Monday Morning Reads
- Warning China’s Rich
- China Halts Over 40 IPOs
- China Muscles In on Renewables l
- The Shipping Crisis Is Getting Worse
- Delta Variant Begins to Menace Recovery
- Jerome Powell’s Policy Revolution Blindsided
- Fed Experts Say Powell Framework Needs Endgame
- It’s Called The Bond Taper. Yes,
- New Appetite for Mortgage Bonds
- Biden and the Fed Wanted a Hot Economy
- Finds Setback Instead
- B-Schools Must Evolve
- Bigger-Is-Better Is Back in Aerospace
- Pfizer to Buy Trillium
- God, Money, YOLO: How Cathie Wood Found Her Flock
- What Say ‘Money Multiplier’ Fabulists
Fast forward: While California voters ended up passing the measure with an overwhelming majority, a new ruling from California Superior Court Judge Frank Roesch said treating drivers as independent contractors was unenforceable. The effort broke the state constitution by unfairly limiting the power of the Legislature in regards to workers' compensation and collective bargaining. He also declared that Proposition 22 hampered the state legislature's authority and its ability to pass future legislation, which is unconstitutional.
Uber, Lyft and other gig companies don't need to immediately change their way of doing business, but the ruling complicates their efforts to preserve their independent worker models. It's also a setback in their years-long fight which culminated in the most expensive ballot measure in the history of California. The companies had hoped to establish a "third type" of employment, in which drivers are treated as contractors but are given more benefits under certain conditions.
Response: "We believe the judge made a serious error by ignoring a century’s worth of case law requiring the courts to guard the voters' right of initiative," said Geoff Vetter, a spokesman for the companies' Proposition 22 campaign. "This outrageous decision is an affront to the overwhelming majority of California voters." Proponents of the plan are already saying they will appeal the court's decision and the group is fighting to get a similar measure enacted next year in Massachusetts.
A new report from Bloomberg suggests that Apple (AAPL) will become the latest corporation to delay the return of its global workforce to the office (until at least January). Wells Fargo (WFC) and Chevron (CVX) have already postponed their September returns following an uptick in coronavirus cases, while Amazon (AMZN) and Facebook (FB) have pushed their return into early next year. Lyft (LYFT) is only calling employees back to its San Francisco headquarters in February, about two years after it first closed its offices.
Connecting the dots: Employees may now stay at home a lot longer than initially forecast, making it harder or more disruptive for them to return them to the office. New routines have been developed during the pandemic, like swapping commuting for exercise or spending more time with family. Some are even thinking that the return to the office could weigh on productivity or make it harder to attract new employees that are more than happy to work in their pajamas.
"If you have a little blip, people go back to the old way. Well, this ain't a blip," said Intel CEO Pat Gelsinger.
Go deeper: Many are touting the future as a "hybrid" work model, where some days are in the office and others are at home, as companies make decisions about their future work environment. Others are sizing up the effects hybrid work will have on the real estate industry, or office REITs in the investing world. "Rent collection has been fairly resilient, even with widespread remote work during the pandemic, due to tenants maintaining ongoing operations and long-term leases with expirations of generally less than 10% per annum over the next few years," according to Fitch Ratings.
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Stock futures are turning higher, all up by 0.3%, after a week in which the major averages saw some losses. Concerns surfaced over the Fed taking away the stimulus punchbowl, with tapering talk moving toward center stage. Investors will once again be watching monetary policy on Thursday and Friday as the Fed's annual economic symposium kicks off in Jackson Hole.
Commentary: "I think that Chairman Jerome Powell is going to step lightly as he did after the last minutes were said and say that 'there is potential, we're looking further, we're data-oriented,' all the sorts of things that come into Fedspeak," said Nomi Prins, author of Collusion: How Central Bankers Rigged the World. "But in terms of actual taper announcement and a specific timing, I don't think that this particular Jackson Hole episode is the time or the place, and I think the Fed’s going to be cognizant of this because of the virtual globality of it."
The FDA this week is also expected to grant its first full approval of a COVID vaccine - from Pfizer-BioNTech (PFE, BNTX). The authorization could encourage more people who are hesitant to get vaccinated, helping spur investing sentiment. The two-dose jab was first cleared by the agency on an emergency use basis in December for people 16 years and older, and is now recommended for anyone over the age of 12.
