a vaccine. In poor countries, the figure is one in 500.

VideoCinemagraphCreditCredit…By Irene Suosalo

Today in the On Tech newsletter, Shira Ovide writes that nearly four years after Amazon agreed to a huge deal to buy Whole Foods and a year into a pandemic that played into the tech giant’s strengths, it’s worth asking two questions: Is Amazon losing in groceries? And why has one of the world’s most ambitious and inventive companies mostly been a follower rather than a leader in one of the biggest spending categories for Americans?

Categories
Politics

Vaccines, sizzling markets, massive spending

Vaccines, hot markets, big spending

United States President Joe Biden gestures as he speaks during the Democratic National Committee’s “Back on Track” drive-in rally to celebrate the 100th President’s Day at the Infinite Energy Center in Duluth, Georgia on April 29, 2021.

Evelyn Hockstein | Reuters

In his first 100 days in office, President Joe Biden signed $ 1.9 trillion in coronavirus relief bill, put forward a multi-trillion dollar plan to overhaul the economy, and unilaterally reversed the course of many Guidelines of his predecessor.

Biden took the reins of former President Donald Trump amid the coronavirus pandemic and a cloud of national social and political unrest.

When he took office on January 20, Biden vowed to lead the nation through an unprecedented “winter of peril” and put it on a path to unity.

As he neared his 100th full day at work, Biden stated this week that America is “leading the world again.”

Here’s a look at what happened in Biden’s first 100 days.

A cabinet that will look like America

Before he took office, Biden promised to build a multifaceted cabinet that would “look like America”.

He is living up to that commitment, according to Kathryn Dunn Tenpas, a president scholar and senior fellow at the Brookings Institution who tracked Biden’s candidates.

The Biden administration is ahead of its recent predecessors with a greater proportion of Senate-approved women and non-white candidates at the 100-day mark than former Presidents Trump, Barack Obama and George W. Bush at their 300-day mark, so Brookings’ tracker.

The data was last updated on Wednesday and includes confirmations to the 15 departments in the succession line. Some departments such as US attorneys as well as military appointments are excluded.

The high-profile minority positions appointed to also reflect Biden’s commitment to diversity, Tenpas said.

“It’s not just that the numbers show he’s appointed more women and non-whites, but he’s putting them in positions they’ve never filled before,” she said.

Biden’s cabinet includes Lloyd Austin, the country’s first Black Defense secretary; Transport Secretary Pete Buttigieg, the first openly gay person to hold a cabinet position; Home Secretary Deb Haaland, first Native American cabinet secretary; Janet Yellen, the first woman to head the finance department; and Xavier Becerra, the first Latin American secretary for health and human services.

President Joe Biden and Vice President Kamala Harris will meet with Cabinet members and immigration officers in the State Dining Room in Washington, DC on March 24, 2021.

Chip Somodevilla | Getty Images

In the past, according to Tenpas, women and minorities have often been appointed to less visible positions, such as the Ministry of Veterans Affairs, the Ministry of Housing, Urban Development and Labor.

The first 100 days are usually a tentative look at administrative deadlines, according to Tenpas. A president’s second 100-day period is often more productive in terms of Senate endorsement. This is another opportunity to examine Biden’s promise of diversity.

200 million gunshots

Biden took office amid the height of the Covid crisis, when the country reported nearly 200,000 Covid cases and more than 3,000 deaths a day.

He set an original goal of 100 million vaccine shots administered within 100 days, which aroused criticism for being too conservative. The White House hit that mark in 58 days and set a new target of 200 million shots, which was exceeded on day 92.

More than half of adults in the United States have received at least one dose, according to the Centers for Disease Prevention, Control and Prevention, and all are now eligible for vaccination.

But the pace of daily shots has dropped to an average of 2.6 million daily reported vaccinations in recent weeks, from a high of 3.4 million in mid-April.

Hottest performance in the market since the 1950s

Major stock market indices have risen sharply during Biden’s tenure, with the S&P 500 outperforming a president dating back at least the 1950s and the Eisenhower administration in its first 100 days.

Relying on a record level of stimuli, the index has risen 25% since election day. This is part of an ongoing rally that began in late March 2020 after the coronavirus crash and has seen few signs of slowing since then.

The Dow Jones Industrial Average is up 23.9% over the period, and the tech-heavy Nasdaq Composite is up 26.2%.

The Biden rally took a hit when it was revealed on April 22nd that the president was planning a capital gain tax hike for the rich, with the S&P 500 and Dow each closing nearly a full percentage point. Shares quickly made up for their losses, however, and the White House brushed off a question related to investor concerns about the tax proposal.

“I’ve been doing this long enough not to comment on movements in the stock market,” White House press secretary Jen Psaki said during a press conference on April 23, adding, “but I’ve actually seen data that comes back went up this morning. “

Under Biden, the market was somewhat volatile, at least in historical terms. The S&P 500 rose or fell 1% or more for the 31 days between election day and Biden’s 100th day, compared to five days under Trump’s early days at the White House.

Big issues, positive reviews

Given the political moment it has entered, Biden’s approval rating has been high so far. However, it is unclear whether his numbers will stay afloat as he and his party prepare for a number of important political battles that could determine the remainder of his presidency.

According to Gallup data, Biden’s approval rating is 57% after 100 days, which makes him far more popular than Trump. But that doesn’t say much: Trump’s rating at that point was – 41% – 14 points lower than any other president in Gallup’s history.

The president’s Republican predecessor maintained historically low approval ratings during his tenure and never exceeded the 50% threshold, Gallup polls show.

Compared to other presidents, Biden’s rating is less impressive. According to Gallup, he’s the third-lowest president since Dwight Eisenhower at the 100-day mark.

Americans tend to give Biden his worst marks for his dealings with China, arms, and immigration.

Still, it is noteworthy that at a time of extreme political polarization, Biden receives positive reviews. Gallup’s latest poll shows Biden with only 11% approval from Republicans but 58% approval from independents. At this point in Trump’s presidency, only 37% of Independents gave him a thumbs up, Gallup shows.

Biden’s approval appears to be largely driven by his government’s decision to focus intensely on Covid from day one.

Americans still view the coronavirus as one of the country’s most pressing issues, and multiple polls show that Biden gets top marks for his handling of the pandemic. Biden urged Congress to pass the $ 1.9 trillion Covid relief plan, which many more Americans support than oppose.

But there is also more appetite for the kind of government spending the government has proposed. For example, fifty-five percent of respondents in a recent NBC News poll said the government should do more to solve problems and meet people’s needs, compared with 41 percent who said they are doing too much.

Even before the White House detailed Biden’s latest spending plan – a $ 1.8 trillion package to support children, students and families – nearly two-thirds of respondents in a Monmouth University survey said they support the idea .

Experts say it makes sense that Biden’s economic proposals – presented in their highest and most ambitious form – seem to resonate with Americans. But those plans will change drastically once lawmakers get their agenda under control, and it’s unclear what Congress can get through.

