Archives for February 2021

Proposals go back to the Democratic primaries

Warren, as well as Vermont Sen. Bernie Sanders, have been pushing for some kind of student debt cancellation plan since 2019, when they were running in the Democratic presidential primary. Biden put out a policy proposal to forgive $10,000 per borrower only after the pandemic began and he was the presumptive nominee.

A broad cancellation of federal student loan debt would be unprecedented. But a memo from lawyers at Harvard’s Legal Services Center and its Project on Predatory Student Lending says the Department of Education has the power to do so.
The Department already has some more targeted debt cancellation policies in place. It wipes away debt for defrauded students as well as disabled veterans. Biden could provide relief for hundreds of thousands of more borrowers just by expanding those programs, according to the National Student Legal Defense Network.

There are thousands of borrowers who say they were defrauded by now-defunct for-profit colleges like Corinthian and ITT Tech, but have waited years for the Education Department to review their claims as DeVos tried to roll-back an Obama-era rule that streamlined the process.

Warren says the economic crisis caused by the pandemic makes it even more important to cancel student loan debt as soon as possible, and argues that it would help narrow the racial wealth gap and jump start the economy by providing relief for more about 45 million Americans.

“Data show that canceling the student loan debt would result in greater home ownership rates, more housing stability, improved credit scores, higher incomes, higher GDP, more small business formation and more jobs,” she said Thursday.
Economists say cancellation might not generate a big GDP boost
Some economists say that canceling student debt is not the best way to jump-start the economy right now. A Goldman Sachs analysis found that forgiving $10,000 of debt per borrower would likely cost $300 billion and add less than 0.1% to GDP, while forgiving up to $50,000 would cost around $800 billion and provide only a slightly bigger boost to GDP.
A separate report from the Committee for a Responsible Federal Budget said that canceling all federal student debt would offer little economic stimulus compared to other aid programs like the small business loan program and enhanced unemployment benefits. It would have a small effect on how much cash people have to spend right now.

GameStop booster did well; many devotees won’t as shares sag

WILMINGTON, Mass. (AP) — “IF HE’S STILL IN, I’M STILL IN,” was the constant refrain from followers of Roaring Kitty, the YouTube personality whose enthusiasm about buying stock in video-game retailer GameStop made him an icon in the social media frenzy that shocked Wall Street last week.

His hometown newspaper in Massachusetts dubbed him a “Brockton legend,” stirring dreams about how the former high school running champion might use his newfound riches to build the city an indoor track. Hollywood studios started sketching out movie proposals about the small-pocketed investors who banded together on social media to vault a troubled brick-and-mortar chain “to the moon” and punish hedge funds that were betting on its failure.

But what was a big victory for Roaring Kitty, a 34-year-old whose real name is Keith Gill, is turning into hardship for followers who jumped on the bandwagon and took risky bets on GameStop’s rollercoaster ride in the stock market.

GameStop shares dropped 42% on Thursday, continuing to plummet from a high of $483 a week ago to around $53. That’s still above the $17 they fetched at the start of the year.

The GameStop saga is also raising complications for Gill, who now faces an inquiry from a Massachusetts state regulator over potential conflicts of interest because of his work as a licensed securities broker and “financial wellness education director” for insurance company MassMutual. The regulator’s letter to MassMutual was first reported by the New York Times.

The company told the Secretary of the Commonwealth’s office that it had previously denied a request from Gill to engage in outside business activity. His last day at the job was Jan. 28.

Gill is also on a list of people who might be called to Congress to testify, said Democratic Rep. Maxine Waters, who leads the House Committee on Financial Services. “I want him here,” she told the Cheddar financial news channel.

Similarly, the heads of several regulatory agencies, including the Securities and Exchange Commission, the Federal Reserve Board and others, met with Treasury Secretary Janet Yellen to discuss “recent financial market volatility.”

Doubts emerged about GameStop and its online boosters this week as the stock plunged, spelling trouble for novice investors who got in too late, bought too high and found themselves caught up in an epic story of battling against the 1%.

