Stocks, oil prices and government-bond yields slid Monday as anxiety mounted over the spread of the Delta coronavirus variant and its potential impact on the global economy.
The Dow Jones Industrial Average slumped 876 points, or 2.5%, in afternoon trading, putting the index on track for its worst one-day drop in point terms since October.
The S&P 500 fell 2%, while the technology-heavy Nasdaq Composite declined 1.3%. Monday’s losses marked an acceleration after U.S. stock indexes retreated last week, snapping a three-week winning streak.
Investors sheltered in the safety of government bonds. The yield on 10-year Treasury notes fell to 1.182%—its lowest level since February—from 1.30% Friday. Bond yields fall when bond prices climb.
Oil prices fell after the Organization of the Petroleum Exporting Countries and a Russia-led group of big producers agreed to raise production. Futures on Brent crude, the international benchmark, tumbled 6.7% to $68.68 a barrel, their lowest level in more than six weeks.
The moves were reminiscent of trading patterns that prevailed in the early days of the pandemic. Investors sold shares of companies directly affected by restrictions on movement and business, while buying government bonds and stocks that stood to benefit from renewed lockdowns.
Surging cases of the coronavirus in many parts of the world, including highly vaccinated countries such as the U.K., have prompted investors to dial down their expectations of economic growth in the coming months. Last week, some of California’s most populous counties either reimposed mask mandates or recommended wearing masks indoors to fight the Delta variant.
“The emergence of this more highly transmissible Delta variant…has brought into the question the sustainability of this reopening and the recovery,” said
a portfolio manager at Fiera Capital. Still, she said the variant would delay rather than derail a big pickup in economic activity and called the selloff a chance to scoop up shares of energy producers, industrial firms and financial companies.
Despite Monday’s selloff, the S&P 500 is up more than 12% this year and closed at a record just one week ago.
“The market has been due for a pause or pullback or, dare I say it, a correction,” said Hans Olsen, chief investment officer of Fiduciary Trust.
Some investors also are concerned that rising prices will pinch consumption and prompt central banks to withdraw stimulus, creating an environment of lower growth and higher inflation in which stocks tend to struggle.
Inflation accelerated to a 13-year high in the U.S. in June. Some evidence suggests that the price increases have started to knock consumers’ confidence in their ability to keep spending. For much of 2021, business reopenings, rising vaccination rates and government pandemic aid have helped propel rapid gains in consumer spending, the economy’s main driver.
“What you’re seeing is a sense that the consumer is starting to be affected quite significantly” by the jump in prices, said
senior macro strategist at Nordea Asset Management.
All 11 sectors of the S&P 500 dropped Monday. Energy and financials were the worst-performing groups.
plans to buy the provider of cloud-based customer-service software in a deal valuing the firm at $14.7 billion. Zoom shares shed 4.1%.
The National Bureau of Economic Research said Monday that the U.S. officially climbed out of a recession in April 2020. The pandemic-driven recession was two months long, making it the shortest on record, according to the bureau, the official arbiter of U.S. recession dates.
Looking ahead, investors will be monitoring corporate earnings this week for signs of how companies are faring amid the revival of economic activity. Air carriers American and United are among the hundreds of companies set to report quarterly results this week, along with
weighed on Hong Kong’s Hang Seng Index, which fell 1.8%.
Japan’s Nikkei 225 dropped 1.3%. More athletes and staff members attending the Tokyo Olympics have tested positive, while cases are surging in Indonesia. Sydney, Australia’s most populous city, is under lockdown because of a Delta outbreak.
David Chao, a market strategist at Invesco, said the spread of the Delta variant across Asia, coupled with low vaccination rates and expectations of additional social-distancing measures, has “taken wind out of the sail for many investors expecting an economic rebound” in the region.
Mr. Chao said he expected investors to continue to pull funds out of Asian stocks and shift them to shares in developed markets with high inoculation rates, such as the U.S. and U.K.
When New York City is at its bleakest, that’s when Ian Schrager tends to shine.
There was 1977, the Summer of Sam. A serial killer prowled the boroughs. Times Square was a cesspool. Martin Scorsese’s “Taxi Driver” might as well have been a documentary film. After dark, people were terrified to go outside. That’s the year Schrager and partner Steve Rubell decided to open a nightclub on Manhattan’s forlorn West Side.
“The West Side was like no-man’s-land, like bombed-out London in the ’40 and ’50s,” Schrager recalled. “Just an unseemly, dangerous place where nobody wanted to go. One of the reasons we went there was because there wouldn’t be any problem with the neighbors.”
Studio 54, they called their club, and New York nightlife would never be the same.
“When times are bad, people always seek out an escape — always,” Schrager said, the Brooklyn in his voice only partly sandpapered away by decades of Vanity Fair adulation and gossip-worthy friends. “I opened my first hotel under Ronald Reagan when interest rates were 21, 22%. So, I learned very quickly what Tiger Woods said about golf, that winning takes care of everything. The vagaries of the economy just don’t matter when you go to market with a good product.”
