The sharp rise in bond yields is forcing traders to consider that they may be holding two irreconcilable ideas in their heads.
One is that the Federal Reserve has no real control over bond market interest rates. The other is that the Fed can keep the stock market aloft as long as it tries to control interest rates.
The resilience of share prices — the S&P 500 rose 5.8 percent in the first quarter — suggests that those two ideas can coexist. But if yields continue to rise, the impact on companies, consumers and homeowners and the appeal that fatter bond yields may have to investors could produce a reckoning for stocks.
“The bond market is at an inflection point that eventually is going to be recognized by the stock market,” said Komal Sri-Kumar, president of Sri-Kumar Global Strategies. “Over the last 30 years, the bond market has only gone one way, but a change is occurring now, and it’s likely to be an abrupt one.”
CRB index, which measures a basket of commodities, rose 52 percent in the 12 months through March. Home prices rose 6 percent last year, according to the Federal Reserve Bank of St. Louis.
$1.9 trillion bill last month to help the economy after the ravages wrought by the pandemic, President Biden proposed spending $2 trillion more on infrastructure projects, albeit over several years.
That $4 trillion, give or take, would be “going into an economy saturated with $6 trillion of stimulus spending from the Trump administration,” Mr. Sri-Kumar said. So much spending is likely to push up inflation and bond yields, he said.
Michael Hartnett, chief investment strategist at Bank of America Global Research, does not expect such concerns to diminish soon.
Because of such factors as “new central bank mandates, excess fiscal stimulus,” as well as “less globalization, fading deflation from disruption, demographics, debt, we believe inflation rises in the 2020s and the 40-year bull market in bonds is over,” Mr. Hartnett said in a report.
Commodities and other hard assets should outperform in the long term, in his view, along with shares of smaller companies, value stocks and foreign stocks. The dollar, shares of big companies and bonds should do worse.
David Giroux, a portfolio manager and head of investment strategy at T. Rowe Price, said he is worried that the bill will come due for much of the government spending.
“There’s a high likelihood we will have higher corporate taxes next year,” Mr. Giroux said. “That will be a headwind for corporate earnings.”
That persuades him to avoid shares of economically sensitive companies for which “a lot of really good news is already priced in.”
He prefers “stocks with really good business models that have been left behind,” including technology giants that are off their highs, such as Amazon and Google, and companies like utilities. Other favorites include regional banks such as PNC and Huntington Bancshares.
Ms. Bitel at William Blair foresees long-term higher returns by big growth stocks. But she throws in an immense caveat: Because rising interest rates tend to force down valuations, especially on the most expensive segments of the market, there could be a sharp decline before the erstwhile Wall Street darlings excel again.
“Retail investors will be able to buy their favorite growth stocks at a 40 percent discount, but that leadership will resume,” she said, emphasizing that the 40 percent was a ballpark figure.
Ms. Bitel also suggested holding foreign stocks, in particular shares of Chinese health care companies and Japanese software companies.
Mr. Paolini recommends banks, energy and real estate, and said he is avoiding carmakers, industrial companies and home builders.
Considering the investment landscape more broadly, he said, “The outlook for the next one to three years is quite good.” Then he seemed to try to talk himself out of that belief.
“The idea that you can simply print money and everything is fine isn’t sustainable,” Mr. Paolini said. “At some point, we will realize too much has been done and the market is too high, and the situation will change quite fast. I don’t know what that level is or how far away we are from it.”
Jerome H. Powell, the Federal Reserve chair, stressed on Thursday that even as economic prospects look brighter in the United States, getting the world vaccinated and controlling the coronavirus pandemic remain critical to the global outlook.
“Viruses are no respecters of borders,” Mr. Powell said while speaking on an International Monetary Fund panel. “Until the world, really, is vaccinated, we’re all going to be at risk of new mutations and we won’t be able to really resume activity with confidence all around the world.”
While some advanced economies, including the United States, are moving quickly toward widespread vaccination, many emerging market countries lag far behind: Some have administered as little as one dose per 1,000 residents.
Mr. Powell joined a chorus of global policy officials in emphasizing how important it is that all nations — not just the richest ones — are able to widely protect against the coronavirus. Kristalina Georgieva, the managing director of the International Monetary Fund, said policymakers needed to remain focused on public health as the key policy priority.
fresh data showed that state jobless claims climbed last week. Mr. Powell pointed out that the burden is falling heavily on those least able to bear it: Lower-income service workers, who are heavily minorities and women, have been hit hard by the job losses.
raising corporate taxes.
“For quite some time, we have been in favor of more investment in infrastructure. It helps to boost productivity here in the United States,” Ms. Georgieva said, calling climate-focused and “social infrastructure” provisions positive. She said they had not had a chance to fully assess the plan, but “broadly speaking, yes, we do support it.”
But the White House’s plan has already run into resistance from Republicans and some moderate Democrats, who are wary of raising taxes or engaging in another big spending package after several large stimulus bills.
Some commentators have warned that besides expanding the nation’s debt load, the government’s virus spending — particularly the recent $1.9 trillion stimulus package — could cause the economy to overheat. Fed officials have been less worried.
“There’s a difference between essentially a one-time increase in prices and persistent inflation,” Mr. Powell said on Thursday. “The nature of a bottleneck is that it will be resolved.”
If price gains and inflation expectations moved up “materially,” he said, the Fed would react.
“We don’t think that’s the most likely outcome,” he said.
The main cause of the radical decline in tax rates for very wealthy Americans over the past 75 years isn’t the one that many people would guess. It’s not about lower income taxes (though they certainly play a role), and it’s not about lower estate taxes (though they matter too).
The biggest tax boon for the wealthy has been the sharp fall in the corporate tax rate.
In the 1950s, ’60s and ’70s, many corporations paid about half of their profits to the federal government. The money helped pay for the U.S. military and for investments in roads, bridges, schools, scientific research and more. “A dirty little secret,” Richard Clarida, an economist who’s now the vice chairman of the Federal Reserve, once said, “is that the corporate income tax used to raise a fair amount of revenue.”
paid zero federal income taxes last year, according to the Institute on Taxation and Economic Policy. Among them: Archer-Daniels-Midland, Booz Allen Hamilton, FedEx, HP, Interpublic, Nike and Xcel Energy.
Alan Rappeport and Jim Tankersley of The Times write.
The justification for the tax cuts has often been that the economy as a whole will benefit — that lower corporate taxes would lead to company expansions, more jobs and higher incomes. But it hasn’t worked out that way. Instead, economic growth has been mediocre since the 1970s. And incomes have grown even more slowly than the economy for every group except the wealthy.
Gabriel Zucman, an economist and tax specialist at the University of California, Berkeley, told me. “The main reason why the U.S. tax system was so progressive before the 1980s is because of heavy taxes on corporate profits.”
President Biden is now trying to reverse some (but by no means all) of the decline in corporate taxes. His plan would raise the corporate tax rate, punish companies that move profits overseas and introduce a rule meant to prevent companies from paying zero taxes, among other things. The money would help pay for his infrastructure plan. “It’s honest, it’s fair, it’s fiscally responsible, and it pays for what we need,” Biden said at the White House yesterday.
Experts and critics are already raising legitimate questions about his plan, and there will clearly be a debate about it. Biden said he was open to compromises and other ideas.
But one part of the criticism is pretty clearly inconsistent with the facts: The long-term decline in corporate taxes doesn’t seem to have provided much of a benefit for most American families.
For more: If you haven’t yet listened to yesterday’s episode of “The Daily” — in which Jesse Drucker explains how Bristol Myers Squibb has avoided taxes — I recommend it.
THE LATEST NEWS
She died at 88.
ARTS AND IDEAS
swelling anti-Asian violence and harassment in the U.S., nearly 30 Asian and Asian-American photographers shared what love looks like in their lives.
some time with the photo essay here.
PLAY, WATCH, EAT
What to Cook
sheet-pan jerk salmon cooks quickly. For more dinnertime inspiration, see the 17 best recipes the NYT cooking team made last month.
In the Garden
Make friends with fungi, both the kind you plant and those that seem to pop up on their own.
