Janet Yellen, nominated to be the next Treasury secretary, will tell lawmakers on Tuesday that the United States needs a robust fiscal stimulus program to get the pandemic-stricken economy back on track and that now is not the time to worry about the nation’s mounting debt burden.
“Right now, with interest rates at historic lows, the smartest thing we can do is act big,” Ms. Yellen will say, according to a copy of her opening remarks to the Senate Finance Committee reviewed by The New York Times.
Ms. Yellen is one of a handful of nominees of President-elect Joseph R. Biden Jr. that will go before senators the day before Mr. Biden’s inauguration. Her confirmation hearing is scheduled for 10 a.m. Eastern.
The confirmation process for Ms. Yellen, a seasoned economist and central banker who served as chair of the Federal Reserve from 2014 to 2018, is expected to be a relatively smooth one.
“This is the worst economic crisis in 100 years, and nobody is better qualified than Secretary-designate Yellen to lead an economic recovery,” said Senator Ron Wyden of Oregon, who will become the Finance Committee chairman when Democrats take control of the Senate.
And Senator Charles E. Grassley of Iowa, currently Republican chairman of the Finance Committee, has spoken positively of Ms. Yellen since Mr. Biden picked her for the job.
Ms. Yellen, who was confirmed to be Fed chair by a Senate vote of 56 to 26, will likely face questions about America’s economic relationship with China, her position on sanctions policy as it relates to Iran and her thoughts on tax policy.
While helping to craft and oversee the Biden administration’s economic relief efforts will initially be her top priority, Ms. Yellen will also steer the government’s sprawling regulatory power over banks and the financial sector. At the hearing, she will be under pressure to show Democrats and progressive groups that she is ready to end what they view as the coddling of Wall Street by Steven Mnuchin, the outgoing Treasury secretary.
In the past, lawmakers tended to preach allegiance to full employment — the lowest jobless rate an economy can sustain without stoking high inflation or other instabilities — while pulling back fiscal and monetary support before hitting that target as they worried that a more patient approach would cause price spikes and other problems.
That timidity appears less likely to rear its head this time around, reports The New York Times’s Jeanna Smialek.
President-elect Joseph R. Biden is set to take office as Democrats control the House and Senate and at a time when many politicians have become less worried about the government taking on debt thanks to historically low borrowing costs.
And the Federal Reserve, which has a track record of lifting interest rates as unemployment falls and as Congress spends more than it collects in taxes, has committed to greater patience this time around.
In the mid-to-late 1960s, Fed officials were tightly focused on chasing full employment. As they tested how far they could push the job market, they did not try to head inflation off as it crept up and saw higher prices as a trade off for lower joblessness. When America took its final steps away from the gold standard and an oil price shock hit in the early 1970s, price gains took off — and it took massive monetary belt-tightening by the Fed and years of serious economic pain to tame them.
There are reasons to believe that this time is different. Inflation has been low for decades and remains contained across the world. The link between unemployment and wages, and wages and prices, has been more tenuous than in decades past. From Japan to Europe, the problem of the era is weak price gains that trap economies in cycles of stagnation by eroding room to cut interest rates during time of trouble, not excessively fast inflation.
U.S. stock futures rose on Tuesday, with the S&P 500 index set to open 0.7 percent higher, before a Senate hearing where Janet Yellen, the incoming Biden administration’s pick for Treasury secretary, is expected to promote a vigorous fiscal response to the pandemic.
Most Asian stocks closed higher, with the Nikkei 225 in Japan up 1.4 percent. European stocks were more mixed. The Stoxx Europe 600 rose 0.1 percent with health care stocks performing the strongest. U.S. markets were closed on Monday for the Martin Luther King’s Birthday holiday.
Ms. Yellen, the former chair of the Federal Reserve, is expected to tell senators at her confirmation hearing on Tuesday morning that the United States needed a robust fiscal stimulus package. “Right now, with interest rates at historic lows, the smartest thing we can do is act big,” Ms. Yellen will say, according to a copy of her opening remarks.
U.S. government bond prices fell. The yield on 10-year notes rose three basis points, or 0.03 percentage points, to 1.11 percent. Yields have risen this month — though they remain extremely low by historical standards — in anticipation of a Democratic-held White House and Congress pursuing a large spending plan. President-elect Joseph R. Biden Jr. proposed a $1.9 trillion relief package last week.
Oil prices rose. Futures of Brent, Europe’s benchmark, rose 1.2 percent to $55.38 a barrel. Futures of West Texas Intermediate rose to $52.54 a barrel. The International Energy Agency cut its estimates for oil demand for 2021 because of lockdowns to curb the spread of the coronavirus. But oil prices have recovered in recent months after Saudi Arabia and some other nations cut production.