Democrats have a slim majority in the House of Representatives and a wafer-thin advantage in the Senate. The Senate filibuster rules require 60 votes for many laws to pass, and the Democrats’ ability to bypass this hurdle through budget voting can only be used sparingly.

Biden has repeatedly said he is looking for bipartisan input while stressing that inaction is not an option on his agenda. However, there is little evidence that Republicans will support Biden’s plans in their current form.

In addition, some moderate to conservative Democrats such as West Virginia Senator Joe Manchin are already expressing skepticism about the surge in spending.

Categories
World News

Extra earnings, April’s huge jobs report and inflation worries might swing markets within the week forward

More earnings, April's big jobs report and inflation worries could swing markets in the week ahead

Traders on the floor of the New York Stock Exchange.

Source: NYSE

April’s job report and a flurry of earnings news make for another busy week for the markets as the calendar rolls into May.

Stocks saw solid gains in April as REITs, consumer staples and communications services outperformed the broader market by more than 7%. April ended sourly, however, and stocks sold on Friday.

“There has been a 30% rally since November,” said Jimmy Chang, chief investment officer at Rockefeller Global Family Office. He noted that November-April is historically the strongest for stocks. “There is a saying, ‘Sale in May, go away.’ It may be a little appropriate this year as we’ve done so well over the past six months. “

Report on great jobs

The April employment report is due to be released on Friday and the market is expecting a large number.

Economists say the workforce could easily reach 1 million in April after 916,000 new jobs were created in March. Estimates range from about 700,000 to a forecast of 2.1 million by Jefferies economists.

According to the Dow Jones, there is a consensus forecast of 978,000 among economists surveyed and the unemployment rate is expected to fall from 6% to 5.8%.

Federal Reserve spokesmen will also be important after Fed chairman Jerome Powell said last week that the central bank is still looking for “significant further progress” on its economic goals.

The chairman stressed that the Fed is not close to scaling back its bond-buying program, which has surprised some investors. Some professionals in the bond market had expected the Fed to begin discussing cut buying at its June meeting and reducing the monthly bond purchase of $ 120 billion by the end of the year or early next year.

“Next week is all about the number of jobs because as part of the Fed’s path to ‘significant progress’ in both of its roles, we’ll see how far along they are next Friday,” said Peter Boockvar, chief investment Officer at Bleakley Advisory Group. The Fed’s mandate is to seek full employment and a steady rate of inflation, targeting 2%.

The Fed was expecting a temporary spell of high inflation that is expected to ease over the course of the year, although Boockvar and others say inflation could be hotter than the central bank expects. The core price index for personal consumption expenditure rose 0.36% in March, with the rate rising from 1.4% in the previous year to 1.8%. It is expected to rise even further in April. Headline inflation in the consumer price index is expected to start at 3% or better when reported on May 12th.

Just days after Powell’s comments on the rejuvenation, Rob Kaplan, president of the US Federal Reserve in Dallas, said Friday the Fed should begin discussions on reducing bond purchases as imbalances in financial markets and the economy are moving faster than expected improve.

The market’s focus on the Fed’s bond program makes the job report even more important. If the central bank begins to scale back these asset purchases, it would signal that it is on track to hike rates. Most economists don’t expect the Fed to hike rates before 2023.

“If that job count is very high, people will make their assessment of when the Fed might rejuvenate,” said Michael Schumacher, director of interest rates at Wells Fargo.

Powell will be among the Fed speakers for the coming week, but he is not expected to take any new views if he attends a National Community Reinvestment Coalition conference on Monday afternoon. Kaplan speaks Tuesday and Thursday, and New York Fed President John Williams and Cleveland Fed President Loretta Mester are also among the central bank officials speaking for the week ahead.

The result increases

So far, 87% of the S&P 500 companies have beat earnings estimates, and earnings appear to be growing by more than 46%, according to Refinitiv.

Jonathan Golub, Credit Suisse’s chief strategist in the US, raised his forecast for the S&P 500 on Friday on the back of strong gains. “We are increasing our target price for 2021 S&P 500 from 4,300 to 4,600, an increase of 9.2% from current levels and 22.5% for the year,” he wrote.

The result is expected by a diverse group of companies, from General Motors to ViacomCBS. Pharma will be in the spotlight, as Covid vaccine makers Pfizer and Moderna report. Draftkings and Beyond Meat are also on the program.

A variety of travel-related companies publish results including Booking Holdings, Hilton Worldwide, Marriott Vacations, and Caesars Entertainment. Consumer brands such as Anheuser Busch Inbev and Estee Lauder report, as do insurers such as AIG, Allstate and MetLife. (A calendar with some key earnings dates is shown below.)

Chang said the market has already discounted a lot of positive news.

“Despite the really strong reports from the Bellwether companies, you are seeing some of the names wear off a bit,” said Chang. “I think it’s a sign that so much good news is being discounted. I suspect the market needs to take a breather. I think in the next few months we will likely see a sideways movement. There will likely be a pullback, which will lead to it. ” be healthy.”

The S&P 500 was up 5.2% in April, closing at 4,181 on Friday. It’s now up 11.2% for the year to date. The Dow rose 2.7% to 33,874 in April and the Nasdaq rose 5.4% in April, ending at 13,962 on Friday.

Chang said he expected some of the “boring” blue chips that didn’t compete in the rally that often do better. Some of these names can be found in the pharmaceutical industry, he said.

Next week, investors will be looking for words from Warren Buffett at Berkshire Hathaway’s annual meeting on Saturday.

Calendar for the week ahead

Monday

Monthly vehicle sales

Merits: Avis Budget, Loews, Alexion Pharmaceuticals, Rambus, Leggett and Platt, Vornado, American Water, Iamgold, Mosaik, Apollo Global Management, ZoomInfo, Estee Lauder, ON Semiconductor

9:45 am Manufacturing PMI

10:00 am ISM production

10:00 a.m. building expenses

2:00 p.m. Senior Loan Officer survey

2:10 p.m. John Williams, President of the New York Fed

2:20 p.m. Fed Chairman Jerome Powell at the National Community Reinvestment Coalition conference

Tuesday

Merits: Pfizer, CVS Health, ConocoPhillips, Martin Marietta Materials, Activision Blizzard, DuPont, KKR, T-Mobile, Akamai, Natural Resource Pioneer, Lattice Semiconductors, Denny’s, Hyatt Hotels, Host Hotels, PerkinElmer, Prudential Financial, Viavi, Caesars Entertainment, Thomson Reuters, Cummins, Vulcan Materials

8:30 a.m. international trade

10:00 a.m. factory orders

1:00 p.m. Robert Kaplan, President of the Dallas Fed

1:00 p.m. Neel Kashkari, President of the Minneapolis Fed

Wednesday

Merits: General Motors, Hilton Worldwide, Booking Holdings, Fox Corp., Uber Technologies, Etsy, PayPal, Allstate, Award, Cognizant Technology, MetLife, Marriott Vacations, CF Industries, Marathonöl, CyberArk Software, Emerson Electric, Amerisourcebergen, BorgWarner, Zynga, Tangier Factory Outlet, Twilio

