Daily Business Briefing
July 22, 2021Updated
July 22, 2021, 1:26 p.m. ET
July 22, 2021, 1:26 p.m. ETCredit…Nam Y. Huh/Associated Press
Sales of homes in the United States rose in June after four consecutive months of declines as the economy continued to reopen and supply constraints eased.
In May, existing home sales in the United States fell 0.9 percent from April as a sharp rise in prices and a shortage of houses for sale led to a slowdown in the market.
“Supply has modestly improved in recent months due to more housing starts and existing homeowners listing their homes, all of which has resulted in an uptick in sales,” Lawrence Yun, NAR’s chief economist, said in a statement.
Existing home sales rose 1.4 percent in June from May, the National Association of Realtors said Thursday. Sales increased nearly 23 percent in June from the year before.
The median home sales price rose 23.4 percent from a year ago, to a record $363,300.
The inventory of unsold homes stood at 1.25 million, down 18.8 percent from a year ago. It typically took just 17 days to sell a home, versus 24 days last June.
Dozens of websites were reported to be offline or slow to load on Thursday, according to the online platform Downdetector, creating headaches for consumers.
The outage affected a range of companies, including financial firms like American Express and Chase, retailers like Amazon and Home Depot and travel companies like Delta Air Lines and Expedia.
On its website, Delta said that it was working to resolve “a technology issue” that was affecting “many global websites.”
“You can continue to check in for flights at this time at the airport,” Delta’s statement said.
The outages were reported as Akamai, one of the largest cloud-computing providers, said it had experienced problems with its DNS service, one of the most fundamental technologies of the web. DNS routes requests for a specific URL to the server where that website actually lives, but it wasn’t immediately clear if the Akamai outage was the source of the issues elsewhere.
At least one website, Zomato, a food delivery company, blamed Akamai for the outage. “Our app is down, owing to a widespread internet outage (Akamai),” the company posted on Twitter.
Akamai also helps many companies make their sites faster and more reliable by serving cached versions of pages from around the globe, but an outage in its network could render those sites unusable.
But just before 1 p.m. Eastern time, Akamai said it had resolved the issue.
“We have implemented a fix for this issue, and based on current observations, the service is resuming normal operations,” Akamai said on Twitter.
Several counties in Virginia, including Campbell and Grayson, reported their 911 systems were down as well. On its Facebook page, the Grayson County sheriffs office said the outage was because of a fiber cut, but that 911 could be reached from landlines.
This is a developing story. Check back for updates.
Read moreCredit…John Macdougall/Agence France-Presse — Getty Images
Mercedes-Benz will shift its focus entirely to electric vehicles in 2025 and be prepared to sell nothing but electric cars by 2030, the company said Thursday, adding a caveat that the transition depends on “market conditions.”
Mercedes thus joined a growing list of companies including General Motors, Stellantis and Renault that have declared their intention to hasten the demise of internal combustion engines in favor of battery-powered vehicles with no tailpipe emissions.
Increasingly, they have little choice. The European Union will effectively ban new cars with internal combustion engines in 2035, while Britain, Norway and other countries have also set expiration dates for vehicles that run on fossil fuels.
Mercedes, the luxury carmaking division of Daimler, also faces pressure from Tesla, which has been stealing well-heeled buyers and is building a factory in Berlin. Tesla leads rivals in batteries and autonomous driving technology. But Ola Källenius, the chief executive of Daimler, said that Mercedes wants to seize the initiative with, for example, a model to be unveiled next year that will go 600 miles on a charge. That would be about 50 percent farther than Tesla’s longest-range car.
“We want to be people to make it happen,” Mr. Källenius told reporters Thursday, “not just go with the flow.”
Mercedes said it would invest 40 billion euros, or $47 billion, on electric cars, vans and light commercial vehicles by 2030. In 2025, the company will introduce three new electric vehicle platforms — collections of components and technology that can be shared among different models — and will no longer develop platforms for internal combustion engines.
The platform shift is significant because it will allow Mercedes to exploit some of the design potential of battery powered vehicles, such as more interior space. Electric motors are smaller than internal combustion engines and do not require large transmissions.
Despite the huge investments required, Mr. Källenius said he was confident Mercedes could continue to enjoy profit margins of more than 10 percent. Electric vehicles have generally been less profitable for carmakers because of the cost of batteries, but Mr. Källenius pointed out that battery prices have been dropping fast.
Mercedes is planning to take tighter control of battery production. Working with partners, it will establish a global network of battery plants and will also build its own electric motors.
One of the new battery factories will be in the United States, three will be in Europe and four will be in Asia. Daimler executives said they had not yet decided on a location for the U.S. plant, but it will probably be close to Mercedes’ existing manufacturing complex in Tuscaloosa, Ala.
