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More Americans were working part-time and temporary jobs last month.
“Involuntary part-time workers,” those in part-time positions for economic reasons, increased by a seasonally adjusted 303,000 in July.
The metric is volatile, but could suggest labor market instability ahead.

Commuters and tourists exit a subway car May 26, 2022 in New York City.
Robert Nickelsberg | Getty Images

More Americans were working part-time and temporary jobs last month, which may herald future shifts in the shape of what today appears a robust jobs market.
Hiring in July easily blew past expectations, suggesting a strong labor market despite other signs of economic weakness. But a jump in the number of workers in part-time positions for economic reasons — usually because of reduced hours, poor business conditions or because they can’t find full-time work — hints at potential instability ahead.

The Bureau of Labor Statistics on Friday reported the number of such workers, called “involuntary part-time workers,” increased by a seasonally adjusted 303,000 in July, to 3.9 million. That follows a sharp decrease of 707,000 in June.
The metric, which is volatile, is still below the 4.4 million involuntary part-time workers recorded in February 2020, before the Covid-19 pandemic upended the labor market.

The number of full-time workers decreased 71,000 over the month, while part-time workers, both voluntary and involuntary, increased by 384,000.
The July uptick wasn’t due to a lack of full-time jobs. Compared with the June report, July saw fewer workers who could only find part-time work. Instead, the report said, workers were forced into part-time roles because of reduced hours and unfavorable business conditions.
The report indicates a move in the “wrong direction,” according to Julia Pollak, chief economist for ZipRecruiter, and could signal a recession ahead.

At the same time, temporary help services jobs showed signs of expansion, increasing by 9,800 in July, more than double the 4,300 increase in June.
These are workers temporarily hired to pick up extra work, and are often the first to be cut when employers brace for tougher economic times, according to Pollak. Growth in that metric, she said, could be a reassuring sign for the economy.

The conflicting indicators could reflect a diverging economy where some industries are struggling more than others, according to Erica Groshen, a former commissioner for the Bureau of Labor Statistics and current senior economics advisor at Cornell University.
Another possibility, she said, is that strong hiring earlier in the month led businesses to pull back to correct.
“Towards the end of the month we had people having their hours cut,” she said.