“I was a little late to the game,” said Will Binette, 21, of Albuquerque, New Mexico, who bought one share of GameStop last week when it was $380. “I don’t really care that I’m losing that much money. It’s about sending a message and redistributing the wealth.”

Binette doesn’t fault Gill, calling him a smart investor who made a “phenomenal profit.” Instead, Binette said, it was the broader community of investors on the Reddit forum WallStreetBets that persuaded him “we can get back at Wall Street for the 2008 crash.”

Gill’s closest followers, who watched Reddit each day for a spreadsheet he posts of his current GameStop holdings, know that it’s likely he has already sold off enough options along the way to make hefty profits — even though he’s indicated that he still holds tens of thousands of shares that are potentially worth tens of millions of dollars. The Associated Press was unable to independently verify those claims.

Many smaller investors use options to play the market. One such contract gives an investor the right to sell a stock at a later date at a certain price. If the share price drops, the holder can exercise the option and sell the share at the higher option price. Such options help investors protect their portfolios against sharp price declines.

Gill indicated Wednesday he’s “gonna back off” the daily updates, without explaining why.

“I don’t believe the movement will be jeopardized even if Roaring Kitty sells, which I know he won’t,” said Jenn Kruza, who first stumbled into Gill’s orbit when she joined one of his livestream chats on YouTube in September.

Back then, the hours-long chats on Mondays, Wednesdays and Fridays were lucky to attract 20 viewers. Gill had contemplated a “short squeeze” attacking hedge funds as early as August, although his more consistent “bull thesis” was that gamers still favored buying physical discs for their game consoles and that, in the longer term, GameStop had a chance at reinventing its business.

The chat was a comfortable outlet for casual investors like Kruza, newly unemployed after the pandemic dashed her hopes of getting a job as a music industry scout in Los Angeles.

“All my friends thought I was crazy for buying into this dead-end retailer and I wanted to hear what this guy had to say,” she said. “I could ask a question and people would answer and wouldn’t think I’m stupid for asking a question. You don’t get that a lot in finance.”

Gill was an ebullient presence, wearing cat-themed shirts and a bright red runner’s headband and playfully bantering with online guests from the basement of his home in the Boston suburb of Wilmington. A disclaimer on Roaring Kitty’s YouTube channel said he wasn’t doling out financial advice — which is subject to regulation — and asked viewers to “please understand that my style of investing is extremely aggressive and I take on a substantial amount of risk. It’s likely my approach would not be suitable for you.”

He has a separate identity on Reddit’s WallStreetBets, where he’s known as DFV, for “deep value” plus an expletive. It wasn’t until December that many of his online acquaintances realized it was the same person.

“Roaring Kitty’s streams were humble and did not imply he had such a big position,” said Joe Fonicello, a 21-year-old college student from Connecticut.

Newcomers who got caught up in January’s hype might not have realized that Roaring Kitty and the circle of WallStreetBets investors who coalesced around GameStop were not, until recently, promoting a social movement.

Kruza said she once participated in the Occupy Wall Street movement, and Fonicello attended last month’s pro-Trump Capitol rallies that preceded the deadly riot. But the discussions on Roaring Kitty’s livestream eschewed politics in favor of making money off what they considered an undervalued company.

“If he decides to take profits we should support him doing so and not get upset that it may affect the price etc or say he betrayed a cause he never signed up for,” wrote one Reddit commenter this week. “If you’ve watched the guys youtube you will know he’s an extremely nice and likeable guy, would hate to see people calling him judas or whatever if he decides to sell.”

Gill didn’t respond to numerous requests for comment over the past week. A woman who answered the door to his house said he was unavailable to speak.

Gill is remembered fondly in his hometown of Brockton, a former shoe industry hub known for churning out boxing greats like Rocky Marciano and Marvin Hagler. He was a top runner in high school and college, where he ran an indoor mile in just over four minutes and three seconds, said Bill Jennings, the retired head coach of the high school track team.

“That intuition he had, he just ran with it. He was a very bright young man,” Jennings said. “I’m just hoping things work out extremely well for him and his family.”

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AP Business Writer Alex Veiga contributed to this report from Los Angeles.

