Category: Penny Stocks

Market Extra: A bullish ‘golden cross’ forms in the Dow industrials

A golden cross formed in the Dow Jones Industrial Average DJIA, +0.68%, more than five months after a bearish chart pattern materialized in the aftermath of the carnage wrought by the COVID-19 pandemic.

A golden cross occurs when the 50-day moving average for an asset price trades above the 200-day MA, while a so-called death cross, comparatively, is when the 50-day falls below the long-term average.

On Thursday, the Dow’s 50-day stood at 26,251.34, and the 200-day moving average was at 26,229.91, according to FactSet data, marking the first time the short-time moving average has punched up above the longer-term average since March 20, and forming a chart pattern that is widely regarded as signaling that a trend higher for stocks appears to be at hand.

As MarketWatch’s Tomi Kilgore notes, crosses, overall, aren’t necessarily good market-timing indicators, however, as they are well telegraphed, but they can help put an asset’s move into perspective.

The last golden cross for the Dow occurred on March 19, 2019 and led to a steady rally for stocks until the death cross that formed nearly exactly year later in the wake of the pandemic.

Read: MarketWatch’s snapshot of the market for Thursday

The golden cross for the Dow comes about a month after a similar cross occurred in the S&P 500 index SPX, +0.64%.

Despite continued weakness in the economy, with the spread of the COVID-19 epidemic in many parts of the U.S. and the world, stocks have still climbed, boosted by government spending and Federal Reserve support for markets.

Technology names have been at the vanguard of the rally from the lows that were put in U.S. markets back in March as they benefited from work-from-home orders while businesses were shut down. However, the perception that technology-related companies are better situated to prosper in the aftermath also has helped the tech-heavy Nasdaq Composite Index COMP, +0.99% to register 31 record closes so far in 2020 while the S&P 500 and Dow have lagged behind.

The Dow, made up of 30 companies, has the lowest concentration of so-called technology or technology related companies and is a price-weighted gauge so its performance has been slightly weaker than those for the S&P 500 and the Nasdaq.

More than half of the Nasdaq comprises tech-related companies while more than a quarter of the S&P 500 consists of tech names.

Only a fifth of the Dow is tech, including Microsoft Corp MSFT, +1.60%. Apple AAPL, +3.48%, Cisco Systems CSCO, +0.93%, Visa V, +1.36%, International Business Machines IBM, +0.53% and Intel Corp. INTC, -0.04%

Those behemoth companies have helped the overall market mount a recovery from the coronavirus-induced lows, and as a result tech-leaning indexes have risen by the most.

The Nasdaq has surged by nearly 62% since its March 23 low and the S&P 500 has climbed almost 50%.

The Dow, isn’t far behind, and has gained 47% since its late-March nadir.

That said, the golden cross formation may suggest to some that the 124-year-old blue-chip index isn’t far from notching its first record since Feb. 12. The Dow stands about 7.5% from its all-time high, while the S&P 500 is about 1.3% from its Feb. 19 record closing high.

To be sure, a rejection of the golden cross isn’t unprecedented. A golden cross formed in January of 2016 but the Dow fell back into a death cross before carving out a new high, according to Dow Jones Market Data.

Market Extra: Nasdaq Composite’s record rally takes it to fastest 1,000-point milestone in 20 years

The Nasdaq Composite Index on Thursday marked its fastest 1,000-point rally to a new round-number milestone in 20 years.

It has been 40 trading days since the Nasdaq Composite COMP, +0.99% registered its most recent 1,000-point move on June 10 and with its close above11,000 representing the quickest such ascent since the 38-day sessions it took to climb from 3,000 to 4,000 achieved in 1999 (see attached table)

To be sure, that period of powerful gains for the Nasdaq came during the dot-com boom and bust 20 years ago, where valuations of tech-centric companies were arguably more divorced from their earnings than they are now. And point moves become less impressive as the index rises. A rise from 10,000 to 11,000 marks a 10% rise, while the 1999 move from 3,000 to 4,000 was a rise of 33%.

