Biden and Republicans Spar Over Unemployment as Job Gains Disappoint

WASHINGTON — The disappointing jobs report released Friday by the Labor Department is posing the greatest test yet of President Biden’s strategy to revive the economy, with business groups and Republicans warning that the president’s policies are causing a labor shortage and that his broader agenda risks stoking runaway inflation.

But the Biden administration showed no signs on Friday of changing course, with the president defending the more generous jobless benefits included in the $1.9 trillion bill he signed into law in March and saying the $4 trillion in spending he proposed for infrastructure, child care, education and other measures would help create more and better-paying jobs after the pandemic.

Speaking at the White House, Mr. Biden urged “perspective” on the report, which showed only 266,000 new jobs added in April. He said it would take time for his aid bill to fully reinvigorate the economy and hailed the more than 1.5 million jobs added since he took office. And he rejected what he called “loose talk that Americans just don’t want to work.”

“The data shows that more workers are looking for jobs,” he said, “and many can’t find them.”

Republicans cast the report as a sign of failure for Mr. Biden’s policies, even though job creation has accelerated since Mr. Biden replaced President Donald J. Trump in the White House. They called on his administration to end the $300 weekly unemployment supplement, while several Republican governors — including those in Arkansas, Montana and South Carolina — moved to end the benefit for unemployed people in their states, citing worker shortages.

relief money to subsidize tax cuts, which could further slow the rollout.

Mr. Biden said at the White House that the administration would begin releasing the first batch of money to state and local governments this month. He said the money would not restore all of the lost jobs in one month, “but you’re going to start seeing those jobs in state and local workers coming back.”

The administration also took steps on Friday to get money out the door more quickly, saying the Treasury Department would release $21.6 billion of rental assistance that was included in the pandemic relief legislation to provide additional support to millions of people who could be facing eviction in the coming months.

Officials said they expected increased vaccination rates to ease some lingering fears about returning to jobs in the pandemic. The number of Americans 18 to 64 who are fully vaccinated grew by 22 million from mid-April, when the survey for the jobs report was conducted, to Friday. That was an acceleration from the previous month. Some White House officials said the administration’s push to further increase the ranks of the vaccinated could be the most important policy variable for the economy this summer.

Treasury Secretary Janet L. Yellen, speaking at the White House, said that a lack of child care related to irregular school schedules was making it a challenge to get the labor market back to full strength. She also said that health concerns about the pandemic were holding back some workers who might return to the market.

“I don’t think that the addition to unemployment compensation is really the factor that’s making the difference,” Ms. Yellen said.

She said that she believed the labor market was healthier than the figures released on Friday suggested, but she allowed that the economic recovery would take time.

“We’ve had a very unusual hit to our economy,” Ms. Yellen said, “and the road back is going to be somewhat bumpy.”

Ms. Boushey and Mr. Bernstein said that it appeared the economy was working through a variety of rapid changes related to the pandemic, including supply chain disruptions that have hurt automobile manufacturing by reducing the availability of semiconductor chips and businesses beginning to rehire after a year of depressed activity because of the virus.

“It’s our view that these misalignments and bottlenecks are transitory,” Mr. Bernstein said, “and they’re what you expect from an economy going from shutdown to reopening.”

Other key economic officials treated the report as a sign that the labor recovery ahead is likely to prove wildly unpredictable. Robert S. Kaplan, the president at the Federal Reserve Bank of Dallas, said in an interview that his economics team had warned him that the April report might show a significant slowdown as shortages of materials — including lumber and computer chips — and labor bit into employment growth.

He said he was hoping to see those supply bottlenecks cleared up, but he was watching carefully in case they did not resolve quickly.

“It shows me that getting the unemployment rate down and moving forward to improved employment to population is going to have fits and starts,” Mr. Kaplan said. He noted that sectors that were struggling to acquire materials, like manufacturing, shed jobs, and he said leisure and hospitality companies would have added more positions if not for challenges in finding labor.

“It’s just one jobs report,” cautioned Tom Barkin, the president of the Federal Reserve Bank of Richmond, in Virginia. But he said labor supply issues could be at play: Some people may have retired, others may have health concerns, and unemployment insurance could be encouraging low-paid workers to stay at home or allowing them to come back on their own terms.

“I get the feeling that people are being choosy,” Mr. Barkin said. “The first question I have in my mind is — is it temporary or is it more structural?”

He said that the supply constraints playing out were likely to fade over time, and that while businesses complain about rising input costs and might have to raise entry-level wages somewhat, he struggled to see that leading to much higher inflation — the kind that would worry the Fed.

The Fed is trying to achieve maximum employment and stable inflation around 2 percent on average. It has pledged to keep its cheap-money policies, which make borrowing inexpensive, in place until it sees realized progress toward those goals.

Neel Kashkari, the president of the Federal Reserve Bank of Minneapolis, said the payrolls disappointment vindicated the Fed’s slow-moving stance.

“I feel very good about our policy approach, which is outcome-based,” Mr. Kashkari said, speaking on a Bloomberg television interview shortly after the report came out. “Let’s actually allow the labor market to recover, let’s not just forecast that it’s going to recover.”

View Source

Despite Chip Shortage, Chip Innovation Is Booming

“It’s a bloody miracle,” said Jim Keller, a veteran chip designer whose résumé includes stints at Apple, Tesla and Intel and who now works at the A.I. chip start-up Tenstorrent. “Ten years ago you couldn’t do a hardware start-up.”

The trends are not necessarily good news for chip customers, at least for the short term. Scarce supplies of many chips have manufacturers scrambling to increase production, and are adding to worries in Washington about reliance on foreign suppliers. Extra demand could extend the shortages, which are already expected to last into 2022.

High demand was evident in earnings for chip companies last quarter, which ended in March. Revenue grew 27 percent, for example, at NXP Semiconductors, a big maker of auto, communications and industrial chips, even though it temporarily closed two Texas factories because of a cold snap.

The industry has historically been notorious for booms and busts, usually driven by purchasing swings for particular products like PCs and smartphones. Global chip revenue slumped 12 percent in 2019 before bouncing back with 10 percent growth last year, according to estimates from Gartner, a research firm.

But there is widening optimism that the cycles should moderate because chips are now used in so many things. Philip Gallagher, chief executive of the big electronics distributor Avnet, cited examples like sensors to track dairy cows, the flow of beer taps and utility pipes, and the temperature of produce. And the number of chips in mainstay products like cars and smartphones keeps rising, he and other executives say.

“This is a lasting growth cycle, not a short spike,” said Kurt Sievers, NXP’s chief executive.

A longtime industry watcher, Handel Jones, who heads the consultancy International Business Strategies, sees total chip revenues rising steadily to $1.2 trillion by 2030 from roughly $500 billion this year.

View Source

Europe Takes a Tougher Line on Chinese Firms: Live Updates

working out an agreement in December intended to make it easier for European companies to invest in what has become the bloc’s most important trading partner for goods.

But since then relations have gone downhill because of tension over Chinese policy toward minority groups in Xinjiang province.

Legislation proposed by the European Commission Wednesday would give it power to investigate and take measures against foreign companies that use government subsidies to get an unfair advantage over domestic competitors, an accusation often leveled at China. A separate proposal, also announced Wednesday, is intended to make Europe less dependent on China for crucial goods like semiconductors, drugs and batteries.

The proposals came a day after Valdis Dombrovskis, the European commissioner for trade, said that work on finalizing the December investment agreement with Beijing was on hold because of repressive Chinese policies.

In March, the European Commission sanctioned four Communist Party officials after accusing them of being responsible for human rights violations against members of the Muslim Uyghurs and other minority groups in Xinjiang.

China retaliated with sanctions against numerous members of the European Parliament, several scholars, and employees of human rights organizations and think tanks which have been critical of China.

In light of the sanctions war, Mr. Dombrovskis told Agence France-Presse on Tuesday that “it’s clear the environment is not conducive for ratification of the agreement.”

