The election infrastructure company Dominion Voting Systems sued Powell for defamation after she pushed lawsuits and made appearances in conservative media on behalf of then-President Donald Trump to sow doubt about the 2020 election results. Dominion claims that Powell knew her election fraud accusations were false and hurtful to the company.
In a new court filing, Powell’s attorneys write that she was sharing her “opinion” and that the public could reach “their own conclusions” about whether votes were changed by election machines.
“Given the highly charged and political context of the statements, it is clear that Powell was describing the facts on which she based the lawsuits she filed in support of President Trump,” Powell’s defense lawyers wrote in a court filing on Monday.
“Indeed, Plaintiffs themselves characterize the statements at issue as ‘wild accusations’ and ‘outlandish claims.’ They are repeatedly labelled ‘inherently improbable’ and even ‘impossible.’ Such characterizations of the allegedly defamatory statements further support Defendants’ position that reasonable people would not accept such statements as fact but view them only as claims that await testing by the courts through the adversary process.”
Election authorities and Dominion have resoundingly called Trump’s loss in the election accurate and untainted by any possible major security risks. Trump’s lawyers and his allies quickly lost or dropped all but one minor case out of nearly 60 following the election, as the then-President sought to overturn Joe Biden’s win in multiple key states.
Though the Trump campaign had sought to distance itself from Powell after she held a conspiracy-filled news conference with his other attorneys, Trump had told people he liked Powell’s arguments and wanted to see more of her on television.
In one chaotic Oval Office meeting in December, Trump said he had considered naming her as a special counsel to investigate voter fraud allegations
Besides Powell, the meeting included her client, former Trump national security adviser Michael Flynn, two people familiar with the matter previously told CNN, describing a session that began as an impromptu gathering but devolved and eventually broke out into screaming matches at certain points, as some of Trump’s aides pushed back on Powell and Flynn’s more outrageous suggestions to overturn the election.
The following day, Trump’s campaign legal team sent a memo to dozens of staffers instructing them to preserve all documents related to Dominion Voting Systems and Powell, in anticipation of litigation by the company.
The lawsuit — filed in January — outlined Powell’s TV appearances and online posts in extraordinary detail, including when she repeated her unfounded beliefs that Dominion was linked to communist Venezuela and Georgia officials were in on election fraud.
“Emboldened by Trump’s endorsement of her false accusations, which launched her into political superstardom, Powell’s defamatory media campaign continued and intensified” with her media appearances, Dominion alleged in its lawsuit.
A former federal prosecutor based in Texas, Powell rose to prominence through her criticism of the Robert Mueller investigation and her promotion of right-wing conspiracy theories about a range of topics on social media.
Powell also claims in court that her statements about the 2020 election were a “matter of public concern” about a publicly known company, Dominion, and thus protected speech.
Her attorneys also claim she had a right to make accusations because she was acting as an attorney for the Trump campaign, even during her right-wing TV appearances. As a result, Powell is asking a judge in Washington, DC, to dismiss the case, or to allow it to be moved to the federal court in Texas.
Chairman of the Federal Reserve Jerome Powell listens during a Senate Banking Committee hearing on “The Quarterly CARES Act Report to Congress” on Capitol Hill in Washington, U.S., December 1, 2020.
Susan Walsh | Reuters
The Federal Reserve could remain a source of angst for markets in the week ahead, with chairman Jerome Powell scheduled to testify twice before Congress and more than a dozen other Fed speeches expected.
The bond market’s reaction to the central bank this past week was unusually volatile.
Though the market was initially steady after the two-day Fed meeting and Powell’s briefing Wednesday, Thursday came with a big selloff in bonds and spiking rates. Traders reacted to the fact that the central bank is willing to let inflation and the economy run hot while the job market recovers.
In the approaching week, bond market professionals will be watching Powell and other member of the Fed for further cues.
“This is bonds’ — I wouldn’t call it day in the sun — it’s more like day in the tornado,” said Michael Schumacher, head of rate strategy at Wells Fargo. “Clearly the bond market is the one the equity market is watching right now, and normally that’s not the case.”
Stocks were lower on the week, with the Dow off about 0.5% and the S&P 500, down 0.7%. The Nasdaq Composite was off 0.8% for the week.
The Russell 2000, however, was hit the hardest, losing close to 3% for the week.
Yields ratcheted higher as the market sold off. Bond yields move inversely to price.
The benchmark 10-year Treasury yield, which impacts mortgages and other loans, rose as high as 1.75% Thursday, a move of more than 10 basis points in less than a day. It was at 1.72% Friday afternoon.
“The bond move has been huge, and it’s starting to scare people,” said Schumacher.
“There’s been this question hanging out there for awhile: How much of an increase in yield can some of the higher octane stocks take?” he asked. “There’s no magic number, but as we speak, the 10-year is up 80 basis points this year. It’s incredible.”
Powell speaks
Powell testifies Tuesday and Wednesday before Congressional committees along with Treasury Secretary Janet Yellen on Covid relief efforts and the economy.
He also speaks on central bank innovation at a Bank for International Settlements event Monday morning.
Other central bank speakers this week include Fed Vice Chairman Richard Clarida, Vice Chairman Randal Quarles, Fed Governor Lael Brainard, and New York Fed President John Williams.
Inflation and the Fed
There is also some key data.
Important releases include the personal consumption and expenditure data on Friday, which includes the PCE deflator, the Fed’s preferred inflation measure. Core PCE inflation was running at an annual pace of 1.5% in January.
The Federal Reserve this past week took no action at its two-day meeting, but it did present new economic projections including a forecast of 6.5% for gross domestic product this year. The central bank’s forecast now shows PCE inflation going to 2.4% this year, but falling to 2% next year.
The majority of Fed officials did not see any interest rate hikes through 2023.
Powell reiterated that the Fed sees just a temporary pickup in inflation this year because of the base effects against last year’s numbers when prices fell.
The central bank will target an average range of inflation around 2%, so that number could exceed that threshold for some time. It’s a change to the Fed’s ground rules, which makes the bond market nervous.
Normally, the Fed would hike interest rates if inflation flared up to avoid an overheating economy and avert a bust cycle.
“For the bond market, and the Fed, there is a communications problem and there’s a consensus problem. There can’t not be tension,” said Diane Swonk, chief economist at Grant Thornton.
“They will be trying to clarify the Fed’s message, but without a consensus on what those numbers and guardrails mean, it will be hard,” she said. “They will be explaining themselves as economists, and they’ll be speaking a different language than the bond market speaks.”
Leo Grohowski, chief investment officer at BNY Mellon Wealth Management, expects the bond market could be more volatile than stocks, and inflation would be problematic for both.
