Business News Live Updates: Emmy Ratings, Twitter Settles Lawsuit
Daily Business Briefing
Sept. 20, 2021, 2:25 p.m. ET
Sept. 20, 2021, 2:25 p.m. ET
Wall Street on Monday was heading for its worst day in months, part of a global sag as a chain of worries — including the troubles of the Chinese property giant Evergrande and questions over Federal Reserve’s exit from its large bond-buying program — weighed on investors’ minds.
The S&P 500 was down 2 percent at midday, on track for its worst one-day slide since May 12. The index has dropped for two consecutive weeks, and before the decline on Monday, it was down more than 2 percent since a record high on Sept. 2.
The September malaise that has gripped American investors watching Washington lawmakers fight over spending on infrastructure and waiting for the Fed to announce its plans to remove supports for the recovering economy hasn’t been helped by the spiraling debt woes of Evergrande.
Evergrande’s issues are crucial for Chinese financial markets. The company owes more than $300 billion to a range of lenders. A default on its debts would likely set off a contagion through the markets as investors worried about which other real estate companies were likely to stiff creditors, and whether banks and insurers that lent to them could also collapse.
“We have been asked repeatedly in recent weeks if ‘this’ — a likely Evergrande default — is China’s Lehman moment,” wrote analysts at Barclays in a client note on Monday.
“The market to some degree was looking for a catalyst for a broader sell-off,” said John Canavan, lead analyst at Oxford Economic. “The Evergrande situation is probably not going to resolve itself without support from China and, if China doesn’t offer that support, the question is to what degree are there spillover risks within Chinese equities and then cascading into the global markets.”
The Hang Seng in Hong Kong dropped 3.3 percent, to its lowest in nearly a year, while most other Asian markets were closed for a holiday. In Europe, the Stoxx Europe 600 fell 1.7 percent, while the FTSE 100 in Britain was down 0.9 percent.
Investors pushed the Hong Kong-listed shares of some of China’s biggest property developers deep into the red amid worries that Evergrande’s problems could affect the funding abilities of other developers at a time of heightened regulatory scrutiny. Shares of the Chinese developer Sinic Holding fell by 87 percent after regulators in one Chinese province said they would punish certain sales practices by developers.
Mike Bell, a strategist at JPMorgan Asset Management in London, said the situation with Evergrande could lead to more volatility over the next month or so, but he wasn’t overly concerned that the company’s problems would have global consequences.
“When we look at China at the moment, we still think the earnings outlook — outside of companies like Evergrande — for the broader market remains very positive,” he said.
Evergrande’s problems are just a part of a wave of investor concerns rippling through the global markets. High natural gas prices in Europe are sending energy bills soaring and causing factories, such as those that make fertilizer, to shut down in Britain, where smaller energy companies are seeking government bailouts.
And questions persist about policy actions that more than a dozen central banks, including those in Japan, Britain and Switzerland, will set during meetings this week. Foremost in investors’ minds is the Federal Reserve, which is expected on Wednesday to discuss a timeline for slowing bond purchases that are aimed at shoring up the U.S. economy. Some economists expect the Fed to signal that it will start winding down the bond purchases later this year. The central bank could then begin to raise interest rates in 2022.
The Fed will also update its forecasts for economic growth and inflation — just two of the economic data points that investors will get this week. Data on the U.S. housing market — including updates on housing starts, existing home sales and new home sales — will arrive this week.
The S&P 500’s drop in September has signaled a clear shift in the market’s tone. Before this month, Wall Street had been enjoying a seven-month run that had lifted stocks more than 20 percent, as investors seemed to shrug off any bad news.
The slump has come as investors weigh the risks of the resurgence of the coronavirus. One measure of whether reported economic numbers are better or worse than analysts expected, the Citigroup U.S. Economic Surprise Index, is at its lowest level since the start of the pandemic last year. Analysts are also pointing to supply-chain disruptions, leading to shortages from computer chips to construction materials, as part of investor concerns.
Another factor looming over Wall Street is the plan to tax stock buybacks. Senate Democrats are coalescing around imposing a new tax on corporations that repurchase their shares, something that could potentially weaken a key source of demand for stocks.