“Although 11,000 by itself doesn’t mean much, these big round numbers are a nice reminder of just how strong this rally has been since the March lows,” Ryan Detrick, chief investment strategist at LPL Financial, wrote via email.

Some investors have expressed concern that the Nasdaq, led by the giants of the tech sector, have is now well ahead of rational ways of measuring its value, including price to earnings, or P/Es.

The Nasdaq Composite has soared more than 60% since hitting a March 23 low, while the S&P 500 index SPX, +0.64% has climbed 50% and the Dow Jones Industrial Average DJIA, +0.68%, which has a lower concentration of tech-related companies, has climbed over 47% over the same period.

The Nasdaq on Thursday was trading in record territory, powered by megacap companies, including Microsoft Corp. MSFT, +1.60% and Tesla Inc. TSLA, +0.30% as well as notable so-called FAANG names, Facebook Inc., Apple Inc. AAPL, +3.48%, Amazon.com Inc. AMZN, +0.62%, Netflix Inc. NFLX, +1.38%, and Google parent Alphabet Inc. GOOG, +1.79% GOOGL, +1.74%.

Those handful of companies have been considered by investors more resilient to the uncertain outlook created by the COVID-19 pandemic that has driven the U.S. economy into a recession.

“Yes, technology is probably extended in the near-term, but when you look at how strong earnings and guidance have been from the group, you realize there’s a reason the Nasdaq is at 11,000 and why eventual continued strength is quite likely,” Detrick said.

: Uber’s delivery business tops core ride-hailing as pandemic rocks earnings

Uber Technologies Inc. reported second-quarter earnings Thursday.

Getty Images

Uber Technologies Inc. posted another quarterly loss of more than $1 billion Thursday as the COVID-19 crisis took a toll on its core ride-hailing business, which was actually surpassed by Uber’s food-delivery business.

Uber UBER, +4.54% reported a second-quarter loss of $1.78 billion, or $1.02 a share, on revenue of $2.24 billion, compared with a record loss of $4.72 a share on revenue of $3.17 billion in the year-ago quarter. Revenue fell 29%, showing the dramatic effects of the COVID-19 pandemic on a once fast-growing business.

The company’s results fell short of Wall Street’s expectations on the bottom line, but revenue actually held up better than analysts projected. Analysts surveyed by FactSet on average had expected Uber to post a loss of 81 cents a share, or nearly $1.4 billion, on revenue of $2.1 billion.

Uber’s ride-hailing business has taken a huge hit. Gross bookings fell 35% to $10.2 billion, but bookings within the “mobility” segment fell more steeply at 73%, and ride-hailing revenue plunged 67% from last year to $790 million.

Chief Executive Dara Khosrowshahi described the ride-hailing business as “a tale of 10,000 cities” in a conference call Thursday afternoon, saying that cities in Asia and Europe are bouncing back while the U.S. is struggling.

“Our Mobility recovery is clearly dependent on the public health situation in any given area,” he said.

Meanwhile, Uber Eats bookings more than doubled from last year, saving the quarter as Uber prepares to dramatically increase the size of that business with the acquisition of PostMates. Uber Eats brought in more revenue than ride-hailing for the first time, rising 103% to $1.21 billion. The company and analysts had expected increased demand in its food-delivery business to help offset the plunge in rides, as would-be riders spent the bulk of the second quarter sheltering in place but got more used to ordering takeout.

At a roughly $30 billion annual gross bookings run rate at the end of Q2 our Delivery business alone is now as big as our Rides business was when I joined the Company in 2017,” Khosrowshahi said in a conference call Tuesday, while adding that PostMates produced annualized gross bookings of $4 billion in the quarter. “We’ve essentially built a second Uber in under three years with an accelerated growth profile, a global footprint and an enormous [total addressable market] .”

Shares of Uber UBER, +4.54% dropped more than 4% in after-hours trading after ending the regular session up 4.6% at $34.72. The stock is up 16% this year.

Uber released results at the same time its lawyers were defending against a lawsuit brought against the company and rival Lyft by California Attorney General Xavier Becerra and the city attorneys of San Francisco, Los Angeles and San Diego over the companies’ noncompliance with a state law that would classify their drivers as employees instead of independent contractors. A preliminary injunction hearing, in which the plaintiffs were seeking immediate reclassification of the drivers before a trial, was set for Thursday afternoon at San Francisco Superior Court.