At some point, he expects there could be a 10% stock market correction, and inflation or a sharp move in bond yields could be a trigger.
“The market is trying to make sense of what could be perceived as a disconnect, between their economic projections and the Fed’s dual mandate of unemployment and inflation,” said Grohowski.
“Yet, they’re committed to keep short rates on hold until the end of 2023,” he said. “That’s what the market is struggling with. I think it’s unsettling to me to hear words like ‘overshoot.'”
Rotation from tech into cyclicals
Grohowski expects what he calls the ‘great rotation’ from tech and growth stocks into cyclicals and value to continue. Growth and tech have been most sensitive to rising rates, and the Nasdaq has corrected more than 10%.
“I think we’re in the sixth or seventh inning of a nine-inning game. It’s not over, but I think we’ve seen the lion’s share of the great rotation out of growth, into value,” said Grohowski. He said that view depends on the 10-year not rising much above 1.75%.
Grohowski is concerned by the Fed’s willingness to let inflation overshoot because inflation is a negative for stocks.
Supply chain issues are a concern. He pointed to Nike’s comments Thursday that its sales were hurt by port congestion, and also the shortage of semiconductors, which is impacting automobile production.
“Inflation expectations are troublesome for P/E [price-earnings] ratios,” Grohowski said. The [stock] market is trading at 22 times our estimate for this year’s earnings.”
He said the market is having difficulty reconciling the lack of any forecasted interest rate hikes versus the strength of the Fed’s economic forecast.
“If you ask me what I lose sleep over? …It’s too much of a good thing. Too much of a good thing is being too accommodative,” Grohowski said.
Bond market direction
Schumacher said there’s a chance the bond market could steady in the next couple of weeks, even if yields tick up.
He said corporate pension funds appear likely to reallocate capital into bonds before the end of the quarter March 31, and that could be supportive. Also as the Japanese fiscal year is set to begin, there could also be new buying in U.S. Treasurys because on a currency adjusted basis U.S. debt looks very cheap, Schumacher said.
He is also watching Treasury auctions in the coming week.
The Treasury auctions $60 billion 2-year notes Tuesday; $61 billion 5-year notes Wednesday, and $62 billion 7-year notes Thursday.
In particular, Schumacher is watching the 7-year auction, which drew poor demand last month.
Week ahead calendar
Monday
Earnings: Tencent Music Entertainment
9:00 a.m. Fed Chairman Jerome Powell at Bank for International Settlement summit
To let some hot air out of the markets? As long as it isn’t “disorderly.”
By Wolf Richter for WOLF STREET.
It seems to be a rare sight that a Treasury Secretary and a Fed Chair color-coordinate their comments about rising long-term yields. On Friday, Treasury Secretary Janet Yellen in an interview on PBS NewsHour echoed what Fed Chair Jerome Powell had said on Thursday in an interview with the Wall Street Journal.
When Yellen was asked about the rising long-term yields that the crybabies on Wall Street are getting so nervous about, Yellen said in her quiet manner: “Long term interest rates have gone up some, but mainly I think because market participants are seeing a stronger recovery, as we have success with getting people vaccinated and a strong fiscal package that’s going to get people back to work.”
“Rising interest rates don’t concern you?” she was then asked.
“I think they’re a sign that the economy is getting back on track, and market participants see that, and they expect a stronger economy,” Yellen said. “And instead of inflation lingering below levels that are desirable for years on end, they’re beginning to see inflation get back to a normal range of around 2%.” And inflation may rise more than that, but it’s going to be transitory, she said.
So on Friday, the Treasury 10-year yield rose to 1.57%, still ludicrously low, given the outlook on inflation, and given the Fed’s insistence that it will let inflation run over 2% – as measured by “core PCE,” the inflation measure that nearly always produces the lowest inflation readings in the US. But that 1.57% was nevertheless the highest since February 14, 2020:
The spread between the Treasury 2-year yield (0.14%) and the 10-year yield (1.57%) widened to 1.43 percentage points. By this measure, the yield curve is the steepest since November 2015:
This rise in the 10-year yield has set off clamoring among the crybabies on Wall Street for the Fed to do something to bring them down. They have already outlined the remedies, including prominently another “Operation Twist,” where the Fed sells Treasury securities with short maturities and buys Treasury securities with long maturities. This concentrated buying of long-dated Treasuries would raise their prices and thereby push down their yields.
The Wall Street crybabies are clamoring for this because massive highly leveraged bets on Treasury securities are producing massive losses.
Even mundane conservative-sounding Treasury bond funds focused on long maturities are taking growing losses. Since the low point in the 10-year yield last August, the share price of the iShares 20 Plus Year Treasury Bond ETF [TLT] has dropped by 19%.
And the 10-year yield is still just at 1.57%. Back in November 2018, it was over twice that and hit 3.24%. In April 2010, there was a day when the 10-year yield went over 4%. Now those were the days! All we’re talking about now is a measly minuscule 1.57%, and the crybabies are out in force to get the Fed to quash these pesky yields that went the wrong way.
The Fed has been responding in a unified voice to indicate that rising yields are a sign of strength, and that as long as they’re a sign of rising strength and not of some tightening in the financial conditions, it would let them rise.
It’s amusing that Yellen has now coddled up to Powell and is singing from the same hymn sheet with Powell to push against the crybabies on Wall Street.
Her expression of comfort with higher long-term yields and rising inflation expectations came the day after Powell laid out the Fed’s position in an interview with the Wall Street Journal.
The Fed expects inflation to move up for two reasons, Powell said in the interview. The “base effect,” with the inflation index having dropped in the spring last year; and a “spending surge” that could lead to “bottlenecks” as the economy reopens, which could create “some upward pressure on prices.” But the Fed is going to brush off the “one-time effects,” and any “transitory increase in inflation,” and it’s going to be “patient” with rate hikes, he said.
To address the rising bond yields, he said: “I would be concerned by disorderly conditions in markets or persistent tightening of financial conditions that threaten the achievement of our goals.” The phrase, “disorderly conditions” came up several times.
The speed of the rise in long-term yields “was something that was notable, and caught my attention,” Powell said. “But again, it’s a broad range of financial conditions that we’re looking at, and that’s really the key; it’s many things. We want to see and would be concerned if we didn’t see “orderly conditions” in the markets, and we don’t want to see a persistent tightening in broader financial conditions. That’s really the test,” he said.
So as long as conditions are not “disorderly,” as long as the 10-year yield zigzags up in an “orderly” manner, and doesn’t go overboard, and as long as a “broad range of financial conditions” remain accommodative – they’re still “highly accommodative,” he said – the Fed would let long-term yields do what they might and see them as a sign of economic strength and welcome higher inflation expectations.