This week, Democrats are also set to turn their focus to raising the federal borrowing limit. Analysts say that until the ceiling is raised, investor exuberance could be hard to find.
Alexandra Stevenson contributed reporting.
The troubled property giant Evergrande, once China’s most prolific developer, has become the country’s most indebted company, a position that means its default could ripple across the country’s economy.
The company, which was founded in 1996, rode China’s property boom that urbanized large swathes of the country and resulted in nearly three-quarters of household wealth being tied up in housing. This put Evergrande at the center of power in an economy that came to lean on the property market for supercharged economic growth.
But Chinese regulators are cracking down on the reckless borrowing habits of property developers. Adding to the company’s misery, China’s property market is slowing and there is less demand for new apartments.
Today, Evergrande is seen as a rickety threat to China’s biggest banks:
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It owes money to lenders, suppliers and foreign investors.
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It owes unfinished apartments to home buyers and has racked up more than $300 billion in unpaid bills.
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It faces lawsuits from creditors and has seen its shares lose more than 80 percent of their value this year.
A failure on the scale of Evergrande would hit the economy, and spell financial ruin for ordinary households. The ratings agency Fitch said this month that default “appears probable.” Moody’s, another ratings agency, said Evergrande was out of cash and time.
Panic from investors could also shake global financial markets and make it harder for other Chinese companies to continue to finance their businesses with foreign investment.
On Monday, the company’s woes began to bleed into the broader market. Investors pushed the Hong Kong-listed shares of some of China’s biggest property developers deep into the red amid worries that Evergrande’s spiraling debt woes could affect the funding abilities of other developers at a time of heightened regulatory scrutiny.
Hong Kong shares of the Chinese developer Sinic Holding fell by 87 percent after regulators in one Chinese province said they would punish certain sales practices by developers.
For the first time in six years, the Emmys did not set or tie a record low for ratings, as 7.4 million viewers tuned in to the awards show on Sunday night, according to Nielsen.
The numbers were the highest in three years and will be a relief to CBS, which broadcast the event, and the TV executives who have watched in horror as awards show ratings have fallen off a cliff in recent years.
The increase in Emmys viewership follows a trend for live sports events, which have also rebounded in recent months.
Sports could actually help explain the audience increase. The ceremony likely benefited from the broadcast of a National Football League game on CBS, which wrapped up only a few minutes before the awards show began. According to preliminary Nielsen data, audience numbers for the Emmys were at their highest when the show began, and then petered out about an hour into the show.
Still, the ratings growth will comfort the Television Academy, and do not represent the full breadth of the audience, either. CBS offered a livestream of the event on its Paramount+ service. When Nielsen releases out-of-home viewing numbers later on Monday, the total could be closer to 8 million viewers.
The Emmys were hosted by Cedric the Entertainer, and featured an in-person ceremony for the first time in two years. Unlike other recent hosts, Cedric the Entertainer stayed away from political material, and opened the show with a song-and-dance number.
Because of the pandemic, the ceremony was more intimate than usual. Producers skipped out on the 7,100-seat Microsoft Theater, the Emmys’ usual home, and instead staged the event inside a tent with a few hundred people gathered around tables and surrounded by food and drink.
Streaming services were the big winners. Netflix’s “The Crown” won best drama and “The Queen’s Gambit” took best limited series, the first time the streaming service ever won top show awards. Between Sunday’s show and last weekend’s Creative Arts Emmys, Netflix took home 44 awards, tying a record previously set by CBS in 1974. Apple TV+, the 22-month old streaming service, won for best comedy with “Ted Lasso.”
“It was a very historic night for streaming,” Bela Bajaria, the head of global TV for Netflix, said at a news conference on Monday.
Twitter agreed to pay $809.5 million to settle a 2016 class action lawsuit that accused the company of misleading investors about its growth, the social media company said on Monday.
As part of the settlement, which is still pending approval from a federal court, Twitter will not admit any wrongdoing, the company said in a regulatory filing. Twitter plans to record a charge for the settlement in the third quarter of this year and to pay it in the fourth quarter. A Twitter spokesman declined to comment.
