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Stock Markets Ignore Bad News on Infections, Earnings


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As coronavirus infections surge in the U.S., fears are rising that the nascent economic recovery is fizzling. But investors seem unfazed.

Daily cases are setting records, with Florida recording the highest one-day total to date over the weekend. Hospitals are straining; health officials warned that more people will die; the country’s top infectious disease expert, Dr. Anthony Fauci, is reportedly being sidelined; and challenges remain in both diagnostic testing and procuring safety equipment.

That’s weighing on the economy. Morgan Stanley economists worry that the U.S. could start shedding jobs, while Bank of America warned that the V-shaped phase of the recovery has given way to a slower “healing phase.”

• Consumers are anxious. A YouGov survey found over a third of Americans would save an unexpected windfall rather than spend it. (That feeling is more pronounced overseas, with nearly 60 percent of Britons preferring to save the money.)

• And the reopening of offices isn’t always going smoothly, with tension between coworkers over masks, social distancing and more, The Wall Street Journal’s Sarah Needleman reports.

Yet U.S. stock futures are up today, following gains in Asia and Europe. That makes some market watchers uneasy. “This is one of those moments where we have to be realistic about bad news, rather than throw up our hands and pretend it’s not happening,” Bloomberg Opinion’s Cathy O’Neil writes.

• The disconnect will be put in sharper relief by the start of earnings season. S&P 500 companies are expected to report a 44 percent drop in profits, on average, for the second quarter; Goldman Sachs analysts think the decline could be more like 60 percent.

• Although investors will pay more attention to executives’ forward-looking comments, worse-than-expected results, combined with signs of stalled-out growth, would make lofty valuations look even more detached from reality.

Chatham Asset Management has won the bidding for McClatchy. The hedge fund, which owns The National Enquirer, prevailed in a competitive auction for the bankrupt newspaper publisher. Chatham plans to keep all 30 of McClatchy’s news outlets, which include The Kansas City Star, The Miami Herald and The Sacramento Bee.

Amazon ordered employees to delete TikTok — then changed its mind. The company told workers on Friday to remove the video app from cellphones, then hours later said that the order was sent in error. Policymakers are concerned that the Chinese-owned app poses national security risks, and users worry that it may be banned.

Corporate leaders urge President Trump to leave DACA alone. Executives of Amazon, G.M. and Hilton, as well as the U.S. Chamber of Commerce, pressed the White House to keep Obama-era protections for 800,000 young immigrants after the Supreme Court ruled that an attempt to wind the program down was improper.

Tesla is close to setting a dubious record. The electric-car maker may become the first company to have its stock face $20 billion worth of short interest, or bets that its shares will drop, according to data from S3 Partners. So far this year, the company’s shares have gained more than 200 percent.

Thousands turned out for Walt Disney World’s reopening. The theme park welcomed visitors — after imposing coronavirus safety measures — on Saturday, even as Florida reported more than 15,000 new coronavirus cases. “We will take any amount of normalcy and any amount of joy that we can get,” one attendee told The Times.

Washington’s pro football team is expected to announce as soon as today that it will drop the “Redskins” name, which many consider to be a slur.

FedEx played a huge role, The Times’s Ken Belson and Kevin Draper report. The logistics company pays $8 million a year for naming rights to the team’s stadium, and its chairman, Fred Smith, is a minority owner of the franchise.

• The company said on July 2 that it would withdraw from the stadium deal if the team name wasn’t changed. The next day, team officials said they would conduct “a thorough review” of the matter.

FedEx’s letter “was really a turning point,” one N.F.L. owner told The Times, adding — in acknowledgment of protests over systemic racism — “at this point in time, you can’t be insensitive.”

The expected announcement won’t include the new name, The Washington Post reports: There’s a trademark fight that needs to be settled.

Michelle Leder is the founder of the S.E.C. filing site footnoted*. Here, she explains how a seemingly obscure rule change could greatly reduce what we know about institutional investors’ portfolios. You can follow her on Twitter at @footnoted.

On Friday, a popular time to publish controversial news, the S.E.C. proposed sweeping changes to the financial disclosure filing known as 13-F. It came in the form of a 53-page document with 90-odd footnotes.

The forms, which are published each quarter by institutional investors who manage over $100 million in assets, have been a staple of investment research for more than 40 years. They reveal quarter-end stock holdings, which are used to track the buying and selling of shares by the so-called smart money.

