Know someone who would like this newsletter? Forward it to them.
The World
Federal Reserve Chair Jerome Powell, pushing back on suggestions that loose monetary policy risked unleashing inflation and financial risks in what may be an emerging economic boom, said there was “hope for a return to more normal conditions” this year but signalled that the central bank intended to maintain its heavy support of the economy. Powell acknowledged in Senate testimony the potentially fast growth to come as vaccinations expand. Coming updates to the Fed’s outlook may show the economy expanding “in the range” of 6% this year, he said, and overall output conceivably returning in the next few weeks to the pre-pandemic level. (Reuters, Financial Times)
The $6.2 billion-an-hour rise in the value of world stocks since March was dubbed the “mother of all asset bubbles” by BofA analysts last week - and all of a sudden there is a high-pitched hissing sound. Tesla and the bellwether FAAMG quintet - Facebook, Amazon, Apple, Microsoft and Google - have seen half a trillion dollars topsliced off their combined value this year. Meanwhile 10-year U.S. Treasury yields have gone up from just under 0.9% to just shy of 1.4%, a 50% increase, as the commodities price surge raises fears of an ‘overshoot.’ (Reuters, Financial Times)
35% of Americans currently approve of the way Congress is handling its job, a 10-percentage-point increase since January and the highest Gallup has measured in nearly 12 years. (Gallup)
U.S. and allies to build 'China-free' tech supply chain: President Biden is set to sign an executive order to accelerate efforts to build supply chains for chips and other strategically significant products that are less reliant on China, in partnership with the likes of Taiwan, Japan and South Korea. The document will order the development of a national supply chain strategy, and is expected to call for recommendations for supply networks less vulnerable to disruptions such as disasters and sanctions by unfriendly countries. (Nikkei Asian Review)
International alarm over China’s treatment of its Uighur minority is coalescing around the 2022 Winter Olympics after Canada’s parliament voted for it to be stripped of the games — while urging a refugee program for Uyghurs and sanctions on top Chinese officials. (The Times, Globe and Mail)
Chinese spies used code first developed by the U.S. National Security Agency to support their hacking operations, Israeli researchers said. (Reuters)
President Biden is tired of dealing with the Middle East — and the region has noticed. The signals are not meant to be subtle, his advisers say. The president has made only one call to a head of state in the Middle East — Israeli Prime Minister Netanyahu. He announced an end to U.S. support for Saudi-led operations in Yemen in his first two weeks in office, a move preceded by a freeze on some arms sales to the region. And his administration has deliberately taken a back seat in responding to a recent deadly rocket attack in northern Iraq that targeted the U.S.-led coalition. (Politico)
Biden plans to call Saudi Arabia’s King Salman today, ahead of the public release of a potentially damning intelligence report about the murder of journalist Jamal Khashoggi. While they are likely to discuss a range of issues, the conversation will be colored by the imminent release of the explosive report expected to involve one of the monarch's sons. (Axios)
The U.S. is preparing to respond to Russia’s poisoning and jailing of Russian opposition leader Alexei Navalny, and is expected to coordinate a sanctions rollout with European allies in the coming weeks. The response would constitute the new administration’s first major step in holding Russia accountable for human rights abuses. Meanwhile, the future of a Russian gas pipeline running into the heart of Europe is in question after 18 companies pulled out of the project in the face of American sanctions. (Politico, The Times)
Texans will pay for decades as the crisis tacks billions onto bills: Power sales totaled $50.6 billion vs. $4.2 billion week prior, and utilities will look to pass costs onto consumers, taxpayers. Meanwhile, a Texas woman who received $9,300 electricity bill filed a class-action lawsuit against wholesale electricity provider Griddy — as four ERCOT board members who live outside of Texas resigned. (Bloomberg, Texas Tribune)
The government failed Texans—so people on the internet stepped in. Within hours of the storm’s onset, a predictable pandemic-era sequence of events took place: people stepped into the void left by the government. They created simple, shareable Google docs that went quickly viral on Instagram and Twitter, giving residents in affected communities and beyond instant access to information that bypassed national organizations. Venmo, Cash App, and GoFundMe pages funneled funds directly to those in need. (MIT Technology Review)
Three former top Capitol security officials deflected responsibility at a Senate hearing for security failures that contributed to the Jan. 6 riot, blaming other agencies, each other and at one point even a subordinate for the breakdowns that allowed hundreds of Trump supporters to storm the Capitol. Their testimony suggested that officials were reluctant to accept responsibility for the politically charged issue of calling in National Guard troops even as the violence escalated. (New York Times)