Earnings Results: GoPro sales top diminished expectations amid pandemic

GoPro Inc. saw losses swell and revenue decline in the second quarter as the pandemic forced closures of retail stores, but sales came in ahead of expectations with management citing “resilient” demand.

Shares were down more than 2% in after-hours trading Thursday.

The company posted a net loss of $51 million, or 34 cents a share, compared with a loss of $11.3 million, or 8 cents a share, in the year-earlier quarter. On an adjusted basis, GoPro GPRO, -0.62% lost 20 cents a share, whereas it earned an adjusted 3 cents a share a year prior. Analysts surveyed by FactSet had been expecting a 17-cent adjusted loss per share.

GoPro’s revenue for the second quarter declined to $134.2 million from $292.4 million a year earlier. The company’s revenue came in above the FactSet consensus of $114.2 million, which had come down from a prior estimate of $137.4 million as of late April and a forecast for $255.8 million as of late March.

“Our direct-to-consumer model is gaining momentum and we’re seeing a faster-than-expected rebound at retail,” Chief Financial Officer Brian McGee said. GoPro disclosed in its earnings release that sales from GoPro.com accounted for 44% of revenue and that channel inventory declined 25% sequentially.

The company said in prepared comments released on its investor site that demand “consistently improved throughout the quarter” and that the company set a new quarterly record for the number of people starting free trials of its Plus service. Plus hit a monthly free-trial record in June that it then surpassed in July, and management expects 600,000 to 700,000 paying Plus subscribers by the end of the year, up from 372,000 in the second quarter.

GoPro saw 95% of revenue coming from cameras priced above $300 in the quarter, which McGee said in the prepared comments was a continuation of past momentum for higher-priced cameras.

“Assuming we do not see a further erosion of consumer confidence due to the pandemic, our expectation is that we will be profitable in the second half of 2020 and nearly break-even to profitable for full year 2020,” he said in the comments.

See also: Fastly stock drops 18% as analysts weigh in on how TikTok may affect the edge-computing platform’s growth

Chief Executive Nick Woodman said in a statement that the company has seen “resilient consumer demand for GoPro” and argued that the brand “has proven to be a part of global consumers’ ‘new normal’ during the pandemic.”

Shares of GoPro have gained 71% over the past three months as the S&P 500 SPX, +0.64% has risen 18%.

Here’s what the Bank of England did to interest rates on Thursday — what’s next?

The U.K. central bank kept its key rate steady at 0.1% and its bond-buying target unchanged at £745 billion on Thursday, but warned that the U.K. economy would not rise back to its 2019 level before the end of 2021. It also gave the clearest signal yet that it no longer considers negative rates as taboo.

The pound rose on the news, up 0.4% against the euro GBPEUR, +0.12% and 0.3% against the dollar GBPUSD, +0.22% in London mid-day trading

The Bank of England’s short-term prospects for the U.K. economy are, however, less somber than they were three months ago, with unemployment at the end of the year seen at 7.5% of the population (versus 10% previously).

Inflation currently stands at an annual 0.6% but could decline to 0.25% in the latter part of the year, the BoE said, warning that it could take another two years before it finally hits its official 2% annual target.

The Bank said it is still reviewing its rate policy, but that negative rates are among the options under study. It “will continue to review the appropriateness of a negative policy rate as a policy tool alongside its broader toolkit,” it indicated.

So, what’s the outlook?

Both decisions on rates and quantitative easing were unanimous among the nine-member monetary policy committee. But tough choices lie ahead, when the Bank will have to decide how to contribute to the stimulus the U.K. economy will need when, come January, it is hit by another major shock — Brexit.

Key Words: This ‘dire’ economic situation ‘deserves to be called a depression — a pandemic depression’

Statues of unemployed men standing in line during the Great Depression at the Franklin Delano Roosevelt Memorial.