Bank of America was the latest lender to reduce how much money it was setting aside to cover potential loan losses, raising its profits. But shares fell about 2 percent in premarket trading after it released quarterly earnings showing that revenue from fixed income trading declined, missing analysts’ expectations. Shares in Goldman Sachs were down about 1 percent as the investment bank also missed estimates for fixed income trading revenue, but revenue from equity sales and trading surpassed expectations.
The global pandemic ravaging American businesses and low-wage employees has barely lapped at the revenues and profits of the country’s biggest banks. Now, banks are saying that the worst of the pandemic’s potential to do them harm has passed.
Bank of America revealed on Tuesday that it had adjusted its calculations for how much cash it needed to set aside for a disaster, joining other large American banks in releasing some rainy-day funds based on an improved economic forecast. Goldman Sachs also said on Tuesday that it had adjusted its reserves, lowering them for some of its businesses while raising them slightly for its new consumer credit card division.
The banks can now use their freed-up cash to do things they avoided last year, like making new loans. They are also preparing to start distributing money to shareholders again after the Federal Reserve lifted temporary restrictions on share buybacks and dividend payments late last year.
“We continued to see signs of a recovery, led by increased consumer spending, stabilizing loan demand by our commercial customers and strong markets and investing activity,” Bank of America’s chief executive, Brian Moynihan, said in a statement accompanying the bank’s earnings report.
The bank released $828 million, less than its counterparts Citigroup and JPMorgan Chase each shed. But the move reflected similar changes to expectations of how the economy would perform this year, now that a vaccine for the coronavirus has begun to be distributed and Congress has passed another economic stimulus package.
In the fourth quarter of 2020, Bank of America earned $5.5 billion after taking in revenue of just over $20 billion. The numbers were not record-setting — in the same period in 2019, earnings were $7 billion and revenue was $22.3 billion — but they signaled that the bank was handily weathering the economic conditions caused by the pandemic. Revenue and income in its giant consumer business was down compared with the previous year, but business in its Wall Street division was better.
In the last three months of 2020, the bank took in $3.9 billion in revenue from trading in the financial markets and other related activities, a 14 percent increase from the same period a year earlier. The division earned $834 million for the quarter, compared with $638 million during the same period in 2019.
Goldman Sachs earned just over $4.5 billion in the final quarter of 2020 on revenue of $11.7 billion, which was 18 percent higher than the same quarter of 2019 thanks to a jump in its Wall Street trading and investment banking businesses. It pared down the amount of money it was setting aside to deal with losses in wholesale loans, but added more for its consumer credit card business, which it started in the spring of 2019.
If you’re in the market for sports memorabilia, you might want to head to Costco. Yes, Costco.
The membership-only wholesale retailer, known for its bargains on bulk food and cleaning supplies, is selling a baseball autographed by Babe Ruth on its website for $64,000.
Costco describes it as “one of the nicest signed Babe Ruth Home Run Special Balls ever made available to the public, and is over all one of the nicest signed Babe Ruth balls known to be in existence.” Costco listed another ball signed by the Sultan of Swat in May for $30,000.
The concept might seem like a departure from Costco’s brand, offering customers staples on the cheap. Not so, said Andrew Lipsman, an analyst at the research firm eMarketer.
“It’s not totally out of character for Costco to sell high-ticket items,” he said, noting that the company has sold furniture and engagement rings, sometimes for hundreds of thousands of dollars. “My sense is that this is some sort of experiment in high-ticket items and seeing what will sell.”
Mr. Lipsman added that it might be a sign that the company was aligning around a growing market. “Sports memorabilia has been skyrocketing over the past year,” he said.
Indeed, the PWCC 500, an index of the top 500 trading cards, reached a record high in June, and has continued climbing. Experts attribute this to the spending power of baby boomers, millennials entering the market and increasing interest from foreigners, The Wall Street Journal reported.
Costco declined to comment for this article.
Baseball collectors’ items often fetch the highest prices. A Ruth jersey sold for $5.67 million at an auction in 2019.
Along with 27 other items on the “sports memorabilia” section of its website, Costco is also selling a bat signed by Ty Cobb. The bat, which Costco describes as “ultra rare and highly valuable,” is inscribed with the phrase “With Best Wishes Sincerely” and dated “3/14/49.” It is priced at $160,000.
Both sales end on Jan. 31.
At the center of an antitrust lawsuit filed by 10 state attorneys general last month is a deal Google extended to Facebook to be a partner in the digital advertising space, according to court documents.
Details of the agreement, based on documents the Texas attorney general’s office said it had uncovered as part of the multistate suit, were redacted in the complaint filed in federal court in Texas last month. But they were not hidden in a draft version of the complaint reviewed by The New York Times, report Daisuke Wakabayashi and Tiffany Hsu.
