The chair of the Federal Reserve and the secretary of the Treasury will paint starkly different visions of the challenges facing the United States economy in the months ahead on Tuesday, further exposing a rift that began to show earlier this month.
While Jerome H. Powell, the Fed Chair, will point to ongoing uncertainty over a vaccine, the economic dangers of a surge in virus cases and the persistent risks to economic prosperity during testimony before the Senate Banking Committee, Treasury Secretary Steven Mnuchin will blame state and local lockdowns as the threat to growth, according to their prepared remarks.
The contrast underlines the divide between two economic policymakers who, earlier in the crisis, worked closely as partners. Mr. Mnuchin announced earlier this month that he would end several Fed emergency loan programs, which are meant to keep credit flowing to state and local governments and medium-sized businesses alike. The Fed has suggested it is disappointed with that decision, and Mr. Powell will address it in his remarks.
Mr. Powell plans to note that the legislation gave “sole authority over its funds” to the Treasury secretary and that the Fed will give the money back. But he will nod to the fact that the Fed believes the programs should continue working.
“Our emergency lending powers require the approval of the Treasury and are available only in very unusual circumstances, such as those we find ourselves in today,” Mr. Powell will say, signaling that he does not believe conditions have returned to normal.
While he plans to reiterate that positive clinical trial results for several vaccine candidates spell good news for the medium term, he will warn that there are still big risks on the horizon.
“For now, significant challenges and uncertainties remain, including timing, production and distribution, and efficacy across different groups,” Mr. Powell will say. “It remains difficult to assess the timing and scope of the economic implications of these developments with any degree of confidence.”
Mr. Mnuchin and Mr. Powell will be appearing jointly on Tuesday before the Senate Banking Committee, and on Wednesday they will testify before the House Financial Services Committee.
In his prepared remarks, Mr. Mnuchin touts the strength of the economic recovery but blames continuing economic shutdowns in some parts of the country for impairing progress and causing “great harm” to American businesses and workers.
Regarding the lending programs, Mr. Mnuchin reiterates his call for the $454 billion that is being clawed back to be reallocated to provide economic relief in a new stimulus bill.
“I continue to believe that a targeted fiscal package is the most appropriate federal response,” Mr. Mnuchin says in his prepared remarks. “The administration is standing ready to support Congress in this effort to help American workers and small businesses.”
Arcadia Group, the British retail company owned by Philip Green that includes the Topshop clothing chain, has gone into administration, a form of bankruptcy, the company said Monday. It is one of the biggest retail collapses in Britain since the start of the pandemic.
Deloitte has been appointed as the administrator. Arcadia, which has 444 stores in Britain, 22 overseas and about 13,000 employees, said it would keep operating during administration.
Ian Grabiner, the chief executive of the group, said in a statement that he had hoped the company could “ride out” the pandemic. “Ultimately, however, in the face of the most difficult trading conditions we have ever experienced, the obstacles we encountered were far too severe,” he added.
No layoffs were announced Monday, but it remained unclear how many jobs could be saved as the administrator deals with the group’s finances.
Arcadia was reportedly seeking a £30 million ($40 million) lifeline, but on Monday the Fraser Group, a retail chain owned by a rival businessman, Mike Ashley, said its offer of a £50 million loan was rejected.
On Friday, Arcadia said lockdowns to curb the spread of coronavirus have had a “material impact” on its business. In recent years, the company has struggled to keep up with fast-fashion online rivals, and its dependency on physical stores has been a disadvantage as the virus has sped up the long-running demise of the British high street.
Earlier this month, during a lockdown period when nonessential stores were forced to close in England, foot traffic on British commercial areas was down 60 percent compared with last year, according to data from Springboard. Since February, online retail sales have grown 45 percent in Britain, while clothing sales — online and in-person — have declined 14 percent, the Office for National Statistics said earlier this month.
Last year, Arcadia entered into a company voluntary arrangement, a type of agreement insolvent companies can come to with creditors and keep operating. It closed more than 80 stores and renegotiated rents of others. It also filed for bankruptcy in the United States and closed all of its stores there.
The collapse of Arcadia is a new low in the career of Mr. Green, who was once deemed the “king of the high street” but has recently been the subject of allegations of racial and sexual harassment. He lives in Monaco, is frequently photographed aboard his 295-foot-long yacht, and used to commute to London in his private jet.