Europe’s tougher line toward China brings it closer to the stance adopted by the Biden administration, which objected to the investment agreement. But Europe remains divided over how to approach an important trading partner that is also a geopolitical rival.

Markus J. Beyrer, director general of BusinessEurope, a leading business lobby, said in a statement Wednesday that the proposal on subsidies is “a step in the right direction in addressing existing legal loopholes and preventing market distortions.”

But a prominent business group in Germany, which is highly dependent on exports to China, was critical.

“The proposed regulation is very complex and there is a risk that its implementation will lead to considerable additional bureaucracy and legal uncertainty for our member companies,” said Ulrich Ackermann, managing director of foreign trade at V.D.M.A., which represents German makers of industrial equipment.

Facebook banned President Donald J. Trump after he used social media accounts to incite a mob of supporters to attack the Capitol on Jan. 6.
Credit…Erin Schaff/The New York Times

A Facebook-appointed panel of journalists, activists and lawyers ruled on Wednesday to uphold the social network’s ban of former President Donald J. Trump, ending any immediate return by Mr. Trump to mainstream social media and renewing a debate about tech power over online speech.

Facebook’s Oversight Board, which acts as a quasi-court to deliberate the company’s content decisions, said the social network was right to bar Mr. Trump after he used the site to foment an insurrection in Washington in January, Mike Isaac reports for The New York Times. The panel said the ongoing risk of violence “justified” the suspension.

But the board also said that Facebook’s penalty of an indefinite suspension was “not appropriate,” and that the company should apply a “defined penalty.” The board gave Facebook six months to determine its final decision on Mr. Trump’s account status.

The board is a panel of about 20 former political leaders, human rights activists and journalists picked by Facebook to deliberate the company’s content decisions, explains Cecilia Kang of The Times. It began a year ago and is based in London.

The idea for the board was for the public to have a way to appeal decisions by Facebook to remove content that violates its policies against harmful and hateful posts. Mark Zuckerberg, Facebook’s C.E.O., has said neither he nor the company wanted to have the final decision on speech.

The company and paid members of the panel stress that the board is independent. But Facebook funds the board with a $130 million trust and top executives played a big role in its formation.

Dogecoin, the cryptocurrency that started as a joke, is on a tear. A surge in the past day pushed it to another record, sending it some 14,000 percent higher than it started the year.

One theory is that the upcoming appearance of Elon Musk, the Tesla chief executive and noted Dogecoin superfan, as the host of “Saturday Night Live” on May 8 could get more people interested in trading the crypto token. It’s as good a reason as any for those who try to rationalize its movements.

The latest bout of Dogecoin mania has somewhat overshadowed what’s going on in Ethereum, the second-largest cryptocurrency, which also set records this week and made its 27-year-old co-creator, Vitalik Buterin, a billionaire (in dollars). The price of Ether, the crypto token built on the Ethereum blockchain, is up more than 350 percent for the year to date, outpacing Bitcoin’s relatively pedestrian 90 percent gain — which, for context, outpaces every stock in the S&P 500 over that period.

  • Stocks on Wall Street rose on Wednesday, following European markets higher, and rebounding from a decline the day before.

  • The S&P 500 rose about half a percent, while the Stoxx Europe 600 index rose 1.4 percent. The FTSE 100 in Britain rose 1.2 percent.

  • In oil markets, Brent crude gained 1.1 percent, to $69.61 a barrel, and West Texas Intermediate rose 1 percent to $66.32 a barrel.

  • New data on the European economy from IHS Markit reflected continued strengthening. The eurozone composite purchasing managers’ index (PMI) for April grew for the second consecutive month. Significantly, the service sector grew after seven months of contraction.

  • “The updated services PMIs for April confirmed that the worst for the eurozone economy should be over,” said Nicola Nobile, the lead eurozone economist for Oxford Economics, in a note to clients. “The vaccination progress and the gradual reopening of some of the economies point to” an increase in economic output already underway, she added.

  • Stellantis, the name for the merger of Fiat Chrysler and PSA, the maker of Peugeot, said the semiconductor shortage caused an 11 percent decline in production of automobiles in the first quarter, representing about 190,000 vehicles.

  • Dealer inventories were down in all areas, “primarily due to the semiconductor shortage,” the company said. Despite that, Stellantis reported net revenue up 14 percent. Shares gained 3 percent in European trading.

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.
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 Tuesday 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 Tuesday. (An earlier version of this item misstated that the actions it described occurred 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 Tuesday 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 Tuesday.

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.”

The Bill and Melinda Gates Foundation in Seattle. Its $50 billion endowment cannot be removed or divided up as a marital asset, a philanthropy scholar said.
Credit…David Ryder/Getty Images

When Bill and Melinda Gates announced filed for divorce in Washington State on Monday, grant recipients and staff members alike wondered what would happen to the Bill and Melinda Gates Foundation.

The message from the headquarters in Seattle was clear: The Bill and Melinda Gates Foundation isn’t going anywhere.

The foundation’s $50 billion endowment is in a charitable trust that is irrevocable, Nicholas Kulish reports for The New York Times. It cannot be removed or divided up as a marital asset, said Megan Tompkins-Stange, a professor of public policy and scholar of philanthropy at the University of Michigan. She noted, however, that there was no legal mandate that would prevent them from changing course.

“I think there may be changes to come,” she said. “But I don’t see it as a big asteroid landing on the field of philanthropy as some of the hyperbole around this has indicated.”

The foundation, which set a new standard for private philanthropy in the 21st century, has given away nearly $55 billion, giving the couple instant access to heads of state and leaders of industry.

The couple’s prominence has also brought a fair share of scrutiny, throwing a spotlight on Mr. Gates’s robust defense of intellectual property rights — in this case, specific to vaccine patents — even in a time of extreme crisis, as well as the larger question of how unelected wealthy individuals can play such an outsize part on the global stage.

“In a civil society that is democratic, one couple’s personal choices shouldn’t lead university research centers, service providers and nonprofits to really question whether they’ll be able to continue,” said Maribel Morey, founding executive director of the Miami Institute for the Social Sciences.

View Source

Warren Buffett Fights Proposals on Climate and Diversity

Tomorrow is Berkshire Hathaway’s annual shareholder meeting, the gathering known as “Woodstock for capitalists.” Like last year, the company is bowing to the times by holding the meeting virtually. But another aspect of the discussion may show that Warren Buffett is increasingly out of step with the times, DealBook’s Michael de la Merced reports.

Investors are pressing Berkshire to disclose more about climate change and work-force diversity. Shareholders, including the Calpers public pension fund, argue that Buffett’s conglomerate isn’t doing enough to disclose its portfolio companies’ progress in addressing those issues. Buffett opposed these initiatives ahead of the meeting, arguing that they cut against Berkshire’s philosophy of letting its subsidiaries operate largely independently. “I don’t believe in imposing my political opinions on the activities of our businesses,” he said at Berkshire’s 2018 annual meeting.

Buffett is expected to get his way, for now. He controls over a third of Berkshire’s voting power and holds sway over faithful retail investors, virtually guaranteeing that the proposals will fail to pass.

  • Simiso Nzima, the head of corporate governance at Calpers, points out that the S.E.C. appears inclined to force more disclosure on climate change risks anyway.

The big question is whether this will tarnish Berkshire’s golden reputation. Corporate America is increasingly heeding investor demands — including from BlackRock, a major Berkshire shareholder — to do more to fight climate change and racial inequity. Berkshire does not dispute the importance of climate change and diversity, but Buffett’s pushback here risks denting his standing as perhaps the world’s most admired investor. “I don’t think at the moment there’s been a slip in the gold standard,” said Lawrence Cunningham, a professor at George Washington University and a Berkshire shareholder, “but if it’s not tended to, there might be.”

Big Tech finishes earnings season on a strong note. Amazon’s first-quarter earnings more than tripled — yes, tripled — to $8 billion, surpassing expectations. As our colleague Shira Ovide writes, the quarter showed that tech giants are “unquestioned winners of the pandemic economy.”

announced today that an E.U. investigation found that the iPhone maker abused its control over its App Store to charge its music-streaming rival more in fees.

