Oil and gasoline futures gyrate after Ida disrupts production.
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Daily Business Briefing
Aug. 30, 2021, 9:47 a.m. ET
Aug. 30, 2021, 9:47 a.m. ET
Energy markets swirled on Monday as investors responded to the immediate disruption of Hurricane Ida while also trying to gauge the economic toll of rising hospitalizations in the United States caused by the coronavirus.
Gasoline futures were 2 percent higher, after climbing more than 4 percent when trading started. West Texas Intermediate oil, the United States benchmark, also jumped at first, but then dropped into negative territory and was 0.8 percent lower Monday morning.
Before Hurricane Ida stormed ashore in Louisiana on Sunday, oil and gas companies shut down more than 90 percent of production in the Gulf of Mexico, making this storm the first of the year to significantly disrupt those industries.
The disruption could affect gasoline prices throughout the region ahead of Labor Day, traditionally one of the year’s high-demand peaks.
“It’s a little speculative to say yet what’s going to happen, but it’s going to be an event,” said Tom Kloza, the global head of energy analysis at Oil Price Information Service. “This could lead to a mini-price spike.”
Analysts at ING said the timing of oil industry’s recovery from the storm could affect prices.
“The big question is, which will make a quicker return — offshore oil production or refining capacity?” the analysts said in a note. “If it is the former, we could start to see a buildup of crude oil inventories,” which could weigh on prices.
Oil prices have slowly recovered from their pandemic depths as economies around the globe reopen from lockdowns and energy demand climbs. But the rise in coronavirus cases caused by the highly contagious Delta variant has threatened an already shaky revival, and the shutdown of oil production in the Gulf of Mexico could further hamper recovery.
The daily average for hospitalized Covid-19 patients in the United States is now more than 100,000, reaching a level not seen since last winter, before most Americans were vaccinated. The European Union is expected on Monday to recommend that member states reimpose travel restrictions on Americans wishing to travel to Europe.
Power companies in southern Louisiana are bracing for significant outages. Cleco and Entergy, two major providers in the New Orleans metro area, said they anticipated widespread flooding and had called up thousands of additional workers and contractors. Entergy warned that customers in the hardest-hit areas “could experience power outages for weeks.”
AstraZeneca has mandated that its U.S.-based employees who are returning to the workplace or visiting customers be vaccinated against the coronavirus, the company confirmed on Monday.
The drug maker, which has headquarters in Cambridge, England, said the mandate also applied to employees of its Alexion Pharmaceuticals subsidiary, which is based in Boston. Accommodations will be made for those with medical, religious or other restrictions.
“To safeguard the health and well-being of our employees and communities, we must follow the science,” an AstraZeneca spokesman said in a statement.
AstraZeneca’s coronavirus vaccine has been authorized for use in 87 countries, according to the company’s website, and 913 million doses have been shipped. The vaccine has not been authorized for use in the United States.
Pfizer, an American competitor based in New York, is requiring all of its U.S. employees and contractors to be vaccinated or participate in weekly Covid-19 testing. Johnson & Johnson and Moderna, both of which have vaccines that are authorized for use in the United States, did not immediately respond to requests for comment.
Facebook’s virtual reality service Horizon Workrooms, announced this month, will allow users to don a virtual reality headset, create an avatar and sit among colleagues in computer-generated corporate settings.
It’s not the only company betting on enterprise VR. You can host virtual fireside chats (using Roomkey), navigate through a gamified office space (on Gather), or put on an entire virtual expo event (on MootUp).
The research firm ARtillery Intelligence expects the sector to be worth about $4 billion in 2023. But not all experts are convinced that meetings in the “metaverse” will catch on quickly, according to the DealBook newsletter. Here are three reasons they gave:
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Content is king, even in virtual reality. Florian Couret, the head of the immersive lab at the property broker BNP Paribas Real Estate, used VR headsets to hold some meetings with colleagues across five European countries last year. But the experiment petered out. “You can have the best tools in the world to meet in virtual reality, but if the content is not interesting, nobody cares,” he said.
