Monday, September 27News That Matters

Stocks Rally to New Highs on Swell of Economic Optimism

By: Ella Koeze·Data delayed at least 15 minutes·Source: FactSet

Wall Street began the week on an upswing on Monday, climbing further into record territory, led by gains in travel and tourism stocks.

The S&P 500 climbed 1.4 percent, and the Nasdaq composite gained 1.7 percent.

Norwegian Cruise Line was the best performing stock in the S&P 500, jumping 7.2 percent after it submitted a letter to the Centers for Disease Control and Prevention on Monday outlining its plan to resume cruises from U.S. ports in July. Other cruise operators were also higher. The C.D.C. on Friday issued technical guidance for how cruises may resume.

Also sharply higher were shares of MGM Resorts and United Airlines.

Tesla rose 4.4 percent in the wake of its report on Friday that it more than doubled the number of cars it delivered in the first quarter from the prior year. The electric carmaker sold 184,8000 vehicles in the first three months of the year, up from 88,500 a year ago. It produced 180,338 vehicles, compared with 102,672 in the first quarter of 2020.

Investors have heard a drumbeat of good economic news in recent days, and Monday was also the first chance stock investors on Wall Street had to react to employment figures released on Friday, as markets were closed that day for Good Friday. The Labor Department said that U.S. employers added 916,000 jobs in March, the biggest jump since August, with hiring in the hospitality, retailing and transportation sectors all rising.

On Monday, the Institute for Supply Management said economic activity in the services sector grew in March for the 10th month in a row.

Although a recent sharp rise in coronavirus cases does add a dose of uncertainty to the picture, few economists expect the impact of a new Covid-19 surge to be as severe as it was last year, thanks in large part to the rapid growth of vaccinations.

In other markets, yields on 10-year Treasury notes, which have been on an upward trajectory since October, have stabilized over the last few days. On Monday the yield ticked down to 1.71 percent.

Oil prices fell. West Texas Intermediate dropped more than 4 percent to $58.65 a barrel. Traders have been adjusting their positions since last Thursday’s decision by OPEC and its allies to slowly relax curbs on output. Those controls were put in place in response to the sharp decline in oil demand during the pandemic.

Stock markets were closed for holidays in China, Hong Kong and much of Europe. The Nikkei index in Japan rose 0.8 percent, to its highest level since mid-March, and the Kospi index in South Korea gained 0.3 percent.

More than 3 million households are behind on their mortgage payments, according to the Consumer Financial Protection Bureau.
Credit…Jenn Ackerman for The New York Times

A wave of foreclosures and evictions threatens to arrive when pandemic-related pauses expire later this year, and the Consumer Financial Protection Bureau is considering restrictions on mortgage servicers that would spread the hit into 2022.

More than 3 million households are behind on their mortgage payments, and nearly 1.7 million will run out their forbearance periods in September, according to the bureau.

“We are at really an unusual point in history,” said Diane Thompson, a senior adviser at the bureau. “I don’t think anybody has ever before seen this many mortgages in forbearance at one time that are expected to exit at one time.”

So the bureau has come up with a proposal to ensure that homeowners don’t go straight from forbearance to foreclosure.

The agency proposed a new rule that would prevent servicers from starting foreclosure proceedings until after Dec. 31. The intent, bureau officials said, is to give borrowers coming off forbearance time to consider their options, such as whether they need a mortgage modification to reduce their monthly payments. The restriction would apply only to mortgages on homes used as primary residences.

The agency also proposed a rule change that would allow servicers to extend loan modification offers to borrowers experiencing a Covid-related hardship without undertaking the full review normally required to adjust a mortgage. The intention is to let lenders quickly offer borrowers more affordable terms, so long as the change does not increase the borrower’s monthly payment or extend the loan’s term by more than 40 years.

The consumer bureau is seeking public comment on its proposals, a required step in the rule-making process that will allow industry groups a chance to raise concerns about the changes.

The Mortgage Bankers Association, a housing industry trade group, did not immediately comment on Monday.

Norwegian Cruise Line outlined a plan on Monday to start cruises in July.
Credit…Alexandre Meneghini/Reuters

The Centers for Disease Control and Prevention issued long-awaited technical guidance for cruise lines on Friday, bringing them one step closer to sailing again in United States waters.

While some cruise lines operating in Europe have been requiring all passengers to be vaccinated, the C.D.C. did not go that far. Vaccination will be critical in the safe resumption of cruising, the agency said, and it recommended that all eligible port personnel, crew and passengers get a Covid-19 vaccine as soon as one becomes available to them.