Tiger Woods is ‘lucky to be alive’ after crash in Rancho Palos Verdes. (Los Angeles Times)
Colleges and universities spent more from their endowments during a fiscal year that ended amid the pandemic despite recording lower-than-average returns. College endowment returns averaged 1.8% in fiscal year 2020. The average rate of return was considerably lower than last year’s 5.3% and falls sharply below the historical target rate of 7.5%. It was the lowest average annual return since 2016. (Inside Higher Ed)
Economy
HSBC will cut its office space by 40% in London and other cities around the world. Office vacancy is up 45% YoY in the City of London to a similar level to that seen in the 2008 global financial crisis. (The Times)
Since February 2020, the leisure-and-hospitality sector has shed nearly 4 million people, or roughly a quarter of its workforce. As of January 2021, 15.9% of the industry’s workers remained unemployed; more than any other industry, according to the Bureau of Labor Statistics. As a result, millions of hospitality workers—a group that includes everyone from front-desk clerks to travel managers—are trying to launch new careers. (Wall Street Journal)
Home Depot said pandemic-related uncertainties made it difficult to predict if its sales dream run from last year will continue into 2021. (Reuters)
Southern California home prices and sales jumped 13% in January from a year earlier, as prospective buyers rushed to take advantage of rock-bottom mortgage rates. (Los Angeles Times)
Treasury Secretary Janet Yellen said President Biden favors boosting taxes on companies, and signaled openness to considering raising rates on capital gains, while steering clear of a wealth levy. She said such a tax would have significant implementation problems. The administration is looking to boost the corporate tax to 28%, Yellen said. (Bloomberg)
Employers want more diversity. They may need to open offices in new places. Research on race in the workplace suggests executives could close racial gaps within their ranks by being more strategic about geographic locations. (Wall Street Journal)
Technology
Clubhouse, the rapidly growing social media audio app, has hired an Android software developer, signaling that the startup has begun development of a version of its app for the popular mobile operating system created by Google. (CNBC)
Is Stripe really worth $115 billion? The 10-year-old startup could be worth more than IBM, the nearly 110-year-old tech company with a market cap of about $107 billion. That's what transactions in a secondary market are showing, with Stripe's valuation reportedly up more than threefold since its last funding round in April 2020. If Stripe is valued above $100 billion, it would be the world's second-highest valuation of a venture-backed private company after only ByteDance, according to CB Insights. Even at its last official valuation of $36 billion, it's the most highly valued fintech startup. (Protocol)
As Disney+ has quickly emerged as the only true competitor to Netflix, new data reveals 40% of Disney+ 100 million subscribers are in the U.S. As Disney has said about 30% of its subscribers come from India, the new figure implies that Europe and Latin America account for less than a third of the total. In contrast, about half of Netflix’s subscribers come from those markets. (The Information)
Apple’s App Sign-in Button Becomes Hot-Button Issue in U.S. Antitrust Probe: Apple says its “Sign in with Apple” button, which gives users the ability to hide their personal details from the app, is “pro privacy.” But investigators are examining how Apple uses the sign-in button and other App Store rules to make it more difficult for users to switch to a rival device maker. (The Information)
French antitrust investigators accused Google of failing to comply with orders on how to conduct negotiations with news publishers over copyright. The investigators wrote that Google’s failure to comply was of an exceptionally serious nature. The competition authority can impose fines of up to 10% of sales on firms it deems to be in violation of its rules. (Reuters)
Smart Links
Read the memo Amazon exec Jeff Blackburn sent to employees announcing he’s leaving the company. (CNBC)
Which Industry Excels at Innovation? Consumer-staples companies stand out in the Management Top 250 ranking. (Wall Street Journal)
Cities aren’t shrinking because everyone’s moving out, but because no one’s moving in. (Slate)
Worldwide digital games earnings rose by 15% YoY to reach $11.6B in January. (SuperData Research)
MLB is slightly deadening the ball this season amid a six-year surge of home runs. (Los Angeles Times)
USPS unveils next-generation mail truck with electric drivetrain option. (The Verge)
Live Events: Today
Learn More (Today, 12 pm ET): The Hot Beat: Reporting on Climate from the Nation’s Capital. The panel will feature Lisa Friedman, Climate Reporter at The New York Times, and Juliet Eilperin, Senior National Affairs Reporter at the The Washington Post. (Registration Required: Harvard Kennedy School)