Home > Business > Powell and Mnuchin to Offer Starkly Different Views on Risks: Live Updates

Powell and Mnuchin to Offer Starkly Different Views on Risks: Live Updates



The Federal Reserve chairman, Jerome Powell, and the Treasury secretary, Steve Mnuchin, testify on the quarterly CARES Act report before the Senate Banking Committee.CreditCredit…Pool photo by Caroline Brehman

Jerome H. Powell, the chair of the Federal Reserve, and Steven Mnuchin, the secretary of the Treasury, are testifying before the Senate Banking Committee. In prepared remarks, they painted starkly different visions of the challenges facing the United States economy in the months ahead, further exposing a rift that began to show earlier this month.

Credit…Al Drago for The New York Times

The chair of the Federal Reserve and the secretary of the Treasury painted starkly different visions of the challenges facing the United States economy in the months ahead on Tuesday, further exposing a rift that began to show last month.

While Jerome H. Powell, the Fed Chair, pointed to ongoing uncertainty over vaccine speed and distribution, the economic dangers of a surge in virus cases and the grim reality that many remain out of work while testifying before the Senate Banking Committee, Treasury Secretary Steven Mnuchin painted a sunnier image of the economic recovery, emphasizing state and local lockdowns as the main threat to growth.

The contrast underlines the divide between two economic policymakers who, earlier in the crisis, worked closely as partners to usher in a sweeping economic response.

That cooperation has cracked. Mr. Mnuchin announced in November that he would end several Fed emergency loan programs, which are meant to keep credit flowing to state and local governments and medium-sized businesses alike. Now, the pair are voicing starkly different economic diagnoses.

Mr. Mnuchin touted the strength of the economic recovery and blamed continuing economic shutdowns in some parts of the country for impairing progress, saying those are causing “great harm” to American businesses and workers.

The Treasury secretary pointed to fact that many jobs have come back and said the unemployment rate had dropped far faster than many had expected. While he agreed that some industries, like restaurants, need support, he reiterated that any additional fiscal spending should be “targeted.”

Mr. Powell warned that ”the outlook for the economy is extraordinarily uncertain” given the ongoing surge in virus cases. He said the winter could be a “tough few months” and small firms might go out of business, even though the economy might rebound strongly in the medium-term as a vaccine becomes available.

“We do have a long way to go,” Mr. Powell said, noting that 10 million people remain out of work and that it is possible to both acknowledge the progress and pay attention to the remaining gap. “We’ll use our tools until the danger is well and truly past, and it may require help from other parts of government as well, including Congress.”

The Fed Chair reiterated that positive clinical trial results for several vaccine candidates spell good news for the medium term, but warned that there are still big risks on the horizon, including related to the vaccine.

“For now, significant challenges and uncertainties remain, including timing, production and distribution, and efficacy across different groups,” Mr. Powell said.

Mr. Mnuchin and Mr. Powell appeared jointly on Tuesday, and on Wednesday they will testify together before the House Financial Services Committee.

Credit…Matt Dunham/Associated Press

As the busiest shopping period of the year gets underway, two of Britain’s largest high-street retailers have collapsed.

Debenhams, a chain of department stores with about 12,000 employees, said on Tuesday that the company would begin to close down. The company would keep operating to clear out its stock and then stores would probably close early next year. Debenhams had already gone into administration, a form of bankruptcy protection, in April but efforts to find a buyer for the chain didn’t succeed. JD Sports, a sporting goods retailer, confirmed on Tuesday that it had dropped out of talks.

It’s the second domino to fall after the collapse on Monday of Arcadia Group, which owns brands including Topshop and Miss Selfridge. Arcadia’s brands have a heavy footprint in Debenhams, selling clothes through stands in the department stores. Arcadia has appointed Deloitte as an administrator to handle its finances because it failed to secure a multimillion-pound lifeline. It said none of the 13,000 staff were being laid off but more than 9,000 are already having their wages subsidized by the government’s furlough program.

“The retail house of cards on the high street is in danger of collapse,” said Susannah Streeter, an analyst, at Hargreaves Lansdown. She said Arcadia’s brands were among the most prominent in Debenhams, “so its collapse into administration clearly put the frighteners on management.”

