Happy Wednesday and welcome back to On The Money. I’m Sylvan Lane, and here’s your nightly guide to everything affecting your bills, bank account and bottom line.
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THE BIG DEAL—Reddit traders cause Wall Street havoc by buying GameStop: Amateur online traders fueled by discussions on Reddit sent shares of a struggling video game retailer flying Wednesday, a moment that is underscoring the divorce between the skyrocketing values of companies and the pain in the real economy.
GameStop, a video game retailer struggling to keep up with direct downloads even before the coronavirus pandemic, saw its share price jump to $347 per share on Wednesday. Overall, its share price has risen over 1,800 percent in January.
It’s not the only seemingly imperiled company that has seen its stock soar because of buys by the nearly 3 million users on Reddit’s subforum r/WallStreetBets (WSB) either.
- Shares of theater chain AMC rose 302 percent, the holding company used to liquidate Blockbuster Video’s assets rose 120 percent, Nokia rose 38 percent and BlackBerry rose 33.4 percent Wednesday, while the stock market on whole took steep losses.
- Most if not all of these companies have bleak financial futures, but they’ve become favorite targets of thousands of self-starting day traders using a proliferation of trading apps like Robinhood.
The Hill’s Chris Mills Rodrigo and I explain here.
LEADING THE DAY
Powell: Inflation fears should not impede more coronavirus aid: Federal Reserve Chairman Jerome Powell said Wednesday that the U.S. economy still faces “considerable risks” driven by the coronavirus pandemic and waived off concerns that further fiscal support could boost inflation.
While Powell said the U.S. economy is ripe for a strong second half, he warned that the pace of COVID-19 vaccinations and the arrivals of new variants still pose serious threats to millions of Americans who are struggling to get by amid the pandemic.
“We’re a long way from a full recovery,” Powell told reporters during a news conference shortly after the Fed announced it would hold interest rates steady and continue purchasing $120 billion each month in Treasury and mortgage bonds.
“Something like 9 million people remain unemployed as a consequence of the pandemic,” he continued, noting a total equal to the peak of the job losses during the Great Recession in 2009.
“Many small businesses are under pressure and there are other needs to be addressed, and the path ahead is still pretty uncertain,” he added. I have more here.
New Jersey lawmakers press for SALT cap repeal in next relief package: New Jersey’s House members are urging the Biden administration and congressional leaders to include repeal of the cap on the state and local tax (SALT) deduction in the next coronavirus relief bill.
- Former President Trump’s 2017 tax-cut law created a $10,000 cap on the SALT deduction.
- Most GOP lawmakers support the cap and have highlighted studies showing that repealing it would primarily benefit high-income households.
- But politicians in high-tax states such as New Jersey, New York and California have been highly critical of the SALT deduction cap, arguing that it hurts their residents as well as their states’ ability to provide robust services to residents.
“Relief from the unfair and destructive SALT cap offers the precise breed of action our constituents, states, and localities will benefit from immediately,” the lawmakers wrote in letters Wednesday to Treasury Secretary Janet Yellen and to House Speaker Nancy Pelosi (D-Calif.) and Senate Majority Leader Charles Schumer (D-N.Y.).
The Hill’s Naomi Jagoda explains here.
ON TAP TOMORROW:
- The Senate Banking Committee holds a hearing on the nominations of Rep. Marcia Fudge (D-Ohio) to be secretary of Housing and Urban Development and Cecilia Rouse to be chair of the White House Council of Economic Advisors at 10 a.m.
Friday 1/29 beginning at 12:30 PM ET | Reset 2021: A New American Start
The inauguration of President Biden and Vice President Harris marks a new era in Washington. As with any presidential transition, priorities and goals will be recalibrated. The administration has outlined a broad policy framework with proposals focused on improving infrastructure and expanding universal access to broadband, revitalizing immigration, supporting environmental sustainability, providing meaningful support to those harmed by the COVID-19 pandemic, and, of course, reviving the economy. Looking ahead to the first 100 days, what steps will be used to drive economic recovery and environmental sustainability and to address immigration? Reps. Peter DeFazio, Stacey Plaskett, David Schweikert and Ted Detuch, USCC’s Tom Donohue, Kevin Hassett, UnidosUS’s Janet Murguía and more. RSVP today for one session or both.
GOOD TO KNOW
- Apple and Facebook reported strong earnings from the last three months of 2020 on Wednesday when they released their quarterly earnings reports.
- The U.S. Chamber of Commerce was nudged out for the top lobbying spender spot by the National Association of Realtors in 2020, marking the first time the powerful pro-business lobbying group didn’t claim the top spot since 2000.
- Campaign finance experts are increasingly skeptical that the companies vowing to freeze political contributions to Republicans who objected to the Electoral College results will carry out those pledges in a meaningful way.
ODDS AND ENDS
- Rep. Michael McCaul (R-Texas), ranking member of the House Foreign Affairs Committee, on Wednesday called on the Senate to block a vote to confirm Gina Raimondo, President Biden’s nominee for Commerce secretary, over concerns about her stance on Chinese telecommunications group Huawei.
- The Senate Commerce Committee advanced President Biden’s pick to lead the Transportation Department, Pete Buttigieg, with a broad bipartisan vote.