Why Are Markets Worrying About the Delta Variant?

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Last week, analysts at Goldman Sachs told clients the potential economic impact of the Delta variant of the coronavirus would be “modest.” Even so, investors seem nervous as infections spread due to the highly contagious strain.

Yesterday it recorded the S&P 500 index. Hardest one-day drop since May and European stocks worst day of the year. Inflation and antitrust enforcement had been a cause for concern for investors, but Chris Brightman, who runs money management firm Research Affiliates, said: “I don’t see these things as triggering the decline.”

The drop surprised some because stocks were generally resilient to the coronavirus. The S&P 500 index is 25 percent higher than before the pandemic. Economies have adapted, some companies have benefited, and government incentives have protected the finances of many individuals and small businesses.

Most companies don’t seem to be changing their hiring or investment plans yet. A private equity manager told DealBook that there are more lockdowns in the “tree of options” that companies are planning, and the probability is now higher than before. Business leaders and investors in the US are also taking cues from the UK “test case”, where the Delta variant has been rolling out for several weeks, the person said. Britain lifted most of its pandemic restrictions yesterday, but the mood there remains vigilant.

Oil price is one reason US investors are nervousIt fell nearly 8 percent on Monday. Rising oil prices were seen as a sign of a strong global recovery. Sharp drop that is apparently out of line moderate increase in supply Data from oil producing countries released at the weekend show that global oil demand and thus economic activity may be lower than expected.

Bond markets also reflect economic discomfort. The economically sensitive 10-year Treasury yield fell to its lowest level since February, at a time when prospects for a pandemic recovery were far less certain. This is also a concern for stock investors. “You’ve experienced this sharp drop in bond yields that the investment community has had trouble explaining,” said Lori Calvasina of RBC Capital. “The equality world is confused and concerned about this.”

There is less confidence that Washington will come to the rescue again. Gridlock made it harder for Congress pass infrastructure bill. Many states want to end extended unemployment benefits. A number of other pandemic safety net programs about to expire. And the Fed is under pressure to cut rates rising inflation. “Most of the success was the coordinated policy of the Fed and the Treasury,” said Brightman. “Now, it seems like the end of all these extraordinary policies is coming.”

Things are improving a bit in early trading today. Stocks take back some of yesterday’s defeat. But the drop may cause investors to take a closer look at whether current stock prices, which are still near all-time highs, are warranted. increasing cases of Covid and slowing down vaccines. “While the bargain hunters will be around, tension is still largely the sentiment swirling in the markets,” Susannah Streeter of Hargreaves Lansdown said in a note.

The pandemic recession was the shortest recorded recession. Economic decline officially it only took two months and expired in April 2020, according to reviewers at the National Bureau of Economic Research. That doesn’t mean the economy has fully recovered, though: There are still almost seven million fewer jobs in the US than before the pandemic.

Amazon will stop Covid testing in US warehouses. The company told its employees that they can now do it. relying on other testing services, Information reports. The move, which is said to include the phasing out of other protective measures, comes as cases rise and vaccination rates remain low in many states where Amazon has warehouses.

China denies Western accusations of state-led hacking. Chinese diplomats accused Countries including the US and Canada are defaming Beijing, claiming ties to cyberattacks, including Microsoft. Accordingly, how does China strengthened cyber attack capabilitiesAccording to US intelligence officials.

Opioid distributors close to a $21 billion deal. AmerisourceBergen, Cardinal Health, and McKesson allocate funds To resolve lawsuits by state and local governments. The potential settlement still needs to be approved by the majority of those who sued.

Today is Jeff Bezos’ launch day. The Amazon founder will take off on a rocket operated in the East at 9 a.m. by the New Origin space company and hopes to join Richard Branson. alien billionaires club. Follow The Times Live coverage of the launch is here.

As the geography of the post-pandemic workforce is beginning to take shape, DealBook has heard that professional services giant PwC has commissioned Morgan Stanley to sell its “global mobility” division. With $200 million in operating earnings, the unit advises companies on telecommuting policies, deals with immigration issues and assists with global tax planning.

As many companies have adopted hybrid models – and some are walking away altogether – advice on managing a distributed workforce is in greater demand. A spokesperson for PwC said the firm did not comment on “rumor or speculation about any changes to our portfolio.” Morgan Stanley declined to comment.