By making vaccinations a recommendation instead of a requirement, the C.D.C. has avoided conflict with Florida, one of the cruise industry’s biggest bases of operations, which has banned businesses from requiring customers to show proof of vaccinations.

Cruise ships in the U.S. have been docked for over a year because of the pandemic and can only restart operations by following the C.D.C.’s Framework for Conditional Sailing Order, issued in October to ensure that cruise ships build the onboard infrastructure needed to mitigate the risks of the coronavirus.

The technical instructions will allow cruise lines to prepare their ships for simulation voyages, designed to test health and safety protocols and operational procedures with volunteers before sailing with paying passengers.

The new recommendations include increasing from weekly to daily the reporting of Covid-19 cases, implementing routine testing of all crew based on a ship’s Covid-19 status and making contractual arrangements with medical facilities on shore for passengers who may fall ill during a voyage.

Once cruise lines have prepared their ships, they must give 30 days notice to the C.D.C. before starting test cruises and will have to apply for a conditional sailing certificate 60 days before a planned regular voyage.

Norwegian Cruise Line, one of the industry’s biggest operators, submitted a letter to the C.D.C. on Monday outlining its plan to resume cruises from U.S. ports in July, which included mandatory vaccination of all guests and crew. The company said that its vaccination requirement and multilayered health and safety protocols exceeded the agency’s Conditional Sailing Order requirements.

But in a statement released on Monday, the Cruise Lines International Association, the industry’s trade group, called the guidelines “so burdensome and ambiguous that no clear path forward or timetable can be discerned.”

The group called on the C.D.C. to lift its hold on cruises and allow a phased resumption of U.S. sailings starting in July. The group “urges the administration to consider the ample evidence that supports lifting the C.S.O. this month to allow for the planning of a controlled return to service this summer,” the statement said.

The Supreme Court on Monday sided with Google in a long-running copyright dispute with Oracle over software used to run most of the world’s smartphones. The 6-to-2 ruling, which resolved what Google had called “the copyright case of the decade,” spared the company from having to face claims from Oracle for billions of dollars in damages.

The case, Google v. Oracle America, No. 18-956, concerned Google’s reliance on aspects of Java, a programming language, in its Android operating system. Oracle, which acquired Java in 2010 when it bought Sun Microsystems, said that using parts of Java without permission amounted to copyright infringement.

Justice Stephen G. Breyer, writing for the majority, said that Google was protected by the “fair use” exception to copyright protections, Adam Liptak reports for The New York Times.

When the Supreme Court agreed to hear the case, it said it would answer two questions: whether the 11,000 lines of software code at issue were copyrightable and, if they were, whether Google’s use of them was subject to the fair-use exception.

Justice Breyer answered only the second question.

“Given the rapidly changing technological, economic and business-related circumstances, we believe we should not answer more than is necessary to resolve the parties’ dispute,” he wrote. “We shall assume, but purely for argument’s sake, that” the code “falls within the definition of that which can be copyrighted.”

Chief Justice John G. Roberts Jr. and Justices Sonia Sotomayor, Elena Kagan, Neil M. Gorsuch and Brett M. Kavanaugh joined the majority opinion. Justice Amy Coney Barrett did not participate in the case, which was argued before she joined the court.

Some big employers are making plans to call employees back to the office, but others are waiting.
Credit…Gregg Vigliotti for The New York Times

At one point the target was the start of 2021. Then it was bumped to July. Now September is the new goal that many companies have marked on the calendar for bringing back office workers who have been working remotely for the past year.

Maybe. Companies are wary of setting hard deadlines, recent reporting by The New York Times found. Some corporations are reopening offices in the spring, while many are saying they will remain flexible, will stage returns over several months and will allow some workers to continue to work from home for a few days a week or more. As nerve-racking as it was for people last year to be abruptly torn from their desks, many people find the prospect of returning distressing.

Here is what some of the country’s biggest companies are telling workers.

Ford, which has more than 30,000 employees in the United States working remotely because of the pandemic, said in March that it would transition to a “flexible hybrid work model.” The company plans to let people stay home for focused work and come into the office for activities that require teamwork. The new protocol will start in July, when the company, which has its main campus in Dearborn, Mich., expects to gradually start bringing more employees back.

IBM, which employs about 346,000 people, hasn’t set a strict timeline for when its U.S. workers will return to the office. It expects about 80 percent of its employees to work with some combination of remote and office schedules, depending largely on role.

