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Bitcoin’s Surge Contrasts With Regulatory Doubts: Live Business Updates – The New York Times

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Kin Cheung/Associated Press

Bitcoin is surging. Even after a decline of as much as 10 percent on Monday, the price of Bitcoin is up so far this year to about $31,000, adding to a furious rally at the end of 2020 that pushed the cryptocurrency near $30,000 a coin, a level it breached over the weekend. In March, it was trading below $4,000.

The euphoria stands in contrast to regulatory doubts about cryptocurrencies.

Digital money enthusiasts have been submitting comments to the Treasury Department on a proposed new disclosure requirement for certain crypto transactions “aimed at closing money laundering regulatory gaps.” The deadline for comments is Monday, and more than 3,500 submissions are already in.

The Blockchain Association sent Treasury Secretary Steven Mnuchin a letter requesting more time to consider the rule, arguing that “difficult and momentous” issues were being handled hastily. Eight House lawmakers also wrote to Mr. Mnuchin, asking that the review period be extended by several weeks.

The staggering 2020 rally highlights Bitcoin’s speculative appeal but also expectations of its lasting value to some investors. The run that has lifted Bitcoin to its current price came as some big institutions said they would begin to buy or allow use of Bitcoin.

  • In May, Paul Tudor Jones, one of Wall Street’s best-known hedge fund managers, said he had put almost 2 percent of his portfolio in Bitcoin. He said the cap on Bitcoin production made it an attractive alternative to the declining value of traditional currencies, which he thought was inevitable as central banks printed more money to encourage an economic recovery.

  • In July, the Office of the Comptroller of the Currency, an American regulator, said this summer that banks would be allowed to hold cryptocurrencies for customers.

  • In August, MicroStrategy, a software company in Virginia, said it bought $250 million of Bitcoin to store some of the cash it had in the corporate treasury.

  • In October, Square said it was putting $50 million of its corporate cash into Bitcoin. In 2018, Square also began offering the digital currency on the Cash App, its phone app that people use to send money between friends and family.

  • Soon after Square did, PayPal announced in October that it would allow people to buy and hold Bitcoin and a few other cryptocurrencies.

Of course, none of that offers any indication of how high Bitcoin could go, or when this rally may end. The last time this kind of speculative fever hit the cryptocurrency — in 2017 and 2018 — it doubled in value before halving again in just a few months.

A PSA assembly line in Slovakia last year. The merger with Fiat Chrysler Automobiles is intended to help both companies make the transition to electric vehicles.  
Radovan Stoklasa/Reuters

Shareholders of Fiat Chrysler Automobiles and PSA, the French maker of Peugeot, Citroën and Opel cars, voted on Monday to merge in an effort to acquire the scale necessary to survive in an industry gripped by technological change.

The new company, to be called Stellantis, would employee 400,000 people and include the Jeep, Ram Trucks and Maserati brands. It would be the world’s fourth-largest carmaker, after Toyota, Volkswagen and the Renault-Nissan-Mitsubishi Alliance, based on vehicle sales during the first nine months of 2020.

Executives of Fiat Chrysler and PSA agreed to merge at the end of 2019 and have been working out the details and securing regulatory approval since then.

Together, the two companies believe they stand a better chance of surviving a transition to electric vehicles, which is happening faster than most analysts predicted.

“We are living through a profound era of change in our industry,” John Elkann, the chairman of Fiat Chrysler, told shareholders by video, drawing comparisons with Fiat’s founding at the dawn of the automobile age. “We believe the coming decade will redefine mobility as we know it.”

But the new company would face major challenges. Neither Fiat Chrysler nor PSA has a strong presence in China, the world’s largest car market, and they have been slow to introduce electric vehicles.

Both companies have been hard hit by the pandemic. PSA’s vehicle sales were down 30 percent in the 11 months through November, while Fiat Chrysler sold 30 percent fewer cars and trucks in the nine months through September, the most recent reporting period. The pandemic has made the rationale for the merger “even more compelling,” Mr. Elkann said.

Carlos Tavares, the chief executive of PSA, would hold the same title at the new entity. Mr. Elkann, a scion of Italy’s Agnelli family and descendant of the man who founded Fiat in 1899, is in line to be chairman. Mike Manley, the chief executive of Fiat Chrysler, would manage the combined company’s American operations.

“We are ready for this merger,” Mr. Tavares said during the meeting of shareholders, which was conducted online. The merger will allow the companies to share the cost of developing electric vehicles, Mr. Tavares said, and give PSA access to the American market and reduce its dependence on Europe.

