Live Business News: Stocks, Markets and Inflation


Daily Business Briefing

June 9, 2021, 1:10 p.m. ET

June 9, 2021, 1:10 p.m. ET

Mary Barra, the chief executive of General Motors, at an assembly plant in Michigan last month. President Biden is seeking to reinstate Obama-era auto pollution restrictions to combat climate change.
Credit…Rebecca Cook/Reuters

General Motors on Wednesday told the Biden administration that it would agree to tighter federal fuel economy and tailpipe pollution rules, along the lines of what California has already agreed to with five other auto companies.

The move is a step by the nation’s largest automaker away from its position during the Trump administration, when G.M.’s chief executive officer, Mary Barra, asked President Donald J. Trump to relax Obama-era auto pollution rules.

President Biden is seeking to reinstate those restrictions as part of his efforts to cut climate-warming pollution, and he hopes to propose new draft auto pollution rules as soon as next month.

Ms. Barra stopped short of endorsing Mr. Biden’s desire to fully reimpose or strengthen the Obama-era auto pollution standards, which to date stand as the strongest policy ever imposed by the federal government to fight climate change. And she also asked the administration to augment the federal rules with provisions that would give incentives to auto companies that are investing in electric vehicles, although she did not specify what those incentives should be.

Just weeks after Mr. Biden’s election, Ms. Barra dropped her company’s support of the Trump administration’s efforts to nullify California’s rules on tailpipe emissions. And days after the new president’s inauguration, she announced that after 2035 her company would sell only vehicles that have zero emissions, a target in line with Mr. Biden’s pledge to cut the United States’ emissions 50 percent from 2005 levels by 2030.

This week, in a letter to Michael Regan, the head of the Environmental Protection Agency, Ms. Barra wrote, “G.M. supports the emissions reduction goals of California through model year ’26,” adding, “the auto industry is embarking upon a profound transition as we do our part to achieve the country’s climate commitments.”

The Obama-era climate rules, which G.M. sought to loosen, required automakers to build vehicles by 2025 that achieve an average fuel economy of 54.5 miles per gallon. The rules would have eliminated about six billion tons of planet-warming carbon dioxide pollution over the lifetime of the vehicles. Mr. Trump rolled back Mr. Obama’s standards from 54.5 miles per gallon by 2025 to 40 miles per gallon and revoked California’s legal authority to set its own state-level standard.

California reached a separate deal with Honda, Ford, Volkswagen, BMW and Volvo under which they would be required to increase their average fuel economy to about 51 miles per gallon by 2026.

Ms. Barra said that her company would now support those standards at the federal level — alongside a program to give some form of credit or incentive to electric vehicle manufacturers like her own company.

Negotiations on the new auto pollution standards are ongoing alongside White House talks to reach a deal on infrastructure legislation, which Mr. Biden hopes will include generous spending on tax credits for electric vehicle manufacturers and consumers, as well as direct government investments in 500,000 new electric vehicle charging stations.

Nick Conger, an E.P.A. spokesman, said in an email that Mr. Regan had spoken this week with leaders from auto manufacturers and that the “conversations have been constructive as the agency moves forward on actions to address emissions from cars and light-duty trucks.”

 Chipotle said in May that it was raising wages and would pay workers from $11 to $18 an hour.
Credit…Winnie Au for The New York Times

That burrito fix is going to get a bit more expensive.

Executives at the fast-food chain Chipotle said on Tuesday that they had raised menu prices by about 4 percent to cover the cost of the increased employee wages.

In May, in an effort to hire 20,000 employees in the tight labor market, Chipotle said it was raising wages and would pay workers from $11 to $18 an hour.

Those higher labor costs will bring higher food prices. “We really prefer not to” raise prices, Chipotle’s chief executive, Brian Niccol, said Tuesday at the Baird Global Consumer, Technology and Services conference. “But it made sense in this scenario to invest in our employees and get these restaurants staffed, and make sure we had the pipeline of people to support our growth.”

Job openings in the United States surged to record levels in April, the Labor Department said on Tuesday, the latest sign that businesses were struggling to hire workers as the economy reopens. Employers added hundreds of thousands of jobs in May, but the road to recovery for the labor market is bumpy.

