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The World
U.S. household spending rose 1% in June, and income increased slightly, but a jump in Covid-19 cases is clouding the economic outlook. Meanwhile, the U.S. economy grew rapidly in the second quarter and exceeded its pre-pandemic size, but the outlook has suddenly turned cloudier due to the fast-spreading Delta variant. GDP grew at a 6.5% annual rate in 2Q21, up slightly from a 6.3% growth rate in 1Q21. The reading pushed the size of the economy above its pre-pandemic level, a milestone that underscores the speed of the recovery that began in May 2020. (Wall Street Journal)
The eurozone economy bounced back from its downturn, logging faster than expected growth of 2% in 2Q21. The quarter-on-quarter rise in eurozone GDP was higher than the 1.5% expected by economists and is the first time the bloc outpaced growth in the U.S. and China since the pandemic started. It marked a strong rebound from the bloc’s 0.3% contraction in 1Q21. Germany, France, Italy and Spain all logged quarter-on-quarter expansions, and all but Germany outperformed economists’ expectations. (Financial Times)
Germany’s annual consumer price inflation accelerated by a more-than-expected 3.1% to hit a 13-year high in July, leading its services sector trade union to immediately demand “strong wage increases.” (Reuters)
The delta variant appears to cause more severe illness than earlier variants and spreads as easily as chickenpox, according to an internal CDC document that argues officials must “acknowledge the war has changed.” The document captures the struggle to persuade the public to embrace vaccination and prevention measures, as new research suggests vaccinated people can spread the virus. The document strikes an urgent note, revealing the agency knows it must revamp its public messaging to emphasize vaccination as the best defense against a variant so contagious that it acts almost like a different novel virus, leaping from target to target more swiftly than Ebola or the common cold. (Washington Post)
Japan will expand states of emergency to three prefectures near Tokyo and Osaka, as COVID-19 cases spike, overshadowing the Summer Games. Meanwhile, Australia’s prime minister wants 80% of adults vaccinated before reopening its border. (Reuters)
China has stopped issuing and renewing passports for non-urgent purposes to try to minimize travel amid the rapid spread of coronavirus variants. (South China Morning Post)
CDC mask decision followed stunning findings from Cape Cod beach outbreak: How a group of vaccinated beachgoers changed our knowledge of the delta variant. As of Thursday, 882 people were tied to the Provincetown outbreak. Among those living in Massachusetts, 74% of them were fully immunized, yet officials said the vast majority were also reporting symptoms. (ABC News)
How to persuade the unvaccinated: When the doctor describing intubation and death is local, communities are more likely to listen. (Harvard Gazette)
‘Breakthrough’ cases rising in L.A., but with fewer hospitalizations: In June, fully vaccinated residents made up 20% of all confirmed coronavirus infections in those 16 and older. (Los Angeles Times)
Israel begins administering 3rd Covid vaccine booster dose to the elderly. (Times of Israel)
Companies are adjusting on the fly: Disney World, Universal Studios Hollywood, Apple stores, and others will require customers to wear masks indoors again. Uber will delay its office reopening and make vaccination mandatory for US employees. LinkedIn now will allow employees to opt for full-time remote work or a hybrid option. Meanwhile, Danny Meyer’s Union Square Hospitality Group, which owns popular high-end restaurants in New York and Washington, D.C., will require vaccine proof for diners and employees and will turn away workers and customers who haven’t received their shot. (Washington Post, Insider, Reuters)
The U.S. and Indonesian armies will launch joint drills Sunday focused on island defense with more 4,500 service members, the largest exercise ever conducted by the two countries. The maneuvers come amid rising tensions over Beijing's military buildup in the South China Sea. (Nikkei Asian Review)
Turkey arrested several hundred illegal migrants heading from Afghanistan towards Europe in the past few days as a fresh exodus of people fleeing the advancing Taliban gathers pace. Up to 1,000 are said to be crossing into Van, the eastern Turkish province that borders Iran, every day, with many more trying to find legal ways to leave Afghanistan if they can afford it. (The Times)
Natural gas prices in Europe and the UK have soared to some of the highest levels on record, threatening to raise costs for households and businesses as global supplies of the critical fossil fuel remain tight. Prices in Asia are also elevated as countries try to attract cargoes of liquefied natural gas to meet strong demand. (Financial Times)
College football powerhouses Texas and Oklahoma will join the Southeastern Conference by 2025, bolstering what is already the most dominant league in the nation and likely sparking a seismic restructuring of the sport. In just a matter of days, the deal to move is already done, a breathtaking preview of what lies ahead for the entire sport as other schools now assess whether there are better financial opportunities available for them in other conferences. (Wall Street Journal)
Americans' confidence in racial fairness is waning: Americans are less certain today than in the recent past that equality of economic opportunity exists for Black Americans. This is seen in slimmer majorities perceiving there to be equality for Black people in employment or housing in their own communities. Also, less than half of Americans believe racial minorities, generally, have the same job opportunities as White people in the U.S. And six in 10 now favor affirmative action programs for racial minorities, up from less than half a decade ago. (Gallup)
