The daily business briefing: June 18, 2020
1.
Netflix CEO Reed Hastings and his wife, Patty Quillin, on Wednesday announced that they would donate $120 million to Spelman College, Morehouse College, and the United Negro College Fund in what they described as the "largest ever contribution by an individual in support of scholarships at historically black Colleges and universities." Hastings also said Netflix would commit $5 million to "nonprofits dedicated to creating direct opportunities for black creators, black youth, and black-owned businesses." Hastings and Quillin noted that historically black colleges and universities "are disadvantaged when it comes to giving" since white capital generally "flows to predominantly white institutions." Morehouse President David A. Thomas said "this is a watershed moment" that would "send a signal that historically black colleges should be valued." [The Wall Street Journal, The New York Times]
2.
Quaker Oats announced Wednesday that it would rename the Aunt Jemima brand of syrup and pancake mix and give it a new image. The branding of the Aunt Jemima products, which date back 130 years, features a black woman named Aunt Jemima. She was originally dressed as a minstrel character, although in recent years the company dropped her "mammy" kerchief in response to growing criticism. "We recognize Aunt Jemima's origins are based on a racial stereotype," Kristin Kroepfl, vice president and chief marketing officer of Quaker Foods North America, said in a news release. Daina Ramey Berry, a professor of history at the University of Texas, said the decision would eliminate a racist depiction of black women that reflected a "plantation mentality." [NBC News]
3.
Federal Reserve Chairman Jerome Powell told lawmakers in the House on Wednesday that the central bank will use every financial tool at its disposal to "get back as quickly as we can to a tight labor market." He said helping the job market recover from the damage from the coronavirus crisis is necessary to prevent economic inequality from getting worse. Powell repeated a point he made a day earlier to the Senate Banking Committee, saying the Fed would keep its benchmark short-term interest rate near zero to help make sure businesses and households can get loans. "This is the largest economic shock to hit our economy in living memory. It looks like it will be the deepest recession," he said, adding that "it will take some time" to get millions who lost their jobs back to work. [The Associated Press]
4.
Economists expect the Labor Department to report Thursday that applications for unemployment benefits remained high last week due to a second wave of layoffs as coronavirus infections increased in some states. Economists surveyed by Reuters forecast a seasonally adjusted 1.3 million new initial jobless claims in the week, down from 1.5 million the previous week, but still about double the peak in the 2007-2009 Great Recession. "People will say claims are coming down, but for an economy that is reopening, that is a huge number," said Steven Blitz, chief U.S. economist at TS Lombard in New York. U.S. stock index futures reversed early losses, inching up ahead of the jobless claims data as investors remained focused on coronavirus trends. [Reuters, MarketWatch]
5.
Hertz Global Holdings on Wednesday pulled its controversial sale of new shares it had warned could become "worthless." The car-rental company, which filed for bankruptcy protection on May 22, said in a filing that it made the decision after being "advised orally" by the Securities and Exchange Commission's division of corporate finance that it would review the stock offering's prospectus. SEC Chairman Jay Clayton told CNBC that the regulator had issues with the plan to sell stock that could wind up having no value. Hertz had filed Monday to sell up to $500 million in shares to capitalize on its rallying stock and raise much-needed cash as the company struggled with a loss of business due to the coronavirus pandemic's impact on the travel industry. [MarketWatch, CNBC]