A big day in New York City: July 1. Mayor Bill de Blasio said the city would fully reopen by that day. But officials concede that tourism won’t fully return to prepandemic levels for years, and employers have been largely targeting the fall for bringing workers back to offices.

The head of the Credit Suisse board’s risk committee steps down. Andreas Gottschling won’t stand for re-election. He is the latest official at the Swiss bank to exit following scandals at Greensill and Archegos.

Good and bad news for AstraZeneca. The drug maker beat expectations for earnings and sales growth, but it is struggling to compile the data requested by U.S. officials to have its Covid-19 vaccine approved by the F.D.A., The Wall Street Journal reported.

given the Tesla chief’s history with the S.E.C.

“No.”


— Whitley Collins of CBRE on how the pandemic has upended the commercial real estate market, reversing the trend of “more and more dense” office spaces.


Marty Walsh, the labor secretary, said yesterday that “in a lot of cases” gig workers in the U.S. should be classified as employees, not independent contractors. “In some cases they are treated respectfully and in some cases they are not, and I think it has to be consistent across the board,” he told Reuters. Shares of Uber, Lyft, Fiverr and DoorDash fell on the news.

But how much control does Walsh have over how companies classify their employees?

There’s no single law that makes workers employees or contractors. The Labor Department can enforce the Fair Labor Standards Act, which establishes the federal minimum wage and overtime pay. This only applies to employees, and who should fall into that category has been the subject of a long-running debate.

New guidance wouldn’t change the law. But it could change how the Labor Department decides whether to bring lawsuits against gig economy companies. “It’s implicitly a sign to employers that you should comply with this interpretation or there’s a risk of enforcement,” Brian Chen, a staff attorney at the National Employment Law Project, told DealBook. The guidance is nonbinding, but Benjamin Sachs, a professor at Harvard Law School, said courts “tend to give it deference” when making decisions. “I wouldn’t be surprised if we saw specific action coming from the department sometime this year,” said William Gould, a Stanford law professor and the former chairman of the National Labor Relations Board.


In Her Words newsletter, explains why promising G.D.P. numbers aren’t the end of the story.

“A boom-like year” is how one economist described what the U.S. economy might look like in 2021. The latest data, published yesterday, showed that G.D.P. grew at a robust 6.4 percent annualized rate in the first quarter.

While the headline numbers may at first glance suggest that America’s economic health is on track for a full recovery, a closer look reveals an economy that is “profoundly unequal across sectors, unbalanced in ways that have enormous long-term implications,” as The Times’s Neil Irwin put it.

Growth has been fueled by consumer spending on goods, while the services sector has yet to recover. Services account for more than 95 percent of the jobs held by women, according to Michael Madowitz, an economist at the Center for American Progress.

“I’m a little worried we’re too confident the service job losses are just going to spring back to life,” Madowitz said. “If nobody closed a business that might be fine, but that seems unlikely.”

Roughly two million women have left the work force since last February. G.D.P. does not account for their lost productivity and earnings, nor for the hours of work at home that women shouldered in the past year, uncompensated.


from a sinking ship to a success proves that putting purpose first is good for profits. Joly spoke to DealBook about “The Heart of Business,” which is out next week.

Why did you write a book?

So much of what I learned in business school is either wrong, dated or incomplete. We urgently need a new philosophy of business and capitalism, a refoundation around purpose and humanity. There’s no going back after the pandemic. We’ve seen each others’ homes and vulnerability. We need to make a declaration of interdependence.

Isn’t pursuing profits the point?

Milton Friedman is on my “most wanted” list. People who oppose stakeholder capitalism are mistaken. We can create better economic outcomes by connecting with employees, customers, communities and the planet. People should refuse zero-sum games. The book is a practical guide for leaders who are eager to abandon the old way.

And it’s also spiritual?

Yes. Because work is fundamental. We should ask ourselves why we work, what drives us. At Best Buy, before the holiday season, we’d gather — even though it’s a very busy time — to talk about what gives people energy, what matters. Magic happens when work is connected to meaning and individual genius, to the thing that’s good or beautiful in each of us.

How does this “magic” manifest itself?

Two Best Buy employees performed pretend “surgery” on a broken dinosaur toy behind the counter and gave a boy back a new item, saying his baby dino recovered. That had to come from the heart. They could have just sent his mother to the shelf. Leaders need to use their heads and hearts and see and hear employees and give people the freedom to make work meaningful.

CNBC)

Politics and policy

Tech

Best of the rest

We’d like your feedback! Please email thoughts and suggestions to dealbook@nytimes.com.

View Source

Europe’s Economy Shrank in First Quarter, Revealing a Recession: Live Updates

United States disclosed that its economy expanded 1.6 percent over the same period, the European downturn presented a contrast of fortunes on opposite sides of the Atlantic.

Propelled by dramatic public expenditures to stimulate growth, as well as swift increases in vaccination rates, the United States — the world’s largest economy — expanded rapidly during the first months of 2021. At the same time, the 19 nations that share the euro currency were caught in the second part of a so-called double-dip recession, reflecting far less aggressive stimulus spending and a botched effort to secure vaccines.

But figures for gross domestic product represent a snapshot of the past, and recent weeks have produced encouraging signs that Europe is on the mend. The alarming spread of Covid-19 in major economies like Germany and France has begun to trend downward, factories have revived production, while growing numbers of people are on the move in cities.

Even as the German economy diminished by 1.7 percent from January to March, Italy and Spain slipped by much smaller magnitudes — 0.4 percent and 0.5 percent respectively. The French economy grew by a modest 0.4 percent, though its prospects face a fresh challenge in the form of new pandemic restrictions imposed this month by the government.

The initial lockdowns last year punished Europe’s economies, bringing large swaths of commercial life to a halt. But the current restrictions are calibrated to reflect improved understanding of how the virus spreads. Rather than closing their doors altogether, restaurants in some countries are serving meals on patios and dispensing takeout orders. Roofers, carpenters and other skilled trades have resumed work, so long as they can stay outside.

“We have sort of learned to live with the pandemic,” said Dhaval Joshi, chief strategist at BCA Research in London. “We are adapting to it.”

Vaccination rates are increasing throughout Europe, a trend likely to be advanced by the European Union’s recent deal to secure doses from Pfizer.

Most economists and the European Central Bank expect the eurozone to expand at a blistering pace over the rest of 2021, yielding growth of more than 4 percent for the full year.

Still, even in the most hopeful scenario, Europe’s recovery is running behind the United States, a reflection of their differing approaches to economic trauma.

Since last year, the United States has unleashed additional public spending worth 25 percent of its national economic output for pandemic-related stimulus and relief programs, according to the International Monetary Fund. That compares to 10 percent in Germany.

But Europe also began the crisis with far more comprehensive social safety net programs. While the United States directed cash to those set back by the pandemic, Europe limited a surge in unemployment.

“Europe has more insurance schemes,” said Kjersti Haugland, chief economist at DNB Markets, an investment bank in Oslo. “You don’t fall as hard, but you don’t rebound that sharply either.”

Exxon reported a $2.7 billion profit in the first three months of the year, thanks to rising production and higher chemical prices.
Credit…Lee Celano/Reuters

Exxon Mobil and Chevron, the two biggest oil companies in the United States, on Friday reported their first quarterly profits after several quarters of losses, signaling that the energy industry is rebounding from the coronavirus pandemic.

Oil prices have climbed in recent months and are now roughly where they were before the pandemic’s full force was felt. As a result, Exxon reported a $2.7 billion profit in the first three months of the year, compared with a loss of $610 million in the same period a year ago. Chevron said its profit was $1.4 billion, down from $3.6 billion a year earlier. Chevron this week raised its dividend by nearly 4 percent.

The American oil benchmark price, now around $64 a barrel, has tripled since last April. Natural gas prices have also strengthened during the recovery.

“The strong first quarter results reflect the benefits of higher commodity prices and our focus on structural cost reductions,” Darren Woods, Exxon’s chief executive, said in a statement.

