February 22, 2024

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Business News: Markets and Covid Live Updates

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Carolina Sanchez, left, whose husband died after contracting Covid-19 while working at a meatpacking plant, is comforted at a protest outside the Occupational Safety and Health Administration office in Denver last September.
Credit…David Zalubowski/Associated Press

President Biden plans on Thursday to direct the Occupational Safety and Health Administration to release new guidance to employers on protecting workers from Covid-19.

In one of 10 executive orders that he is expected to sign Thursday, the president will ask the agency to step up enforcement of existing rules to help stop the spread of Covid-19 in the workplace and to explore issuing a new rule requiring employers to take certain precautions.

The moves were outlined in a White House fact sheet circulated to the press.

The other executive orders also relate to Covid-19, including orders directing federal agencies to issue guidance for the reopening of schools and to use their powers to accelerate the production of protective equipment and expand access to testing.

Critics accused OSHA of weak oversight under former President Donald J. Trump, especially during the pandemic, when it relaxed record-keeping and reporting requirements related to Covid-19 cases.

Under Mr. Trump, the agency also announced that it would mostly refrain from inspecting workplaces outside of a few high-risk industries like health care and emergency response, and critics complained that its appetite for fining employers was limited. Mr. Biden’s executive order will urge the agency to target “the worst violators,” according to the White House fact sheet.

Union officials and labor advocacy groups have long pleaded with the agency to issue a rule, known as an emergency temporary standard, laying out steps that employers must take to protect workers from the coronavirus. The agency declined to do so under Mr. Trump, but Mr. Biden supported this approach during the campaign.

“We talked about a national standardized strategy for working men and women in this country to function under this cloud of the pandemic,” Rory Gamble, the president of the United Automobile Workers union, said after a meeting with Mr. Biden in mid-November. “He indicated he would do whatever it took.”

A farmer preparing to harvest his corn crop in Iowa. President Donald J. Trump sold the trade deal with China as a boon for American farmers and manufacturers.
Credit…Kia Johnson/Reuters

China has fallen far short of its promise to buy hundreds of billions of dollars in American products as part of an initial trade deal it reached with the United States last January, according to data released on Thursday, creating another Trump-era challenge for the Biden administration to confront.

A key part of the deal, which resulted in a tariff cease-fire between both countries, included a commitment from China that it would buy an additional $200 billion worth of American goods and services in 2020 and 2021. But an analysis of Chinese import data conducted by the Peterson Institute for International Economics found that, nearly a year after the agreement went into effect, China has bought just 58 percent of the goods that it had committed to purchase.

The shortfall poses a challenge for President Biden as he seeks to reorient the United States’ relationship with China. The new administration faces a big question of whether to keep the tariffs that President Donald J. Trump imposed on $360 billion worth of Chinese goods in an attempt to force Beijing to commit to certain economic changes. Mr. Biden must now decide whether to maintain those tariffs — which have raised prices for American companies — or find new ways to curb China’s practices of subsidizing its exports and stealing intellectual property.

At her confirmation hearing this week, Janet L. Yellen, Mr. Biden’s nominee to be Treasury secretary, sounded a tough tone toward China and said the administration would look to address any economic misbehavior by China. Ms. Yellen suggested that the United States would engage its allies to help in that effort, which would be a marked departure from the Trump administration’s aggressive and unilateral approach.

In written responses to the Senate Finance Committee, which were reviewed by The New York Times on Thursday, Ms. Yellen said Mr. Biden would not make any immediate moves with regard to the tariffs but suggested that the United States needed to take a different approach from the one the Trump administration had pursued.

“President Biden has said that he is not going to make any immediate moves on the current China tariffs,” she wrote. “As part of his review, he is going to consult with allies to galvanize collective pressure.”

Mr. Trump sold the trade deal as a boon for American farmers and manufacturers, saying the Chinese government would buy agricultural and energy products, along with other goods and services.

But China bought only 64 percent of the agricultural products that it had committed to purchase, 60 percent of the manufactured products and 39 percent of energy products, according to the Peterson Institute’s analysis.

Trump administration officials have blamed the pandemic and the slowing global economy for China’s failure to buy as many goods as expected. Before they left office, Mr. Trump and his top economic officials said they expected Beijing to eventually make good on its promises. The administration never used the enforcement provisions that were part of the deal, despite extensive negotiations about how such a mechanism would work. It is now up to the Biden administration to decide whether to initiate those penalties.

Waiting for coronavirus tests in San Bernardino, Calif. A surge in the virus and the slow rollout of vaccinations have set back recovery hopes.
Credit…Alex Welsh for The New York Times

Fresh evidence of the job market’s fragility emerged Thursday, underscoring the economic challenges for the Biden administration and heightening the pressure for a fresh wave of stimulus from Washington.