With his first flurry of New York hotels — Morgans, the Royalton and the Paramount — Schrager invented the modern boutique hotel. With the Delano in Miami and the Mondrian in West Hollywood, he defined urban resort. After selling his expanded Morgans Hotel Group in 2005, he turned his attention to high-end residential buildings including Manhattan’s 40 Bond and 50 Gramercy Park North, then began rethinking hotels all over again.
Just in time for New York’s latest slap upside the head.
“Ridiculous!” Schrager scoffs. “New York is forever. And I don’t believe in paradigm shifts. We haven’t had one of those since Noah and the Great Flood. We always go back to living the way we lived before. Always. I don’t have any data. I can’t tell you when. But I felt that way in March of last year, despite what all the experts and pundits were saying. No. We will absorb this shot. We will move on. Even 2008, when we almost went into a financial meltdown, a few years later, what happens? Everybody goes back to what they were doing.”
It’s all just a matter of riding the wave.
Schrager’s current wave is something called the PUBLIC hotel, which he describes as a new approach to luxury hospitality, a luxury almost anyone can afford, at least every once in a while.
The 367-room PUBLIC Hotel New York, designed by Pritzker Prize-winning architects Herzog & de Meuron with minimalist interiors by British designer John Pawson, is a contemporary 28-story building at 215 Chrystie St. on the Lower East Side near the Bowery, another New York district not always known as a tony destination. As at most hotels, the rates bounce around a bit depending on occupancy. But they’re hovering in the $200s, not the $500s and $600s that some high-end New York hostelries demand.
“You know luxury is not only for rich people,” Schrager said. “Luxury is a state of being, a state of mind. It’s about feeling comfortable and having the freedom of time and being treated very kindly and in a very friendly way, rather than being inundated with all these telltale things from the past. White gloves. Gold buttons. Bone china. Who needs all those luxuries from Europe in the 17th and 18th centuries? That doesn’t cut it anymore.”
Today, Schrager said, hotel guests want to check in quickly and get up to their rooms. They want the cappuccino now and don’t care if it’s served in a china cup and saucer. They want fast Wi-Fi. They’re happy to carry — or more likely roll — their own suitcases to the room. “Suitcases have wheels now,” Schrager said. “Why do you need one person to unpack your car for you and someone else to bring your luggage to the room, when you’ll have to tip both of them $5? We’d rather focus on the service that matters.”
Now that the post-pandemic visitors are finally returning to New York — vacation and business travelers — his hotel is buzzing again, Schrager said. “I do think the pandemic has made people think about what’s important to them. There is a more spiritual understanding of what matters.”
Schrager is also in business with Marriott International MAR, -2.52%,
having partnered with the company on its new luxury-lifestyle line of EDITION Hotels. “We’re doing about 40 of them around the world,” he said. “I don’t build them. I don’t purchase them. I just create them.”
But the PUBLIC is his. “I think this is the future of the industry, to be able to provide a really sophisticated product with exciting food and beverage and entertainment options and great service that’s available to anybody. People aren’t stupid. They know the real thing when they see it.”
The plan, he says, is to “do 10 of them over the next five years and then sell to someone who can do a hundred.”
Then, Ian Schrager can go create something else.
Ellis Henican is an author based in New York City and a former newspaper columnist.
Officials say the Miami-Dade County Courthouse will begin undergoing repairs immediately after a review found safety concerns within the building
ByThe Associated Press
July 10, 2021, 2:19 PM
• 3 min read
MIAMI — The Miami-Dade County Courthouse will begin undergoing repairs immediately after a review, prompted by the deadly collapse of a nearby condominium building, found that safety concerns exist within the courthouse, officials said.
A joint statement from multiple leaders released late Friday said an engineer’s report recommended floors 16 and above be closed to staff at the courthouse. The leaders decided all courthouse employees would go back to working from home.
The courthouse, a historic building completed in 1928, is where most civil cases are heard and contains some administrative offices. Separate courthouses for criminal, children’s and family cases are not affected.
The statement said workers only recently returned to the building after working remotely due to the coronavirus pandemic. Court operations will go back to a remote format until the safety concerns are addressed. People with upcoming court proceedings scheduled to take place in person will be receiving a new notice with instructions, the statement said.
Miami-Dade Mayor Daniella Levine Cava, Circuit Court Chief Judge Nushin Sayfie and Clerk of Courts Harvey Ruvin released the statement.
Specific details about what repairs are needed were not disclosed. The courthouse was built in 1928 and added to the U.S. National Register of Historic Places in 1989, news outlets reported. The building has 28 floors.
Miami-Dade County is in the early stages of construction of a new civil courthouse, with plans to sell the historic building. Over the years it has been beset by leaks, mold and issues with its facade.
The building underwent a review following the collapse of Champlain Towers South in Surfside.
Miami-Dade County Mayor Daniella Levine Cava said Saturday that 86 people were confirmed dead and 43 unaccounted for.