Only six months ago, many analysts warned that Exxon would have to cut its dividend, but now the shareholder payout appears safe because of rising production and higher chemical prices. Exxon this month reported yet another in a string of big oil discoveries off the coast of Guyana, one of its most important growth areas.

At Chevron, sales and other revenue in the quarter increased to $31 billion, $1 billion more than the year-ago quarter.

“Earnings strengthened primarily due to higher oil prices as the economy recovers,” said Mike Wirth, Chevron’s chief executive.

Both companies suffered losses from the severe Texas freeze in February. Exxon reported that lost sales and repairs cost the company nearly $600 million. Chevron said its results were weakened by $300 million in lost oil and refining production and repairs.

Volkswagen wanted to have a little fun when it introduced the all-electric ID.4 to the United States in March. The Securities and Exchange Commission wasn’t laughing.
Credit…Bryan Derballa for The New York Times

Volkswagen’s American unit was only kidding when it put out the word late in March that it was changing its name to “Voltswagen” to show its commitment to electric vehicles. To say the April Fool’s joke didn’t land is an understatement. Now the misfired marketing gag has prompted an inquiry by the Securities and Exchange Commission.

Volkswagen did not dispute reports in Der Spiegel and other German media that the S.E.C. was looking into whether the carmaker misled shareholders with the faux rebranding. Volkswagen in Germany declined to comment Friday.

Publicly listed companies are not supposed to fool their shareholders, even in jest. Some media reported the purported name change as fact until Volkswagen of America admitted it was all a joke.

German law also requires companies to be honest with their shareholders, but a spokeswoman for the stock market regulator, known as Bafin, said the agency saw no basis to investigate the Voltswagen issue.

It is unlikely that Volkswagen will face a serious penalty if the S.E.C. finds a violation, at least not compared to the tens of billions of dollars that an emissions scandal has cost the company since 2015. The gag does not appear to have had any influence on the price of Volkswagen shares, which rose for several days even after the company admitted it was all a ruse.

Like a comedian bombing onstage, the most painful consequence may be the humiliation.

Comments from Marin. J. Wash, the labor secretary, on gig workers sent shares of Uber, Lyft, Fiverr and DoorDash down sharply.
Credit…Pool photo by Pat Greenhouse/EPA, via Shutterstock

Martin J. Walsh, the labor secretary, said on Thursday that “in a lot of cases” gig workers in the United States should be classified as employees, not independent contractors. “In some cases they are treated respectfully and in some cases they are not, and I think it has to be consistent across the board,” he told Reuters.

Shares of Uber, Lyft, Fiverr and DoorDash fell sharply on the news. These companies’ business models depend on classifying workers as independent contractors, who are not entitled to labor protections like a minimum wage or overtime pay.

But how much control does Mr. Walsh have over how companies classify their employees?

There’s no single law that makes workers employees or contractors. The Labor Department can enforce the Fair Labor Standards Act, which establishes the federal minimum wage and overtime pay. This law applies only to employees, and who should fall into that category has been the subject of a long-running debate.

In 2015, the Obama administration issued guidance that many interpreted to mean that app-based workers should be considered employees. It was rescinded by the Trump administration.

In 2021, the Trump administration issued a rule that would have made it easier for the same companies to classify workers as contractors. It was nixed by the Biden administration. Mr. Walsh’s comments suggest his interpretation will be similar to the Obama administration’s. And David Weil, reportedly President Biden’s nominee to lead the Labor Department’s wage and hour division, wrote the 2015 guidance.

New guidance wouldn’t change the law, but it could change how the Labor Department decides whether to bring lawsuits against gig economy companies. “It’s implicitly a sign to employers that you should comply with this interpretation or there’s a risk of enforcement,” Brian Chen, a staff attorney at the National Employment Law Project, told the DealBook newsletter.

Although such guidance is nonbinding, Benjamin Sachs, a professor at Harvard Law School, said courts “tend to give it deference” when making decisions. “I wouldn’t be surprised if we saw specific action coming from the department sometime this year,” said William Gould, a Stanford law professor and the former chairman of the National Labor Relations Board.

Ari Emanuel, the chief executive of the entertainment conglomerate Endeavor. “We’re platform agnostic, and we serve all parties,” he said of the streaming wars.
Credit…Shannon Stapleton/Reuters

The Endeavor Group, the entertainment conglomerate run by the Hollywood mogul Ari Emanuel, pulled its initial public offering at the last minute in 2019, amid lukewarm interest from investors. Last year posed its own difficulties, with a pandemic that hurt its live events business as well as its talent agency.

But Endeavor finally made its market debut on Thursday, closing the day with a market cap of more than $10 billion. Mr. Emanuel spoke with the DealBook newsletter about what changed — and what comes next.

On why the I.P.O. went ahead this time:

“There was confusion with regard to the U.F.C., so we cleaned that up,” Mr. Emanuel said about the mixed-martial arts league that Endeavor is acquiring full control of with proceeds from the offering. Debt was also a worry before, and the company’s leverage will be reduced with help from a $1.7 billion private placement, with Third Point and Elliot Management among the investors. S&P Global upgraded the company’s credit rating on Thursday.

Endeavor also used the pandemic period to restructure and consolidate, shifting further away from its talent agency roots. And Mr. Emanuel expects its events business, entertainment relationships and intellectual property will help feed a demand for “content in all forms” after the pandemic: “We’re the story about coming out.”

On Endeavor’s role in the streaming wars:

“We’re platform agnostic, and we serve all parties,” Mr. Emanuel said. The broadcasters are spending “huge” amounts to build out their streaming platforms. “I don’t have to do that,” he said. “I just have to supply it.”

On how he met Elon Musk, who is joining Endeavor’s board:

“I definitely cold called. That’s kind of in my nature,” Mr. Emanuel said. “We’ve represented him in some of his endeavors. And then over time, he and I became friendly.”

“He’s also a great entrepreneur, meaning he knows how hard it is to build and run a company,” he added, noting that they often call each other for advice.

On whether he has any concerns about putting Mr. Musk on the board given the Tesla chief’s run-ins with securities regulators:

“No.”

Receiving the AstraZeneca vaccine in Budapest.
Credit…Akos Stiller for The New York Times

The vaccine developed by AstraZeneca and the University of Oxford brought in $275 million in sales from about 68 million doses delivered in the first three months of this year, AstraZeneca reported on Friday.

AstraZeneca disclosed the figure, most of which came from sales in Europe, as it reported its first-quarter financial results. It offers the clearest view to date of how much money is being brought in by one of the leading Covid vaccines.

AstraZeneca, which has pledged not to profit on its vaccine during the pandemic, has been selling the shot to governments for several dollars per dose, less expensive than the other leading vaccines. The vaccine has won authorization in at least 78 countries since December but is not approved for use in the United States.

The vaccine represented just under 4 percent of AstraZeneca’s revenue for the quarter; it was nowhere near the company’s biggest revenue generator. By comparison, the company’s best-selling product, the cancer drug Tagrisso, brought in more than $1.1 billion in sales in the quarter.

AstraZeneca has said it is planning to seek emergency authorization for its vaccine to be used in the United States, even as it has become clear that the doses are not needed. The Biden administration said this week that it would make available to the rest of the world up to 60 million doses of its supply of AstraZeneca shots, pending a review of their quality.

If the company does win authorization from the U.S. Food and Drug Administration, it could help shore up confidence in a vaccine whose reputation been hit by concerns about a rare but serious side effect involving blood clotting. The F.D.A.’s evaluation process is considered the gold standard globally.

Johnson & Johnson, whose vaccine was authorized for emergency use at the end of February, reported last week that its vaccine generated $100 million in sales in the United States in the first three months of the year. The federal government is paying the company $10 a dose. Like AstraZeneca, Johnson & Johnson has pledged to sell its vaccine “at cost” — meaning it won’t profit on the sales — during the pandemic.