What to Read
“First Person Singular,” Haruki Murakami’s new story collection, allows the author’s “own voice — or what sounds like his own voice, wonderfully translated by Philip Gabriel — to enter the narratives,” David Means writes in a review.
The late-night hosts talked about Representative Matt Gaetz.
Now Time to Play
predicted that the new name was “not likely to be forgotten.”
You can see today’s print front page here.
Today’s episode of “The Daily” is about the Chauvin trial. On “Sway,” Diana Trujillo discusses the future of space travel.
Lalena Fisher, Ian Prasad Philbrick, Tom Wright-Piersanti and Sanam Yar contributed to The Morning. You can reach the team at firstname.lastname@example.org.
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WASHINGTON — The Biden administration unveiled a tax plan on Wednesdaythat would increase the corporate tax rate in the U.S. and limit the ability of American firms to avoid taxes by shifting profits overseas.
Much of the plan is aimed at reversing a deep reduction in corporate taxes under President Donald J. Trump. A 2017 tax bill slashed the corporate rate to 21 percent from 35 percent and enacted a series of other provisions that the Biden administration says have encouraged firms to shift profits to lower-tax jurisdictions, like Ireland.
Some of the provisions in President Biden’s plan can be enacted by the Treasury Department, but many will require the approval of Congress. Already, Republicans have panned the proposals as putting the U.S. at a disadvantage, while some moderate Democrats have indicated they may also want to see some adjustments, particularly to the proposed 28 percent corporate tax rate.
Administration officials estimate the proposals will raise a total of $2.5 trillion in new tax revenue over a 15 year span. Analysts at the University of Pennsylvania’s Penn Wharton Budget Model put the estimate even higher, estimating a 10-year increase of $2.1 trillion, with about half the money coming from the plan’s various changes to the taxation of multinational corporations.
Organization for Economic Cooperation and Development.
The administration sees raising the rate as a way to increase corporate tax receipts, which have plunged to match their lowest levels as a share of the economy since World War II.
Ensure big firms pay at least 15 percent in taxes
Many large companies pay far less than the current tax rate of 21 percent — and sometimes nothing. Tax code provisions allow firms to reduce their liability through deductions, exemptions, offshoring and other mechanisms.
The Biden plan seeks to put an end to big companies incurring zero federal tax liability and paying no or negative taxes to the U.S. government.
the so-called global intangible low-taxed income (or GILTI) tax to 21 percent, which would narrow the gap between what companies pay on overseas profits and what they pay on earned income in the U.S.
And it would calculate the GILTI tax on a per-country basis, which would have the effect of subjecting more income earned overseas to the tax than under the current system.
Punish U.S. companies that headquarter in low-tax countries
A provision in the plan known as SHIELD (Stopping Harmful Inversions and Ending Low-tax Developments) is an attempt to discourage American companies from moving their headquarters abroad for tax purposes, particularly through the practice known as “inversions,” where companies from different countries merge, creating a new foreign firm.
Under current law, companies with headquarters in Ireland can “strip” some of the profits earned by subsidiaries in the United States and send them back to the Ireland company as payment for things like the use of intellectual property, then deduct those payments from their American income taxes. The SHIELD plan would disallow those deductions for companies based in low-tax countries.
Push for a global agreement to end profit shifting
The Biden administration wants other countries to raise their corporate tax rates, too.
The tax plan emphasizes that the Treasury Department will continue to push for global coordination on an international tax rate that would apply to multinational corporations regardless of where they locate their headquarters. Such a global tax could help prevent the type of “race to the bottom” that has been underway, Treasury Secretary Janet Yellen has said, referring to countries trying to outdo one another by lowering tax rates in order to attract business.
Republican critics of the Biden tax plan have argued that the administration’s focus on a global minimum tax is evidence that it realizes that raising the U.S. corporate tax rate unilaterally would make American businesses less competitive around the world.
Replace fossil fuel tax subsidies with clean-energy incentives
The president’s plan would strip away longstanding subsidies for oil, gas and other fossil fuels and replace them with incentives for clean energy. The provisions are part of Mr. Biden’s efforts to transition the U.S. to “100 percent carbon pollution-free electricity” by 2035.
The plan includes a tax incentive for long-distance transmission lines, would expand incentives for electricity storage projects and would extend other existing clean-energy tax credits.
A Treasury Department report estimated that eliminating subsidies for fossil fuel companies would increase government tax receipts by over $35 billion in the coming decade.
“The main impact would be on oil and gas company profits,” the report said. “Research suggests little impact on gasoline or energy prices for U.S. consumers and little impact on our energy security.”
Doing away with fossil fuel subsidies has been tried before, with little success given both industry and congressional opposition.
Beef up the Internal Revenue Service
The Internal Revenue Service has struggled with budget cuts and slim resources for years. The Biden administration believes better funding for the tax collection agency is an investment that will more than pay for itself. The plan released on Wednesday includes proposals to bolster the I.R.S. budget so it can hire experts to pursue large corporations and ensure they are paying what they owe.
The Treasury Department, which oversees the I.R.S., noted in its report that the agency’s enforcement budget has fallen by 25 percent over the last decade and that it is poorly equipped to audit complex corporate filings. The agency is also unable to afford engaging in or sustaining multiyear litigation over complex tax disputes, Treasury said.
As a result of those constraints, the I.R.S. tends to focus on smaller targets while big companies and the wealthiest taxpayers are able to find ways to reduce their tax bills.
WASHINGTON — Large companies like Apple and Bristol Myers Squibb have long employed complicated maneuvers to reduce or eliminate their tax bills by shifting income on paper between countries. The strategy has enriched accountants and shareholders, while driving down corporate tax receipts for the federal government.
President Biden sees ending that practice as central to his $2 trillion infrastructure package, pushing changes to the tax code that his administration says will ensure American companies are contributing tax dollars to help invest in the country’s roads, bridges, water pipes and other parts of his economic agenda.
On Wednesday, the Treasury Department released the details of Mr. Biden’s tax plan, which aims to raise as much as $2.5 trillion over 15 years to help finance the infrastructure proposal. That includes bumping the corporate tax rate to 28 percent from 21 percent, imposing a strict new minimum tax on global profits and levying harsh penalties on companies that try to move profits offshore.
The plan also aims to stop big companies that are profitable but have no federal income tax liability from paying no taxes to the Treasury Department by imposing a 15 percent tax on the profits they report to investors. Such a change would affect about 45 corporations, according to the Biden administration’s estimates, because it would be limited to companies earning $2 billion or more per year.
President Donald J. Trump’s 2017 tax cuts. Biden administration officials say that law increased the incentives for companies to shift profits to lower-tax countries, while reducing corporate tax receipts in the United States to match their lowest levels as a share of the economy since World War II.
Treasury Secretary Janet L. Yellen, in rolling out the plan, said it would end a global “race to the bottom” of corporate taxation that has been destructive for the American economy and its workers.
“Our tax revenues are already at their lowest level in generations,” Ms. Yellen said. “If they continue to drop lower, we will have less money to invest in roads, bridges, broadband and R&D.”
The plan, while ambitious, will not be easy to enact.
Some of the proposals, like certain changes to how a global minimum tax is applied to corporate income, could possibly be put in place by the Treasury Department via regulation. But most will need the approval of Congress, including increasing the corporate tax rate. Given Democrats’ narrow majority in both the Senate and the House, that proposed rate could drop. Already, Senator Joe Manchin III of West Virginia, a crucial swing vote, has said he would prefer a 25 percent corporate rate.
search of the lowest possible tax bill.
Companies also shift jobs and investments between countries, but often for different reasons. In many cases, they are following lower labor costs or seeking customers in new markets to expand their businesses. The Biden plan would create new tax incentives for companies to invest in production and research in the United States.
weakened by subsequent regulations issued by Mr. Trump’s Treasury Department.
Conservative tax experts, including several involved in writing the 2017 law, say they have seen no evidence of the law enticing companies to move jobs overseas. Mr. Biden has assembled a team of tax officials who contend the provisions have given companies new incentives to move investment and profits offshore.