Under the S.E.C.’s proposal, the filing threshold would rise to $3.5 billion, “reducing unnecessary burdens on smaller managers,” according to Jay Clayton, the commission’s chairman. The change would eliminate nearly 90 percent of all 13-F filings, based on the regulator’s own research.

The S.E.C. notes that the change would still require disclosure for 90 percent of the dollar value of stock holdings. Very large investors, like Warren Buffett’s Berkshire Hathaway, whose holdings are tracked obsessively, would still be required to file 13-F’s, as would boldface names like Bill Ackman’s Pershing Square, Seth Klarman’s Baupost Group, and Dan Loeb’s Third Point.

Not everyone finds the forms useful. A longstanding complaint is that 13-F disclosures are out of date, since filers have up to 45 days to disclose their holdings. (The S.E.C. has ignored calls to make these disclosure more timely.) The forms do not account for short positions or other types of investments. And filers can request “confidential treatment” that delays disclosure, as Berkshire Hathaway did in 2015 as it was building a position in Phillips 66.

One S.E.C. commissioner, Allison Herren Lee, issued a statement opposing the change. Ms. Lee, who was nominated by President Trump last year, said that the proposed rule “joins a long list of recent actions that decrease transparency.”

The S.E.C. is soliciting public comment on the proposal for 60 days.

The Oracle of Omaha said last week that he had given $2.9 billion to charity. That generated headlines about his generosity — and made room for others to surpass him in net worth, which now stands at $69 billion.

• There’s Mukesh Ambani, India’s richest man, whose Reliance Industries has more than doubled in stock price since March. Net worth, per Bloomberg: $70.2 billion.

  • Updated July 7, 2020

    • What are the symptoms of coronavirus?

      Common symptoms include fever, a dry cough, fatigue and difficulty breathing or shortness of breath. Some of these symptoms overlap with those of the flu, making detection difficult, but runny noses and stuffy sinuses are less common. The C.D.C. has also added chills, muscle pain, sore throat, headache and a new loss of the sense of taste or smell as symptoms to look out for. Most people fall ill five to seven days after exposure, but symptoms may appear in as few as two days or as many as 14 days.

    • Is it harder to exercise while wearing a mask?

      A commentary published this month on the website of the British Journal of Sports Medicine points out that covering your face during exercise “comes with issues of potential breathing restriction and discomfort” and requires “balancing benefits versus possible adverse events.” Masks do alter exercise, says Cedric X. Bryant, the president and chief science officer of the American Council on Exercise, a nonprofit organization that funds exercise research and certifies fitness professionals. “In my personal experience,” he says, “heart rates are higher at the same relative intensity when you wear a mask.” Some people also could experience lightheadedness during familiar workouts while masked, says Len Kravitz, a professor of exercise science at the University of New Mexico.

    • I’ve heard about a treatment called dexamethasone. Does it work?

      The steroid, dexamethasone, is the first treatment shown to reduce mortality in severely ill patients, according to scientists in Britain. The drug appears to reduce inflammation caused by the immune system, protecting the tissues. In the study, dexamethasone reduced deaths of patients on ventilators by one-third, and deaths of patients on oxygen by one-fifth.

    • What is pandemic paid leave?

      The coronavirus emergency relief package gives many American workers paid leave if they need to take time off because of the virus. It gives qualified workers two weeks of paid sick leave if they are ill, quarantined or seeking diagnosis or preventive care for coronavirus, or if they are caring for sick family members. It gives 12 weeks of paid leave to people caring for children whose schools are closed or whose child care provider is unavailable because of the coronavirus. It is the first time the United States has had widespread federally mandated paid leave, and includes people who don’t typically get such benefits, like part-time and gig economy workers. But the measure excludes at least half of private-sector workers, including those at the country’s largest employers, and gives small employers significant leeway to deny leave.

    • Does asymptomatic transmission of Covid-19 happen?

      So far, the evidence seems to show it does. A widely cited paper published in April suggests that people are most infectious about two days before the onset of coronavirus symptoms and estimated that 44 percent of new infections were a result of transmission from people who were not yet showing symptoms. Recently, a top expert at the World Health Organization stated that transmission of the coronavirus by people who did not have symptoms was “very rare,” but she later walked back that statement.

    • What’s the risk of catching coronavirus from a surface?