On the other hand, if markets become disorderly again, as they were in March, “the Committee is prepared to use the tools it has to foster achievement of its goals,” he said.
He refused to nail down at what level of the 10-year yield the Fed would get nervous and start rummaging through its toolbox. But apparently, that point isn’t around the corner just yet.
The effect is that higher long-term yields are letting some of the hot air out of the markets. And the Fed may be encouraging it, as long as it’s “orderly.”
The bond market has been getting hammered for months, with big losses scattered across Treasuries with long maturities and investment-grade corporate bonds. The housing market will eventually respond to rising mortgage rates, and mortgage rates started rising in early January.
But junk-bond yields have barely ticked up from astounding record lows. Demand for these instruments remains red hot, amid record issuance so far this year. This enthusiasm for junk bonds – which allows all kinds of wobbly companies to fund their cash burn – is a sign of “highly accommodative financial conditions.”
When the average BB yield doubles to 7% and the average CCC yield doubles to 15% (my cheat sheet for bond credit ratings), financial conditions are getting tighter, funding for cash-burn machines is getting tougher and more expensive, and the Fed would be getting nervous. But that’s not happening yet.
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The stock market opened higher Thursday morning, erasing overnight losses. The stock market rally is reeling, with the Nasdaq and growth stocks under heavy pressure in recent weeks amid rising bond yields. Federal Reserve Chairman Jerome Powell will speak today, with investors looking for any possible comments related to Treasury yields.
X
The Dow Jones Industrial Average rose 0.5% while the Nasdaq composite and S&P 500 climbed 0.4%.
Dow component Boeing (BA) is near a buy point after flirting with a breakout Wednesday. Brazilian miner Vale (VALE), global steel giant Arcelor Mittal (MT) and specialty chemicals maker Element Solutions (ESI) are also are near entries.
Boeing stock rose 3% early Thursday. But this is a tricky market for any buys.
The U.K. has launched an antitrust probe vs. Apple (AAPL) over alleged anti-competitive practices at its App Store. Apple already faces App Store investigations by antitrust officials in the U.S. and European Union.
Apple stock was little changed after the open. Shares lost 2.45% on Wednesday. AAPL stock is below its 50-day line after a late January breakout fizzled.
Walt Disney (DIS) will close at least 20% of its Disney store locations by the end of the year, including at least 60 in the U.S. It’ll focus more on e-commerce. It’s just the latest example of Disney shifting its business online. Disney stock fell a fraction, and is near the top of its buy range from a flat base.
DraftKings (DKNG) rallied nearly 3% on a deal with UFC to become exclusive sportsbook and daily fantasy partner in the U.S. and Canada.
Square (SQ) is buying a majority in Jay-Z’s music platform Tidal for $297 million. Jay-Z will join Square’s board. Square stock fell modestly.
Burlington Stores (BURL), soared and gapped out of a flat base. The off-price retailer reported a 3% revenue gain after three straight quarters of declining sales.
Chipmaker and software maker Broadcom (AVGO) reports late tonight. AVGO stock fell to its 10-week line on Wednesday, but held above that level after the open. Broadcom is an Apple iPhone supplier, but that’s only part of the business.
Disney stock is on SwingTrader.
The 10-year Treasury yield was steady at 1.47% after rising Wednesday, ending a three-day slide. The 10-year Treasury yield briefly topped 1.6% last week.
Initial jobless claims rose to 745,000 last week from 730,000. Economists expected to see new filings increasing to 760,000.
Join IBD experts as they analyze actionable stocks in the stock market rally on IBD Live.
Fed Chief Powell Plot ‘Twist’?
Fed chief Jerome Powell will speak at a conference just after midday Eastern Time. It’ll be his last public comments before the March 16-17 Fed meeting. The 10-year Treasury yield has surged over the last several weeks on expectations that a massive Biden stimulus bill, along with the coronavirus pandemic fading in the months ahead, will spur a huge economic recovery that can drive up inflation. Crude oil, copper and many commodity prices have skyrocketed recently. While that’s been good news for mining, financial and many other so-called “real economy” companies and stocks, it’s been a catalyst for the sell-off in growth stocks.
Powell and other policymakers have signaled they want faster inflation and are probably not too concerned about 10-year Treasury yields below 2%. But the pace of rising yields has caught the eye of Fed Gov. Lael Brainard, she admitted Tuesday.
Powell has stressed that he’s focused on full employment, not worried about financial markets, though that was in the context of the stock market rally punching to fresh highs. But investors may want to hear he say that he’s at least paying attention to Treasury yields.
Could Powell hint at a policy change? There’s speculation that the Federal Reserve could try to bring down long-term yields, by buying long-term Treasuries and buying shorter-term Treasuries. The Fed has employed this “Operation Twist” before, in 1961 and again in 2011.
But even if Powell is ready for such a move, he may not want to tip his hand before the mid-March Fed meeting.
Stock Market Rally On The Brink
The stock market rally may be on its last legs. The confirmed uptrend has been an “uptrend under pressure” for several days.
The Dow Jones Industrial Average slipped 0.4% in Wednesday’s stock market trading. The S&P 500 index slumped 1.3%, closing just above its 50-day line. The Nasdaq composite plunged 2.7%, tumbling below its 50-day line and closing below its Feb. 23 low. All the major indexes closed near session lows.
If the S&P 500 falls through its 50-day line and the Nasdaq loses further ground, the post-election stock market rally may be over.
Investors need to focus on sectors that are working and scale back exposure in speculative growth names.
Read The Big Picture tonight to stay in sync with the market direction and leading stocks and sectors.
Please follow Ed Carson on Twitter at @IBD_ECarson for stock market updates and more.
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Resurgent worries about rising U.S. bond yields hit global shares on Thursday as investors waited to see if Federal Reserve Chair Jerome Powell will address concerns about the risk of a rapid rise in long-term borrowing costs.
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The spectre of higher U.S. bond yields also undermined low-yielding, safe-haven assets, such as the yen, the Swiss franc and gold.
Benchmark 10-year U.S. Treasuries rose to 1.477% as investors bet U.S. inflation could pick up as an economic recovery gathers steam, driven by government stimulus and further progress in vaccination programs.
“It is not clear how the Fed wants to deal with bond yields,” said Hirokazu Kabeya, chief global strategist at Daiwa Securities.
“The pace of rises in yields has been far faster than most people have expected and there’s speculation the authorities may be starting to think about tightening their policy.”
The MSCI’s ex-Japan Asian-Pacific shares lost 1.7% in early trade while Japan’s Nikkei fell 1.9%.
TECH STOCKS PUMMELED AS BOND YIELDS RISE
E-mini S&P futures slipped 0.4% while the futures for the Nasdaq, the unequivocal leader of the post-pandemic rally, fell 0.6% to a two-month low.