In 2006, Mr. Green was knighted for “services to the retail industry.” But Mr. Green’s reputation was hurt after he sold BHS, a department store chain founded in 1928, for £1 in 2015 and the company collapsed a year later with a pension deficit of £571 million. It prompted a parliamentary investigation, and in 2017 Mr. Green agreed to pay £363 million into the pension scheme.
Meredith Corporation has parted ways with J.D. Heyman, the editor in chief of Entertainment Weekly magazine, the company confirmed on Monday.
A Meredith spokeswoman said that the end of the editor’s tenure at the publication would go into effect “immediately.” The reason was not disclosed. Mr. Heyman, a former longtime editor at another Meredith-owned publication, People, became the top editor of Entertainment Weekly in June 2019.
“Meredith thanks J.D. for his contributions to the E.W. and People brands over his many years of service,” the spokeswoman said. “A national search is being conducted to fill the role.”
The appointment of Mr. Heyman to the top editorial job at Entertainment Weekly came as the publication cut its print edition from weekly to monthly and shifted much of its focus to its digital media and video. The change came two years after Meredith took ownership of Entertainment Weekly as part of its $2.8 billion purchase of its previous owner, Time Inc., which started the publication in 1990.
Mr. Heyman was previously the deputy editor of People magazine, where he worked for nearly 15 years. He did not immediately respond to requests for comment.
By: Ella Koeze·Source: Refinitiv
Propelled by progress on coronavirus vaccines and investor relief over the end of a noisy presidential election in the United States, markets posted one of their biggest rallies in years in November.
The S&P 500 notched a gain of 10.8 percent for the month, its best monthly showing since April and the fourth-best month for the index in 30 years.
On Monday, parts of the stock market sensitive to the shorter-term outlook for growth were a drag as the rapidly expanding Covid-19 pandemic continues to threaten economic activity like consumer spending and travel.
Airlines and energy companies were some of the worst performers. Retailers like Gap Inc. and the apparel branding company PVH Corp., which owns Calvin Klein and Tommy Hilfiger, also tumbled after a lackluster Black Friday, the traditional start to the holiday shopping season.
While analysts expect the upsurge in the virus to slow the economy over the next few months, they say the downturn should be short-lived.
“On the other side of this potential divot in economic activity, however, awaits what we believe will be a powerful cocktail of a vaccine, further fiscal stimulus, pent-up demand for services, and increased consumer confidence associated with a broad reopening of the global economy,” Jason DeSena Trennert of Strategas Research wrote in a client note on Monday.
The market’s performance over the last month has mirrored this widespread willingness among investors to mostly look past the current nationwide surge of Covid-19 cases. Pfizer, Astra-Zeneca and Moderna suggested in November that viable vaccines could be weeks or months away.
Such drug makers saw solid market gains in November. Pfizer was about 14 percent higher. Shares of Moderna — a far smaller company — more than doubled, rising 126 percent for the month, including 20 percent on Monday after the company said that it would ask regulators in Europe and the United States for emergency approval of its vaccine candidate.
Companies in industries such as travel and hospitality that have been battered by virus — and thus reliant on a vaccine to restore their fortunes — were some of November’s best performers.
Cruise lines and casino companies also rose during the month: Carnival climbed more than 40 percent and Wynn Resorts and MGM Resorts each rose more than 30 percent.
“There is considerable pent-up demand for travel, leisure activities and holidays in the developed world,” wrote analysts with Capital Economics in a note on Monday.
The Russell 2000 index of small capitalization stocks, which is more heavily reliant on the outlook for growth in American domestic economy, rallied more than 18 percent in November.
Analysts say the rally also reflects investor relief that the 2020 election season is all but over. Despite the wave of litigation launched by President Trump seeking overturn the results of the vote, it now appears that President-elect Joseph R. Biden Jr. is all but assured of be sworn in as president on Jan. 20.
Arizona, a swing state that flipped to the Democrat officially certified Mr. Biden’s narrow victory on Monday.
Mr. Biden’s early personnel announcements for economic policy posts have been largely well-received on Wall Street. On Monday, he officially announced his economic team, including Janet L. Yellen, the former Fed chair, as the first woman to lead the Treasury Department.
The stock market’s rally in November — the S&P 500 rose 10.8 percent — came as several drugmakers touted their progress in developing a coronavirus vaccine.