Agence France-Presse/Getty Images

‘This situation is so dire that it deserves to be called a “depression”—a pandemic depression … It seems disrespectful to the many losing their jobs and shutting their businesses to use a lesser term to describe this affliction. ‘

— Economists Carmen Reinhart and Vincent Reinhart

That’s the bleak assessment delivered by economists Carmen Reinhart and Vincent Reinhart in an article published online Thursday that will appear in the September/October issue of Foreign Affairs. Carmen Reinhart, a well-known Harvard economist, was appointed chief economist at the World Bank after completing the article. Vincent Reinhart was a top staffer at the Federal Reserve under Alan Greenspan and is now chief economist at BNY Mellon.

The memory of the Great Depression of the 1930s has made many economists reluctant to use the term to describe the current situation, they wrote. While the Great Depression was “wrenching in both its depth and its length in a manner not likely to be repeated,” they said, the 19th and early 20th centuries were, in fact, “filled with depressions.”

They noted that in recent global downturns, some engines of growth remained intact. Most recently, for example, emerging markets, notably China, were a key source of growth in the 2008 financial crisis. “Not this time,” they said. “The last time all engines failed was in the Great Depression; the collapse this time will be similarly abrupt and steep. ”

Related: ‘Make no mistake…the pandemic morphed into a Depression-like crisis,’ says UCLA economist, who predicts U.S. economy won’t recover from coronavirus until 2023

The U.S. economy contracted at an annualized pace of 32.9% in the second quarter, according to official data, the sharpest since at least the late 1940s.

Some economists have argued, however, that the sharp contraction created as the pandemic forced the near-shutdown of the U.S. and other major economies will give way to a quick rebound and that the accompanying recession may have already ended. The stock market has roared back from its pandemic-induced plunge in February and March, with the S&P 500 SPX, +0.64% ending Wednesday less than 2% below its all-time closing high from Feb. 19.

Opinion: The coronavirus-led economic recession may be over, but the depression has barely begun

The authors acknowledged that some important economies are reopening, reflected in improving business conditions across Asia and Europe and in a turnaround in the U.S. labor market. “That said, this rebound should not be confused with a recovery ,” they wrote.

In the worst financial crises since the mid-19th century, it took, on average, eight years for per capita GDP to return to the precrisis level, they noted, while the median was seven years. Historic levels of monetary and fiscal stimulus might allow the U.S. to fare better, but most countries don’t have the capacity to offset the economic damage from the pandemic, they said, which means the rebound “is the beginning of a long journey out of a deep hole.”

Cullen Roche: No, we’re not heading toward the next Great Depression

They see three reasons for a long slog back to economic growth: the hit to global demand from border closures and business lockdowns that have hit export-dependent economies hard; a sharp rise in unemployment that’s likely to remain stubbornly high; and the regressive impact of the crisis, which has seen hit those with lower incomes the hardest.

“There is no one-size-fits-all solution to these political and social problems,” they argued. “Officials need to press on with fiscal and monetary stimulus. And above all, they must refrain from confusing a rebound for a recovery.

Key Words: Bill Gates: Another crisis looms and it could be worse than the coronavirus

‘By 2060, climate change could be just as deadly as COVID-19, and by 2100, it could be five times as deadly.’

That’s Microsoft MSFT, +1.14% co-founder Bill Gates urging the government to address climate change with the same “sense of urgency” as it has the coronavirus crisis. If the proper measures aren’t taken, he wrote in a blog post this week, then the impact could be far more devastating.

Gates put the mortality rate of coronavirus at about 14 deaths per 100,000. By the end of the century, if the emissions growth rate stays its current course, he said we could be faced with an extra 73 deaths per 100,000 people due to rising global temperatures.

“As awful as this pandemic is, climate change could be worse,” he wrote. “If you want to understand the kind of damage that climate change will inflict, look at COVID-19 and spread the pain out over a much longer period of time. The loss of life and economic misery caused by this pandemic are on par with what will happen regularly if we do not eliminate the world’s carbon emissions.”

Gates projected that, within 20 years, the economic damage from climate change will be as bad as having the equivalent of a COVID-19 pandemic every decade.