Vaccines from Pfizer and Moderna cost more, and neither company has said that it will forego profits. Pfizer has said that it expects its vaccine to bring in about $15 billion in revenue this year; Moderna said it anticipates $18.4 billion in sales.

Both companies are scheduled to report their first-quarter results next week.


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

U.S. stocks fell in early trading on Friday, with the S&P 500 pulling back from a record high reached the day before, as traders closed positions for the end of the month and continued to react to company earnings.

Despite Friday’s decline, the S&P 500 is still on track for a gain of about 5 percent for April, its best monthly showing since November — when stocks rallied nearly 11 percent in the wake of the U.S. presidential election.

The benchmark stock index had hit a record after data showed the American economy grew strongly at the start of the year. Forecasters predict the economy will be back to its prepandemic size by the summer and will help drive global economic growth.

Oil prices fell, with futures on West Texas Intermediate, the U.S. benchmark, dropping more than 2 percent to $63.50 a barrel.

Tesla has been losing market share even as demand for rooftop solar power has grown.
Credit…Caleb Kenna for The New York Times

Tesla’s solar ambitions date to 2015 when it announced that it would sell panels and home batteries alongside its electric cars. A year later, Elon Musk, the company’s chief executive, promised that Tesla’s new shingles would turbocharge installations by attracting homeowners who found solar panels ugly.

After delays, Tesla began rolling out the shingles in a big way this year, but it is already encountering a major problem, Ivan Penn reports for The New York Times.

The company is hitting some customers with price increases before installation that are tens of thousands of dollars higher than earlier quotes, angering early adopters and raising big questions about how Tesla, which is better known for its electric cars, is running its once dominant rooftop solar business.

The shingles remain such a tiny segment of the solar market that few industry groups and analysts bother to track installations.

Tesla is not the only company to pursue the idea of embedding solar cells, which convert sunlight into electricity, in shingles. Dow Chemical, CertainTeed, Suntegra and Luma, among others, have offered similar products with limited success.

But given Mr. Musk’s success with Tesla’s electric cars and SpaceX’s rockets, Tesla’s glass shingles attracted outsize attention. He promised that they would be much better than anything anybody else had come up with and come in a variety of styles so they could resemble asphalt, slate and Spanish barrel tiles to fit the aesthetic of each home.

During a quarterly earnings call on Monday, Mr. Musk insisted that demand for Tesla’s solar roofs “remains strong” even though the company had raised prices substantially. He described the last-minute increases as a teething problem.

Customers are unhappy with the growing pains. Dr. Peter Quint was eager to install Tesla’s solar shingles on his 4,000-square-foot home in Portland, Ore., until the company raised the price to $112,000, from $75,000, in a terse email. When he called Tesla for an explanation, he was put on hold for more than three hours.

“I said, ‘This isn’t real, right?’” said Dr. Quint, whose specialty is pediatric critical care. “The price started inching up. We could deal with that. Then this. At that price, in our opinion, it’s highway robbery.”

The average selling price of Ford models rose 8 percent in the first three months of 2021 compared with a year ago, to $47,858, according to the auto-sales data provider Edmunds.com.
Credit…Mohamed Sadek for The New York Times

In the first months of 2021, what was good for the auto industry was decidedly good for the American economy.

Spending on motor vehicles and parts rose almost 13 percent in the first quarter, making a big contribution to the increase in gross domestic product, the Commerce Department reported Thursday. Strong sales of new and used vehicles were propelled by consumers who had delayed purchases earlier in the pandemic and by others who — because of the virus — wanted to rely less on public transit or shared transportation services like Uber.

Two rounds of stimulus payments since late December were a big factor. Low interest rates, readily available credit, rising home values and stock prices, and strong trade-in values for used models also eased the path for consumers.

In fact, demand in the first quarter was robust enough that the auto industry was able to post healthy results despite a shortage of computer chips that forced temporary shutdowns of many auto plants.

The number of new cars and light trucks sold increased 11 percent from the comparable period a year earlier, to 3.9 million, according to the auto-sales data provider Edmunds.com.

On Wednesday, Ford Motor reported it made a $3.3 billion profit in the quarter, its highest total since 2011. While it produced 200,000 fewer vehicles in the quarter than it had planned, the average selling price of Ford models rose to $47,858, 8 percent higher than in the first quarter a year ago, Edmunds reported.

The combination of strong consumer demand and tight inventories — partly a result of the chip shortage — has produced something of a dream scenario for auto retailers. At AutoNation, the country’s largest chain of dealerships, many vehicles are being sold near or at sticker price even before they arrive from the factory.

“I’ve never seen so much preselling of shipments,” said Mike Jackson, the chief executive. “These vehicles are coming in and going right out.”

In the first quarter, AutoNation’s revenue jumped 27 percent, to $5.9 billion, and the company reported $239 million in profit. That was a turnaround from a loss a year ago, when the pandemic crimped sales and forced AutoNation to close stores.

View Source

Auto sales helped get the American economy off to a good start in 2021.

In the first months of 2021, what was good for the auto industry was decidedly good for the American economy.

Spending on motor vehicles and parts rose almost 13 percent in the first quarter, making a big contribution to the increase in gross domestic product, the Commerce Department reported Thursday. Strong sales of new and used vehicles were propelled by consumers who had delayed purchases earlier in the pandemic and by others who — because of the virus — wanted to rely less on public transit or shared transportation services like Uber.

Two rounds of stimulus payments since late December were a big factor. Low interest rates, readily available credit, rising home values and stock prices, and strong trade-in values for used models also eased the path for consumers.

In fact, demand in the first quarter was robust enough that the auto industry was able to post healthy results despite a shortage of computer chips that forced temporary shutdowns of many auto plants.

Ford Motor reported it made a $3.3 billion profit in the quarter, its highest total since 2011. While it produced 200,000 fewer vehicles in the quarter than it had planned, the average selling price of Ford models rose to $47,858, 8 percent higher than in the first quarter a year ago, Edmunds reported.

The combination of strong consumer demand and tight inventories — partly a result of the chip shortage — has produced something of a dream scenario for auto retailers. At AutoNation, the country’s largest chain of dealerships, many vehicles are being sold near or at sticker price even before they arrive from the factory.

“I’ve never seen so much preselling of shipments,” said Mike Jackson, the chief executive. “These vehicles are coming in and going right out.”

In the first quarter, AutoNation’s revenue jumped 27 percent, to $5.9 billion, and the company reported $239 million in profit. That was a turnaround from a loss a year ago, when the pandemic crimped sales and forced AutoNation to close stores.

View Source

U.S. Economy Rebounds as Pain Caused by Pandemic Eases: Live Updates

the first-quarter growth rate was 6.4 percent.

2019 Q4 LEVEL

$20 trillion

+1.6%

FROM

PRIOR

QUARTER

Gross domestic product,

adjusted for inflation and

seasonality, at annual rates

2019 Q4 LEVEL

$20 trillion

+1.6%

FROM

PRIOR

QUARTER

Gross domestic product, adjusted for inflation

and seasonality, at annual rates

“This was a great way to start the year,” said Gregory Daco, chief U.S. economist at Oxford Economics. “We had the perfect mix of improving health conditions, strong fiscal stimulus and warmer weather.”

“Consumers are now back in the driver’s seat when it comes to economic activity, and that’s the way we like it,” he added. “A consumer that is feeling confident about the outlook will generally spend more freely.”

Looking ahead, economists said they expected to see even better numbers this quarter.

“It’s good news, but the better news is coming,” said Ian Shepherdson, chief economist at Pantheon Macroeconomics. “There’s nothing in this report that makes me think the economy won’t grow at a gangbusters pace in the second and third quarter.”

The expansion last quarter was spurred by stimulus checks, he said, which quickly translated into purchases of durable goods like cars and household appliances.

“This demonstrates the value of government intervention when the economy is on its knees from Covid,” he added. “But in the coming quarters, the economy will be much less dependent on stimulus as individuals use the savings they’ve accumulated during the pandemic.”