8:15 am ADP employment

9:30 a.m. Charles Evans, President of the Chicago Fed

9:45 a.m. Services PMI

10:00 am ISM services

11:00 am Eric Fedgren, President of the Boston Fed

12:00 p.m. Loretta Mester, President of the Cleveland Fed

3:00 p.m. Evans at the Chicago Fed

Thursday

Merits: Regeneron, ViacomCBS, Kellogg, Moderna, Murphy Oil, Beyond Meat, Shake Shack, Square, Roku, Axon, Cushman and Wakefield, Tapestry, Neilsen, AIG, Anheuser-Busch, EOG Resources, Consolidated Edison, DropBox, Expedia, Roku , Peloton Interactive, Datadog, Cardinal Health, Ambac Financial

8:30 am Initial jobless claims

8:30 a.m. Productivity and Costs

9:00 a.m. John Williams of the New York Fed

10:00 a.m. Dallas Fed Chaplain

1:00 p.m. Loretta Mester, President of the Cleveland Fed

1:00 p.m. Raphael Bostic, Atlanta Fed President

Friday

Merits: Cigna, Siemens, Gannett, AMC Networks, Draftkings, Liberty Broadband and Elanco Animal Health

8:30 a.m. employment

10:00 a.m. wholesale

3 p.m. consumer credit

Categories
World News

Asia-Pacific shares little modified as markets wrestle for route

Asia-Pacific stocks little changed as markets struggle for direction

SINGAPORE – Asia Pacific stocks barely changed on Wednesday morning, with major markets wrestling over direction.

In Japan, the Nikkei 225 fell slightly while the Topix index rose 0.2%.

Japan’s retail sales rose 5.2% year over year in March, according to the government. According to Reuters, this was higher than a median market forecast for growth of 4.7%.

South Korea’s Kospi slipped easily. The S & P / ASX 200 in Australia was down about 0.1%. Australia’s inflation data for the first quarter are expected. The consumer price index is expected to be released at 9:30 a.m. HK / SIN.

MSCI’s broadest index for stocks in the Asia-Pacific region outside of Japan was down 0.08%.

On corporate developments, investors will monitor Alibaba’s Hong Kong-listed shares after the Wall Street Journal reported that China is investigating how founder Jack Ma received swift approval to list the company last year.

The major indices on Wall Street were muted overnight in the US. The S&P 500 closed little changed at 4,186.72, while the Dow Jones Industrial Average also ended its trading day largely unchanged at 33,984.93. The Nasdaq Composite fell 0.34% to close at 14,090.22.

Currencies and oil

The US dollar index, which tracks the greenback versus a basket of its peers, stood at 90.893 after hitting below 90.9 at the start of the trading week.

The Japanese yen was trading at 108.79 per dollar after weakening significantly below 108 against the greenback at the beginning of the trading week. The Australian dollar was trading at $ 0.7762 after yesterday’s drop of around $ 0.78.

Oil prices were higher on the morning of Asian trading hours and the international benchmark’s Brent crude oil futures rose 0.12% to $ 66.50 a barrel. US crude oil futures rose 0.13% to $ 63.02 a barrel.

Here’s a look at what’s on tap:

  • Australia: First quarter consumer price index at 9:30 am HK / SIN
Categories
World News

Taxes and inflation might be key themes for markets within the week forward

5 things to know before the stock market opens Thursday, April 15

Traders on the floor of the New York Stock Exchange.

Source: NYSE

The last week of April will be a busy one for the markets with a Federal Reserve meeting and a barrage of earnings news.

Inflation and taxes will continue to be hot topics in the markets.

President Joe Biden is expected to detail his American Families Plan and the tax increases to be paid for it, including a much higher capital gains tax for the wealthy. The plan is the second part of its Better Back Down agenda and will include new spending proposals designed to help families. The President addresses a joint session of Congress on Wednesday evening.

With around a third of the S&P 500 reports including big tech names like Apple, Microsoft, Alphabet, and Amazon, this is a big week of earnings.

As many have already done, companies like Boeing, Ford, Caterpillar, and McDonald’s are likely to describe the cost pressures they face from rising material and transportation costs and supply chain disruptions.

At the same time, the Fed is expected to defend its policy of allowing inflation to run hot while reassuring markets that it sees the rise in prices as temporary. The central bank meets on Tuesday and Wednesday.

The central bank takes over the main stage

“I think the Fed doesn’t want to be a feature next week, but the Fed is being pushed into the background due to inflation concerns,” said Diane Swonk, chief economist at Grant Thornton.

The central bank is not expected to take any political action, but Fed Chairman Jerome Powell’s press conference after Wednesday’s meeting is being closely watched.

So far, the flood of profit news has been positive: 86% of companies reported winning hits. According to Refinitiv, net income is projected to grow around 33.9% in the first quarter based on estimates and actual reports. Sales are 9.9% higher.

There is important inflation data on Friday when the Fed’s preferred inflation meter is reported.

The personal consumption expenditure report is expected to show core inflation to rise 1.8%, still below the Fed’s 2% target. Further data releases concern first-quarter gross domestic product on Thursday, which, according to the Dow Jones, is expected to have grown by 6.5%.

“I don’t think the Fed has any urgency to change monetary policy right now,” said Ian Lyngen, head of US interest rate strategy at BMO. “The Fed has to acknowledge that the data is improving. We had a strong first quarter.”

“The Fed needs to acknowledge this, but at the same time maintain its highly accommodative policy, so it needs to acknowledge the fact that the simple policy is justified,” he said.

Lyngen said the Fed is likely to point out ongoing concerns about the pandemic around the world as a potential risk to economic recovery.

Powell is also expected to reiterate that the Fed will let inflation rise above its 2% target for a period of time before raising rates to give the economy more time to heal. “It’s going to be a challenge for the Fed,” said Swonk.

The base effects for the next few months cause inflation to rise sharply on the basis of a comparison with a weak period last year. The consumer price index for April could be above 3%, compared to 2.6% last month, added Swonk.

“The Fed is trying to get a lot more people on the dance floor before shouting ‘last call’,” she said. “Really, what Powell has been saying since day one is if we take care of people on the fringes and get them back into work, the rest will take care of themselves.”

Stocks were slightly lower over the past week and government bond yields remained at lower levels. The 10-year return, moving against price, was 1.55% on Friday.

The S&P 500 fell 0.1% to end the week at 4,180 while the Nasdaq Composite fell nearly 0.3% to 14,016. The Dow was just under 0.5% at 34,043.

Outlook for tax hikes

Stocks were hit hard on Thursday when Biden suggested a capital gains tax rate of 39.6% for people who earn more than $ 1 million a year, according to news.

Combined with the 3.8% net investment tax, the new levy would more than double the long-term capital gains rate of 20% or the richest Americans.

Strategists said Biden is expected to propose raising the income tax rate for those who earn more than $ 400,000.

“I think a lot of people are starting to assess the risk that both corporate and capital gains taxes will rise significantly,” said Lyngen.