“The key point is not that climate change will be disastrous,” he said. “The key point is that, if we learn the lessons of COVID-19, we can approach climate change more informed about the consequences of inaction, and more prepared to save lives and prevent the worst possible outcome. The current global crisis can inform our response to the next one.”

We need to let science and innovation lead the way, Gates said, finding the necessary solutions, such as cleaner sources of energy and other zero-carbon tools, that work not only for the global powers, but for poorer countries poised to get hit the hardest, as well.

“The effects of climate change will almost certainly be harsher than COVID-19’s, and they will be the worst for the people who did the least to cause them,” Gates continued. “The countries that are contributing the most to this problem have a responsibility to try to solve it.”

Rex Nutting: Is greed holding back a drug that could treat COVID-19 patients?

A health-care provider comforts a COVID-19 patient in an intensive care unit.

AFP via Getty Images

Greed is the great motivator in our economy. It prods people and companies to constantly strive to innovate, to create new and better products with the hope of earning fabulous riches.

But greed doesn’t always work the way the textbooks teach it. In the real world, companies that maximize profits don’t always improve the lives of consumers, contrary to what you might have learned in Econ 101 from reading Adam Smith’s musings about how it is the greed of bakers—not their benevolence—that gives us our daily bread.

Even Smith recognized that his invisible hand dematerializes once a company gains monopoly power; for instance, by controlling patents, as Gilead Sciences GILD, -0.10% does.

Gilead’s gold mine

In a time of global pandemic, Gilead—with its suite of antiviral drugs—is sitting on a gold mine. One of its drugs, remdesivir, has been proven to be effective in shortening hospitalizations of COVID-19 patients. It’s not a panacea, but it is better than nothing.

But Gilead may have a better drug in its pipeline that it won’t sell, a compound known as GS-441524 that is closely related to remdesivir and which, limited studies suggest, could be cheaper and more effective as a treatment for COVID-19.

The consumer watchdog group Public Citizen charged Tuesday that the company refuses to test and develop GS-441524 because selling the inferior drug remdesivir is more profitable. (Gilead did not respond to a request for a comment.)

In other words, Gilead owns a gold mine, but it will only sell us the tin it unearths. It leaves the gold in the ground, because the inferior metal is more profitable.

“It is unclear why Gilead and federal scientists have not been pursuing GS-441524 as aggressively as remdesivir, but the answer may be found in the corporation’s patent holdings,” Public Citizen said in a letter sent to the company and to top federal health officials. “The corporation’s monopoly over remdesivir may last five years longer than that for GS-441524, allowing Gilead to make substantially greater profits from the sale of remdesivir as a COVID-19 treatment.”

GS-441524 may work better

Two medical researchers signed on to Public Citizen’s complaint. In an opinion column published by Statnews.com in May, Florian L. Muller and Victoria C. Yan of the University of Texas’s MD Anderson Cancer Center urged the company to “ditch remdesivir and focus on its simpler and safer ancestor.” They also speculated that Gilead was giving remdesivir more attention because of potential monopoly windfall profits instead of thinking about potential benefits for public health.

In their op-ed and in a paper published in June by the American Chemical Society, Muller and Yan argued that manufacturing GS-441524 is much less complicated than making remdesivir and that it probably works better. “The benefit of using GS-441524 over remdesivir is that GS-441524 can almost certainly be given at much higher doses due to its lower toxicity,” they wrote. It could be a more effective therapy for many more patients, they theorized.

The two drugs are quite similar. “Remdesivir has a small but clever modification that makes it better at entering cells, but it and GS-441524 work in exactly the same way to inhibit viruses,” Sarah Zhang summarized in a story she wrote for The Atlantic.

But no one knows for sure if GS-441525 will work in human patients. No one even knows if GS-441525 is safe for humans, because it has never been tested.

Black market for cat lovers

This isn’t the first time Gilead has abandoned GS-441524 despite its promise as an antiviral. Although the company has not sought approval for veterinary uses, a large and highly illegal black market for the drug (mysteriously sourced from Chinese bootleggers for $7,000 to $12,000 per course of treatment) sprung up after researchers found it to be safe and very effective in treating an otherwise fatal disease in cats that’s caused by a feline coronavirus related to the coronavirus that causes COVID-19 in humans.

