Inventory Markets and the Economic system: Reside Updates

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Bitcoin fell below $30,000 on Tuesday for the first time since January after a torrid week in which the cryptocurrency has lost nearly 30 percent of its value.

Over the past week, traders have been muttering about “death crosses,” hashrates and the Chinese province of Sichuan. But committed crypto enthusiasts told DealBook that the big picture is more promising than ever.

Bitcoin’s plunging price has set off a technical pattern called the death cross, in which the 50-day moving average drops below the 200-day average. Some chart watchers think this portends trouble — hence the ominous name.

In addition to falling prices, there is a marked drop in processing activity on the Bitcoin network. The hashrate, a measure of the computing power devoted to processing the cryptocurrency, has fallen sharply, which many believe is related to Chinese authorities’ cracking down on the huge computer farms that “mine” the currency in regions like Sichuan, where hydropower is plentiful. China’s central bank also said on Monday that it had summoned banks and fintech firms to remind them that crypto trading in the country is banned.

The more important long-term trend, however, is the gradual mainstream adoption of cryptocurrencies, said Matthew Sigel, the head of digital assets research at investment manager VanEck. Goldman Sachs is now trading Bitcoin futures, and the bank recently published a 60-page report on the viability of digital assets.

But regulatory obstacles remain significant. VanEck’s application for a Bitcoin exchange-traded fund in the United States was delayed for a second time last week. (Mr. Sigel declined to comment on the application.) These vehicles, which already trade in Canada and parts of Europe, would greatly expand the scope of potential investors with exposure to crypto. Some regulators and industry insiders believe it is only a matter of time before they are allowed in the United States.

And beyond financial institutions, the government adoption of Bitcoin by El Salvador may finally prove that crypto is what its proponents have long proposed: a tool for democratizing finance. Although some Bitcoin enthusiasts are critical of the hastily adopted Salvadoran law making Bitcoin legal tender, Mr. Sigel said it gave the country’s mostly unbanked population a new choice and promoted technological innovation, just as other countries encourage green energy with subsidies.

Read moreCredit…Pool photo by John Thys

European Union regulators took aim at the heart of Google’s business model on Tuesday, announcing that the Silicon Valley giant was the subject of a new antitrust investigation for potentially abusing its dominance in the online advertising market to stifle competition.

The investigation is part of a broader push by the European authorities to clamp down on the world’s largest technology companies. Amazon, Apple and Facebook are also the subject of antitrust actions by the 27-nation bloc, and the European Union is drafting new antitrust and digital services laws to further tighten oversight of Big Tech.

Online advertising has helped Google become one of the world’s most valuable and powerful companies, with its parent company Alphabet earning a net profit of $40 billion last year. But publishers such as News Corporation, as well as rival digital advertising firms, have long complained that Google’s dominance makes it harder to attract advertising revenue from their websites and for competitors to gain ground.

The European Commission, the bloc’s executive body, said the investigation was focused on the display advertising market, which is worth an estimated $24 billion in Europe and where Google offers a number of services to both advertisers and publishers. The company collects data to target advertising, sells ad space on websites across the internet and offers services that work as an intermediary between advertisers and publishers.

“We are concerned that Google has made it harder for rival online advertising services to compete in the so-called ad tech stack,” Margrethe Vestager, the European Commission’s executive vice president in charge of competition policy, said in a statement.

“A level playing field is of the essence for everyone in the supply chain,” she said.

Announcing the start of the formal investigation is one step in a long process that could drag on for years. Google could face fines of up to 10 percent of global revenue and demands to change its business practices if found guilty.

In focusing on advertising, authorities are focusing on a cornerstone of Google’s financial success. Its dominance has helped the company build a sprawling digital empire in internet search, email, entertainment, maps, cloud computing, smartphones and other consumer electronics, shopping and autonomous driving. With a market value of more than $1.6 trillion, Google is one of the world’s largest companies.

The commission’s investigation focuses on ways that Google leverages its power in the advertising technology market to limit competition, including forcing advertisers to use certain Google services to buy display advertising on YouTube. Investigators said they would also examine a new Google policy for its Chrome browser intended to replace tracking “cookies” placed on websites with a new system created by Google.

A Google spokeswoman said the company would “continue to engage constructively with the European Commission to answer their questions and demonstrate the benefits of our products.”

“Thousands of European businesses use our advertising products to reach new customers and fund their websites every single day,” the spokeswoman said. “They choose them because they are competitive and effective.”