Executives at six of the more than 20 partners in a digital advertising alliance, all of whom spoke on condition of anonymity to avoid jeopardizing their business relationships with Google, told The Times that their agreements with Google did not include many of the same generous terms that Facebook received and that the search giant had handed Facebook a significant advantage over the rest of them.
Perhaps the most serious claim in the draft complaint was that the two companies had predetermined that Facebook would win a fixed percentage of auctions that it bid on. “Unbeknown to other market participants, no matter how high others might bid, the parties have agreed that the gavel will come down in Facebook’s favor a set number of times,” the draft complaint said. A Google spokeswoman said Facebook must make the highest bid to win an auction, just like its other exchange and ad network partners.
Facebook had 300 milliseconds to bid for ads sold through Google’s network, according to court documents. But the executives at Google’s other partners said they usually had just 160 milliseconds or less to bid.
Facebook was allowed direct billing relationships with the sites where ads would appear, according to the court documents. For most other partners, Google controlled pricing information, effectively putting up a wall and hiding how much of winning bids sites end up receiving, the executives at other companies said.
Google agreed to help Facebook have a better understanding of who would be shown the ads by helping the company identify 80 percent of mobile users and 60 percent of web users, the documents said. But several other partners said they had little such help understanding who was being shown ads.
The Paycheck Protection Program’s loose rules allowed virtually any small business or company in America to qualify for a government-backed relief loan. Citizens and activist groups have criticized thousands of recipients that they deemed unworthy, including wealthy lawyers, politicians and political lobbyists, publicly traded companies and businesses under government investigation.
Now, an advocacy group that fights online misinformation is drawing attention to a group of loan recipients it finds troubling: anti-vaccine activists.
Six organizations that have challenged the safety of vaccines and made claims that scientists have called false received loans that collectively added up to more than $1.1 million, according to data from the Small Business Administration, which manages the program. (The data was released last month under a court order, in response to a lawsuit filed by The New York Times and other news organizations.)
The groups that received the loans are Children’s Health Defense, founded by Robert F. Kennedy Jr.; the Informed Consent Action Network; the National Vaccine Information Center; Mercola.com Health Resources and Mercola Consulting Services, both affiliated with the prominent vaccine skeptic Joseph Mercola; and the Tenpenny Integrative Medical Center, a medical practice run by Dr. Sherri Tenpenny, a physician and author who opposes vaccines.
The loans, which were made by banks and backed by the government, ranged in size from $72,500 to Dr. Tenpenny’s medical center to $335,000 to Mercola.com. They do not appear to violate Small Business Administration rules: P.P.P. loans were widely available to any small company or nonprofit (generally those with 500 or fewer workers) willing to certify that “current economic uncertainty makes this loan request necessary” to support their continuing operations.
The Center for Countering Digital Hate, a London-based advocacy group, uncovered the loans and alerted The Washington Post, which first reported on them. Imran Ahmed, the group’s chief executive, called it “bananas” that such groups were eligible for taxpayer-funded relief money.
“There’s an anomaly here,” Mr. Ahmed said. “The P.P.P. was needed to deal with the economic shock of Covid, and the anti-vaxxers fundamentally inhibit our ability to defeat Covid and move past this.”
Barbara Loe Fisher, the president of the National Vaccine Information Center in Sterling, Va., said by email that her group applied for the loan “when it became apparent that lockdowns and social distancing restrictions directly threatened the job security of a number of our employees and jeopardized continued rental of our Virginia headquarters office.” The group used the loan to retain all of its 21 workers, she said.
Ms. Fisher disputed the notion that her group is anti-vaccine. The organization “does not make vaccine use recommendations and encourages everyone to become fully informed about the risks and complications of infectious diseases and vaccines,” she said.
The Paycheck Protection Program distributed $523 billion to more than five million small companies from April to August to help them endure the shutdowns and other economic shocks caused by the coronavirus pandemic. So long as recipients use most of the money to pay their workers and comply with other rules, the loans are eligible to be fully forgiven and paid off by the U.S. government.
The Senate confirmation hearing of Janet Yellen as Treasury secretary begins on Tuesday, with a focus on reviving the pandemic-stricken economy, recovering lost jobs and regulating Wall Street. On economic stimulus, “right now, with interest rates at historic lows, the smartest thing we can do is act big,” Ms. Yellen is set to say in her opening remarks.
Corporate earnings season is ramping up, with more of America’s big banks releasing fourth-quarter earnings. Bank of America and Goldman Sachs reported on Tuesday, while Morgan Stanley steps up on Wednesday.
Netflix also reports its latest earnings on Tuesday, followed by Procter & Gamble and United Airlines on Wednesday, and IBM and Intel on Thursday.
Joseph R. Biden Jr. is expected to issue dozens of executive orders on Thursday, his first full day in office as president. He will also present legislative proposals for a $1.9 trillion stimulus bill, changes to immigration laws and other priorities of his administration.