Tech shares are vulnerable because their lofty valuation has been supported by expectations of a prolonged period of low interest rates.
Powell is due to speak at 12:05 p.m. EST (1705 GMT). Many Fed officials have downplayed the rise in Treasury yields in recent days, although Fed Governor Lael Brainard on Tuesday acknowledged concerns over the possibility a rapid rise in yields could dampen economic activity.
The market will have to grapple with a huge increase in debt sales after rounds of stimulus to deal with a recession triggered by the pandemic.
The issue is not limited to the United States, with the 10-year UK Gilts yield jumping back to 0.779%, near its 11-month high of 0.836% hit last week, after the government unveiled much higher borrowing.
Currency investors continued to snap up dollars as they bet on a U.S. economy outshining its peers in the developed world in coming months.
The dollar rose to a seven-month high of 107.16 yen.
“U.S. dollar/yen has been on a one-way trajectory since the start of 2021,” said Joseph Capurso, head of international economics at the Commonwealth Bank of Australia.
“The brightening outlook for the world economy is a positive for both U.S. dollar/yen and Australian dollar/yen.”
Other safe-haven currencies were soft, with the Swiss franc flirting with a four-month low against the dollar and a 20-month trough versus the euro.
Gold hit a nine-month low of $1,702.8 per ounce on Wednesday and last stood at $1,711.5.
Other major currencies were little moved, with the euro flat at $1.2054.
Investor focus on a U.S. economic rebound was unshaken by data released overnight that showed the U.S. labor market struggling in February, when private payrolls rose less than expected.
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Oil prices rose for a second straight session early on Thursday, as the possibility that OPEC+ producers might decide against increasing output at a key meeting later in the day underpinned alongside a drop in U.S. fuel inventories.
U.S. crude rose 0.3% to $61.44 per barrel.
(Additional reporting by Koh Gui Qing in New York; Editing by Sam Holmes and Richard Pullin)
Tech stocks led the market into sharp early losses Tuesday, ahead of Senate testimony from Fed Chief Jerome Powell. The $1.9 trillion federal stimulus package moved forward in the House late Monday, helping to lift oil prices and some pandemic reopening plays. Earnings news ignited ZoomInfo, and sent Nexstar Media into a buy range. Meanwhile, Home Depot swung low on the Dow Jones today, following its fourth-quarter report.
X
The Nasdaq Composite unwound 3.5% at the starting bell as Baidu (BIDU) and Tesla (TSLA) dropped more than 11% each at the starting bell. The S&P 500 opened to a 1.4% loss. The Dow industrials shed more than 200 points, down 0.7%. Procter & Gamble (PG) topped the Dow Jones today, rising nearly 3%.
Etsy (ETSY), Tesla and Enphase Energy (ENPH) traded lowest among S&P 500 stocks. CBRE Group (CBRE) and Extra Storage (EXR) led, up more than 5% each on earnings news.
Earnings News: ZoomInfo Spikes, Nexstar Breaks Out
In earnings news, Nexstar Media Group (NXST) and IBD Leaderboard stock ZoomInfo (ZI) rose after reporting results late Monday.
ZoomInfo rallied more than 10% after topping analysts’ fourth-quarter revenue and earnings views late Monday. At least four analysts raised price targets on the stock early Tuesday. Piper Sandler weighed in at the top of the list with a 70 price target. ZoomInfo stock has been volatile, reversing an 11% advance from a Feb. 3 breakout and diving back below the 53.18 buy point — as well as cutting support at its 21-day exponential moving average on Monday.
Technically, the pullback triggered a sell rule, but it stopped short of setting off the automatic stop-loss rule. Tuesday’s premarket action points to the stock retaking the buy point in early trade, a valid buy opportunity. But investors should be sure to mind the shifting status of the uptrend, especially before diving into volatile young stocks with recent initial public offerings.
Texas-based television broadcaster Nexstar Media Group popped 4.6% after its healthy fourth-quarter report. The move sent shares into a buy range above a 131.10 buy point in a 12-week ascending base. The buy range runs to 137.66.
Dow Jones Today: Home Depot Breaks Support
Home Depot (HD) crumbled 5% on the Dow Jones today, despite reporting a strong fourth-quarter earnings and revenue beat late Monday. The company also increased its quarterly dividend 10%, to $1.65 per share.
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The drop sent Home Depot stock up to cut below its 10-week moving average. The stock has been seesawing above and below the line since August, forming in the process a 26-week flat base. The base has a 293.05 buy point. Shares ended Monday 6% below that entry.
Stimulus Set For House Floor Vote
In Washington, the House Budget Committee passed President Joe Biden’s $1.9 trillion American Rescue Plan Monday after a 19-16 vote, with Republicans opposing the measure. The move sets the package up for a House floor vote later this week. House Democrats are aiming to have the package ready for the president’s signature before current supplemental unemployment benefits expire on March 14.
Federal Reserve Chairman Jerome Powell is due to address the Senate Banking, Housing and Urban Affairs Committee at 10 a.m. ET.
Bonds, Copper Flat; Oil At 13-Month High
Among other U.S. markets, bonds flattened, with the 10-year yield at 1.36%, up sharply from lows around 0.50% in August. Yields had started 2020 at around 1.8%, down from about 2.7% a year earlier.
Oil prices rose, with West Texas Intermediate crude up 0.5% to above $62 a barrel, and at its highest level since Jan. 8, 2020. Europe’s Brent crude benchmark rose to near $66. Copper also paused its rally, with futures trading flat near $4.15 a pound, the highest mark since July 2011.
Stock Market ETF Strategy And How To Invest In The Current Uptrend
Bitcoin Dips Below $46,000
Bitcoin recovered some early losses Tuesday, after sinking below $46,000 to touch its lowest level since Feb. 11, according to CoinDesk. Bitcoin had climbed to a record high above $58,000 on Sunday.
Among Bitcoin-related stocks, Marathon Patent Group (MARA) tanked 15%, while MicroStrategy (MSTR) traded down 7.4%. The Amplify Transformational Data Sharing ETF (BLOK) slumped 10.5%.
Stock Market ETF Strategy And How To Invest In The Current Uptrend
IBD Leaderboard stock PayPal Holdings (PYPL) dropped 6.5%. PayPal stock has felt some influence from Bitcoin price swings since October, when the company launched a cryptocurrency trading service that deals in Bitcoin. The loss points PayPal stock toward a drop below its 21-day moving average, and a possible test of support at its 10-week line.
Coronavirus Update: 41-Day Decline Ends
As the cumulative death toll from the coronavirus pandemic in the U.S. climbed above 500,000 on Monday, the seven-day average for new Covid-19 cases reported daily in the U.S. and worldwide ticked higher for the first time in 41 days. New cases reported worldwide, averaged across the prior seven days, increased to 360,341 on Monday. That is more than 50% below the high of 745,985, recorded on Jan. 11.
