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Credit…Steven Senne/Associated Press
The Federal Reserve released its twice-annual monetary policy report to Congress on Friday, offering an assessment of the economy that was at once hopeful and cautious as vaccines stoke the prospects of an economic recovery, but risks crowd the horizon.
“While unprecedented fiscal and monetary stimulus and a relaxation of rigorous social-distancing restrictions supported a rapid rebound in the U.S. labor market last summer, the pace of gains has slowed and employment remains well below pre-pandemic levels,” the central bank said in the report.
The Fed used the missive, which comes ahead of testimony by the Fed chair, Jerome H. Powell, before a Senate committee on Tuesday and a House committee on Wednesday, to underline the uneven economic costs of the pandemic. The report included a special box dedicated to those disparities.
“Job losses last spring were disproportionately severe among lower wage workers, less-educated workers, and racial and ethnic minorities, as in previous recessions, but also among women, in contrast to previous recessions,” the Fed noted.
Childcare burdens resulting from school closures are an important factor holding back women’s participation in the labor force, the central bank said. Among mothers between the ages of 25 to 54 with children between the ages of 6 and 17, the share who said they were out of the labor force because of caregiving responsibilities was up 2.5 percentage points in the three months ending January 2021 compared with the same period a year earlier, the Fed said, based on staff calculations of government data. That increase for mothers exceeded a 0.5 percentage point increase for fathers.
The report also pointed to possible financial risks down the road. It noted that banks and other financial institutions have held up well so far, but that they “may experience additional losses as a result of rising defaults in the coming years.”
Plus, “longstanding vulnerabilities at money market mutual funds and open-end investment funds remain unaddressed,” the Fed said.
The president of the Federal Reserve Bank of Boston says he expects a winning streak for the digital currency Bitcoin to eventually come to an end.
“Personally, I’ve been surprised that Bitcoin has continued to flourish,” Eric Rosengren, the head of the regional central bank, said in an interview with The New York Times on Friday.
The digital currency is trading at more than $50,000 per coin and on Friday surged to a market value of more than $1 trillion. That increase has been helped along as big companies like Tesla and finance firms like Bank of New York Mellon increasingly embrace Bitcoin.
But Mr. Rosengren said he could not see a long-lived use case for Bitcoin in a world where central banks were likely to offer their own alternatives eventually.
“I would suspect, down the road, that a number of central banks will have digital currency,” he said. “When there is a digital currency available, other than the underground economy, it’s not clear why people would use Bitcoin.”
“I would expect, over time, Bitcoin prices to come under pressure,” he continued.
Mr. Rosengren noted that China and Sweden were well along in thinking about digital currencies, and that the Boston Fed was also researching the possibility for the United States. The Fed — and especially its chair, Jerome H. Powell — has been clear that it will tread very carefully into the digital currency space, given the important role the U.S. dollar plays in the global economy.
Some smaller central banks have been more experimental. The Bahamian central bank introduced the Sand Dollar, a central bank digital currency, last year.
Credit…Lm Otero Jose Luis Magana/Associated Press
The chief executives of Facebook, Google and Twitter will face skeptical lawmakers again next month when a congressional committee questions them about the ways disinformation spreads across their platforms.
The House Energy and Commerce Committee said Thursday that it would hold a hearing on March 25 with Mark Zuckerberg of Facebook, Sundar Pichai of Google and Jack Dorsey of Twitter.
The committee has been examining the future of Section 230 of the Communications Decency Act, a 1996 law that shields the platforms from lawsuits over much of the content posted by their users. The attack on the Capitol on Jan. 6, which included participants with ties to QAnon and other conspiracy theories that have spread widely online, has renewed concerns that the law allows the platforms to take a hands-off approach to extremist content.
“For far too long, Big Tech has failed to acknowledge the role they’ve played in fomenting and elevating blatantly false information to its online audiences,” a group of the committee’s top Democrats said in a statement. “Industry self-regulation has failed.”
Andy Stone, a spokesman for Facebook, said the company “believes it’s time to update the rules of the internet, and this hearing should be another important step in the process.”
The House Judiciary Committee announced its own set of hearings on the tech industry on Thursday. It said it would hold multiple hearings on how to update antitrust laws to address the power of the tech giants. The committee questioned chief executives before concluding a lengthy investigation into the companies last year.
The Judiciary Committee’s first hearing will take place on Wednesday.
Credit…Samuel Zeller for The New York Times
Renault, the French carmaker, reported a loss of 8 billion euros, or $9.7 billion, in 2020 as the pandemic gutted sales, but the company said that was profitable in the later part of the year.
Most of the annual loss stemmed from Renault’s stake in its troubled partner, Nissan. Losses at the Japanese carmaker drained €5 billion from the bottom line, Renault said. In addition, Renault car sales plunged 20 percent for the year, to just short of three million vehicles.
“After a first half impacted by Covid-19, the group has significantly turned around its performance in the second half,” Luca de Meo, Renault’s chief executive, said in a statement, without giving a figure. He said that 2021 was “set to be difficult given the unknowns regarding the health crisis as well as electronic components supply shortages.”