For a time, Britain’s fashion retailers enjoyed a golden period and were seen as a source of national pride. Marks & Spencer was a byword for quality for decades, while the Debenhams evening wear department was a middle-class destination for all of life’s major celebrations. In the 2000s, Topshop — once considered the jewel in the crown of Philip Green’s Arcadia — was a genuine style authority.

But all these brands have suffered for years. Fast-fashion giants from overseas, like Zara from Spain and H&M from Sweden, started selling cheaper, trendier clothes. They were followed more recently by online-only upstarts such as Boohoo and Pretty Little Thing.

Last year, Debenhams went into administration, wiping out some shareholders, and Arcadia entered into a so-called company voluntary agreement in Britain, where it closed stores and renegotiated debt terms, and filed for bankruptcy in the United States.

But the pandemic has hastened their demise. Lockdowns have twice shuttered clothing stores in England and accelerated the e-commerce revolution. Old guard retailers and department stores that were too slow to invest in their online operations have found themselves grappling with the costly fallout of real estate empires visited by fewer and fewer people. This summer M&S said it planned to lay off 7,000 employees.

“Like Arcadia Group, Debenhams might have stood a better chance had its footprint of retail stores been smaller, but they were stuck with too many shops, on long leases they could not wriggle out of,” Ms. Streeter said.

Credit…Atul Loke for The New York Times

The world will start to recover only gradually next year from a devastating global recession brought on by the coronavirus pandemic, but the revival is unlikely to repair an income divide that is leaving more people around the world poorer because of the crisis, the Organization for Economic Cooperation and Development said Tuesday.

The organization, in its half-yearly economic outlook, forecast the global economy would grow by 4.2 percent next year. Led by a massive rebound in China, the momentum is likely to pick up only after the summer.

Even then, most economies will be smaller at the end of 2021 than they were at the end of 2019. That’s because lockdowns to contain the pandemic have carved $7 trillion out of global gross domestic product, Angel Gurría, the O.E.C.D.’s secretary general, said during an online news conference.

“The impact is massive,” Mr. Gurría said. “In human and economic terms this pandemic will have been extremely costly,” he said, adding: “There is hope, but we are not out of the woods yet.”

The notable exception is China, which curbed the pandemic with aggressive quarantine policies. It has rebounded quickly and will end the year with growth of around 10 percent, said Laurence Boone, the organization’s chief economist. South Korea, Sweden and India have also weathered the economic crisis far better than most European countries and nations in Latin America, which have at times struggled to contain the virus, the organization said.

The recovery in Western countries especially is likely to remain fragile as governments continue social distancing policies and keep borders partly closed through the first half of 2021. It may also take at least a year for governments to fully roll out campaigns to vaccinate citizens against the coronavirus, the organization said.

The O.E.C.D. urged governments to continue shielding their economies from the fallout by extending financial support programs and strengthening national health care and social safety nets.

But even with such support, it said, millions of small and medium-sized businesses that are the main drivers of job creation are facing mounting debt levels putting their survival and capacity to invest and create jobs at risk.

The crisis has also worsened income inequality. Today, nearly half of all low-income adults in the 37 countries that are members of the organization have trouble paying their bills, while a third have had to get food from a food bank.

Their children have also suffered disproportionately. While the children of well-off parents have been able to plug into remote schooling fairly easily, dropout rates from online schooling for children in low-income households have been massive, Ms. Boone said, leaving them far behind their peers.

Mr. Gurría said the cost to governments of maintaining social and economic support programs is worth it if it allows countries to ride out the storm until a vaccine is widely available and business activity can resume.

“With the availability of vaccines there is an even stronger case for large scale support of the economy in the remaining months of the pandemic,” he said.

By: Ella Koeze·Source: Refinitiv

  • Stocks rose on Tuesday, extending last month’s rally as investors appeared to be looking beyond what is likely to be a bleak winter — with rising virus cases and businesses trying to survive lockdowns and other restrictions — and focusing instead on the prospect of an economic recovery generated by the rollout of vaccines next year. European and Asian stocks were also higher.