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After making it through the busiest three weeks of earnings season, we’re taking a step back and making sense of what we’ve learned. Here are four common themes around the consumer, banks, Big Tech and energy that have emerged among companies in our portfolio. 1. (Some) consumers are strong How’s the consumer holding up in the face of the hottest inflation in four decades? Earnings season so far tells us the answer is not as simple as “well” or “poorly.” It depends on who you ask and where you look. In a general sense, higher-income consumers have been able to weather the inflationary storm better than those in lower-income brackets. Unfortunately, this is not a complete surprise. The earnings reports of American Express (AXP) and Dom Perignon parent LVMH offer evidence of this bifurcation. Fast food giant McDonald’s (MCD), on the other hand, has said it’s seeing lower-income customers trade down to value-menu offerings and buy less combo meals. Walmart (WMT), which had been a Club holding until Monday , warned last week that inflation is causing many shoppers to spend more of their discretionary income on food and other essentials. What we’ve seen from the consumer-focused stocks we still own has, so far, been respectable all things considered. Amazon Wall Street had pretty low expectations for Amazon (AMZN) ahead of the print, but the e-commerce giant’s results ultimately proved to be mostly positive. While revenue at Amazon’s online store sales were down 4% year over year, that figure includes the negative effects of the strong U.S. dollar and compares to a time in 2021 when e-commerce sales soared thanks to the pandemic. Strip out currency headwinds, and online store revenue from April to June was flat compared with the same period in 2021, which happened to include Prime Day. This year, Prime Day is in Amazon’s third quarter (current quarter) — and, as we wrote last month, data suggests it was another successful day. Note: Online store revenue consists of revenue from first-party products and vendors. Amazon reports the commissions it collects from third-party sellers in its “third party seller services” segment, which grew 9% year over year. Sales at Amazon’s physical stores, which primarily consists of Whole Foods locations, rose 12% year over year (13% ex-currency). Costco Costco (COST) hasn’t reported quarterly earnings yet, as the wholesale retailer operates on a slightly different calendar than others; its fiscal Q4 numbers are set to be released Sept. 22. We have, however, gotten its June and July monthly sales data, and both updates served to only bolster our conviction in owning Costco despite concerns about a recession and consumer slowdown. On Wednesday, Costco said total comparable sales in July rose 10% overall , and 7% when excluding currency impacts and gasoline price changes. We also were very happy with Costco’s June sales . While we’ve liked Costco for years, the company’s membership model and value-driven ethos really makes it the right retailer to own in this environment . Membership fees are its main source of profit, protecting the bottom line even as other retailers face pressure there. Those fees also allow the company to offer competitive prices on the actual products in its warehouses, appealing to price-conscious consumers due to inflation. That said, Costco’s members tend to skew toward higher-income brackets , meaning they may not be feeling as squeezed compared to, say, the average Walmart shopper. Apple Apple’s earnings report also showed the resiliency of certain types of consumers. For example, sales of iPhones in its April-to-June quarter topped Wall Street expectations , and CEO Tim Cook indicated the company saw “a record level of switchers” to iPhone from Android devices. In general, iPhones are thought to be premium smartphones, so the figure Cook cites may suggest those who can afford to spend a bit more on their mobile device are willing to do so. While Apple did not issue formal guidance for its ongoing fiscal fourth quarter, Cook told CNBC the tech titan anticipates sales will “accelerate in the September quarter despite seeing some pockets of softness.” Procter & Gamble For Procter & Gamble (P & G), we know the products it makes like laundry detergent, toothpaste and paper towels will remain in demand even if the economy is slowing. It’s why we look at P & G as a recession-resistant stock. However, we are always mindful about the potential for consumers to trade down to cheaper alternatives of those essential household items. Management spoke about that dynamic when the company reported fiscal Q4 numbers last week . Here’s what CEO Jon Moeller said on the conference call: “As consumers face increased pressure on nearly every aspect of their household budgets, we invest to deliver truly superior value in combination of price and product performance to earn their loyalty every day. So far, elasticities in most categories where we’ve taken price increases have been better than our historical experience,” he said. Even though consumers have generally stuck with P & G despite recent price hikes, CFO Andre Schulten said it would be “naïve” to think consumers aren’t more attentive to their spending right now. To that end, the company expects at some point price elasticities to return to their historic levels. Note: Price elasticity is all about the relationship between rising prices of products and demand for those products. P & G execs are essentially saying that recent price hikes to offset rising input costs haven’t impacted demand as much as they’ve historically done. Schulten also said P & G is monitor what he calls a “reemergence” of private-label brands in certain categories, such as family care. However, the CFO said, “We are still able to grow share in those markets where we see private label coming back.” 2. Reasons for owning banks intact As we detailed earlier this week , we continue to hold two financial stocks in the portfolio despite the fact recession fears have weighed on the group: Wells Fargo (WFC) and Morgan Stanley (MS). On the earnings front, specifically, we hoped for a better quarter from Morgan Stanley than we received in mid-June, and Wells Fargo’s headline numbers were mixed . In both instances, though, our overall investment thesis remained intact, so we’re willing to be patient as they play out. Wells Fargo Our reasons for owning Wells Fargo, in particular, got a bit of a lift Friday morning, when the July nonfarms payroll report came in much stronger than expected, in a sign of labor market resiliency even as other data suggests a slowing recovery. This potentially helps Wells Fargo in two ways, evidenced by its shares up more than 2% on Friday in a down day for the S & P 500 . The first is the stronger the labor market remains, the more likely it becomes that the Federal Reserve remains aggressive in its rate-hiking approach to cool inflation. WFC’s net interest income is boosted by higher interest rates, so if Friday’s strong jobs number increases the odds the Fed issues another 75-basis point hike in September, that’s good for Wells Fargo. That said, next week we get two key inflation reports and those will also factor heavily into the market’s expectations of the Fed’s next move. The second way Wells Fargo can benefit from Friday’s jobs