So far, companies haven’t contributed much to the proposed increase in corporate taxes from 21% to 28%, but they have talked about other costs.

David Bianco, Chief Investment Strategist for America at DWS, expects larger companies to deal better with supply chain constraints than smaller ones. Big Tech is also likely to outperform automakers who have already announced production shutdowns during the semiconductor shortage, he said.

“Next week is tech week. I think we’re going to get on our knees and just be in awe of their business models and their ability to grow on a gigantic scale,” said Bianco.

He said he was not in favor of Wall Street popular trading in cyclicals and out of growth. He still prefers growth.

“We are really overweight because we are concerned about rising interest rates,” said Bianco. “I’m not optimistic that I expect the market to grow that much from here.”

“We have continued to grow and looked deeper into bond replacements, utilities, food staples and real estate,” he said, adding that he is underweight industrials, energy and materials. “Energy is doomed. It will be nationalized through regulation. I like industrial companies, they are well-run companies, but I think the expectations of infrastructure spending for traditional infrastructures are too high.”

He also said industrials are good companies, but stocks are overvalued.

Bianco said he likes big stores, but smaller retailers face huge challenges that affected them even before Covid. He also finds small biotech companies attractive.

“I like health care stocks. These ratings are reasonable. People have been paranoid about politicians beating them since 1992. They make it and lately they are delivering,” he said.

Calendar for the week ahead

Monday

Merits: Tesla, Canadian National Railways, Canon, Check Point Software, Otis Worldwide, Vale, Ameriprise, NXP Semiconductor, Albertsons, Royal Phillips

8:30 a.m. consumer goods

Tuesday

The FOMC begins a two day meeting

Merits: Microsoft, Alphabet, Visa, Amgen, Advanced Micro Devices, 3M, General Electric, Eli Lilly, Hasbro, United Parcel Service, BP, Novartis, JetBlue, Pultegroup, Archer Daniels Midland, Waste Management, Starbucks, Texas Instrument, Chubb, Mondelez, FireEye, Corning, Raytheon

9:00 a.m. S & P / Case-Shiller

9:00 a.m. FHFA real estate prices

10:00 am Consumer Confidence

10:00 a.m. vacant apartments

Wednesday

Merits: Apple, Boeing, Facebook, Qualcomm, Ford, MGM Resorts, Humana, Norfolk Southern, General Dynamics, Boston Scientific, eBay, Samsung Electronics, GlaxoSmithKline, Yum Brands, SiriusXM, Aflac, Cheesecake Factory, Community Health System, CIT Group, Entergy, CME Group, Hess, Ryder System

8:30 a.m. leading indicators

2 p.m. Fed statement

2:30 p.m. Briefing from Fed Chairman Jerome Powell

Thursday

Merits: Amazon, Caterpillar, McDonald’s, Twitter, Bristol-Myers Squibb, Comcast, Merck, Northrop Grumman, Airbus, Kraft Heinz, Intercontinental Exchange, Mastercard, Gilead Sciences, US-Stahl, Cirrus Logic, Texas Roadhouse, Cabot Oil, PG & E, Royal Dutch Shell, Church & Dwight, Carlyle Group, Southern Co.

8:30 am Initial jobless claims

8:30 a.m. Real GDP Q1

10:00 a.m. Pending home sales

Friday

Merits: ExxonMobil, Chevron, Colgate-Palmolive, AstraZeneca, Clorox, Barclays, AbbVie, BNP Paribas, Weyerhaeuser, Illinois Tool Works, CBOE Global Markets, Lazard, Newell Brands, Aon, LyondellBasell, Pitney Bowes, Phillips 66, Charter Communications

8:30 am Personal Income and Expenses

8:30 a.m. Employment Cost Index Q1

9:45 am Chicago PMI

10:00 am consumer mood

Saturday

Merits: Berkshire Hathaway

Categories
World News

Japan shares edge larger as main markets in Asia-Pacific are closed

Japan stocks edge higher as major markets in Asia-Pacific are closed

SINGAPORE – Japanese stocks rose Monday afternoon as many major Asia Pacific markets are closed for public holidays.

In Japan, the Nikkei 225 was up 0.91% while the Topix index was up 0.66%.

South Korea’s Kospi hovered over the flatline. LG Electronics’ shares rose approximately 0.6%. The company announced on Monday that it was closing its mobile division to focus resources on “growth areas” like electric vehicle components.

The broadest MSCI index for stocks in the Asia-Pacific region outside of Japan has hardly changed.

The markets in Australia, Mainland China and Hong Kong are closed on Mondays for public holidays.

US payrolls exceed expectations

In terms of economic development, the U.S. Department of Labor reported Friday that the number of non-agricultural workers rose by 916,000 in March – well above the 675,000 increase that Dow Jones polled economists had expected.

The unemployment rate also fell to 6%, in line with the expectations of economists polled by Dow Jones.

Currencies and oil

The US dollar index, which tracks the greenback versus a basket of its peers, came in at 92.942 – up above 93.3 from late last month.

The Japanese yen was trading at 110.57 per dollar, weaker than 110.5 against the greenback last week. The Australian dollar changed hands at $ 0.7619, above the $ 0.756 level seen last week.

Oil prices were lower in the afternoon of Asian trading hours, with the international benchmark Brent crude oil futures falling 0.99% to $ 64.22 a barrel. US crude oil futures were down 0.91% to $ 60.89 a barrel.

Categories
Business

Fallout From Hedge Fund’s Defaults Spreads By Markets: Dwell Updates

A Credit Suisse branch in Basel, Switzerland. After the bank warned of significant losses on Monday, its shares fell 14 percent.

Here’s what you need to know:

Credit…Arnd Wiegmann/Reuters

The fallout from a series of defaults at a New York hedge fund reverberated through markets for a second day on Monday, as global banks tried to size up their exposure to one firm’s string of bad bets.

Shares in Credit Suisse, the Swiss bank, dropped 14 percent on Monday and the Japanese bank Nomura closed 16 percent lower, after the banks said they could face significant losses because of defaults by an American investment firm.

U.S. stocks fell on Monday, with the S&P 500 opening 0.2 percent weaker. European stock indexes were mixed but an index of European banks was 0.6 percent lower.

Neither Credit Suisse nor Nomura named the investment firm whose default could lead to big losses, but Bloomberg identified it as Archegos Capital Management, a New York-based family office that manages the wealth of Bill Hwang, a former hedge fund manager at Tiger Asia Management who was found guilty of wire fraud in 2012.

Investment banks that provided services to Archegos, such as Goldman Sachs and Morgan Stanley, dumped huge quantities of stocks including ViacomCBS and Chinese tech companies on Friday.

Archegos was forced into the stock sales, worth about $20 billion, after bets the fund made moved the wrong way, Bloomberg reported. Shares in ViacomCBS, one of Archegos’s positions, dropped 23 percent on Wednesday last week. On Friday, the share price plummeted a further 27 percent as the investment banks liquidated positions. ViacomCBS shares fell about 3 percent in early trading on Monday.

