National

After a record economic expansion, the coronavirus pandemic sent the U.S. economy into a recession as unemployment soared to staggering heights. The country now faces urgent questions about how much stimulus is needed for reeling consumers and businesses, and what a recovery might look like.

Economy & Business

Axios Closer

Shelves may not be so empty this holiday season — at least at the big stores.

Why it matters: Supply chain issues have hung like storm clouds over the retail sector, but major companies planned enough ahead of time and wrangled the shipping workarounds they needed to ensure they have enough to sell during their most important sales quarter. 

By the numbers: Target’s inventory at the end of the third quarter was “strong” — 17.6% higher than last year’s — the company reported on Wednesday.

Walmart’s U.S. inventory grew 11.5% in the third quarter over last year.

What they're saying: TJX (owner of T.J. Maxx, Marshalls, HomeGoods) CEO Ernie Herrman said it's “in an excellent inventory position, with most of the product needed for the holiday season either on hand or scheduled to arrive at our stores and online in time for the holidays.”

Retailers have good news for gift-givers

Major retailers got ahead of shipping delays in anticipation for their busiest quarter.

A customer shops for toys at a Target store in Houston, Texas, last month. Photo: Brandon Bell/Getty Images

Shopping

Axios Pro: Deals

Retail

Treasury Secretary Janet Yellen warned in a letter to lawmakers on Tuesday that the federal government will run out of money to pay its bills as soon as Dec. 15 if the debt ceiling is not suspended or raised. 

One idea to ensure the government does not default, even if the debt ceiling is not raised, is to mint a trillion-dollar coin. Yellen has called this a gimmick, but some economists insist it’s a legitimate finance trick that can be used to stave off a default. 

Axios Re:Cap host Felix Salmon is joined by former U.S. Mint Director Philip Diehl to discuss the idea behind the trillion-dollar coin and whether it’s remotely likely to be minted in the next month.

Taking on the debt ceiling with a trillion dollar coin

The trillion dollar coin has been called a gimmick, but it could be a last-minute solution.

Debt ceiling

Axios Re:Cap

Podcasts

President Biden has made the COVID-19 crisis and a post-Trump return to national unity and traditional democratic ideals his top priorities. From vaccinations to stimulus to schools, Biden is seeking bipartisan compromise while showing a willingness to use executive authority and bare Democratic majorities in the U.S. House and Senate to implement his policies. Republican leaders are navigating deep party divisions over if and how to move beyond former President Trump.

Politics & Policy

Axios Generate

Here are two numbers that say a lot about how investors view two key electric vehicle startups: $232,000 and $89 billion.

Driving the news: That's luxury EV startup Lucid Motors Q3 revenue and its market capitalization at yesterday's close of trading.

Lucid, which just began deliveries, has zoomed past Ford's market cap and matched General Motors.

Meanwhile, EV startup Rivian, which just went public last week, has a stunning market cap of roughly $150 billion after yesterday's latest gains.

Why it matters: The eye-popping valuations signal how investors see the potential for huge EV market growth, and how those two startups may be well-poised.

Lucid's team includes several Tesla veterans, and its Lucid Air just won Motor Trend's car of the year.

The Amazon- and Ford-backed Rivian, which just recently began deliveries of its pickup, also has a foothold in the growing market for electric delivery vehicles thanks to its large contract with Amazon.

Yes, but: “Unfortunately, a company like Tesla doesn’t come along very often and the valuations placed on Rivian and Lucid are questionable, particularly in comparison to the existing automotive companies," Edmunds analyst Jessica Caldwell tells the Financial Times.

Investors shower love on Rivian and Lucid

The eye-popping valuations signal how investors see the potential for huge EV market growth.

Photo: Igor Golovniov/SOPA Images/LightRocket via Getty Images

Electric vehicles

Transportation

Ominous forecasts about the impact of climate change serve as the backdrop for the world — led by U.S. lawmakers and companies — to debate big action on the problem, which could upend energy systems and our way of life.

Energy & Environment

Axios Pro Rata

Gooder Foods, maker of a new "better for you" mac and cheese brand, raised $6.4 million from Springdale Ventures, Willow Growth Partners, Third Craft, Gingerbread Capital, Purple Arch Ventures and First Course Capital. 

