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Business News Live: Elon Musk, Bitcoin and Jerome Powell

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Jerome H. Powell, the Federal Reserve chair, and Janet L. Yellen, the Treasury secretary, give virtual testimony on the Coronavirus Aid, Relief and Economic Security Act before the Senate Banking Committee.CreditCredit…Jessica Mcgowan/Getty Images

America’s top two economic officials told Senators on Wednesday that the economy is healing but still in a deep hole, and that continued government support is providing a critical lifeline to families and businesses.

Jerome H. Powell, the Federal Reserve chair, and Janet L. Yellen, the Treasury Secretary and Mr. Powell’s immediate predecessor at the Fed, are testifying before the Senate Banking Committee. Their comments echo their testimony before House lawmakers on Tuesday.

Mr. Powell said in prepared remarks that the government averted the worst possible outcomes in the pandemic economic recession with its aggressive spending response and super-low Fed interest rates.

“But the recovery is far from complete, so, at the Fed, we will continue to provide the economy the support that it needs for as long as it takes,” he said.

Ms. Yellen is likely to face questions about the Treasury’s administration of the recently passed $1.9 trillion relief package. Her Treasury Department has been racing to distribute $1,400 checks to millions of Americans, posing a test for Ms. Yellen’s team, which is not yet fully in place.

She could also field questions on the prospects for future legislation, after news broke this week that the Biden administration is making plans for a $3 trillion infrastructure package.

Both policymakers may need to speak about the prospects for inflation, which some prominent analysts have warned could pick up as the government spends big in a rebounding economy. Mr. Powell has consistently pushed back on such concerns.

“We do expect that inflation will move up over the course of this year,” Mr. Powell said on Tuesday. “Our best view is that the effect on inflation will be neither particularly large nor persistent.”

Elon Musk, the chief executive of Tesla, said on Twitter that the company would accept Bitcoin as payment for cars in the United States.
Credit…Brendan Smialowski/Agence France-Presse — Getty Images

Elon Musk, the chief executive of Tesla who recently added the title “Technoking,” said on Wednesday that the company would accept Bitcoin as payment for cars in the United States.

Tesla will hold the digital currency, rather than convert payments to dollars, and handle the crypto transactions internally, Mr. Musk said.

“Bitcoin paid to Tesla will be retained as Bitcoin, not converted to fiat currency,” Mr. Musk explained in a tweet. That means when someone buys a Tesla with Bitcoin, the price of the car could well rise — or fall — over time. In other words, Tesla is turning one-time payments into assets with shifting value, or, essentially, investments.

Buyers outside the United States will have the option to use Bitcoin “later this year,” Mr. Musk said.

Mr. Musk said last month that the company bought $1.5 billion in Bitcoin for its treasury. The announcement on Wednesday confirms speculation in the crypto community that Tesla would not simply contract out payments to a third-party processor and treat Bitcoin like dollars.

Since Tesla’s initial Bitcoin purchase in February, the price of Bitcoin and other cryptocurrencies has soared to record highs, but trading has been volatile.

It’s clever marketing insofar as it makes the crypto community even more enthusiastic about their investments and Tesla, but as blockchain developer Mariano Conti told The New York Times in February, “I expect more people would rather hold their Bitcoin than use it to buy a Tesla.”

This bridge can be yours for $69 million.
Credit…Open Sea

The comedian John Cleese is selling a digital sketch that comes with a nonfungible token, or NFT, to authenticate its authorship via blockchain technology. It’s a joke, sort of.

Evoking a classic con, the sale of the Brooklyn Bridge, the Monty Python actor is auctioning an image of the bridge by “The Unnamed Artist John Cleese,” with bidding running through April Fools’ Day. “I don’t make the jokes,” Mr. Cleese told the DealBook newsletter. “I just point them out.”

The project highlights the hyper-commodification of art in a frenzied market. Christie’s recently held its first NFT auction, selling the work of an artist known as Beeple for $69,346,250. That’s how much Mr. Cleese is asking for the sketch (plus 50 cents) if a bidder wants to “buy it now.” He’ll split the proceeds evenly with his partners: a comedy writer, an animator and a law professor doubling as crypto consultant.

The highest bid for Mr. Cleese’s work is now about $36,000. “I think it’s very funny,” Mr. Cleese said. “At the same time, we might make some money.”

“Some things are worth pointing out, and some are not,” Mr. Cleese said. The Beeple sale was notable because it revealed a “mad world,” he added, with people disconnected from meaningful emotional experiences, like seeing a painting at a gallery. Yet the 81-year-old also conceded that someone younger, for whom the line between the physical and digital worlds is more blurred, could have feelings about an NFT.

The art world can’t afford to dismiss NFTs, Mr. Cleese said. Nor can he. By mocking the craze, he is now implicated in the thing he finds absurd — just how he’s made a living as a comedian.

Robinhood and its chief executive, Vlad Tenev, have faced scrutiny over the role the app played in the GameStop trading frenzy. But investors have stood by the company.
Credit…House Financial Services Committee

Robinhood, the stock-trading app, said on Tuesday that it had filed a draft registration to go public, joining a wave of financial technology companies that plan to list on the stock market or that have raised new funding.