Microsoft backs Australian plan to make Google pay for news

CANBERRA, Australia (AP) — Microsoft said on Wednesday it supports Australia’s plans to make the biggest digital platforms pay for news and would help small businesses transfer their advertising to Bing if Google quits the country.

Microsoft has been positioning itself to increase market share for its search engine Bing after a Google executive told a Senate hearing last month that it would likely make its search engine unavailable in Australia if the government goes ahead with a draft law that would make tech giants pay for news content.

Microsoft President Brad Smith said in a statement that he and Microsoft Chief Executive Satya Nadella had told Prime Minister Scott Morrison and Communications Minister Paul Fletcher in an online meeting last week that “Microsoft fully supports” the so-called News Media Bargaining Code.

Morrison this week confirmed he had spoken to Nadella about Bing replacing Google in Australia.

“I can tell you, Microsoft’s pretty confident” that Australians would not be worse off, Morrison said on Monday.

Smith said he had assured the government leaders that small businesses who wished to transfer their advertising from Google to Bing could do so simply and without transfer costs.

“We believe that the current legislative proposal represents a fundamental step towards a more level playing field and a fairer digital ecosystem for consumers, business and society,” Smith said.

The Australia Institute’s Center for Responsible Technology, an independent think tank, welcomed Microsoft’s stance and called on Google to withdraw its threat to close its search services within Australia.

“This is a significant development and should send a message to both Google and Facebook that their network dominance in Australia is only as strong as their respect for Australians,” the center’s Director Peter Lewis said in a statement.

Although Bing is Australia’s second most popular search engine, it has only a 3.6% market share, according to web analytics service Statcounter. Google says it has 95%.

Swinburne University senior lecturer on media Belinda Barnet said Bing and other search engines could fill the void left by Google and deliver benefits.

“People need to realize it will not be personalized in the sense that Google advertising in searches is, so Bing doesn’t know and frankly doesn’t care that you’re in the market for yoga pants, for example,” Barnet said.

“Some of these platforms, Google and Facebook in particular, feed you more misinformation if you’re already prone to clicking on misnformation, so they create this echo chamber, in a sense,” she said. “But a product like DuckDuckGo and Ecosia is not going to know that in the past you’ve looked at 100 articles about how vaccines are bad and they will just give you the most accurate information that they can find.”

Peter Strong, chief executive of the Council of Small Business Organizations Australia, an advocacy group, expected the disruption to small businesses created by Google’s departure from Australia would be short lived.

“We’re not panicking,” Strong said. “But it would have a short-term impact.”

“It would be a bad thing if Google quits, but if Bing took over, the situation would be the same,” he added. “One organization has the capacity to blackmail a country and that should never happen,” he said, calling for more government regulation.

A Senate committee that is scrutinising the draft legislation will report to the government next week.

The mandatory code proposed by the government aims to make Google and Facebook pay Australian media companies fairly for using news content the tech giants siphon from news sites.

There are no plans to make smaller search engines such as Bing pay for linking users to Australian news, but the government has not ruled that option out.

Google has faced pressure from authorities elsewhere to pay for news. Last month, it signed a deal with a group of French publishers paving the way for the company to make digital copyright payments. Under the agreement, Google will negotiate individual licensing deals with newspapers, with payments based on factors such as the amount published daily and monthly internet site traffic.

But Google is resisting the Australian plan because it would have less control over how much it would have to pay. Under the Australian system, if an online platform and a news business can’t agree on a price for news, an arbitration panel will make a binding decision on payment.

Sony booming on hit ‘Demon Slayer,’ headed to record profit

TOKYO (AP) — Sony Corp.’s its fiscal third quarter profit jumped 62%, positioning the Japanese entertainment and electronics giant for a record annual profit as its bottom line got a healthy boost from its mega-hit animation film “Demon Slayer.”

Tokyo-based Sony reported Wednesday a 371.9 billion yen ($3.5 billion) profit for the October-December period, up from 229.5 billion yen a year earlier.

Sony’s video-games sector thrived as people stuck at home for the coronavirus pandemic turned to such entertainment content.