“Please pray for all those who’ve lost loved ones and for those whose hearts are broken by this unspeakable tragedy.”
The recovery effort was to continue despite expected bad weather throughout the day. She added that recovery work paused for about an hour after a nearby lightning strike at 7 a.m. Saturday. No evidence of asbestos has been found at the site so far, she said.
Several other buildings have been reviewed to search for any structural concerns, and some — such as a condo building in North Miami Beach — have been evacuated.
The statement said the courthouse’s basement would also undergo an inspection to determine whether additional repairs are needed.
U.S. stock futures edged lower Friday as investors assessed fresh waves of Covid-19 infections globally that could hamper global supply chains and drive up inflation.
Futures tied to the S&P 500 ticked down almost 0.3%, a day after it closed at a record. The broad market index remains on track for its best month since November. Nasdaq-100 futures declined 0.3%, suggesting that technology shares may be among the weakest performers after the opening bell.
Rising Covid-19 cases in Brazil and India and signs of weakening in China’s manufacturing sector are sapping some of the optimism that took the major indexes up to all-time highs earlier in the week. New variants are threatening to hobble global travel, convulse supply chains further and slow the recovery, investors say.
Signs that the U.S. growth is accelerating are also stoking concern that inflation may rise too much, driven by a persistent shortage of products like electronic chips and the prospect of more fiscal stimulus flooding markets. Persistent inflation can erode portfolio returns.
“That is where the market is, wrestling between those two,” said Edward Park, chief investment officer at Brooks Macdonald.
If the supply constraints and inflationary factors extend into next year, “the growth parts of the markets, which are supported by this ultra cheap money environment, will struggle,” he added.
New economic data from China weighed on sentiment, with official gauges for manufacturing falling short of expectations in April. China’s statistics bureau said global chip shortages, international logistics jams and rising delivery costs have weighed on factory operations.
Increased costs for businesses due to supply-chain issues could be passed on to consumers, boosting prices, investors said.
High cases of Covid-19 in India, Brazil and Japan have bolstered concerns that new variants could emerge and spread globally. A variant of the coronavirus first spotted in India has been detected in the U.S. and 18 other countries and territories. Another variant from Brazil that has been detected in more than 30 nations.
“The third wave is the big thing,” Mr. Park said. “The greater the case count, the greater the chance a new variant is created that unwinds a lot of the good work being done in the vaccine rollout program.”
In bond markets, optimism about U.S. growth prospects—stemming from better-than-expected corporate earnings, signs of the labor market’s recovery, and President Biden’s new $1.8 trillion spending proposal—have encouraged money managers to sell government bonds, considered the safest assets. There are also growing concerns that inflation could curtail the returns from fixed-income securities, and from stocks that are richly valued for their future cash flow.
The yield on the 10-year Treasury note ticked up to 1.645% from 1.639% Thursday, and is poised to extend its advance for five of the past six days. Yields rise when prices fall.
“You’re seeing a lot of companies reporting pricing pressures, supply chain disruptions, coupled with all this extra stimulus coming through from the U.S. that is why people are now really starting to focus on inflation,” said Edward Smith, head of asset allocation research at U.K. investment firm Rathbone Investment Management. “Persistent inflation beyond spring is the biggest risk to markets this year, because it could cause the Fed to taper and hike interest rates sooner than expected.”
Investors are likely to continue monitoring earnings, with energy giants
Fresh figures on U.S. consumer spending, due at 8:30 a.m. ET, are expected to show a rebound in March. Economists anticipate that Americans boosted spending as warmer weather and the vaccine rollout encouraged people to spend stimulus checks and savings.
Overseas, the pan-continental Stoxx Europe 600 edged 0.1% higher.
Most major indexes in Asia declined by the close of trading. Hong Kong’s Hang Seng shed almost 2%. The Shanghai Composite Index, South Korea’s Kospi and Japan’s Nikkei 225 each fell 0.8%.
as an existential threat to his dream of the future. So
decided to fight. He gave his dispute with the world’s biggest company a code name: Project Liberty.
The clash was a bold gambit from a man who built an empire around “Fortnite,” the online multiplayer shooter game filled with cartoonish characters that became a phenomenon beloved by teenagers around the world. The ambition of Epic Games Inc.’s chief executive was that Fortnite’s legions of devoted young fans could turn it into a thriving social network, and help realize his vision of the “metaverse,” a shared virtual world where people might one day live, work and hang out.
Mr. Sweeney saw Apple as a central roadblock to that vision, according to people familiar with his thinking and documents unveiled in a recent court proceeding, because of the iPhone maker’s tight control over how people access “Fortnite” and any other mobile apps from Epic. Apple’s App Store takes a 30% cut of Epic’s revenue from those users.
Epic circumvented Apple’s fees and rules last August by introducing its own system for processing user purchases into mobile versions of “Fortnite.” It also prepared for a larger legal and public-relations campaign, complete with a video mocking a legendary Apple ad and the social-media hashtag #FreeFortnite.
