Daily Business Briefing
Updated
May 27, 2021, 8:31 p.m. ET
General Motors said on Thursday that it would restart four North American plants that had been idled for much of the last four months because of the global shortage of computer chips.
The announcement comes after the company and other automakers have spent much of the last few months announcing they were idling factories and slowing production because they could not get enough of the tiny parts, which are essential to not just cars but also electronics, appliances and many other goods. Shares of G.M. jumped on the news and were trading up more than 2 percent at 1 p.m.
The automaker said it planned to restart production of the Chevrolet Camaro at its Lansing Grand River factory in Michigan on June 21, sooner than previously expected. The plant has been idle since Feb. 5. Production of two other vehicles, the Cadillac CT4 and CT5 sedans, will restart a week later.
A Canadian plant that makes the Chevrolet Equinox sport-utility vehicle will resume operations June 14 and run through July 2, when it will begin a normal two-week summer shutdown. The plant, know as CAMI Assembly, has been closed since Feb. 8.
Two S.U.V. plants in Mexico will restart on Monday. These include a factory in San Luis Potosi that makes the Equinox and GMC Terrain, and another in Ramos Arizpe that makes the Equinox and the Chevy Blazer.
Two G.M.’s plants in South Korea are also scheduled to resume full production by the end of May. The Bupyeong 1 plant has been operating at 50 percent capacity since late April, while the Changwon assembly plant will also add a second shift.
G.M. has said the semiconductor shortage will lower pretax profit this year by $1.5 billion to $2 billion. It earned $3 billion in net income in the first quarter but expects to make only $500 million in the second.
The company appears to be weathering the shortage with fewer problems than Ford Motor, which has said the lack of chips could reduce its production to just half as many vehicles in the second quarter as it had previously planned.
Three months after the death of the right-wing talk radio star Rush Limbaugh, Premiere Networks announced that Clay Travis and Buck Sexton would take over his time slot.
The duo will host a weekday program from 12 p.m. to 3 p.m. Eastern that will be syndicated by Premiere Networks, a division of iHeartMedia, to hundreds of radio stations across the United States, the network said Thursday.
The broadcaster has been running old episodes of “The Rush Limbaugh Show” in the time slot since Mr. Limbaugh’s death in February. “The Clay Travis & Buck Sexton Show” will start on June 21. The hirings were first reported by The Wall Street Journal.
Mr. Limbaugh died on Feb. 17 at age 70 from complications of lung cancer. He had dominated the conservative media landscape for more than three decades with his provocative commentary and propensity to push conspiracy theories. At the time of his death, he had a following of roughly 15 million listeners.
Premiere Networks is hoping to retain that audience with their new picks, but the pair face competition from Mr. Limbaugh’s counterparts on other networks. Cumulus Media’s Westwood One arm announced in April that the right-wing commentator Dan Bongino would take over the 12 p.m. to 3 p.m. time slot on its radio stations with a new show. Radio America recently re-signed a multiyear deal with Dana Loesch, the former National Rifle Association spokeswoman, who also has a program in the same time slot.
Mr. Travis, 42, is the founder of the sports and politics website Outkick.com, which was recently bought by Fox Corp. He hosts a nationally syndicated show on Fox Sports Radio and co-hosts a daily sports betting TV show on Fox Sports 1. Mr. Sexton, 39, a former C.I.A. officer, has his own three-hour weekday talk radio program on Premiere Networks and is a frequent Fox News guest.
A day after testifying to the Senate Committee on Banking, the chief executives of the six largest banks faced a second round of questioning from lawmakers on Thursday in an hourslong hearing before the House Committee on Financial Services.
Some of the lawmakers’ questions on topics like overdraft fees echoed Wednesday’s Senate hearing.
Others questioned executives for their views on financial regulation.
David Solomon, the chief executive of Goldman Sachs, said he believed more disclosure was needed on special purpose acquisition companies, the blank-check firms known as SPACs that have become a Wall Street favorite for bypassing the traditional public offering process.
“I think there’s an opportunity for more plain language disclosure, so that investors really understand the sponsorship economics in plain clear language, and they also understand the process,” Mr. Solomon said.
Mr. Solomon also said there were “opportunities to think carefully” about disclosure and liabilities in a typical I.P.O. process.