Agustin Reyna, a director at the European Consumer Organization, said the investigation was a “significant move” by the European Commission. “Fair competition in this market is important for consumers because it could encourage alternative, privacy-friendly advertising models to emerge,” he said.

Earlier this month, Google settled a similar antitrust investigation by the French authorities, with the company agreeing to pay roughly $270 million in fines and make it easier for rivals to use some of its advertising services.

In Germany, antitrust regulators recently announced an investigation of Google over its data-processing practices. The company has also been targeted by competition authorities in Britain, Australia, Turkey and Russia, among other jurisdictions.

In the United States, Google is battling a Justice Department lawsuit accusing the company of illegally protecting its dominance in online search and advertising. Authorities said Google unfairly paid for deals with companies like Apple to make Google the iPhone’s default search engine, and impeded competition by using exclusive contracts and agreements with customers. Parallel cases have been brought by attorneys general in dozens of states.

Ms. Vestager, who leads digital policy for the European Commission, is a familiar adversary for Google. The company has been charged with violating European Union antitrust laws three times in recent years, resulting in billions of dollars worth of fines.

In 2017, authorities fined Google €2.4 billion for unfairly using its dominance as a search engine to strengthen its online shopping service over rivals. A year later, the commission fined Google €4.34 billion for using its Android mobile operating system to require manufactures to install Google as the default search engine on smartphones.

And in 2019, Google was fined €1.5 billion for imposing unfair terms on companies using its search bar on their websites.

Google has filed appeals in all of the cases.

Read moreCredit…Karen E. Segrave for The New York Times

Lumber prices soared over the past year, frustrating would-be pandemic do-it-yourselfers, jacking up the costs of new homes and serving as a compelling talking point in the debate over whether government stimulus efforts risked the return of 1970s-style inflation.

The housing-and-renovation boom drove insatiable demand for lumber, even as the pandemic idled mills that had already been slowed by an anemic construction sector since the 2008 financial crisis. Lumber futures surged to new heights, peaking at more than $1,600 per thousand board feet in early May, The New York Times’s Matt Phillips reports.

But since then, the prices of those same plywood sheets and pressure-treated planks have tumbled, as mills restarted or ramped up production and some customers put off their purchases until prices came down. Lumber prices in the futures market, for example, are down more than 45 percent from their peak, slipping below $1,000 for the first time in months. That’s still high — from 2009 to 2019, prices averaged less than $400 per thousand board feet — but the sell-off has been gaining momentum over the last few weeks.

It’s a dance of supply and demand that has reassured many experts and the Federal Reserve in their belief that painful price jumps for a range of products like airline tickets and used cars will abate as the economy gets back to normal.

Why have prices fallen so fast? It’s partly because they set off a surge of production at the country’s roughly 3,000 sawmills.

Mostly concentrated in the rich belt of Southern yellow pine that stretches from the woods of East Texas to the Carolinas, mills buzzed back to life in a rush to sell wood for prices few would have imagined possible a couple of years ago.

“Nobody’s not running capacity right now,” said Joe Hankins, sales manager at Hankins Lumber, a sawmill and timber company in the north-central Mississippi town of Grenada.

The professional homebuilding industry, the largest source of demand for lumber, is also decelerating from a breakneck pace, with some builders citing high prices for wood as a reason to hold off on construction.

Those decisions by consumers and companies are a major reason some analysts think the recent rise in inflation is the result of temporary mismatches in supply and demand, rather than a harbinger of runaway price increases stoked by all the money pouring into the economy.

The lumber market’s behavior is a sign of consumer sanity, said Kristina Hooper, chief global market strategist at the investment management firm Invesco.

“We don’t have that kind of buying frenzy that creates sustained inflation,” she said.

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U.S. stocks fluctuated on Tuesday ahead of testimony from Jerome H. Powell, the Federal Reserve chair, on what comes next for the central bank’s monetary policy. Mr. Powell is expected to provide an outlook for inflation and the labor market on Tuesday afternoon before the House Select Subcommittee.

Mr. Powell’s remarks come after John C. Williams, president of the Federal Reserve Bank of New York, offered an optimistic view of the nation’s economic outlook as widespread vaccines and business reopenings drive growth.

  • The S&P 500 was little changed in early trading, after back-to-back swings that saw the index fall sharply and then recover those losses.

  • The yield on 10-year U.S. Treasury notes was at 1.49 percent and the U.S. dollar rose slightly.