“You’ll enjoy the upcoming fireworks show,” Mr. Sweeney said in an email to an ally at
Google booted “Fortnite” from their app stores, Epic responded by suing both companies.
The fate of Epic’s fight has widespread implications for the entire technology world. It could help determine everything from how much revenue app developers are able to keep to how exposed Apple could be to potential antitrust violations. Apple has rejected claims it has monopoly power, saying that Epic broke the terms of a contract and engaged in a smear campaign.
A resolution could be drawing near. Starting May 3, the dispute goes to trial before federal Judge
Yvonne Gonzalez Rogers
in Oakland, Calif. The judge must decide whether Apple is misusing its power to quash competition or if Epic is merely trying to break its contract with the iPhone maker to boost its bottom line.
Save the world
The man at the center of this clash is a 50-year-old programmer who prefers an office uniform of cargo pants and T-shirts. He eschewed the clubby confines of Silicon Valley to locate Epic’s headquarters just outside of Raleigh, N.C. Mr. Sweeney’s previous dealings with other technology companies showcase his instincts for big and prolonged fights, as well as an eye for strategy. The Maryland native is worth more than $9 billion, according to Bloomberg’s Billionaires Index.
He launched Epic from his parents’ basement at age 20 in 1991 and evolved his company from solely building games for PCs to include those for videogame consoles and smartphones. In 2012, he sold a 40% stake of his company to
, in part to tap the Chinese tech giant’s expertise in mobile gaming and wringing money from users through small purchases known as microtransactions. (Mr. Sweeney remains Epic’s largest shareholder.) Epic also owns the video-chat app Houseparty and makes the Unreal Engine, a suite of software tools for developing games and producing special effects for television shows, movies and other types of digital content.
Epic’s biggest hit started with the 2017 launch of “Fortnite: Save the World,” then a $40 game for up to four players to fight zombies and build forts. A few months later, after disappointing results, Epic offered up a new, free-to-play mode called “Battle Royale,” in which 100 players duke it out until only one combatant or squad remains. It later sold virtual currency that players could use to acquire in-game perks such as an outfit to make their avatars appear as a Marvel Comics superhero.
To build the community, since only a small percentage of players make such purchases, Epic pushed console makers to allow users of one machine to play “Fortnite” with users of another machine, in what would be an industry first for all three major videogame systems. That meant a PlayStation player could join a match with a friend on Microsoft’s Xbox or
In the fall of 2017, Epic updated its software that briefly allowed a Sony PlayStation “Fortnite” player to compete against someone on Microsoft’s Xbox. It pulled that function back, saying it was a mistake, after online chat boards lighted up with excitement. Seeing what was possible, gamers demanded more. Players cast Sony as the villain on social media with hashtags such as #blamesony and #notfortheplayers, a harbinger for the Apple dispute.
As Sony internally debated its position, executives were worried about exposure of its consumer-behavior data and competitors taking an unfair share of their business, according to people familiar with the talks. They felt Epic had backed them into a corner and worried that finicky gamers would turn on them, the people said.
Following months of negotiations, Sony relented. Asked about it afterward, Mr. Sweeney described it simply as “an effort in international diplomacy.” Since then, the Tokyo-based company has twice invested in Epic, having most recently contributed around $200 million in a funding round that valued Epic at $28.7 billion. A spokesman for Sony declined to comment.
Mr. Sweeney’s hardball tactics with Sony helped him usher in cross-play across videogame consoles, personal computers and Apple and Android devices.
All hands on deck
The relationship with Apple was cordial for its first decade. In March 2018, “Fortnite” was launched on Apple’s App Store. A year later, Mr. Sweeney was at the annual Game Developers Conference celebrating how cross-play had helped the game grow to almost 250 million players world-wide – a smashing success. Apple’s managers were happy to help promote the new hit, offering technical and marketing assistance to Epic.
Mike Schmid, head of Apple’s games business development for the App Store, helped oversee the “Fortnite” rollout and several updates. In a court statement, he described an “all-hands-on-deck treatment to address Epic’s non-stop asks, which frequently involved middle-of-the-night calls and texts demanding short-turnaround.”
To manage the work, he assigned someone in Australia so Apple could provide 24-hour coverage.
The relationship described by Apple in court papers differs greatly from the experiences detailed by other developers on Apple’s iOS mobile operating system. Smaller software makers have complained about what they perceive as Apple’s seemingly arbitrary rules and mercurial ways.
With Epic, Apple appeared to go out of its way to help the gamemaker establish itself on the platform. Mr. Schmid said Epic employees had told him Apple represented just 7% of its revenue. He couldn’t be reached for comment through Apple.
“On a variety of occasions, Epic personnel have told me that if Apple did not comply with its demands, Epic would simply terminate its relationship with Apple and remove its games off the iOS platform,” Mr. Schmid said in court records. A core part of Apple’s antitrust defense is that Epic’s games are available on a variety of tech companies’ platforms, not just Apple’s.