report is all about credit risk. The bank set aside $580 million in the second quarter to help cover potential loan losses. Defaults have been at relatively low levels during the pandemic, but with concerns about slowing economic growth, Wells Fargo believes they will likely increase in the coming months, so they proactively are holding onto those funds. At least for now, Friday’s jobs report lends some credence to the idea that, perhaps, the U.S. economy can stave off a recession, even as the Fed aggressively raises rates in an attempt to bring inflation under control. Under that scenario, in which employment levels remain high, Wells Fargo could run into fewer bad loans than initially expected. This means the money the bank proactively set aside could, eventually, be released and boost earnings in the process. In some ways, higher net interest income without a recession is a best-of-both-worlds outcome for Wells Fargo. We cannot predict whether that will occur, but the July jobs number is a feather in the cap of the bulls who believe it can. For that reason, we’ll be paying close attention to Wells Fargo shares in the near term. If they were to keep charging higher to around $50, we may trim our position out of discipline. It’s already our second-largest weighting behind Apple, and we don’t want to be greedy with the gain we have. The stock closed Thursday at $42.77 per share and has traded as high as $44.29 Friday. 3. Better-than-feared tech returns despite negative sentiment It’s no secret that the market has hated growth stocks this year. But with the broader market down, we’re going to stick by high-quality, cash generating tech companies. More Apple While we mentioned Apple’s iPhone sales above, the company’s overall third-quarter results were better-than-feared, beating Wall Street expectations. While Apple warned in the second quarter that supply issues could lower sales in the following quarter, the iPhone maker delivered revenue of $83 billion driven buy continued demand for its products. China lockdowns were not as painful as anticipated either. The company only saw 1% decline in that business as Covid lockdowns persisted. Apple also has a burgeoning services business, which was the fastest growing segment of the company’s quarter. While supply constraints could still be a burden going forward, Apple proved it can still deliver higher gross margins during this short-term phenomenon. While AAPL stock is being held back for the year, we think Apple is one of the best run companies that can handle an economic downturn. The slower macro backdrop is causing some companies to cut back on spending, but it’s safe to say cloud solutions will probably not be one of those pullbacks simply because businesses today rely on the cloud to operate. That was reflected in Club holding Microsoft (MSFT)’s latest earnings. Microsoft Microsoft delivered consistent growth in its cloud business driven by Azure and other cloud services, offset by softer PC demand, China lockdowns and supply disruptions. Microsoft also returned $12.4 billion to shareholders in its June quarter in the form of share repurchases and dividends, a 19% year over year increase. More Amazon Looking at Amazon’s overall second-quarter revenue, it also topped analysts’ estimates. One area that companies cut as they face budgeting challenges is advertising. But Amazon saw less of a slump in advertising revenue compared to competitors in the second quarter. Amazon also stands out as the market leader in the cloud. Amazon Web Services continues to be the most adopted cloud solution across industries. It’s difficult to bet against the e-commerce giant since it has tentacles in a slew of markets including health care, auto, telecom, media and entertainment, home security and many others. Alphabet Of the three main players in cloud computing solutions, Alphabet (GOOGL) places third. While the Google parent fell short on cloud revenue, we were encouraged to see momentum in this segment. The strong dollar and recession fears weighed on the quarter, but Alphabet has a best-in-class revenue growth, profitability and balance sheet. Meta Platforms It’s not so rosy for all Big Tech. Meta Platforms (META) was one of the mega caps that missed on their latest earnings. It also delivered a bleak forecast, stemming from concerns about weaker demand from its advertising business coupled with higher expenses and foreign exchange headwinds. Looking into the future, the metaverse will require the company to spend a lot of money, taking years before it can monetize. Moreover, TikTok is overpowering Meta’s Reels, which is why Jim Cramer said in August’s “Monthly Meeting” on Thursday that he’s losing confidence in the company . Overall, we struggle to see the reasons behind the drop in tech. These are high quality companies that largely exhibit growth. It’s possible investors think they’re market value needs to reset. There might be more pain in these names, which is why we suggest a dollar-cost average investing approach. 4. Oil holdings returning tons of cash The theme for energy this quarter is the sector’s ability to offer superior free cash flows, a majority of which are given to shareholders through share buybacks and dividends. Devon and Chevron Companies like Chevron (CVX) had a knockout quarter benefitting from higher oil prices. Devon Energy (DVN) reported $2.1 billion in free cash flow in the quarter, the highest quarterly amount of free cash flow in the company’s 51-year history. Pioneer Natural Resources Pioneer Natural Resources (PXD) returned more than 95% of its free cash flow to shareholders after reporting better than anticipated earnings. Even if oil prices decline, we are confident Pioneer can maintain cash returns to shareholders because it has 20 years’ worth of inventory. Pioneer is the highest dividend-yielding stock in the S & P 500. We have roughly 8% of our fund in oil, which serves as an inflation hedge. We’ve benefitted from the oil rally in June but since then oil has been coming down from its highs. Now, it’s possible that oil can go down $80 to $85 per barrel — and if it keeps falling, investors may get concerned whether these companies can continue paying out their large dividends. But as a reminder, in the Club, we own stocks, not trade them and we’re using oil stocks as a hedge because they serve us more than cash. If there is a setback in this category, it could be a chance for us to reassess our position, so we don’t lose on our hedge position. While lower oil prices are concerning, we think the limited oil supply isn’t enough to cover demand. That said, if we were to add to our energy positions, we would have to wait for oil stocks to pullback. Note: If oil prices continue to fall, that could help the inflation picture and take pressure off the Fed to raise rates so aggressively. That would benefit our more economically sensitive names. (Jim Cramer’s Charitable Trust is long WFC, MS, META, AAPL, MSFT, AMZN, GOOGL, DVN, CVX, PXD. See here for a full list of the stocks.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust’s portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY , TOGETHER WITH OUR DISCLAIMER . NO FIDUCIARY OBLIGATION OR DUTY EXISTS, OR IS CREATED, BY VIRTUE OF YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTING CLUB. NO SPECIFIC OUTCOME OR PROFIT IS GUARANTEED.