In the U.S., the seven-day average for new reported cases rose on Monday to 69,528, still down more than 72% from the peak of 255,258 reached on Jan. 11, according to Worldometer.
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Deaths also ticked higher for a second day. The seven-day average for deaths reported daily rose to 2,042 on Monday. The daily average for deaths reported had fallen for 25 days after hitting a high of 3,447 on Jan. 26.
The Centers for Disease Control and Prevention reports that 75.2 million doses of vaccine have so far been distributed in the U.S. Some 64.177 million doses have been administered, meaning just under 20% of the U.S. population has so far received at least one shot.
Among related stocks, Co-Diagnostics (CODX) and Moderna (MRNA) were taking early hits, down 4.1% and 1.5%, respectively. No clear news was driving the moves.
Dow Jones Today: Salesforce Earnings
IBD Long-Term Leader Salesforce.com (CRM) will be the last regular-season earnings report among Dow Jones stocks. It’s due to report its fourth-quarter earnings after the close on Thursday. Salesforce shares fell 2% in early trade on the Dow Jones today.
Salesforce stock is climbing the right side of a cup base that formed after a failed November breakout from a double-bottom base. MarketSmith puts the buy point at 271.02, and Salesforce shares were about 10% below that mark at the end of trade on Friday.
Find Alan R. Elliott on Twitter@IBD_Aelliott
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Jerome Powell is returning to Capitol Hill as Democrats push for a new $1.9 trillion spending plan.Credit…Al Drago for The New York Times
After it rocketed higher last year, the United States’ official unemployment rate has fallen to 6.3 percent. But top economic officials are increasingly citing a different figure, one that puts the jobless rate at a far higher 10 percent.
The higher figure includes people who have stopped looking for work, and the disparity between the official rate and the expanded statistic underlines the unusual nature of the pandemic shock and reinforces the idea that the economy remains far from a full recovery.
The reality that labor market weakness lingers, a year into the pandemic, could come up again as Jerome H. Powell, the Federal Reserve chair, testifies before Congress starting on Tuesday. Mr. Powell is set to speak before the Senate Banking Committee at 10 a.m. Tuesday, then before the House Financial Services Committee on Wednesday.
The Bureau of Labor Statistics tallies how many Americans are looking for work or are on temporary layoff midway through each month. That number, taken as a share of the civilian labor force, is reported as the official unemployment rate.
But economists have long worried that by relying on the headline rate, they ignore people they shouldn’t, including would-be employees who are not actively applying for jobs because they are discouraged or because they are waiting for the right opportunity.
Now, key policymakers are all but ditching the headline statistic, rather than just playing down its comprehensiveness. In an alternate unemployment figure, they’re adding back people who have left the job market since last February, along with those who are misclassified in the official report.
“We have an unemployment rate that, if properly measured in some sense, is really close to 10 percent,” Treasury Secretary Janet L. Yellen said on CNBC last week. And a week earlier, Mr. Powell cited a similar figure in a speech about lingering labor market damage.
“Published unemployment rates during Covid have dramatically understated the deterioration in the labor market,” Mr. Powell said recently. People dropped out of jobs rapidly when the economy closed, and with many restaurants, bars and hotels shut, there is nowhere for many workers who are trained in service work to apply.
Mr. Powell will be testifying as Democrats look to pass $1.9 trillion in new economic relief, an effort that has raised concerns in some quarters about the potential for higher inflation. Mr. Powell has said he and his colleagues do not expect inflation to move much higher persistently, and has typically pushed for additional government support to help the economy through the pandemic.
Rates on longer-term government bonds — which serve as benchmarks for things as varied as mortgages and credit-card debt — have been grinding higher and investors will also be watching carefully for any hints at how the Fed is interpreting that increase.
A closed restaurant in Tampa, Fla. The Federal Reserve chair, Jerome Powell, will testify before Congress on Tuesday and Wednesday about the economic recovery.Credit…Eve Edelheit for The New York Times
The S&P 500 was set for a fourth straight of day losses on Tuesday. Stock futures indicated the index would fall 0.8 percent when the market opens, following European stock markets lower. Tech stocks have suffered some of the heaviest losses, and futures of the Nasdaq, a tech-heavy index, dropped 1.4 percent.
Stocks have dropped recently as a rise in U.S. inflation expectations and bond yields has raised concerns that the Federal Reserve will tighten its monetary policy sooner than expected, upending the easy-money policies that have helped bolster stocks during the pandemic.
The central bank’s policymakers have said they would look past a short-term rise inflation and keep supporting the economy, but investors will be listening for more details when Jerome H. Powell, the central bank chair, testifies before the Senate Banking Committee later on Tuesday and the House on Wednesday.
The official unemployment rate in the United States has fallen to 6.3 percent, but top economic officials are increasingly citing a figure that puts the jobless rate at 10 percent. The disparity reinforces the idea that the economy remains far from a full recovery.
Stocks
Premarket trading indicates that tech stocks will continue their decline. On Monday, the information technology sector of the S&P 500, which includes Apple and Microsoft, dropped 2.3 percent, leading losses in the overall index. And the Nasdaq fell 2.8 percent.
Tesla shares dropped nearly 9 percent in premarket trading on Tuesday, after falling about 9 percent on Monday as Bitcoin prices also tumbled. Over the weekend, Elon Musk tweeted that prices of Bitcoin and Ether, the two largest cryptocurrencies, “do seem high.” A few weeks ago, the electric carmaker said it bought $1.5 billion in Bitcoin, sending prices of both soaring.
Europe
The Stoxx 600 Europe fell 1 percent, with tech stocks dropping the most.
The unemployment rate in Britain rose to 5.1 percent for the three months ending in December, 1.4 percentage points higher than it was a year earlier, official statistics showed on Tuesday. Job losses have fallen particularly hard on young people: The number of employees on company payrolls has declined by 726,000 in the past year, nearly three-fifths of these workers were under 25.
HSBC shares fell 1.8 percent in London after Europe’s largest bank said its pretax profit dropped 34 percent last year. It also announced plans to increase investments in Asia as it was “moving the heart of the business” there, including relocating some senior executives. The bank also said it would start paying dividends again.
Macy’s, the department store company that also owns Bloomingdale’s and Bluemercury, said on Tuesday that its net sales in 2020 tumbled 29 percent to $17.3 billion, highlighting the toll that the pandemic has taken on mall chains and apparel stores.