The Labor Department said 961,000 workers filed initial claims for state unemployment benefits last
week. On a seasonally adjusted basis, new claims totaled 900,000.

The figures represented a decline from the previous week but remain extraordinarily high by historical standards and have recently reverted to levels not seen since midsummer. In the comparable week a year ago, before the pandemic, there were 282,000 initial claims.

“Unfortunately, the labor market started 2021 with very little momentum,” said Greg Daco, chief U.S. economist at Oxford Economics. “There hasn’t been any improvement, and if anything, there has been deterioration.”

New restrictions and lockdowns amid a surge in cases in many parts of the country have decimated employment in the restaurant and leisure and entertainment industries, with little relief in sight.

“The level of layoffs is very high, and the virus is causing serious disruption,” said Rubeela Farooqi, chief U.S. economist at High Frequency Economics. “It’s going to be pretty rough over the next few months.”

The Labor Department reported earlier this month that employers cut payrolls by 140,000 in December, the first decline since the mass layoffs of last spring.

The beginning of vaccinations in December provided optimism about a quick turnaround, but the slow rollout in many parts of the country has set back those hopes. On the other hand, the passage of a $900 billion stimulus package last month and the prospect of more aid under the Biden administration allayed fears of a double-dip recession.

Among the emergency federal programs extended by the recent legislation was Pandemic Unemployment Assistance, which helps freelancers, part-time workers and others normally ineligible for state jobless benefits. A total of 424,000 new claims were filed under the program last week, up from 285,000 the previous week.

Mr. Daco said uncertainty about the program’s continuation might have held back claims late last year, so the jump last week might represent belated filings as well as the overall weakness of the labor market.

But Pandemic Unemployment Assistance and a $300 weekly supplement to state and federal unemployment benefits will both expire in mid-March without new legislative action.

Ms. Farooqi said meaningful improvement in the economy was unlikely by then. “More aid is needed for households and businesses,” she said. “Many businesses will shut down, and a lot of jobs will be lost without it. That poses a downside risk for the economy in the near term.”

Over all, the best bet for the economy is more vaccinations, said Carl Tannenbaum, chief economist at Northern Trust in Chicago.

“There is no better economic stimulus than a successful vaccine rollout,” he said. “It will reduce the risk of human interaction and provide a basis on which different types of businesses can open more durably.”

Rock-bottom interest rates have prompted a surge in home buying and refinancing.
Credit…John Raoux/Associated Press

Even as the labor market struggles, there are signs that other economic measures are turning more positive. Interest rates are rising, an indication that traders expect faster growth and higher prices once mass inoculations take hold and the coronavirus recedes.

Yields on the benchmark 10-year Treasury note have jumped by 20 basis points to 1.10 percent over the last two months, breaking the 1 percent threshold on Jan. 6. Rates remain extremely low by historical standards, but a continuation in the surge could threaten one of the leading bright spots in the economy — the housing market.

Rock-bottom interest rates have prompted a surge in home buying and refinancing, as borrowers take advantage of the Federal Reserve’s move to lower rates after the coronavirus struck last March.

Low rates have also buoyed the stock market, as yield-hungry investors turned to equities in search of faster growth. An upturn in interest rates — reflecting lower bond prices as other investments become more attractive — would almost certainly undermine the momentum that has propelled major market indexes to record highs.

So far, economists play down the likelihood of a surge in rates. But all eyes are nevertheless on yields, said Carl Tannenbaum, chief economist at Northern Trust in Chicago.

“It’s the No. 1 question I get from clients,” Mr. Tannenbaum said. “I know there are folks out there that think the 10-year yield is poised to become unmoored and shoot up to 1.5 or 2 percent. But I find that highly unlikely.”

Even if Mr. Tannenbaum is right about the solidity of the real estate market, rising yields could put a brake on the Biden administration’s stimulus efforts.

So-called bond vigilantes drove rates higher in the 1990s during the Clinton administration, helping to force officials to make deficit reduction a higher priority than new spending.

“We just bumped up our rate forecast for 2021,” said Scott Anderson, chief economist at Bank of the West in San Francisco. “If Biden gets his way with more stimulus, there will definitely be more concern about the pace of Treasury bond issuance. This could all make the bond market nervous.”

For now, though, a surge in rates is unlikely, said Gus Faucher, chief economist at PNC Financial Services in Pittsburgh. What’s more, the Federal Reserve can push back on yields, whether by increasing asset purchases or buying more longer-term debt.

“The Fed has some options,” Mr. Faucher said. “And the Biden administration has made it clear the economy needs more stimulus. I don’t expect them to balk on their stimulus plans even if rates move higher.”