Jamie Dimon, the chief executive of JPMorgan Chase, called for more regulation of cryptocurrencies, noting that the bank will offer some forms of digital currency as clients demand them. “My own personal advice to people is stay away from it — that does not mean the clients don’t want it,” he said.
Lawmakers also questioned Mr. Dimon and Jane Fraser, Citigroup’s chief executive, about the banks’ resistance to conducting racial equity audits, as urged by some investors. Nearly 40 percent of JPMorgan shareholders said they were in favor of a racial equity and audit report at a recent shareholders’ meeting, but Mr. Dimon said he did not believe one was necessary.
Mr. Dimon highlighted the investments the firm has made and committed toward racial equity, a mission to which he said the firm is “devoted.”
“That is completely different than the bureaucracy and B.S. of having outside orders come in to certify something,” Mr. Dimon said. “If there are best practices that we can learn from, we’ll learn from them, but this kind of thing is not going to make it much better over time — it just adds a whole layer of unnecessary cost.”
Citi shareholders recently voted down a proposal that would have required the company’s board to oversee a racial equity audit. “We didn’t think it was needed to have a separate audit,” Ms. Fraser said of that proposal, which was pushed by CtW, an adviser to union pensions. “But it is something that we’re looking at again given it was brought up by our shareholders.”
Treasury Secretary Janet L. Yellen warned on Thursday that her agency lacked sufficient resources to oversee an economic recovery that still has “a long road ahead” and called on Congress to provide her with more funds to oversee a sprawling set of relief programs.
In testimony before a House appropriations subcommittee, Ms. Yellen expressed confidence that the end of the pandemic recession was in sight, but said that the Treasury Department is facing an overwhelming task in disbursing hundreds of billions of dollars of relief money with the same budget that it had a decade ago. The Treasury Department has been central to the federal government’s response to the health crisis, funneling stimulus payments and aid to millions of Americans, states, cities and businesses.
“Our team has done valiant work implementing these programs with the resources at our disposal,” Ms. Yellen said in prepared remarks. “But we cannot continue to be good stewards of this recovery — and tackle the new bodies of work that Congress assigns to us in the years beyond — with a budget that was designed for 2010.”
The call for more funding comes as the Biden administration will formally propose a $6 trillion budget on Friday.
Ms. Yellen said that Treasury’s Domestic Finance, Economic Policy, and Tax Policy offices have all seen their budgets cut by about 20 percent since 2016, during the Trump administration. She noted that the Internal Revenue Service, which has seen its budget gutted in the last decade, has been responsible for making approximately $800 billion in stimulus payments in the last year and is now getting ready to start making monthly payments of the expanded child tax credit.
The White House’s preliminary budget, released in April, asked for $14.9 billion for the Treasury Department, including $13.2 billion for the I.R.S.
Making the case for beefing up the I.R.S., Ms. Yellen said that $7 trillion of government tax revenue is likely to fall through the cracks in the next decade because the agency lacks the staff to crack down on tax cheats.
Ms. Yellen is expected to face questions from lawmakers on the trajectory of the recovery, the threat of inflation and her remarks earlier this month that interest rates might need to rise as the economy recovers.
In another advantage for streaming, films can skip a theatrical release entirely — for the second year in a row — and still be eligible for the Academy Awards, which will next be held on March 27, the Academy of Motion Picture Arts and Sciences said on Thursday.
In making its decision, the organization cited a marketplace “still impacted by the pandemic.” Movie theaters in the United States reopened months ago with limited capacity. Cinemas in some areas of South America, Europe and Asia are closed or have only reopened recently.
Only films that had a previously planned theatrical release are eligible for Oscar consideration under the streaming rule, the academy said. (In other words, no traditional TV movies can enter the fray.)
The academy had previously required at least a perfunctory theatrical release of at least a week in Los Angeles. Netflix, Amazon Studios and other streaming services reluctantly acceded to that rule, which was dropped in April 2020 as the pandemic surged. At the time, the academy said it would restore its theatrical release requirement after cinemas returned to normal operation. On Thursday, the academy indicated that its position was unchanged.