The labor market has forced other restaurant chains to increase wages to attract job candidates. That’s a stark contrast from earlier this year, when Congress was debating raising the minimum wage to $15 an hour, and the restaurant industry argued such a move would imperil the economic recovery.

But Chris Kempczinski, the chief executive of McDonald’s, said on a call with Wall Street analysts in January that the company was doing “just fine” in the more than two dozen states that had phased in higher minimum wages. In May, McDonald’s said it was raising hourly wages for current employees by an average of 10 percent and that the entry-level wage for new employees would rise to $11 to $17 an hour, based on the location of the restaurant. The pay increases apply only to its 650 company-owned restaurants; the vast majority of its nearly 14,000 restaurants in the United States are independently owned.

Even with the price increases, Chipotle executives argued that the price of their food items remained reasonable. Excluding higher-priced markets like New York, the price of a chicken burrito remains below $8, Mr. Niccol noted, and that a price increase of 3 to 4 percent equates to “quarters and dimes that we’re layering in.”

A solar farm in Fayetteville, N.C. President Biden wants to eliminate greenhouse gas emissions from the electric grid by 2035.
Credit…Jeremy M. Lange for The New York Times

One of the nation’s biggest solar-energy companies said on Wednesday that it would double production in the United States by opening a third plant in Ohio by the middle of 2023.

The company, First Solar, said it would invest $680 million to build a new plant in Lake Township, Ohio, which is about an hour south of Cleveland, where it already has a plant. The project is expected to add 500 jobs to the company’s roster of 1,600 employees in the United States.

“We have said that we stand ready to support President Biden’s goal to transition America to a clean, energy-secure future, and our decision to more than double our U.S. manufacturing capacity with this new facility is First Solar making good on that commitment,” Mark Widmar, the company’s chief executive, said in a statement. “This facility will represent a significant leap forward in photovoltaics manufacturing, a true factory of the future.”

Mr. Biden wants to eliminate greenhouse gas emissions from the electric grid by 2035, an ambitious goal that would involve remaking the energy industry. The president has promised that the transition to cleaner energy would create millions of new jobs, a claim that some critics have said is far-fetched.

Over the last decade or so, most solar panel manufacturing has moved to China and other Asian countries where labor costs tend to be a lot lower than in the United States. That has been frustrating to Democratic lawmakers who have embraced solar power but also want more domestic manufacturing jobs.

But First Solar, which is based in Tempe, Ariz., and a couple of other companies have in recent years expanded production in the United States. In 2019, the Korean company Hanwha Q CELLS opened a plant in Dalton, Ga., and the Chinese firm JinkoSolar opened a factory in Jacksonville, Fla.

In addition to the operations in Lake Township, First Solar also has a plant in the Toledo area. The company’s panels are different from the more widely used silicon crystalline models. First Solar’s panels are made from a thin film silicon material and are typically used in large solar farms that supply power directly to the electric grid rather than on residential rooftops.

First Solar said its new plant should help it further reduce costs and allow American-made panels to compete more effectively with those produced in China. A sharp drop in the cost of solar panels over the last 10 years have made them one of the least expensive ways to generate electricity, far cheaper in some cases than power plants that burn coal and natural gas.

“For Shell, this ruling does not mean a change but rather an acceleration of our strategy,” said Ben van Beurden, the chief executive of Shell.
Credit…Benoit Tessier/Reuters

Royal Dutch Shell will respond to a recent defeat in a Dutch court by accelerating its efforts to reduce its carbon dioxide emissions, the company’s leader said Wednesday.

Ben van Beurden, the chief executive of Shell, said that he was “disappointed” by the ruling requiring the oil company, Europe’s largest, to move faster in slashing greenhouse gases, but added that the company was planning to do just that.

“For Shell, this ruling does not mean a change but rather an acceleration of our strategy,” Mr. van Beurden said in an article published on LinkedIn. “We will seek ways to reduce emissions even further in a way that remains purposeful and profitable,” he added.