On today's economic calendar: The latest figures from the housing market come into focus, with existing home sales data being published this morning (new home sales are reported tomorrow). On the earnings front, JD.com (JD) and Madison Square Garden Entertainment (MSGE) will announce results before the open, while Palo Alto Networks (PANW) will release its Q2 report after the close.
Inching near the $50,000 level all weekend, Bitcoin (BTC-USD) finally climbed above the milestone on Sunday evening as the crypto continues to rebound from its collapse in early May. The upward movement sent the total market value of cryptocurrencies to $2.2T, while crypto trading volume over the last 24 hours reached $109B. Also rallying on the news: Cardano (ADA-USD) +9%; Binance Coin (BNB-USD) +6%; Ethereum (ETH-USD) +3%; Dogecoin (DOGE-USD) +2%.
Catalysts: On Friday, Coinbase said it would add $500M in crypto to its balance sheet and allocate 10% of profits into a crypto assets portfolio. PayPal has announced it will allow people to buy, hold and sell four types of cryptocurrencies - Bitcoin, Ethereum, Litecoin (LTC-USD) and Bitcoin Cash (BCH-USD) - in the U.K. It's the company's first international expansion for its crypto offering outside the U.S., where it launched the service in October 2020.
Global crypto adoption has risen some 881% in the past 12 months, according to crypto data firm Chainalysis, which uses factors like peer-to-peer exchange trading volume and value received.
Outlook: While $50K makes for a nice headline, the level to watch might be a bit higher. "The minor breakouts reflect positive short-term momentum and improved intermediate-term momentum following July's successful test of support near $30K. The next hurdle on the chart is just above $51K," wrote Katie Stockton, technical strategist at Fairlead Strategies. She also points out that Bitcoin (BTC-USD) has passed other tiers of resistance in recent weeks, including its 50-day and 200-day moving averages.
American banks are exercising more caution on transactions with Afghan counterparts as they wait for guidance from U.S. officials on whether sanctions on the Taliban will apply across the country now that the Islamist group is in control, WSJ reports. That comes as the two big U.S. money-transfer services - Western Union (WU) and MoneyGram International (MGI) - halted payments into Afghanistan, which consequently serve as an important source of support for many Afghan families.
Other action: The Financial Action Task Force, a global terror-finance watchdog organization, also warned member countries that they must freeze assets of the Taliban given its designation as a terrorist group assigned by the U.S., the United Nations, and other countries. Given that the Taliban has taken control of institutions of the state, markets and key industries, finance officials are expressing concern that the sanctions will apply to a broader range of transactions.
So far, the U.S. Treasury Department hasn't provided much in the way of guidance to the financial industry, but former Treasury officials told the WSJ that the decision on whether to broaden the application of sanction will hinge, in part, on how the Taliban governs. Withholding public guidance now, they say, gives the U.S. government leverage in its diplomatic efforts by keeping its options open for wider sanctions.
Commercial help: The Biden administration has meanwhile ordered six domestic airlines to contribute 18 total planes to help with the evacuation of Americans and Afghans seeking to leave country after the Taliban takeover, only the third time in 70 years for such a request. American Airlines (AAL), Atlas Air (AAWW), Delta Air Lines (DAL) and the Omni Air unit of Air Transport Services (ATSG) will provide three planes each, while Hawaiian Holdings (HA) will send four and United Airlines (UAL) will pitch in with two jets. The commercial aircraft will not fly in and out of Kabul, but will ferry evacuees to the U.S. from bases in Germany, Qatar and Bahrain to ease transport bottlenecks.
In Asia, Japan +1.8%. Hong Kong +1.1%. China +1.5%. India +0.4%.
In Europe, at midday, London +0.4%. Paris +0.9%. Frankfurt +0.2%.
Futures at 6:20, Dow +0.3%. S&P +0.3%. Nasdaq +0.3%. Crude +2.9% at $63.91. Gold +0.4% at $1790.30. Bitcoin +1.8% at $50298.
Ten-year Treasury Yield +2 bps at 1.28%
Today's Economic Calendar
What else is happening...
Three sectors are expected to drive S&P earnings through 2021.
As the crypto concept turns 50, could its market cap rival gold?
Broadcast bounces back in Nielsen TV Gauge, but streaming marches on.
Oil and gas companies continue to hold the line on capex.
Money supply growth may give clues about Bitcoin price path.