Shares in Goldman Sachs and Morgan Stanley opened about 2-3 percent lower on Monday. Shares in Deutsche Bank fell more than 3 percent, after it was said to also have some exposure to Archegos.

Credit Suisse has already been roiled this month by the collapse of Greensill Capital, a London-based financial firm it sold funds for, and to whom it extended loans of $140 million. The Swiss bank told investors it would probably report some losses on the loan.

“A significant U.S.-based hedge fund defaulted on margin calls made last week by Credit Suisse and certain other banks,” the Swiss bank said on Monday. It did not yet know the exact size of the loss from exiting its positions but “it could be highly significant and material to our first quarter results,” the statement said.

  • Oil prices bounced around on Monday following news about the fate of the container ship that had been blocking the Suez Canal for nearly week. The ship was finally freed on Monday, raising the prospect that trade flows would be restored, but authorities said more work was needed before maritime traffic could restart.

  • Yields on 10-year Treasury notes fell 2 basis points, or 0.02 percentage point, to 1.65 percent.

Bill Hwang, right, with his lawyer in 2012. Archegos Capital Management manages the personal fortune of the former hedge fund mogul.Credit…Emile Wamsteker/Bloomberg

The fallout from risky investments made by Archegos Capital Management continued to spread through the global markets on Monday, and it could spur more attention from regulators on the murky world of swaps and investor borrowing, the DealBook newsletter reports.

But how did one firm’s bad bets cascade to become a multibillion-dollar fire sale of stocks by banks around the world? Here’s what we know so far:

Archegos manages the personal fortune of the former hedge fund mogul Bill Hwang, who won Wall Street’s business despite having pleaded guilty to insider trading years ago. It amassed huge positions in media giants like ViacomCBS and in several Chinese tech companies — largely with borrowed money.

The Archegos strategy included using swaps, contracts that gave Mr. Hwang financial exposure to companies’ shares while hiding both his identity and how big his positions really were. (It is also becoming increasingly apparent that several Wall Street banks lent Archegos money without knowing that others were doing the same thing for the same trades.)

Trouble for Mr. Hwang, and his banks, arose when the prices of those stocks started to fall. That prompted some of his lenders to demand cash to cover his bets. When they began to question his ability to do so, some of them, including Goldman Sachs and Morgan Stanley, seized some of his holdings and kicked off the sale $20 billion worth in huge block trades.

That forced selling led to even bigger drops in the prices of those stocks, starting a vicious circle.

Goldman Sachs has told investors that its potential losses are “immaterial,” having covered its exposure, but other investment banks faced a reckoning:

  • Credit Suisse told investors that a “U.S.-based hedge fund” had defaulted on its margin calls, which could lead to losses that were “highly significant and material to our first-quarter results.”

  • Nomura said that one of its U.S. arms could suffer “a significant loss” because of the forced sales.

One person who is surely paying attention is Gary Gensler: President Biden’s pick to lead the S.E.C. has been an advocate for market transparency, having argued that unregulated dark pools could cause a broader risk to the U.S. economy.

Southwest Airlines, the largest buyer of Boeing’s 737 Max jet, said that it had ordered a total of the planes over the next decade.Credit…Jim Watson/Agence France-Presse — Getty Images

Southwest Airlines is doubling down on Boeing’s troubled 737 Max jet, adding 100 new orders for the plane just months after regulators began allowing it to fly again.

The airline, already the largest customer of the Max, said on Monday that it had ordered a total of 349 Max jets over the next decade. Southwest, which resumed flights aboard the Max this month, also said it had more than doubled the number of planes it had options to buy, to 270.

“Southwest Airlines has been operating the Boeing 737 series for nearly 50 years, and the aircraft has made significant contributions to our unparalleled success,” Gary Kelly, Southwest’s chief executive, said in a statement. “Today’s commitment to the 737 Max solidifies our continued appreciation for the aircraft.”

Regulators around the world grounded the Max, which is quieter and more fuel-efficient than its predecessors, in March 2019 following fatal crashes in Ethiopia and Indonesia that killed 346 people. The Federal Aviation Administration lifted its ban on the plane in November, requiring various changes and upgrades. It was soon followed by other aviation regulators and the plane has been used on thousands of flights since.

The expanded Southwest order comes as more passengers start flying again. More than 1.5 million people were screened at airport security checkpoints on Sunday, according to the Transportation Security Administration, the most since the coronavirus pandemic began. Still, that was about 37 percent fewer people than the agency had screened on the same day in 2019.

Southwest did not say how much it will pay for its new Max order. The airline is spending more than $10 billion in new and existing airplane orders. The airline expects to receive 28 Max planes this year and at least 30 each year after through 2025.

By acquiring Houghton Mifflin, HarperCollins, which is owned by Rupert Murdoch’s News Corp, will be better able to compete as publishing has come to be dominated by the biggest players.Credit…Richard Drew/Associated Press

HarperCollins, one of the five largest publishing companies in the United States, has made a deal to acquire Houghton Mifflin Harcourt Books and Media, the trade publishing division of Houghton Mifflin Harcourt, for $349 million.

The acquisition will help HarperCollins expand its catalog of backlist titles at a moment of growing consolidation in the book business. Houghton Mifflin publishes perennial sellers by well-known authors such as J.R.R. Tolkien, George Orwell, Philip Roth and Lois Lowry, as well as children’s classics and best-selling cookbooks and lifestyle guides.

News of the sale was reported earlier by The Wall Street Journal.

By acquiring Houghton Mifflin, HarperCollins, which is owned by Rupert Murdoch’s News Corp, will be better able to compete as publishing has come to be dominated by the biggest players.

The book business has been transformed by consolidation in the past decade, with the merger of Penguin and Random House in 2013, News Corp’s purchase of the romance publisher Harlequin, and Hachette Book Group’s acquisition of Perseus Books. Last fall, ViacomCBS agreed to sell Simon & Schuster to Penguin Random House for more than $2 billion, in a deal that has drawn scrutiny from antitrust regulators and has raised concerns among booksellers, authors and agents.

Book sales across the industry have remained strong during the pandemic, but Houghton Mifflin saw its revenue fall sharply last year because of a steep drop in sales in its education division. Its revenue fell by more than 46 percent in the nine months that ended on Sept. 30 of last year, compared with the same period in 2019. The company put its trade publishing division up for sale last fall, as it aims to focus on its core business of K-12 educational publishing, and to pay down its debt.

“There is incredible demand for our expertise as schools across the country plan for post-pandemic learning and recovery,” Houghton Mifflin’s president and chief executive, Jack Lynch, said in a news release. “This is an inflection moment for K-12 education in our country and for HMH as a trusted partner to schools and teachers in advancing learning for every student.”

Tankers and freight ships near the entrance of the Suez Canal.Credit…Ahmed Hasan/Agence France-Presse — Getty Images

Oil prices fell on Monday as word spread that the giant cargo ship blocking the Suez Canal had been set free, raising hopes that hundreds of vessels, many carrying oil and petroleum products, could soon proceed through the critical waterway.