Why it matters: America is deeply divided, but we can all agree that mac and cheese is delicious.

The big picture: The founding team includes former execs from Annie's and Kraft, plus actress Gal Gadot. It's also the fourth startup for CEO Jennifer Zeszut.

The bottom line: "Normally, the company would have staged a bunch of taste tests, but due to the pandemic, Gooder Foods created an online community, shipping out thousands of small bags of noodles for people to try. In fact, the company developed more than 1,000 versions of noodles to get the right one." — Christine Hall, TechCrunch

"Better for you" mac and cheese maker Gooder Foods raises $6.4M

America is deeply divided, but we can all agree that mac and cheese is delicious.

Startups

Data: Federal Reserve via FRED; Chart: Axios Visuals

The chip shortage is starting to abate — at least a little.

Driving the news: Manufacturing of motor vehicles jumped 11% in October, according to industrial production numbers out Tuesday from the Federal Reserve.

The big picture: GM, for one, said it would reopen all its North America plants in November, so output could improve again this month.

Yes, but: Don't expect a full recovery any time soon.

Many of those factories will be running well below full capacity, and industry estimates still imply the chip shortage will last well into next year, analysts at Capital Economics wrote in a research note.

Chip gridlock loosens

But don't expect a full recovery any time soon.

Microchips

New Ford F-Series pickup trucks are stored in a lot during a semiconductor shortage at Kentucky Speedway in Sparta, Kentucky, 

A who’s who of financial regulatory agencies are convening Wednesday to talk about how to ensure the $22 trillion Treasury market functions properly.

At issue: Fixing liquidity problems that have, at times, exacerbated price swings.

Why it matters: U.S. Treasuries are the benchmark for all other financial markets. Large price moves here mean a revaluing of all the assets pegged to them — everything from U.S. corporate bonds to equities to mortgages.

State of play: Signs of illiquidity have cropped up this year, even as the Federal Reserve has been plowing extra funds into the market with its monthly bond purchases. 

“We're near peak liquidity as far as global central banks go, and we're seeing some signs that all is not well … It’s unsettling,” Mark Cabana, rates strategist at BofA, tells Axios.

What's happening: For one, there was the startlingly weak auction for 30-year Treasuries last week on the back of worse-than-expected inflation data.

Markets in the 20-year Treasury note have also experienced low liquidity. So have those in certain Treasury futures, as well as Treasury inflation-protected securities breakevens (an indicator of inflation expectations), BofA analysts wrote in a report on Monday.

Context: The plight stems from a pullback on the part of macro hedge funds that faced steep losses on their positions earlier in the fall — and have stepped out of the market, Cabana says.

But events of the recent past — from a sloppy auction back in February to the market’s near-collapse in March 2020 — also underly the current dialogue.

The backstory: Primary dealers — mainly banks who facilitate liquidity by making markets in the paper — have scaled back their activity due to capital constraints imposed by post-financial crisis regulations.

But over the same period, the Treasury market has ballooned to nearly $22 trillion, from $5 trillion.

The seventh annual U.S. Treasury Market Conference on Wednesday — featuring speakers like SEC chair Gary Gensler and New York Fed President John Williams — isn't going to solve liquidity for the bond market.

But it is going to bring high-level representatives from the government sector together with market participants from the private sector who buy and sell the bonds that fund our government.

Regulators don't want to be reactive to one-off events or short-term blips — they do want to pave the way for a better functioning market that isn't prone to large and disorderly moves.

What’s next: Wednesday's discussions — and the potential studies and papers that come out of them — could help inform policymaking.

Treasury has already proposed reforms like expanded central clearing of trades, gathering better data on positions and transactions, and investigating the role that levered hedge funds play in the market.

Go deeper: Inflation data spurs weak 30-year Treasury auction

Signs of stress in the Treasury market

Hedge funds that faced steep losses earlier this year have stepped out of the market.

Treasury Department

Axios What's Next

Toyota Motor is finally jumping into the electric vehicle race while defending its continued focus on hybrids as the best way to reduce carbon emissions.