Investors in one of them, Cambridge, Mass.-based Moderna, reaped even bigger gains. The stock gained 126 percent in November, and surged 20 percent on Monday after the company said would apply to the Food and Drug Administration to authorize its coronavirus vaccine for emergency use. The first injections may occur as early as Dec. 21 if the process goes smoothly and approval is granted, Moderna’s chief executive said in an interview.
Moderna’s gains have far outpaced those of other vaccine developers, in part because it is a far smaller company, and in part because the announcement could help it generate actual profits for the first time. Since the company went public in December 2018, it has never posted a quarterly profit.
Still, even after a sevenfold increase in its market value this year, Moderna is worth about $60 billion; fellow vaccine-developer Pfizer’s value is more than $200 billion. For its part, Pfizer was up about 14 percent this month, while U.S.-listed depository shares of BioNTech, the smaller German firm with which Pfizer collaborated in its vaccine effort, was up more than 45 percent.
The U.S.-listed shares of Britain’s AstraZeneca, which also has a promising candidate in development, were up more than 5 percent in November.
Salesforce is in talks to acquire Slack in a deal that could be announced as soon as Tuesday, according to people with knowledge of the matter who weren’t authorized to talk about the takeover publicly.
The potential deal is a bet on remote working, an area that bankers believe will be a hot spot for consolidation in the months ahead, as highly valued software companies look to roll up the fragmented market for collaboration tools.
The premise behind such moves is that work practices may never return to pre-pandemic norms, so Salesforce and others are hoping to cash in on the shift by assembling a suite of services to make remote working easier.
Software companies are riding high on surging stock prices, sitting on large cash piles and able to tap more capital easily if they need to. In addition to Salesforce, potential buyers include Adobe (which bought Workfront earlier this month), Twilio (purchaser of Segment and Sendgrid) and ServiceNow. Potential targets include Airtable, Asana, Box, DocuSign, Dropbox and Smartsheet. These deals won’t be cheap, but as the shares of buyers rise in tandem with targets, that may simply mean more stock-for-stock deals.
Slack has recorded somewhat muted growth in its share price compared with rivals, but it’s not a minor purchase: the messaging firm had a market capitalization of about $17 billion before The Wall Street Journal first reported the talks with Salesforce last week, and is now worth around $23 billion.
Representatives for Slack and Salesforce didn’t respond to requests for comment on Monday. Reached last week, Marc Benioff, Salesforce’s chief executive, had declined to comment.
Looming large in the work-from-home market is Microsoft. Its Office software is already installed on many workplace computers, which makes it easy to integrate its Slack-like collaboration tool, Teams. (Slack contends in an antitrust suit against Microsoft in Europe that its bundling of Teams with Office is anticompetitive.) Microsoft has been acquisitive throughout the pandemic, trying to scoop up TikTok and announcing a deal to buy the gaming company Zenimax Media.
It may face more regulatory scrutiny than rivals, but it can certainly afford plenty more purchases. Microsoft is sitting on roughly $136 billion in cash and it is one of the few companies with a AAA credit rating.
Erin Griffith contributed reporting.
This year’s Black Friday looked nothing like a usual one. Crowds at suburban malls and city shopping districts were comparatively sparse. With the coronavirus touching virtually every corner of the United States, social distancing, restrictions on business activity and health concerns kept many people home.
They shopped online, however.
According to Adobe Analytics, which scans 80 percent of online transactions across the top 100 U.S. web retailers, consumers spent $9 billion on Friday. That’s a 21.6 percent increase over Black Friday in 2019 and the second-biggest number for online retailers Adobe has ever tracked. In the four days from Thanksgiving through Sunday, consumers spent $23.5 billion online, a 23 percent increase over last year, according to Adobe.
Another research firm, Facteus, which monitors millions of debit and credit card payments made in the United States, found that department stores’ in-person sales fell significantly on Friday, but that their online sales spiked. The firm found a similar pattern for electronics retailers.
And Friday’s online sales surge is expected to be outdone on Monday, which is Cyber Monday, a promotional event concocted in 2005 when most retailers still offered deep discounts online.
A large portion of consumer spending moved online long before the pandemic, but the global health crisis is accelerating that trend. About 59 percent of shoppers had started their holiday shopping by early November this year, the National Retail Federation estimated.