Mr. Biden’s plan would raise the rate of Mr. Trump’s minimum tax and apply it more broadly to income that American companies earn overseas. Those efforts would try to make it less appealing for companies to book profits in lower-tax companies.
The S.H.I.E.L.D. proposal is an attempt to discourage American companies from moving their headquarters abroad for tax purposes, particularly through the practice known as “inversions,” where companies from different countries merge, creating a new foreign-located firm.
Under current law, companies with headquarters in Ireland can “strip” some of their profits earned by subsidiaries in the United States and send them back to the Ireland company as payments for things like the use of intellectual property, then deduct those payments from their American income taxes. The S.H.I.E.L.D. plan would disallow those deductions for companies based in low-tax countries.
Tax professionals say Mr. Biden’s proposed changes to that law could be difficult to administer. Business groups say they could hamper American companies as they compete on a global scale.
Republicans denounced the plan as bad for the United States economy, with lawmakers on the House Ways and Means Committee saying that “their massive tax hikes will be shouldered by American workers and small businesses.”
coupled with an effort through the Organization for Economic Cooperation and Development to broker a global agreement on minimum corporate taxation, will start a worldwide revolution in how and where companies are taxed. That is in part because the Biden plans include measures meant to force other countries to go along with a new global minimum tax that Ms. Yellen announced support for on Monday.
Treasury Department officials estimate in their report that the proposed changes to the minimum tax, and the implementation of the S.H.I.E.L.D. plan, would raise an estimated $700 billion over 10 years on their own.
Business groups warn the administration’s efforts will hamstring American companies, and they have urged Mr. Biden to wait for the international negotiations to play out before following through with any changes.
Members of the Business Roundtable, which represents corporate chief executives in Washington, said this week that Mr. Biden’s minimum tax “threatens to subject the U.S. to a major competitive disadvantage.” They urged the administration to first secure a global agreement, adding that “any U.S. minimum tax should be aligned with that agreed upon global level.”
However, some companies expressed an openness on Wednesday to some of the changes.
John Zimmer, the president and a founder of Lyft, told CNN that he supported Mr. Biden’s proposed 28 percent corporate tax rate.
“I think it’s important to make investments again in the country and the economy,” Mr. Zimmer said. “And as the economy grows, so too does jobs and so too does people’s needs to get around.”
The Biden administration unveiled its plan to overhaul the corporate tax code on Wednesday, offering an array of proposals that would require large companies to pay higher taxes to help fund the White House’s economic agenda.
The plan, if enacted, would raise $2.5 trillion in revenue over 15 years. It would do so by ushering in major changes for American companies, which have long embraced quirks in the tax code that allowed them to lower or eliminate their tax liability, often by shifting profits overseas. The plan also includes efforts to help combat climate change, proposing to replace fossil fuel subsidies with tax incentives that promote clean energy production.
Some corporations have expressed a willingness to pay more in taxes, but the overall scope of the proposal is likely to draw backlash from the business community, which has benefited for years from loopholes in the tax code and a relaxed approach to enforcement.
Treasury Secretary Janet L. Yellen said during a briefing with reporters on Wednesday that the plan would end a global “race to the bottom” of corporate taxation that she said has been destructive for the American economy and its workers.
global minimum tax to 21 percent and toughening it, to force companies to pay the tax on a wider span of income across countries.
That, in particular, has raised concerns in the business community, with Joshua Bolten, chief executive of the Business Roundtable, saying in a statement this week that it “threatens to subject the U.S. to a major competitive disadvantage.”
The plan would also repeal provisions put in place during the Trump administration that the Biden administration says have failed to curb profit shifting and corporate inversions, which involve an American company merging with a foreign firm and becoming its subsidiary, effectively moving its headquarters abroad for tax purposes. It would replace them with tougher anti-inversion rules and stronger penalties for so-called profit stripping.
The plan is not entirely focused on the international side of the corporate tax code. It tries to crack down on large, profitable companies that pay little or no income taxes yet signal large profits to companies with their “book value.” To cut down on that disparity, companies would have to pay a minimum tax of 15 percent on book income, which businesses report to investors and which are often used to judge shareholder and executive payouts.
One big beneficiary of the plan would be the Internal Revenue Service, which has seen its budget starved in recent years. The Biden administration’s proposal would beef up the tax collection agency’s budget so that it can step up enforcement and tax collection efforts.
The annual letter to shareholders by JPMorgan Chase’s chief Jamie Dimon was just published. The widely read letter is not just an overview of the bank’s business but also covers Mr. Dimon’s thoughts on everything from leadership lessons to public policy prescriptions.
“The U.S. economy will likely boom.” A combination of excess savings, deficit spending, a potential infrastructure bill, vaccinations and “euphoria around the end of the pandemic,” Mr. Dimon wrote, may create a boom that “could easily run into 2023.” That could justify high equity valuations, but not the price of U.S. debt, given the “huge supply” soon to hit the market. There is a chance that a rise in inflation would be “more than temporary,” he wrote, forcing the Fed to raise interest rates aggressively. “Rapidly raising rates to offset an overheating economy is a typical cause of a recession,” he wrote, but he hopes for “the Goldilocks scenario” of fast growth, gently increasing inflation and a measured rise in interest rates.
“Banks are playing an increasingly smaller role in the financial system.” Mr. Dimon cited competition from an already large shadow banking system and fintech companies, as well as “Amazon, Apple, Facebook, Google and now Walmart.” He argued those nonbank competitors should be more strictly regulated; their growth has “partially been made possible” by avoiding banking rules, he wrote. And when it comes to tougher regulation of big banks, he wrote, “the cost to the economy of having fail-safe banks may not be worth it.”
“China’s leaders believe that America is in decline.” While the U.S. has faced tough times before, today “the Chinese see an America that is losing ground in technology, infrastructure and education — a nation torn and crippled by politics, as well as racial and income inequality — and a country unable to coordinate government policies (fiscal, monetary, industrial, regulatory) in any coherent way to accomplish national goals,” he wrote. “Unfortunately, recently, there is a lot of truth to this.”
a leveraged buyout offer from the private equity firm CVC Capital, sending its shares to a four-year high. Toshiba has had a series of scandals, and faces pressure from activist investors.
raising the corporate rate to help pay for President Biden’s infrastructure plans — though he didn’t mention the White House’s proposed rate, 28 percent. Other corporate chiefs are privately criticizing the potential tax rise.
The company behind the Johnson & Johnson vaccine mix-up has a history of errors. Emergent BioSolutions, which the U.S. relied on to produce doses by J.&J. and AstraZeneca, had a made manufacturing errors before. Experts worry this may leave some Americans more wary of getting vaccinated, even as Mr. Biden has moved up the eligibility deadline for U.S. inoculations.
An electric aircraft maker sues a rival for intellectual property theft. Wisk, which is backed by Boeing and the Google founder Larry Page, said that former employees downloaded confidential information before joining Archer, a competitor. Archer, which is going public by merging with a SPAC run by Moelis & Company and which counts United Airlines as an investor, denied wrongdoing and said it was cooperating with a government investigation.
A blistering start for venture capital in 2021. Start-ups set a fund-raising quarterly record in the first three months of the year, raising more than $62 billion, according to the MoneyTree report from PwC and CB Insights. That’s more than twice the total a year earlier and represents nearly half of what start-ups raised in all of 2020.
Why is the Amazon union vote taking so long?
Voting in the union election at an Amazon warehouse in Bessemer, Ala., ended on March 29, and counting began the next day, but the outcome is still unknown. What’s going on? It’s less about the number of ballots than how they’re counted.
The stakes are high, for both Amazon and the labor movement. Progressive leaders like Bernie Sanders have argued a victory for the union, the first at an Amazon facility in the U.S., could inspire workers elsewhere to unionize. And Amazon is facing increased scrutiny for its market power and labor practices.
a painstaking process:
Once Amazon and the union have gone back and forth over disputed voters, the N.L.R.B. counts the uncontested ballots anonymously and by hand, on a video conference open to reporters. This could start today.
“Economic fortunes within countries and across countries are diverging dangerously.”
— Kristalina Georgieva, the managing director of the I.M.F., on how the uneven rollout of vaccines poses a threat to the global economic recovery.