A trader works at the New York Stock Exchange NYSE in New York, the United States, May 18, 2022. U.S. stocks plummeted on Wednesday as weak earnings from major retailers stoked concerns about the impact of inflation.
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Elon Musk’s SpaceX raised $250 million in an equity round last month, the company disclosed in a securities filing on Friday.
The equity raising lifts the total to $2 billion in 2022.
SpaceX’s valuation has soared in the last few years, reaching $127 billion during its previous equity round in May, CNBC reported.

A Starship prototype stands on the company’s launchpad in Boca Chica, Texas on March 16, 2022.

Elon Musk’s SpaceX raised $250 million in an equity round last month, the company disclosed in a securities filing on Friday. It has now raised $2 billion in 2022.
The filing doesn’t specify the sources of the funds, but noted they came from five investors.

SpaceX did not disclose a change in its valuation. The company’s value has soared in the last few years, with SpaceX raising billions to fund work on two capital-intensive projects — the next generation rocket Starship and its global satellite internet network Starlink. Its value hit $127 billion during its previous equity round in May, CNBC reported. That raise brought in $1.725 billion.
SpaceX is working toward the next milestone in Starship’s development – the first attempt to reach orbit. Musk earlier this week said on Twitter that a successful orbital flight “is probably between 1 and 12 months from now.”