The settlement stems from a lawsuit filed by a shareholder, claiming that Twitter’s top executives misled investors about its sluggish user growth in late 2014 and early 2015. During that period, Twitter publicly projected that monthly active user numbers would continue to grow, while the company had internal daily active user statistics that showed declining growth, the lawsuit said.
Twitter has shifted its user growth and engagement the statistics several times. In 2019, the company began disclosing the number of people who used its service on a daily basis, a number that painted a brighter picture of its growth as monthly active users declined. Today, Twitter reports only the daily active users that it considers “monetizable” — users who see ads on the Twitter platform.
In its most recent earnings report in July, Twitter said it had 206 million daily active users, a 11 percent increase over the previous year. The company has not yet set a date for its third-quarter earnings report.
Securities regulators scored a victory in the battle to bring some order to the fast-growing cryptocurrency industry as Coinbase, the crypto exchange, said it would not go ahead with an interest-generating financial product called Lend.
The company made the announcement not long after it said the Securities and Exchange Commission had warned it could face a lawsuit if it went forward with the product.
In an update to a June blog post announcing Lend, Coinbase said it had decided not to offer the new product, which would have allowed customers to earn up to 4 percent interest on holdings of USD Coin, a dollar-pegged stablecoin created with the payments company Circle.
Hundreds of thousands of customers had signed up for Lend over the past few months, Coinbase said.
Coinbase made no mention of the S.E.C.’s warning — called a Wells notice — in the brief blog update and offered no explanation for its decision to pull the product.
“We continue our work to seek regulatory clarity for the crypto industry as a whole,” Coinbase said in the posting. The company declined a request for comment.
The S.E.C., which did not return a request for comment, has indicated that it considers some interest-bearing products like Lend to be securities, making them subject to strict oversight. Coinbase does not consider Lend to be a security. It and others in the crypto industry have warned against overly restrictive regulation, contending that such moves would stifle the industry’s growth in the United States.
Coinbase initially responded to the S.E.C. warning with a defiant stance. Brian Armstrong, Coinbase’s chief executive, blasted regulators in a series of posts on Twitter. He said the S.E.C. showed “sketchy” behavior and noted that other crypto companies offer interest-generating products.
Coinbase, which went public on the Nasdaq exchange in April, had long taken the position that it embraced regulation for cryptocurrency. The company’s public feud with the S.E.C. seemed out of step with the shifting mood in the industry. Crypto companies may just be resigned to the inevitability of new rules as financial regulators are preparing to issue reports in the coming months on various regulatory pathways.
Gary Gensler, the S.E.C. chair, last week repeated his belief at a Senate Banking Committee hearing that the crypto industry was akin to the “Wild West” and needed more investor protection. He said legal precedents gave regulators the ability to determine when a new crypto product crossed the line from a largely unregulated commodity to a security or investment product subject to stricter rules.
“The Supreme Court has weighed in many times,” Mr. Gensler told the Banking Committee. “There is a fair amount of clarity.”
Crypto companies have also faced scrutiny from financial regulators at the state level.
BlockFi, a company that offers high interest on crypto holdings, as Lend would have done, is the focus of securities regulators in multiple states, including its home state, New Jersey, for failing to register these accounts as securities. The company was served with a cease-and-desist order in late July. Gurbir Grewal, the former New Jersey attorney general, took on a new role as the chief of enforcement at the S.E.C. in late July, as well. The New Jersey Attorney General’s Office declined to comment.
Robert York, the editor in chief of The Daily News of New York, is being replaced on an interim and “as-needed” basis by Andrew Julien, the editor and publisher of its corporate sibling The Hartford Courant, who will remain in that job while a search for a permanent editor takes place, an executive at the publisher of the newspapers said.
The change, which was effective immediately, was announced on Monday in memos sent to Daily News and Courant staff members by Toni Martinez, a human resources executive at the newspapers’ parent company, Tribune Publishing. A Tribune spokesman confirmed the news but did not give a reason for his departure.