“The company has refused to license GS-441524 for animal use, out of fear that its similarity to remdesivir could interfere with the human drug’s FDA-approval process—originally for Ebola,” Zhang wrote in her Atlantic story about the bizarre black market for GS-441524 among cat lovers.

Zhang explains: “Because GS-441524 and remdesivir are so similar, any adverse effects uncovered in cats might have to be reported and investigated to guarantee remdesivir’s safety in humans. Gilead’s caution about generating unnecessary cat data is standard industry practice.”

Ah ha! Now we may be getting closer to solving the mystery. For a patent holder, ignorance is sometimes more profitable than knowledge.

It seems that “standard practice” in the drug industry directly contradicts the Constitution’s reasons for granting intellectual property rights. Instead of promoting “the Progress of Science and useful Arts,” patents too often serve to retard the advancement of science and useful arts, such as medicine.

In this case, retarding the advancement of knowledge is causing great suffering among both humans and cats.

Follow the money

I can hear your objections already. Gilead discovered these drugs and has the absolute right to do whatever it wants with them, just as a poet has the right to burn their verses. The world is poorer for it, true, but “it is what it is.”

These are strong moral arguments, but they ignore the fact that you and I paid for at least some of the discovery of these drugs. We should own at least a stake in them. The federal government gave Gilead at least $70 million to develop antiviral drugs to save lives and reduce suffering, not to enrich Gilead’s managers and shareholders.

Gilead has great scientists and researchers and they should be amply rewarded for their success. Gilead should earn a fair profit for its work, but it should not get an unearned windfall, and it should not be able to lock up promising drugs merely because it is greedy. The public paid for the discovery of GS-441524 and remdesivir, and that intellectual property should be in the public domain.

By the way, the argument for public control of intellectual property funded by the public also applies to the billions of dollars that governments here and in Europe have given to various companies and organizations to develop vaccines for COVID-19. And it also applies to the hundreds of billions the public has invested in other drugs and medical treatments.

The money was given to solve a problem, not to reward greed. Because greed isn’t always good.

Rex Nutting has been covering economics and politics in Washington for more than 25 years.

Suggested further reading

Richard Haass: How nationalism could ruin the COVID-19 vaccine

Mariana Mazzucato: How to make sure the drug companies don’t make off like bandits as we develop a COVID-19 vaccine

Joseph Stiglitz: Should patents come before patients? How drug monopolies hamper the fight against coronavirus

: Pelosi, McConnell trade blame as coronavirus deal standoff continues

WASHINGTON, DC – JULY 29: Speaker of the House Nancy Pelosi (D-CA), Senate Majority Leader Senator Mitch McConnell (R-KY), and Senate Minority Leader Chuck Schumer (D-NY) speak after the casket with the remains of Rep. John Lewis (D-GA) is carried from the U.S. Capitol building July 29 in Washington. (Photo by Brendan Smialowski-Pool/Getty Images)

Don’t hold your breath for another coronavirus aid deal from Congress soon.

Republican and Democratic congressional leaders showed few signs of movement Thursday morning and the departure of the Senate for the weekend indicated a ratcheting down of expectations on Capitol Hill.

Ahead of yet another meeting late Thursday between House Speaker Nancy Pelosi, Senate Democratic Leader Chuck Schumer, White House Chief of Staff Mark Meadows and U.S. Treasury Secretary Steve Mnuchin, Pelosi and Senate Majority Leader Mitch McConnell traded barbs.

“While they focus on unrelated liberal demands like tax cuts for rich people in blue states, we’re focused on serious solutions for the problems facing Americans right now,” McConnell said as he opened up the Senate for its Thursday session.

“Instead of getting serious, the Democratic leaders have chosen instead to misrepresent and even lie about what’s at stake,” he said.

McConnell was referring to the Democrats bid to reverse the  limitation on federal tax deductions for payment of certain state and local taxes which would arguably help upper-income earners in Democratic states.

“Perhaps you mistook them for somebody who gives a damn” about people hurt most economically by the virus and the resulting lockdown, Pelosi said about Republicans in an appearance on CNBC.