Credit Suisse’s expensive mistakes
After the 2008 financial crisis, Credit Suisse emerged battered by high-risk bets and promised to do better. A series of recent scandals suggests it hasn’t, The Times’s Jack Ewing writes.
A recap of the Swiss bank’s troubles over the past year or so:
A spying scandal that led to the ouster of Tidjane Thiam as C.E.O.
Ties to Greensill Capital, the SoftBank-backed lender that has filed for insolvency and will lead to losses at the Swiss bank.
Its involvement with Archegos, whose hugely leveraged stock bets went south, saddling the bank with a big hit.
30-day comment period on to-be-drafted regulations that would make it harder to obscure who controls a company. Among the details to be worked out are what entities should report and when; how to collect, protect and update information for a database; and the criteria for sharing with law enforcement.
“We could not be more excited,” Kenneth Blanco, the director of the Treasury’s Financial Criminal Enforcement Network (FinCEN), told bankers recently. The U.S. has been under pressure to address its vulnerability to money laundering and financial crimes:
In 2016, the international Financial Action Task Force gave the country a failing grade on transparency of company ownership.
In 2018, banks and financial institutions began having to collect that information from clients to help law enforcement identify individuals.
In January, Congress passed the Corporate Transparency Act, which requires businesses to report ownership to the government.
New rules could make forming small businesses, special purpose vehicles and other closely held entities “significantly” more burdensome, said Steve Ganis of Mintz, an expert in anti-money laundering regulation. “FinCEN’s new regime will make things much more complicated for start-ups, where control and ownership are highly fluid,” he said. Public companies and many larger businesses would be exempt because they already face stricter scrutiny.
THE SPEED READ
Flipkart, the Indian e-commerce company owned by Walmart, is reportedly planning to go public through an I.P.O. this year. (Bloomberg)
Grab, the Singaporean tech giant, is near a deal to merge with a SPAC backed by Altimeter Capital at a $35 billion valuation. It would be the biggest-ever blank check deal. (FT)
Fox sued the owner of FanDuel over the price of its option to buy a stake in the sports betting service. (CNBC)
Politics and policy
Coinbase, whose direct listing is set for next week, said it collected more revenue in the first quarter this year than in all of 2020. (CNBC)
The audio chat start-up Clubhouse is said to be raising funds at a $4 billion valuation. (Bloomberg)
The S.E.C. accused an actor of running a $690 million Ponzi scheme built around false claims of deals with Netflix and HBO. (Bloomberg)
Best of the rest
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was published early Wednesday. The letter, which is widely read on Wall Street, is not just an overview of the bank’s business but also covers Mr. Dimon’s thoughts on everything from leadership lessons to public policy prescriptions.
“The U.S. economy will likely boom.” A combination of excess savings, deficit spending, vaccinations and “euphoria around the end of the pandemic,” Mr. Dimon wrote, may create a boom that “could easily run into 2023.” That could justify high stock valuations, but not the price of U.S. debt, given the “huge supply” soon to hit the market. There is a chance that a rise in inflation would be “more than temporary,” he wrote, forcing the Federal Reserve to raise interest rates aggressively. “Rapidly raising rates to offset an overheating economy is a typical cause of a recession,” he wrote, but he hopes for “the Goldilocks scenario” of fast growth, gently increasing inflation and a measured rise in interest rates.
“Banks are playing an increasingly smaller role in the financial system.” Mr. Dimon cited competition from an already large shadow banking system and fintech companies, as well as “Amazon, Apple, Facebook, Google and now Walmart.” He argued those nonbank competitors should be more strictly regulated; their growth has “partially been made possible” by avoiding banking rules, he wrote. And when it comes to tougher regulation of big banks, he wrote, “the cost to the economy of having fail-safe banks may not be worth it.”
“China’s leaders believe that America is in decline.” The United States has faced tough times before, but today, “the Chinese see an America that is losing ground in technology, infrastructure and education — a nation torn and crippled by politics, as well as racial and income inequality — and a country unable to coordinate government policies (fiscal, monetary, industrial, regulatory) in any coherent way to accomplish national goals,” he wrote. “Unfortunately, recently, there is a lot of truth to this.”
“The solution is not as simple as walking away from fossil fuels.” Addressing climate change doesn’t mean “abandoning” companies that produce and use fossil fuels, Mr. Dimon wrote, but working with them to reduce their environmental impact. He sees “huge opportunity in sustainable and low-carbon technologies and businesses” and plans to evaluate clients’ progress according to reductions in carbon intensity — emissions per unit of output — which adjusts for factors like size.
Other notable news (and views) from the letter:
With more widespread remote working, JPMorgan may need only 60 seats for every 100 employees.“This will significantly reduce our need for real estate,” Mr. Dimon wrote.
JPMorgan spends more than $600 million a year on cybersecurity.
Mr. Dimon cited tax loopholes he thought the United States could do without: carried interest, tax breaks for racing cars, private jets and horse racing, and a land conservation tax break for golf courses.
This was Mr. Dimon’s longest letter yet, at 35,000 words over 66 pages. The steadily expanding letters — aside from a shorter edition last year, weeks after Mr. Dimon had emergency heart surgery — could be seen as a reflection of the range of issues top executives are now expected, or compelled, to address.
Target will spend more than $2 billion with Black-owned businesses by 2025, it announced on Wednesday, joining a growing list of retailers that have promised to increase their economic support of such companies in a bid to advance racial equity in the United States.
Target, which is based in Minneapolis, will add more products from companies owned by Black entrepreneurs, spend more with Black-owned marketing agencies and construction companies and introduce new resources to help Black-owned vendors navigate the process of creating products for a mass retail chain, the company said in a statement.
After last year’s protests over police brutality, a wave of American retailers, from Sephora to Macy’s, have committed to spending more money with Black-owned businesses. Many of them have joined a movement known as the 15 Percent Pledge, which supports devoting enough shelf space to Black-owned businesses to align with the African-American percentage of the national population.
Target’s announcement appears to be separate from that pledge. It said its commitment added to other racial-equity and social-justice initiatives in the past year, including efforts to improve representation among its work force.
Samsung’s sales grew by an estimated 17 percent in the first quarter from a year earlier, and operating profit increased by 44 percent, the company said on Wednesday. The South Korean electronics titan’s growth has been helped during the pandemic by strong demand for televisions, computer monitors and other lockdown staples.
The company released its latest flagship smartphones, the Galaxy S21 series, in January. In the United States, the devices handily outsold Samsung’s last line of premium phones in their first six weeks on the market, according to Counterpoint Research, which attributed the strong performance in part to Americans receiving stimulus payments.
Samsung’s handset business has also been buoyed of late by the U.S. campaign against Huawei, one of the company’s main rivals in smartphones. The Chinese tech giant’s device sales have plummeted because American sanctions prevent its phones from running popular Google apps and services, limiting their appeal to many buyers.
Another competitor, LG Electronics, said this week that it was getting out of the smartphone business to focus on other products.
Samsung’s first-quarter revenue was likely hurt by February’s winter storm in Texas, which caused the company to halt production for a while at its manufacturing facilities in Austin.
The company is expected to report detailed financial results later this month.
Jeff Bezos, Amazon’s founder and chief executive, said on Tuesday that he supported an increase in the corporate tax rate to fund investment in U.S. infrastructure.
President Biden is pushing a plan to spend $2 trillion on infrastructure improvements, in part by raising the corporate tax rate to 28 percent, from its current rate of 21 percent.
Mr. Bezos said in a statement on Amazon’s corporate website that he applauded the administration’s “focus on making bold investments in American infrastructure.”
“We recognize this investment will require concessions from all sides — both on the specifics of what’s included as well as how it gets paid for (we’re supportive of a rise in the corporate tax rate),” Mr. Bezos said.
For years, Amazon has been a model for corporate tax avoidance, fielding criticism of its tax strategies from Democrats and former President Donald J. Trump. In 2019, Amazon had an effective tax rate of 1.2 percent, which was offset by tax rebates in 2017 and 2018, according to the Institute on Taxation and Economic Policy, a left-leaning research group in Washington. In 2020, the company paid 9.4 percent in taxes on U.S. pretax profit of about $20 billion, the group said.