The retailer, which is based in New York, swung to a net loss of $3.9 billion for the year that ended Jan. 31, from a $564 million profit the prior year. But the company said it “anticipates 2021 as a recovery and rebuilding year,” particularly after a better than expected fourth quarter and holiday selling season, which was profitable even as sales dropped by 19 percent.
With its hundreds of stores, Macy’s is often viewed as a barometer for the health of department stores, malls and American consumers. Even before the pandemic hit, Macy’s was under strain. Last February, the company said that it planned to close about 125 of its least productive stores over three years and cut about 2,000 corporate and support function positions. Sales in 2019 had fallen to $24.6 billion from $25 billion a year earlier, though it was profitable at the time.
L Brands has said that it is weighing a sale or spinoff of Victoria’s Secret by August.Credit…Brendan Mcdermid/Reuters
Less than a year after the pandemic thwarted an effort to sell Victoria’s Secret to the investment firm Sycamore Partners, the lingerie chain’s owner, L Brands, will again test private equity’s appetite for the business, according to the DealBook newsletter.
L Brands’ bankers at Goldman Sachs will begin formally pitching buyout firms about a potential takeover as soon as this week. L Brands said this month that it was weighing a sale or spinoff of Victoria’s Secret by August, as it focuses on its faster-growing Bath & Body Works division.
Victoria’s Secret had “substantially increased its valuation” and that L Brands was still evaluating all options for the business, Stuart Burgdoerfer, the chief financial officer of L Brands, said in a statement.
Victoria’s Secret has embarked on a turnaround effort since the Sycamore sale collapsed. A priority has been overhauling its brand, as younger customers shunned its overtly sexy products for alternatives focused on comfort and criticized its marketing as exclusionary.
Victoria’s Secret has overhauled its marketing, introducing a campaign last year that featured transgender, plus-size and older models. It is bringing back its much beloved swimwear brands to select stores.
The company has also changed up its management after former top executives were accused of misogyny and sexual harassment. New hires have included Martha Pease as chief marketing officer and Patti Cazzato as head of merchandising.
The lingerie market is in demand. A recent investment valued Rihanna’s Savage x Fenty brand at $1 billion, for example. For prospective buyers, Victoria’s Secret remains a well-known label with a sizable market share.
Still, potential acquirers may have one lingering concern: the continuing investigations and shareholder lawsuits about the ties between L Brands’ chairman, Les Wexner, and Jeffrey Epstein.
Sapna Maheshwari contributed reporting.
On the second day of the DealBook DC Policy Project, we will hear from more policymakers and business leaders about the challenges for the coronavirus vaccine rollout, the future of financial regulation and the outlook for bipartisanship in polarized times.
Here is the lineup (all times Eastern):
12:30 P.M. – 1 P.M.
Karen Lynch of CVS Health on the vaccine rollout
Karen Lynch took over CVS Health this month as the pharmacy chain takes center stage in efforts to fight the pandemic. It is working with the government to distribute the coronavirus vaccine in its stores, as well as in nursing homes and assisted-living facilities. To aid in those efforts, the company hired 15,000 employees at the end of last year, staffing up to deal with what President Biden has called “gigantic” logistical hurdles to the vaccine rollout.
2:30 P.M. – 3 P.M.
Vlad Tenev of Robinhood and Jay Clayton, former S.E.C. chairman, on the markets
At the center of the recent meme-stock frenzy was the online brokerage firm Robinhood, which has attracted millions of users with commission-free trades but drew outrage among its users when it halted trading in GameStop and other stocks at the height of the mania.
Vlad Tenev, Robinhood’s chief executive, is fresh from facing hours of hostile questioning at a congressional hearing last week about his company’s business practices. Joining him to discuss what regulators should now do — if anything — is Jay Clayton, the veteran Wall Street lawyer who led the Securities and Exchange Commission during the Trump administration. From the beginning of his tenure, Mr. Clayton said that his mission was protecting “the long-term interests of the Main Street investor.”
5:30 P.M. – 6 P.M.
Senator Mitt Romney on finding common ground
Senator Mitt Romney, Republican of Utah, crossed party lines to vote to convict President Donald J. Trump on articles of impeachment, twice. He is also drafting a bill with Senator Tom Cotton, Republican of Arkansas, that would raise the minimum wage while forbidding businesses to hire undocumented immigrants. This is typical of Mr. Romney’s approach, speaking to concerns on both sides of the aisle in an era of stark partisan divisions.
HSBC’s headquarters in Hong Kong. The bank, which is based in London, derives more than half of its revenue from China.Credit…Jerome Favre/EPA, via Shutterstock
HSBC is deepening its focus on Asia as it looks to unload some of its troubled Western operations, the bank said on Tuesday.
Noel Quinn, the chief executive, said the bank would invest $6 billion to expand its wealth management and wholesale banking business in Hong Kong, China and Singapore over the next five years. He also said he was considering relocating some of the bank’s top executives to Hong Kong because it would be “important to be closer to growth opportunities.”
Underscoring the turn toward Asia, the bank, which is based in London, also said it was considering the sale of its U.S. retail banking network and was in talks with potential buyers for its French consumer banking unit.
HSBC, which derives more than half of its revenue from China, has come under increasing political pressure from China and Britain over its business operations in Hong Kong, the former British colony. Pro-Beijing lawmakers in the city have publicly pressured it to embrace the Communist Party’s firmer grip on Hong Kong. When some executives have pledged support to Beijing, British members of Parliament have hammered the bank.
The political focus on HSBC is unlikely to ease and any future public statement about plans to move top executives to Hong Kong could prompt further criticism from British lawmakers.
“We haven’t firmed up our plans yet,” Mr. Quinn said on a call with reporters. “But the majority of executives will remain in London.”
HSBC, which reported its profit before tax in 2020 fell by 34 percent to $8.8 billion compared with a year earlier, blamed the pandemic for its financial performance.
Ardagh’s can-making business has grown by working with several seltzer-based beverage companies, like White Claw and Truly Hard Seltzer.Credit…Richa Naidu/Reuters
The company that makes the aluminum cans used by LaCroix, White Claw and other beverage giants is spinning off that business in a deal that values the new company at $8.5 billion, the company announced Tuesday.
The deal by the Ardagh Group, which is based in Luxembourg, would be in the form of a merger with a special-purpose acquisition vehicle, or SPAC, backed by an affiliate of the Gores Group, a private equity firm based in California.
It is a bet on the continued growth of the can business, as companies increasingly weigh the environmental consequences of their products. Nestlé announced the sale of its water business for $4.3 billion this month, in part a move to shift away from water packaged in plastic. Aluminum cans are far easier to recycle than plastic bottles.
Ardagh will retain a roughly 80 percent stake in the company after the deal. Investorsare contributing a $600 million private placement, while Gores is putting in $525 million in cash. The new company, Ardagh Metal Packaging, will issue$2.65 billion of new debt. Those proceeds will go to Ardagh.