The impasse continued amid a backdrop of shaky economic data ahead of the July jobs report due out Friday. Meanwhile, weekly jobless claims fell in early August, but remained high by historical standards, at 1.19 million.

At her weekly press conference, flanked by Schumer, Pelosi said she could see light at the end of the tunnel that is the talks.

“We just don’t know how long the tunnel is. But we have to move quickly, more quickly, because the light at that end of the tunnel may be the freight train of the virus coming at us if we do not act to contain it,” she said.

The stalemate so far has seen the extra $600 paid weekly to the jobless by the federal government lapse. Another program put in place in March, the Paycheck Protection Program to aid small businesses, is set to expire Saturday without congressional action also. A federal moratorium on evictions expired July 25 but a separate requirement for 30 days’ notice of evictions provides some protection for delinquent tenants through Aug. 24.

“Congress should be strengthening the PPP. Instead, the Democrats have put it in jeopardy,” McConnell said, noting Republicans have offered to renew it at $190 billion in lending authority, which would be an expansion from the approximately $140 billion in unused authority it now has.

The standoff is also beginning to affect lawmakers’ plans for the usually sacrosanct annual August break. House lawmakers left Washington last week, but were told they would get a 24-hour notice to return if there was a House vote expected.

McConnell used similar language Thursday morning but said the Senate will at least formally stay in session, though without scheduled votes it is unclear how much substantial business will be conducted.

“I’ve told Republican Senators they will have 24-hour notice before a vote, but the Senate will be convening on Monday, and I will be right here in Washington.” McConnell said. “The House has already skipped town, but the Senate won’t adjourn for August unless and until the Democrats demonstrate they will never let an agreement materialize.”

All the back-and-forth raises the chances the White House will attempt to make some moves unilaterally by executive order to provide economic relief without the blessing of Congress.

Such a move could extend the eviction moratorium and revive supplemental jobless benefit payments. Pelosi has said President Donald Trump could extend the moratorium through executive action, but that would not forestall delinquent rents from piling up and being due at the end of the moratorium.

Read more: Trump may have power to extend eviction moratorium on his own, Pelosi says

The other possibility is a short-term bill on a narrow set of issues the two sides agree on, something that Meadows and Mnuchin have brought up before the two sides agreed to reach the framework for a deal by the week’s end.

And there is general bipartisan agreement on sending another round of cash payments to individuals, giving schools and colleges money to reopen safely and even on the PPP, albeit with some disagreement on details.

But the White House has said the jobless payments and the eviction moratorium should top any short-term bill, while Pelosi remained adamantly opposed to a stopgap bill when asked about it after her and Schumer’s press conference was over.

“We’re not having a short-term extension,” Pelosi said flatly.

The Conversation: Diversity training doesn’t work that well — and may even reinforce stereotypes

U.S. colleges and universities will be embracing diversity training with renewed vigor this fall.

In response to the killing of George Floyd, the massive Black Lives Matter protests and pressure from students, dozens of colleges and universities have made public commitments to new anti-racism initiatives.

The University of Florida will require all students, faculty and staff to undergo training on “racism, inclusion and bias.” Northeastern University will institute “cultural competency” and “anti-racism training” for every member of the campus community. And Ohio Wesleyan University will mandate “universal diversity, equity, and inclusion training.”

Given the vital importance of confronting past and present racism, we believe it is imperative that colleges and universities address racial disparities and discrimination in higher education head-on. However, as scholars who study race and social inequality, we know that diversity training suffers from “chronically disappointing results.” Recent research in psychology even suggests that diversity training may cause more problems than it solves.

What diversity training looks like

Called into a typical diversity training session, you may be told to complete a “privilege walk”: step forward if “you are a white male,” backward if your “ancestors were forced to come to the United States,” forward if “either of your parents graduated from college,” backward if you “grew up in an urban setting,” and so on.

You could be instructed to play “culture bingo.” In this game, you would earn points for knowing “what melanin is,” the “influence Zoot suits had on Chicano history” or your “Chinese birth sign.”