Mr. York, who was the editor and publisher of The Morning Call of Allentown, Pa., another Tribune title, before taking The Daily News editorship in 2018, did not immediately reply to a request for comment on Monday morning.
Mr. Julien “grew up in New York and is eager to work with the talented staff of The Daily News,” Ms. Martinez wrote.
The turnover comes as The Daily News, the tabloid that was once the country’s largest-circulation newspaper (and the inspiration for The Daily Planet, where Superman’s alter ego, Clark Kent, worked), and The Courant find themselves under new ownership. In May, Tribune was bought by the New York hedge fund Alden Global Capital in a deal worth $633 million.
Other Tribune papers include The Chicago Tribune, The Baltimore Sun and The Orlando Sentinel. The deal effectively made Alden, which also owns newspapers through its MediaNews Group subsidiary, the second-largest newspaper chain in the United States after Gannett.
Both The Daily News and The Courant have shed staff through buyouts offered shortly after the acquisition was completed. Eight Daily News staff members and five Courant staff members had buyouts approved in May, according to figures compiled by the NewsGuild, the union representing journalists at both papers.
Tribune’s acquisition by Alden was opposed by journalists at Tribune newspapers, who urged the previous management to seek local, benevolently minded owners for Tribune’s newspapers. A Maryland businessman who wished to give The Sun to a new local nonprofit group mounted an alternative bid, but its financing failed to come through and Tribune shareholders approved Alden’s proposal in May.
The Washington Post is expanding its editor ranks as it pushes forward with plans for growth in national and international coverage under its new executive editor, Sally Buzbee.
Ms. Buzbee, the former top editor of The Associated Press who took the helm at The Post in June, announced the creation of 41 editing roles in a note to staff on Monday, saying the positions would increase The Post’s capacity to cover global news as it breaks.
The roles include two new deputy managing editors to The Post’s masthead to work alongside the existing two, one of whom will oversee The Post’s live coverage of developing news. A number of positions for assignment editors, breaking news editors and multiplatform editors will also be created, as well as two roles for editors charged with upholding newsroom standards.
The new positions would increase the number of journalists of color in editing roles, Ms. Buzbee said in an interview.
“A real benefit toward us in a situation like this is ensuring that this will also improve the diversity of our staff, provide career paths across the newsroom for a more diverse group of people, for people from a wide variety of backgrounds and skill sets,” she said.
The jobs are mostly based in Washington, she said.
“I could see some of these jobs potentially being filled outside of Washington, and I could see future jobs around a national expansion potentially that way, but I also think that the vast majority of our leadership is going to be here,” Ms. Buzbee said.
The Post has undergone a rejuvenation in the last decade with the investment of Jeff Bezos, the Amazon founder and billionaire who bought the newspaper in 2013 for $250 million. Under Martin Baron, the executive editor who retired in February, the newsroom nearly doubled to more than 1,000 journalists.
Soon after Ms. Buzbee arrived as Mr. Baron’s replacement in June, the publication announced in June the creation of new breaking-news hubs in Seoul and London as part of its efforts to become a global newsroom.
“To become a 24/7 news organization, you have to empower people across the globe to be able to make decisions,” Ms. Buzbee said. “I would say that we’re in the process of making progress toward that, maybe not quite there.”
While the Delta variant of the coronavirus has delayed plans by many U.S. companies to bring employees back to offices en masse, New York City workers who have been trickling into Midtown Manhattan are discovering that many of their favorite haunts for a quick cup of coffee and a muffin in the morning or sandwich or salad at lunchtime have disappeared. A number of those that are open are operating at reduced hours or with limited menus.
By the end of 2020, the number of chain stores in Manhattan — everything from drugstores to clothing retailers to restaurants — had fallen by more than 17 percent from 2019, according to the Center for an Urban Future, a nonprofit research and policy organization.
Across Manhattan, the number of available ground-floor stores, normally the domain of busy restaurants and clothing stores, has soared. A quarter of the ground-floor storefronts in Lower Manhattan are available for rent, while about a third are available in Herald Square, according to a report by the real-estate firm Cushman & Wakefield.