The company has said in the past that it “pays all the taxes we are required to pay in the U.S. and every country where we operate.”
Companies employ varied strategies to reduce their tax liabilities. In 2017, the same federal bill that lowered the tax rate to 21 percent expanded tax breaks, including allowing the immediate expensing of capital expenditures. The goal was to lift investment, but the change also caused the number of profitable companies that paid no taxes to nearly double in 2018 from prior years.
American Diesel Training, a school in Ohio that prepares people for careers as diesel mechanics, is part of a new model of work force training — one that bases pay for training programs partly on whether students get hired.
The students agree to an share about 5 percent to 9 percent of their income depending on their earnings. The monthly payments last four years. If you lose your job, the payment obligation stops.
Early results are promising, Steve Lohr reports for The New York Times, and experts say the approach makes far more economic sense than the traditional method, in which programs are paid based on how many people enroll. But there are only a relative handful of these pay-for-success programs. The challenge has been to align funding and incentives so that students, training programs and employers all benefit.
State and federal officials are now looking for new ways to improve work force development. President Biden’s $2 trillion infrastructure and jobs plan, announced last week, includes billions for work force development with an emphasis on “next-generation training programs” that embrace “evidence-based approaches.”
Social Finance, a nonprofit organization founded a decade ago to develop new ways to finance results-focused social programs, is seeking, designing and supporting new programs — for-profit or nonprofit — that follow the pay-for-success model.
“There is emerging evidence that these kinds of programs are a very effective and exciting part of work force development,” said Lawrence Katz, a labor economist at Harvard. “Social Finance is targeting and nurturing new programs, and it brings a financing mechanism that allows them to expand.”
Major U.S. and European stock indexes hovered near record highs on Wednesday after a stream of mostly upbeat economic data and the progress on vaccinations.
U.S. stock futures were little changed on Wednesday, but the S&P 500 was set to open within half a percentage point of its record. The Stoxx Europe 600 and DAX index in Germany both fell about 0.1 percent after climbing to new highs on Tuesday.
On Tuesday, the International Monetary Fund upgraded its forecast for global economic growth and said some of the world’s wealthiest countries would lead the recovery, particularly the United States, where the economy is now projected to grow by 6.4 percent this year.
The rollout of vaccines is a major reason for the rosier forecast in some countries, the I.M.F. said. President Biden said that he wanted states to make all adults eligible for vaccines by April 19, two weeks earlier than his previous deadline. In Britain, the Moderna vaccine was administered for the first time on Wednesday, making it the third vaccine available.
Still, the I.M.F. warned on Tuesday against an unequal recovery because of the uneven distribution of vaccines around the world with some lower-income countries not expected to be able to vaccinate their populations this year.
Elsewhere in markets
The yield on U.S. 10-year bonds dropped for a third straight day to 1.64 percent, the lowest in two weeks, before the Federal Reserve publishes the minutes from its mid-March meeting. Last month, policymakers released new economic projections that had the central bank’s interest rate near zero for several more years.
Oil price fell with futures for West Texas Intermediate, the U.S. benchmark, declining 0.5 percent to $59.06 a barrel.
Shares in Carnival, the cruise ship operator, rose nearly 5 percent in premarket trading after the Centers for Disease Control and Prevention said sailings could restart “hopefully, by midsummer,” Bloomberg reported. Carnival shares have already jumped 10 percent since the C.D.C. issued new guidance for the cruise industry on Friday.
HONG KONG — Political opposition has been quashed. Free speech has been stifled. The independent court system may be next.
But while Hong Kong’s top leaders take a tougher line on the city of more than seven million people, they are courting a crucial constituency: the rich. Top officials are preparing a new tax break and other sweeteners to portray Hong Kong as the premier place in Asia to make money, despite the Chinese Communist Party’s increasingly autocratic rule.
So far, the pitch is working. Cambridge Associates, a $30 billion investment fund, said in March it planned to open an office in the city. Investment managers have set up more than a hundred new companies in recent months. The Wall Street banks Goldman Sachs, Citigroup, Bank of America and Morgan Stanley are increasing their Hong Kong staffing.
“Hong Kong is second only to New York as the world’s billionaire city,” said Paul Chan, Hong Kong’s financial secretary, at an online gathering of finance executives this year.
erupted two years ago. At the same time, it is trying to charm the city’s financial class to keep it from moving to another business-friendly place like Singapore.
“It is a one-party state, but they are pragmatic and they don’t want to hurt business,” Fred Hu, a former chairman of Goldman’s Greater China business, said of Chinese officials.
For apolitical financial types, the changes will have little impact, said Mr. Hu, who is also the founder of the private equity firm Primavera Capital Group. “If you’re a banker or a trader, you may have political views, but you’re not a political activist,” he said.
flowed out of local Hong Kong bank accounts and into jurisdictions like Singapore.
Tensions run taut inside Hong Kong’s gleaming office towers. Even executives who are sympathetic to the government have declined to speak publicly for fear of getting caught in the political crossfire between Beijing and world capitals like Washington and London. Hong Kong’s tough rules on movement in the pandemic may also spark some expatriates to leave in the summer once school ends.
Today in Business
For now, however, financial firms are doubling down on Hong Kong. Neal Horwitz, an executive recruiter in Singapore, said finance was likely to remain in Hong Kong “until the ship goes down.”
carried interest, which is typically earned by private equity investors and hedge funds. Officials had discussed the plan for years but didn’t introduce a bill until February, and it could pass in the coming months through the city’s Beijing-dominated legislature.
sparked criticism elsewhere, including in the United States. But Hong Kong fears a financial exodus without such benefits, said Maurice Tse, a finance professor at Hong Kong University’s business school.
“To keep these people around we have to give a tax benefit,” he said.
Hong Kong has also proposed a program, Wealth Management Connect, that would give mainland residents in the southern region known as the Greater Bay Area the ability to invest in Hong Kong-based hedge funds and investment firms. Officials have boasted that it would give foreign firms access to 72 million people. Hong Kong and mainland Chinese officials signed an agreement in February to start a pilot program at an unspecified time.
Pandemic travel restrictions have slowed the proposal’s momentum, said King Au, the executive director of Hong Kong’s Financial Services Development Council, but it remains a top priority.
“I want to highlight how important the China market is to global investors,” Mr. Au said.
Mainland money has already helped Hong Kong look more attractive. Chinese firms largely fueled a record $52 billion haul for companies that sold new shares on the Hong Kong Stock Exchange last year, according to Dealogic, a data provider. New offerings this year have already raised $16 billion, including $5.4 billion for Kuaishou, which operates a Chinese video app. The record start has been helped in part by Chinese companies that have been pressured by Washington to avoid raising money in the United States.
triple its hires across China, and a spokeswoman said a Hong Kong staff increase was part of that. Bank of America is adding more people in Hong Kong, while Citi has said it will hire as many as 1,700 people in Hong Kong this year alone.
hew to the party line. Still, it is considering moving some of its top executives to Hong Kong, because it will be “important to be closer to growth opportunities,” Noel Quinn, HSBC’s chief executive, said in February.
Investment funds are flocking to Hong Kong, too, after officials in August lowered regulatory barriers to setting up legal structures similar to those used in low-tax, opaque jurisdictions like the Cayman Islands and Bermuda. Government data shows that 154 funds have been registered since then.
Xi Jinping, China’s top leader, and Li Zhanshu, the Communist Party’s No. 3 official, at one point owned Hong Kong property, according to a trail that can be traced partly through public records.
While officials have welcomed business, they have made clear to the financial and business worlds that they will brook no dissent. In March, Han Zheng, a Chinese vice premier, praised the stock market’s performance and the finance sector in a meeting with a political advisory group but made its limits clear.
“The signal to the business community is very simple,” said Michael Tien, a former Hong Kong lawmaker and businessman who attended the closed-door session. “Stay out of politics.”
three million doses are being given on average each day, compared with well under one million when Mr. Biden took office in January, according to the Centers for Disease Control and Prevention. Every state has now given at least one dose to a quarter or more of its population. About 62.4 million people — 19 percent of Americans — have been fully vaccinated.
