Fallout Widens From Mobbing of US Capitol
The fallout is spreading in the wake of supporters of President Trump mobbing the U.S. Capitol last week. Marriott International and several other major corporations reportedly plan to halt certain political contributions, and some internet companies are cutting the president's access after he was blamed for inciting the attack that left five dead, including a U.S. Capitol Police officer.
The Bethesda, Maryland-based hotel company was joined by the Blue Cross Blue Shield insurance group in saying they wouldn’t give money to lawmakers who objected to certifying President-elect Joe Biden’s election victory over Trump after the crowd had stormed the building.
“In light of this week’s violent, shocking assault on the United States Capitol, and the votes of some members of Congress to subvert the results of November’s election by challenging Electoral College results, BCSBA will suspend contributions to those lawmakers who voted to undermine our democracy,” Kim Keck, Blue Cross Blue Shield’s chief executive officer, said in a statement.
In the Senate, six Republican senators voted in favor of objecting to Arizona’s electoral votes for Biden, fewer than expected after eight switched their position once debate resumed after the mob had been cleared from the U.S. Capitol. There were 121 House Republicans who voted to prevent electoral votes, fewer than expected before the incident.
Seven Republican Senators voted in favor of objecting to Pennsylvania’s results while 138 House Republicans objected.
Big banks JPMorgan Chase and Citigroup said they are pausing contributions to political action committees for a period of time, which would affect politicians from both parties. Bank of America told CNBC that the events of Jan. 6 would factor into decisions it makes leading up to the mid-term elections.
And Twitter announced it was permanently banning Trump from its platform, citing postings it said could fan the flames of more violence. Twitter had been Trump’s biggest social media instrument to reach his followers directly. Facebook took the same step, the combination of which drew criticism that big technology companies were exercising censorship, while others argued that the step was overdue.
Amazon entered the fray with a decision to remove startup social media platform Parler from its servers, John Matze, Parler’s CEO, announced on his platform. “This was a coordinated attack by the tech giants to kill competition in the marketplace,” Matze wrote.
Parler pitched itself as a place for free and unfettered speech, gaining a lot of users quickly when Trump and conservatives touted and flocked to it. Apple and Google, however, removed the app from their stores because of what happened at the U.S. Capitol and death threats posted on the site.
Job Losses Mount
The Labor Department said Friday the U.S. economy’s recovery suffered the first loss of jobs since April, defying expectations that there would be a small gain.
Nonfarm payrolls dropped 140,000 last month, the Labor Department reported, which is 10,000 jobs higher than the payroll company ADP’s report on Wednesday. Analysts had projected a gain of 50,000 jobs, which still would have been a significant slowing of growth.
The unemployment rate stayed at 6.7%. Temporary layoffs increased 277,000 to 3 million while permanent losses fell 348,000 to 3.4 million.
As was the case with ADP’s report, the hospitality industry’s payrolls shed the most but by a much larger number. The Labor Department showed a drop of 498,000 for the industry.
Increases in professional and business services and retail were the largest categories offsetting the big loss in hospitality jobs.
Joseph Brusuelas, chief economist for accounting firm RSM US, wrote in a blog post that he views the dip as “a temporary lull in hiring than the breakout of a new trend that results in soaring unemployment.”
Mass vaccine distribution will play a big role in creating the conditions for faster economic growth and employment, Brusuelas wrote.
Meanwhile, payroll firm Paychex reported that small business hiring slowed in December.
The index Paychex does with data firm IHS Markit dropped to 94.06 from 94.29 in November. A reading over 100 means a growth rate greater than in 2004, the benchmark year considered to have normal economic growth. The index was last above 100 in June 2017, declining before the pandemic largely because small businesses couldn't compete with big companies for talent.
James Diffley, chief regional economist at IHS Markit, said in a statement that the “winter season brought a surge in COVID-19 cases and with it a retreat in jobs growth.”
Walgreens Exceeds Earnings Expectations
Walgreens posted stronger than expected earnings in its first quarter with pharmacy sales driving the results.
Sales hit $$36.3 billion for the quarter that ended Nov. 30, a 5.7% increase over the previous year, the Deerfield, Illinois-based company reported last week.
It posted a loss of $308 million compared to $845 million in net income in 2019. The loss is related to a $1.5 billion charge taken with its equity investment in drug wholesale and distribution company AmerisourceBergen.
Excluding the charge, Walgreens earned $1.22 per share, which beat Wall Street expectations of $1.03 per share.
Walgreens' real estate has increasingly become popular among investors looking for places to invest given that it and other drug store chains were deemed essential during U.S. lockdowns early in the pandemic, which allowed them to stay open while other businesses closed.
The company took a conservative view about what its earnings will look like going forward because it doesn’t yet know what renewed lockdowns in the United Kingdom will do to the bottom line.
Online Marketplace Prices IPO Shares
Secondhand clothing marketplace Poshmark that counts actor Ashton Kutcher as an investor set its initial public offering price to raise as much as $300 million as it taps into a hot IPO market for technology companies.
In an update to its S-1 filing with the Securities and Exchange Commission, Poshmark said it plans to sell its shares in a range of $35 to $39 each, which would bring $296 million at the high end.
Redwood City, California-based Poshmark was founded in 2011 and has raised more than $153 million in funding over the years.
In its filing, Poshmark reported net revenue of nearly $193 million for the nine months that ended Sept. 30, 2020. With 70 million users, Poshmark said it turned a profit for the first time in the quarter that ended June 30 of last year.
With its platform, sellers sell directly to buyers using a shipping box provided by Poshmark. That means the company doesn’t need warehouses and a distribution network for products beyond the boxes.
The company leases facilities in Newark, New Jersey, California, Canada and India, which are sufficient for now, according to its filing.
But Poshmark noted it intends to "expand our facilities or add new facilities as we add employees and enter new geographic markets, and we believe that suitable additional or alternative space will be available as needed to accommodate any such growth.”