Wall Street Prepares for Big Corporate Profits

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After closing the books in the second quarter, executives have the most positive view ever of their company’s profits. Data from FactSet. And this could be a good sign that profitability growth will continue even after the expected recovery from the pandemic economic collapse.

Companies started reporting second-quarter earnings this week. Things really start tomorrow when Goldman Sachs, JPMorgan Chase and PepsiCo post their earnings before the market opens. Especially big banks Likely to generate bumper profits, reports Lananh Nguyen of The Times.

For now, profits are rising. Analysts estimate that earnings for companies in the S&P 500 rose more than 60 percent in the second quarter compared to last year. This may be the strongest growth in more than 10 years, but it’s less impressive than it sounds. Almost all of the growth is a result of the reopening of the economy, as well as the fact that the same period a year ago was the depth of pandemic quarantines.

  • The impact of Covid and expected earnings growth for the S&P 500 in the second quarter are not much higher than long-term average growth rates compared to the pre-pandemic profit path.

Will earnings continue to increase after the first launch? Some soft economic data recently scared the market, and analysts expect corporate profits to moderate in the coming quarters. Still, full-year S&P 500 earnings growth is expected to compete with the strongest in recent history. And business leaders seem confident that their companies are coming out of the pandemic in much better shape than expected (although they tend to be a half-full group).

  • FactSet reported that 66 companies in the S&P 500 posted higher second-quarter earnings guidance than analysts expected. This is the highest figure in a quarter since at least 2006, when FactSet began tracking statistics.

The G20 has signed a global tax revision. The group’s finance ministers supported efforts to establish a global minimum tax rate of 15 percent and impose new taxes on multinational corporations. But as lawmakers in the US and elsewhere, we have a long way to go. discuss the details.

Concern about coronavirus variants is growing worldwide. new species such as delta continues to spread rapidly, can threatens the global economic recovery, G20 officials said. In positive news, researchers are increasingly encouraged: breath tests able to detect Covid-19

China’s IPO pressure has frozen the plans of TikTok’s parent company. ByteDance reported halted efforts to list its shares abroad Earlier this year, Beijing officials focused on cybersecurity, The Wall Street Journal reported. (Didi continued with a US listing, then quickly fell into hot water.) Over the weekend, the Chinese government suggested new data requirements For companies wishing to list their overseas shares.

Texas Republicans impose new voting restrictions. deputies moved forward by overhauling the state’s voting laws in a special legislative session. Criticizing the proposals as efforts to disenfranchise minority voters, Democrats are poised to fight, but their options are limited; All eyes are on Texas-based companies to see if they will make a statement about the measures.

Goldman Sachs grapples with whether to increase the salaries of young bankers. The executives of the Wall Street giant discuss the wisdom of increasing compensation The Financial Times to address complaints about burnout, even as competitors raise salaries. The counter-argument: It would set a “dangerous precedent” and erode the idea of ​​paying for performance.

After years of persuading companies to do more tackling climate changeLarry Fink has new goals in his quest to make the economy more sustainable. Speaking at the G20 summit on Sunday, the BlackRock chief said that the World Bank and International Monetary Fund “rethinking their roles

  • Fink urged the two international organizations to change how they support sustainability in developing countries.

  • He also criticized governments and said they should do more to limit the use of fossil fuels.

  • And he shot himself. Fink said corporate disclosures on climate impacts, which he put forward as chairman of the world’s largest investment firm, are not the answer alone.

The World Bank and IMF should act more like Fannie Mae and Freddie Mac, Fink said it’s less like traditional lenders. Institutions’ guarantees can lead to large additional investments in green technologies in emerging markets. For example, the U.S. government’s guarantees to mortgage insurers led to an $11 trillion market for home loans.

This is a very big idea. Critics will say that the primary beneficiaries of the proposal will be big investors like BlackRock, who will protect themselves from losses. (For his idea to fly, investors would have to share some of their investment earnings with institutions as well.) Fink is sometimes called too incremental in his approach, but what he proposes will fundamentally change the function of the World Bank and the IMF, as well as reshaping the role of governments in tackling climate change.

Companies cannot do this alone. Fink has long pushed the corporate sector to lead climate initiatives, doing more than most to put the environment on board agendas. Now he criticizes governments and other government agencies for not pulling their weight on climate change and says even the world’s largest multinationals and investment firms cannot handle it on their own, he deserves a watch.


