Yellen Says Interest Rates May Need to Rise as Biden Spends: Live Business Updates – The New York Times

Credit…Doug Mills/The New York Times

Treasury Secretary Janet L. Yellen said higher interest rates might be needed to keep the economy from overheating given the large investments that the Biden administration is proposing to rebuild the nation’s infrastructure and remake its labor force.

The comments, shown on Tuesday at an event sponsored by The Atlantic, come amid heightened concern from some economists and businesses that the United States is in for a period of higher inflation as stimulus money flows through the economy and consumers begin spending again. The Treasury secretary has no role in setting interest rate policies.

Jerome H. Powell, the Federal Reserve chair, said last month that the central bank is unlikely to raise interest rates this year and wants to see further healing in the American economy before officials will consider pulling back their support by slowing government-backed bond purchases and lifting interest rates.

While the Fed is watching for signs of inflation, Mr. Powell and other Fed officials have said they believe any price spikes will be temporary and will not be sustained. On Monday, John C. Williams, president of the Federal Reserve Bank of New York, said that while the economy is recovering, “The data and conditions we are seeing now are not nearly enough” for the Fed’s policy-setting committee “to shift its monetary policy stance.”

Ms. Yellen, who preceded Mr. Powell as Fed chair, did not predict a huge spike in interest rates but said that some “modest” increases might be necessary as the economy recovers and the administration tries to push through infrastructure and other investments aimed at making the United States more competitive and productive.

“It may be that interest rates will have to rise somewhat to make sure that our economy doesn’t overheat, even though the additional spending is relatively small relative to the size of the economy,” Ms. Yellen said when asked if the economy could handle the kind of robust spending that the Biden administration is proposing.

“I think that our economy will grow faster because of them,” Ms. Yellen said of the proposed investments, such as research and development spending.

The Biden administration has proposed spending approximately $4 trillion over a decade and would pay for the investments with tax increases on companies and the rich.

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

Stocks on Wall Street tumbled on Tuesday, led by a decline in big technology companies, as major indexes retreated from near-record territory.

The S&P 500 fell more than 1 percent, with the largest technology companies — Apple, Amazon, Alphabet, Tesla, and Facebook — dropping between 2 and 4 percent. The tech-heavy Nasdaq composite fell about 2.5 percent.

Travel and cruise industry stocks were also sharply lower. Carnival and Norwegian Cruises Line fell more than 4 percent. Marriott International and Las Vegas Sands also fell sharply.

Adding to the volatility on Tuesday were comments by Treasury Secretary Janet L. Yellen, who said that higher interest rates might be needed to keep the economy from overheating. Stock investors have been wary of higher interest rates, amid concern from some economists that the United States is in for a period of higher inflation. The Treasury secretary has no role in interest rate setting, but the publication of Ms. Yellen’s comments helped pushed stock indexes lower.

The Stoxx Europe 600 fell 1.4 percent, while the FTSE 100 in Britain gave up earlier gains to drop about 0.7 percent.

Oil prices bucked the trend. Brent crude gained 1.8 percent, to $68.79 a barrel. It has not closed above $70 barrel since late 2018. West Texas Intermediate also rose sharply.

  • Infineon, a big producer of semiconductors in Germany, reported “booming” demand for chips as it posted strong quarterly results. But the company warned of continuing supply chain problems and its shares fell.

  • “Demand greatly exceeds supply for the majority of applications,” said the chief executive, Reinhard Ploss, in a statement. Even though its plants are running at “full speed,” he continued, the company still faced supply chain bottlenecks. “We are doing everything we can to provide our customers with the best possible support in this situation.”

  • The world’s largest oil producer, Saudi Aramco, reported a 30 percent rise in net income in the first quarter compared with the same period a year ago.

  • The company is joining other energy producers that reported strong earnings this quarter as oil prices continued their recovery from last year’s collapse.

  • “The momentum provided by the global economic recovery has strengthened energy markets,” Aramco’s chief executive, Amin H. Nasser, said in a statement. “Given the positive signs for energy demand in 2021, there are more reasons to be optimistic that better days are coming.”

Twitter has begun to add paid subscriptions, and announced plans to introduce other subscriber features in the future.
Credit…Laura Morton for The New York Times

Twitter plans to acquire the subscription service Scroll, the social media company announced on Tuesday, as it expands its plans for subscription offerings. The two companies declined to disclose the deal terms.

Scroll charges its users a fee to block advertising on participating news websites, then distributes a cut of its earnings to its partner publishers, which include USA Today, Vox and The Atlantic. Publishers can earn up to 50 percent more from the service than they do from advertising, Scroll contends. Twitter plans to integrate the service into its platform, and use its technology to build other subscription services.