Sony’s quarterly sales edged up 9% to 2.7 trillion yen ($25.7 billion).

Sony also got a lift from the popularity of its PlayStation 5 console, which went on sale late last year, and did well in software and online-service sales, despite launch costs, the company said.

Sony has sold more than 4.5 million PlayStation 5 consoles, and more people were waiting to get the machines since production hasn’t kept up with demand, company officials told reporters.

Mobile games also did well. Movie releases lagged, with new films being postponed and theaters closed in some places due to coronavirus restrictions.

In Japan, movie theaters have stayed open with social distancing measures, helping “Demon Slayer” gain massive popularity amid a dearth of rival releases.

Sony’s other divisions, such as consumer electronics products, imaging solutions and financial services, had mixed or flat results compared to the previous year.

Sony, which also makes Bravia TVs and Alpha mirrorless cameras, raised its full fiscal year profit forecast to 1.085 trillion yen ($10 billion), a record for the company.

That’s considerably higher than the 800 billion yen ($7.6 billion) projection given in October. Sony earned 582 billion yen in the fiscal year that ended March 2020.

Sony said it hoped to boost profits for the year across the board in its sprawling businesses, including games, music, electronics products and other operations.

Among the best-selling music from Sony in the quarter just ended were AC/DC’s “Power Up” and Bruce Springsteen’s “Letter to You.”

Among Japanese artists, “homura,” a theme song for “Demon Slayer,” by LiSA, and “Step and a Step,” by NiziU did well, according to Sony. Sony said it’s counting on relatively new artists like American singer Doja Cat.

Atul Goyal, an equity analyst with Jefferies, noted that Sony has been beefing up its music division, such as with its recent acquisition of independent distributor AWAL, which he called “a win-win relationship.”

“Streaming is driving secular growth in the music business, and Sony is well-positioned to drive sustained profit growth,” Goyal said.

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Yuri Kageyama is on Twitter https://twitter.com/yurikageyama

COVID case at Australian Open hotel cancels play at tuneups

MELBOURNE (AP) — All competition at six Australian Open tuneup events scheduled for Thursday was called off and 520 people who flew to Melbourne for the year’s first tennis major were ordered to isolate after a worker at one of the tournaments’ quarantine hotels tested positive for COVID-19.

The Australian Open is scheduled to begin Monday. Any players, coaches or officials who quarantined at the Grand Hyatt hotel in Melbourne were deemed to be casual contacts of the 26-year-old infected man and required to remain in their accommodation until they test negative.

“We will work with everyone involved to facilitate testing as quickly as possible,” Tennis Australia said in a statement announcing the postponement of all matches at Melbourne Park. A dedicated facility will be used to get players, coaches, officials and staff tested as quickly as possible.

Victoria state premier Daniel Andrews said he called a late-night news conference Wednesday to announce the case “through an abundance of caution.”

Speaking before all of Thursday’s play was postponed, which he acknowledged was a possibility, Andrews said of the Australian Open: “At this stage, no impact on the tournament proper.”

He held another news conference early Thursday local time, confirming close family contacts of the infected worker had tested negative and contact tracing was advanced.

Allen Cheng, the state’s deputy chief health officer, said six people in the Grand Hyatt during the quarantine period for the Australian Open had tested positive and were transferred to a medical facility, and it was likely the man — a resident support officer — was infected there.

“We are aware that he was on a floor where there were cases,” Cheng said.

Everyone in the city will be required to wear masks while indoors.

The hotel advertises it has 550 rooms, including 25 premium suites.

The latest coronavirus restrictions could test the resolve of players who have recently come out of two weeks in quarantine, and give ammunition to critics of the decision to allow people to fly in from all over the world for the year’s first major.

Australian Open organizers didn’t immediately have details of how many players were ordered to isolate.

Under the current plans, up to 30,000 spectators are expected daily at Melbourne Park for the two-week Grand Slam event and there was no immediate indication of a change.

Everyone who arrives in Australia must undergo a mandatory 14-day quarantine under the COVID-19 pandemic regulations. The Australian Open used three hotels in Melbourne for the bulk of the players to quarantine and had other secure accommodation and facilities in Adelaide, South Australia state, for some of the biggest stars, including Serena Williams, Naomi Osaka, Novak Djokovic and Rafael Nadal.