The streaming wars have vastly reshaped the movie industry. Amazon announced on Wednesday its acquisition of Metro-Goldwyn-Mayer, a deal that will bolster its film library for its Prime Video service. And last week, AT&T announced a deal to spin off its WarnerMedia group and combine it with Discovery Inc., a move meant to strengthen WarnerMedia’s struggling HBO Max streaming service and a nascent streaming platform owned by Discovery.
Movies seen primarily on streaming services dominated the most recent Oscars.
Nominations for the 94th Academy Awards will be announced on Feb. 8. The timing of the ceremony was influenced by a number of factors, including a desire to steer clear of other live-television events such as the Winter Olympic Games, which are scheduled to take place in China in February. It has been hard enough for the academy to get people to watch the Oscars telecast without competition: About 10 million people watched the 93rd Academy Awards last month, fewer than half the number a year earlier.
Exxon Mobil was dealt a stunning loss at its annual shareholder meeting on Wednesday from an unlikely opponent: a small new activist investor focused on climate change, Engine No. 1. The hedge fund won at least two seats on the oil giant’s 12-member board. It may yet claim a third nominee when the counting is over.
For corporate America, the DealBook newsletter reports, the upset victory for Engine No. 1 and its allies is a clear sign that company boards and leaders need to pay attention to environmental, social and governance issues (known as E.S.G.) — or suffer rebukes.
Exxon was the first activist campaign for Engine No. 1, which was founded last year by an energy and tech investor, Chris James. Its head of active engagement is Charlie Penner, a veteran hedge fund executive who helped lead campaigns against companies like Apple while at Jana Partners.
Engine No. 1 began agitating against the oil giant in December, calling on the company to diversify away from fossil fuels and reduce its carbon emissions. But it began work on the campaign last March, courting large investors like public pension funds that held far larger stakes in Exxon, and thus had more sway. That’s how it parlayed a stake of just 0.02 percent into getting its preferred nominees on the company’s board.
The fund’s campaign was a bet on a confluence of events, according to two people with knowledge of the matter, including longstanding investor dissatisfaction with Exxon’s corporate governance and a growing appreciation on Wall Street for E.S.G.
That position appeared to be supported after the Exxon meeting. In a note explaining why it backed some of Engine No. 1’s board candidates, BlackRock — which owns nearly 7 percent of Exxon — said the company’s directors “need to further assess the company’s strategy and board expertise against the possibility that demand for fossil fuels may decline rapidly in the coming decades.”
Exxon had largely played down Engine No. 1’s concerns, and pressured the firm to drop its challenge after a much bigger hedge fund, D.E. Shaw, called off a campaign. But Engine No. 1 persisted, and also benefited from timing: It began its campaign while oil prices were still depressed by the pandemic. Had oil not rebounded in recent months, Engine No. 1 executives believed, all four of its proposed directors might have been elected, the people with knowledge of the matter said.
Boeing agreed to pay at least $17 million in a settlement with the Federal Aviation Administration over production oversights involving hundreds of planes.
The penalty stems from two production lapses, the F.A.A. said on Thursday. In one case, Boeing had installed equipment with unapproved sensors on 759 narrow-body 737 Max and 737 NG planes, the agency said. In the other, the manufacturer submitted 178 Max jets for certification when the aircraft potentially had parts that were not approved by regulators.
“Keeping the flying public safe is our primary responsibility,” the F.A.A. administrator, Steve Dickson, said in a statement.
The agreement comes as Boeing seeks to resolve other production issues with the Max and the larger 787 Dreamliner. Boeing resumed deliveries of the Dreamliner in March after addressing quality concerns with the plane.
The Max, which was grounded worldwide for 20 months after a pair of fatal crashes, was approved to fly again in November. Boeing asked airlines last month to stop flying some of the planes over electrical concerns, but it recently received approval for a fix that would resolve the issue.
The F.A.A. said that Boeing would pay the $17 million penalty within 30 days. The aerospace manufacturer also agreed to make certain changes to its procedures.
The changes include more closely overseeing suppliers and improving procedures to prevent installation of parts that do not conform with approved designs. Boeing could face up to $10.1 million in additional penalties if it fails to make the changes quickly enough.