Cumulative percent change in

G.D.P. from the start of the

last five recessions

Final quarter

before

recession

5 quarters

into recession

Cumulative percent change in G.D.P.

from the start of the last five recessions

Final quarter

before

recession

5 quarters

into recession

Overall economic activity should return to prepandemic levels in the current quarter, Mr. Anderson said, while cautioning that it will take until late 2022 for employment to regain the ground it lost as a result of the pandemic.

Still, the labor market does seem to be catching up. Last month, employers added 916,000 jobs and the unemployment rate fell to 6 percent, while initial claims for unemployment benefits have dropped sharply in recent weeks.

Tom Gimbel, chief executive of LaSalle Network, a recruiting and staffing firm in Chicago, said: “It’s the best job market I’ve seen in 25 years. We have 50 percent more openings now than we did pre-Covid.”

Hiring is stronger for junior to midlevel positions, he said, with strong demand for professionals in accounting, financing, marketing and sales, among other areas. “Companies are building up their back-office support and supply chains,” he said. “I think we’re good for at least 18 months to two years.”

Spending on goods like automobiles led the way in the first quarter, but demand for services like dining out should revive in the second quarter, said Rubeela Farooqi, chief U.S. economist at High Frequency Economics. “I think we will see a surge in services spending,” she said.

As more Americans become vaccinated, many economists expect a decline in new unemployment claims.
Credit…James Estrin/The New York Times

Initial jobless claims fell last week to yet another pandemic low in the latest sign that the economic recovery is strengthening.

About 575,000 people filed first-time claims for state unemployment benefits last week, the Labor Department said Thursday, a decrease of 9,000 from the previous week’s revised figure. It was the third straight week that jobless claims had dropped.

In addition, 122,000 new claims were filed for Pandemic Unemployment Assistance, a federal program that covers freelancers, part-timers and others who do not routinely qualify for state benefits. That was a decline of 12,000 from the previous week.

Neither figure is seasonally adjusted. On a seasonally adjusted basis, new state claims totaled 553,000.

“Today’s report, and the other data that we got today, signals an improving labor market and an improving economy,” said Daniel Zhao, senior economist with the career site Glassdoor. “It is encouraging that claims are continuing to fall.”

Although weekly jobless claims remain above levels reached before the pandemic, vaccinations and warmer weather are offering new hope. Most economists expect the slow downward trend in claims to continue in the coming months as the economy reopens more fully.

But challenges lie ahead. The long-term unemployed — a group that historically has had a more difficult time rejoining the work force — now make up more than 40 percent of the total number of unemployed. Of the 22 million jobs that disappeared early in the pandemic, more than eight million remain lost.

“The labor market is definitely moving in the right direction,” said AnnElizabeth Konkel, an economist at the online job site Indeed. She noted that job postings as of last Friday were up 22.4 percent from February 2020.

Still, she cautioned that industries like tourism and hospitality would probably remain depressed until the pandemic was firmly under control. She also stressed that child care obligations might be preventing people ready to return to work from seeking jobs.

“We still are in a pandemic — the vaccinations are ramping up but there is that public health factor still,” Ms. Konkel said. “We’re not quite there yet.”

The NBC sitcom “The Office” became a big streaming hit for Netflix and is now back in the Comcast fold, available on its streaming service Peacock.
Credit…Chris Haston/NBC

If you want a clear picture of the state of the media industry in upheaval, Comcast offers a good snapshot.

The company, which includes NBC, Universal Pictures, several theme parks, and the Peacock streaming service, beat Wall Street’s expectations in its first-quarter earnings report on Thursday as it continued to shift its emphasis from cable to digital.

To start, take these figures from its results:

Despite the regular pace of cord cutting, Comcast’s cable television business pulled in over $5.62 billion in revenue for the first quarter. That was flat compared with last year, but it’s still the company’s biggest business, accounting for a fifth of all revenue.

Peacock, on the other hand, is the fastest growing, but it loses the most money. Last year, it approached $700 million in pretax losses. This year, the streaming platform is expected to lose $1.3 billion as Comcast spends big to load it up with original shows and sports programming with the aim of attracting more viewers.

That’s the operating thesis behind every major media company today: replace the eroding base of profit-rich cable customers with loss-making streaming viewers in the hope that over time the digital audience will become more valuable. The Walt Disney Company, ViacomCBS, Discovery Inc. and AT&T’s WarnerMedia are all trying to make the transformation without entirely losing their shirts.

Peacock’s 42 million sign-ups should also come with an asterisk. The service is free and easy to join, but that doesn’t mean everyone is watching. (The figure includes paid versions of Peacock, which feature more content and fewer commercials.) A February report from the tech news site The Information revealed that a little more than 11 million households were watching the service.

Even so, the aim of Peacock is to replace the lost advertising from Comcast’s cable and broadcast channels as people continue to cut the cord. Peacock, which is available nearly everywhere, can also act as a hedge against other cable operators such as Charter or Cox when Comcast’s media division, NBCUniversal, negotiates carriage fees.

Peacock offers some of the most popular streaming shows, including “The Office,” a top hit on Netflix before it lost the rights to the series in 2021 when the license expired and the show reverted back to its owner, Comcast.

In a few years, Peacock will have the rights to stream National Football League games on Sunday alongside NBC as part of a new agreement. That could ruffle feathers with some of NBC’s affiliate stations if viewers drop TV and opt for Peacock to watch football. The streamer will also have some games exclusively. In March, the service added WWE.

Comcast sells something that has proved more durable than sports and entertainment: broadband, the piping that carries all streaming platforms. The company saw a surge in subscribers during the pandemic. In the first quarter, sales increased 12 percent to $5.6 billion. It’s likely to overtake cable television as the company’s biggest business.

At NBCUniversal, sales sharply dropped as movie theaters remained mostly shut and fewer people were visiting theme parks under the pandemic. Revenue fell 9 percent to $7 billion and pretax profit decreased 12 percent to $1.5 billion. Advertising at its television networks, which include NBC, MSNBC and Syfy, fell 3.4 percent to $2.1 billion.

Overall, the company beat expectations, reporting adjusted profit of 76 cents a share on $27.2 billion in revenue, and its stock was climbing on Thursday morning. Investors were looking for 59 cents in per-share profit and $26.6 billion in sales.

Microsoft will decrease the share of money it charges independent developers that publish computer games on its online store, starting in August, the company said on Thursday.

Developers will keep 88 percent of the revenue from their games, up from 70 percent. That could make Microsoft’s store more attractive to independent studios than competitors like Valve’s gaming store, called Steam, which typically starts by taking a 30 percent cut. Epic Games’ store takes 12 percent.

“We want to make sure that we’re competitive in the market,” said Sarah Bond, a Microsoft vice president who leads the gaming ecosystem organization. “Our objective is to have a leading revenue share and really a leading platform.”

The share of revenue that developers get to keep has come under greater scrutiny across the tech industry. Google and Apple have faced antitrust questions for the 30 percent fees they charge developers whose programs appear in their app stores.

Last year, Epic sued Apple and Google separately, claiming they violated antitrust laws by forcing developers to use their payment systems. Epic had tried to bypass the fees by letting customers pay for items in its Fortnite video game directly through Epic. That caused Apple and Google to boot Fortnite from their app stores.

Apple and Google have since reduced fees for some developers. Epic’s lawsuit against Apple is set to head to trial on Monday in U.S. District Court in Oakland, Calif.

A Shell recharging station for electric vehicles in the Netherlands. Despite investments in renewable energy, Shell’s profit last quarter was largely the result of rising oil and gas prices.
Credit…Koen Van Weel/EPA, via Shutterstock

Strong profit increases from two of Europe’s largest energy companies, Royal Dutch Shell and Total, demonstrated that what really matters for the financial performance of these companies remains the price of oil and natural gas.

Their recent investments in clean energy, described by company officials as essential for the future, remain marginal.

Total said that adjusted net income rose by 69 percent compared with the period a year earlier, when the effects of the pandemic were beginning to kick in, to $3 billion, while Shell said that what it calls adjusted earnings rose by 13 percent to $3.2 billion.

