The Week in Business: Rethinking Office Plans
A new spike in coronavirus cases, driven by the highly infectious Delta variant, rattled investors and companies last week.,
What’s Up? (July 18-24)
Delta Variant Drives Uncertainty
A new spike in coronavirus cases, driven by the highly infectious Delta variant, rattled investors and companies last week. On Monday, fear over what a rise in cases, mostly among the unvaccinated, would mean for the global economic recovery drove the worst decline for the S&P 500 in months. But on Tuesday, stocks bounced back. The recent outbreaks are also prompting executives to rethink their plans for reopening offices. Apple, for example, said it would delay its plans to return to the office by at least a month, to Oct. 1 at the earliest. But not all companies have come to the same conclusion. Morgan Stanley’s chief legal officer urged the bank’s outside law firms to call their lawyers back to the office.
NBC Wins the Olympics
The summer games, delayed for a year, kicked off in Tokyo on Friday with a subdued ceremony inside a nearly empty stadium. Most residents of Japan and many public health experts were in favor of canceling the event, which is taking place during a state of emergency in the country after a spike in Covid-19 cases. Depending on who is counting, Tokyo has spent between $8 billion and $12.6 billion more than budgeted on the games. And at least 75 people with Olympic credentials, including six athletes, have tested positive for Covid-19 since arriving in Tokyo. Expectations of an enormous windfall for Japan’s largest marketing firm dwindled as sponsors canceled or reduced their campaigns and promotional events. But NBCUniversal, which has exclusive rights to broadcast the Games in the United States, is still expecting a full turnout for advertisers. According to an estimate from the data research firm Kantar Media, advertisers are expected to spend $2.25 billion to appear alongside Olympics coverage, a 20 percent increase from the 2016 games in Rio de Janeiro.
Airlines Bounce Back
Outbreaks of the highly contagious Delta variant have so far not been hampering airlines’ recovery. Customer spending on airlines briefly exceeded 2019 levels this month, according to Facteus, a research firm that monitors online payments. Ticket prices and the number of people screened by the Transportation Security Administration are also on the upswing, and American, Southwest and Delta all reported profits for the second quarter. (United reported a loss but projected it would return to profitability in the third quarter.) But it’s not all clear skies for the aviation industry. None of these companies would be near profitability without the $54 billion of federal aid that has helped pay employee salaries during the pandemic. Passenger volumes are still down from the before times, and carriers are struggling with delays and staff shortages as they ramp up quickly.
What’s Next? (July 25-31)
Robinhood Trades on Robinhood
Robinhood, the stock trading app, is set to begin trading on the Nasdaq market by the end of the week. The company, which allows users to make free trades using an easy interface, plans to set its share price at a range that could value it at as much as $35 billion. Robinhood’s plans for its initial public offering are unusual in that it will sell up to a third of its shares directly to its customers through its app, a move intended to uphold a promise to “democratize investing.” The move may also introduce volatility, as there is no guarantee that those investors won’t immediately dump the shares when the stock begins trading. But the greater risk for Robinhood may be a regulatory one. The company last year agreed to pay a $65 million fine over accusations that it misled customers about its business. Last month, it agreed to pay a $70 million fine over issues like misleading information and system outages, and it is facing nearly 50 lawsuits over its decision to curb trading during the GameStop trading frenzy.
The Fed Wrestles With Inflation
The Federal Open Market Committee meets on Tuesday and Wednesday. While the Federal Reserve is not expected to change its policies, a key measure of inflation in June climbed at its fastest pace in 13 years, leading its chair, Jerome H. Powell, to acknowledge that inflation had increased “notably.” Mr. Powell has said he expects high inflation to stick around for six months or so, and the Biden administration has repeatedly called price increases “transitory.” Many economists agree with that assessment, but some think high inflation could last longer.
The Centers for Disease Control and Prevention’s nationwide ban on evictions will expire on July 31. Some local and state governments, including California and New York, have their own eviction moratoriums that will remain in effect after that date. But for many renters who are behind on payments, the time to apply for emergency rental assistance is running out. Congress has allocated $45 billion for assistance to landlords and tenants, but rollout of the aid has been slow, with only about $3 billion having reached people by the end of June.
Netflix is losing some ground to new rivals like Disney+. Zoom Video spent $15 billion on a company that makes software for customer service call centers. Entrepreneurs are throwing baby showers for their start-ups. And the U.S. government and European Union report their numbers on second-quarter economic growth this week.