Oil prices had swirled earlier in the day, as prospects of an end to the logjam brightened, and then dimmed. But following the announcement that the containership Ever Given had been freed, the price of Brent crude, the international benchmark, fell about 2.5 percent, to $63.90 a barrel.

Since the vessel got stuck early last week, tankers have been lining up at the entrances to the canal waiting to deliver their cargoes to Europe and Asia.

The Suez Canal is a crucial choke point for oil shipping, but so far the impact on the oil market of this major interruption of trade flows has been relatively muted. Though prices jumped after shipping on the canal was halted, oil prices still remain below their nearly two-year highs of about $70 a barrel reached earlier this month.

Traders are now expected to focus on broader threats to the oil market, including whether the imposition of new lockdowns in Europe may hold back the recovery of oil demand from the pandemic.

From a global perspective, oil supplies are considered adequate, and the Organization of the Petroleum Exporting Countries, Russia and other producers, the group known as OPEC Plus, are withholding an estimated eight million barrels a day, or about 9 percent of current consumption, from the market. Officials from OPEC Plus are expected to meet by video conference on Thursday to discuss whether to ease output cuts.

Goldman Sachs’s headquarters in New York. A group of investors is suing the Wall Street bank over claims of fraud. Credit…Johannes Eisele/Agence France-Presse — Getty Images

The Supreme Court will hear arguments on Monday from Goldman Sachs and pension funds over a claim that the Wall Street giant misled investors about its work selling complex debt investments in the prelude to the 2008 financial crisis.

In its latest brief, Goldman makes an interesting argument, the DealBook newsletter reports: Investors shouldn’t rely on statements such as “honesty is at the heart of our business” or “our clients’ interests always come first” that appear in Securities and Exchange Commission filings and annual reports.

The case is a test of shareholders’ ability to sue over claims of investment fraud. The pension funds sought to sue as a class over Goldman’s statements, saying they belied those statements of honesty, and lower courts agreed to let them proceed. Goldman has argued that the investors are engaged in “guerrilla warfare” and aren’t providing “serious legal arguments,” relying on support from the federal government instead.

However, the Biden administration isn’t taking sides, technically. It will argue as a “friend of the court” on Monday that “meritorious private securities-fraud suits” are “an essential complement” to enforcing securities laws.

“I expect the court to be troubled by the claim that companies cannot be held accountable for saying that clients come first and then acting otherwise,” Robert Jackson Jr., who served on the S.E.C. from 2018 to 2020 and is now an N.Y.U. law professor, told DealBook.

The justices probably won’t agree with the claim that making a company “mean what it says” will lead to a tsunami of meritless lawsuits,” he added. Regardless, Goldman is right that the stakes are high, because the case is likely to decide whether shareholders can “hold corporate insiders accountable when they tell investors one thing and do another,” Mr. Jackson said.

President Nicolás Maduro of Venezuela promoted an unproven remedy for Covid-19 on Facebook, which prompted the company to freeze his page. Credit…Manaure Quintero/Reuters

The Facebook page of Venezuela’s president, Nicolás Maduro, was frozen for “repeated” violations of its misinformation policies, including a post about an unproven remedy for Covid-19, the company said on Sunday, the latest example of the social media giant cracking down on political figures who violate its content policies.

Mr. Maduro’s Facebook page will be frozen for 30 days in a “read-only” mode, the company said, “due to repeated violations of our rules.”

“We removed a video posted to President Nicolas Maduro’s Page for violating our policies against misinformation about Covid-19 that is likely to put people at risk for harm,” a Facebook spokesman said. “We follow guidance from the W.H.O. that says there is currently no medication to cure the virus.” The spokesman was referring to the World Health Organization.

Facebook’s move came after Mr. Maduro posted a video on his page that promoted Carvativir, a drug derived from thyme. He said in January that the medicine was a “miracle,” but did not provide evidence of its effectiveness — and declined to release the name of the “brilliant Venezuelan mind” that created the drug. In the video, Mr. Maduro falsely claimed that Carvativir can be used preventively and therapeutically against the coronavirus.

In the past, Facebook has been criticized for its inaction against political figures who test the boundaries of the company’s content policies by spreading misinformation. Mark Zuckerberg, the founder and chief executive of Facebook, has said he does not want to be the “arbiter of truth” in public discourse.

But in recent months, Facebook has cracked down on certain types of misinformation across the network. The company has banned posts containing false or misleading information regarding the coronavirus, and has shown willingness to take action against some political figures. And in the past, it has removed at least one post by Jair Bolsonaro, the president of Brazil, for false coronavirus remedy claims regarding the malaria drug hydroxychloroquine.

In January, after insurgents stormed the United States Capitol, President Donald J. Trump’s account was banned indefinitely for inciting his supporters to violent action using the social network.

In response to his account restriction, Mr. Maduro has said Facebook is practicing a form of “digital totalitarianism,” according to Reuters, which first reported Mr. Maduro’s suspension.

Mr. Maduro said on Twitter on Sunday that he would continue to broadcast his regular coronavirus briefing from his other digital accounts, including Instagram, YouTube and Twitter. And to circumvent his suspension, he said he would use the Facebook account belonging to his wife, Cilia Flores, to broadcast Covid-19 information. Facebook would not comment on whether it would suspend Ms. Flores’s account.

A rally on Friday in support of the Amazon workers outside the Retail, Wholesale and Department Store Union’s building in Birmingham, Ala.Credit…Charity Rachelle for The New York Times

One of the most closely watched union elections in recent history is wrapping up on Monday, one that could alter the shape of the labor movement and one of America’s largest employers.

Almost 6,000 workers at an Amazon warehouse near Birmingham, Ala., one of the company’s largest, are eligible to vote in this election. After years of fierce resistance from the company, they could form the first union at an Amazon operation in the United States.

The outcome of the vote may not be known for days, but the union drive has already succeeded in roiling the world’s biggest e-commerce company and spotlighting complaints about its labor practices, The New York Times’s Karen Weise and Michael Corkery write. If the Retail, Wholesale and Department Store Union succeeds, it would be a huge victory for the labor movement, whose membership has declined for decades. A victory would also give it a foothold inside one of the country’s largest private employers. The company now has 950,000 workers in the United States, after adding more than 400,000 in the last year alone.

If the union loses, particularly by a large margin, Amazon will have turned the tide on a unionization drive that seemed to have many winds at its back. A loss could force labor organizers to rethink their overall strategy and give Amazon confidence that its approach is working.

Hansjörg Wyss, the former chief executive of the medical device manufacturer Synthes, said he had agreed to join a bid for Tribune Publishing.Credit…Ruben Sprich/Reuters

A Swiss billionaire who has donated hundreds of millions to environmental causes is a surprise new player in the bidding for Tribune Publishing, the major newspaper chain that until recently seemed destined to end up in the hands of a New York hedge fund.

Hansjörg Wyss (pronounced Hans-yorg Vees), the former chief executive of the medical device manufacturer Synthes, said he had agreed to join with the Maryland hotelier Stewart W. Bainum Jr. in a bid for Tribune, an offer that could upend Alden Global Capital’s plan to take full ownership of the company, Marc Tracy of The New York Times writes.