During earnings calls this month, several retail executives said that they were uncertain about how much holiday shopping had actually been done in October and early November thanks to promotions that started well before Halloween. Matthew Bilunas, chief financial officer at Best Buy, said “it’s really difficult to predict exactly how much was pulled into” the third quarter.
Most retailers operate on a calendar where the fourth quarter starts in November and ends in January, in part to fully capture the holiday shopping season.
“We think it’s going to be a prolonged shopping season,” Brian Cornell, chief executive of Target, said on a separate call. “We’re going to see very different shopping patterns. We don’t expect to see those big spikes during Black Friday and on weekends.”
The holiday shopping season comes at a critical moment for the U.S. economy, which is struggling again as the number of coronavirus cases surges with colder weather in many parts of the country. Millions of people are still out of work or have been forced into part-time employment. Overall consumer spending, which drives as much as two-thirds of economic activity, has slowed in recent months along with the expiration of some emergency government spending programs.
Sapna Maheshwari contributed reporting.
DoorDash is setting its sights high for its stock market debut.
The food-delivery company said on Monday that it hopes to raise up to $2.8 billion from its initial public offering, in a sale that could value the company at as much as $31.6 billion, including all shares and options. It has set a price range of $75 to $85 a share for the I.P.O.
The fund-raising goal, disclosed in the food-delivery company’s latest I.P.O. prospectus, signals the company’s ambitions as it begins pitching prospective investors. It was valued at $16 billion in a private fund-raising round in June.
The company is hoping that investors will overlook losses and a thicket of potentially costly labor regulations and clamor for a piece of a fast-growing gig-economy giant.
DoorDash expects to price its offering in the next few weeks — making it one of the last companies to go public in 2020 — and will trade on the New York Stock under the ticker symbol “DASH.”
Monday’s prospectus also shed more light on how much control DoorDash’s founders — and in particular Tony Xu, its chief executive — will hold even after the company goes public, thanks to their holdings of a special class of stock, a common feature in Silicon Valley corporate governance.
Mr. Xu, Andy Fang and Stanley Tang will control shares that give them at least 69 percent of voting power at the company. Moreover, Mr. Xu has the right to vote the shares held by his co-founders.
President-elect Joseph R. Biden Jr. officially named top members of his economic team on Monday, showcasing his commitment to diversity and placing several women in top economic roles.
With the picks, which require Senate confirmation, Mr. Biden is sending a clear message that economic policymaking in his administration will be shaped by liberal thinkers with a strong focus on worker empowerment as a tool for economic growth. They include:
Cecilia Rouse, a Princeton labor economist, to run the three-member Council of Economic Advisers. She would be the first Black woman to lead the council. A labor economist, she worked on Mr. Obama’s Council of Economic Advisers for two years and at the White House’s National Economic Council during the Clinton administration.
Neera Tanden, the chief executive of the Center for American Progress, to lead the Office of Management and Budget. Ms. Tanden, who would be the first Indian-American to lead the Office of Management and Budget, has advocated aggressive spending to alleviate economic harm from the pandemic and has dismissed concerns about adding to the deficit at the current moment.
Janet L. Yellen, the former Federal Reserve chair, as Treasury secretary. Ms. Yellen, who is also a labor economist, was one of the first officials to suggest allowing the labor market to run “hot” — meaning leaving interest rates lower for longer — in order to help lift wages and get more people into jobs.
Jared Bernstein and Heather Boushey were named to join Ms. Rouse on the Council of Economic Advisers, which is a three-member team that advises the president on economic policy. They both come from a liberal, labor-oriented school of economics that views rising inequality as a threat to the economy and emphasizes government efforts to support and empower workers. Mr. Bernstein was Mr. Biden’s first chief economist when he was vice president. Ms. Boushey was a top policy adviser to Mrs. Clinton in 2016. Both have advocated a large stimulus package to help workers and businesses hurt by the pandemic recession.
Adewale Adeyemo, known as Wally, a senior international economic adviser in the Obama administration, as deputy Treasury secretary. An immigrant from Nigeria, he has extensive experience working at the Treasury Department during the Obama administration, when he was a senior adviser and deputy chief of staff.
Brian Deese, a former Obama economic aide who helped lead that administration’s efforts to bail out the American automotive industry, has also been selected to lead the National Economic Council, according to three people with knowledge of the selection. Mr. Deese is a veteran of economic policymaking, having served as the acting head of the Office of Management and Budget and the deputy director of the Economic Council under Mr. Obama, as well as a special adviser on climate change.
