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News Brief: Extremist Threats, Economic Slowdown, GameStop Stock Surge

SARAH MCCAMMON, HOST:

Law enforcement officials across the country are on high alert this morning.

RACHEL MARTIN, HOST:

The Department of Homeland Security issued a warning yesterday that the country faces an increased risk for potential violence by domestic extremists in the coming months. Such warnings have been rare in recent years, but DHS says the attack on the U.S. Capitol on January 6 may have emboldened radicals.

MCCAMMON: For more, we are joined by NPR national security correspondent Greg Myre. Good morning, Greg.

GREG MYRE, BYLINE: Good morning, Sarah.

MCCAMMON: Tell us about this warning issued by the Department of Homeland Security. Are officials citing any specific threat?

MYRE: No, they're not. And so - this bulletin doesn't name any individual, no group, no specific threat, doesn't say anything is imminent. It's a very generalized warning, but it is clearly referring to the far right - that there's this elevated threat that DHS sees for the next few months at least. The statement says that domestic extremists may be fueled by, quote, "false narratives" related to the election last November to the January 6 assault on the Capitol and even to last week's presidential transition.

MCCAMMON: And we know that DHS has issued warnings in the past. I'm thinking about those color-coded warnings after 9/11 about jihadist groups like al-Qaida. But, Greg, I don't recall warnings about far-right extremists in the past. Is this a new thing?

MYRE: So the short answer is yes. The Department of Homeland Security was created after 9/11, and those color-coded warnings that you mentioned were widely mocked. They were often hard to interpret. Was this an imminent threat? Should you avoid air travel? And we really haven't seen the government issue this kind of broad, generalized warning about the far right.

But now President Biden clearly believes that his predecessor, President Trump, didn't deal with this and in fact, often played it down despite the increased number of far-right episodes or attacks in recent years. There was no strong public warning in the lead-up to the January 6 events at the Capitol. Biden clearly wants to get ahead of this. His nominee for Homeland Security, Alejandro Mayorkas, hasn't been confirmed yet. But the Biden administration has already called for DHS and the FBI to lead an intelligence assessment of this threat, and now DHS has issued this warning.

MCCAMMON: You mentioned those earlier warnings were sometimes hard to interpret. People didn't know what to do with them. But what do we know about what this new warning means for us, for the general public?

MYRE: Right. I spoke about this with Dan Byman. He's a Georgetown University professor who's studied terrorism, domestic and foreign, for a long time. He says the Biden administration is sending a message to several groups. The - he's telling law enforcement that this is going to be a priority, telling far-right groups that they're going to be under scrutiny. And he also believes that Biden and his administration is speaking to the public.

DAN BYMAN: It's a warning to the broader public. It's trying to say that this is a genuine threat on par with other forms of terrorism and is trying to say the new administration is going to emphasize not only jihadist terrorism by groups like ISIS, but it's going to focus on a much wider range of domestic threats.

MCCAMMON: Now, law enforcement has made more than a hundred arrests in connection with the insurrection at the Capitol on January 6. What's been the response from far-right extremists?

MYRE: Well, it's hard to say that there's any clear, definite response. But one thing on social media, we're seeing these groups indicate that they know they're being watched, that it may be a good time to be cautious and stay below the radar. But I think what's clear is President Biden wants to keep this issue in the spotlight. There's still National Guard troops in the Washington area, will be around through President Trump's impeachment trial. Biden appears to be laying down a marker declaring this is going to be a priority throughout his entire tenure.

MCCAMMON: NPR's Greg Myre. Thank you.

MYRE: My pleasure.

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MCCAMMON: The nation's economic engine has slowed considerably in recent months as it faced off against a winter wave of coronavirus infections.

MARTIN: That slowed the rapid rebound that happened in the summer and the early fall that we saw. Forecasters expect to see stronger economic growth this year. But of course, getting the economy on track is totally dependent on getting control of the pandemic.

MCCAMMON: To talk more about that, NPR's Scott Horsley joins us now. Hi, Scott.

SCOTT HORSLEY, BYLINE: Good morning, Sarah.

MCCAMMON: The Commerce Department is issuing a report this morning on the last three months of 2020. What are we expecting from that?

HORSLEY: It's expected to show significantly slower growth than we had in the previous three months. You know, 2020 was a roller coaster. We had a really sharp plunge in economic activity back in March and April, when the pandemic first took hold, then we had a big rebound in June, July, August, September, when we climbed partway out of the hole we'd fallen into. But as colder weather came in and hospitals started filling up, that rebound kind of tapered off. Now, some industries are still doing OK. Construction is booming. Manufacturing is pretty strong. But in-person businesses like restaurants, bars, hotels, they're really struggling. And Federal Reserve Chairman Jerome Powell says that's a big part of the economy. And until it's fixed, we're not going to be out of the woods.

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JEROME POWELL: We're a long way from a full recovery. Something like 9 million people remain unemployed as a consequence of the pandemic. That's as many people as lost their jobs at the peak of the global financial crisis and the Great Recession.

HORSLEY: Now, that's certainly an improvement from the worst point last year, when we were down 22 million jobs. But we likely ended 2020 with an economy that's a few percentage points smaller than it was before the pandemic.