The exact timing or price of the offering has not been set. Private market investors have valued Robinhood at roughly $12 billion and some have speculated its initial public offering could top $20 billion. It is working with Goldman Sachs on its offering, a person familiar with the company said.

Robinhood used a process known as filing confidentially that allows it to keep some details under wraps in the early part of going public.

Financial technology companies have been booming. Coinbase, a cryptocurrency start-up, is expected to list its shares in the coming weeks, with investors estimating that it could be worth as much as $100 billion. Stripe, a start-up that offers payment processing services, raised funding this month that valued it at $95 billion, making it the most valuable start-up in the United States.

Robinhood began making plans to go public last year after its growth spiked in the pandemic, with some people using their stimulus checks to day trade.

But it paused those plans in January when a group of online traders banned together to drive up the stock prices of so-called “meme stocks” like GameStop, causing short-sellers to lose money and forcing the exchanges to halt trading of some stocks.

Amid the frenzy, Robinhood restricted the trading of some stocks, outraging many of its users and drawing nearly 50 lawsuits and multiple probes from regulators. Vlad Tenev, the company’s chief executive, was called to testify in front of Congress about the market frenzy and Robinhood’s role in it.

Despite the anger, the GameStop incident boosted Robinhood’s name recognition and led to more downloads of its app, which is popular because it charges no fees for stock trading. Robinhood has been criticized for making day trading into a gambling-like game, where investors don’t always understand the risk they are taking on.

Private investors have stood by the Menlo Park, Calif.-based company. During the frenzy, Robinhood raised two rounds of emergency funding totaling $4.4 billion in a matter of days.

Stocks on Wall Street rebounded on Wednesday, while shares in Europe were slightly lower. Oil prices climbed, also rebounding from a recent decline, after a container ship blocked traffic in the Suez Canal.

  • The S&P 500 index rose about half a percent in early trading, while the Nasdaq composite was flat.

  • Yields on government bonds ticked higher. The yield on 10-Year Treasury notes was at 1.64 percent. Yields had declined on Tuesday after Jerome H. Powell, the Federal Reserve chair, continued to play down the prospects of high sustained inflation.

  • Intel rose about 2 percent in early trading. The company said on Tuesday that it planned to spend $20 billion on two new chip factories near facilities in Arizona amid a global shortage.

  • GameStop dropped about 20 percent after quarterly earnings released on Tuesday missed expectations and the company said in a filing it could sell additional shares.

  • Tesla’s shares were slightly lower after Elon Musk said the carmaker would accept Bitcoin, the cryptocurrency, as payment for cars in the United States.

  • The eurozone purchasing managers’ index for manufacturing and services for March was above 50 — the line between contraction and expansion — for the first time since October. Germany manufacturing output was at a record high and the index for British services rose to 56.8, well above expectations for a reading of 51.

  • The benchmark Stoxx Europe 600 index was 0.2 percent weaker, after opening 0.7 percent down. The FTSE 100 index in Britain was down 0.3 percent.

  • Data showed that inflation in Britain unexpectedly fell to an annual rate of 0.4 percent in February from 0.7 percent the month before. Analysts at RBC said they still expected inflation to rise in coming months, but the lower-than-expected February data reflected the pandemic’s disruption to normal seasonal price patterns. For example, clothing prices didn’t rise in the new year after the traditional sales period.

  • Oil prices rose after a container ship got stuck in the Suez Canal, blocking traffic in one of the world’s busiest shipping arteries. The canal is important for the movement of oil as it travels from the Persian Gulf region to Europe and North America. Brent crude futures rose as much as 3.3 percent, to just under $63 a barrel, but then eased slightly after reports that the vessel had been refloated and workers were hoping to clear a space for shipping to resume.

  • Walt Disney Studios on Tuesday pushed back the release dates of six movies, including “Black Widow,” a hotly anticipated Marvel prequel. In addition, “Black Widow,” now scheduled for July 9 instead of May 7, and another major Disney movie, “Cruella” (May 28), will premiere on Disney+ at the same time they arrive in theaters. Disney pulled “Luca,” the next Pixar film, from theatrical release entirely, saying it would debut exclusively on Disney+ on June 18. The other movies that were delayed include “Free Guy,” an action-comedy starring Ryan Reynolds as a bank teller who finds himself inside a video game; “Shang-Chi and the Legend of the Ten Rings,” a Marvel extravaganza starring Simu Lieu alongside Awkwafina; and “Death on the Nile,” an all-star remake based on the Agatha Christie mystery.

  • Shares of GameStop tumbled in after-hours trading on Tuesday as quarterly earnings missed expectations and the company said in a filing it could sell additional shares. The company’s stock was down roughly 12 percent shortly after 6 p.m. The stock began to slide after the company said in a separate filing with the Securities and Exchange Commission that it was evaluating whether to sell additional stock “primarily to fund the acceleration of our future transformation initiatives.”

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