Daimler stopped short of promising not to sell any more cars with internal combustion engines. Some regions of the world by 2030 may not have the charging networks that make owning an electric vehicle practical.
“Mercedes-Benz will be ready to go all-electric at the end of the decade,” the company said in a statement, adding, “where market conditions allow.”
Initial claims for state jobless benefits rose last week, the Labor Department reported Thursday.
The weekly figure, before seasonal adjustments, was about 406,000, an increase of 14,000 from the previous week. New claims for Pandemic Unemployment Assistance, a federally funded program for jobless freelancers, gig workers and others who do not ordinarily qualify for state benefits, totaled 110,000, up about 14,000 from the week before. The figures are not seasonally adjusted. (On a seasonally adjusted basis, state claims totaled 419,000, an increase of 51,000.)
New state claims remain high by historical standards but are one-third the level recorded in early January. The benefit filings, something of a proxy for layoffs, have receded as businesses return to fuller operations, particularly in hard-hit industries like leisure and hospitality.
More than 20 states have recently discontinued some or all federal pandemic unemployment benefits — including a $300 supplement to other benefits — even though they are funded through September. Officials in those states said the payments were keeping people from seeking work. But judges in Maryland and Indiana have blocked the early cutoff, and legal challenges are pending in three other states.
A survey of 5,000 adults conducted June 22-25 by Morning Consult found that those whose unemployment benefits were about to expire felt more pressure to find work. But of all those on unemployment insurance, relatively few — 20 percent of those who had worked full time, and 28 percent of those who had worked part time — said the benefits were better than their previous work income in meeting basic expenses.
The Labor Department’s employment report for June showed that the economy had 6.8 million fewer jobs than before the pandemic. A separate report found 9.2 million job openings at the end of May as businesses that had closed or cut back during the pandemic raced to hire employees to meet the reviving demand.
But there is a substantial amount of turnover, with far more workers quitting their jobs than are being laid off — a sign that many are jumping to positions that pay even slightly more. And the rush by businesses to staff up in lower-paying jobs means that many workers can afford to wait for a better deal.
The drug maker Biogen reported on Thursday that its controversial Alzheimer’s drug Aduhelm brought in $2 million in its first few weeks of availability, the first revenue for a treatment that is expected to generate billions of dollars and strain Medicare’s budget within a few years.
The company did not disclose the number of patients that have received the drug, which is priced at $56,000 annually on average. Biogen’s chief executive, Michel Vounatsos, said on an earnings call that a “big chunk” of the revenue had come from stockpiled inventory and that the drug’s release has been somewhat slower than the company had anticipated.
Industry analysts expected the drug to get off to a modest start. Many insurers have not yet decided how to cover it. Administration sites — typically memory clinics that see patients with cognitive problems — have been slowed by the complexities of administering the drug, which must be given as a monthly intravenous infusion.
The federal agency that administers Medicare announced earlier this month that it would initiate a monthslong review to determine whether to standardize coverage of the drug across the country, a step that could restrict which patients receive it. In the meantime, some Medicare Advantage plans, an alternative to traditional Medicare that is offered by private insurance companies, have already approved patients to receive the drug, the company said.
Biogen executives spent much of the earnings call on Thursday defending Aduhelm and the process that led to its approval.
Read moreCredit…Kai Pfaffenbach/Reuters
The European Central Bank updated its message to financial markets on Thursday, saying it will briefly tolerate some jumps in inflation before policymakers take action to raise interest rates.
It was the first policy announcement since the central bank offered the results of its strategy review this month, which showed that policymakers would allow emergency measures to persist even if inflation temporarily rises above 2 percent. In the review, the bank also said it would use its influence in the bond market to tackle climate change.
The central bank’s latest forward guidance, published Thursday, was changed to reflect this new strategy. Interest rates will “remain at their present or lower levels” until inflation is seen reaching 2 percent “well ahead” of the end of the central bank’s projection horizon, which is approximately three years, “and durably” for the rest of that period. Policymakers will also keep interest rates low until there is evidence that inflation will stabilize at 2 percent “over the medium term.”
“This may also imply a transitory period in which inflation is moderately above target,” the statement said.
This leads to the potential for a longer period of low interest rates and bond purchases because the central bank will not be forced to react to temporary bouts of higher inflation. In general, the region has suffered from persistently low inflation.
The new guidance has raised the bar for higher interest rates in Europe, Claus Vistesen, an economist at Pantheon Macroeconomics, wrote in a note.
Last week, data showed that the annual inflation rate in the eurozone was 1.9 percent in June, down from 2 percent in May. The central bank forecasts inflation to rise again this year before falling next year. In 2023, at the end of its projection horizon, inflation is forecast to be just 1.4 percent.
“The outlook for inflation over the medium term remains subdued,” Christine Lagarde, the central bank’s president, said on Thursday.