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Employee resistance will be a major obstacle, said Darrell West, a senior fellow at the Brookings Institution. Gamers might already be living in the metaverse, but workers are creatures of habit, he said. Virtual reality may be too “far afield from our regular forms of interaction” to make it into the workplace anytime soon, Mr. West said.
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Better broadband infrastructure is needed. “Connectivity is actually still a big challenge,” Mr. West said. If companies want realistic virtual office spaces, they, and tech companies, are going to have to invest a lot more money in infrastructure, he added.
Despite the hurdles, some industries are already embracing the technology. Alexandros Sigaras, an assistant professor of research at Weill Cornell Medicine, said mixed-reality headsets were piloted in I.C.U.s during the pandemic to bring additional expertise into the room without risking exposure to the virus. He regularly hosts meetings in VR and believes there’s potential for the technology in all types of workplaces.
Tuesday
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Consumer confidence: The Conference Board is set to report its consumer confidence index for August. Consumer’s optimism could ebb after mostly unchanged results from the month before as the Delta variant continued to spread in August. Another measure of consumer attitudes, the University of Michigan’s consumer sentiment index, showed a sharp decline in August.
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Elizabeth Holmes jury selection: Jury selection begins for the trial of Elizabeth Holmes, the disgraced founder of the blood-testing start up Theranos, which will be held in San Jose, Calif. Ms. Holmes, who could face up to 20 years in jail if convicted, has pleaded not guilty to allegations that she defrauded investors, doctors and patients.
Wednesday
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OPEC+ meeting: The Organization of the Petroleum Exporting Countries and its allies are expected to meet after the cartel agreed in July to increase production by 400,000 barrels a day each month beginning in August. Analysts expect the coalition to ratify that schedule amid concerns that the Delta variant could threaten the global economic recovery.
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Campbell earnings: The maker of Campbell’s Soup, Prego pasta sauce and Swanson broth is set to report its financial performance for the quarter ending Aug. 1. Will inflationary pressures and increasing supply chain bottlenecks affect the company’s bottom line?
Friday
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Jobs report: The Labor Department is expected to release its monthly jobs report for August after reporting the biggest monthly gain in hiring in nearly a year for July. Economists surveyed by Bloomberg expect to see an increase of 750,000 positions, but they’ll be looking to see if the rapid pace of hiring remains or if the sustained outbreak of the Delta variant hampered industries trying to regain their footing.
When 49 major national law firms that often compete with each other banded together on Friday to condemn lawsuits targeting special purpose acquisition companies, the financial world took notice, the DealBook newsletter reports.
The financial vehicles known as SPACs have recently come under attack in prominent shareholder suits that challenge their fundamental structure, starting with an action against the $4 billion blank-check firm run by the billionaire investor William Ackman, which forced him to rethink his approach.
While SPACs seek a merger target, they park their funds in short-term investments like Treasury bills. The lawsuits say that these financial vehicles aren’t operating companies but investment funds, so they should be subject to the stricter oversight of the Investment Act of 1940 (which would dampen the freewheeling SPAC market).
Two prominent securities law professors, John Morley of Yale and Robert Jackson, the former commissioner of the Securities and Exchange Commission who is now at Columbia, were behind the suits. After suing Mr. Ackman, the professors sued two other SPACs.
Kirkland & Ellis, one of the top legal advisers to SPACs, helped to organize other firms to issue the statement, which said the lawsuits were “without factual or legal basis.” Some who signed on, like Simpson & Thatcher, have comparatively little involvement with SPACs. They are protesting on principle, organizers said.
“The market has already driven some reform,” said Christian Nagler of Kirkland & Ellis. “Otherwise it should be done by proposing rules and laws, not by lawsuits.”
The firms also wanted to push back against attention drawn to the suits by the reputations of Mr. Morley and Mr. Jackson. “We really needed something powerful to take away that P.R. narrative,” said Joel Rubinstein of White & Case.