“People come to Twitter every day to discover and read about what’s happening,” Mike Park, Twitter’s vice president for product, said in a blog post announcing the deal. “If Twitter is where so much of this conversation lives, it should be easier and simpler to read the content that drives it.”

In recent months, Twitter has begun to add paid subscriptions, and announced plans to introduce other subscriber features in the future.

In January, Twitter acquired Revue, a newsletter provider, and said it would take a 5 percent cut of subscription revenue. In February, the company revealed plans to introduce “Super Follows,” a feature that would allow Twitter users to place some of their content behind a pay wall. And this week, Twitter said it planned to add a ticketing feature to its audio chat, Spaces, so that hosts can charge listeners for entry into their discussions.

Twitter plans to supplement its advertising revenue with revenue from subscriptions, and has raced to add content like newsletters and audio chats that it thinks audiences will pay for. Its acquisition of Scroll will add journalism to that list.

“For every other platform, journalism is dispensable. If journalism were to disappear tomorrow their business would carry on much as before,” Tony Haile, Scroll’s chief executive, wrote in a blog post. “Twitter is the only large platform whose success is deeply intertwined with a sustainable journalism ecosystem.”

Pandora is looking to address ethical concerns held by consumers about the jewelry business.
Credit…Ints Kalnins/Reuters

Pandora, the world’s biggest jeweler by volume, said on Tuesday that it will no longer use mined diamonds for any new designs, and is switching to man-made stones produced in laboratories instead.

The Copenhagen-based company said it would release its first collection to use synthetic stones in Britain this year before turning to other markets in 2022. The range of rings, bangles and earrings will feature stones from 0.15 to 1 carat in size. Pandora’s chief executive, Alexander Lacik, said in a statement Tuesday that diamonds should be affordable as well as sustainable.

Lab-grown diamonds are physically, chemically and optically identical to mined diamonds, and proponents say that their production results in less environmental damage than traditional mining practices, and also doesn’t have the same associations with human rights abuses. Prices of man-made diamonds have fallen over the past two years after the miner De Beers started offering synthetic stones in 2018, and they are now up to 10 times cheaper than mined diamonds, according to a report by Bain & Company.

While mined diamonds went into about 50,000 Pandora pieces of jewelry out of a total of 85 million items made last year, meaning the shift required within the company supply chain will be negligible, the announcement by Pandora is the latest by a major industry player looking to address growing ethical concerns held by consumers about the jewelry business. The jeweler has already said it will only use recycled gold and silver beginning 2025.

Tim Sweeney, the chief executive of Epic Games, said that the company wanted to build “a phenomenon that transcends gaming.”
Credit…Jim Wilson/The New York Times

The chief executive of Epic Games offered a granular explanation of the popular game Fortnite to paint an expansive portrait of his company’s world on the first day of what is expected to be a three-week trial, pitting Epic against Apple in a fight over Apple’s App Store fees and other rules that could reshape the $100 billion app economy.

Fortnite, Tim Sweeney said, “is a phenomenon that transcends gaming,” Erin Griffith reports for The New York Times.

“Our aim of Fortnite is to build something like a metaverse from science fiction,” he said.

Metaverse? A court reporter needed clarification. It’s a virtual world for socializing and entertainment, Mr. Sweeney said.

In a mostly empty courtroom in Oakland, Katherine Forrest of the law firm Cravath, Swaine & Moore opened Epic’s case by previewing a series of emails between Apple’s top executives. The emails were evidence, Ms. Forrest argued, that the tech giant purposely created a “walled garden” that locks consumers and developers inside. That forces them to use Apple’s payment system, she said.

Once Apple lured users and developers into its walled garden, “the garden gate was closed, the lock turned,” Ms. Forrest said. She compared Apple’s fees on in-app purchases for subscription services to a car dealership that takes a commission on gas sales.

Apple’s lawyers described, in their opening statement, a thriving market for app distribution that includes gaming consoles, desktop computer gaming and the mobile web. Karen Dunn of Paul, Weiss argued that the 30 percent commission was in line with industry standards and that Epic’s requests, if granted, would make iPhones less secure, while unlawfully forcing Apple to do business with a competitor.

Ms. Dunn added that Epic’s case was a self-serving way to avoid paying fees it owed Apple and was on shaky legal footing.