In 2021, shortages of semiconductors, a problem for almost all carmakers, could cut production by as much as 100,000 vehicles, Renault said.
Mr. de Meo, who became Renault’s chief executive in July, last month announced a plan to return to profitability that includes cuts in production capacity, sales of fewer models and increased parts sharing among vehicles to simplify manufacturing.
Credit…Joe Raedle/Getty Images
Oil and natural gas futures fell after jumping earlier in the week. Both were affected by the fierce winter storms that caused millions of people to go without power across Texas this week.
West Texas Intermediate, the U.S. benchmark crude, dropped 2.5 percent on Friday, to about $59 a barrel. It had jumped 6 percent from Friday to Wednesday, as oil production was hindered by the weather.
Natural gas futures, which rose as a result of the storms, have moved up and down in recent days. On Friday, they ended down 0.4 percent after dropping as much as 3 percent earlier in the day. They still remain elevated from last week.
Word that the Biden administration was offering to restart talks to restore an accord limiting Iran’s nuclear program was seen as weighing on oil prices. Lifting sanctions against Iran could allow it sell more oil on the global market. Brent crude, the international benchmark, was down 2 percent on Friday, to $62.68 a barrel.
The S&P 500 fell 0.2 percent, bringing its total losses for the week to 0.7 percent. The benchmark index fell every day this week after a string of gains last week. (There were not four consecutive days of gains, as was earlier stated here.)
Shares of Uber dropped 1 percent after Britain’s Supreme Court ruled that the company’s drivers must be classified as workers entitled to a minimum wage and vacation time. The case had been closely watched because of its ramifications for the gig economy.
European markets were broadly higher, with the Stoxx Europe 600 up 0.5 percent and FTSE 100 in Britain gaining 0.1 percent. Asian markets closed mixed, with the Nikkei in Japan down 0.7 percent while the Shanghai composite in China rose 0.6 percent.
Purchasing managers’ index data for February, from Markit, showed a variety of trends across Europe. The France composite output index hit a three-month low, reflecting the restrictions on business activity imposed by the latest lockdown. The Germany composite index rose, helped by an export-led manufacturing upturn.
In Britain, retail sales fell 8.2 percent in January compared with the preceding month, government data said, a downturn that was sharpened by a lockdown that started in the new year. But the decline was less than expected, and also not as bad as the 22 percent drop seen in April, when Britain went into an earlier lockdown. The Office of National Statistics said some of the improvement probably came from businesses learning to adapt to lockdowns, with more online and click-and-collect sales.
Credit…Tamir Kalifa for The New York Times
In California, wildfires and heat waves in recent years forced utilities to shut off power to millions of homes and businesses. Now, Texas is learning that deadly winter storms and intense cold can do the same.
Bill Magness, the president and chief executive of the Electric Reliability Council of Texas, the state’s grid operator, said on Thursday that Texas was “seconds and minutes” from a catastrophic blackout this week as rotating outages were used to control the flow of electricity.
The country’s two largest states have taken very different approaches to managing their energy needs — Texas deregulated aggressively, letting the free market flourish, while California embraced environmental regulations. Yet the two states are confronting the same ominous reality: They may be woefully unprepared for the increasing frequency and severity of natural disasters caused by climate change.
Blackouts in Texas and California have revealed that power plants can be strained and knocked offline by the kind of extreme cold and hot weather that climate scientists have said will become more common as greenhouse gases build up in the atmosphere.
The problems in Texas and California highlight the challenge the Biden administration will face in modernizing the electricity system to run entirely on wind turbines, solar panels, batteries and other zero-emission technologies by 2035 — a goal that President Biden set during the 2020 campaign.
The federal government and energy businesses may have to spend trillions of dollars to harden electricity grids against the threat posed by climate change and to move away from the fossil fuels responsible for the warming of the planet in the first place. These are not new ideas. Scholars have long warned that American electricity grids, which are run regionally, will come under increasing strain and needed major upgrades.
“We really need to change our paradigm, particularly utilities, because they are becoming much more vulnerable to disaster,” Najmedin Meshkati, an engineering professor at the University of Southern California, said about blackouts in Texas and California. “They need to always think about literally the worst-case scenario because the worst-case scenario is going to happen.”
Congressman Calls Robinhood’s Help Line and Gets Voicemail
After telling the House Financial Services Committee about the suicide of Robinhood user Alex Kearns, who died believing he had lost $730,000 on the brokerage app, Representative Sean Casten called its help line.