  • The S&P 500 index rose about 1 percent in early trading, a gain that could put it back in record territory. November was the strongest month since April for the S&P 500 and the second strongest month since 2011, as stocks were propelled higher by relief over vaccine development and the conclusion of a turbulent U.S. presidential election.

  • Asian markets rose on Tuesday after data showed Chinese manufacturing activity expanded at its fastest pace in a decade, and exceeded analysts’ expectations, according to the latest report from Caixin and IHS Markit. The Shanghai composite index rose 1.8 percent, the Hang Seng Index in Hong Kong was 0.9 percent higher and the Nikkei 225 in Japan gained 1.3 percent.

  • In Europe, Britain’s FTSE 100 climbed nearly 2 percent, while benchmarks in Germany and France were about 1 percent higher.

  • The Organization for Economic Co-operation and Development presented a counterargument to the optimism in financial markets on Tuesday. It lowered its forecast for global growth next year to 4.2 percent, saying the economy will “gain momentum only gradually” and China will account for more than a third of the growth.

  • Tesla rose about 4 percent in early trading, after S&P Dow Jones Indices said it would add the stock to the S&P 500 in a single step later in the month. S&P Dow Jones had been weighing adding Tesla to the index in a two-step process because of the company’s large market capitalization.

Credit…Calla Kessler/The New York Times

Airbnb is trying to ride the soaring stock market to a comeback.

The home rental start-up said on Tuesday that it intends to sell shares at between $44 and $50 each in its initial public offering, valuing it as high as nearly $35 billion.

The company said it plans to raise as much as $2.75 billion from the offering, according to a prospectus filed with the Securities and Exchange Commission. Its three founders also plan to sell stock that may be valued at as much as $95 million.

Such a sale would return Airbnb’s valuation to where it was before the pandemic battered its business. At the beginning of the year, investors had valued the company at $31 billion. But in the spring, with travel halted and cancellations pouring in, Airbnb raised emergency funding valuing it at $18 billion.

Airbnb is betting that Wall Street will buy into its narrative of a rebounding business. Even though its revenue shrank in the first nine months of the year compared to the same period last year, bookings in the most recent three-month period recovered as people took road trips to home rentals in remote areas.

Airbnb now plans to embark on a virtual “road show” to pitch its stock to investors over the next week, culminating with its shares listing on Nasdaq under the symbol “ABNB.”

The company is among a flock of high-profile tech companies going public before the end of the year. On Monday, the food delivery company DoorDash said it hoped to raise up to $2.8 billion from its I.P.O., in a sale that could value the company at as much as $31.6 billion. E-commerce company Wish and children’s game maker Roblox are expected to list their shares in the coming weeks.

Michael J. de la Merced contributed reporting.

Credit…Hiroko Masuike/The New York Times

Geoffrey S. Berman, the former U.S. attorney for the Southern District of New York who was fired by President Trump in June, has joined the law firm of Fried, Frank, Harris, Shriver & Jacobson, the firm said on Tuesday.

Mr. Berman, 61, will head Fried Frank’s white collar defense, regulatory enforcement and investigations practice, the firm said.

Mr. Berman, who led the prosecutor’s office while it was conducting highly sensitive corruption investigations of people in Mr. Trump’s orbit, was dismissed on June 20 after the attorney general, William P. Barr, unsuccessfully tried to persuade him to step down.

Mr. Berman agreed not to fight his dismissal after Mr. Barr said Mr. Berman would be replaced by his handpicked deputy, Audrey Strauss.

During his two and a half years as U.S. attorney, Mr. Berman also oversaw a number of high-profile prosecutions: sex-trafficking charges against Jeffrey Epstein; a securities fraud conspiracy case against the former Republican congressman Chris Collins of New York; and a racketeering conspiracy case against Daniel Hernandez, the rapper and Instagram star known as Tekashi69.

Mr. Berman also supervised the prosecution of a Turkish state-owned bank, Halkbank, on charges of violating U.S. sanctions against Iran. The bank has pleaded not guilty. The case was a key point of contention between Mr. Berman and Mr. Barr, who had pushed to allow the bank to avoid indictment as part of a settlement.