By early 2020, “Fortnite” was showing signs of aging, although popularity for online games can sometimes ebb and flow due to new seasons or features. The privately held company doesn’t disclose financial records but app-analytics firm Sensor Tower Inc. estimates global consumer spending within “Fortnite” on Apple devices had fallen in the first quarter of last year to $70 million from a peak of almost $180 million in the third quarter of 2018. Epic Chief Financial Officer Joe Babcock, who departed the company in early 2020, said it expected the trend to continue, according to a deposition he gave cited by Apple. Mr. Babock couldn’t be reached for comment.
Epic disputes the notion that “Fortnite” was waning in popularity, as the company in May 2020 said it had reached 350 million registered accounts.
But for this new plan to work, the company needed to find a way it could afford to compensate its would-be partners. Apple’s 30% share, the presentation concluded, was an “existential issue” for its plan and needed to be cut so Epic could share a majority of the profit with creators.
The battle begins
Last spring Epic began sharpening its plan to wrest itself from Apple’s fees and control. Its team investigated ways to surreptitiously add an alternative payment system to the versions of “Fortnite” on Apple and Google’s app stores, according to court records. By May Epic decided it would deploy the new system through a so-called hotfix, an important software update usually reserved for security bugs, records show, and do so just before the debut of the game’s new season.
Epic executives initially considered targeting Google alone, according to court records citing internal emails. But later they decided to include Apple, which in time would become the focus of the effort.
From an early stage, the plan depended on Epic’s payment system being rejected, read an email between Epic executives disclosed in court records. At that point: “The battle begins. It’s going to be fun!”
predicted there was a greater than 50% chance Apple would immediately remove “Fortnite” from its platforms, according to an Epic employee deposition cited in court records. “They may also sue us to make an example.” Mr. Rein declined to comment.
While it worked on the technical attack, Epic also planned to cut prices on certain items in the console and PC versions of “Fortnite” by 20%— essentially creating a reason for players to eschew the mobile alternative offered by Apple.
But first, Epic would go to the front door and ask a favor of Apple and Google: The company wanted permission to run its own competing store and payment system.
In a late June email to Apple CEO
according to court records, Mr. Sweeney sought an exemption from App Store rules. Most important, he wanted to stop paying Apple’s 30% fee.
Apple rejected the request in a July 10 letter, laying out many of the same arguments it would make in defending itself against the eventual Epic lawsuit. Epic had other ways to sell its game, Apple’s lawyer added, as well as noting Epic collects royalties from games built on its software.
“Yet somehow, you believe Apple has no right to do the same, and want all the benefits Apple and the App Store provide without having to pay a penny,” the letter concluded. “Apple cannot bow to that unreasonable demand.”
Mr. Sweeney on July 17 responded with another email to Mr. Cook and others calling the response a “self-righteous and self-serving screed.” He promised to “continue to pursue this, as we have done in the past to address other injustices in our industry.”
Behind the scenes, Epic’s Project Liberty team met regularly and devised a way to present their plan to a judge and the public. The team included as many as 200 Epic staffers, outside lawyers and public-relations advisers. It developed an argument that Apple violated antitrust laws with its requirements that all apps offered on its iPhones and iPads go through its App Store and that all purchases of digital content go through the tech giant’s in-app purchase system.
It wasn’t a unique gripe. Other app makers, including
and Spotify Technology SA, have also butted heads with Apple on its slice of fees and control. Apple says the walled mobile-software garden it built in 2008 is now responsible for more than a half-trillion dollars in commerce.
Epic’s team worried it wouldn’t be a sympathetic character in a public fight and that gamers would blame the company if Apple and Google ultimately decided to yank “Fortnite.” So it strategized on how to bring in additional companies, including smaller, sympathetic developers, to advocate for its cause, records say. It also studied past Apple responses to major public fights, focusing on its battle with the Federal Bureau of Investigation over demands to create a backdoor into the iPhone of a shooter in a 2015 terrorist attack in San Bernardino, Calif. The controversy subsided when the government found an alternative way into the device.
The Epic team concluded that Apple could be thin skinned when it came to its public image. “Nothing moves Apple to change other than notable consumer pressure,” an Epic memo noted.
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As August approached, Epic’s board of directors was briefed on the project’s final pieces in a presentation dubbed “battle plan.” By this point, the board was told, Epic had spent time helping form the Coalition for App Fairness, an advocacy group, to support its crusade and it tested the payment system that would eventually be uploaded to Apple’s and Google’s app stores.
Mr. Sweeney sent emails to Sony, Microsoft and Nintendo alerting them to the upcoming price changes in “Fortnite,” a prelude to the “fireworks show.”
On Aug. 13, he lighted the fuse. “Epic will no longer adhere to Apple’s payment processing restrictions,” Mr. Sweeney wrote at about 2 a.m. in an email to Apple. Hours later, Epic flipped the switch on the new payment system and a public-relations campaign to rally gamers to its fight.