The appointments could fall short of hopes within the progressive wing of the Democratic Party, which has been frustrated that their views are not being sufficiently represented in early personnel decisions. In particular, the decision to select Ms. Tanden, a divisive and partisan figure in the party, could culminate in an intraparty fight, as well as a confirmation battle.
Republicans, who are fighting to retain control of the Senate, are unlikely to easily pass Ms. Tanden, who advised Hillary Clinton’s 2016 presidential campaign and has been one of the most outspoken critics of President Trump.
Mr. Biden’s other picks are expected to be less contentious.
Ajit V. Pai, the Republican chairman of the Federal Communications Commission, said Monday that he would leave his post the day that President-elect Joseph R. Biden Jr. is sworn in, capping a tenure of sweeping deregulation across the telecommunications industry.
Mr. Pai’s most prominent effort was rolling back net neutrality rules that forbid internet providers from blocking content, slowing down its delivery or charging for higher priority on their networks. His Democratic predecessor put the rules in place with the support of liberal activists over the opposition of companies like AT&T and Comcast. But Mr. Pai undid the rules within a year of being appointed by President Trump.
Mr. Pai eliminated lower-profile rules governing the telecommunications industry, loosening media ownership restrictions and lifting some price caps in the lucrative market for business broadband connections. He also faced a global race to develop next generation wireless networks and more recently was drawn into the debate over the rules governing social media platforms like Facebook and YouTube.
He was widely expected to step down after Mr. Biden won the presidential election.
S&P Global, the owner of stock indexes like the Dow and the S&P 500, said on Monday that it plans to acquire IHS Markit for $44 billion, including debt. The transaction would create a financial information powerhouse at a time when data increasingly fuels automated trading.
The all-stock deal — the biggest announced so far this year — would give S&P Global control of IHS Markit, whose software is used by many of the world’s biggest financial institutions.
It is the latest show of strength by big companies amid the pandemic. Corporate boards have increasingly come to believe that getting bigger will help them ride out the turbulence caused by the coronavirus, while investors have encouraged companies to use stocks and cheap debt to buy growth.
Other big deals struck so far this year include Nvidia’s $40 billion takeover of the computer chip designer Arm and Aon’s $30 billion acquisition of its rival insurance broker Willis Towers Watson.
Financial data has long been one of the most coveted commodities on Wall Street, as demonstrated by the multibillion-dollar value of Bloomberg L.P., the empire of former New York City Mayor Michael R. Bloomberg.
Big deals in recent years have further illustrated its worth: Last year, the parent of the London Stock Exchange agreed to buy Refinitiv, the former data arm of Thomson Reuters, for $14.5 billion.
IHS Markit itself was the product of a 2016 merger between IHS, which was founded in 1959 as a repository for aerospace data, and Markit, which was created in 2003 as a source of price information about the financial derivatives known as credit-default swaps.
Under the terms of the deal, S&P Global will own nearly 68 percent of the combined company, while investors in IHS Markit will own the remainder.
The companies expect the deal to close in the second half of next year, pending approval from shareholders and antitrust regulators.
The head of the Tokyo Stock Exchange resigned on Monday, nearly two months after a technical glitch at the exchange shut down equities trading across Japan in a major if temporary disruption to the financial markets in the world’s third largest economy.
The decision by the exchange’s president and chief executive, Koichiro Miyahara, followed an announcement earlier in the day by Japan’s financial regulator that it had issued a business improvement order to the exchange and its parent company, the Japan Exchange Group.
In a news conference on Monday, Akira Kiyota, chief executive of the parent company, announced that he would be taking over from Mr. Miyahara and pledged to avoid future shutdowns. He also said that he would take a 50 percent pay cut as an expression of contrition for the problems caused by the shutdown.
The disruption occurred early on the morning of Oct. 1 after the system that runs the exchange failed to switch to a backup in response to a hardware problem. The problem cascaded across Japan, shutting down most of the country’s major exchanges for a full day and rattling investor confidence.
The Tokyo Stock Exchange is the world’s third-largest equity market, behind the New York Stock Exchange and the Nasdaq Stock Market, with nearly $6.2 trillion worth of stocks, according to the World Federation of Exchanges. It has the most listed companies of any major exchange and handles tens of billions of dollars of business on an average day.
Japan had last experienced a systemwide shutdown in 2005.