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Federal Reserve Chairman Jerome Powell.
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Fed Chair Jerome Powell speaks with Congressional Select Subcommittee about the Corona crisis today at 2 pm Investors can be forgiven if they feel a little nervous. When Powell spoke last week,
Dow Jones Industrial Average
had its worst week since October.
The sell-off began when the Fed revealed on Wednesday that interest rates could rise in 2023. Yes, 2023. The sell-off accelerated on Friday when James Bullard, president of the St. Louis Fed, said interest rates could rise earlier. Bullard also said the Fed has been discussing when to stop buying bonds, another form of its recent support for the markets.
Now investors will be told when Congress wants interest rates to rise. It’s likely to break down along political lines, with Democrats focusing on the employment side of the Fed’s dual mandate, and Republicans taking advantage of inflation.
The unemployment rate in the US is still 5.8%, up about 2 percentage points since the start of the pandemic, but the consumer price index rose 5% year-on-year in May.
Investors can expect Powell to hold on to his recent scriptand his statement does just that: the economy is improving thanks to vaccinations and government support, but has not yet fully recovered. Until then, the Fed lends a helping hand.
And that’s what everyone is concerned about.
Al Root
*** Join Barrons on Tuesday at noon as corporate and philanthropic leaders explore initiatives to reduce the wealth gap. Viewers will hear from executives from the Ford Foundation, BofA Securities and Exelon. Register here.
***
Senate to consider voting rights bill this week
The Senate is expected to consider a voting bill this week that would bring sweeping changes to the election and counter Republican-led efforts to tighten voting procedures in states like Georgia, Florida and Texas. Republicans have proposed at least 216 bills in 41 states, giving state legislators more authority over elections.
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The For the People Act that the House was adopted in March calls for automatic voter registration, restores voting rights for previously incarcerated people, reduces gerrymandering and expands early and absent voting.
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Senate Leader Mitch McConnell (R., Ky.) said: no Republicans would vote for the bill. Majority Leader Chuck Schumer (D., NY) said: Democrats will pass legislation to protect voting rights and protect our democracy.
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To pass the bill despite Republican opposition, Senate S Democrats should abolish the 60-vote chambers’ filibuster rule, something moderates like Senator Joe Manchin (D., W.Va.) and Senator Kyrsten Sinema (D., Ariz.) are against.
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Manchin’s compromises include a 15-day voting period, automatic voter registration for people with driving licenses, and making Election Day a national holiday. But he differs from Democrats in supporting voter ID cards and absentee voting limits, and in opposing government funding for candidates.
What’s next: White House press secretary Jen Psaki said Monday the bill was the first part of a broader effort on voting rights, adding that not passing it would lead to a new consideration of the filibuster rule. The Senate held a procedural vote on Tuesday to begin the debate.
Janet H. Cho
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Supreme Court Rejects NCAA Limits on Athlete Benefits
Supreme Court handed over to National Collegiate Athletic Association a defeat on Monday, saying it illegally restricted schools from competing for talent by offering athletes tantalizing benefits as long as they are tied to education.
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The decision could have been: broad implications for the future of college sports, although the case did not involve companies that paid college athletes through endorsements. It also comes at a time of renewed focus on antitrust laws to protect competition.
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The unanimous decision said the NCAA should allow colleges to recruit athletes by offering fees and benefits associated with education, such as internships, computers and study programs abroad.
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On Tuesday, representatives of the association’s most powerful schools and athletic conferences will begin a two-day meeting where they will vote on the name, image and likeness rules, as several states now have laws allowing player approval.
What’s next: Judge Brett Kavanaugh warned that the NCAA’s remaining rules limiting compensation raise serious questions under antitrust laws. Tradition alone cannot justify the NCAA’s decision to build a massive fundraising venture on the backs of student athletes who are not fairly compensated.
Liz Moyer
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EU opens investigation into Google’s digital advertising activities
the European Commission said Tuesday it had opened a formal investigation into Google’s digital advertising business to assess whether the US company distorts competition by favoring its own business.
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The probe is to determine if Google is restriction of third-party access to user data for advertising purposes on websites and apps, while such data is reserved for personal use, the European Commission said in a release.
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Google generated $147 billion in revenue of online ads last year, according to according Reuters.
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The EU competition watchdog has fined the company more than €8 billion ($9.5 billion) over the past decade for disrupting competition in online shopping, Android smartphones and online advertising.
What’s next: The survey, which began informally two years ago, is similar to one initiated last year by a group of US states. It will now take months and the Commission has no deadline to end it.
Pierre Brianon
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Netflix signs deal with filmmaker Steven Spielberg
Academy Award-winning director Steven Spielberg’s production company Amblin Partners has signed a deal to make multiple new feature films for
Netflix
the coming years.
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Amblin’s recent films include: Oscar winnersGreen Book and 1917. It also worked with Netflix on The Process of the Chicago 7. Green Book beat Netflixs Rome for Best Picture at the 2019 Academy Awards.
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The major US theater chains, including:
AMC Entertainment Holdings,
refused to show Rome because Netflix wouldn’t adhere to the industry-standard exclusive 90-day theatrical window before studios can distribute their movies elsewhere. Rome made it to about a thousand independent theaters. -
Spielberg joins a growing list of Hollywood powerhouses working with the streaming giant. The list includes Martin Scorsese, Adam Sandler, Michael Bay, Will Smith and Dwayne The Rock Johnson.
What’s next: Netflix and Amblin have not disclosed financial details of their agreement. It’s also unclear whether Spielberg himself would direct any of the films slated for Netflix.
Connor Smith and Nicholas Jasinskiz
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American Airlines cancels flights as demand for travel rises
US Airlines
cancels about 950 flights in the first half of July or 1% of its flights to relieve pressure on its operations amid a surge in travel demand and recent storms that have caused delays and cancellations.
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Cutting flights makes it possible more room to adapt to the unexpected, such as staff shortages at the companies that provide catering, push wheelchairs and fueling services, and allows American to have more pilots in reserve, the airline said.
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Scott Kirby, CEO of United Airlines told Axiosthe US could face a shortage of pilotsbecause the military today produces far fewer pilots than it did during the Cold War, and it’s hard to become a commercial airline pilot on your own.
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US extended restrictions on non-essential travel to Canada and Mexico until July 21, the Department of Homeland Security said via Twitter.
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On Sunday, 2.1 million people passed through U.S. airports, another pandemic and the fifth time since June 11 that the daily number has crossed 2 million, according to data from the Transportation Security Administration. That’s 3.5 times the number who traveled on that date in 2020.
What’s next: Airlines and employees on Monday asked Attorney General Merrick Garland for tougher enforcement and consequences for onboard violence. The Federal Aviation Administration has recorded more than 3,000 incidents of unruly passengers this year and is carrying out nearly 400 enforcement actions
Janet H. Cho
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Join the Barrons Daily virtual stock market challenge this month and show us your stuff.
Start a new challenge every month and invite the readers of the newsletter! to build a portfolio with virtual money and compete against the Barrons and MarketWatch community.
Everyone starts with the same amount and can trade as often or as little as they want. Keep a close eye on the leaders and at the end of the challenge, the winner whose portfolio has the most value will be announced in the Barrons Daily newsletter.
Are you ready to compete? Join the challenge and choose your stocks here.
***
Newsletter edited by Mary Romano, Liz Moyer, Matt Bemer, Ben Levisohn
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