The deal, involving an already-public company carving off a unit with the backing of a SPAC, is the latest twist on a SPAC transaction. The Gores Group’s experience in SPACs was part of its appeal to Ardagh as a buyer, said Ardagh’s chair, Paul Coulson.
The Gores SPAC, named Gores Holdings V, is the seventh such deal the group has done. “You don’t really want to be going to a surgeon and have him perform his first surgery,” Mr. Coulson said.
Ardagh generates more half its roughly $7 billion in annual sales from making cans for beverage companies. This past year, sales by the unit grew 2 percent, fueled by beverage sales and environmental awareness, while earnings before interest tax depreciation and amortization grew 8 percent. Ardagh will keep its glass packaging business.
For beverage companies, cans have become an increasingly important tool for branding, providing colorful and sleek packaging.
When Ardagh acquired its canning operation in 2016 for $3 billion, it did most of its business with legacy brands like large soda and beer companies. It has since worked with younger and faster-growing seltzer-based brands like White Claw, LaCroix and Truly Hard Seltzer to help charge its growth. To prepare for further expected expansion in the United States, it bought a factory in Huron, Ohio.
Globally, the company is considering growth in Europe and Brazil, where beer sales remain strong as consumers are increasingly shifting from tap to cans.
Shelly Ross found herself in a bureaucratic nightmare after requesting a second loan via PayPal for Tales of the Kitty, her San Francisco cat-sitting business.Credit…Anastasiia Sapon for The New York Times
Nearly a month into the second run of the Paycheck Protection Program, $126 billion in emergency aid has been distributed by banks, which make the government-backed loans, to nearly 1.7 million small businesses.
But a thicket of errors and technology glitches has slowed the relief effort and vexed borrowers and lenders alike, Stacy Cowley reports for The New York Times.
Some are run-of-the-mill challenges magnified by the immense demand for loans, which has overwhelmed customer service representatives. But many stem from new data checks added by the Small Business Administration to combat fraud and eliminate unqualified applicants.
Instead of approving applications from banks immediately, the S.B.A. has held them for a day or two to verify some of the information. That has caused — or exposed — a cascade of problems. Formatting applications in ways that will pass the agency’s automated vetting has been a challenge for some lenders, and many have had to revise their technology systems almost daily to keep up with adjustments to the agency’s system. False red flags, which can require time-consuming human intervention to fix, remain a persistent problem.
Numerated, a technology company that processes loans for more than 100 lenders, still has around 10 percent of its applications snarled in error codes, down from a peak of more than 25 percent, said Dan O’Malley, the company’s chief executive.
Nearly 5 percent of the 5.2 million loans made last year had “anomalies,” the agency revealed last month, ranging from minor mistakes like typos to major ones like ineligibility. Even tiny mistakes can spiral into bureaucratic disasters.
If confirmed, Wally Adeyemo will be a pivotal player in America’s economic diplomacy efforts.Credit…Leah Millis/Reuters
Wally Adeyemo, President Biden’s nominee for deputy Treasury Secretary, plans to emphasize the importance of rebuilding the United States’ alliances to combat China’s unfair trade practices and halt foreign interference in the country’s democratic institutions at his confirmation hearing on Tuesday, according to a copy of his prepared remarks, which were reviewed by The New York Times.
His remarks highlight the importance that the Biden administration is placing on multilateralism as it seeks to undo many of the economic policies put in place by former President Donald J. Trump.
Mr. Adeyemo will tell members of the Senate Finance Committee that Treasury Secretary Janet L. Yellen has asked him to focus on national security matters at the department. If confirmed, he will be a pivotal player in the country’s economic diplomacy efforts.
“We must reclaim America’s credibility as a global leader, advocating for economic fairness and democratic values,” Mr. Adeyemo will say.
Mr. Adeyemo is expected to be introduced at the hearing by Senator Elizabeth Warren, the progressive Democrat from Massachusetts. Ms. Warren, who established the Consumer Financial Protection Bureau before joining the Senate, worked with Mr. Adeyemo, who served as her first chief of staff.
Mr. Adeyemo will discuss the nexus between economic and national security, arguing that “Made in America” policies will make the country more competitive around the world. If confirmed, he is expected to conduct a broad review of Treasury’s sanctions program, which the Trump administration used aggressively, but often haphazardly, against Iran, North Korea, Venezuela and other countries.
“Treasury’s tools must play a role in responding to authoritarian governments that seek to subvert our democratic institutions; combating unfair economic practices in China and elsewhere; and detecting and eliminating terrorist organizations that seek to do us harm,” Mr. Adeyemo, a former Obama administration official, will say.
Born in Nigeria, Mr. Adeyemo emigrated with his parents to the United States when he was a baby and settled in Southern California outside Los Angeles. At the hearing, he will also talk about his working-class upbringing and the need to ensure that low-income communities and communities of color, which have been hit hardest by the pandemic, receive relief.
The coronavirus pandemic dealt a big blow to WeWork’s business.Credit…Kate Munsch/Reuters
Adam Neumann, the flamboyant co-founder of WeWork, and SoftBank, the Japanese conglomerate that rescued the co-working company in 2019, have in recent weeks made significant headway toward settling their drawn-out legal dispute, according to two people with knowledge of the matter. That battle has stalled SoftBank’s efforts to take WeWork public.
As part of its multibillion-dollar bailout of WeWork, SoftBank offered to pay $3 billion for stock owned by Mr. Neumann and other shareholders. Several months later, after the coronavirus pandemic had emptied WeWork’s locations, SoftBank withdrew the offer. Mr. Neumann then sued SoftBank for breach of contract.
SoftBank was already a big investor in WeWork when it withdrew plans for an initial public offering in 2019. Now, SoftBank has plans to combine WeWork with a publicly traded special-purpose acquisition company, a type of deal that has recently become a popular way of quickly bringing private companies public. The legal dispute between Mr. Neumann and SoftBank is a threat to such a deal because it leaves unresolved the question of how much control SoftBank has over WeWork.
The settlement talks, which were reported earlier by The Wall Street Journal, could still fall apart, the two people said. Under the terms being discussed, SoftBank would buy half the number of shares that it had originally agreed to, one of the people said. As a result, it would pay $1.5 billion, not $3 billion. Mr. Neumann would get nearly $500 million instead of almost $1 billion, but he would retain more of his shares.
Under Mr. Neumann, WeWork grew at a breakneck pace and was using up so much cash that it was close to bankruptcy before SoftBank stepped in. Under the management team SoftBank installed, WeWork has tried to cut costs by slowing its growth and negotiating deals with the landlords it rents space from.