The main factor in the improved performance by both companies was a roughly 20 percent rise in oil prices along with an increase in natural gas prices, leading to higher revenues. During a news conference to discuss the results, Jessica Uhl, Shell’s chief financial officer, said that a $10 jump in oil prices would translate into a $6.4 billion increase in cash for the company’s coffers on an annual basis.

Shell, which cut its dividend last year for the first time since World War II, confirmed that it would increase the payout for the quarter by 4 percent, to about 17 cents a share.

Both companies have tethered their futures to generating and distributing renewable sources of energy. Shell in February said its oil production had peaked in 2019, and it has been investing in various clean energy ventures, including a network of 60,000 charging stations for electric vehicles. And Total has, among other things, invested in options to build offshore wind farms off Britain.

In its earnings statement, Total took the lead among the oil majors in providing details on its investments in renewable energy like wind and solar. The company said these businesses brought in $148 million for the quarter, measured as earnings before interest, taxes, depreciation and amortization. This figure was about 2 percent of the overall total for the company of $7.3 billion, according to analysts at Bernstein, a research firm.

Although Airbus reported a quarterly profit after a full-year loss for 2020,  “the market remains uncertain,”  said Guillaume Faury, the company’s chief executive.
Credit…Chema Moya/EPA, via Shutterstock

Airbus announced Thursday that it had returned to a profit in the first quarter following a 1.1 billion euro loss last year because of the coronavirus pandemic, but its top executive warned that the economic toll would continue.

“The first quarter shows that the crisis is not yet over for our industry, and that the market remains uncertain,” Guillaume Faury, chief executive of the world’s largest airplane maker, said in a statement.

Airbus booked a net profit of 362 million euros ($440 million) between January and March, compared with a loss of 481 million euros a year earlier, as cost-cutting measures — which included more than 11,000 layoffs announced last year for its global operations — bolstered the bottom line. Revenue fell 2 percent to 10.5 billion euros.

Airbus delivered 125 commercial aircraft to airlines in the three-month period, up from 122 a year earlier. Over all, Airbus delivered 566 aircraft to airlines in 2020, 40 percent less than expected before the pandemic.

Airbus has previously warned that the industry might not recover from the disruption caused by the pandemic until as late as 2025, as new virus variants delay a resumption of worldwide air travel.

Given the uncertain outlook, Airbus won’t ramp up aircraft deliveries this year. The company said it expected to deliver 566 aircraft on back order from airline companies, the same number as last year.

It maintained its forecast for an underlying operating profit of two billion euros for the year.

S&P 500

%

Nasdaq

%

As of

Data delayed at least 15 minutes

Source: Factset


Stocks on Wall Street jumped on Thursday, rising with European stock indexes, amid indications that the economy is moving toward a recovery to prepandemic levels.

The Commerce Department reported Thursday that the U.S. economy expanded 1.6 percent in the first three months of 2021, compared with 1.1 percent in the final quarter last year, or 6.4 percent on an annualized basis.

A day earlier, the Federal Reserve said that the outlook was improving and that it would continue to provide substantial monetary support, easing investors’ concerns that it would soon start easing the stimulus efforts it launched a year ago when the Covid-19 crisis forced a near shutdown of many parts of the economy.

“While the level of new cases remains concerning,” Jerome H. Powell, the Federal Reserve chair, said, “continued vaccinations should allow for a return to more normal economic conditions later this year.” The central bank kept interest rates near zero and said it would continue buying bonds at a steady clip.

The S&P 500 rose 0.7 percent. Market sentiment continued to rise after President Biden detailed more of his spending plans — which total $4 trillion — to fund expanded access to education and reduce the cost of child care, among other things.

Oil prices rose. Futures of West Texas Intermediate, the U.S. benchmark, climbed more than 2 percent to above $5 a barrel.

The Stoxx Europe 600 rose 0.3 percent as a measure of economic confidence for the eurozone surged higher.

Amazon announced raises for half a million employees in its warehouses, delivery network and other fulfillment teams.
Credit…Chang W. Lee/The New York Times

Amazon will increase pay between 50 cents and $3 an hour for half a million workers in its warehouses, delivery network and other fulfillment teams, the company said on Wednesday.

The action follows scrutiny of Amazon from lawmakers and an unsuccessful unionization push that ended this month at its large warehouse in Alabama. In 2018, Amazon raised its minimum pay to $15 an hour. In recent months, it has publicly campaigned to raise the federal minimum to $15, too.

Amazon has been on a hiring spree during the pandemic. As more customers ordered items online, the company added 400,000 employees in the United States last year. Its total work force stands at almost 1.3 million people.

Amazon typically revaluates wages each fall, before the holiday shopping season. But this year, it moved those changes earlier, said Darcie Henry, an Amazon vice president of people experience and technology. The new wages will roll out from mid-May through early June. Ms. Henry said the company was hiring for “tens of thousands” of open positions.

Jeff Bezos, Amazon’s founder and chief executive, recently told shareholders in his annual letter that he recognized the company needed “a better vision for how we create value for employees — a vision for their success.” He said that Amazon had always striven to be “Earth’s Most Customer-Centric Company,” and that now he wanted it to be “Earth’s Best Employer and Earth’s Safest Place to Work” as well.

Amazon is scheduled to report quarterly earnings on Thursday.

Gary Gensler’s tenure leading the Securities and Exchange Commission is off to a rocky start: Alex Oh, who he named just days ago to run the regulator’s enforcement division, has resigned following a federal court ruling in a case involving one of her corporate clients, ExxonMobil.

In her resignation letter on Wednesday, Ms. Oh said the matter would be “an unwelcome distraction to the important work” of the enforcement division.

Ms. Oh’s resignation letter followed a ruling on Monday from Judge Royce C. Lamberth of the Federal District Court for the District of Columbia over the conduct of Exxon’s lawyers during a civil case involving claims of human rights abuses in the Aceh province of Indonesia.

According to Judge Lamberth’s ruling, Exxon’s lawyers claimed without providing evidence that the plaintiffs’ attorneys were “agitated, disrespectful and unhinged” during a deposition. He ordered Exxon’s lawyers to show why penalties were not warranted for those comments.

The ruling did not single out any lawyers by name. Ms. Oh was one of the lead lawyers for Exxon.

The judge’s order also granted the plaintiffs’ motion that Exxon pay “reasonable expenses” associated with litigating their request for sanctions and with an accompanying motion to compel additional testimony from Exxon related to the deposition.

Ms. Oh’s resignation letter did not mention the Exxon case by name, but a person briefed on the matter confirmed that the ruling from Judge Lamberth had prompted her to step down.

Ms. Oh, a former federal prosecutor in Manhattan who worked for the elite firm Paul, Weiss for nearly two decades, was picked by Mr. Gensler to oversee the S.E.C.’s 1,000-attorney enforcement division on April 22. The same day, she filed a notice with the court in the Exxon case saying she had withdrawn from the matter because she had resigned from the firm to join the federal government.

The civil litigation involving Exxon is nearly two decades old and involves allegations by the plaintiffs that Exxon’s security personnel “inflicted grievous injuries” on them. The lawsuit was brought under the federal Alien Tort Claims Act, which enables residents of other countries to sue in the United States for damages arising from violations of U.S. treaties or “the law of nations.”

Mr. Gensler said in a news release that Melissa Hodgman, who had been the enforcement division’s acting chief since January, will return to that position. Ms. Hodgman has been an enforcement attorney with the agency since 2008. He thanked Ms. Oh for her “willingness to serve the country.”

Ms. Oh could not immediately be reached for comment.

Brad Karp, chairman of Paul, Weiss, said the firm would not comment on the matter because it involved ongoing litigation. “Alex is a person of the utmost integrity and a consummate professional with a strong ethical code,” he added.

Ms. Oh is a highly respected lawyer, but her selection had been criticized by the Revolving Door Project, a good-government group, because she had been in private practice for so many years and had defended some of the largest U.S. companies.