Project Liberty was in play.
Apple and Google both booted the game by day’s end, springing the second part of Epic’s plan: a legal battle.
A trial date hasn’t been set in Epic’s lawsuit against Google, though the situation is distinct. Devices that run Google’s Android operating system can download software from other app marketplaces in addition to the Google Play store. Google has said that Epic violated its app store’s policies as well, which are designed to keep it safe for users.
In the months after its lawsuit, Epic pursued complaints with regulators around the world and supported lobbying efforts among statehouses and Congress for changes that would crimp Apple’s power. It also released an online video that echoed Apple’s famous 1984 ad, a nod to George Orwell’s dystopian novel, that framed the computer maker as the underdog against the then-mighty
This time around, the image of a televised Big Brother was replaced by one of a talking Apple wearing glasses similar to those of Mr. Cook. The call to action at the end read: “Join the fight to stop 2020 from becoming ‘1984.’ ”
U.S. stock futures wobbled Wednesday as an increase in global Covid-19 infection levels led to concerns about the pace of economic recovery.
Futures tied to the S&P 500 and the Dow Jones Industrial Average wavered between gains and losses after two straight days of declines. Technology-heavy Nasdaq-100 futures slid 0.3%.
A new wave of Covid-19 infections is sweeping through a number of countries including India and Japan, raising the prospect of fresh hurdles to the anticipated global economic rebound. Health authorities are also warning that new variants may emerge that are resistant to the existing batch of coronavirus vaccines. Given those concerns, investors are putting the brakes to what has been a furious rally in stocks in recent weeks, leaving the major indexes hovering near record highs.
“There are still risks in this market, particularly as it relates to the vaccine rollout and virus mutations,” said Shoqat Bunglawala, head of international multiasset investments at Goldman Sachs Asset Management. “We’re still likely to be in an environment with some volatility.”
Investors are also closely monitoring corporate earnings to see if the current valuations of expensive stocks can be justified.
will post earnings after the New York closing bell.
“We expect earnings to surprise on the upside, but the risks are asymmetric. In an environment where markets are at record highs, any company that doesn’t deliver is really punished,” said
chief strategist at Pictet Asset Management. “Over the next few months the direction of earnings will determine the direction of the market.”
The retreat in U.S. stocks this week is simply a “normal pause” in a bull market, with investors taking the opportunity to book profits and reassess their risk appetite, Mr. Paolini said. “As long as the U.S. economy is strong, it’s not really worth the risk of betting against the equity market.”
CAMBRIDGE, Mass. (Project Syndicate)—President Joe Biden’s $2 trillion infrastructure plan is likely to be a watershed moment for the American economy, clearly signaling that the neoliberal era, with its belief that markets work best and are best left alone, is behind us. But while neoliberalism may be dead, it is less clear what will replace it.
The challenges that the United States and other advanced economies face today are fundamentally different from those they faced in the early decades of the 20th century. Those earlier challenges gave rise to the New Deal and the welfare state. Today’s problems—climate change, the disruption of labor markets due to new technologies, and hyper-globalization—require new solutions.
We need a new economic vision, not nostalgia for a mythicized age of widely shared prosperity at home and global supremacy abroad.
On climate change, Biden’s plan falls short of the Green New Deal advocated by progressive Democrats such as Rep. Alexandria Ocasio-Cortez. But it contains significant investments in a green economy, such as supporting markets for electric vehicles and other programs to cut carbon-dioxide emissions, making it the largest federal effort ever to curb greenhouse-gases.
Economics is different from an arms race. A strong U.S. economy should not be a threat to China, just as Chinese economic growth need not threaten America. ”
On jobs, the plan aims to expand employment offering good pay and benefits, focusing, in addition to infrastructure, on manufacturing and the growing and essential care economy.
New ways of thinking about the role of government are as important as new priorities. Many commentators have framed Biden’s infrastructure plan as a return to big government. But the package is spread over eight years, will raise public spending by only 1 percentage point of gross domestic product, and is projected to pay for itself eventually.
A boost in public investment in infrastructure, the green transition, and job creation is long overdue. Even if the plan were nothing more than a big public investment push financed by taxes on large corporations, it would do a lot of good for the U.S. economy.
We need a new economic vision, not nostalgia for a mythicized age of widely shared prosperity at home and global supremacy abroad. ”
But Biden’s plan can be much more. It could fundamentally reshape the government’s role in the economy and how that role is perceived.
Traditional skepticism about government’s economic role is rooted in the belief that private markets, driven by the profit motive, are efficient, while governments are wasteful. But the excesses of private markets in recent decades—the rise of monopolies, the follies of private finance, extreme concentration of income, and rising economic insecurity—have taken the shine off the private sector.