When movie theaters reopen in New York City, masks will be mandatory, and theaters must assign seating to patrons to guarantee proper social distancing.Credit…Angela Weiss/Agence France-Presse — Getty Images
Movie theaters in New York City will be permitted to open for the first time in nearly a year on March 5, Gov. Andrew M. Cuomo announced at a news conference on Monday.
The theaters will only be permitted to operate at 25 percent of their maximum capacity, with no more than 50 people per screening. Masks will be mandatory, and theaters must assign seating to patrons to guarantee proper social distancing. Tests for the virus will not be required.
Movie theaters were permitted to open with similar limits in the rest of the state in late October, but New York City was excluded out of concern that the city’s density would hasten the spread of the virus there.
The virus has battered the movie theater industry. In October, the owner of Regal Cinemas, the second-largest cinema chain in the United States, temporarily closed its theaters as Hollywood studios kept postponing releases and cautious audiences were hesitant to return to screenings. AMC Entertainment, the world’s largest movie theater chain, has increasingly edged toward bankruptcy.
The economic effects of the pandemic have been particularly felt in New York City, one of the biggest movie markets in the United States. Theaters in the city closed in mid-March, as the region was becoming an epicenter of the pandemic in the country.
While other indoor businesses, including restaurants, bowling alleys and museums, had been allowed to open in the city, Mr. Cuomo had kept movie theaters closed out of concern that people would be sitting indoors in poorly ventilated theaters for hours, risking the further spread of the virus.
Theaters that open will be required to have enhanced air filtration systems. Public health experts say when considering indoor gatherings, the quality of ventilation is key because the virus is known to spread more easily indoors.
Mr. Cuomo’s announcement was applauded by the National Association of Theater Owners.
“New York City is a major market for moviegoing in the U.S.; reopening there gives confidence to film distributors in setting and holding their theatrical release dates, and is an important step in the recovery of the entire industry,” the association said in a statement.
In a statement, AMC’s chief executive, Adam Aron, said the company would open all 13 of its New York City theaters on March 5.
The move came just days after Mr. Cuomo said that indoor family entertainment centers and places of amusement could reopen statewide, at 25 percent maximum capacity, on March 26. Outdoor amusement parks will be allowed to open with a 33 percent capacity limit in April.
The governor also said that the state was working on guidelines to allow pool and billiards halls to reopen after the state lost a lawsuit from pool hall operators. Those establishments will be allowed to reopen at 50 percent capacity with masks required, he said.
Cases in New York remain high despite climbing down from their January peak. Over the last seven days, the state averaged 38 cases per 100,000 residents each day, as of Sunday. That is the second-highest rate per capita of new cases in the last week in the country, after South Carolina.
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Federal Reserve Chairman Jerome Powell speaks Wednesday to the Economic Club of New York on the “State of the U.S. Labor Market.”
The speech comes as job gains have slowed considerably after a rapid recovery following pandemic-inducted layoffs in March and April. Though nonfarm payrolls have recovered more than 12 million of the lost positions, primarily in the hospitality and health care professions, more than 10 million workers remain unemployed.
After seeing a loss of 227,000 in December, nonfarm payrolls grew by 49,000 in January and the unemployment rate fell to 6.3%.
The Fed has made inclusive employment gains a priority and has said it will not raise interest rates until it sees substantial progress towards that goal.
Read more Job openings increased toward the end of 2020, but a big employment gap remains Even with unprecedented gains, the jobs market is still struggling to get back to normal Fed’s Bostic says economy could recover more quickly than expected
A Pennsylvania mother of eight on the run from authorities for her role in the Capitol riot has been arrested by the FBI, according to federal prosecutors.
Rachel Marie Powell of Sandy Lake, Pennsylvania, “is in custody,” Margaret Philbin, a spokesperson for the Pittsburgh U.S. Attorney’s Office, told The Daily Beast.
Powell, 40, was apprehended Thursday night in New Castle, according to Philbin. She could not immediately be reached for comment, and does not yet have a lawyer listed in court records.
The cheese and yogurt purveyor—dubbed “the bullhorn lady” after video emerged of Powell appearing to shout orders through a bullhorn during the Jan. 6 sacking of the Capitol—was apparently not home when the FBI raided her house Thursday afternoon. Neighbors told local news reporters that Powell and her family had lived there for several years but mostly kept to themselves.
According to a complaint filed Friday in federal court, Powell is facing charges of obstruction, depredation of government property, entering a restricted building with a dangerous weapon, and violent entry/disorderly conduct. She was scheduled to appear before a judge at 3 p.m.
The filing says Powell used a pipe to smash a window at the Capitol, causing more than $1,000 in damages. An anonymous tipster first outed Powell to the FBI, it explains, and gave agents the link to Powell’s Facebook profile. There, agents were able to match photos of Powell wearing a distinctive set of earmuffs with those she was seen wearing at the Capitol.
After being seen on video during the Jan. 6 riot in a pink hat and sunglasses, Powell gained her signature moniker, though she was also known as “Pink Hat Lady.”
“People should probably coordinate together if you’re going to take this building,” Powell shouted through a shattered window to a group of insurrectionists inside the Capitol. “We got another window to break to make in-and-out easy.”
Powell, who became the subject of her own FBI “Wanted” poster, agreed to an interview with Ronan Farrow of The New Yorker before she was charged.
Originally from Anaheim, California, Powell told Farrow that she acted spontaneously on Jan. 6, and was “not part of a plot.”
“I have no military background…. I’m a mom with eight kids,” she said. “That’s it. I work. And I garden. And raise chickens. And sell cheese at a farmers’ market…. Listen, if somebody doesn’t help and direct people, then do more people die? That’s all I’m going to say about that. I can’t say anymore. I need to talk to an attorney.”
Powell apparently became radicalized during the past year or so: When she wasn’t manning a table at local farmers’ markets, Powell used Facebook to post about topics such as yoga and organic food. However, she recently began expressing increasingly extreme political views that included various conspiracy theories about COVID-19 and unfounded doubts about the validity of the 2020 presidential election.
“It isn’t to [sic] late to wake up, say no, and restore freedoms,” she wrote on Facebook last May.
Powell was reportedly influenced by Infowars founder Alex Jones, who has claimed the Sandy Hook school shooting was a hoax, and former New York City Mayor Rudy Giuliani, who has made countless false claims while serving as Donald Trump’s personal attorney.
Deborah Lemons, Powell’s mother, told Farrow that Powell was held at gunpoint during a carjacking when she was a child. She said it “amazed” her that her daughter—with whom Lemons has had a strained relationship for the past several years—would participate in the Capitol riot having been on the wrong end of violence in the past.
“She well knows what it’s like to wonder if she’s gonna lose her life,” said Lemons.
