Monday, June 14, 2021

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    Stocks Slide as Virus Cases Surge and Restrictions Tighten

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    Ant’s staggering growth hasn’t come without hiccups. In 2017, it started a bid for MoneyGram, the Dallas-based money transfer company. But as Ana Swanson and Paul Mozur wrote, American officials effectively killed that plan a year later, as the relationship between China and the United States grew more hostile.

    Ant would be valued at around $310 billion — more than many of the largest Wall Street banks (JPMorgan Chase has a market value of about $316 billion) — once the initial public offering is completed. But even in 2016, interest in fast-growing Chinese technology companies meant investors were willing to pay a high price for the business.

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    At the time, Paul Mozur and Michael J. de la Merced wrote that Ant had fetched a valuation of about $60 billion, in a private financing round — or more than $10 billion over the market value of PayPal Holdings.

    Credit…Leah Millis/Reuters

    The discount fashion chain Ross announced on Monday that it opened 39 new stores across 17 states in October, including 30 Ross Dress for Less locations and nine dd’s Discounts outlets.

    “We remain committed to growing our Ross and dd’s footprints across our existing markets as well as expansion into our newer markets,” Gregg McGillis, executive vice president for property development for Ross Stores, said in a statement.

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    The new locations complete Ross’s plan to open 66 additional stores in its 2020 fiscal year, which runs through January. The chain has 1,594 locations in 40 states, the District of Columbia and Guam.

    Ross’s expansion comes at a time when many other clothing retailers are contracting, with the pandemic taking a heavy toll on apparel sellers and forcing some prominent companies — including J. Crew, Brooks Brothers and Neiman Marcus — to file for bankruptcy in recent months.

    The pandemic has also exposed a growing gap between the haves and the have-nots. Workers who have kept their jobs and are not dining out or going on vacations may find themselves with more discretionary money to spend, leading high-end retailers like Bergdorf Goodman to offer socially distanced in-store appointments, as well as same-day delivery to Manhattan and the Hamptons for online orders.

    But bargain retailers are showing signs of growth. Dollar General reported in August that same-store sales jumped 18 percent in its second quarter and that it had opened 500 new stores in the 26 weeks that ended July 31.

    A high-ranking Black executive at Nielsen, the data company that tracks television viewership, says the company discriminated against her based on her race, according to a lawsuit she filed on Monday.

    Cheryl Grace, a senior vice president in charge of consumer engagement for the company’s U.S. operations, said in the lawsuit that even though she was the top executive in charge of liaising with minority communities throughout the country, Nielsen’s leaders excluded her from conversations about diversity and equality in the wake of George Floyd’s death. At the same time, Ms. Grace said in the lawsuit, white executives excelled even after making insensitive and even racist comments, while Black executives in the company struggled for recognition.

    Distraught, Ms. Grace wrote to the company’s chief executive, David Kenny, who is also its chief diversity officer, with a list of concerns.

    “Within the last year, I have watched a white senior executive be placated for her egregious lapse in judgment and “slip of the tongue” when she referred to her African-American assistant as a slave; while a very junior African-American associate was terminated just last month for her lapse in judgment in how she disseminated an email about microaggressions,” she wrote in the June 16 letter, which was entered into court records as part of the lawsuit.

    “This is the reason African-American associates who rely on their paychecks for survival don’t speak up at Nielsen!” Ms. Grace wrote.

    According to the lawsuit, after Ms. Grace complained to Mr. Kenny, officials from Nielsen’s legal and human resources departments combed through her employee record and accused her of “expense fraud” for previously approved expenses like a makeup artist and a limousine service that she billed to the company years earlier.

    “Nielsen received notification of this filing minutes ago and so does not have a fulsome response to the allegations at this time,” said Fernanda Paredes, a company spokeswoman. “The company stands for celebrating and counting every voice. We are committed to ensuring a diverse and inclusive workplace long into the future.”

    Ms. Paredes said Mr. Kenny, who is described in the lawsuit but is not a named party, did not have a comment.

    Credit…Lindsey Wasson for The New York Times

    The World Trade Organization on Monday authorized the European Union to impose $4 billion in tariffs on American-made imports, a potential escalation in a costly trans-Atlantic trade dispute.

    It was not immediately unclear when the European Union would start imposing tariffs, but officials in Brussels have previously suggested any levies would come after the U.S. presidential election on Nov. 3.

    The decision by the W.T.O., a trade body based in Geneva, allows Europe to retaliate against the United States for billions of dollars in illegal subsidies given to Boeing. It is the latest salvo in a 16-year legal battle between Airbus and Boeing, the world’s largest aircraft producers, and follows a previous W.T.O. ruling that allowed the United States to tax European goods over subsidies provided to Airbus.

    Given the potential damage of an escalating trade war, however, both sides have signaled they would be open to negotiating a compromise. During the meeting, European Union officials said that it was “not in the interest of anyone that the E.U. and the U.S. proceed to impose mutual retaliation; instead of progressively stepping up, the E.U. wishes to step down,” according to a Geneva trade official with knowledge of the discussion.

    The United States said Monday it regretted the decision and wanted to hammer out a “negotiated resolution” to the long-running dispute. The Trump administration last year imposed tariffs on European planes, wine, cheese and other products after the W.T.O., in a parallel case, gave the United States permission to retaliate on up to $7.5 billion of European exports annually for subsidies that Airbus had received from European governments.

