Treasury Secretary Janet Yellen is expected to meet this week with the heads of financial market regulators, including the Federal Reserve and the Securities and Exchange Commission, to discuss market volatility posed by retailers in ‘meme stocks’ such as GameStop is created, to discuss. to an official of the treasury.
The meeting will already take place on Thursday, the official said. It is expected to include representatives from the Commodity Futures Trading Commission and the Federal Reserve Bank of New York. Reuters reported earlier on the meeting.
The meeting is a sign of an increased investigation in Washington into the madness in the past ten days. Shares in GameStop, a video game retailer, showed a remarkable surge last week, but have since fallen from their dizzying heights and tested the will of investors committed to it as a challenge for Wall Street investors. Since Friday, the price of GameStop shares has dropped from $ 325 to $ 90.
Shares rose 11% early Wednesday. AMC Entertainment, another company whose shares were accepted by online retailers, rose about 7 percent and fell 41 percent the previous day.
The pullback on Tuesday allayed concerns that the large hedge funds that were on the losing side of GameStop’s boom would have to sell shares of other larger companies to make up for the losses.
Many companies announced donations via political action committees across the board after the January 6 riot in the Capitol. These interruptions were mostly meant temporarily, and there are now intense internal debates in U.S. business people about what to do if the self-imposed deadlines approach.
Businesses are divided into three main camps:
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Draw up targeted prohibition provisions. After reviewing their policies, some companies said they would only give to the 147 Republican lawmakers who objected to confirming the election results. This is what Walmart and Google did.
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Stop all political donations. The brokerage firm Charles Schwab decided to close its PAC and concluded that a clear and non-political position is in the best interests of our clients, employees, shareholders and the communities in which we operate. ‘
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Then wait again. Many companies that have interrupted all the giving of interruptions have not yet announced what happens next, and one possibility is that they are simply going back to what they did before. “If they do it in the hope that this issue will disappear, I think it’s not very smart,” said Doug Pinkham, president of the Public Affairs Council.
Companies that have yet to say what they will do after an initial break in everything that gives are Microsoft, which has set a deadline for February 15; American Airlines, which is suspended for three months; BP, which is interrupted for six months; and Hilton, who said it all stops indefinitely.
Corporate advisers, lobbyists and executives say that employees are the ones who put the greatest pressure on directors as they consider their options. Democratic officials criticize businesses for ‘both sides’ and privately threaten to restrict access to policymakers for companies that have interrupted all donations. But Democratic control of Congress is tight, and Republicans can still pursue their cause for relevance.
Several companies are discussing management changes and greater transparency around the actions of their corporate PACs. But consider this: Microsoft suspended its PAC in 2019 for several months in response to pressure on employees, and eventually made changes such as the addition of an employee advisory board and monthly donation reporting. It is now (again) reconsidering its approach to the election challenges and storms of the Capitol.
“You spend your evenings at dinner, and the reason you go is because the PAC is writing a check,” Microsoft President Brad Smith said in recent comments on the political donations, referring to the work of the company government affairs team. But out of the effort, he added, “develops a relationship with legislators and emerges and solidifies.”
The pandemic was disastrous for the overall economy. But for businesses that provide much-needed entertainment for bored consumers trapped at home, it was a bonanza.
Take Sony from Japan. The company reported on Wednesday that its profit rose nearly 20 percent to $ 3.4 billion during the three-month period ending in December, compared to the same period a year earlier.
The windfall was mainly driven by the company’s entertainment and games departments. Demand for its latest gaming system, the PlayStation 5, has helped boost sales of games and other digital content, the company said in an announcement of its quarterly financial results.
Over the past decade, Sony, once known as the world-class A-to-Z supplier of high-quality consumer electronics, has increasingly relied on its PlayStation console to boost its performance.
The release of the long-awaited fifth version of the game system in mid-November was an exciting success, with avid fans sometimes fighting to get hold of one of the devices. The company sold 4.5 million units by the end of December, Sony said.
Sony’s profits do not come from the machines themselves, but the content that drives them. Quarterly revenue from software and network fees rose 40 percent to $ 8.4 billion, driving the company through a 30 percent increase in total playing time on its network service compared to the same period in 2019.
The segment accounted for approximately one third of the company’s profit in the first nine months of this financial year.
