Stocks rose on Wednesday, continuing their tumultuous ride since the discovery of the new Covid variant last week.
The S&P 500 was set to open 1.3 percent higher, following a 1.9 percent decline on Tuesday when the head of the Federal Reserve said that the central bank could speed up its plan to withdraw stimulus because of high inflation.
An index of volatility in the U.S. stock market surged to its highest since early March on Friday after the new Omicron variant was reported by researchers in South Africa. The VIX index has declined a little since then, but remains above levels seen in the past two months.
Traders had pushed back their expectations about when the Fed might eventually raise interest rates, in light of the news about the variant and some predictions that current vaccines will be less effective against it. But Jerome H. Powell, the Fed chair, said the risk of higher inflation had increased. If the central bank finishes tapering its bond-buying program sooner than expected, it could also raise interest rates sooner.
“If the Omicron variant of the Covid virus proves a temporary distraction, global markets will need to adjust” to more hawkish Fed, Steen Jakobsen, chief investment officer at Saxo Bank, wrote in a note.
The Stoxx Europe 600 rose 1.1 percent, reversing a 0.9 percent fall the previous day. The Nikkei 225 in Japan closed 0.4 percent higher.
Futures on oil rose, with West Texas Intermediate, the U.S. benchmark, up 4.9 percent to $69.43 a barrel. Brent crude, the European benchmark, rose 5.2 percent, to $72.77 a barrel. The Organization of the Petroleum Exporting Countries and its allies including Russia will meet on Thursday to decide whether or not to stick to their plan of gradually increasing oil production.
A rushed emergency aid program for small companies devastated by the pandemic improperly sent nearly $3.7 billion to recipients prohibited from receiving federal funds, according to a government audit released on Tuesday.
The finding adds to a mountain of evidence chronicling what the Small Business Administration’s inspector general, Hannibal Ware, called an “unprecedented amount of fraud” in the agency’s pandemic relief efforts. In October, Mr. Ware’s office chastised the agency for improperly doling out billions in relief money to self-employed people who made “flawed or illogical” claims of having additional workers on their payroll.
Its Economic Injury Disaster Loan program distributed more than $210 billion last year in loans and grants. The program was organized in a hurry by the Trump administration as millions of businesses temporarily shut down because of the coronavirus and was designed to quickly send out money to help companies keep up on their bills.
But the agency failed to do a legally required check of applicants’ identifying details against the Treasury Department’s Do Not Pay system, according to Tuesday’s report from Mr. Ware’s office.
The Do Not Pay system was set up in 2011 to reduce improper payments to people who are dead, convicted of tax fraud or barred from receiving federal contracts, among other red flags. Mr. Ware found 117,135 applicants who got grants and 75,180 recipients who got loans despite matches in the system indicating a “high likelihood” that the payments were improper.
Isabella Casillas Guzman, who became the agency’s administrator in March, said at a House hearing this month that she had heightened the agency’s fraud controls over its Covid-19 relief programs. “The guardrails did not exist” last year, under the prior administration, she said.
In a response included in Mr. Ware’s report, the Small Business Administration said that on April 6, 2021 — more than a year after the disaster loan program began — it started checking Do Not Pay records before sending out funds. The agency also said it would review the loans and grants previously made to recipients who were flagged as ineligible.
“We agree with the S.B.A. Office of Inspector General that the Trump administration should have applied this risk management tool, and, therefore, the S.B.A. has done just that under the Biden-Harris administration,” Han Nguyen, an agency spokesman, said on Tuesday.
The furniture companies that dot Hickory, N.C., in the foothills of the Blue Ridge Mountains, have been presented with an unforeseen opportunity: The pandemic and its ensuing supply chain disruptions have dealt a setback to the factories in China and Southeast Asia that decimated American manufacturing in the 1980s and 1990s with cheaper imports.
At the same time, demand for furniture is very strong.
In theory, that means Hickory’s furniture companies have a shot at building back some of the business that they lost to globalization. Local furniture companies had shed jobs and reinvented themselves in the wake of offshoring, shifting to custom upholstery and handcrafted wood furniture to survive. Now, furniture makers like Hancock & Moore have a backlog of orders. The company is scrambling to hire workers.
Yet the same forces that are making it difficult for overseas manufacturers to sell their goods in the United States — and giving American workers a chance to command higher wages — are also throwing up obstacles, Jeanna Smialek reports for The New York Times.
Many of the companies are dependent on parts from overseas, which have been harder — and more expensive — to obtain. Too few skilled workers are seeking jobs in the industry to fill open positions, and businesses are unsure how long the demand will last, making some reluctant to invest in new factories or to expand to towns with bigger potential labor pools.
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Electric vehicles are central to the Biden administration’s push for clean energy and a revival of American manufacturing. But as Apple did with gadgets, Tesla is forming stronger ties with China to get closer to both its adroit manufacturing supply chain and huge market of car buyers.
China is poised to become a major player in electric cars, and Tesla and a slew of Chinese electric vehicle upstarts are helping its companies become even more competitive.
Tesla’s huge factory in Shanghai works with local suppliers to make increasingly sophisticated components that are helping them go head-to-head with Western and Japanese auto suppliers.
“China is overtaking its competitors by switching lanes in the car race,” said Patrick Cheng, chief executive of NavInfo, a mapping and autonomous driving technology company in Beijing. “The race used to be about internal combustion engine vehicles. Now it’s the electric cars.”
One hears the word “overtaking” a lot in the Chinese auto industry. Many of its executives and engineers believe that the transition to new-energy vehicles presents a similar opportunity as mobile internet did in the last decade, when Chinese companies created powerful platforms such as the mobile messaging app WeChat and the short video app TikTok.
That’s why the Chinese government has embraced Tesla with open arms. It has offered Mr. Musk’s company cheap land, loans, tax benefits and subsidies. It even allowed Tesla to run its own plant without a local partner, a first for a foreign automaker in China.
Beijing is seeking what the business world calls the catfish effect: Toss an aggressive fish into a pool so that the established denizens will swim harder.
Electric cars could shake up the auto industry — and, by extension, jobs, technology and geopolitical influence. READ THE FULL ARTICLE →