At the same time, it is better understood today that in a complex economy characterized by so much uncertainty, top-down regulation is unlikely to work. Regardless of the specific domain—promoting green technologies, developing new institutional arrangements for home-care workers, deepening domestic supply chains for high-tech manufacturing, or building on successful workforce development programs—government collaboration with nongovernmental actors will be essential.
If it succeeds, the example it sets of markets and governments acting as complements, not substitutes—demonstrating that each works better when the other pulls its weight—could be its most important and enduring legacy. ”
In all these areas, the government will have to work with markets and private businesses, as well as other stakeholders such as unions and community groups. New models of governance will be required to ensure public objectives are pursued with the full participation of those actors who have the knowledge and capacity to achieve them. The government will have to become a trusted partner; and it will have to trust other social actors in turn.
In the past, each excessive swing in the state-market balance has eventually prompted an excessive swing in the opposite direction. The Biden plan can break this cycle. If it succeeds, the example it sets of markets and governments acting as complements, not substitutes—demonstrating that each works better when the other pulls its weight—could be its most important and enduring legacy.
Biden’s unhelpful framing
In this regard, it is unhelpful to view the Biden plan as a way to restore America’s competitive position in the world, especially vis-à-vis China. Unfortunately, Biden himself is guilty of this framing. The package will “put us in a position to win the global competition with China in the coming years,” he recently argued.
It may be politically tempting to market the infrastructure plan in this fashion. In an earlier era, the prevailing fear that the U.S. was losing its edge to the Soviet Union in ballistic missiles and in the space race helped catalyze a national technological mobilization.
But there is much less reason for fearmongering today. It is unlikely to buy much Republican support for the plan, given the intensity of partisan polarization. And it diverts attention from the real action: if the plan increases incomes and opportunities for ordinary Americans, as it should, it will have been worth doing, regardless of the effects on America’s geopolitical status.
Moreover, economics is different from an arms race. A strong U.S. economy should not be a threat to China, just as Chinese economic growth need not threaten America. Biden’s framing is damaging insofar as it turns good economics at home into an instrument of aggressive, zero-sum policies abroad. Can we blame China if it tightens restrictions on U.S. corporations as a defensive measure against the Biden plan?
The plan could transform the U.S. and set an important example for other developed countries to follow. But to achieve its potential, it must avoid misleading state-versus-market dichotomies and outdated Cold War tropes. Only by leaving behind the models of the past can it chart a new vision for the future.
A few weeks ago, New York hedge fund Alden Global Capital LLC was on the verge of acquiring Tribune Publishing Co. —home to the Chicago Tribune, Baltimore Sun and other U.S. metro newspapers—with seemingly no one in its way.
Then it offended one of its partners in the deal, setting off a battle that could help shape the future of local news in America.
Maryland hotel magnate Stewart Bainum Jr. had worked out a side arrangement with Alden Chief Executive Heath Freeman to buy the Sun, a paper Mr. Bainum grew up reading. Then, in Mr. Bainum’s view, Alden tried to raise the cost of a fee agreement that would substantially jack up the price, people close to the situation said.
Mr. Bainum told his advisers late on the afternoon of Friday, March 12, that he was worried he could no longer trust Alden, according to a person familiar with the matter.
That evening, the 74-year-old got on the phone with his bankers and decided to attempt a stunning 11th-hour move: his own bid for the whole company, which he announced by the end of the weekend.
Two years ago, Rebecca Mead of the New Yorker published a long article, “The Airbnb Invasion of Barcelona,” that addressed some of the challenges of unfettered tourism. Prior to the Covid-19 pandemic, Barcelona, year over year, found itself steadily drowning in foreign visitors. Short-term rentals on Airbnb, often illegally operated, filled the city’s apartment buildings and depressed the local housing supply. Barcelona’s main tourist draws, including Park Güell and the Sagrada Familia Church, were thronged by enormous quantities of visitors.
In the summer of 2014, spurred by the drunken antics of holiday-makers, protesters took to the streets to bring attention to “the pestilence of young visitors who came to Barcelona not to sample the local culture but to enact internationally recognized tropes of partying.” Three years later, 60% of Barcelona residents claimed in a survey that the city had reached or exceeded its capacity to host tourists.
Hating tourists is nothing new, as the Italian journalist Marco D’Eramo notes in “The World in a Selfie,” translated into English by Bethan Bowett-Jones and David Broder. Mr. D’Eramo quotes a British magazine article from 1848 lamenting that, for all their merits, the advent of the railroad and the steamboat had “afflicted our generation with one desperate evil; they have covered Europe with Tourists.” Adam Smith, in his “Wealth of Nations” (1776), heaped mocking scorn on the vogue of young men gallivanting around the Continent on so-called Grand Tours.
“The World in a Selfie,” first published in 2017, has been updated in this English-language edition to account for the pandemic, which shut down international travel for a year. Mr. D’Eramo highlights tourism’s paramount role in the world economy, smartly observing that Covid “proved the centrality of tourism through tourism’s omission. Once this industry ceased, not only airlines and shipping companies but aircraft manufacturers and shipyards found themselves on the verge of bankruptcy.” The book, “an inquiry into the tourist age,” is somewhat disjointed, moving distractedly at times from topic to topic and losing the thread in the philosophical weeds. But in its more focused moments, “Selfie” makes for a bracing, provocative examination of an all-too-human pastime.