MCCAMMON: So the critical question - what will it take to get the economy to bounce back?

HORSLEY: Getting control of the virus. You know, the Fed is doing its part, keeping interest rates near zero. Congress has provided some additional relief payments, and President Biden is pushing for more. But ultimately, Powell says, the economic recovery depends on solving the public health problem.

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POWELL: There's nothing more important to the economy now than people getting vaccinated. If you think about the places where the economy is weak - I mentioned bars and restaurants. That's 400,000 jobs we lost last month. And that's all because of the spread of the pandemic.

HORSLEY: Powell, who is 67 years old, got his first shot of the vaccine not long ago. He expects to get a second dose pretty soon. We know, though, it's going to take months to get shots to everybody who wants one. And in the meantime, the Fed chairman says wearing face masks, following other public health guidelines can help.

MCCAMMON: And Scott, looking out to the rest of this year, what is the outlook like for the economy?

HORSLEY: Thousands of people are still dying from COVID-19 every day. And that is going to continue to weigh on economic activity for at least a few more months. But if we are successful in stopping the pandemic, we could see pretty rapid economic growth in the second half of this year.

Senior economist Ben Herzon, who's with IHS Markit, says there could be a lot of pent-up demand for the kind of in-person services we've been skipping for the last 10 months, although he says it's not entirely clear how much extra money people might spend once they feel safe doing so.

BEN HERZON: One example is haircuts. You probably won't get more haircuts than you otherwise would have. But maybe people are really tired of staying at home, and they will go out to eat more than they would otherwise.

HORSLEY: The International Monetary Fund's projecting the economy will grow more than 5% in 2021. That would put us back to pre-pandemic levels sometime in the second half of this year.

MCCAMMON: NPR's Scott Horsley, thanks so much.

HORSLEY: You're welcome.

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MCCAMMON: Our last story this morning is about a revolt against Wall Street.

MARTIN: Right. And at the heart of this revolt is the company GameStop. Maybe you've seen one of these video game stores at the mall, although when was the last time you were in a mall? Stay tuned. That's actually a part of the story.

Over the past week, a big group of amateur investors on Reddit pushed GameStop's stock price to crazy, crazy heights. GameStop wins in all this, and Wall Street hedge funds lose.

MCCAMMON: To explain what's going on here is NPR's Rafael Nam.

OK. So this situation with GameStop has been all over social media. What exactly is going on with this stock?

RAFAEL NAM, BYLINE: So this all started in a Reddit group called wallstreetbets. It's a forum where regular investors gather to exchange stock tips, share memes and boast about their trades. One stock that caught their attention was GameStop. It's a struggling retailer, and many professional investors were shorting the stock. Now, what that means is that they were betting the stock price would fall. Well, people at wallstreetbets - and there's 2 million of them by one estimate - they did not think GameStop shares would fall. Instead, they started driving up the shares by a lot.

So that put Wall Street pros who were shorting the stock in a serious bind 'cause in order to get out of a short, you have to buy back the shares. It just doesn't matter how expensive it's gotten. In market talk, that's called a short squeeze. And as hedge funds rushed to buy back shares - well, guess what? - shares surge. How much? GameStop ended up gaining 1,700% this month and 130% yesterday alone.

MCCAMMON: Seventeen hundred percent - so why the focus on GameStop in particular?

NAM: So that's hard to say. Some people genuinely think GameStop is a good stock. But for many others, they seem to be motivated by trying to get at - these professional investors in trouble. There's a populist soak-the-rich argument that's popular in these social media platforms. And one of their biggest victims was a well-known hedge fund called Melvin Capital. This week, Melvin was forced to close their GameStop short and take a huge loss. And this has put other Wall Street firms on notice. Already, retail investors groups like wallstreetbets are going after new companies, including the - AMC, the movie theater, BlackBerry. Both the stocks posted great gains this month for the same reasons as GameStop.

MCCAMMON: And what do we make of this? I mean, is it a good thing?

NAM: Well, this is certainly a David vs. Goliath element to this. Markets have done phenomenally well last year, and professional investors have done pretty well for themselves. So yeah, there's that populist element in going after them. And markets are also a very important part of our financial system. And when you create volatility and fear like this, it can really impact sentiment.

MCCAMMON: Retail investors have, at least in this case, demonstrated to Wall Street that they have some power. So how might this affect the future of the stock market?

NAM: Well, the activities really shook Wall Street. Millions of retail investors started trading stocks last year, but we've rarely seen something like this. It's usually the retail investors who take the big losses. So this is definitely going to attract regulatory scrutiny. One key question is going to be, was there market manipulation? Did investors band together and deliberately drive up the shares to then sell it? That would be pump and dump.

MCCAMMON: Right.

NAM: But proving that is going to be a very big undertaking for regulators. There's also a really ugly side to this. Professional investors are being targeted on social media with insults, death threats. It's similar to the nastiness in a political discourse. It's just now happening in Wall Street.

MCCAMMON: NPR's Rafael Nam. Thank you so much.

NAM: Oh, thank you. Transcript provided by NPR, Copyright NPR.