Starbucks has permanently closed 44 outlets in Manhattan since March of last year. Pret a Manger has reopened only half of the 60 locations it had in New York City before the pandemic. Numerous delicatessens, independent restaurants and smaller local chains have gone dark.
But in a city where one person’s downturn is someone else’s opportunity, some restaurant chains are taking advantage of the record-low retail rents to set up shop or expand their presence in New York City.
In the second quarter, food and beverage companies signed 23 new leases in Manhattan, leading apparel retailers, which signed 10 new leases, according to the commercial real estate services firm CBRE.
Shake Shack and Popeyes Louisiana Kitchen were among those signing new rental agreements this year. The burger chain Sonic signed a lease for its first New York City outpost. The Philippines-based chicken joint Jollibee, which enjoys a committed following, plans to open a huge flagship restaurant in Times Square.
Lanson Jones, an avid tennis player in Houston, did not want to spoil his streak of good health during the pandemic by getting a vaccine.
Then he contracted Covid. Still, he chose not to get vaccinated. Instead, he turned to another kind of treatment: monoclonal antibodies, a year-old, laboratory-created medicine no less experimental than the vaccine.
In a glass-walled enclosure at Houston Methodist Hospital this month, Mr. Jones, 65, became one of more than a million Covid patients, including Donald J. Trump and Joe Rogan, to receive an antibody infusion.
The federal government covers the cost of the treatment, currently about $2,100 per dose, and has told states to expect scaled-back shipments because of the looming shortages. Seven Southern states account for 70 percent of orders.
Amid the din of antivaccine falsehoods circulating in the United States, monoclonal antibodies have become the rare coronavirus medicine to achieve near-universal acceptance. Championed by mainstream doctors and conservative radio hosts alike, the infusions have kept the country’s death toll — nearly 2,000 per day and climbing at a rapid rate — from soaring even higher.
“The people you love, you trust, nobody said anything negative about it,” Mr. Jones said of the antibody treatment. “And I’ve heard nothing but negative things about the side effects of the vaccine and how quickly it was developed.”
But the treatment’s popularity is straining the U.S. healthcare system.
The infusions take about an hour and a half, including monitoring afterward, and require constant attention from nurses at a time when hard-hit states often cannot spare them.
“It’s clogging up resources, it’s hard to give, and a vaccine is $20 and could prevent almost all of that,” said Dr. Christian Ramers, an infectious disease specialist and the chief of population health at Family Health Centers of San Diego, a community-based provider. Pushing antibodies while playing down vaccines, he said, was “like investing in car insurance without investing in brakes.”
The largest U.S. accounting firms have perfected a remarkably effective behind-the-scenes system to promote their interests in Washington, Jesse Drucker and Danny Hakim report in The New York Times.
Their tax lawyers take senior jobs at the Treasury Department, where they write policies that are frequently favorable to their former corporate clients, often with the expectation that they will soon return to their old employers. The firms welcome them back with loftier titles and higher pay, according to public records reviewed by The Times and interviews with current and former government and industry officials.
From their government posts, many of the industry veterans approved loopholes long exploited by their former firms, gave tax breaks to former clients and rolled back efforts to rein in tax shelters — with enormous impact.
Even some former industry veterans said they viewed this so-called revolving door as a big part of the reason that tax policy had become so skewed in favor of the wealthy, at the expense of just about everyone else. President Biden and congressional Democrats are seeking to overhaul parts of the tax code that overwhelmingly benefit the richest Americans.
This revolving door, with people cycling between the public and private sectors, is nothing new. But the ability of the world’s largest accounting firms to embed their top lawyers inside the government’s most important tax-policy jobs has largely escaped public scrutiny.
“Lawyers who come from the private sector need to learn who their new client is, and it’s not their former clients. It’s the American public,” said Stephen Shay, a retired tax partner at Ropes & Gray who served in the Treasury during the Reagan and Obama administrations. “A certain percentage of people never make that switch. It’s really hard to make that switch when you know where you are going back in two years, and it’s to your old clients. The incentives are bad.”