  • Most European stock indexes fell, reversing earlier gains. The Stoxx 600 Europe was little changed after climbing 0.2 percent.

  • West Texas Intermediate, the U.S. crude benchmark, was little changed $73.68 a barrel. Brent crude, the global benchmark, fell 0.2 percent, to $74.79.

  • GameStop shares jumped as much as 8.7 percent after the company raised $1.1 billion in stock sale. The video game retailer, which was at the center of a retail trading frenzy earlier this year, has since overhauled its board and executive team in an effort to pivot to a digital strategy.

Federal Reserve Chair Jerome H. Powell is expected to tell lawmakers that growth is “on track to post its fastest rate of increase in decades.”Credit…Pool photo by Al Drago

Jerome H. Powell, the Federal Reserve chair, will offer an optimistic take on the United States economy but little hint at what comes next for monetary policy in prepared remarks set for delivery before House lawmakers on Tuesday afternoon.

Economic growth this year “appears to be on track to post its fastest rate of increase in decades,” Mr. Powell is scheduled to say, while noting that the strength marks recovery from very low levels.

His testimony comes on the heels of the Fed’s meeting last week, in which officials held interest rates steady but suggested they were expected to rise modestly from near-zero levels by the end of 2023.

Mr. Powell will tell lawmakers that “conditions in the labor market have continued to improve, although the pace has been uneven,” and that “job gains should pick up in coming months as vaccinations rise, easing some of the pandemic-related factors currently weighing them down.”

Although inflation has picked up sharply — fueling debate in Washington and on Wall Street over whether the government has overdone its pandemic response — the Fed chair will say that the recent pace of price gains is unlikely to last. But he will give little guidance about what the combination of a strengthening economy and stabilizing prices will mean for central bank policy.

“The Fed’s policy actions are guided by our dual mandate to promote maximum employment and stable prices for the American people, along with our responsibilities to promote the stability of the financial system,” Mr. Powell will say, without getting into much further detail.

The Fed has held its policy interest rate close to rock bottom since March 2020 and is buying $120 billion in government-backed bonds each month, policies that are meant to keep many kinds of borrowing cheap, pushing money through the economy and bolstering demand.

Mr. Powell’s testimony comes after the Fed’s June policy meeting fueled days of selling in the stock market. Policymakers released an optimistic set of economic projections, and more than half penciled in rate increases in 2023 — earlier than they had previously expected. Mr. Powell downplayed the significance of those projections, but did offer a sunny economic outlook, and signaled that the Fed was beginning to talk about when and how to slow down its asset purchases.

The Fed chair is likely to face questions about the central bank’s vast coronavirus rescue package, which saw it backstopping corporate bond markets, municipal debt and even midsize businesses amid market turmoil last year. He is scheduled to speak before the Select Subcommittee on the Coronavirus Crisis.

Read moreJustin Hoffman, who is looking for work, said he probably would have quit his job eventually. But the pandemic, he said, hastened his decision.Credit…Maddie McGarvey for The New York Times

Millions of workers have voluntarily left their jobs recently, one of the most striking elements of the newly blazing-hot job market.

According to the Labor Department, nearly four million people quit their jobs in April, the most on record, pushing the rate to 2.7 percent of those employed.

The rate was particularly high in the leisure and hospitality industry, where competition for workers has been especially fierce. But the number of those quitting registered across the board, The New York Times’s Sydney Ember reports.

Economists believe that one reason more workers are quitting is simply a backlog: By some estimates, more than five million fewer people quit last year than would otherwise be expected, as some workers, riding out the labor market’s convulsions, stuck with jobs they may have wanted to leave anyway. (And the millions of involuntary job losses during the pandemic surely accounted for some of the reduction in quitting.) Now that the economy is regaining its footing, workers may suddenly be feeling more emboldened to heed their impulses.

But another factor may be the speed with which the economy has reawakened. As the pandemic has receded and the great reopening has swept across the country, businesses that had gone into hibernation or curtailed their work force during the pandemic have raced to hire employees to meet the surging demand.

At the same time, many people remain reluctant to return to work because of lingering fears of the virus, child care or elder care challenges, still-generous unemployment benefits, low wages or other reasons.

The result has been an explosion of job openings, despite a relatively high unemployment rate, as businesses struggle to recruit and retain employees — a dynamic that has placed power more firmly in workers’ hands. With employers offering higher wages to attract candidates, many workers — especially in low-wage positions in restaurants and hotels — are leaving their jobs and jumping to ones that pay even slightly more.

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