“We take our responsibility to meet all regulatory requirements very seriously,” Boeing said in a statement. “These penalties stem from issues that were raised in 2019 and which we fully resolved in our production system and supply chain.”
Australia’s travel ban may have no end in sight, with borders mostly closed until the middle of next year.
But about 180 lucky people got to take a Qantas Airways flight on Wednesday — to 43,000 feet above Sydney and back — to get what were possibly the best views of the “super blood moon.” (Tickets sold out in three minutes.)
The rare astronomical event of a supermoon and a total lunar eclipse happening at once meant that moon appeared bigger than usual while turning a blood red color against the night’s sky because of its position in the Earth’s shadow.
Airlines, hit hard by the slump in travel during the pandemic, have offered flights to nowhere over the past year, giving passengers a chance to get out to town without defying any travel restrictions.
After staying at home for months on end and having to cancel trips to Thailand three times because of the pandemic, Maruschka Loupis, a communications officer from Sydney, said that getting on a B787 Dreamliner flown by Qantas was a thrill. She and her husband decided to splurge on two business class tickets, costing 1,499 Australian dollars each, or about $1,200, for the chance to see the supermoon up close. Or, well, eight miles closer than from the ground.
The moon was so vivid that it reminded her of the kind of solar system modules that students brought to science class, said Ms. Loupis, 66. The Milky Way looked like spilled oatmeal strewn across the sky. “It was not something you see from the Earth like a normal person,” she said.
The Qantas pilots worked with an astronomer from the Commonwealth Scientific and Industrial Research Organization, Australia’s national science and research agency, to design a path that would offer passengers optimal views. As the flight climbed above clouds and atmosphere pollution, flight attendants served cosmic cocktails and Milky Way chocolate bars.
An unexpected treat was catching a glimpse of a shooting star, Ms. Loupis said. After getting through the pandemic, it was easy to know what to wish for: Good health for many years to come.
Facing a national decline in Covid-19 vaccination rates and an underwhelming response to vaccines in its own stores, the U.S. pharmacy chain CVS will offer a chance at money, vacations and a Super Bowl trip to persuade the unvaccinated to start going in for their shots.
CVS said in April that it could administer 25 million shots each month, but as of this week it had only administered about 17 million doses in total as mass vaccination sites ended up playing a bigger role in the nation’s early vaccination campaign.
The CVS incentives could not only help get more people vaccinated, but provide a boost to the company: The Medicare payment to administer each dose is $40.
Nationally, the average number of doses administered daily has slowed to 1.7 million, down from a peak of more than 3.3 million in April.
CVS said in a statement that in an effort to “provide a positive reminder of the activities that are possible once vaccinated,” it had joined with other companies to offer prizes to people who get a shot at one of its pharmacies.
Among the incentives: Weeklong Norwegian Cruises, $100 dates sponsored by the dating app Hinge and a trip to Super Bowl LVI next year.
CVS will give 125 people $500 and five people $5,000 to host family reunions.
People 18 and older who “received a vaccination or certify that they’ve registered to receive a vaccination from CVS Health” are eligible for the sweepstakes, which runs from June 1 to July 10, the statement said.
CVS isn’t the first to offer inducements to the unvaccinated. Ohio, Colorado and Oregon are offering residents a chance at $1 million for getting vaccinated, and Gov. Andrew M. Cuomo of New York on Wednesday said that residents ages 12 to 17 who get vaccinated would be entered to win a full-ride scholarship to a public university in the state. (Other incentives include free beer in New Jersey and $50 gift cards in Detroit for driving someone to a vaccination site.)
More than 165 million Americans have received at least one dose of a Covid-19 vaccine, according to the Centers for Disease Control and Prevention. Still, only 40 percent of the U.S. population has been fully vaccinated, leaving a significant portion of the country vulnerable to infection.
With the Memorial Day holiday looming, Dr. Rochelle P. Walensky, the C.D.C. director, warned unvaccinated Americans on Tuesday that they “remain at risk of infection” and should still take precautions like distancing and wearing a mask.
Stocks on Wall Street rose on Thursday as investors weighed fresh data on the economic recovery in the United States.
Claims for state unemployment benefits fell again last week, to a new pandemic low of 420,000. the Labor Department said. The Commerce Department also reported that orders for new equipment, a measure of business spending, rose in April.