The bank, which has more than 20,000 office employees in New York City, has told employees that the five-day office workweek is a relic. It is considering a rotational work model, meaning employees would switch between working remotely and in the office.

The consulting firm formerly known as PricewaterhouseCoopers, which has about 284,000 employees, is set to open one office in each of its major cities in May and all of its offices in September. Even when the offices are formally reopened, PwC will allow some workers, depending on their job, to work remotely at least part time.

Most of Walmart’s 1.5 million employees work at the retail giant’s stores, and a vast number have continued to go into work throughout the pandemic. It said on March 12 that it would start bringing workers back at its Bentonville, Ark., office campus no earlier than July. Its global technology employees will continue to work virtually “for the long-term.”

At Wells Fargo, 60,000 employees worked at bank branches and other facilities during the pandemic, but 200,000 more worked remotely. The company told its staff in a memo last month that it had set a Sept. 6 return-to-office target and was “optimistic” that conditions surrounding Covid-19 vaccinations and case levels would allow it to keep it.







‘Stop the Race to the Bottom’: Yellen Calls for Global Minimum Tax Rate

Treasury Secretary Janet L. Yellen called for a global minimum corporate tax on Monday to prevent companies from evading taxes, as the Biden administration focuses on raising revenue in the U.S. to pay for a multi-trillion-dollar infrastructure package.

Another consequence of an interconnected world has been a 30-year race to the bottom on corporate tax rates. Competitiveness is about more than how U.S.-headquartered companies fare against other companies in global merger and acquisition bids. It’s about making sure the governments have stable tax systems that raise sufficient revenue to invest in essential public goods and respond to crises, and that all citizens fairly share the burden of financing government. President Biden’s proposals announced last week call for bold domestic action, including to raise the U.S. minimum tax rate and renewed international engagement, recognizing that it’s important to work with other countries to end the pressures of tax competition and corporate tax base erosion. We’re working with G20 nations to agree to a global minimum corporate tax rate that can stop the race to the bottom. Together, we can use a global minimum tax to make sure the global economy thrives, based on a more level playing field in the taxation of multinational corporations, and spurs innovation, growth and prosperity.

Video player loading
Treasury Secretary Janet L. Yellen called for a global minimum corporate tax on Monday to prevent companies from evading taxes, as the Biden administration focuses on raising revenue in the U.S. to pay for a multi-trillion-dollar infrastructure package.CreditCredit…Andrew Harnik/Associated Press

Treasury Secretary Janet L. Yellen made the case on Monday for a global minimum tax, kicking off the Biden administration’s effort to help raise revenue in the United States and prevent companies from shifting profits overseas to evade taxes.

Ms. Yellen, in a speech to the Chicago Council on Global Affairs, called for global coordination on an international tax rate that would apply to multinational corporations regardless of where they locate their headquarters. Such a global tax could help prevent the type of “race to the bottom” that has been underway, Ms. Yellen said, referring to countries trying to outdo one another by lowering tax rates in order to attract business.

Her remarks came as the White House and Democrats in Congress begin looking for ways to pay for President Biden’s sweeping infrastructure plan to rebuild America’s roads, bridges, water systems and electric grid.

“Competitiveness is about more than how U.S.-headquartered companies fare against other companies in global merger and acquisition bids,” Ms. Yellen said. “It is about making sure that governments have stable tax systems that raise sufficient revenue to invest in essential public goods and respond to crises, and that all citizens fairly share the burden of financing government.”

Senator Ron Wyden, the Oregon Democrat in charge of writing tax legislation, will release a new plan on Monday to overhaul the way the United States taxes multinational corporations. In addition to raising revenue, the proposal, which is co-authored by Senator Sherrod Brown of Ohio and Senator Mark Warner of Virginia, seeks to discourage companies from shifting profits and jobs to low-tax countries to avoid paying taxes in America. It also creates new incentives through the tax code for companies to invest in research and manufacturing in the United States.

The speech represented Ms. Yellen’s most extensive comments since taking over as Treasury secretary, and she underscored the scope of the challenge ahead.

“Over the last four years, we have seen firsthand what happens when America steps back from the global stage,” Ms. Yellen said. “America first must never mean America alone.”

Ms. Yellen also highlighted her priorities of combating climate change and reducing global poverty and underscored the importance of the United States helping to lead the world out of the crisis caused by the pandemic. Ms. Yellen called on countries not to pull back on fiscal support too soon and warned of growing global imbalances if some countries do withdraw before the crisis is over.