Sony has also seen significant growth in profits from its music and film segments.
The windfall, which includes surprising growth in sales of its consumer choices, led Sony to increase its financial forecast by about one-third to $ 8.5 billion for the 2020 financial year, which runs in Japan through March.
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Google’s parent company, Alphabet, said on Tuesday that fourth-quarter sales rose 23 percent from a year earlier to $ 56.9 billion, a record high for a quarter, and net profit rose 43 percent to $ 15.2 billion. Alphabet has benefited from a continuing downturn in its core business, advertising on search results. Revenue from search advertising rose 17 percent to $ 31.9 billion in the fourth quarter, Alphabet said.
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Amazon sold a record $ 125.6 billion in the fourth quarter on Tuesday, while profits more than doubled to $ 7.2 billion from a year earlier. It was the first time the company exceeded $ 100 billion in sales in a single quarter. Brian Olsavsky, chief financial officer of Amazon, said in a call with investment analysts that Amazon would spend more on infrastructure and groceries for cloud computing, and expand its logistics operations – especially its fast-growing last-minute delivery network, which depends on a half-million contract. drivers to deliver packages.
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In the worst year for the company in four decades, Exxon said it lost $ 22.4 billion in 2020, compared to a profit of $ 14.3 billion in 2019. A large portion of the company’s losses comes from $ 19.3 billion in depreciation over the past three months. of the year when the company declined the value of U.S. natural gas fields purchased when gas prices were much higher before hydrofracking flooded the market a decade ago.
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BP on Tuesday reported its first loss in at least a decade, with a loss of $ 5.7 billion for the year compared to a profit of $ 10 billion for 2019. The company said it had a profit of $ 115 million for the fourth quarter of 2020, which represents a year. drop per year of about 95 percent. BP is to blame for the decline in numerous factors, including the low demand for its refined products due to the economic slowdown brought about by the pandemic, as well as the low prices for oil and natural gas.
United States
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Shares on Wall Street rose for a third day, following gains in most European and Asian indices, following stronger earnings reports from the tech sector.
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Alphabet, Google’s parent company, and Amazon both reported record sales over the past quarter. The Japanese Sony said profits rose 20 percent as its entertainment and games divisions helped ease the boredom of consumers who were at home.
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The S&P 500 rose 0.3 percent in early trading, while the technically heavy Nasdaq composite rose 0.7 percent. Alphabet jumped 7 percent and Amazon, which also said founder Jeff Bezos would retire as CEO this summer, gained about 0.6 percent.
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The S&P 500 gained more than 3 percent this week, with a setback from a similar decline last week. These gains came in part when shares of GameStop and other shares with social media gains withdrew, raising concerns that large hedge funds that were on the losing side of the boom would have to sell shares of other larger companies to make up. the losses.
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On Wednesday, GameStop bounced back slightly from its recent dive and rose about 11 percent early in trading. The stock has fallen 72 percent over the past two days.
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Treasury revenues rose as Democratic lawmakers took steps to push through President Biden’s $ 1.9 billion economic rescue plan without Republican support. Democrats are also constantly negotiating with Republicans about a possible stimulus bill, but said they will continue without Republican support if necessary.
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The price of crude oil also continued to rise, reflecting optimism about the economy and after reports that stocks fell last week. West Texas Intermediate, a U.S. benchmark, has climbed past $ 55 a barrel, to its highest point in more than a year.
Europe
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Italy’s stock market was the best in Europe, with the FTSE MIB index rising 2.6 percent on Wednesday after Mario Draghi was named the next prime minister and formed a new government. Mr. Draghi, a former head of the European Central Bank, helped the region out of a debt crisis just less than a decade ago.
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The Stoxx Europe 600 rose 0.6 percent, while the FTSE 100 was slightly lower in Britain.
Asia
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The Nikkei 225 in Japan climbed 1 percent, while the Hang Seng index in Hong Kong climbed 0.2 percent. Sony’s shares rose 1.6 percent after its earnings report.
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Alibaba said on Tuesday it was conducting internal investigations into its affairs in response to an antitrust inquiry by the Chinese government. Alibaba saw a 37 percent increase in sales in the most recent quarter, with a profit of $ 12.2 billion on revenue of $ 33.9 billion.