    Earlier this month, the United States proposed giving up its levies on European products, including French wine, Italian cheese and Scotch whisky, if Airbus repaid billions of dollars in public aid. But it would continue with the tariffs if the European Union moved ahead with its own levies in American goods following the W.T.O. ruling on Monday, a United States representative told the meeting, according to the Geneva trade official.

    Both sides have escalated their political rhetoric in recent weeks. “Europe has the opportunity to retaliate, and the Americans must prepare for it,” French Finance Minister Bruno Le Maire said this month. Mr. Trump responded during a news briefing that if the Europeans retaliated, “we will retaliate even harder.”

    Any tariffs could be particularly daunting for Boeing as it grapples with financial hardship and layoffs linked to the economic fallout from the pandemic and from the 737 Max jetliner, which has been grounded worldwide since March 2019 after two crashes killed a total of 346 people.

    Credit…Tony Avelar/Agence France-Presse — Getty Images

    For 15 years, Apple and Google — Silicon Valley’s two most valuable companies — have been partners in one of the most lucrative business deals in history: an agreement to feature Google’s search engine as the preselected choice on Apple devices, including the iPhone.

    The deal, updated over the years, has been worth billions of dollars to both companies, but it is now in jeopardy after the Justice Department filed a landmark lawsuit last week that accused Google of using illegal tactics — like the rarely discussed pact with Apple — to protect its monopoly and choke off competition in web search.

    Apple and Google’s parent company, Alphabet, compete on plenty of fronts, like smartphones, digital maps and laptops. But the rivalry has been put aside when it suits their financial interests.

    Nearly half of Google’s search traffic comes from Apple devices, according to the Justice Department, and the prospect of losing the Apple deal has been described as a “code red” scenario inside the company. When iPhone users search on Google, they see the search ads that drive Google’s business. They can also find their way to other Google products, like YouTube.

    In exchange, Apple receives an estimated $8 billion to $12 billion in annual payments.

    After a meeting in 2018 between the companies’ two chief executives, Tim Cook and Sundar Pichai, a senior Apple employee wrote to a Google counterpart that “our vision is that we work as if we are one company,” according to the Justice Department’s complaint.

    The Justice Department argues that the arrangement has unfairly helped make Google, which handles 92 percent of the world’s internet searches, the center of consumers’ online lives.

    Credit…Armando Franca/Associated Press

    Long before the coronavirus swept across Europe this spring, many cities were complaining that a proliferation of short-term apartment rentals aimed at tourists through platforms like Airbnb was driving up housing costs for locals and destroying the character of historic districts.

    Now that the pandemic has all but cut off the steady flow of visitors, many European cities are seizing an opportunity to push short-term rentals back onto the long-term housing market.

    In Lisbon, the capital of Portugal, the city government is becoming a landlord itself by renting empty apartments and subletting them as subsidized housing. In Barcelona, Spain, the housing department is threatening to take possession of empty properties and do the same.

    Other city governments are enacting or planning new laws to curb the explosive growth of rentals aimed largely at tourists. Amsterdam has banned vacation rentals in the heart of the old city, and Paris is planning a referendum on Airbnb-type listings.

    When tourists are plentiful, renting a property on a short-term basis can be more lucrative for owners than a long-term tenant, something that city governments say has distorted housing markets in cities where supply is already tight.

    “We entered the pandemic with a huge pressure on our housing market, and we cannot afford to exit the pandemic with the same set of problems,” said Lisbon’s mayor, Fernando Medina.

    The city has started signing five-year leases for empty short-term rental apartments. These properties are then sublet at lower prices to people eligible for subsidized housing. The city government has set aside 4 million euros, or about $4.7 million, for the first year of subsidies.

    The program is aiming to attract 1,000 apartment owners this year, and has drawn 200 so far. Mr. Medina said he was confident that the plan would meet its goal, since a quick rebound in tourism seems increasingly unlikely as the pandemic drags on.

    More than a third of the S&P 500 reports earnings this week. Companies have soundly beat (lowered) expectations thus far.

    The tech giants are expected to rake in cash, with Microsoft reporting on Tuesday and Alphabet, Amazon, Apple and Facebook on Thursday. On Wednesday, the chief executives of Alphabet, Facebook and Twitter are expected to testify before the Senate Commerce Committee on “transparency and accountability.”

    In finance, HSBC reports on Tuesday; Blackstone, Deutsche Bank, Mastercard and Visa on Wednesday; Credit Suisse on Thursday; and KKR on Friday

    Pharmaceutical firms providing coronavirus treatment updates along with earnings include Merck, Novartis and Pfizer on Tuesday; Amgen and GlaxoSmithKline on Wednesday; and Moderna and Sanofi on Thursday.

    Updates from heavy industry come from BP and Caterpillar on Tuesday; Boeing, Ford and General Electric on Wednesday; Shell and Volkswagen on Thursday; and ExxonMobil on Friday.

    But the biggest number of the week is the release on Thursday of third-quarter United States G.D.P., the last major economic data point before the election. It’s expected to show a record-breaking 30 percent annualized surge, but because it follows a collapse of roughly the same magnitude in the previous quarter, the economy will still be down from where it was at the start of the pandemic.

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