Now that Richard Branson can call himself an astronaut, the race for companies to take paying customers to the stars has begun.

“Everything was magical” Branson said yesterday after flying to the edge of space in a Virgin Galactic rocket plane. She was on hand to cheer him up at the New Mexico spaceport. other alien billionaire Elon Musk. Jeff Bezos of Blue Origin, who will be launching his company’s rocket next week, told Branson:a successful and safe flight(Blue Origin also brazenly stated that unlike Virgin Galactic, its passengers will be flying over the ship. internationally recognized space border.)

The leisure spaceflight business is still a long way off. While Virgin Galactic’s vehicle has proven its safety, more testing needs to be done before the company can officially launch. $250,000 cost per ticket. It’s unclear when Blue Origin will take on paying customers. The person who offered $28 million Flying with Bezos on July 20.


— Senator Bernie Sanders, in an interview With Times Opinion columnist Maureen Dowd about her priorities in addressing inequality. “You now have the richest men in the world who are not particularly worried about the world,” he added.


Increasingly, scientists who turn basic research into cures for disease are forced to think like venture capitalists, or risk their ideas disappearing in the so-called “valley of death.” They may soon find a new way to fund the journey from initial discoveries to clinical trials with DealBook’s Ephrat Livni BioBonds. Reports for The Times.

BioBonds will create low-interest, government-backed loans for “translation” research. These would be packaged into a bond and sold on the secondary market for risk-averse institutional investors such as pension funds. In May, Illinois Democrat Representatives Bobby Rush and Pennsylvania Republican Brian Fitzpatrick enacted legislation This will create these $30 billion in loans over three years and help fund FDA-approved clinical trials.

Pandemic digs research funding hole ‘much deeper’ said Karen Petrou, co-founder and managing partner of Federal Financial Analytics, a consulting firm in Washington that designed BioBonds. Last year, clinical trials were halted, resources diverted from laboratories, attention focused on urgent needs, and a lot of funding dried up. But it would have been impossible for pharmaceutical companies to quickly follow the COVID vaccine development process without the initial efforts of academic labs.

“We needed an American model” said Peter. Many countries support private sector funding for biomedical research, and each does it differently. Suffering from retinal degeneration and blind in his 40s, Petrou discovered researchers’ funding struggle in 2013 while trying to raise money for research on his condition. Potential investors said such projects It was too speculative. Refused to accept this as a final answer.

Green ties are a source of inspiration, created a $750 billion private market in sustainability projects through publicly backed loans. D., director of translational oncology operations at Brown University and a former Pfizer scientist. Attila Seyhan said BioBonds offer a “lifeline” for medical research. While loans must be repaid, he believes university business units working with scientists on commercialization projects will find creative ways to get them to work. He said that even if only 1 percent of the bets work, it’s still useful: “This is how drug development works.”

Read the full story about BioBonds.

Opportunities

  • Nordstrom is buying shares in brands owned by British online fashion retailer Asos, which aims to attract younger shoppers. (NYT)

  • Indian retail giant Flipkart, controlled by Walmart, has raised new funds with a valuation of $38 billion. (Bloomberg)

  • The family that owns the Daily Mail is considering taking the newspaper publisher privately in a $1.1 billion deal. (Reuters)

  • The mark of the time: A SPAC named Far Peak Acquisition is buying a company called Bullish. (CNBC)

Policy

  • Meet Tim Wu, the man behind President Biden’s antitrust initiative. (WSJ)

  • A judge in California has ruled that victims of a 2019 mass shooting at a synagogue can sue Smith & Wesson. (WaPo)

  • “Pelosi Husband’s Tech Stock Highlights Lawmakers Trades Act” (Bloomberg)

  • It’s one of the low-profile fronts in regulators’ plan to rein in Big Tech: It makes it easier to repair electronics like AirPods. (CNBC)

  • Two major tech companies, TSMC and Foxconn, will purchase millions of doses of Covid vaccine on behalf of the Taiwanese government. (WSJ)

best of the rest

  • How to get the right to be included in the workplace. (hire)

  • Companies are adding stress-relieving features to products to address consumers’ pandemic concerns. (WSJ)

  • “Will robots fill the stands at the Tokyo Games?” (Work day)

  • Baby boomers and millennials have one thing in common: they don’t like email. (NYT)

We want your feedback! Please email your thoughts and suggestions. dealbook@nytimes.com.



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