Increased supply-chain and freight costs for cereal makers could translate into higher retail prices for customers.
Credit…Sara Hylton for The New York Times

Before the pandemic, when suppliers raised the cost of diapers, cereal and other everyday goods, retailers often absorbed the increase because stiff competition forced them to keep prices stable.

Now, with Americans’ shopping habits having shifted rapidly — with people spending more on treadmills and office furniture and less at restaurants and movie theaters — retailers are also adjusting, Gillian Friedman reports for The New York Times.

The Consumer Price Index, the measure of the average change in the prices paid by U.S. shoppers for consumer goods, increased 0.6 percent in March, the largest rise since August 2012, according to the Bureau of Labor Statistics. Procter & Gamble is raising prices on items like Pampers and Tampax in September. General Mills, which makes cereal brands including Cheerios, is facing increased supply-chain and freight costs that could translate into higher retail prices for customers.

At the beginning of the pandemic, companies were focused on fulfilling demand for toilet paper, cleaning supplies, canned food and masks, said Greg Portell, a partner at Kearney, a consulting firm. The government was watching for price-gouging, and customers were wary of being taken advantage of.

Now that the economy is beginning to stabilize, companies are starting to rebalance pricing so that it better fits their profit expectations and takes into account inflation. “This isn’t an opportunistic profit-taking by companies,” Mr. Portell said. “This is a reset of the market.”

Gary Gensler, the chair of the Securities Exchange Commission, has some expertise with cryptocurrencies.
Credit…Kayana Szymczak for The New York Times

For many cryptocurrency supporters and investors, regulatory approval of a Bitcoin exchange-traded fund in the United States represents the holy grail. It would allow the crypto-curious to get exposure to Bitcoin without having to buy the tokens themselves, signifying that digital assets are really, truly mainstream.

But it’s not meant to be — yet. On Wednesday, the Securities and Exchange Commission delayed a decision on a Bitcoin E.T.F. proposal from the investment manager VanEck, saying it needs more time but offering no other explanation.

Delay is not denial, and it may be a good sign, Todd Cipperman, the founder of the compliance services firm CCS, told the DealBook newsletter. When considering the concept of a crypto E.T.F. in 2018, the S.E.C. raised questions about investor protection issues and put a “wet blanket on the whole idea,” he said.

Now, crypto is much bigger, and Gary Gensler, who taught courses about blockchain technology at M.I.T., is chair of the S.E.C. His expertise doesn’t guarantee success for crypto E.T.F.s, but it will be easier for an expert in the field to approve them, Mr. Cipperman suggested.

The S.E.C. gave itself until mid-June, with the option to take more time, but it must decide before year’s end. The regulator has rejected every proposal to date, starting with the first Bitcoin E.T.F. pitch in 2013, presented by the Winklevoss twins, which was eventually dismissed in 2017 (and again in 2018). There are several E.T.F. proposals on the table now, including one from the traditional finance giant Fidelity.

Canada is moving faster, approving all kinds of crypto E.T.F.s, after allowing its first Bitcoin E.T.F. in February. Hester Peirce, an S.E.C. commissioner and vocal crypto champion, told DealBook earlier this month that she has been “mystified” by her agency’s response to some prior applications, which met the standards in her view. With more players now engaging in the process, approval could be looming — eventually.

View Source

Global chip shortage will slash Ford’s production by about half in the second quarter.

Ford Motor said on Wednesday that the global shortage of computer chips will take a greater toll on its business than previously expected and would likely cut its vehicle production in the second quarter by about half.

“The effects of the shortage have grown,” Ford’s chief financial officer, John Lawler, said during a conference call with reporters. “We now expect the semiconductor shortage to get worse and bottom out in the second quarter but continue to put pressure on our operating results in the second half of the year.”

Ford expects the shortage to lower its operating profit this year by $2.5 billion, to between $5.5 billion to $6.5 billion. It had previously said the impact of the shortage would be between $1 billion to $2.5 billion.

The shortage was exacerbated in March by a fire at a plant owned by a Japanese electronics supplier, Renesas.

the ability to command higher prices helped Ford’s bottom line, as did lower warranty costs and a $900 million gain related to its stake in Rivian, an electric vehicle start-up.

While it hopes to be able to make up some of the lost production later in the year, Ford will likely produce 1.1 million fewer vehicles in 2021 than it had planned to, Mr. Lawler said.

Ford has been trying to streamline its operations and raise its profits for several years with modest success until now. In 2020, it named Mr. Farley to the top job, charging him with accelerating the turnaround.

The automaker has developed vehicles that could revitalize profits. It redesigned its F-150 pickup truck, the top-selling vehicle in the United States. It has also gotten strong reviews for a new Bronco sport-utility vehicle and the Mustang Mach E, an electric S.U.V. styled to resemble the company’s famous sports car.

But the chip shortage has crimped its plans. In the first three months of the year, Ford has had to pause or slow production at a variety of plants, including some that make the F-150, which generates a large chunk of its profits.

View Source

A Computer Chip Shortage Has Hobbled the Auto Industry

Around the world, auto assembly lines are going quiet, workers are idle and dealership parking lots are looking bare.

A shortage of semiconductors, the tiny but critical chips used to calibrate cars’ fuel injection, run infotainment systems or provide the brains for cruise control, has sent a shudder through the automaking world.

A General Motors plant in Kansas City closed in February for lack of chips, and still hasn’t reopened. Mercedes-Benz has begun to hoard its chips for expensive models and is temporarily shutting down factories that produce lower-priced C-Class sedans. Porsche warned dealers in the United States this month that customers might have to wait an extra 12 weeks to get their cars, because they lack a chip used to monitor tire pressure.

The French automaker Peugeot, part of the newly formed Stellantis automaking empire, has gone so far as to substitute old-fashioned analog speedometers for digital units in some models.

consumer electronics, which tend to be more lucrative customers.

German economic research institutes warned in a joint report this month.

The crisis has exposed not only how dependent the car industry is on a few suppliers, but also how vulnerable it is to disruptions. Supply chain managers shuddered last month when an early-morning fire knocked out production at a factory owned by Renesas Electronics in Hitachinaka, Japan, north of Tokyo. Renesas is a crucial supplier of chips used to monitor brake functioning, control power steering, trigger airbags and in many other tasks.

Storms in Texas earlier in the year temporarily forced the shutdown of three semiconductor factories. And Taiwan is in the midst of a severe drought, analysts at IHS Markit warned in a recent report. Chip manufacturing requires large amounts of very pure water.

Even without a pandemic and supply chain disruptions, the auto industry is in turmoil. In the United States, sales have been basically flat since the early 2000s. Profit margins are slim. Some big automakers may not survive the shift to electric cars.

“If I were a chip manufacturer I wouldn’t start investing in a new plant unless I got free money from the government,” said ManMohan S. Sodhi, who teaches supply chain management at the business school at City, University of London.

Ford Motor said Wednesday that it would keep several U.S. plants idle longer than expected because of the chip shortage.

The auto industry has been paralyzed by supply chain disruptions before. Mr. Källenius recalled an episode when a hurricane struck Puerto Rico and shut down production at a factory that, to his surprise and pretty much everyone else’s, was the only source of a coating essential to some kinds of auto electronics.

Automobiles have tens of thousands of parts and so many layers of suppliers and sub-suppliers and sub-sub-suppliers that even carmakers have trouble keeping track of every component’s provenance.

The economics of the industry are such that only suppliers with the highest volume survive. Smaller suppliers tend to die out because they can’t produce parts or materials as cheaply as the big players, leaving the industry dependent on one or two manufacturers of high-pressure fuel lines, for example, or a certain specialized plastic.

The current semiconductor shortage may not be the last. The auto industry’s need for semiconductors is expected to explode in coming years because of autonomous driving features and the increasing popularity of electric vehicles, which are more reliant on software than internal combustion engines.

Mr. Källenius said, though, that the most sophisticated chips were not the ones currently giving him headaches. “We are missing the most simple of chips, that maybe only cost cents or dollars,” he said. “That’s holding us up from building a product that costs $75,000.”

View Source