“Today, we are pleased to announce another acceleration of the vaccine eligibility phases to earlier than anticipated,” Gov. Larry Hogan of Maryland said on Monday, announcing that all Maryland residents 16 or older would be eligible from Tuesday for a vaccine at the state’s mass vaccination sites, and from April 19 at any vaccine provider in the state.
Also on Monday, Gov. Philip D. Murphy of New Jersey said residents 16 or older in his state would be eligible on April 19. Mayor Muriel Bowser of Washington said later on Monday that city residents 16 or older would also be eligible on April 19.
That leaves two states, Oregon and Hawaii, keeping to Mr. Biden’s original deadline of May 1. Their governors did not immediately respond to requests for comment about whether they would broaden eligibility sooner, but Gov. Kate Brown of Oregon announced on Monday that all frontline workers and their families, as well as those 16 or older with underlying health conditions, would be eligible immediately.
In Hawaii, 34 percent of residents have received at least one dose; in Oregon, the figure is 31 percent. Alabama has vaccinated the lowest proportion of its residents, at 25 percent.
But as Ms. Brown noted in her announcement about eligibility — and as experts have warned for weeks — “we’re in a race between vaccines and variants.”
Along with dangerous coronavirus variants that were identified in Britain, South Africa and Brazil, new mutations have continued to pop up in the United States, from California to New York to Oregon.
The shots will eventually win, scientists say, but because each infection gives the coronavirus a chance to evolve further, vaccinations must proceed as fast as possible.
As that race continues, the optimism sown by the steady pace of vaccinations may be threatening to undermine the progress the nation has made. Scientists also fear Americans could let their guard down too soon as warmer weather draws them outside and case levels drop far below the devastating surge this winter.
Cases are now rising sharply in parts of the country, with some states offering a stark reminder that the pandemic is far from over: New cases in Michigan have increased 112 percent and hospitalizations have increased 108 percent over the past two weeks, according to a New York Times database.
The United States is averaging more than 64,000 new cases each day, an 18 percent increase from two weeks earlier. That’s well below the peak of more than 250,000 new cases daily in January, but on par with last summer’s surge after reopenings in some states, like Arizona, where patrons packed into clubs as hospital beds filled up. The United States is averaging more than 800 Covid-19 deaths each day, the lowest level since November.
Yet again, governors across the country have lifted precautions like mask mandates and capacity limits on businesses. Medical experts have warned that these moves are premature, and Mr. Biden has urged governors to reinstate the restrictions.
Travel is up again, too, with more than one million people passing through airport security each day in the United States since March 11, according to the Transportation Security Administration. On Sunday, more than 1.5 million people passed through T.S.A. checkpoints. The C.D.C. said last week that fully vaccinated Americans could travel domestically with low risk, but should still follow precautions like wearing masks.
In Beijing, the vaccinated qualify for buy-one-get-one-free ice cream cones. In the northern province of Gansu, a county government published a 20-stanza poem extolling the virtues of the jab. In the southern town of Wancheng, officials warned parents that if they refused to get vaccinated, their children’s schooling and future employment and housing were all at risk.
China is deploying a medley of tactics, some tantalizing and some threatening, to achieve mass vaccination on a staggering scale: a goal of 560 million people, or 40 percent of its population, by the end of June.
China has already proven how effectively it can mobilize against the coronavirus. And other countries have achieved widespread vaccination, albeit in much smaller populations.
But China faces a number of challenges. The country’s near-total control over the coronavirus has left many residents feeling little urgency to get vaccinated. Some are wary of China’s history of vaccine-related scandals, a fear that the lack of transparency around Chinese coronavirus vaccines has done little to assuage. Then there is the sheer size of the population to be inoculated.
To get it done, the government has turned to a familiar tool kit: a sprawling, quickly mobilized bureaucracy and its sometimes heavy-handed approach. This top-down, all-out response helped tame the virus early on, and now the authorities hope to replicate that success with vaccinations.
Already, uptake has skyrocketed. Over the past week, China has administered an average of about 4.8 million doses a day, up from about one million a day for much of last month. Experts have said they hope to reach 10 million a day to meet the June goal.
“They say it’s voluntary, but if you don’t get the vaccine, they’ll just keep calling you,” said Annie Chen, a university student in Beijing who received two such entreaties from a school counselor in about a week.
A top vaccines official at the European Medicines Agency said on Tuesday that AstraZeneca’s vaccine was linked to blood clots in a small number of recipients, the first indication from a leading regulatory body that the clots may be a real, if extremely rare, side effect of the shot.
The agency itself has not formally changed its guidance, issued last week, that the benefits of the AstraZeneca vaccine outweigh the risks, but any further ruling from regulators would be a setback for a shot that Europe and much of the world are relying on to save lives amid a global surge in coronavirus cases.
The medicines agency said last week that no causal link between the vaccine and rare blood clots had been proven. Only a few dozen cases of blood clots have been recorded among the many millions of people who have received the vaccine across Europe.
But the vaccines official, Marco Cavaleri, told an Italian newspaper that “it is clear there is an association with the vaccine,” and that the medicines agency would announce “in the next hours” that it had determined there was a link. The medicines agency did not immediately respond to questions about its plans.
Those comments represented the first indication by a leading regulatory body that the blood clots could be a genuine, if extremely rare, side effect of the AstraZeneca vaccine. Previously, health officials in several European countries temporarily restricted the use of the shot in certain age groups, despite the European Medicines Agency’s recommendation to keep administering it.
Regulators in Britain and at the World Health Organization have also said that, while they were investigating any rare side effects, the shot was safe to use and would save many lives.
Mr. Cavaleri told the Italian newspaper Il Messaggero that European regulators had not determined why the vaccine might be causing the rare blood clots, which generated concern because the cases were so unusual. They involved blood clots combined with unusually low levels of platelets, a disorder that can lead to heavy bleeding.
The most worrisome of the conditions, known as cerebral venous sinus thrombosis, involves clots in the veins that drain blood from the brain, a condition that can lead to a rare type of stroke.
The clots are, by all accounts, extremely rare. European regulators were analyzing 44 cases of cerebral venous sinus thrombosis, 14 of them fatal, among 9.2 million people who received the AstraZeneca vaccine across the continent. Emer Cooke, the European Medicines Agency’s director, said that the clotting cases in younger people translated to a risk for one in every 100,000 people under 60 given the vaccine. Younger people, and especially younger women, are at higher risk from the brain clots, scientists have said.
In Britain, regulators last week reported 30 cases of the rare blood clots combined with low platelets among 18 million people given the AstraZeneca vaccine, which was developed with the University of Oxford. No such cases were reported in people who had received the Pfizer-BioNTech vaccine in Britain.
Regulators in Britain have said that people should get the vaccine “when invited to do so.” But British news reports indicated Monday night that regulators were considering updating that guidance for certain age groups.
Monika Pronczuk and Emma Bubola contributed reporting.
North Korea said on Tuesday that it had decided not to participate in the Tokyo Olympic Games this summer because of the coronavirus pandemic.
The North’s national Olympic Committee decided at a March 25 meeting that its delegation would skip the Olympics “in order to protect our athletes from the global health crisis caused by the malicious virus infection,” according to Sports in the Democratic People’s Republic of Korea, a government-run website.
It is the first Summer Olympics that the North has missed since 1988, when they were held in Seoul, the South Korean capital.
North Korea, which has a decrepit public health system, has taken stringent measures against the virus since early last year, including shutting its borders. The country officially maintains that it has no virus cases, but outside health experts are skeptical.
North Korea’s decision deprives South Korea and other nations of a rare opportunity to establish official contact with the isolated country. Officials in the South had hoped that the Olympics — to be held from July 23 to Aug. 8 — might provide a venue for senior delegates from both Koreas to discuss issues beyond sports.
The 2018 Winter Olympics, held in the South Korean city of Pyeongchang, offered similar hope for easing tensions on the Korean Peninsula. Kim Yo-jong, the only sister of North Korea’s leader, Kim Jong-un, grabbed global attention when she attended the opening ceremony, becoming the first member of the Kim family to cross the border into South Korea.