Why it matters: Toyota earned a reputation for environmental leadership with its Prius hybrid back in 1997. But lately, it has been eclipsed by Tesla, the world leader in electric vehicles. 

Now, as its biggest competitors vow to dump gasoline cars in favor of battery-powered ones, Toyota finds itself in the unusual position of playing catch up. 

Driving the news: Toyota introduced its first battery-electric vehicle, the bZ4X, against a stunning California sunset in advance of this week's AutoMobility LA, the Los Angeles auto show.

The SUV, which arrives at dealerships in spring 2022, will have a driving range of about 250 miles, slightly less than the 300-mile "sweet spot" that other mainstream carmakers are now targeting.

Toyota said it designed the electric powertrain to retain 90% of its battery capacity even after 10 years of ownership.

The bZ4X is the first of 15 battery-electric models Toyota plans to introduce globally by 2025, including seven with the bZ (Beyond Zero) brand moniker. 

The big picture: Toyota argues that a mix of hybrids, plug-in hybrids and EVs is better for the environment, and says its strategy will enable the company to achieve carbon neutrality by 2050 as planned.

Toyota says its portfolio of "electrified vehicles" — which includes gas-electric hybrids, plug-in hybrids and hydrogen fuel cells like the Mirai — account for more than 40% of all alternative powertrain vehicles sold in the U.S. 

 Toyota has 55 "electrified" vehicles globally today and plans to have 70 by 2025. 

What they're saying: Toyota is "extremely proud" of its environmental record, Cooper Ericksen, group vice president of product planning and strategy for Toyota Motor North America, told journalists.

"We have nothing to apologize for," Ericksen said, noting that other carmakers are making bold commitments about the future, and then walking them back. 

"Talk is cheap. Actions speak louder than words," he said.

"If you’ve been producing vehicles one way forever, and you don't have a bridge strategy, then the only thing you can talk about is what you're going to do," added Mike Tripp, VP of vehicle marketing and communications at Toyota North America.

The bottom line: Despite all of the attention on electric vehicles, they still only account for about 5% of new car sales. With a broad portfolio of alternative powertrains, Toyota says it is meeting customers where they are.

Toyota joins the battery-powered EV craze

Its first battery-electric vehicle, the bZ4X, is an SUV arriving at dealerships in spring 2022.

Toyota's new BZX4 electric SUV, against a stunning California sunset

Toyota's Mike Tripp introduces the bZ4X, the automaker's first electric vehicle. Photo: Joann Muller/Axios

Toyota

The U.S. Constitution — one copy of it, anyway — is the latest asset to become the focus of crypto-powered, meme-stock-style investment fever.

What's happening: People are ponying up millions of dollars worth of cryptocurrency to buy into ConstitutionDAO, a consortium assembling a bid on an original Constitution that's for sale in a Thursday Sotheby's auction.

The auction describes the document as one of 13 surviving copies of the Constitution's original 1787 print run.

As of Tuesday afternoon, ConstitutionDAO — or the 13 Twitter accounts listed on its website as organizers — had raised more than $5 million worth of Ethereum toward its bid. (Sotheby's says the expected range for the auction is $15 to $20 million.) 

Catch up quick: DAO stands for "decentralized autonomous organization." DAOs are created in code using crypto-based systems, most commonly Ethereum. 

People who buy into ConstitutionDAO will receive voting rights to steer decisions made by the group, but not actual fractional ownership of the DAO assets. That helps keep the project from triggering securities regulations.

Yes, but: Like previous online group-investing crazes — including those surrounding GameStop stock and canine cryptocurrencies — the participants in ConstitutionDAO are both making investment decisions and engaging in a kind of collective stunt or trolling.

The photo on ConstitutionDAO's Twitter profile is a shot of Nicolas Cage in "National Treasure," the 2004 film about a treasure map hidden on the back of a copy of the Declaration of Independence.

"We're All Gonna Buy The Constitution," reads the Twitter profile banner.

The big picture: As with NFTs, DAOs are part of the cryptocurrency-fueled "Web3" movement, which aims to displace today's giant online platforms (and offline financial institutions) by spreading decentralized, blockchain-based technology. 