At the time of his dismissal, Mr. Berman also was overseeing an investigation into Rudolph W. Giuliani, the president’s personal lawyer, over his activities in Ukraine. Mr. Giuliani has denied any wrongdoing.

“Geoff is one of the most respected prosecutors in the United States,” said James D. Wareham, the global chair of Fried Frank’s litigation department, “and his expertise trying major cases and leading high-profile investigations will translate seamlessly into his new role as head of our white collar practice.”

Mr. Berman, who spent the fall as a visiting professor at Stanford Law School, said in a statement that Fried Frank “is a great fit for me, personally and professionally, and I am excited to be part of the team.”

Mr. Berman will be a member of the governance committee at Fried Frank, a white-shoe firm of about 500 lawyers in the U.S. and Europe known for its litigation, mergers and acquisitions, real estate, and asset management practices, among others. Ms. Strauss, who continues to serve as the acting U.S. attorney in Manhattan, worked at Fried Frank for more than two decades.

Credit…Jay Mallin/Bloomberg, via Getty Images

President-elect Joseph R. Biden Jr. and Vice President-elect Kamala Harris are set to introduce key members of their economic team on Tuesday, as they prepare to assume the White House at a moment when the economic recovery from the coronavirus pandemic is slowing and millions remain out of work.

The nominees are expected to speak in detail about their biographies, continuing an effort by Mr. Biden’s selections to lean on personal stories to make a case for confirmation in a Senate where several Republicans have already promised a rough road for Mr. Biden’s picks.

Mr. Biden is poised to enter the White House at a time of national crisis amid the worsening virus outbreak. The Department of Labor and Department of Commerce have reported an increase in applications for state jobless benefits and a decrease in personal income. Coronavirus cases have soared in recent weeks, a development that Federal Reserve Chair Jerome H. Powell called “concerning” in testimony before lawmakers on Tuesday, saying it “could prove challenging in the next few months.”

Mr. Biden has warned of a “very dark winter” ahead and called on Congress to pass relief to help workers, businesses, and state and local governments. Mr. Biden’s advisers are preparing for what could be another economic downturn in early 2021. But another economic stimulus package has languished in Congress, where Democrats and Republicans have been unable to reach a deal, though leaders of both parties have called for compromise in recent days.

A bipartisan group of senators rolled out a potential compromise plan on Tuesday morning that appeared to fit the contours of what Mr. Biden, Speaker Nancy Pelosi of California and Senator Chuck Schumer of New York, the Democratic leader, have said must frame any stimulus deal in Washington. They include additional aid to the unemployed and small businesses, along with money to help state and local governments patch budget holes that have been ripped open during the pandemic.

Tuesday’s slate of nominees and appointees includes several women in top economic roles. The selections, markedly different from Mr. Trump’s cabinet, which has been overwhelmingly white and male, follow Mr. Biden’s campaign promise to build an administration that looks like America.

He has chosen Cecilia Rouse to lead the Council of Economic Advisers; she would be the first Black woman in the role. Ms. Rouse is a Princeton economist who worked on the Council of Economic Advisers during part of the Obama era and on the White House’s National Economic Council during the Clinton administration.

His pick for the Office of Management and Budget — Neera Tanden, the chief executive of the Center for American Progress — would be the first Indian-American to lead the office if confirmed. Mr. Biden also selected Janet L. Yellen, a former Federal Reserve chair, to be his Treasury Secretary. If confirmed, she would be the first woman to fill the position.

Ms. Tanden has met immediate resistance from Republican senators who have criticized her for attacking Republicans publicly, including on her Twitter feed. She previewed the group’s likely emphasis on personal stories in a Twitter post on Monday, after her nomination was announced: “After my parents were divorced when I was young, my mother relied on public food and housing programs to get by,” she wrote. “Now, I’m being nominated to help ensure those programs are secure, and ensure families like mine can live with dignity.”

Mr. Biden and Ms. Harris are also scheduled to announce their picks for deputy treasury secretary, Adewale Adeyemo, and members of the Council of Economic Advisers, Jared Bernstein and Heather Boushey.