Previously, the central bank had been aiming for inflation below, but close to, 2 percent. Now it has a “symmetric” 2 percent target “over the medium term.”
The change in policy guidance comes as the rising number of coronavirus cases has led governments in the region to reimpose some restrictions, hoping not to derail the fragile economic recovery. On Thursday, interest rates and the pace of the central bank’s bond-buying program stayed the same.
As the vaccination rollout continues and strict lockdowns have been eased, “the recovery in the euro area economy is on track,” Ms Lagarde said. “But the pandemic continues to cast a shadow, especially as the Delta variant constitutes a growing source of uncertainty.”
In recent months, the reopening of many businesses, combined with supply chain disruptions because of shortages of critical items such as semiconductors, has led to price increases across Europe and the United States. Central banks are being pushed to explain when these increases might lead to a pullback in monetary stimulus. So far, policymakers have indicated they will withstand higher inflation as long as it is temporary.
The statement from the European Central Bank on Thursday reiterates its desire to not withdraw stimulus prematurely.
The change in the central bank’s forward guidance is intended “to underline its commitment to maintain a persistently accommodative monetary policy stance to meet its inflation target,” the statement said.
As investors expect interest rates to stay low and negative for several years in Europe, the monetary policy path is diverging even more strongly from the United States, where policymakers expect to raise interest rates in 2023.
Read moreCredit…Erin Schaff/The New York Times
K.K.R. is making a “significant” minority investment in Sol Systems, a renewable energy company that helps finance solar projects, the private equity giant said Thursday. The investment firm, which has $367 billion in assets under management, is also committing to spending up to $1 billion in projects with Sol, the DealBook newsletter was first to report.
“Almost all large corporate customers, including many of the traditional oil and gas companies, have goals to go 100 percent renewable by 2030 or 2040,” said Yuri Horwitz, Sol’s chief executive. Those commitments come as regulatory and investor scrutiny is expected to intensify in the coming years.
Private equity firms are racing to invest in renewable energy during the Biden administration, driven in part by expectations of increased public investment as the White House aims to cut the country’s fossil-fuel emissions by 80 percent by 2030. The amount of solar capacity installed in the first quarter in the United States was nearly 50 percent larger than the year before, setting a first-quarter record, according to a report by the Solar Energy Industry Association and research firm Wood Mackenzie Power & Renewables.
Sol invests in underserved communities alongside its solar power projects. Its partnership with Microsoft, announced last year, included $50 million in investments in the areas surrounding the sites of its installations.
This week, the Carlyle Group announced it was forming a renewable energy infrastructure unit. And K.K.R. brought on Tim Short and Benoit Allehaut this spring to help steer renewable investments in its $18 billion infrastructure division. Among its recent deals was a $1.4 billion investment last year in the wind and solar company NextEra.
But KKR is still betting on fossil fuels. “Natural gas is still a very important aspect of the energy transition until we have technology solutions that allow otherwise,” Mr. Short said. And last month, the firm announced a $5.7 billion deal to create a vehicle that consolidates shale oil companies.
Read moreCredit…Ian C. Bates for The New York Times
Robinhood plans to sell as much as a third of its initial public offering, or $770 million of shares, directly to customers through its app. And anyone can participate in a special livestream of its investor presentations this Saturday.
The moves are highly unusual and upend the traditional I.P.O. process, Erin Griffith and Lauren Hirsch report for The New York Times. No company has ever offered so many shares to everyday investors at the outset; firms typically reserve just 1 or 2 percent of their shares for customers. And investor presentations usually take place behind closed doors with Wall Street firms.
“We recognize that for many of you this will be the first I.P.O. you have had a chance to participate in,” Vlad Tenev and Baiju Bhatt, Robinhood’s founders, wrote in its offering prospectus. They added that they wanted to put customers on an “equal footing” with large institutional investors.
Robinhood is also letting its employees sell up to 15 percent of their shares immediately upon its listing, rather than having them wait the traditional six months. That could add to volatile trading.
But the risks of opening up an I.P.O. are significant. Big professional funds tend to hold stock that they buy in an I.P.O., but there is little to stop everyday investors from immediately dumping Robinhood’s shares. And any technical problems could invite regulatory scrutiny and investor lawsuits, bankers said.
In 2006, the phone service provider Vonage tried to sell shares to its customers in its I.P.O. But a technical glitch left buyers unclear whether their trades had gone through until days later, when the stock had plummeted. Customers sued Vonage, and regulators fined the banks that ran the offering.
Read moreCredit…Hiroko Masuike/The New York Times
Olympic advertisers are feeling anxious about the more than $1 billion they have spent to run ads on NBC and its Peacock streaming platform.
Calls to cancel the events have intensified as more athletes test positive for the coronavirus. The event is also deeply unpopular with Japanese citizens and many public health experts, who fear a superspreader event. And there will be no spectators in the stands.