You can think of ConstitutionDAO as a more anonymous, cryptographic version of a GoFundMe or Kickstarter project, but instead of getting a "backer's gift" you get a "governance token." 

The catch: DAOs are legally murky novelties that probably can't take direct ownership of an asset like this, at least right now.

Sotheby's told Axios' Felix Salmon: "As DAOs are not legally recognized entities in most jurisdictions, Sotheby's requires DAOs to take certain legal steps to ensure the entity can participate in our auctions at this time."

Our thought bubble: ConstitutionDAO's buyers are simultaneously having meme fun and trying to make a more serious statement about governance and collective ownership.

In 1996, at the dawn of Web 1.0, John Perry Barlow wrote a famous "Declaration of the Independence of Cyberspace." 

Web3 is all about new kinds of money and ownership, so instead of writing a new constitution, its enthusiasts have set out to buy an old one.

Why it matters: ConstitutionDAO organizers say they "intend to put The Constitution in the hands of The People." They say they will place the document out for public view with the help of an "esteemed partner" if their bid succeeds. 

True, you can already see a different copy of the Constitution at the National Archives, and it's already collectively owned by the American people, as Bloomberg's Matt Levine points out.

But only ConstitutionDAO's copy will offer visitors the futuristic aura of blockchain tech — along with the "lulz" of an online in-joke.

What's next: If the bid fails, the organizers say they expect the DAO to return the contributions.

Crypto believers bid on U.S. Constitution

The effort aims to flex the power of new kinds of distributed organizations — and also to crack a meme-stock-like joke.

Photo of masked person holding a framed page of the U.S. constitution

Cryptocurrencies

From the Valley to D.C., Big Tech players like Facebook, Google and Amazon are under more scrutiny than ever as new technology develops and privacy and antitrust concerns grow in lockstep with companies’ ambitions.

Technology

Drug company Viatris has priced its new generic insulin, called Semglee, at almost $270 per vial, a mere $20 cheaper than the longstanding competitor that has existed for years.

The big picture: The rollout of Semglee highlights the specific warped incentives within the insulin market, where diabetes patients have struggled to afford their insulin for years.

By the numbers: When the FDA approved Semglee, technically called a "interchangeable" biosimilar drug, it appeared Viatris priced the drug at $98.65 per vial.

It turns out that was the price of a different Semglee that was approved in 2020 that is being phased out, and now that $98.65 price will apply to an unbranded version of Semglee.

The list price of the interchangeable Semglee is $269.38 per vial ($404.04 per five-pen package). 

That compares to Lantus, the main competitor, which is $283.56 per vial ($425.31 per five-pen package).

A reminder: The list price does not factor in rebates paid to supply chain middlemen and represents what uninsured patients could have to pay.

Between the lines: These insulin prices spotlight the games that are played behind the scenes between drug companies, pharmacy benefit managers and pharmacies.

Viatris is offering two versions of Semglee, just like how Eli Lilly did for its fast-acting insulin.

The higher-priced version almost certainly comes with higher rebates that are paid to PBMs, while the lower-priced version likely comes with little to no rebates.

Viatris did not answer questions about Semglee's rebates and net price.

The bottom line: Physicians and pharmacists can easily substitute Semglee for Lantus, but it doesn't appear this will significantly affect how much everyone pays for this type of insulin even though that's the big selling point of biosimilars.

The new generic insulin isn't as cheap as you thought

Turns out biosimilars have to deal with rebates, too.

Illustration of a syringe pulling from a vial with a hundred dollar bill as a label.  

Drug prices

Health care costs

The U.S. faces a range of health care flashpoints — unaffordable drugs, opioids, vaping — as we debate whether to adopt universal care. For now, the Affordable Care Act is the law of the land, but Republicans want to issue it a final death blow.

Health

TerraPower, the Bill Gates-founded nuclear power venture, announced Tuesday plans to replace a Wyoming coal-fired power station with a $4 billion advanced reactor demonstration project.

Why it matters: Roughly half of the project's funding will come from the U.S. government, including $1.5 billion from the infrastructure bill that President Biden signed into law this week, per an emailed statement from Energy Secretary Jennifer Granholm.