Mr. Adeyemo served as a senior international economic adviser under former President Barack Obama, and Mr. Bernstein was Mr. Biden’s first chief economist when he was vice president. Ms. Boushey, a top policy adviser to Hillary Clinton in 2016, leads the Washington Center for Equitable Growth, a liberal think tank focused on inequality.

The introductions will follow a similar event last week, when Mr. Biden publicly introduced members of his foreign policy and national security team.

Credit…Simon Dawson/Reuters
  • Arcadia Group, the British retail company owned by Philip Green that includes the Topshop clothing chain, has gone into administration, a form of bankruptcy, the company said Monday. It is one of the biggest retail collapses in Britain since the start of the pandemic. Deloitte has been appointed as the administrator. Arcadia, which has 444 stores in Britain, 22 overseas and about 13,000 employees, said it would keep operating during administration.

  • Meredith Corporation has parted ways with J.D. Heyman, the editor in chief of Entertainment Weekly magazine, the company confirmed on Monday. A Meredith spokeswoman said that the end of the editor’s tenure at the publication would go into effect “immediately.” The reason was not disclosed.

  • DoorDash said on Monday that it hopes to raise up to $2.8 billion from its initial public offering, in a sale that could value the company at as much as $31.6 billion, including all shares and options. It has set a price range of $75 to $85 a share for the I.P.O. The fund-raising goal, disclosed in the food-delivery company’s latest I.P.O. prospectus, signals the company’s ambitions as it begins pitching prospective investors. It was valued at $16 billion in a private fund-raising round in June.

Nasdaq asked the Securities and Exchange Commission on Tuesday for permission to adopt a new requirement for the companies listed on its main U.S. stock exchange: have at least one woman and one “diverse” director, and report data on boardroom diversity. If companies don’t comply they would face potential delisting, reports the DealBook newsletter.

If approved, Nasdaq will require boards to have at least one woman and one director who self-identifies as an underrepresented minority or L.G.B.T.Q. (Those categories are not, of course, mutually exclusive.)

It would be the first time a major stock exchange demanded more disclosure than the law requires, which Nasdaq’s chief executive, Adena Friedman, described as “an unusual step.” It raises questions about whether exchanges could use their listing rules to force action on other hot-button issues, like climate change.

To give Nasdaq-listed companies time to comply, they will need to publicly disclose their diversity data within a year of S.E.C. approval, and have at least one woman or diverse director within two years. Bigger companies will be expected to have one of each type of director within four years.

Companies that report their data but don’t meet the diversity standards would have to publicly explain why. Over the past six months, Nasdaq found that more than 75 percent of its listed companies did not meet its proposed diversity requirements.

Any potential rule changes would take months to come into effect: After Nasdaq files its request, the S.E.C. will solicit public comments. That typically lasts several weeks, and then the commission will decide how to proceed.

Nasdaq had lobbied the S.E.C. to make diversity disclosure a rule for all companies. “The ideal outcome would be for the S.E.C. to take a role here,” Ms. Friedman said. “They could actually apply it to public and private companies because they oversee the private equity industry as well.”

Nasdaq cites research showing the benefits of board diversity, from higher-quality financial disclosures to the lower likelihood of audit problems. “Diversity of the board is an important element of giving investors confidence in the future sustainability of the company,” Ms. Friedman said. “It’s not like we’re saying this is an optimal composition of a board, but it’s a minimum level of diversity that we think every board should have.”

The labor market has recovered 12 million of the 22 million jobs lost from February to April. But many jobs may not return any time soon, even when a vaccine is deployed, The New York Times’s Eduardo Porter reports.

This is likely to prove especially problematic for millions of low-paid workers in service industries like retailing, hospitality, building maintenance and transportation, which may be permanently impaired or fundamentally transformed. What will janitors do if fewer people work in offices? What will waiters do if the urban restaurant ecosystem never recovers its density?

Powell and Mnuchin to Offer Starkly Different Views on Risks: Live Updates 2


Decline in jobs

from the first

through the

third quarter

of 2020

Nursing and

home health aides


systems analysts

Share of workers who transition

into occupations that are growing

Powell and Mnuchin to Offer Starkly Different Views on Risks: Live Updates 3

Decline in jobs

from the first

through the third

quarter of 2020

Share of workers

who transition

into occupations

that are growing

Taxi Drivers

Waiters and Waitresses

Hosts and Hostesses


Childcare Workers

Production Clerks


Preschool Teachers


Insurance Agents

Teacher Assistants

Food Prep Workers

House Cleaners

Special Ed. Teachers

Practical and Voc. Nurses


Education Administrators

Goods Buyers

Other Service Sales Rep.