      Touching contaminated objects and then infecting ourselves with the germs is not typically how the virus spreads. But it can happen. A number of studies of flu, rhinovirus, coronavirus and other microbes have shown that respiratory illnesses, including the new coronavirus, can spread by touching contaminated surfaces, particularly in places like day care centers, offices and hospitals. But a long chain of events has to happen for the disease to spread that way. The best way to protect yourself from coronavirus — whether it’s surface transmission or close human contact — is still social distancing, washing your hands, not touching your face and wearing masks.

    • How does blood type influence coronavirus?

      A study by European scientists is the first to document a strong statistical link between genetic variations and Covid-19, the illness caused by the coronavirus. Having Type A blood was linked to a 50 percent increase in the likelihood that a patient would need to get oxygen or to go on a ventilator, according to the new study.

    • How can I protect myself while flying?

      If air travel is unavoidable, there are some steps you can take to protect yourself. Most important: Wash your hands often, and stop touching your face. If possible, choose a window seat. A study from Emory University found that during flu season, the safest place to sit on a plane is by a window, as people sitting in window seats had less contact with potentially sick people. Disinfect hard surfaces. When you get to your seat and your hands are clean, use disinfecting wipes to clean the hard surfaces at your seat like the head and arm rest, the seatbelt buckle, the remote, screen, seat back pocket and the tray table. If the seat is hard and nonporous or leather or pleather, you can wipe that down, too. (Using wipes on upholstered seats could lead to a wet seat and spreading of germs rather than killing them.)

    • What should I do if I feel sick?

      If you’ve been exposed to the coronavirus or think you have, and have a fever or symptoms like a cough or difficulty breathing, call a doctor. They should give you advice on whether you should be tested, how to get tested, and how to seek medical treatment without potentially infecting or exposing others.

• And there’s Elon Musk, who has benefited from a run-up in Tesla’s shares. Net worth: $70.5 billion.

Mr. Buffett is now 10th on Bloomberg’s list, behind Jeff Bezos, Bill Gates, Mark Zuckerberg, Bernard Arnault, Steve Ballmer, Larry Page, Sergey Brin, Mr. Musk and Mr. Ambani.

🏦 America’s biggest banks report second-quarter earnings this week, with analysts expecting loan-loss provisions to eat into profits in a major way. Trading and fee income will help those with strong investment banking divisions, but the probable drop in earnings could put pressure on dividends. Citigroup, JPMorgan Chase and Wells Fargo report on Tuesday, Goldman Sachs is up on Wednesday, and Bank of America and Morgan Stanley round things out on Thursday.

🗣 Other companies reporting earnings this week: Delta Air Lines on Tuesday, kicking off what’s expected to be the worst quarter ever for airlines; Netflix on Thursday, giving an update on how lockdowns have lifted subscriptions; and Johnson & Johnson, also on Thursday, providing news on its coronavirus vaccine. BlackRock, Burberry, Charles Schwab, Domino’s Pizza and PepsiCo are also due to release results.

🛢 OPEC members and Russia will hold a virtual meeting on Wednesday, in which the major oil-producing states are expected to reverse production cuts. But a resurgence in coronavirus infections may scuttle those plans.

💰 Officials at central banks around the world will debate economic stimulus. The Bank of Canada and Bank of Japan are to announce their latest moves on Wednesday, and the European Central Bank on Thursday.

🛍 Key gauges of U.S. consumers will come on Thursday, with the data on retail sales, and Friday, with a reading of consumer confidence. Both are expected to improve, but not by as much as last month.


• Multiplan, a health care services provider, agreed to merge with the “blank-check” investment company Churchill Capital III and go public in a $11 billion deal. It’s the biggest merger to date to be structured that way. (Reuters)

• Virgin Atlantic is reportedly close to securing $504 million in emergency funding from the investment firm Davidson Kempner. (Bloomberg)

Politics and policy

• Nearly 60 universities, including Stanford and Duke, filed a motion to support Harvard and M.I.T.’s lawsuit opposing Trump administration visa guidelines for international students. (Bloomberg)

• Disagreements between the Fed and the Treasury Department reportedly delayed the central bank’s Main Street lending program. (WSJ)


• Facebook, which is under pressure for allowing misinformation and hate speech, is considering banning political ads. (NYT)

• The carmaker Rivian has raised $2.5 billion as it races Tesla and Nikola to introduce the first all-electric pickup. (CNBC)

Best of the rest

• “Wall Street Gets the Flak, But Tech C.E.O.s Get Paid All the Money” (Bloomberg)

• Why a crisis is a good time to raise workers’ pay. (FT)

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