Wednesday Morning Reads
- China’s Real Estate Crisis Could Threaten Growth
- Chinese Media Walks a Fine Line
- The Reclusive Dictator
- Stagflation-Lite Looms
- Opt Out of Holiday Spending
- Bitcoin Sits Below All-Time High
- Stock Fear Gauge Defies Bond Turmoil
- Facebook Renaming Report Sparks Speculation
- Elon Musk Will Become a Trillionaire
- Of Shots and Supply-Chain Snarls
- The Incredible Disappearing Hotel Breakfast
There were fights over lockdowns, then face masks, but now the battle over vaccine mandates appears to be heating up across the country. On September 9, President Biden announced a new mandate that would apply to businesses with 100 or more employees, which is expected to cover some 80M workers nationwide. While it won't go into effect until federal regulators issue a rule, the mandate is expected to happen soon (it's also separate from an order that targets federal contractors).
Bigger picture: Shortly after the directive was announced, Arizona became the first state to sue Biden over the workplace mandate, while Montana preempted the federal action by passing an anti-mandate law. Florida has also promised to challenge the Biden administration's rule in federal court, though a recent challenge in Maine (based on religious exemptions) was rejected by the Supreme Court, and a bill that would have banned employers from requiring employees to be vaccinated failed in the Texas Legislature. States are not the only ones responding to the mandate as corporations who are most affected by the order express their opinions.
On Tuesday, General Electric (NYSE:GE) and Union Pacific (NYSE:UNP) announced that they would comply with the vaccine mandate deadline (Dec. 8) set by the Biden administration for companies that are federal contractors. Others, like UPS (NYSE:UPS) and Disney (NYSE:DIS) met with White House officials yesterday to discuss the private sector vaccine plan amid concerns it could worsen labor shortages and supply chain troubles. Meanwhile, Southwest Airlines (LUV) dropped a proposal to put unvaccinated staff on unpaid leave starting in December, while pilot labor unions have sought to block the mandates or sought alternatives such as regular testing.
Proof of vaccination: Some cities, like NYC, San Francisco and New Orleans, have taken vaccine mandates one step further, requiring indoor businesses to ask for proof of a dose before giving service. Some backlash has grown in these areas as well, with an In-N-Out in Fisherman's Wharf briefly shut down by the health department for not enforcing the city's vaccine mandate. "We refuse to become the vaccination police for any government," said Arnie Wensinger, In-N-Out's chief legal and business officer. "This is clear governmental overreach and is intrusive, improper, and offensive." (18 comments)
After an initial post-market rise following its earnings report, Netflix (NFLX) turned 2% lower as investors began digesting some of the streamer's numbers. While the company added a net 4.38M global subscribers - better than its own guidance for 1.54M, as well as analyst expectations for 3.5M - forecasts for the coming quarter (8.5M subs) stayed in line with last year's holiday period despite a slew of new shows and programming.
Quote: We're in uncharted territory," co-CEO Reed Hastings said on a post-earnings call. "We have so much content coming in Q4 like we've never had, so we'll have to feel our way through and it rolls into a great next year also."
Netflix is also tweaking its controversial approach to measuring shows' success, which had looked at the number of accounts that had viewed a title for at least two minutes in its first 28 days on the service. It will now focus on total hours viewed per title. That will make a slight difference in its rankings, but "we think engagement as measured by hours viewed is a slightly better indicator of the overall success of our titles and member satisfaction," adding it also gives proper credit to rewatching a show, traditionally a big draw for the service.
Squid Game: "A mind-boggling 142M member households globally have chosen to watch the title in its first four weeks." By comparison, under Netflix's now-former measurement system, Bridgerton's Season 1 was the most-viewed program (82M accounts) and Extraction the top movie (99M accounts). Stay tuned for later this week, when Squid Game marks its first full week in Nielsen's time-based rankings charts. (14 comments)
All the bad press Facebook (FB) has experienced in recent weeks will warrant a name change, according to The Verge's Alex Heath. The social network is still reeling from a massive internal document leak that showed Instagram made body image issues worse for a substantial minority of teen girls, as well as a ramping up of regulatory pressure and Congressional testimony. In fact, the rebranding could arrive in the coming week, per the report.
Something bigger? The move wouldn't just clear the company of bad vibrations, but follow in the footsteps of Google's (GOOG, GOOGL) parent company changing to Alphabet: Facebook wants to be known for more than social media. A separate parent name could put Facebook under a larger umbrella, along with Instagram, WhatsApp, Oculus and more.
It could also be good timing, given CEO Mark Zuckerberg's ambition to be the "Metaverse" company. As described in Wall Street Breakfast earlier this week, the Metaverse is an "embodied internet," where people can "interact in immersive, 3D and shared digital worlds." Facebook plans on hiring 10,000 skilled engineers across the EU over the next five years for the effort, which it calls "one of its most pressing priorities."
Possible date? Zuckerberg plans to talk about the name change at Facebook's Connect conference on Oct. 28, but could unveil it sooner. (38 comments)
While the company is still bleeding cash, WeWork (WE) is finally set to list on the public markets. Special purpose acquisition company BowX Acquisition's (BOWX) shareholders have voted to approve a business combination with the flexible workspace provider at a $9B valuation, which will list on the NYSE tomorrow under ticker "WE." WeWork lost $2.1B in the first quarter of the year, as well as $3.2B over 2020.
Backdrop: After filing IPO paperwork back in August 2019, WeWork faced intense scrutiny of its finances and leadership from investors and the media. A month later, the firm put its IPO on ice, CEO and co-founder Adam Neumann resigned, while SoftBank (OTCPK:SFTBY) - WeWork's biggest investor - took control of the company. The office space provider's valuation was then cut to as low as $10B from $47B. However, in the past year, WeWork has made changes to its corporate governance, announced large staff cuts and instituted a massive cost-cutting drive as it targets positive cash flow in 2021.
Outlook: Shares of BowX Acquisition tumbled nearly 10% on Tuesday after news of the merger broke, but have rebounded 3.5% in premarket trade. In a world that has gone through the coronavirus pandemic, many have found the appeal of work-from-home, which grants a more flexible framework and time with the family. However, the transition to remote work could also increase the appeal of WeWork's pitch to companies that want satellite offices for their workers or space for just a few days per week. (4 comments)
In Asia, Japan +0.1%. Hong Kong +1.4%. China -0.2%. India -0.7%.
In Europe, at midday, London flat. Paris -0.2%. Frankfurt flat.
Futures at 6:20, Dow flat. S&P flat. Nasdaq +0.1%. Crude -1% at $81.63. Gold +0.5% at $1778.80. Bitcoin +3% at $63977.
Ten-year Treasury Yield unchanged at 1.64%
Today's Economic Calendar
7:00 MBA Mortgage Applications
10:30 EIA Petroleum Inventories
12:00 PM Fed's Evans: "Racism and the Economy: Focus on the Wealth Divide"
12:00 PM Fed's Bostic: "Racism and the Economy: Focus on the Wealth Divide"
12:00 PM Fed's Kashkari: "Racism and the Economy: Focus on the Wealth Divide"
1:00 PM Fed's Quarles: Economic Outlook
1:00 PM Results of $24B, 20-Year Bond Auction
1:45 PM Fed's Bullard: "Racism and the Economy: Focus on the Wealth Divide"
2:00 PM Fed's Beige Book
8:35 PM Fed's Daly Speech
What else is happening...
Cathie Wood: Deflation is a bigger threat than inflation; here's how she's playing it.