Pfizer’s vaccine is disproportionately reaching the world’s rich.
Credit…Dado Ruvic/Reuters

On Tuesday, Pfizer announced that its Covid vaccine brought in $3.5 billion in revenue in the first three months of this year, nearly a quarter of its total revenue. The vaccine was, far and away, Pfizer’s biggest source of revenue, report Rebecca Robbins and Peter S. Goodman of The New York Times.

The company did not disclose the profits it derived from the vaccine, but it reiterated its previous prediction that its profit margins on the vaccine would be in the high 20 percent range. That would translate into roughly $900 million in pretax vaccine profits in the first quarter.

Pfizer has been widely credited with developing an unproven technology that has saved an untold number of lives.

But the company’s vaccine is disproportionately reaching the world’s rich — an outcome, so far at least, at odds with its chief executive’s pledge to ensure that poorer countries “have the same access as the rest of the world” to a vaccine that is highly effective at preventing Covid-19.

As of mid-April, wealthy countries had secured more than 87 percent of the more than 700 million doses of Covid-19 vaccines dispensed worldwide, while poor countries had received only 0.2 percent, according to the World Health Organization. In wealthy countries, roughly one in four people has received a vaccine. In poor countries, the figure is one in 500.

Throughout the pandemic, Eleven Madison Park has been preparing food boxes for needy families. The new plant-based iteration of the restaurant will help sustain efforts like those, said its chef, Daniel Humm.
Credit…Lucas Jackson/Reuters

Eleven Madison Park, the Manhattan restaurant that has been called the best in the world, will serve an all-plant-based menu when it reopens after more than a year of being closed because of the pandemic.

Eleven Madison Park’s multicourse menu will keep its prepandemic price of $335, including tip, Brett Anderson and Jenny Gross report for The New York Times.

Daniel Humm, Eleven Madison Park’s chef, said the decision is the result of a yearslong re-evaluation about where his career was headed, which reached its breaking point during the pandemic.

“It became very clear to me that our idea of what luxury is had to change,” Mr. Humm said. “We couldn’t go back to doing what we did before.”

While the restaurant’s ingredient costs will go down, labor costs will go up as Mr. Humm and his chefs work to make vegan food live up to Eleven Madison Park’s reputation. “It’s a labor intensive and time consuming process,” he said.

It marks a striking departure for one of the most lavishly praised American restaurants of the past 20 years. Though Mr. Humm still offers plenty of red meat at his London restaurant, Davies and Brook at Claridge’s hotel, the move at Eleven Madison Park — which has four stars from The New York Times and three from Michelin — suggests how different fine dining may look as restaurants reopen and reimagine themselves.

Protesters at the State Capitol in Austin, Texas, demonstrated against Republicans’ proposed bills to restrict voting in the state.
Credit…Eric Gay/Associated Press

Two broad coalitions of companies and executives are releasing letters on Tuesday calling for expanded voting access in Texas, wading into the debate over Republican legislators’ proposed new restrictions on balloting after weeks of relative silence.

One letter comes from a group of large corporations, including Hewlett-Packard, Microsoft, Unilever, Salesforce, Patagonia and Sodexo, as well as local companies and chambers of commerce, and represents the first major coordinated effort among businesses in Texas to take action against the voting proposals.

The letter, under the banner of a new group called Fair Elections Texas, stops short of criticizing the two voting bills that are now advancing through the state’s Republican-controlled Legislature, but opposes “any changes that would restrict eligible voters’ access to the ballot.”

A separate letter, also expected to be released on Tuesday and signed by more than 100 Houston executives, goes further. It directly criticizes the proposed legislation and equates the efforts with “voter suppression.”

That letter was organized by a breakaway faction of the Greater Houston Partnership, the equivalent of a citywide chamber of commerce in the country’s fourth-largest city, and came after a month of intense debate within the organization over how to respond to the voting proposals.

Together, the letters signify a sudden shift in how the business community approaches the voting bills in Texas. Until now, American Airlines and Dell Technologies were the only major corporations to publicly speak out about the Texas legislation, and after doing so they quickly found themselves threatened by Republicans in Austin, the state capital.

But with a varied coalition that numbers well into the dozens, companies are hoping a collective voice willing to apply pressure at the state level could break through and sway the thinking of some Republican legislators who may be wavering on the bills.

Corporations across the country find themselves at the center of a swirling partisan debate over voting rights. With Republicans in almost every state advancing legislation that would make it harder for some people to vote, companies are under pressure from both sides. Democratic activists, along with many mainstream business leaders, are calling on corporations to oppose the new laws. At the same time, a growing chorus of senior Republicans is telling corporate America to keep quiet.

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Yellen Says Interest Rates May Need to Rise as Biden Spends: Live Business Updates – The New York Times

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