Of course, the law firms defending SPACs are protecting millions of dollars in legal fees, as well as principles. As for the motivations of Mr. Morley and Mr. Jackson in bringing these cases? The professors declined to comment, citing ongoing litigation.
The S.E.C. has reviewed more than 1,000 SPAC I.P.O.s over two decades and never made a demand that the vehicles be registered under the Investment Company Act of 1940, the law firms’ letter noted.
That said, SPACs were “a sleepy backwater for 18 years and a boomtown for the last 18 months,” said William Birdthistle, an Investment Act specialist at the Chicago-Kent College of Law. Just because the S.E.C. did things one way before doesn’t mean it will continue to do so, especially under the tough-talking leadership of Gary Gensler.
The S.E.C. could opt to file briefs in the lawsuits, though that would only fuel more rumors about what is driving the litigation. The S.E.C. did not respond to a request for comment.
New mobile money apps are promoting themselves as part of the solution to a stubborn problem: a lack of financial savvy, particularly among young Americans.
The apps offer slick educational videos and tools while enabling children and teenagers to save and spend and even invest in stocks, Ann Carrns writes for The New York Times. And they’ve caught the attention of researchers and financial advisers who say the tools may help engage and enlighten young users, even as they worry that the apps, without close parental involvement, may encourage bad financial behavior.
Numerous reports have noted that financial literacy in the United States has resisted improvement for some time, even though more states have begun requiring schools to teach it.
Financial technology, or “fintech,” start-ups see the apps as a way to sign up customers early by offering personal finance instruction along with spending and saving tools.
Here are some notable apps:
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Copper bills itself as “the only bank that teaches teens about money,” and offers brief, peppy videos and a financial literacy quiz that teenagers or their parents can take.
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Step, an app for teenagers, offers a secured credit card, which can be used to make a deposit that serves as collateral; users can spend up to the amount of the deposit, and build credit when using it.
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Greenlight began as a tool to help parents manage children’s chores and pay them an allowance. It has added features including cash back on its debit card, and an option that lets children invest through a brokerage account opened in a parent’s name.
Amazon customers will soon have another payment option at checkout.
Affirm, a so-called buy now, pay later payment provider that allows customers to pay for their purchases in installments, said on Friday that it had reached a deal with the online retail giant.
Affirm said Amazon customers would be able to use its service on purchases of $50 or more — including items like furniture, home goods, electronics and fashion — and pay in monthly installments. Once approved, customers will be able to see the total purchase price upfront — and they won’t be charged any late or hidden fees, the company said.
The service is being tested with select customers now, Affirm said, and will become more broadly available to shoppers in the coming months. Certain purchases, including those from Whole Foods Market, Amazon Fresh and certain digital purchases like movies and books, will not be eligible, according to Affirm.
“Amazon is always looking to add flexible payment options,” an Amazon spokeswoman said, “and Affirm does just that by offering transparent pay-over-time solutions that customers can choose based on their needs.”
Buy now, pay later services have become an increasingly popular option among consumers. And the partnership follows another giant deal last month: Square, the payments firm run by the Twitter chief executive Jack Dorsey, agreed to acquire Afterpay for $29 billion. That deal will open the installment option to millions of small business that process their credit card transactions through Square’s app.
Affirm — whose shares rocketed more than 30 percent in after-hours trading — has already become partners with 12,000 merchants, including Walmart and Peloton. Peloton accounted for 30 percent of the company’s total revenues in the first fiscal quarter of 2021, according to an August research report from FT Partners, an investment banking firm focused on financial technology. That was up from 14 percent in the same quarter a year earlier.
Amazon’s partnership with Affirm is its first with a buy now, pay later provider in the United States; it works with Zip in Australia, where these options are already more established. Amazon had already provided monthly payment plan options on its own for select customers buying certain products. It also offered installment programs for customers with the Amazon.com Store Card, the Amazon Rewards Visa Card, and eligible Citi credit card members.