PwC announced a major restructuring in June. Company consolidated its operations It is divided into two units: “Trust Solutions” to house accounting and tax business, and “Consulting Solutions” for advisory services offerings. As part of this renewal, PwC also announced plans to invest $12 billion in recruiting, training and technology, and to employ 100,000 new workers by 2026.

PwC has tried different ways over the years. HE IS sold his consulting arm Amid regulatory pressure for accounting firms to separate consulting from auditing, IBM bought $3.5 billion in 2002, but rebuild that job through acquisitions as it loses ground to its competitors. (Editors once again Examines the Big Four, including PwC, on the balance of accounting and advisory services.) PwC recorded sales of $43 billion in its last fiscal year, with just over 40 percent auditing, about 35 percent consulting, and 25 percent auditing. tax and legal services.


– Ananya Das, managing director at Guggenheim Securities, in a LinkedIn post This takes a different approach to advertising work for young bankers who often feel overworked and expendable. especially during the pandemic. “I imagine you’re a cold-blooded person,” he added, “a bunch of diamonds created under tremendous pressure, and I’m putting my hat on because I won’t be able to survive.”


Shortly after the Capitol riot on January 6, hundreds of major corporations said they would suspend political donations, either entirely or privately, to Republican lawmakers who voted against the approval of the presidential election. Now, many of these companies have started giving back to Democrats and most Republican opponents.

Disclosures regarding corporate political donations surfaced last week as candidates and companies announced their deadlines. Here are some notable developments:

In the first six months of the year, Lockheed Martin It was donated to the 53 Republican Congressmen who voted against ratifying the presidential election. newsletter Popular Facts. This was the most of any corporate PAC since the Capitol revolt. Among those who received money from Lockheed was Georgia Representative Andrew Clyde. The Times reported He is one of the most vocal people trying to redefine rebellion as nonviolent.

House minority leader, Representative Kevin McCarthy Raised over $500,000 from PACs of more than 60 companies and business groups in the second quarter. Companies that gave money to McCarthy who promised to stop the contributions included Abbott Laboratories, Ford, and UPS. According to The Hill.

About three dozen companies kept their promise to stop donations to Republican objectors. These include: Amazon, Disney, Google, Microsoft and Morgan Stanley, According to Popular Information. And again, even among donors, they’ve become less generous as a group, Wall Street Journal reports. It’s worth noting that these figures only include donations made directly from corporate PACs. as DealBook announcedCompanies can divert their money to candidates or political parties in many ways that are nearly impossible to follow.

Opportunities

  • Apollo Global Management said it is in talks to partner with Fortress to acquire British supermarket chain Morrisons. (FT)

  • In IPO news: Language learning app Duolingo, $3.4 billion valuation, the clothing rental service Rent the Runway filed in secret go to the public. (Reuters, Bloomberg)

  • LVMH has agreed to buy a majority stake in Off-White, the streetwear brand run by Virgil Abloh, and give it a larger role in the French fashion conglomerate. (NYT)

  • Generate Capital, a major investor in green energy, has raised $2 billion for its latest and greatest fundraising. (WSJ)

Policy

  • A deep dive into how the FDA approved an expensive and controversial Alzheimer’s drug despite the skepticism of its own officials. (NYT)

  • Twitter has temporarily suspended Georgia Republican Representative Marjorie Taylor Greene’s account for spreading misinformation about the coronavirus. (NYT)

  • Treasury Secretary Janet Yellen has urged regulators to act quickly to regulate the fast-growing stablecoin industry. (NYT)

  • Government-linked hacking has become a pervasive and perhaps long-lasting feature of the global order. (NYT)

Tokyo Olympics

  • Here’s how Dentsu became an unseen force behind the Olympics and why the ad giant is ready to miss an anticipated drop. (NYT)

  • International Olympic Committee member Dick Pound says the IOC should not be held responsible for a COVID-19 outbreak at the Games. (Times Opinion)

  • Why are the beds in the athletes’ village made of cardboard? (NYT)

  • “Day-To-Day A Goldman Sachs Analyst Helps Place Israeli Baseball In The Olympics” (WSJ)

best of the rest

  • The attacks using Israeli spyware show that Apple’s claims about iPhone security are not true. (WaPo)

  • Leon Black has shed a surprising amount of light on his personal life by rebutting sexual assault accusations. (Bloomberg)

  • Entrepreneurs hold “business showers” ​​like baby showers, but for start-ups. (NYT)

  • Workers are returning to the office, but the golden age of food trucks may be over. (NYT)

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

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