The Natrium™ reactor and integrated energy system

The big picture: TerraPower will build the 345-megawatt facility at the site of the Naughton coal plant in Kemmerer, Wyoming, about 130 miles northeast of Salt Lake City, pending federal and local approval, per a company statement.

The coal plant is set to close in 2025 and the new facility is due to open in 2028.

The Natrium reactor "would be fueled by uranium enriched up to 20%, a far higher level than today's fuel," Reuters notes.

Details: "The project features a 345 MW sodium-cooled fast reactor with a molten salt-based energy storage system," according to TerraPower's statement.

"The storage technology can boost the system's output to 500 MW of power when needed, which is equivalent to the energy required to power around 400,000 homes. The energy storage capability allows the plant to integrate seamlessly with renewable resources."

Of note: This is one of two projects supported by the U.S. Department of Energy, with initial funding of $160 million.

What they're saying: TerraPower CEO Chris Levesque said in a statement that the company's technology "will help ensure the continued production of reliable electricity while also transitioning our energy system and creating new, good-paying jobs in Wyoming."

Granholm said: "The energy communities that have powered us for generations have real opportunities to power our clean energy future through projects just like this one, that provide good-paying jobs and usher in the next wave of nuclear technologies."

The project has also won the support of conservative leaders, including Sen. John Barrasso (R-Wyo.), who praised the site choice:

Bill Gates' TerraPower to build $4B nuclear power plant in Wyoming

Half of the project's funding will come from the U.S. government, including from the infrastructure bill that President Biden signed.

Bill Gates speaks during the Global Investment Summit at the Science Museum on October 19, 2021 in London, England.

TerraPower chair Bill Gates at an October event in London. Photo: Leon Neal - WPA Pool/Getty Images

Nuclear power

The Staples Center in Los Angeles will be renamed Crypto.com Arena, the arena's owner announced Wednesday.

Why it matters: Cryptocurrencies are pushing deeper into the American mainstream.

It's a 20-year naming rights agreement between Crypto.com, a Singapore-based crypto exchange and mobile wallet provider, and building owner Anschutz Entertainment Group. No financial terms were disclosed, but Axios hears the total value exceeds $700 million.

For context, SoFi paid over $600 million for 20-year naming rights to the new NFL stadium in Los Angeles, where the Chargers and Rams play, while Intuit paid over $500 million for 23-year naming rights to a new arena that will house the Los Angeles Clippers.

The official transfer will occur on Christmas Day, inclusive of the Staples logo being replaced on the building's iconic roof, just before the Lakers host the Brooklyn Nets. 

Behind the scenes: Staples originally paid around $120 million for a 20-year naming rights deal in 1999, when it was riding high as one of America's preeminent retailers. Ten years later, it renegotiated for permanent naming rights for an undisclosed amount.

What no one knew, however, was that AEG was eager to bring in a fresher name. In early 2019 it quietly bought back the naming rights from Staples, which by that point was owned by private equity firm Sycamore Partners.

Crypto.com this past summer heard that AEG was seeking out a new sponsor, and the two sides began hammering out a deal that involves several experiential and philanthropic components. 

Rationale: AEG gets to rebrand its building with something that feels more like the future than the past. For Crypto.com, it's about elevating its brand in the capital of America's entertainment and creator economy.

Rival crypto exchange FTX earlier this year paid $135 million for 19-year naming rights to the NBA arena in Miami.

If Coinbase.com and Robinhood weren't looking for arena deals yesterday, they probably are today.

Yes, there are some echoes of the dot-com boom, when Internet upstarts entered the naming rights game. One of them, CMGI, faltered before its football field even hosted a single game (instead, the New England Patriots play at Gillette Stadium). 

The bottom line: Crypto is in. Retail is out. 

Staples Center goes crypto

The building's owner quietly bought back the naming rights from Staples in early 2019.

Illustration of a coin with binary code being lifted by a crane in front of the Staples Center

Photo illustration: Sarah Grillo/Axios. Photo: Emma McIntyre/Getty Images

Shifts in technology and media are changing the way we play, watch and understand sports. Business models are adapting and social change is forcing those in charge of teams and leagues to reconsider decades-old practices.

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