For NBCUniversal, which has paid billions of dollars for the exclusive rights to broadcast the Olympics in the United States through 2032, the event is a crucial source of revenue. There are more than 140 sponsors for NBC’s coverage on television, on its year-old streaming platform Peacock and online, an increase over the 100 that signed on for the 2016 Summer Games in Rio de Janeiro, Tiffany Hsu reports for The New York Times.
Chris Brandt, the chief marketing officer of Chipotle, said that the situation was “not ideal,” but that the company still planned to run a campaign featuring profiles of Olympic athletes.
“We do think people will continue to tune in, even without fans, as they did for all kinds of other sports,” Mr. Brandt said. “It’s going to be a diminishing factor in terms of the excitement, but we also hope that the Olympics are a bit of a unifier at a time when the country can seem to be so divided every day.”
Ad agency executives said companies were regularly checking in for updates on the coronavirus outbreak in Japan and might fine-tune their marketing messages accordingly.
“Everyone is a little bit cautious,” said David Droga, the founder of the Droga5 ad agency, which worked on an Olympics campaign for Facebook showcasing skateboarders. “People are quite fragile at the moment. Advertisers don’t want to be too saccharine or too clever but are trying to find that right tone.”
Among the biggest increases:
|Telephone calls||5 min.||8 min.|
|Lawn and garden care||12 min.||16 min.|
|Relaxing and leisure||3.9 hr.||4.6 hr.|
|Sports, exercise and recreation||19 min.||22 min.|
|Housework||32 min.||36 min.|
|Food preparation and cleanup||37 min.||40 min.|
|Animal and pet care||7 min.||8 min.|
|Sleeping||8.8 hr.||9 hr.|
Among the biggest decreases:
|Household management||11 min.||11 min.|
|Caring for and helping children in household||20 min.||19 min.|
|Working||3.2 hr.||3 hr.|
|Grooming||41 min.||36 min.|
|Travel related to consumer purchases||14 min.||12 min.|
|Socializing and communicating||36 min.||30 min.|
|Shopping||21 min.||17 min.|
|Travel related to work||16 min.||11 min.|
The pandemic upended every aspect of daily life last year — work, leisure, even sleep. New government data paints the most detailed picture yet of just how fundamental those disruptions were.
Americans spent nearly 10 waking hours a day at home in 2020, compared with less than eight hours a day in 2019. They commuted less (11 minutes a day in 2020 on average, down from 16 minutes a day in 2019), shopped less (17 minutes in 2020, down from 21) and worked out more (22 minutes, up from 19).
And, perhaps unsurprisingly in a year of canceled vacations and government-mandated lockdowns, they spent a lot more time alone — nearly an hour a day more than in 2019. Seniors, in particular, spent more than eight hours a day alone in 2020.
Those numbers are from the American Time Use Survey, which every year asks thousands of people to track, minute by minute, how they spend their day. Normally, the changes are small from one year to the next. Not this time.
Some of the most telling changes are the ones that reflect the unique nature of the pandemic. People spent more time talking on the phone last year, and less time socializing outside their homes. They spent more time taking care of their lawns, and less time taking care of their personal appearance. And, of course, they spent far more time working from home: About 42 percent of employed adults were working at home on a given day in 2020, nearly double the share in 2019.
For some people, the disruptions were far more fundamental. Mass layoffs meant that millions fewer people had jobs in 2020, pushing down the average time spent working by 17 minutes on average. (Among those who kept their jobs, there was little change in the amount of time they worked.)
Parents with school-aged children spent an average of 1.6 hours more a day providing “secondary child care” — time spent taking care of children while also doing other things, such as working. Women shouldered more of that burden than men.
The pandemic even affected the data itself: The government put the survey on hold from mid-March until mid-May, so the numbers don’t reflect the most intense period of lockdowns and business closings last year. (The report released Thursday compares the period from mid-May to the end of the year in 2020 to the same period in 2019.)
Stocks on Wall Street drifted between gains and losses on Thursday as investors considered the rise in initial jobless claims last week. The Labor Department said about 406,000 Americans filed new claims for state unemployment benefits, an increase of 14,000 from the previous week.
The S&P 500 was flat in early trading. The Nasdaq composite edged higher.
The yield on U.S. 10-year Treasury notes fell to 1.27 percent from 1.30 percent.
Markets in Europe were higher, with the Stoxx 600 Europe gaining 0.4 percent. The European Central Bank said interest rates will “remain at their present or lower levels” until inflation is seen reaching 2 percent “well ahead” of the end of the central bank’s projection horizon.
Oil prices rose on Thursday, with West Texas Intermediate, the U.S. crude benchmark, climbing 0.7 percent to $70.79 a barrel.