Players were tested every day during quarantine.

The infected worker tested negative on his last day at the hotel on Jan. 29, but subsequently tested positive and has been working with government and health officials on contact tracing.

“This is one case. There’s no need for people to panic,” Andrews said. “There’s no need for people to be alarmed. We Victorians know what to do, and we have proven, as a state, very successful at managing these sorts of outbreaks, these sorts of issues.”

Earlier Wednesday, Victoria health officials announced that the state had gone 28 days without a case involving local transmission.

Australia has 909 deaths attributed to COVID-19, including 820 in Victoria state. Most of those were during a second deadly wave last year when a hard lockdown and overnight curfews were put in place in Melbourne.

SERENA ADVANCES

Just hours before the government’s announcement of the positive test, 23-time major champion Serena Williams beat Tsvetana Pironkova 6-1, 6-4 to advance to the quarterfinals of the Yarra River Classic.

Williams will next face Danielle Collins, who upset third-seeded Karolina Pliskova 7-6 (5), 7-6 (3), and could reach a semifinal match against Ash Barty. The top-ranked Barty beat No. 52-ranked Marie Bouzkova in three sets and will next play Shelby Rogers.

Williams was asked when was the last time she played a warmup tournament so close to a major.

Last year’s U.S. Open was her short answer. Then she elaborated.

“But before that, before this whole pandemic, I could count the times on one finger I’ve done that,” she said. “I’m just happy to be out here in any circumstances. It’s so cool after what the world went through the last 12 months.”

Williams had a tough win over Pironkova in last year’s U.S. Open quarterfinals, and then withdrew from their scheduled second-round match at the French Open because of an Achilles injury.

Williams won her last major title at the 2017 Australian Open, when she was pregnant with her daughter, Olympia. She’s still chasing Margaret Court’s all-time record of 24 Grand Slam singles titles, and an eighth in Australia.

On the bottom half of the draw, defending Australian Open champion Sofia Kenin rallied from a set and a break down to fend off Jessica Pegula 5-7, 7-5, 6-2.

OSAKA IN THREE

U.S. Open champion Naomi Osaka advanced in the Gippsland Trophy with a 3-6, 6-3, 6-1 win over No. 371-ranked Katie Boulter. Next up for her will be Irina Begu, who upset fifth-seeded Johanna Konta 4-6, 7-6 (10), 7-6 (4).

Second-ranked Simona Halep advanced along with third-seeded Elina Svitolina, who beat former French Open champion Jelena Ostapenko 6-7 (4), 6-3, 6-2.

ATP CUP

Italy and Russia were the first teams to reach semifinals of the ATP Cup, the 12-team men’s event.

Fabio Fognini beat Benoit Paire before Matteo Berrettini defeated Gael Monfils 6-4, 6-2 to clinch Italy’s win over France, giving the Italians top spot in Group C.

Daniil Medvedev secured Russia’s win over Japan when he beat Kei Nishikori 6-2, 6-4. Russia is on top of Group D with wins over Argentina and Japan.

Germany opened with a win over Canada, with Alexander Zverev clinching it by holding off Denis Shapovalov 6-7 (5), 6-3, 7-6 (4), and Australia beat Greece 2-1.

CHAMPIONS IN GRAMPIANS

Three-time major champion Angelique Kerber took a while to adjust in her first match since leaving quarantine, beating Katerina Siniakova 6-3, 4-6, 6-3 in the Grampians Trophy.

It’s the event for those players who were forced into hard lockdown — not allowed to leave their rooms, even for practice — after being deemed close contacts of passengers on their flights who tested positive for COVID-19 after arriving in Australia.

Other major champions in the draw included Sloane Stephens and Svetlana Kuznetsova, who both lost in the first round.

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AP Sports Writer Dennis Passa in Brisbane, Australia, contributed to this report.

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More AP tennis: https://apnews.com/hub/tennis and https://twitter.com/AP_Sports

Archives for February 2021

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