The slow pace of the deployment of vaccines around the world is also a concern for Ms. Yellen, who lamented that many developing and middle-income countries have been unable to invest in robust rollouts of inoculations, which could hurt the global economy.

“The result will likely be a deeper and longer-lasting crisis, with mounting problems of indebtedness, more entrenched poverty, and growing inequality,” Ms. Yellen said, estimating that as many as 150 million people could be pushed into extreme poverty this year. “This would be a profound economic tragedy for those countries, one we should care about.”

In a sharp break with the administration of former President Donald J. Trump, Ms. Yellen emphasized the importance of the United States working closely with its allies, noting that the fortunes of countries around the world are intertwined.

Overhauling the international tax system is a big part of that. Corporate tax rates have been falling around the world in recent years. Under the Trump administration, the rate in the United States was cut from 35 percent to 21 percent. Mr. Biden wants to raise that rate to 28 percent and increase the international minimum tax rate that American companies pay on their foreign profits to 21 percent.

The Organization for Economic Cooperation and Development, in coordination with the United States, has been working to develop a new international tax architecture that would include a global minimum tax rate for multinational corporations as part of its effort to curtail profit shifting and tax base erosion.

Ms. Yellen said she is working with her counterparts in the Group of 20 advanced nations on changes to the global tax system that will help prevent businesses from shifting profits to low-tax jurisdictions.

“President Biden’s proposals announced last week call for bold domestic action, including to raise the U.S. minimum tax rate, and renewed international engagement, recognizing that it is important to work with other countries to end the pressures of tax competition and corporate tax base erosion,” Ms. Yellen said. “We are working with G20 nations to agree to a global minimum corporate tax rate that can stop the race to the bottom.”

Ed Bastian, the chief executive of Delta Air Lines, abandoned all pretense of neutrality last week about the Georgia voting law. “The entire rationale for this bill was based on a lie,” he told employees.
Credit…Etienne Laurent/EPA, via Shutterstock

Corporations have increasingly taken social and political stands, often spurred by the policies of former President Donald J. Trump. But the fight over voting laws, like the one recently passed in Georgia that restricts ballot access in several ways, has again thrust big businesses into partisan politics, pulled by Democrats focused on social justice and Republicans who have proven willing to punish those that cross them.

It presents a “head-spinning new landscape for big companies,” The New York Times’s David Gelles writes.

In Georgia, Delta tried to stay out of the fight at first. The airline is the state’s largest employer, and civil rights activists reached out to the company in February, flagging what they saw as problematic provisions in the Georgia voting law. The next month, Delta’s lobbyists pushed state lawmakers to remove some of the provisions, although Ed Bastian, the carrier’s chief executive, spoke out only in general terms until the bill was passed.

Then a group of more than 70 Black executives published a letter decrying the law and others like it in the works. The former American Express chief executive Kenneth Chenault, who is Black, spoke at length with Mr. Bastian. Mr. Bastian wrote a strongly worded memo that was sent to staff members the next morning, expressing “crystal clear” opposition to the law, which he said was “based on a lie.” Coca-Cola’s James Quincey quickly followed. The companies subsequently faced more criticism from Republican leaders than did other big Atlanta employers, like Home Depot and UPS, that stuck to less-specific statements about voting rights.

More fallout from the Georgia law:

  • Major League Baseball cited its opposition to “restrictions to the ballot box” as the reason for moving its All-Star Game out of Atlanta. Moving the game could cost Georgia over $100 million in tourism revenue, prompting the state’s Republican governor, Brian Kemp, to decry the move as a surrender to liberal activists.

  • Stacey Abrams, the prominent Georgia Democrat and voting rights activist, said she was “disappointed” by M.L.B.’s move and worried about the economic hit, but supported the league’s overall stance. The producer and actor Tyler Perry also fretted about collateral damage from boycotts even as he protested the law.

  • Trying to avoid a repeat in Texas, American Airlines and Dell have objected to a proposal that would restrict measures designed to make voting easier in the state. The statements were more forceful than Coke and Delta had initially been in Georgia. “To make American’s stance clear: We are strongly opposed to this bill and others like it,” the airline said.

Credit…Nicholas Law

In today’s On Tech newsletter, Shira Ovide explores what Britain’s bicycle bubble more than a century ago has in common with current crazes for nonfungible tokens, technology start-ups and electric vehicle companies.