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Following Friday’s much stronger-than-anticipated nonfarm payrolls report for July, the 10-Year Treasury yield jumped to more than 2.8% and the stock market began pricing in a higher probability that the Federal Reserve will increase interest rates by 75 basis points at its September meeting. The Fed started its most recent rate hiking cycle to try to halt rising inflation back in March with a 25-basis-point move, followed by 50-basis points in May and 75-basis points in both June and July. There had been some hope that the Fed was on a “hike and wait” pathway because the prices of so many different commodities have fallen over the past few months. In fact, the market had expected a 50-basis-ponit hike in September before the jobs numbers were released. However, we must now keep in mind that a strong labor market with robust wage gains might mean the Fed still has more work to do. One scenario we’re thinking about is what happens if the yield on the 10-Year yield crosses back over 3.0%, a level that always seems to have some psychological importance and in recent months has served to pressure stocks of high-multiple growth companies with little to no earnings, particularly in tech, that rely on lower rates to fund expansion. In this year’s turbulent market, we’ve done our best to avoid those types of stocks that are wrong for this investing and macroeconomic environment, favoring shares in companies that make things for a profit, trade at reasonable valuations to their peers, and return extra cash to shareholders in the form of dividends and buybacks. Here are five stocks we think can do well even if the 10-Year yield moves back above 3% and the labor market remains resilient. Wells Fargo (WFC) is a clear beneficiary of higher interest rates due to its large deposit base. As rates rise, Wells Fargo can make more money from the interest it charges on its loans versus what it pays on deposits. In banking, that’s called net-interest income (or loss). When Wells Fargo reported its second-quarter earnings in July , management raised its full-year net interest outlook to 20% growth from 2021 levels. That was up from a previous view of 15% growth. If job gains and wage growth remains solid, even through more rate hikes, to the point where the Fed engineers a “soft landing,” we think the current fears around loan defaults will prove to be overblown Morgan Stanley (MS) should benefit from rising rates as well, but to a lesser extent than Wells Fargo because it has less interest-rate bearing assets and credit risk. However, we like Morgan Stanley more for its return of capital to shareholders and its reasonable valuation than for the limited boost of higher rates, as we noted in our analysis of second-quarter earnings. Humana (HUM) , a health insurance company, is a stock we like because it has no sensitivity to higher rates, and it’s the type of firm that can deliver on earnings guidance through a broader economic downturn. Humana recently reported a strong second quarter , but the stock sold off on the news due to profit-taking and some disappointment that management did not flow through the entirety of the earnings beat to its full-year outlook. We thought the selloff was wrong because management is taking those extra profit dollars to reinvest in the company and support its 2023 Medicare Advantage (MA) product offering. This is the right move for the long-term health of the company because MA is one of Humana’s most lucrative businesses. Danaher (DHR) is another health-related name we like. Although the Fed may need to keep hiking rates to beat inflation and slow the economy down, Danaher’s business should remain resilient. Danaher can keep growing while economic activity around the world slows because it has exposure to strong secular growing end markets like life sciences, diagnostics, and water quality. Also, almost 75% of the company’s revenues are recurring, and the majority of those are consumables that are specified into highly regulated manufacturing processes or specific to the equipment Danaher supplies. In other words, there is no ability to substitute once you buy Danaher equipment. That’s a big reason why Danaher’s base business, excluding Covid, just delivered 8% organic revenue growt h in a quarter that was supposed to be challenged by the lockdowns in China. Constellation Brands (STZ) is another one we think can go higher because a strong labor market means people have more cash in their wallets to go out and spend on alcohol. We believe Constellation Brands, with its leading Mexican beer portfolio, is taking market share in the beer marketplace based on the recent lackluster earnings reports from competitors like Molson Coors (TAP). Or if the economy does happen to slow down, we think Constellation can still perform well because beer sales tend to be resilient in downturns, and trade down is less likely in its brands, which include Corona, Modelo and Pacifico. We also believe the steps the company is making to move past its corporate governance issues through the elimination of its voting class line is a long-term positive for shareholders. That’s despite the premium that’ll have to be paid out to the Sands family. (Jim Cramer’s Charitable Trust is long WFC, MS, HUM, DHR and STZ. See here for a full list of the stocks.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust’s portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY , TOGETHER WITH OUR DISCLAIMER . NO FIDUCIARY OBLIGATION OR DUTY EXISTS, OR IS CREATED, BY VIRTUE OF YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTING CLUB. NO SPECIFIC OUTCOME OR PROFIT IS GUARANTEED.

