Jobless Claims May Show Uptick as Trend Stays Positive: Live Updates
The latest update on the labor market is scheduled to arrive Thursday morning when the government releases its weekly report on jobless claims.
The unexpectedly sharp drop announced last Thursday took Wall Street by surprise and fueled hopes that the economic recovery was gaining momentum. About 613,000, it was the lowest weekly total of initial claims for state unemployment benefits since the pandemic began, though still high by historical standards.
This time, analysts surveyed by Bloomberg expect the figure to climb. Even so, most forecasters maintain that the labor market is improving.
“We know from experience that weekly claims bounce around from one week to the next,” said Gregory Daco, chief U.S. economist at Oxford Economics, and reports from states like California tended to spike and drop. What matters is the longer-term trend, he said, and since January, there has been consistent progress.
Warmer weather, more extensive coronavirus vaccination efforts and a stream of government assistance that has enabled consumer spending have all contributed to recent gains.
According to the Census Bureau’s weekly Household Pulse Survey, more than four million people who were unemployed in March said they were not working because they were afraid of catching Covid-19.
“It’s important to keep in mind that the trend is going in the right direction,” said Heidi Shierholz, director of policy at the left-leaning Economic Policy Institute, “but we’re still at crisis levels of unemployment claims.”
Credit Suisse said on Thursday that it suffered a loss in the first quarter stemming from loans it made to the collapsed investment fund Archegos Capital Management, a debacle that has prompted Switzerland’s financial regulator to investigate whether the bank was doing a poor job monitoring the riskiness of its investments.
The loss of 252 million Swiss francs, about $275 million, from January through March, came after a loss of 4.4 billion francs from Archegos that wiped out a big increase in revenue. Credit Suisse also said on Thursday that it had sold bonds to investors to raise $2 billion to shore up its capital.
The bank expects additional losses from Archegos of about $655 million as it finishes winding down its exposure to the firm, Thomas Gottstein, the chief executive of Credit Suisse, said during a conference call with reporters Thursday.
The bank, based in Zurich, has suffered a series of calamities this year that have severely damaged its reputation and finances. Swiss regulators are also investigating a spying scandal and Credit Suisse’s sale of $10 billion in funds packaged by Greensill Capital. The funds were based on financing provided to companies, many of which had low credit ratings or were not rated at all. Greensill collapsed in March, and its ties to former Prime Minister David Cameron of Britain have caused a political scandal.
Mr. Gottstein promised Thursday that Credit Suisse would overhaul its systems for tracking risk to avoid future disasters. Several top executives have already left the bank as part of a management shake-up, including Lara Warner, the chief risk and compliance officer.
Credit Suisse also plans to pare back the size of a unit that serves hedge fund clients and was involved in the Archegos losses. Mr. Gottstein declined to say whether the debacle would lead to major changes at Credit Suisse’s investment bank, which has a large presence in New York.
But he suggested that Credit Suisse would not retreat from investment banking. “The underlying results show that the strategy is working,” he told reporters. “I wouldn’t say that because we had two disappointing incidents we should throw the whole strategy overboard.”
If not for the Archegos loss, Credit Suisse would have made a pretax profit of 3.6 billion francs, the bank said. Revenue for the quarter rose 30 percent to 7.6 billion francs as Credit Suisse raked in fees from lively trading on stock and bond markets.
The bank is certain to face intense official scrutiny in months to come. The Swiss regulator, known as Finma, said it would “investigate in particular possible shortcomings in risk management” at Credit Suisse. Finma also said that it would “continue to exchange information with the competent authorities in the U.K. and the U.S.A.”
Mr. Gottstein acknowledged Thursday that the bank had received inquiries from regulators in the United States and Britain, but did not give details.
He declined to confirm a report in the The Wall Street Journal that Credit Suisse’s exposure to Archegos had reached more than $20 billion before the fund collapsed in late March. Mr. Gottstein conceded that Credit Suisse was one of the banks most exposed to Archegos.
The quarterly loss, which Mr. Gottstein described as “unacceptable,” compared with a profit of 1.3 billion francs in the first quarter of 2020.
Tile said Apple boxed out its products and then copied them. Spotify said Apple blocked it from telling customers that they could find cheaper prices outside its iPhone app. And Match Group testified that it now paid nearly $500 million a year to Apple and Google in app store fees, the dating company’s single largest expense.
That testimony came Wednesday at a Senate hearing on Apple’s and Google’s control over their app stores, held by the Judiciary subcommittee on antitrust. The hearing was the latest example of the growing scrutiny of Big Tech and the increasing agreement among Democrats, Republicans and smaller companies that the world’s biggest tech companies have become too powerful.
At the hearing, representatives from Apple and Google defended their companies’ practices, saying that they don’t copy competitors, that few apps pay their commissions and that they charge the commissions to fund the security of their app stores.
Both Democratic and Republican senators were skeptical of those explanations. “Google and Apple are here to defend the patently indefensible,” said Senator Richard Blumenthal, a Democrat from Connecticut. “If you presented this fact pattern in a law school antitrust exam, the students would laugh the professor out of the classroom, because it is such an obvious violation of our antitrust laws.”
Apple and Google have long had a stranglehold on the business of mobile apps. But that position, which has earned them hundreds of billions of dollars, has increasingly led to regulatory, legal and public-relations headaches.