Mr. Wyss, who has given away some of his fortune to help preserve wildlife habitats in Wyoming, Montana and Maine, said he was motivated to join the Tribune bid by his belief in the need for a robust press. “I have an opportunity to do 500 times more than what I’m doing now,” he said.

Alden, which already owns roughly 32 percent of Tribune Publishing shares, is known for drastically cutting costs at the newspapers it controls through its MediaNews Group subsidiary. Last month, the hedge fund reached an agreement with Tribune, whose papers include The Daily News, The Baltimore Sun and The Chicago Tribune, to buy the rest of the company’s shares.

The sale of Tribune, which the newspaper company hopes to conclude by July, requires regulatory approval and yes votes from company shareholders representing two-thirds of the non-Alden stock.

“We are in a hyper-growth industry,” said Dhivya Suryadevara, Stripe’s chief financial officer.Credit…Richard Drew/Associated Press

Thousands of financial technology start-ups are riding an investor frenzy driven by a growing realization that the industry is ripe for a tech makeover, writes Erin Griffith of The New York Times.

When the pandemic forced businesses to speed up their usage of digital tools, including e-commerce and online banking, the demand for what is known as fintech exploded.

Now start-ups with names like Blend, Brex and Dave that provide decidedly unglamorous banking, lending and payment processing offerings are hot tickets. That was punctuated this month when Stripe, a payments company, raised $600 million in a financing that valued it at $95 billion, the highest ever for a private start-up in the United States.

Financial technology companies are also making a splash on the stock market. On Tuesday, Robinhood, a stock trading app popular with young adults, filed for an initial public offering. And Coinbase, a cryptocurrency start-up, is scheduled to go public in the next few weeks in what could be a $100 billion listing.

In total, venture capital investors poured $44.4 billion into financial technology start-ups last year, up from $1.1 billion in 2009, according to PitchBook, which tracks private financing. Many investors are now making bold predictions that these start-ups will upend big banks, established credit card providers — and in some cases, the entire financial system.

Categories
World News

The tip of the quarter might create volatility for markets within the week forward

The end of the quarter could create volatility for markets in the week ahead

Traders work on the trading floor of the New York Stock Exchange.

NYSE

Stocks could be hurt in the coming week from quarter-end trading as pension funds and other large investors buy bonds and sell stocks to balance their portfolios.

The dramatic rise in bond yields this quarter is causing fund managers to shift their holdings to make up for the lack of bond holdings.

The focus in the coming week could be on the overall economy. The March employment report is expected on Friday, and the White House infrastructure plans are expected to be released on Wednesday. There is also ISM manufacturing data released on Thursday.

The March job report is scheduled for a morning when the stock market is closed for Good Friday. However, bonds trade for half a day, ending at 12:00 noon. Economists estimate that 630,000 jobs were created in March and the unemployment rate fell from 6.2% to 6%, according to the Dow Jones.

President Joe Biden is expected to announce details of his $ 3-4 trillion infrastructure plan in Pittsburgh on Wednesday. However, strategists say it is too early to say what the plan might look like or how big it will be in its final form.

Stocks were higher for the past week while government bond yields were less volatile. The closely observed 10-year ratio was 1.67% on Friday after 1.75% the previous week. Yields are moving against price and strategists expect rates to fall further over the coming week as investors rebalance their holdings.

“It’s the last week of the quarter so there can only be too much noise,” said Peter Boockvar, chief investment strategist at Bleakley Advisory Group. “Of course we will keep an eye on the bonds. The 10-year period now seems to be in a range of 1.60% to 1.70%. I think people are just trying to get a foothold here. They are trying to to find out. ” out.”

Some strategists say quarter-end trading for stocks, especially big-cap tech, could be positive as rates temporarily stopped rising.

Inventories are higher in the quarter to date. The S&P 500 gained 1.6% over the course of the week and 5.8% in the quarter to date. The Dow was up 1.4% for the week and up 8% in the first quarter. The Nasdaq lagged behind, falling 0.6% for the week and 1.9% for the quarter.

Bonds were much more dramatic in the quarter. The 10-year reference return rose from 0.93% at the end of last year.

“It’s in the driver’s seat right now,” said NatWest’s Blake Gwinn of the 10-year return. The 10 year rate of return is the most widely used rate of return as it affects mortgages and other major financing rates.

Gwinn, head of US interest rate strategy, said he had changed his view of the 10-year deadline and now expects the yield to hit 2% from 1.75% by the end of the year. In the short term, however, the yield could fall further as large funds buy Treasuries. Japanese investors are also expected to be active buyers towards the end of the year on Wednesday.

“If anything, we really hope that returns will continue to drop a little lower so that we have a better place to get back into shorts,” he said.

Infrastructure plan

Gwinn said he is focused on the Biden infrastructure plan and doesn’t think it’s still priced in in the market. The $ 1.9 trillion fiscal plan just signed by the president was a driver of bond yields as investors weighed the expected surge in economic activity and the associated higher debt levels.

“The Biden plan is my biggest risk to the treasury market right now. I don’t have the full Biden plan priced into my … forecast this year,” he said. “If we suddenly get started quickly and that comes together in the second quarter, I’ll have to rethink my 2% target.”

Gwinn said the market had “fiscal fatigue”.

“There are a lot of doubts and uncertainties about how it will pass, when it will pass and whether it will pass … it is not tangible enough,” he said.

The plan is expected to span several years, and the Democrats are expected to seek tax increases to pay for it.

rotation

The rotation into cyclical and value stocks is expected to continue in the next quarter. Energy and Finance had the best results in the first quarter, up 33% and 16.5% respectively. Tech was up 1.7% but outperformed utilities and consumer staples.

“I think certain parts of the market have a lot of upside potential, but some of it may come at the expense of growth stocks,” said Dan Suzuki, vice CIO, Richard Bernstein Advisors. He also assumes that growth stocks will continue to react negatively to rising interest rates and positively to falling ones. This trade has decoupled a bit in the past week.

“It won’t go one-on-one with every wobble,” he said. “I think the base behind this is real. If you think rates will climb to 2% by the end of the year, that’s really bad for expensive high-growth names. Markets care less about absolute levels than direction The higher the interest, the worse it is for high multiple stocks. “

Suzuki said the rise in interest rates is pushing some of the foam off the market. Special purpose vehicle stocks (SPACs) had risen by more than 5% on average on their first few days of trading in February and posted no profit in March, according to a University of Florida finance professor.

“As we see the economy getting better and better at an incredibly fast rate, especially as you add some extra momentum, you have companies that will benefit the most from that acceleration and that will grow 2X, 3X plus.” he said. “To her credit, those high, multi-growth stocks have been so robust last year … Tech earnings growth comes in mid-teens next year, but again the more cyclical parts of the economy – energy, materials, industry, small caps as a result As they rebound, they will see much stronger earnings growth this year.