To help the White House with its goal of vaccinating 100 million people in its first 100 days, Amazon offered to vaccinate a large share of its workers.
Credit…Johannes Eisele/Agence France-Presse — Getty Images

On President Biden’s first day in office, the head of Amazon’s consumer business, Dave Clark, sent a letter to the White House with an offer to help achieve the goal of vaccinating 100 million people in the administration’s first 100 days. By way of assistance, the retailer offered to vaccinate a large share of its workers.

The e-commerce giant has made similar offers to state governments, including Tennessee and Washington, although Amazon was not among the companies Gov. Jay Inslee of Washington announced as partners in its vaccination plan this week.

Those earlier letters to governors were signed by Brian Huseman, who runs Amazon’s U.S. lobbying team, which has been seeking permission from the Centers for Disease Control and Prevention to vaccinate “essential” workers at the company’s warehouses, data centers and Whole Foods “at the earliest appropriate time.”

The company has hired a health care provider to help administer the vaccine to employees, it said in the letters.

This suggests that public-private partnerships to distribute vaccines may come with perks for the companies taking part, the DealBook newsletter notes, potentially giving companies leverage to push employees up the line in priorities set by states. Several states are struggling to roll out vaccines as fast as they’d like because of issues with funding, staffing and logistics. In his letter to Mr. Biden, Mr. Clark said that Amazon could help with “operations, information technology and communications capabilities,” though he didn’t specify what that would entail.

The New Yorker Union decided on a walkout on Thursday after a recent round of negotiations with management failed.
Credit…Jeenah Moon for The New York Times

The New Yorker’s union employees did not go to work on Thursday.

The more than 100 employees represented by The New Yorker Union, which includes fact checkers, web producers and some other editorial employees, decided on the daylong walkout after recent rounds of negotiations with management failed, said Natalie Meade, the union chair.

The issue is pay. Ms. Meade, who is a fact checker at the magazine, said the union wanted to raise the salary minimum to $65,000. In the recent negotiations, managers at The New Yorker did not hit that number, she said, instead offering wage increases that she called “insulting.”

“They already know they’re underpaying us,” Ms. Meade said.

The union, which does not represent The New Yorker’s staff writers, has been working toward a collective bargaining agreement since 2018. The walkout started at 6 a.m. on Thursday and was scheduled to last 24 hours.

Before negotiations, the union conducted a pay study based on data from Condé Nast, the magazine’s parent company. The survey found that union workers at The New Yorker had a median salary of $64,000 and that the company’s editorial assistants were paid a median of $42,000.

In a statement on Thursday, a New Yorker spokesperson said that proposals made during the recent bargaining sessions on salary were “initial offers.”

“It is our hope that, as opposed to resorting to actions like this one, the union will bargain in good faith and return a counter proposal, as is standard in negotiations,” the statement said. “That way, we can work together productively to reach a final contract as quickly as possible.”

The New Yorker spokesperson also faulted the union’s pay study, adding: “We are devoted to fair pay all around. We dispute certain conclusions of this study, and we are determined to get to an equitable agreement.”

In September, Senator Elizabeth Warren, Democrat of Massachusetts, and Representative Alexandria Ocasio-Cortez, Democrat of New York, pulled out of keynote speaker slots at The New Yorker Festival in solidarity with union workers, who were planning a digital picket line to pressure management into including a “just cause” proposal in their agreement.

“Just cause” is a provision often included in union contracts that sets a standard employers have to meet to discipline or fire workers. New Yorker management eventually agreed to include it.

The New Yorker Union is part of the NewsGuild of New York, which represents employees at The New York Times, Reuters, The Daily Beast and other news outlets.

Volkswagen’s new electric vehicle, the ID.3. The car suffered from software problems that delayed its arrival in showrooms last year.  
Credit…Ints Kalnins/Reuters

Volkswagen, the largest carmaker in Europe, faces penalties of more than 100 million euros, or $120 million, after it failed last year to cut the carbon dioxide emissions of its vehicles enough to meet European standards.

The company blamed the shortfall on disruption to auto sales caused by the pandemic, which slowed the rollou
t of the ID.3, Volkswagen’s new electric vehicle.

Still, the failure to meet environmental standards was a setback for Volkswagen as it tries to position itself as the company that will make electric cars affordable for the masses. The German company is still recovering from an emissions cheating scandal in 2015 that badly damaged its reputation.

European Union rules that took effect last year compel carmakers to sharply reduce their output of carbon dioxide, a cause of climate change. Volkswagen said that it cut average CO2 emissions of its vehicles by 20 percent compared with 2019, but that was not enough to avoid penalties.

The ID.3, with a starting price of less than €30,000, or $36,000, has suffered from software problems that delayed its introduction. Nonetheless, the company said it delivered 57,000 ID.3s in 2020 and that demand was strong.