Mr. Kim used the North’s participation in the Pyeongchang Olympics as a signal to start diplomacy after a series of nuclear and long-range missile tests. Inter-Korean dialogue soon followed, leading to three summit meetings between Mr. Kim and President Moon Jae-in of South Korea. Mr. Kim also met three times with President Donald J. Trump.
But since the collapse of Mr. Kim’s diplomacy with Mr. Trump in 2019, North Korea has shunned official contact with South Korea or the United States. The pandemic has deepened the North’s diplomatic isolation and economic difficulties amid concerns over its nuclear ambitions. North Korea launched two ballistic missiles on March 25 in its first such test in a year, in a challenge to President Biden.
Since North Korea’s first Olympic appearance in 1972, it has participated in every Summer Games except for the Los Angeles event in 1984, when it joined a Soviet-led boycott, and in 1988, when South Korea played host. North Korean athletes have won 16 gold medals, mostly in weight lifting, wrestling, gymnastics, boxing and judo, consistently citing the ruling Kim family as inspiration.
The Tokyo Games were originally scheduled for 2020 but were delayed by a year because of the pandemic. The organizing committee has been scrambling to develop safety protocols to protect both participants and local residents. But as a series of health, economic and political challenges have arisen, large majorities in Japan now say in polls that the Games should not be held this summer.
Even though organizers have barred international spectators,epidemiologists warn the Olympics could still become a superspreader event. Thousands of athletes and other participants will descend on Tokyo from more than 200 countries while much of the Japanese public remains unvaccinated.
Prime Minister Jacinda Ardern of New Zealand announced on Tuesday that her nation would establish a travel bubble with Australia, allowing travelers to move between the countries without needing to quarantine for the first time since the pandemic began.
The bubble, which will open just before midnight on April 19, is expected to deliver a boost to tourism and to families that have been separated since both countries enacted strict border closures and lockdown measures that have all but eliminated local transmission of the coronavirus.
The announcement came after months of negotiations and setbacks, as Australia battled small outbreaks and officials in both countries weighed testing requirements and other safety protocols.
“The director general of health considers the risk of transmission of Covid-19 from Australia to New Zealand is low and that quarantine-free travel is safe to commence,” Ms. Ardern said at a news conference.
Since last year, Australia has permitted travelers from New Zealand to bypass its hotel quarantine requirements. New Zealand’s decision to reciprocate makes the two countries among the first places in the world to set up such a bubble, following a similar announcement last week by Taiwan and the Pacific island nation of Palau.
Australians flying to New Zealand will be required to have spent the previous 14 days in Australia, to wear a mask on the plane and, if possible, to use New Zealand’s Covid-19 contact tracing app. In the event of an outbreak in Australia, New Zealand could impose additional restrictions, including shutting down travel to a particular Australian state or imposing quarantine requirements, Ms. Ardern said.
She warned that the new requirements would not necessarily free up many spaces in New Zealand’s overwhelmed hotel quarantine system, which has a weekslong backlog for New Zealanders wishing to book a space to return home. Of the roughly 1,000 slots that would now become available every two weeks, around half would be set aside as a contingency measure, while most of the others would not be appropriate for travelers from higher-risk countries, Ms. Ardern said.
Before New Zealand closed its borders to international visitors in March 2020, its tourism industry employed nearly 230,000 people and contributed 41.9 billion New Zealand dollars ($30.2 billion) to economic output, according to the country’s tourism board. Most of the roughly 3.8 million foreign tourists who visited New Zealand over a 12-month period between 2018 and 2019 came from Australia.
Ms. Ardern encouraged Australians to visit New Zealand’s ski areas, and said she would be conducting interviews with Australian media outlets this week to promote New Zealand as a tourism destination.
The bubble would also make it easier for the more than 500,000 New Zealanders who live in Australia to visit their families.
“It is ultimately a change of scene that so many have been looking for,” Ms. Ardern said, addressing Australians. “You may not have been in long periods of lockdown, but you haven’t had the option. Now you have the option, come and see us.”
There was no need to pipe in crowd noise at Globe Life Field on Monday, as the Texas Rangers hosted the Toronto Blue Jays in front of the largest crowd at a sporting event in the United States in more than a year.
From the long lines of fans waiting to get into the stadium to the persistent buzz of the spectators during quiet moments, the game in Arlington, Texas, was a throwback to a time before the coronavirus crippled the country.
“It felt like a real game,” Rangers Manager Chris Woodward said. “It felt like back to the old days when we had full capacity.”
The official crowd of 38,238 fans, which was announced as a sellout, represented 94.8 percent of the stadium’s 40,300-seat capacity. It topped the Daytona 500 (which allowed slightly more than 30,000 fans) and the Super Bowl (24,835), both of which were held in February, as the largest crowd at a U.S. sporting event since the pandemic began last year.
The lifting of capacity restrictions in Texas made the enormous crowd possible. And for Major League Baseball, which claims its teams collectively lost billions during a largely fanless 2020 season, it was a hopeful sign that large crowds can return to all of the league’s games before too long. The open question is whether such events can be safe as the pandemic continues.
M.L.B. requires all fans over age 2 to wear masks at games this season, but a large percentage of the fans in Arlington went maskless. That will undoubtedly raise fears of the event resulting in a spike in coronavirus cases.
Garment workers in factories producing clothes and shoes for companies like Nike, Walmart and Benetton have seen their jobs disappear in the past 12 months, as major brands in the United States and Europe canceled or refused to pay for orders after the pandemic took hold and suppliers resorted to mass layoffs or closures.
Most garment workers earn chronically low wages, and few have any savings. Which means the only thing standing between them and dire poverty are legally mandated severance benefits that are often owed upon termination, wherever the workers are in the world.
According to a new report from the Worker Rights Consortium, however, garment workers are being denied some or all of these wages.
The study identified 31 export garment factories in nine countries where, the authors concluded, a total of 37,637 workers who were laid off did not receive the full severance pay they legally earned, a collective $39.8 million.
According to Scott Nova, the group’s executive director, the report covers only about 10 percent of global garment factory closures with mass layoffs in the last year. The group is investigating an additional 210 factories in 18 countries, leading the authors to estimate that the final data set will detail 213 factories with severance pay violations affecting more than 160,000 workers owed $171.5 million.
“Severance wage theft has been a longstanding problem in the garment industry, but the scope has dramatically increased in the last year,” Mr. Nova said. He added that the figures were likely to rise as economic aftershocks related to the pandemic continued to unfold across the retail industry. He believes the lost earnings could total between $500 million and $850 million.
The report’s authors say the only realistic solution to the crisis would be the creation of a so-called severance guarantee fund. The initiative, devised in conjunction with 220 unions and other labor rights organizations, would be financed by mandatory payments from signatory brands that could then be leveraged in cases of large-scale nonpayment of severance by a factory or supplier.
Several household names implicated in the report made money during the pandemic. Amazon, for example, reported an increase in net profit of 84 percent in 2020, while Inditex, the parent company of Zara, made 11.4 billion euros, about $13.4 billion, in gross profit. Nike, Next and Walmart all also had healthy earnings.
Some industry experts believe the purchasing practices of the industry’s power players are a major contributor to the severance pay crisis. The overwhelming majority of fashion retailers do not own their own production facilities, instead contracting with factories in countries where labor is cheap. The brands dictate prices, often squeezing suppliers to offer more for less, and can shift sourcing locations at will. Factory owners in developing countries say they are forced to operate on minimal margins, with few able to afford better worker wages or investments in safety and severance.
“The onus falls on the supplier,” said Genevieve LeBaron, a professor at the University of Sheffield in England who focuses on international labor standards. “But there is a reason the spotlight keeps falling on larger actors further up the supply chain. Their behavior can impact the ability of factories to deliver on their responsibilities.”
More than a year after the pandemic brought down the curtain at theaters and concert halls around the world, the performing arts are beginning to return to the stage.