Economy
The SEC has stopped processing registrations of U.S. IPOs and other sales of securities by Chinese companies while it crafts new guidance for disclosing to investors the risk of a new regulatory crackdown by Beijing. Chinese listings in the U.S. have reached a record $12.8 billion so far this year. Deal flow slowed down substantially after Chinese regulators banned ride-sharing giant Didi Global from signing up new users just days after its blockbuster IPO. They followed up with crackdowns on technology and private education companies. (Reuters)
IPOs from Texas, Florida and Colorado — among the states that have seen the fastest increases in venture funding in recent years — are also on track to outpace the public-market debuts those states have seen in the same time frame. And that means they can expect to see new liquid wealth injected into their startup ecosystems. (Crunchbase)
U.S. crypto traders are evading offshore exchange bans: A new report from a data firm whose technology is used by the CFTC for investigations and market surveillance found that hundreds of Americans are trading risky crypto derivatives on offshore exchanges such as FTX and Binance. The report sheds light on an open secret in the industry: U.S. crypto enthusiasts can easily bypass measures that seek to block them from offshore exchanges. (Wall Street Journal)
Credit Suisse resorts to rehiring risk staff on elevated salaries after scandals. (Financial Times)
The positive social media response to Simone Biles withdrawing from Olympic competition highlights how the artificial line between health care and mental health care is finally beginning to dissolve. And startup investors have taken notice. Venture capital investments in mental health startups rose 72.6% between 1Q21 and 1Q21. Mental and behavioral health deals more than doubled between 2019 and 2020, and in 1Q21, it accounted for 19% of all digital health funding. (Axios)
MacKenzie Scott and Melinda French Gates partnered to give away $40 million to four organizations that promote gender equality. The projects, which were awarded $10 million each, are focused on gender equality in caregiving, tech, higher education and minority communities. An additional $8 million was split between two finalists working on issues of domestic violence and training young women “to flex their political power.” (CNBC)
In a survey of 5,000 flight attendants from 30 airlines, 85% said they had dealt with unruly passengers this year, with over half saying they had experienced five or more such incidents and 17% saying they were involved in an incident that got physical. Since the start of the year, the FAA said it has received 3,615 reports of unruly passengers. The agency has initiated 610 investigations, and levied fines or penalties in 95 incidents. In 2019, the FAA initiated fewer than 150 investigations of bad passenger behavior. (Wall Street Journal)
Technology
Amazon, Apple, Alphabet, Microsoft and Facebook brought in $331 billion in revenue in 2Q21. A few things we learned from the Big Five this quarter: 1) It's still really, really good to be Big Tech. 2) The ad business is booming. 3) The chip shortage isn't getting better. 4) A metaverse platform war is coming. 5) Who's afraid of the FTC? Everybody, and also nobody. (Protocol)
Subscription services are coming for the game industry: Of the biggest companies in gaming today, Amazon, Apple, Electronic Arts, Google, Microsoft, Nintendo, Nvidia, Sony and Ubisoft all operate some form of game subscription. Subscription services have existed in gaming for decades. But now, as these subscriptions are married to nascent but fast-growing cloud gaming services that allow you to stream games to almost any screen, the industry is bracing itself for a potential paradigm shift akin to what happened to television, film and music. (Protocol)
Pearson, the educational publisher which has faced pressure for years over the rising cost of college textbooks, is launching an app offering US students access to all 1,500 of its titles for a monthly subscription of $14.99. CEO Andy Bird, former chair of Walt Disney International, hopes the all-you-can-eat app will create a relationship with students, establishing Pearson as the go-to brand for life-long learning from childhood to the workforce. (Financial Times)
Uber teaming up with Rosetta Stone to offer free language courses to drivers. The company is funding education and career-building programs to address a nationwide driver shortage. (The Verge)
Private equity can develop and deploy digital capabilities in a portfolio company by building in-house capabilities, entering into collaborations, acquiring businesses with the necessary capabilities or outsourcing the need completely. Ambitious PE firms should consider the currently under-explored route of partnering with start-ups to stoke digital transformation. (Private Equity Wire)
Canada proposed the creation of a digital safety commissioner role to oversee violations of new harmful online content rules and issue penalties to platforms. (Toronto Star)
Smart Links
City University of New York to wipe out $125 million in student balances. (Wall Street Journal)
The best place to ride out a global societal collapse is New Zealand, study finds. (Washington Post)
Robinhood shares slide 8% in IPO. (Protocol)
Where has the IPO lockup gone? Tech firms trim them back. (The Information)
Big edtech IPOs are here, and shifting from China to the U.S. (Crunchbase)
Kirkland & Ellis eyes massive office lease at Salesforce Tower, which will open in early 2023. (Chicago Tribune)