One recurring theme here is our futile search, through travel, for the “authentic.” Mr. D’Eramo saves his most biting commentary for UNESCO and its “World Heritage” listings, which he likens to a “kiss of death.” “Once the label is affixed,” he writes, “the city’s life is snuffed out; it is ready for taxidermy.” That’s hyperbole, no doubt, but his commentary on the unintended consequences of preservation is compelling.
WASHINGTON (AP) — These are busy days for Republican state attorneys general, filing repeated lawsuits that claim President Joe Biden and his administration are overstepping their authority on immigration, climate change, the environment and taxes.
The strategy harks back to what Democrats did during Trump’s presidency, heading to court in New York, California, Maryland and other states where they were likely to receive a friendly reception. Even before that, Republicans were frequent filers during Barack Obama’s White House years.
“This is something the Republicans have taken from the Democratic playbook, just as the Democrats had taken a lot of things from the Republican playbook during Trump’s tenure,” said New York University law professor Sally Katzen, who served in the Clinton White House.
The legal action reflects GOP opposition to Biden initiatives, but it also is providing the attorneys general, many with higher political ambitions, to showcase their willingness to stand up to Biden and unabashedly side with Trump.
Missouri Attorney General Eric Schmitt, seeking the Republican nomination for U.S. Senate in 2022, brags in a TV ad that he is “on the conservative front line suing to stop the Biden administration’s worst abuses.”
The main target of lawsuits filed so far have been executive orders issued by Biden.
But several states also have sued over a provision of the $1.9 trillion COVID-19 rescue plan that prohibits states from using their share of federal money to reduce taxes.
Chris Carr, the Georgia attorney general and new chairman of the Republican Attorneys General Association, said he and his colleagues have been cast in this role because Democrats control both houses of Congress and the White House.
“We’ve got a situation where President Biden says, ‘Look, I want to be more bipartisan in nature.’ But then he turns around and has issued more executive orders in the beginning of a term than any president in modern history, I’m told,” Carr said.
“Our job is to ensure the rule of law is upheld. It’s a natural tension we’ve seen throughout American history. How does the federal government stay in its lane?” he said.
It took only two days after Biden’s inauguration for the first legal fight to erupt.
Several other states have since followed with similar claims.
Just since the middle of March: • Texas, Montana and 19 other states filed suit in Texas to overturn Biden’s cancellation of the contentious Keystone XL oil pipeline from Canada. • Louisiana Attorney General Jeff Landry led 13 states in suing the administration to end a suspension of new oil and gas leases on federal land and water and to reschedule canceled sales of leases in the Gulf of Mexico, Alaska waters and western states. • Missouri sued over the restriction on state tax cuts as a condition of receiving money from the huge COVID-19 bill.
Earlier in March, Schmitt led 12 states in a suit that claims the administration lacks the authority to take account of the social costs of climate change. The president said on Jan. 20 that federal agencies must account for damages caused by increased greenhouse gas emissions, including changes in farm productivity, human health and property damage from increased flood risk.
In at least two instances, Republicans are trying to get the Supreme Court involved to keep in place Trump policies that Biden is reviewing or has indicated he will reverse.
Paxton is leading a push to get the justices to reimpose the Trump-era immigration rule denying green cards to immigrants who use public benefits like food stamps. A federal court has blocked the policy nationwide and the Biden administration dropped the defense of it.
Ohio Attorney General Dave Yost is leading a 19-state effort to keep the court from dismissing a case over the Trump policy that bans family planning programs that receive federal funds from referring women for abortions.
The administration and medical groups that had challenged the policy agreed to dismiss the case because the Health and Human Services Department shortly will propose a new rule rescinding the ban on abortion referrals.
Paxton’s predecessor was Greg Abbott, now the Texas governor. Abbott burnished his conservative credentials by frequently going to court over Obama initiatives. “I go into the office, I sue the federal government, and I go home,” he said in 2013, boasting then of having sued the administration 25 times.
By the middle of 2016, the Wall Street Journal counted at least 44 times that Texas went to court against the Obama administration.
The one thing that has changed since the last Democratic administration is that Trump was able to move appeals courts across the country to the right, adding six judges each to appeals courts that hear cases from Ohio and Texas and four to the court that includes Missouri. All three already leaned conservative.
Even the famously liberal 9th U.S. Circuit Court of Appeals in San Francisco, which hears appeals from Montana, became more evenly balanced in the past four years, with the addition of 10 Trump appointees.
“Republican attorneys general might take extra comfort from the fact that there were a significant number of conservative judges confirmed during the Trump administration, and there are a number of courts of appeals where the balance was tipped. So, it’s an even better shot than before,” Katzen said.