On May 26, the District Court in The Hague ruled that Shell must reduce its global net carbon emissions by 45 percent, by 2030 compared with 2019. The court said that Shell owed a duty of care to the citizens of the Netherlands, where the company has its headquarters, to protect them from the consequences of global warming like rising sea levels.

Mr. van Beurden said his first reaction to the ruling was “surprise” because Shell had been in the forefront among oil majors in setting out targets to reduce emissions including those of the customers who burn the company’s products in their cars or jet engines. He also said that if Shell decided to stop selling gasoline and diesel today, people would just turn to other providers for fuel. “It would not help the world one bit,” he said.

Mr. van Beurden said that Shell still expected to appeal the judgment.

After reflection, though, Mr. van Beurden said he and his colleagues also felt “a determination to rise to the challenge” posed by the court.

The Shell executives may have realized that the ruling is a harbinger of increased pressures to come and that Shell, which has a long history dating to the 19th century, needs to do more on climate change if it wants to thrive in future decades.

Martin Winterkorn, the former chief executive of Volkswagen, in 2017. Prosecutors in Berlin said he lied to German lawmakers about what he knew about the emissions scandal.
Credit…John Macdougall/Agence France-Presse — Getty Images

Volkswagen said on Wednesday that its former chief executive, Martin Winterkorn, would pay the company 11.2 million euros (about $13.7 million) for “breaches of due diligence” that led to the company’s emissions cheating scandal as part of a settlement with other former executives totaling €288 million.

The announcement came the same day that prosecutors in Berlin charged Mr. Winterkorn with lying to the German parliament about his knowledge of the carmaker’s emissions scandal, raising fresh questions about his role in a cover-up.

Mr. Winterkorn was once one of Germany’s most powerful men, but what he knew about of the emissions cheating has remained a crucial question for Volkswagen, even though he resigned in 2015, when the scandal first broke. Overall, the scandal has cost Volkswagen tens of billions of euros in fines, settlements and legal fees.

Prosecutors in Berlin said Wednesday that Mr. Winterkorn knew far earlier than he had acknowledged to a parliamentary panel in 2017 that the company had secretly equipped millions of diesel-powered VW cars with special software, known as a defeat device, to cheat on emissions tests. The gimmick made the vehicles appear environmentally friendly and attractive to ecologically conscious consumers.

“In his testimony, the accused falsely claimed to have been informed of the defeat devices only in September 2015,” Berlin prosecutors said in a statement.

“According to the indictment, he had since May 2015 been aware that the engine control software of some VW vehicles had been equipped with a function to manipulate the exhaust values in testing,” prosecutors added.

The latest legal salvo against Mr. Winterkorn came as Volkswagen announced on Wednesday that it was facing fresh charges from French authorities for cheating on emissions tests.

Volkswagen’s decision to seek settlements from former executives is a turnaround for the company, which had previously been reluctant to publicly accuse former top managers of complicity in the emissions fraud.

In addition to Mr. Winterkorn, Rupert Stadler, the former chief executive of the Audi luxury car division, has agreed to pay €4.1 million. Most of the rest of the payments will be made by insurance companies providing directors’ and officers’ coverage. The settlement must be approved at the annual shareholders’ meeting next month.

Mr. Winterkorn, who still faces criminal charges in Braunschweig, a town near VW’s headquarters in Wolfsburg, on accusations of fraud related to the case, has long contended that he was not aware of any wrongdoing.

In early 2017, Volkswagen pleaded guilty in the United States to criminal charges that included conspiracy to defraud the government, violations of the Clean Air Act and obstruction of justice. The company paid $20 billion to resolve civil and criminal charges related to the scandal.

President Biden is set to revoke a Trump-era executive order that sought to ban TikTok from U.S. app stores.
Credit…Narinder Nanu/AFP via Getty Images

President Biden on Wednesday revoked a Trump-era executive order that sought to ban the popular apps TikTok and WeChat and replaced it with one that calls for a broader review of a number of foreign-controlled applications that could pose a security risk to Americans and their data.