Mail Carriers

Mechanic Supervisors

Stock Movers

Packaging Operators

Administrative Assistants

Building Cleaners



















































Their prognosis is bleak. Marcela Escobari, an economist at the Brookings Institution, warns that even if the economy adds jobs as the coronavirus risk fades, “the rebound won’t help the people that have been hurt the most.”

Looking back over 16 years of data, Ms. Escobari finds that workers in the occupations most heavily hit since the spring will have a difficult time reinventing themselves. Taxi drivers, dancers and front-desk clerks have poor track records moving to jobs as, say, registered nurses, pipe layers or instrumentation technicians.

The challenge is not insurmountable. Stephanie Brown, who spent 11 years in the Air Force, found her footing relatively quickly after losing her job as a cook at a hotel in Rochester, Mich., in March. She took advantage of a training program offered by Salesforce, the big software platform for businesses, and got a full-time job in October as a Salesforce administrator for the New York software company Pymetrics from her home in Ann Arbor, Mich.

Yet despite scattered success stories, moving millions of workers into new occupations remains an enormous challenge.

Training has always been a challenge for policymakers, and the pandemic complicates matching new skills with jobs. At scale, it will be a considerable challenge to assist workers in the transition to a new economy in which many jobs are gone for good and those available often require proficiency in sophisticated digital tools.

Credit…Emily Kask for The New York Times

Exxon Mobil announced on Monday that it would significantly cut spending on exploration and production over the next four years and would write off up to $20 billion of investments in natural gas.

The company struggled to adapt as oil and gas prices tumbled this spring when the coronavirus pandemic took hold. While oil prices have recovered somewhat in recent months, they remain much lower than they were at the start of the year.

The company said it was removing gas projects from its plans in Appalachia, the Rocky Mountains, Oklahoma, Texas, Louisiana, Arkansas, Canada and Argentina.

Darren Woods, Exxon Mobil’s chief executive, said in a statement that the moves were designed to “improve earnings power and cash generation, and rebuild balance sheet capacity to manage future commodity price cycles while working to maintain a reliable dividend.”

Exxon’s board of directors accepted a proposal by management to slash capital expenditures to between $16 billion and $19 billion next year, down from $23 billion in 2020. This year’s capital expenditures had already been reduced from a planned budget of $33 billion, as the company slowed projects in Africa and the Permian Basin in New Mexico and West Texas.

The company said capital spending would be limited to between $20 billion and $25 billion annually through 2025.

In 2010, Exxon Mobil acquired XTO Energy and its natural gas assets for more than $30 billion, just as gas prices were peaking. Over the next decade, the shale boom flooded the market with cheap gas.

Exxon Mobil had previously resisted writing down assets by large amounts. Several of the largest oil companies have recently written down assets, including Royal Dutch Shell by up to $22 billion, BP by more than $17 billion and Chevron by $10 billion.

But Exxon has fared worse than other major oil companies during the pandemic. It was removed from the Dow Jones industrial average in August and has suffered three consecutive quarterly losses. It recently said it would cut 14,000 jobs, or 15 percent of its global work force.

Exxon’s stock, which is down more than 40 percent over the past year, is back to where it was in 2003. Company executives continue to express confidence about the future because Exxon is producing more oil and gas in the Permian Basin and in the offshore waters of Guyana and Brazil. The company has also committed to maintaining its dividend, which yields more than an 8 percent return on its share price.

Source link

Hi guys, this is Kimmy, I started LicensetoBlog to help you with the latest updated news about the world with daily updates from all leading news sources. Beside, I love to write about several niches like health, business, finance, travel, automation, parenting and about other useful topics to keep you find the the original information on any particular topic. Hope you will find LicensetoBlog helpful in various ways. Keep blogging and help us grow as a community for internet lovers.