Federal and state lawmakers are holding hearings and considering legislation to weaken the companies’ app-store controls. The Justice Department is investigating the issue. And in a trial next month, Apple is set to face off against Epic Games, the Fortnite maker, which is suing Apple for forcing it to use Apple’s payment system in its iPhone app.
Jared Sine, the chief legal officer at Match Group, said on Wednesday that Google had called his company the previous night when his planned testimony became public. He said Google wondered why his testimony appeared to be tougher than what Match had said on a recent earnings call.
Mr. Blumenthal called that intimidation, and Senator Amy Klobuchar, the Minnesota Democrat who is the subcommittee’s chairwoman, suggested that the senators would investigate.
Wilson White, a government affairs official at Google, said that Match was an important partner and that Google would never aim to intimidate the company.
“There are many, many ways they could hurt our business,” Mr. Sine said. “We’re all afraid, is the reality, Senator. We’re fortunate you’re listening to us today.”
“Well,” Ms. Klobuchar replied, “I hope the Justice Department is, too.”
The market may already be dictating some of the agenda for Gary Gensler, who started as chairman of the Securities and Exchange Commission on Saturday.
Mr. Gensler already has a lot on his plate, Matthew Goldstein reports for The New York Times:
One of the first things he will probably have to weigh in on is whether to assert more control over the red-hot market for special purpose acquisition companies, or SPACs, those speculative businesses that have raised well over $100 billion from investors.
He must also decide whether the S.E.C. should do more to protect small investors, who have recently become a major force in the stock markets.
Then there’s Archegos Capital Management, the $10 billion fund whose implosion last month spotlighted the loosely regulated world of family offices.
“Gensler is going to be confronted with a range of enforcement issues, and he is going to have to determine what his priorities are,” said Daniel Hawke, a former chief of the S.E.C.’s market abuse unit and now a partner with the law firm Arnold & Porter.
Dennis Kelleher, chief executive of Better Markets, a nonprofit organization, said he expected Mr. Gensler to focus on reforming the rules around corporate disclosures — including seeking more transparency from companies and big investors on their risks from climate change and contributions to it, as well as diversity on company boards — because it affected much of his agenda.
“Disclosure writ large will be a common thread through all the issues,” Mr. Kelleher said. “The S.E.C. is fundamentally a disclosure agency, and through better disclosure, you are supposed to be able to empower investors and enable enforcement.”
Arrival, a small electric vehicle company, is creating highly automated “microfactories” where its delivery vans and buses will be assembled by multitasking robots, breaking from the approach pioneered by Henry Ford and used by most of the world’s automakers.
The advantage, according to Arrival, is that its microfactories will cost about $50 million rather than the $1 billion or more required to build a traditional factory, Neal E. Boudette reports for The New York Times.
“The assembly line approach is very capital-intensive, and you have to get to very high production levels to make any margin,” said Avinash Rugoobur, Arrival’s president and a former General Motors executive. “The microfactory allows us to build vehicles profitably at really any volume.”
The company is also replacing most steel parts used in vehicles with components made from advanced composites, a mix of polypropylene, a polymer used to make plastics, and fiberglass. These parts are to be held together by structural adhesives instead of metal welds.
The use of composites, which can be produced in any color, would eliminate three of the most expensive parts of an auto plant — the paint shop, the giant printing presses that stamp out fenders and other parts, and the robots that weld metal parts into larger underbody components. Each typically costs several hundred million dollars.
The company, which is based in London and is setting up factories in England and the United States, says this method should yield vans that cost a lot less than other electric models and even today’s standard, diesel-powered vehicles.
Shares in renewable energy companies rose as President Biden’s two-day climate summit began on Thursday, designated as Earth Day. Mr. Biden is expected to announce that the United States will intend to cut greenhouse gas emissions nearly in half by the end of the decade.
Ahead of the virtual summit with dozens of world leaders, Britain has also sped up its own climate change targets. On Tuesday, it set a new target of cutting emissions by nearly 80 percent by 2035, compared with 1990 levels. On Wednesday, the European Union agreed to a new target to reduce net emissions at least 55 percent by the end of the decade.
“As governments around the world look to kick-start their recoveries as well as reach climate goals, green spending has become one avenue for doing so,” strategists at UBS Global Wealth Management wrote in a note. “We think the sustainable investment universe will continue to expand rapidly.”
Shares in Orsted, a Danish wind energy company, rose 3.4 percent on Thursday, ending a eight-day streak of losses. Shares in Siemens Gamesa Renewable Energy jumped nearly 6 percent. First Solar shares rose in premarket trading, extending a gain of 5.4 percent from Wednesday. The iShares Global Clean Energy exchange-traded fund, which has $5.6 billion in assets, rose 2 percent on Wednesday and kept climbing in premarket trading.
Elsewhere in markets
U.S. stock futures were little changed. The Stoxx Europe 600 index rose 0.5 percent.
Credit Suisse shares plunged 6 percent on Thursday after the Swiss bank said it suffered a loss in the first quarter after billions of francs were lost because of loans made to investment fund Archegos Capital Management
The euro rose 0.2 percent against the dollar before the European Central Bank announces its latest monetary policy decisions. Economists are not expecting a change after the bank ramped up the pace of its bond buying program at its previous meeting in March.