Calendar for the week ahead

Monday

Merits: Vaxcyte, Cal-Maine Foods

Tuesday

Merits: Lululemon Athletica, Chewy, McCormick, BioNtech, FactSet, Blackberry, PVH

9:00 am S&P / Case-Shiller property prices

9:00 a.m. FHFA real estate prices

10:00 am Consumer Confidence

12:00 pm Raphael Bostic, Atlanta Fed President

2:30 p.m. John Williams, President of the New York Fed

Wednesday

Merits: Walgreens Boots Alliance, Micron, Dave & Buster, guess

8:15 am ADP employment

9:45 am Chicago PMI

10:00 a.m. Pending home sales

10:45 am Bostic from Atlanta Fed

Thursday

Merits: CarMax

8:30 am Initial jobless claims

9:45 am Manufacturing PMI

10:00 am ISM Manufacturing

10:00 a.m. building expenses

1:00 p.m. Philadelphia Fed President Patrick Harker

Friday

Good Friday holiday

Exchange closed

8:30 a.m. Employment Report

Categories
Business

TheScore is taking part in underdog in U.S. sports activities playing and public markets

TheScore is playing underdog in U.S. sports gambling and public markets

Score Media and Gaming will ring the opening bell on March 16, 2021 on the Nasdaq.

The Nasdaq

Build it slowly.

This is how media company theScore is looking to establish its gambling asset as the Canada-based company is now fully active in the US sports betting and public market landscape.

“This is how we built our success with our TV network in Canada and how we built our success with the app,” said John Levy, CEO of the company.

TheScore is a sports games and media company that believes its mobile app user base is critical to its growth plan to outsource its sports betting business. Levy knows it will be a challenge as theScore lags behind top companies like FanDuel and Barstool Sports. But he welcomes the competition.

“It’s about who wins in the market and who has the best product and who has the best ideas,” Levy said.

The outsider role

65-year-old Levy spoke about his company when he spoke to CNBC about theScore last September. He envisioned the day Canada will expand its sports game and also welcomed theScore’s longshot status in the sector as a whole.

“We’re an outsider,” said Levy. “We’re the most popular and least well-known brand in the US. But in six months, a year, or eighteen months, that won’t be the case.”

TheScore moved to its digital outlet role in 2012 when Levy sold theScore’s broadcast business to Rogers Communications for $ 167 million. He then said that unloading the network would allow theScore to “focus 100% on our digital products” and expand the mobile app.

The score is listed on the Toronto Stock Exchange and was introduced this year in the US on the Nasdaq under the ticker “SCR” after the initial public offering raised $ 183.6 million. The company currently has a market capitalization of $ 1.3 billion.

The mobile app has around 3.9 million users per month and provides users with live results, statistics and news. TheScore makes money with sponsorship and digital ads as well as the app and launched its theScore Bet mobile betting app in 2019. It seeks to raise awareness of the flagged “undervalued” betting app Levy as competitors spend millions on branding.

“They don’t know us in the media or in the betting business. And nobody knows us in the financial markets,” Levy said. “But those who do will be hugely rewarded.”

Score Media and Gaming will ring the opening bell on March 16, 2021 on the Nasdaq.

The Nasdaq

The strategy of the score

The company declined to discuss the Core Bet users, but the app is available in four states, including New Jersey and Colorado. Levy said the company will “take a step-by-step approach to building its user base, giving people what they want, and striving for the longevity of what this company will propose.”

But here too theScore is behind in the US scene. Companies like Penn National-sponsored Barstool Sports App are leaders in this field and are available in states like Pennsylvania and Illinois. Jay Snowden, CEO of Penn National Gaming, told CNBC’s “Squawk Box” that other states like Indiana and New Jersey will be launched in the next few months. New York is also in sight.

Others, including Fox Corporation’s Fox Bet and MGM’s BetMGM, have also gained prominence in mobile gambling in the United States. TheScore must compete against these larger companies and endure policies of getting more states to license the company.

However, it has help from Canada. A bill (C-218) legalizing sports betting for one-off events is nearing completion and Prime Minister Justin Trudeau endorses the legislation. TheScore believes its home market has the potential to grow to $ 5.4 billion and estimates that the Ontario market alone could reach $ 2.1 billion by 2025.

Canadians place over $ 7 billion in illegal wagers as gambling in the country is mostly limited to horse racing, according to Bloomberg.

TheScore said it had a record quarter for its media revenue, generating $ 10.6 million in the first quarter of 2021. Chad Beynon, an analyst at Macquarie Securities, described his stock as “outperforming”. He said theScore plans to own its sports betting technology and that it could add long-term revenue growth.

“We believe this is important, especially for a company like [theScore]which has the ability to curate the content, offer unique bets and deliver in-play bets that represent only 15% of the current US market compared to 75% in the UK, “Beynon wrote.” In addition, this strategy would also lead to lower platform fees (15% of sales), which should enable a faster margin ramp. “

Chris Lencheski, chairman of private equity advisory firm Phenicia, said he likes theScore’s position, especially with Canada going online. Lencheski acknowledged that gambling companies spend millions on branding as they battle for future market share, but added, “I like the fact [theScore] didn’t put a huge obligation on them just because they felt outside pressure to look like something else.

“Often [companies] Say, “We’re going to look just like another company and we’re going to make it bigger and spend more money,” he added, using Quibi as an example. “How many billions of dollars did you put in this thing? And it was done before it started. TheScore made a nice niche for itself.”

John Levy, CEO of Score Media and Gaming, will ring the opening bell on March 16, 2021 on Nasdaq.

The Nasdaq

Have some lunch

But at some point theScore has to decide what it wants to be in the sports games space and how it will grow.

Properties like BetMGM will take advantage of their hotel properties to attract and retain online gamblers. Meanwhile, digital companies like FanDuel and PointsBet are teaming up with sports teams to bolster their brand and seduce users. And Caesars, who bought William Hill for $ 3.7 billion, is also driving its brand forward.

But Lencheski said companies that broaden their niche by providing speed around the user experience and accurate betting odds would be among the top players. He said peer-to-peer sports games could excel, and companies like theScore could benefit from their user base.

But Lencheski warned the dollar average about getting a new customer, and the grip that customer brings will weigh on businesses with little capital. He predicted that mergers and acquisitions between sports game companies would take place in the next 24 to 48 months.

“If it’s less expensive to consolidate and win, we have to spend money,” Lencheski said. “In other words, when it costs more money to find the next customer than to take part in someone else’s offer.”

TheScore was mentioned among early candidates for a possible acquisition. The company told CNBC that it will not comment on any rumors or speculation when asked about acquisition rumors.

Again, months ago Levy said this was the plan: grow slowly. But theScore is now on the clock, playing the sports betting game as an underdog.

“We are thinking about becoming and positioning ourselves as an industry leader,” said Levy. “We love to be the outsider because they don’t see us coming. We will destroy them. We will nibble on them first and then we will have their lunch.”

Disclosure: CNBC’s parent company Comcast and NBC Sports are investors in FanDuel.