The S&P 500 climbed about 0.2 percent, ending the day less than 1 percent short of the high it hit on May 7.
Stock trading has grown turbulent since then as investors worry about inflation and the risk that the Federal Reserve might cut back on its support for the economy.
The Fed has a dual mandate to keep inflation stable and reach full unemployment, and recent data has shown a sharp rise in prices. Policymakers say the increase is likely to be temporary, but they have been “talking about talking” about when the central bank will be ready to slow down its bond-buying program. The monetary stimulus has helped keep stock prices high.
That said, the strength of the labor market is being vigorously debated. In April, job gains slowed sharply and some employers have complained about struggling to fill vacancies even as millions of people remain unemployed.
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Initial claims for state jobless benefits fell last week, the Labor Department reported Thursday.
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The weekly figure was 420,000, a decline of 34,000 from the previous week and the lowest weekly total since before the pandemic. New claims for Pandemic Unemployment Assistance, a federally funded program for jobless freelancers, gig workers and others who do not ordinarily qualify for state benefits, totaled 93,500, a slight decline from the prior week. The figures are not seasonally adjusted.
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New state claims remain high by historical levels but are less than half the level recorded as recently as early January. The benefit filings, something of a proxy for layoffs, have receded as business return to fuller operations, particularly in hard-hit industries like leisure and hospitality.
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More than 20 Republican-led states have said they will abandon federally funded emergency benefit programs in June or early July, saying the income is deterring recipients from seeking work as some employers complain of trouble filling jobs. Those programs include not only Pandemic Unemployment Assistance but also extended benefits for the long-term unemployed.
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In a separate report, the government on Thursday issued its second reading for U.S. growth in the first three months of the year. It said that the economy expanded by 6.4 percent in the first quarter, the same rate as reported last month.
Today in the On Tech newsletter, Shira Ovide writes that she fears that the major technologies of the future will be more closed and controlled by tech giants than the personal computers, web browsers and smartphones that dominate our digital lives today.
Big Oil was dealt a stunning defeat on Wednesday when shareholders of Exxon Mobil elected at least two board candidates nominated by activist investors who pledged to steer the company toward cleaner energy and away from oil and gas.
The success of the campaign, led by a tiny hedge fund against the nation’s largest oil company, could force the energy industry to confront climate change and embolden Wall Street investment firms that are prioritizing the issue, The New York Times’s Clifford Krauss and Peter Eavis report.
The campaign
Engine No. 1, the hedge fund leading the campaign, was seeking to defeat four of the company’s 12 director candidates. Its victory is a sharp rebuke to Darren W. Woods, Exxon’s chairman and chief executive, and is the culmination of years of efforts by activists to force the oil giant to change its environmental policies and approach. Engine No. 1 and its allies had argued that Exxon’s stance on climate change and the oil and gas business was not just bad for the planet but that it would hurt the company’s profits in the future as governments required businesses to reduce and eventually eliminate emissions of greenhouse gases.
The winners
Gregory Goff, former chief executive of Andeavor, a refiner, and Kaisa Hietala, an environmental scientist and former executive at Neste, a Finnish energy company that produces biofuels, were the two nominees declared winners. The company said the final results would not be publicly available Wednesday, and an independent inspector will determine the timing of an announcement.
Reactions
“This isn’t really about ideology, it’s about economics,” Chris James, founder of Engine No. 1, said. “And economics is what has driven the adoption of some of the alternative fuel sources versus fossil fuels. We want there to be an acceptance of change.”
“We welcome the new directors,” said Mr. Woods, the Exxon head. “While there is still more to do, we are proud of the progress we have made to reduce emissions and clear plans for further reductions.”
“This signals a new era for the role of corporations in climate change and a new era for corporate governance,” said Erik Gordon, a University of Michigan business professor.
Why it matters
The vote reveals the growing power of giant Wall Street firms that manage the 401(k)s and other investments of individuals and businesses to press chief executives to pursue environmental and social goals. Some of these firms are run by executives who say they see climate change as a major threat to the economy and the planet. The loss of at least two seats on its board will almost surely energize activists to pressure Exxon, other oil companies and businesses in various industries that they believe are not doing enough to address climate change.