Carl Icahn at the DealBook Conference in 2015. By reducing his stake in Herbalife, the investor will also give up five board seats held by his designees.
Karsten Moran for The New York Times

The billionaire financier Carl Icahn has begun to cash out of his nearly decade-long bet on the nutritional food supplements company Herbalife, an investment that survived both regulatory review and a prominent — though unsuccessful — challenge by another activist investor.

Herbalife said late on Sunday that it would buy back about $600 million worth of stock held by Mr. Icahn, who has been the company’s biggest shareholder since 2013. Doing so would also mean that he will give up five board seats held by his designees.

The move, which will reduce Mr. Icahn’s stake to 6 percent from 13 percent, caps an investment success few could have foreseen in late 2012, when the billionaire first poured money into Herbalife.

At the time, Mr. Icahn pushed back against a campaign by William A. Ackman, the manager of the hedge fund Pershing Square Capital Management, who had prominently accused the company of being an illegal pyramid scheme on the verge of being shut down. Mr. Ackman shorted Herbalife shares, wagering that their price would fall to zero, eventually pouring $1 billion into his bet.

Herbalife denied the accusations, and Mr. Icahn became one of several hedge fund managers to bet against Mr. Ackman. Such was Mr. Icahn’s conviction that he raised his stake in the company in 2013, becoming its largest shareholder and most vocal defender.

The investment led to a memorable shouting match between Mr. Icahn and Mr. Ackman live on CNBC that devolved into a televised airing of grievances — and transfixed Wall Street traders. (The level of the debate’s eloquence may have been encapsulated by Mr. Icahn likening his rival to “a crybaby in the schoolyard.” The two later buried the hatchet.)

Mr. Ackman was forced to concede defeat in 2018, quietly closing out the last of his short position after a federal review of Herbalife led to an enforcement action that fell far short of shutting down the company.

Mr. Icahn, however, held onto his stake for years, selling his shares over time. It has proved to be profitable as well: The investor said in 2018 that he had collected a $1 billion return on his investment.

In a statement late on Sunday, Mr. Icahn said that “the time for activism has passed” at Herbalife.

An oilfield in the Irkutsk region of Russia. The prospect of OPEC, Russia and other oil producing countries opening taps could quickly depress oil prices.
Vasily Fedosenko/Reuters

Officials from OPEC, Russia and other major oil producing countries are expected to meet by videoconference on Monday to consider allowing further increases in output in the face of reduced demand from the pandemic.

During a difficult meeting in December, the group, known as OPEC Plus, reached a compromise that permitted production to increase by 500,000 barrels a day starting Jan. 1, instead of a previously agreed two million barrels a day. The group also agreed to meet monthly to consider whether further increases were warranted.

The members are still keeping about seven million barrels a day, or about 7 percent of global supply in normal times, off the market. The prospect of opening taps could quickly depress oil prices.

Analysts say that the gradual recovery of the global economy and demand for oil may test the group’s cohesion in the coming months. Producers like Russia, Iraq and the United Arab Emirates have their reasons for wanting to lift production, but there are also arguments for proceeding cautiously, including the worsening pandemic in areas like Europe and the United States and what appears likely to be a slow rollout of vaccines.

“We crossed a lot of red lines that had not been crossed before,” Jerome H. Powell, the chair of the Federal Reserve, said of the central bank’s pandemic response.
Nate Palmer for The New York Times

Jerome H. Powell, the 67-year-old chair of the Federal Reserve, will face pressure from all sides in 2021, and he could find himself auditioning for his own job. His term expires in early 2022, which means that President-elect Joseph R. Biden Jr. will choose whether to renominate him.

Mr. Powell, a Republican who was made a Fed governor by President Barack Obama and elevated to his current position by President Trump, has yet to say publicly whether he wants to be reappointed, reports The New York Times’s Jeanna Smialek.

His chances could be affected by the Fed’s coronavirus crisis response, which has been credited as early and swift.

“We crossed a lot of red lines that had not been crossed before,” Mr. Powell said at an event in May.

The Fed rolled out nearly the entire menu of emergency loan programs it used during the 2008 financial crisis, and it teamed up with the Treasury Department to announce programs that had never been tried — including plans to support lending to small and medium-size businesses and buy corporate debt. In early April, it tacked on a plan to get credit flowing to states.

But the Fed’s extraordinary actions in 2020 weren’t aimed only at keeping credit flowing. Mr. Powell and other top Fed officials pushed for more government spending to help businesses and households, an uncharacteristically bold stance for an institution that tries mightily to avoid politics. As the Fed took a more expansive view of its mission, it weighed in on climate change, racial equity and other issues its leaders had typically avoided.

In Washington, reactions to the Fed’s bigger role have been swift and divided. Democrats want the Fed to do more, portraying the attention to climate-related financial risks as a welcome step but just a beginning. Republicans have worked to restrict the Fed to ensure that the role it has played in this pandemic does not outlast the crisis.