The Trump-era order had not been carried out “in the soundest fashion,” administration officials said in a call with reporters on Wednesday, adding that the new directive would establish “clear intelligible criteria” to evaluate national security risks posed by software applications connected to foreign governments, particularly China.

Mr. Biden’s order will bolster recent actions the Biden administration has taken to curb the growing influence of Chinese technology companies, and it is the first significant step Mr. Biden has taken to address a challenge left for him by President Donald J. Trump, whose administration last year fought to ban TikTok and force its Chinese-owned parent company, ByteDance, to sell the app. TikTok, with an estimated 100 million U.S. users, fought back, suing the Trump administration over the impending ban in federal court.

In September, the Trump administration followed through with another executive order banning operations of TikTok and WeChat, the popular messaging service owned by Tencent. A judge granted an injunction of the Trump order, giving TikTok a lifeline until November.

At the same time, the Trump administration took on the role of dealmaker. It said TikTok could maintain U.S. operations only if it sold itself to a U.S. company and shed all Chinese-based infrastructure and ties. After rushed bids and jockeying by tech giants, Oracle and Walmart won their bid to buy a stake in the company for an undisclosed amount. Mr. Trump then rejected the deal that his administration had orchestrated.

TikTok’s woes subsided with Mr. Trump’s election defeat. Though the company is still under scrutiny with the Biden administration’s new executive order, analysts say the dramatic ups and downs for the company will significantly subside.

James Lewis, a senior vice president of the Center for Strategic and International Studies, said the Biden administration has shown no easing of the government’s strong stance against China. But the new executive order lays out much more precise criteria for weighing risks posed by TikTok and other companies owned by foreign adversaries like China.

“They are taking the same direction as the Trump administration but in some ways tougher, in a more orderly fashion and implemented in a good way,” Mr. Lewis said.

On Wednesday, administration officials would not go into specifics about the future of TikTok’s availability to American users or say whether the United States government would seek to compel ByteDance to transfer American user data to a company based in the United States. Amid a number of successful legal challenges waged by ByteDance, a deal to transfer the data to Oracle fell through this year shortly after Mr. Biden took office.

Administration officials said that a review of TikTok by the Committee on Foreign Investment in the United States, the body that considers the national security implications of foreign investments in U.S. companies, was still continuing and separate from the order.

Several apps, including TikTok, WeChat, and AliPay, did not immediately respond to requests for comment.

Mr. Biden’s order was meant to broaden one issued in 2019 by the Trump administration, which banned American telecommunications companies from installing foreign-made equipment that could pose a threat to national security. That order did not name specific companies, nor did the one Mr. Biden issued on Wednesday. The new directive also does not mention specific retaliatory measures that could be taken if an application is found to be a threat to national security.

  • Lordstown Motors, an electric vehicle start-up that aimed to revive a shuttered General Motors factory in Ohio, said on Tuesday that it did not have enough cash to start commercial production of its electric pickup truck and might have to close its doors. In a regulatory filing, Lordstown said it would not be able to begin “commercial scale production” without raising more money from investors and lenders. It added that there was “substantial doubt regarding our ability to continue as a going concern” — a legal phrase companies often use to alert investors that they might not survive.

  • Ohio’s attorney general, Dave Yost, filed a lawsuit on Tuesday in pursuit of a novel effort to have Google declared a public utility and subject to government regulation. The lawsuit seeks to use a law that’s more than a century old to regulate Google by applying a legal designation historically used for railroads, electricity and the telephone to the search engine. If Google were declared a so-called common carrier like a utility company, it would prevent the company from prioritizing its own products, services and websites in search results.

Outdoor dining at a restaurant in Chapel Hill, N.C. Small-business owners are concerned about inflation, hiring and money, but still think things are moving in the right direction.
Credit…Gerry Broome/Associated Press

Small-business owners were hit hard by the pandemic. But they are still feeling pretty optimistic, according to a new survey of 10,000 businesses conducted by Goldman Sachs and reported first by DealBook.

That positive outlook comes even as entrepreneurs stare down three big concerns:

  • Inflation. Eighty-two percent of small-business owners are concerned about inflation, and 83 percent have experienced an increase in operating costs in the past few months.