A smattering of theater and comedy shows lit up New York stages over the last few days, but next week will see one of the higher-profile arts returns. The New York Philharmonic is scheduled to give its first live performance in a concert hall since the pandemic began: “a musical musing on Goethe,” at the Shed at the Hudson Yards development on April 14.
The reopenings come at a confusing moment in the pandemic. Vaccinations are rising in the United States — Saturday was the first time the country reported more than four million doses in a single day, according to data compiled by The New York Times — but so are case counts.
While new cases, deaths and hospitalizations are far below their January peak, the average number of new reported cases has risen 19 percent over the past two weeks.
Still, performance spaces are carefully starting to welcome audiences, at a fraction of their capacity. There remains much debate over what regulations to impose on attendees. In Israel, concertgoers are required to have a Green Pass, which certifies that they have been vaccinated, though enforcement can be spotty.
In New York, as at the Daryl Roth Theater, an Off Broadway venue, temperatures were checked as a small audience streamed in for an immersive sound performance based on the José Saramago novel “Blindness” — a dystopian tale from 25 years ago whose resonances eerily align with the present. Mayor Bill de Blasio, masked and sneaker-clad, greeted some theatergoers on the sidewalk outside with wrist and elbow bumps.
But that optimism has been tinged with more halting news that underscores how fragile these reopenings are.
The Park Avenue Armory had to postpone one of the most high-profile experiments to bring indoor live performance back to New York. A sold-out run of “Afterwardsness,” a new piece that addresses the pandemic and violence against Black people, was canceled after several members of the Bill T. Jones/Arnie Zane Company tested positive for the virus.
At the Comedy Cellar, a Greenwich Village club that has nursed the early careers of many comics, laughter filled the room for its first show, but reminders of reality were impossible to miss: Performers’ microphones were swapped out between each set, every fresh one covered with what looked like a miniature shower cap.
John Touhey, 27, said that his reason for coming was simple. “Just to feel something again,” he said.California officials have announced guidelines for indoor concerts, theater, sports and other events, which will be permitted beginning April 15. Capacity will be linked to a county’s health tier.
Los Angeles County, for example, on Monday moved into the orange tier, which would allow venues that hold up to 1,500 people to operate at 15 percent capacity, or 200 people. The number rises to 35 percent if all attendees are tested or show proof of vaccination.
In Minneapolis, pandemic-weary music fans may have to wait longer, but the results will be louder. First Avenue, a legendary club, last month booked its first new, non-postponed show since the pandemic began, The Star Tribune reported. The band is Dinosaur Jr., led by J. Mascis, one of the most durable indie rockers of the last 30 years. The show is scheduled for Sept. 14.
Minority communities in Britain have long felt estranged from the government and medical establishment, but their sense of alienation is suddenly proving more costly than ever amid a coronavirus vaccination campaign that depends heavily on trust.
With Britons enjoying one of the fastest vaccination rollouts in the world, skepticism about the shots remains high in many of the communities where Covid-19 has taken the heaviest toll.
“The government’s response to the Black, Asian and minority ethnic communities has been rather limited,” said Dr. Raja Amjid Riaz, 52, a surgeon who is also a leader at the Central Mosque of Brent, an ethnically diverse area of North London. “Those people have not been catered for.”
As a result, communities like Brent offer fertile ground for the most outlandish of vaccine rumors, from unfounded claims that they affect fertility to the outright fabrication that shots are being used to inject microchips.
With the government seen as still disengaged in Black, Asian and other ethnic minority communities even as they have been hit disproportionately hard both by the virus itself and by the lockdowns imposed to stop its spread, many local leaders like Dr. Riaz have taken it upon themselves to act.
Some are well-known and trusted figures like religious leaders. Others are local health care workers. And still others are ordinary community members like Umit Jani, a 46-year-old Brent resident.
Mr. Jani’s face is one of many featured on 150 posters across the borough encouraging residents to get tested for the virus and vaccinated, part of a local government initiative.
The goal is to reframe the community’s relationship with the power structure, and perhaps establish some trust.
“In Brent, things have been done to communities and not in partnership,” said Mr. Jani, who said he had seen the toll the virus has taken on the area’s Gujarati and Somali communities.
For most Americans, the third stimulus payment, like the first two, arrived as if by magic, landing unprompted in the bank or in the mail.
But it’s not as straightforward for people without a bank account or a mailing address. Or a phone. Or identification.
Just about anyone with a Social Security number who is not someone else’s dependent and who earns less than $75,000 is entitled to the stimulus. But some of the people who would benefit most from the money are having the hardest time getting their hands on it.
“There’s this great intention to lift people out of poverty more and give them support, and all of that’s wonderful,” said Beth Hofmeister, a lawyer for the Legal Aid Society’s Homeless Rights Project. “But the way people have to access it doesn’t really fit with how most really low-income people are interacting with the government.”
Interviews with homeless people in New York City over the last couple of weeks found that some mistakenly assumed they were ineligible for the stimulus. Others said that bureaucratic hurdles, complicated by limited phone or internet access, were insurmountable.
Paradoxically, the very poor are the most likely to pump stimulus money right back into devastated local economies, rather than sock it away in the bank or use it to play the stock market.
“I’d find a permanent place to stay, some food, clothing, a nice shower, a nice bed,” said Richard Rodriguez, 43, waiting for lunch outside the Bowery Mission last month. “I haven’t had a nice bed for a year.”
Mr. Rodriguez said he had made several attempts to file taxes — a necessary step for those not yet in the system — but had given up.
“I went to H&R Block and I told them I was homeless,” he said. “They said they couldn’t help me.”
U.S. coronavirus cases have increased again after hitting a low late last month, and some of the states driving the upward trend have also been hit hardest by variants, according to an analysis of data from Helix, a lab testing company.
The country’s vaccine rollout has sped up since the first doses were administered in December, recently reaching a rolling average of more than three million doses per day. And new U.S. cases trended steeply downward in the first quarter of the year, falling almost 80 percent from mid-January through the end of March.
But during that period, states also rolled back virus control measures, and now mobility data shows a rise in people socializing and traveling. Amid all this, more contagious variants have been gaining a foothold, and new cases are almost 20 percent higher than they were at the lowest point in March.
“It is a pretty complex situation, because behavior is changing, but you’ve also got this change in the virus itself at the same time,” said Emily Martin, an epidemiologist at the University of Michigan School of Public Health.
Michigan has seen the sharpest rise in cases in the last few weeks. B.1.1.7 — the more transmissible and more deadly variant of the coronavirus that was first discovered in Britain — may now make up around 70 percent of all of the state’s new cases, according to the Helix data.
Higher vaccination rates among the country’s older adults — those prioritized first in the vaccination rollout — mean that some of those at highest risk of complications are protected as cases rise again.
But almost 70 percent of the U.S. population has still not received a first dose, and only about half of those ages 65 and older are fully vaccinated. And in many states, those with high-risk conditions or in their 50s and 60s had not yet or had only just become eligible for the vaccine when cases began to rise again, leaving them vulnerable.
The tiny German state of Saarland, home to around 990,000 people, is making a cautious return to a new kind of normal in a pilot project that state officials hope could show how to keep the local economy open while controlling infections. From Tuesday, residents who test negative for the coronavirus will be able to use outdoor dining areas, gyms and movie theaters and even attend live theater performances.
Even as cases have continued to rise in Germany, prompting calls for a harsher national lockdown to halt a third wave of the pandemic — which has already shut down many of its European neighbors.
“More vaccinating, more testing, more mindfulness, more options: That’s the formula we want to use as Saarland break new ground in the fight against the coronavirus pandemic,” Tobias Hans, the governor of the state in southwestern Germany, said last week as he announced the reopening plans.
Under the guidelines, as many as 10 people can meet outdoors, and anyone with a negative test result within the previous 24 hours can visit stores, gyms, theaters and beer gardens — places that have largely been closed across Germany since the country announced a “lockdown light” in November.
(Many stores have been open since March, when a court overturned the rules.)
The Saarland project begins the same day that new regulations require travelers from the Netherlands to present a negative coronavirus test to cross the border into Germany. Travelers from the Czech Republic, France and Poland face similar measures.