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Airlines sold tickets in June and July at prices on par with what they charged in 2019, but fares dropped in August and early September as the spread of the Delta variant of the coronavirus weighed on travel, according to the Adobe Digital Economy Index. In August, when holiday planning typically begins in earnest, flight sales for Thanksgiving were down about 18 percent in August compared with the same month in 2019.
The Biden administration will lift travel restrictions starting in November on foreigners who are fully vaccinated against the coronavirus, reopening the country to thousands of people, including those who have been separated from family in the United States during the pandemic.
The foreign travelers will need to show proof of vaccination before boarding and a negative test for the coronavirus within three days before coming to the United States, Jeff Zients, the White House pandemic coordinator, said Monday.
“International travel is critical to connecting families and friends, to fueling small and large businesses, to promoting the open exchange ideas and culture,” Mr. Zients said. “That’s why, with science and public health as our guide, we have developed a new international air travel system that both enhances the safety of Americans here at home and enhances the safety of international air travel.”
The administration has restricted travel for foreigners looking to fly to the United States from a group of European countries, Iran and China for more than a year.
Unvaccinated Americans overseas aiming to travel home will have to clear stricter testing requirements. They will need to test negative for the coronavirus one day before traveling to the United States and show proof that they have bought a test to take after arriving in the United States, Mr. Zients said. The Centers for Disease Control and Prevention will also soon issue an order directing airlines to collect phone numbers and email addresses of travelers for a new contact-tracing system. Authorities will then follow up with the travelers after arrival to ask whether they are experiencing symptoms of the virus.
The changes announced on Monday only apply to air travel and do not affect restrictions along the land border, Mr. Zients said.
The Trump administration began implementing the travel bans against foreign travelers in January 2020 in the hopes of preventing the spread of disease. The effort was largely unsuccessful. The prior administration’s mangled announcements over the restrictions also led to exoduses of American citizens, with packed, chaotic airports that had porous screenings.
Mr. Biden has kept the restrictions against potential travelers from the European Union, Britain, India and others, despite pleas from business leaders in need of profits from tourism, immigrant workers who traveled overseas to renew work visas to work in the United States only to be left stranded and citizens left separated from their romantic partners abroad.
The White House maintained the restrictions were necessary, particularly after the spread of the contagious Delta variant this summer fueled a rise of coronavirus cases and undermined the central theme of Mr. Biden’s presidency — vaccinating Americans and getting the pandemic under control.
Mr. Zients cited the pace of vaccinations administered globally as a reason for the administration’s pivot. The decision also comes on the eve of a visit by Prime Minister Boris Johnson, who was expected to press Mr. Biden to lift the ban. British officials had hoped the president would announce a relaxation of restrictions when he came to Cornwall, England, in June for the Group of 7 summit meeting and were disappointed when he did not. Their frustration has only deepened since then.
The easing of the travel restrictions also comes as the administration has sought to reduce tensions with another ally in France after the United States kept Paris in the dark as they secretly negotiated an agreement with Australia to build nuclear submarines.
British officials note that the United States had not imposed a similar ban on people from Caribbean nations, which had a higher rate of infection than Britain, or from Argentina, which had lower percentage of its population vaccinated. About 82 percent of people in Britain above the age of 16 have had two shots.
Britain and several European Union countries allow fully vaccinated people from the United States to travel without quarantining, and officials there were annoyed when the United States did not reciprocate.
The ban, European officials point out, has kept families separated since early 2020, as the coronavirus was erupting across Europe. European countries have weathered a third wave of infections propelled by the Delta variant. But in several countries, including Britain, infection rates have begun to level off and even decline.
After the announcement, Giovanni Vincenti, 42 years old, an Italian professor who lives in Baltimore, thought about his grandparents abroad would finally get to meet his daughter, who was born last May.
“I am trying not to cry because it’s such a beautiful day,” said Mr. Vincenti. On Monday, Mr. Vincenti’s wife, who is a Polish researcher on vaccines, was already on her computer trying to book a flight for her mother.
Stephen Castle contributed reporting from London.