June 2020, Alex Kearns, who was 20 years old at the time, from Naperville, Illinois, killed himself, largely thanks to a bug in the Robinhood system. The bug was that he turned on the app, it said he owed $730,000 that he did not have, because of options positions that he thought canceled out but didn’t appear to. He called the help line. The help line, of course, was not manned, as we’ve discussed. He sent several panicked emails — three, to be precise — did not receive a response. Ultimately there was a response from the emails saying that, in fact, his positions were covered. But by that point, it was too late, because he had taken his own life. The — this is a gentleman who is 20 years old. Under Illinois law, he was not allowed to buy a beer, but he was allowed to take on $730,000 in positions and exposure that he did not have the liquidity to cover. Your mission, Mr. Tenev, is to democratize finance. But the history of financial regulation is to protect people like Alex Kearns from the system. As the old joke goes, if you’re playing poker and you can’t figure out who the fish is at the table, you should leave the table because you’re probably the fish. And there is an innate tension in your business model between democratizing finance, which is a noble calling, and being a conduit to feed fish to sharks. So I’m nervous. I think I got an exposure. And I call your help line now. Let’s call and let’s listen in the time we have remaining to what I’m going to hear on the other end of the phone. Voicemail: “Thank you for calling Robinhood. Please visit us at robinhood.com or on our app for support. If you have an urgent trading need, please make sure to include details of it when reaching out. Thanks have a great day.”
After telling the House Financial Services Committee about the suicide of Robinhood user Alex Kearns, who died believing he had lost $730,000 on the brokerage app, Representative Sean Casten called its help line.CreditCredit…via C-Span
The chief executives of Robinhood, Reddit, Citadel and Melvin Capital Management were among the witnesses at a hearing on the GameStop trading frenzy held by the House Financial Services Committee on Thursday.
Vlad Tenev, the chief executive of Robinhood, was the target for both Democrats and Republicans, fielding more than half of the lawmakers’ questions. “I love your company because it does, when correctly managed, provide investment opportunities for individuals who are currently frozen out of the markets for one reason or another,” said Representative Anthony Gonzalez, Republican of Ohio. He added: “At the same time, though, I believe a vulnerability was clearly exposed in your business model.”
Representative Sean Casten, an Illinois Democrat, capped his sharp questioning of Mr. Tenev, in which he relayed the story of a 20-year-old college student who killed himself last summer believing that he’d lost more than $700,000, by dialing the Robinhood help line and letting everyone listen in as a short message was played and the call was terminated. Representative Alexandria Ocasio-Cortez, Democrat of New York, said Robinhood’s decisions had “harmed customers,” and accused it of passing on hidden costs to its customers.
Keith Gill — known on YouTube as Roaring Kitty — testified that his interest in the company was based on his belief that the market was underestimating the brick-and-mortar retailer’s value. His testimony included winking references — such as dangling what appeared to be his oft-worn red headband off a picture of a kitten visible over his shoulder and the statement “I am not a cat” — to internet meme culture.
Several harsh questions were directed at Kenneth C. Griffin, the chief of Citadel. Members of Congress asked skeptical questions about Citadel’s practice of paying to trade against customers at online brokers like Robinhood. Mr. Griffin tried to explain the intricacies of the business but was often cut off. “Our folks are tired of bailing you all out when you screw up and gamble with the retirement fund. And that’s exactly what happens every single moment,” Representative Rashida Tlaib, Democrat of Michigan, said to him.
Credit…Anna Moneymaker for The New York Times
Senator Joe Manchin III, Democrat of West Virginia, announced on Friday that he would oppose Neera Tanden, President Biden’s nominee to lead the Office of Management and Budget, imperiling her prospects in an evenly divided Senate.
The fate of the nomination is now in the hands of a party Ms. Tanden has frequently criticized. She would need the support of at least one Republican senator in order to be confirmed, with Vice President Kamala Harris breaking a tie.
Given Ms. Tanden’s litany of critical public statements and tweets against members of both parties before her nomination, it is unclear whether such support exists — or if other Democrats will also come forward in opposition.
In a statement released Friday, Mr. Manchin cited comments from Ms. Tanden that were personally directed at Senators Mitch McConnell of Kentucky, now the minority leader; Bernie Sanders, the Vermont independent now in charge of the Senate Budget Committee; and other colleagues.
“I believe her overtly partisan statements will have a toxic and detrimental impact on the important working relationship between members of Congress and the next director of the Office of Management and Budget,” Mr. Manchin said. “For this reason, I cannot support her nomination. As I have said before, we must take meaningful steps to end the political division and dysfunction that pervades our politics.”
Ms. Tanden faced tough grilling from both Republicans and Democrats during her two confirmation hearings earlier this month.
Republicans spent the first hour of her first hearing before a Senate homeland security committee asking Ms. Tanden to explain her past Twitter posts and why she had deleted more than 1,000 tweets shortly after the November election.
Senator Rob Portman, Republican of Ohio, read aloud posts in which she called Mr. McConnell “Moscow Mitch” and said that “vampires have more heart than Ted Cruz,” a Republican senator from Texas.
Her second hearing was no less fiery, with Mr. Sanders confronting her over her history of leveling personal attacks on social media, including at him.
Ms. Tanden and Mr. Sanders have clashed since the 2016 election, with Mr. Sanders accusing her in 2019 of “maligning my staff and supporters and belittling progressive ideas.”
Ms. Tanden apologized to lawmakers during both hearings, saying she regretted many of her previous remarks.
“I deeply regret and apologize for my language, some of my past language,” Ms. Tanden said. “I recognize that this role is a bipartisan role, and I recognize I have to earn the trust of senators across the board.”