  • Hiring. Seventy-one percent of small businesses are hiring full-time or part-time employees, and 81 percent of those hiring say they are finding it difficult to recruit qualified candidates. (Why is it so hard to hire right now? Reasons include coronavirus fears, low wages, child care issues and expanded unemployment benefits.)

  • Access to capital. The majority of small businesses that took a rescue loan from the Small Business Administration (82 percent) expect to exhaust their funding this summer, and less than a quarter are very confident that they will be able to maintain payroll without additional government relief. “If you have a bad financial statement from last year, which most do, you’re not able to qualify for an S.B.A. loan,” said Joe Wall, a managing director of government affairs at Goldman Sachs. “So that’s the immediate crisis that we see coming.”

Even with those worries, 67 percent of business owners think things are moving in the right direction. “People aren’t wearing their masks,” Mr. Wall said, a sign that vaccinations have helped business conditions improve, especially compared with this time last year. “So I think there’s a reason for them to be optimistic.”

Senator Angus King, independent of Maine, said that people had been able to take tax deductions for “money has never reached working charities.”
Credit…J. Scott Applewhite/Associated Press

A new bill being introduced on Wednesday will try to ensure that money promised to charity gets to the people who need it more quickly.

The bill, from Senators Angus King of Maine and Chuck Grassley of Iowa, would try to prevent money from being marooned indefinitely in donor-advised funds, which are akin to 401(k)s for philanthropy but have few regulations or requirements. More than $140 billion sits in these accounts. Another $1 trillion resides in endowments of private foundations like the Bill and Melinda Gates Foundation, which are required to pay out only 5 percent of their assets each year, Nicholas Kulish reports for The New York Times.

The bill would close a loophole to speed giving to working charities: Foundations would no longer be able to meet the 5 percent annual payout requirement by giving to a donor-advised fund where there currently is no payout requirement. The bill also would prohibit foundations from counting the salaries or travel expenses of a donor’s family members toward the 5 percent minimum.

The proposed legislation would require that a donor who wants the full tax benefit right away would have to ensure that the funds are dispensed within 15 years. It does include a significant carve out for community foundations, which often support local institutions in smaller cities and towns across the United States. Under the bill, any donor could keep up to $1 million in a community foundation without falling under proposed new payout rules.

Stocks on Wall Street drifted higher on Wednesday and European shares were mixed, as traders awaited more data on inflation.

With an early gain of about 0.1 percent, the S&P 500 briefly climbed above its May 7 closing record.

Momentum in the stock market has stalled recently as investors try to gauge whether consumer price increases are temporary hiccups as businesses reopen and welcome consumers ready to spend or if the increases point to persistent problems, which central banks will have to address by easing stimulus measures.

A big jump in prices was reported in China on Wednesday, as the government said that prices charged by factories, farmers and other producers had soared 9 percent in May compared with a year earlier, when the pandemic held down expenses. But consumers remain largely unaffected: China’s Consumer Price Index was only 1.3 percent higher in May than a year earlier.

More light will be shed on Thursday, when the closely watched U.S. Consumer Price Index is released with the latest figures for May. Its previous monthly report showed prices rising at the fastest rate in a decade.

Ahead of that report, yields on U.S. government bonds fell, reflecting easing concerns in the bond market. The yield on 10-year Treasury notes dropped below 1.5 percent.

Also on Thursday, the European Central Bank will weigh in on this debate, as it will announce whether it will continue its accelerated pace of buying up bonds, a tool to reduce the cost of borrowing in the eurozone economy.

Video

Cinemagraph
CreditCredit…Maria Chimishkyan

Today in the On Tech newsletter, Shira Ovide talks to Sapna Maheshwari about the jump in the number of Americans skipping the supermarket to order online, and how stores and their workers are navigating the unknown future of groceries.



Source link

Related Posts

Privacy Preferences
When you visit our website, it may store information through your browser from specific services, usually in form of cookies. Here you can change your privacy preferences. Please note that blocking some types of cookies may impact your experience on our website and the services we offer.