The ID.3 is not being sold in the United States, but Volkswagen plans to begin delivering the ID.4, an electric SUV, to American dealers in March. The car will have a starting price of $40,000.

Volkswagen did not say exactly how high the European emissions fine would be, only that it would exceed €100 million. Matthias Schmidt, an independent analyst in Berlin who tracks electric car sales, estimated the fine would come to €140 million. Volkswagen said it had already set aside enough money to avoid an impact on fourth-quarter earnings.

The European Central Bank’s headquarters in Frankfurt. The bank’s policymakers have commited spending 1.9 trillion euros in bond markets to keep interest rates low.
Credit…Kai Pfaffenbach/Reuters

The European Central Bank promised on Thursday to keep easy money flowing after its president, Christine Lagarde, said that the eurozone economy shrank in the last three months of 2020 and that the outlook for 2021 was uncertain.

The bank left its stimulus measures intact, as expected, after ramping up its de facto money printing in December to limit economic damage from the pandemic.

Following a meeting of its governing council, the bank reiterated its intent to pump as much as 1.9 trillion newly created euros, or $2.3 trillion, into bond markets as part of a “pandemic emergency” program intended to keep market interest rates low.

The bond purchases will continue at least until March 2022 and longer if necessary, the bank said. The central bank also said that it would maintain a program that effectively pays banks to lend money to businesses and consumers.

Ms. Lagarde stressed that the bank could adjust the amount of stimulus up or down depending on how quickly the pandemic was brought under control. “All instruments can be adjusted and nothing is off the table,” she told reporters during an online news conference.

The ultimate goal, Ms. Lagarde repeated numerous times, was to ensure that borrowing costs for businesses, eurozone citizens and governments remained favorable.

Her statement that stimulus could also be reduced raised expectations that the central bank might be expecting a quicker economic recovery. But Ms. Lagarde, citing extended lockdowns and the slow rollout of vaccinations, indicated she remained wary, though she stopped short of predicting a recession in the first quarter of 2021.

“I wish I was cautiously optimistic,” Ms. Lagarde said. “I’m now getting old enough to be realistic and to observe the development of the situation, which is really hard to predict.”

  • Stocks on Wall Street were unchanged in early trading on Thursday, a day after the S&P 500 index closed at a record.

  • The FTSE 100 in Britain and Stoxx Europe 600 posted modest gains, with the latter touching an 11-month high. Most Asian markets had ended higher.

  • United Airlines fell more than 4 percent, after it said it lost $1.9 billion in the fourth quarter, bringing its total losses for 2020 to just over $7 billion, its worst year since merging with Continental Airlines a decade ago.

  • In Europe, some renewable energy stocks
    extended their gains on Thursday. President Biden has recommitted the United States to the Paris climate agreement and pledged to spend heavily on the development of alternative energy.

  • Shares of Siemens Gamesa, a Spanish subsidiary of Siemens Energy that makes wind turbines, rose more than 3 percent on Thursday. Orsted and Vestas, two Danish wind energy companies, also climbed, and are up nearly 6 percent and 8 percent this week.

Already oil companies have found roughly 10 billion barrels of probable recoverable reserves of oil and gas off the coast of neighboring Guyana.
Credit…Adriana Loureiro Fernandez for The New York Times

Suriname, Guyana and Brazil are the new areas of focus for oil companies, attracting more new investment than the Gulf of Mexico and other more established oil fields. They are helping to keep global oil prices relatively low, undermining efforts by Russia and its allies in the Organization of the Petroleum Exporting Countries, like Saudi Arabia, to manage global supply and push up prices.

The recent pickup in interest in Guyana and Suriname is somewhat surprising because their promise as oil producers has often come up empty, reports The New York Times’s Clifford Krauss. Companies drilled more than 100 unsuccessful wells there, mostly in shallow waters, from 1950 to 2014. But after rich fields were found in the deep waters off Brazil, Exxon Mobil and other companies returned to take another look. Exxon struck a gusher in Guyanese waters in 2015, opening the current flurry of exploration.

In Guyana, oil companies have found more than 10 billion barrels of probable reserves of accessible oil and gas offshore, according to IHS Markit, the energy consulting firm. Production began in 2019 and is ramping up quickly. Guyana already accounts for one of the top 50 oil basins worldwide, according to consultants.

Suriname has at least three billion to four billion barrels of reserves, energy experts said, or up to half the new oil and gas discovered around the world last year.

Oil companies say they can make money in Suriname with oil prices as low as $30 to $40 a barrel because of lower costs. That is roughly equivalent to the threshold in Guyana and well below today’s oil price. It is also below break-even levels in many places, including some U.S. shale fields, where costs usually add up to nearly $50 a barrel.

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