You might be informed that white folks use “white talk,” which is “task-oriented” and “intellectual,” while people of color use “color commentary,” which is “process-oriented” and “emotional.”

You will most definitely be encouraged to internalize an ever-expanding diversity lexicon. This vocabulary includes terms such as Latinx, microaggressions and white privilege.

It also features terms that are more obscure, like “adultism,” which is defined as “prejudiced thoughts and discriminatory actions against young people, in favor of the older.”

Disappointing results and unintended consequences

In terms of reducing bias and promoting equal opportunity, diversity training has “failed spectacularly,” according to the expert assessment of sociologists Frank Dobbin and Alexandra Kalev. When Dobbin and Kalev evaluated the impact of diversity training at more than 800 companies over three decades, they found that the positive effects are short-lived and that compulsory training generates resistance and resentment.

“A company is better off doing nothing than mandatory diversity training,” Kalev concluded.

Some of the most popular training approaches are of dubious value. There is evidence, for example, that introducing people to the most commonly used readings about white privilege can reduce sympathy for poor whites, especially among social liberals.

There is also evidence that emphasizing cultural differences across racial groups can lead to an increased belief in fundamental biological differences among races. This means that well-intentioned efforts to celebrate diversity may in fact reinforce racial stereotyping.

With its emphasis on do’s and don’t’s, diversity training tends to be little more than a form of etiquette. It spells out rules that are just as rigid as those that govern the placement of salad forks and soup spoons. The fear of saying “the wrong thing” often leads to unproductive, highly scripted conversations.

This is the exact opposite of the kinds of debates and discussions that you would hope to find on a college campus.

The main beneficiaries of the forthcoming explosion in diversity programming will be the swelling ranks of “diversity and inclusion” consultants who stand to make a pretty penny. A one-day training session for around 50 people costs anywhere between $2,000 and $6,000. Robin DiAngelo, the best-selling author of “White Fragility,” charges up to $15,000 per event.

In this belt-tightening era of COVID-19, should colleges and universities really be spending precious dollars on measures that have been “proven to fail”?

Alternatives to training

In our view, instead of pouring money into diversity training, colleges and universities would be better off using their limited resources to provide increased financial aid and better academic support systems for underrepresented students. The increasing number of scholarships and fellowships that have been established in George Floyd’s name are a welcome step in this direction.

We also recommend that schools invest more in expanding the full range of educational opportunities at their disposal to better understand and disrupt systemic racism.

This includes coursework, lecture series, discussion panels, student speak-outs, college-wide teach-ins, exhibitions, performances and common readings. Such an approach would enable universities to use the extensive knowledge and expertise that their faculty, students and staff already have on issues of race and inequality. It would be far better than relying on the kind of mass-produced, drive-through diversity training provided by outside “experts.”

Campus communities don’t need diversity consultants to lead workshops about terms such as “microaggressions,” “micro-invalidations” and “micro-insults.” Instead they should discuss thought-provoking works such as poet Claudia Rankine’s book “Citizen,” a personal account that “strips bare the everyday realities of racism.”

Rather than simply declaring that “illegal immigrant” is an unacceptable derogatory term, analyze Jason De Leon’s “The Land of Open Graves,” a vivid portrait that “pushes our understanding of how lives are lived and lost on the U.S.-Mexican border to a new level.”

To explain the concept of “intersectionality,” replace “social identity wheel” exercises with an examination of the 1977 Combahee River Collective Statement, whose Black feminist authors insisted that it was not possible to “separate race from class from sex oppression.”

Facing urgent calls for action, colleges and universities have embraced diversity training to try to prove that they really are doing something to advance racial justice. But the relevant evidence suggests that in offering ineffective, superficial remedies to the complex problems of prejudice and exclusion, diversity training will shortchange campus communities and short-circuit critical thinking.

If colleges and universities want to effect meaningful social change, they will soon discover that diversity training is no substitute for education.

Amna Khalid is an associate professor of history at Carleton College in Northfield, Minn. Jeffrey Aaron Snyder is an associate professor of educational studies at Carleton College. This was first published by The Conversation — “Why diversity training on campus is likely to disappoint.”