Skiers and snowboarders waited to board the Squaw One Express lift at Squaw Valley Ski Resort recently. The resort has enacted social distancing measures. 
Cayce Clifford for The New York Times

The ski industry already took a hit in the spring when the pandemic struck and many resorts had to close early, leading to $2 billion in losses and causing layoffs or furloughs of thousands of employees, according to the National Ski Areas Association, a trade group. The industry saw its lowest number of visits, 51 million, since the 2011 to 2012 season, the association said.

Now resorts are setting their expectations low for the new ski season, reports Kellen Browning for The New York Times.

Mike Pierce, a spokesman for Mount Rose Ski Tahoe, a resort in western Nevada, said the mind-set was “to just maintain status quo and survive.” He declined to provide any financials, but said, “if we break even, that’s almost considered a success.”

Even before the pandemic, the ski industry was laboring to build interest in the sport. The number of skiers has stagnated in the past decade, according to the National Ski Areas Association.

How the ski resorts do this winter will have a domino effect on tax revenue for state economies. In New Mexico, the truncated ski season last winter and this spring generated $41 million in taxes, but George Brooks, the executive director of the state’s ski association, said he expected no more than 40 percent of that number in the coming months.

Vail Resorts, the world’s largest ski company with 37 resorts around the globe, including 34 in the United States, reported in an earnings call on Dec. 10 that it lost $153 million from August through October, wider than the loss of $106.5 million in the same period a year ago. Rob Katz, chief executive of Vail Resorts, said that season pass sales were up about 20 percent, but he expected fewer visitors and less revenue this winter than in previous seasons.


Personal income increased




Would have been sharply negative without P.P.P.

All other

income

+$265 billion

Proprietor’s income

+$29 billion

Stimulus checks

Total disposable

personal income

+$276 billion

+$1.03 trillion

Unemployment

insurance benefits

A lot of money

+$499 billion

Less than you

expected?

-$43 billion

Would have been sharply negative without P.P.P.

All other

income

+$294 billion

Proprietor’s

income

+$29 billion

Total disposable

personal income

Stimulus checks

+$276 billion

+$1.03

trillion

Unemployment

insurance benefits

A lot of

money

+$499 billion

Less than you

expected?

-$43 billion


Note: Data from March to November 2020 compared with the same time period in 2019.·Source: Bureau of Economic Analysis

To understand why the markets are buoyant even as 3,000 people a day are dying of coronavirus, The New York Times’s Neil Irwin and Weiyi Cai dig into the data.

Salaries and wages fell less in 2020, in the aggregate, than even a careful observer of the economy might think. Total employee compensation was down only 0.5 percent for those nine months, more akin to a mild recession than an economic catastrophe.

That might seem impossible. How can the number of jobs be down 6 percent but employee compensation be down only 0.5 percent?

It has to do with which jobs have been lost. The millions of people no longer working because of the pandemic were disproportionately in lower-paying service jobs. Higher-paying professional jobs were more likely to be unaffected, and a handful of other sectors have been booming, such as warehousing and grocery stores, leading to higher incomes for those workers.

The arithmetic is as simple as it is disorienting. If a corporate executive gets a $100,000 bonus for steering a company through a difficult year, while four $25,000-per-year restaurant workers lose their jobs entirely, the net effect on total compensation is zero — even though in human terms a great deal of pain has been incurred.

Combine soaring personal income and falling spending, and Americans in the aggregate were building savings at a startling rate. It had to go somewhere.

  • Stock climbed on the first trading day of 2021, with several European indexes jumping more than 1 percent while stocks on Wall Street rose more modestly.

  • Some of the first economic data of the year showed manufacturing activity continuing to expand across Europe and Asia, giving investors a reason to stay optimistic, even as the number of coronavirus cases around the world climbs higher and countries from Japan to Britain are contemplating more social restrictions that will weigh on economic growth.

  • The S&P 500, which is trading in record territory, rose less than half a percent in early trading before giving up those gains. The Stoxx Europe 600 index climbed 1.5 percent and the FTSE 100 index in Britain jumped 2.7 percent.

  • Last year, the S&P 500 gained 16 percent as investors poured money into stocks after the central bank stepped in to support financial markets, Congress spent trillions on unemployment and business support programs, and vaccinations began, showing a sustainable way out of the pandemic.

  • Commodities prices rose as the U.S. dollar declined as investors across markets were willing to look for some riskier investments. Gold rose 2.6 percent to its highest level in months, and metals including silver and copper also climbed. Crude oil futures were also slightly higher, though their early gains also faded.

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