Federal Reserve Board Chairman Jerome Powell speaks during a news conference following a two-day meeting of the Federal Open Market Committee (FOMC) in Washington, July 27, 2022.
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Xi jinping has a master plan for China. Its ultimate goal is for the country to be the 21st century’s dominant superpower, both feared and admired. China’s bellicose response to the visit to Taiwan by Nancy Pelosi, the speaker of America’s House of Representatives, encapsulates the desire to be fearsome. As for admiration, that is to come from growing economic and technological heft. Here, Mr Xi’s plan involves a reshaping of Chinese private enterprise. At first blush, this exercise has been painful for business. Last year the combined market value of China’s largest private companies fell for the first time, according to the Peterson Institute for International Economics (piie). A crackdown against successful internet firms has wiped as much as $2trn from their collective market values. On August 4th Alibaba, an e-merchant, reported its first ever quarterly decline in revenues. A day earlier its financial affiliate, Ant Group, revealed a slide in profits. Jack Ma, who co-founded both firms, may soon concede control of Ant. His net worth has fallen by more than $20bn in the past couple of years. That of Hui Ka Yan, founder of Evergrande, a property giant, has crashed from $40bn in 2020 to $6bn. Last month Carlos Tavares, the boss of Stellantis, a carmaker (whose largest shareholder, Exor, part-owns The Economist’s parent company), said it would exit a Chinese joint-venture after complaining of “growing political interference”.Yet if you look closer the picture is more complex. Even as some firms suffer, a new cohort of tycoons is thriving in Mr Xi’s China. China’s ten richest tycoons have accumulated a net $167bn in fresh wealth since the start of 2020, according to data from Bloomberg, a financial-information firm. Even as old corporate darlings decline, new ones are rising. In the past few weeks The Economist has spoken to several of the new champions, and the mood is surprisingly upbeat.China’s private sector has grown into one of the most dynamic in the world. According to the piie, by 2020 privately controlled companies accounted for more than half of the market capitalisation of China’s 100 biggest listed firms, compared with less than a tenth a decade earlier (see chart 1). Private companies employ 80% of urban workers, or around 150m all told, and account for 60% of Chinese gdp. Thirty-two of them feature in the Fortune 500 ranking of the world’s biggest firms by revenue, up from none in 2005. The march from Maoism to markets has been long and arduous. Until 1992 “entrepreneurs were looked down upon”, recalls Zheng Chunying, back then a government functionary in Liaoning province. But China was buzzing with talk of change and its ailing leader, Deng Xiaoping, had just reaffirmed the government’s commitment to economic reforms. Liaoning’s local government began encouraging officials and Communist Party members to start their own firms. Mr Zheng became the proud co-owner, with his wife and sister, of a small shop that sold imported clothing from Hong Kong and shoes from Europe. When in 1996 officials were suddenly banned from running businesses, he quit his government job rather than closing his shop. He was one of a cohort who chose business over bureaucracy. His decision was vindicated in 2002. That year the party constitution was amended to allow businesspeople to become members. In the following years Chinese business went from strength to strength. Businesspeople cite the first five years of Mr Xi’s leadership between 2012 and 2017 as the heyday of private enterprise. Technology groups such as Alibaba and Tencent, and conglomerates like hna and Dalian Wanda rose to global prominence. Their founders became household names—and accumulated Croesus-like riches. Five years ago the mood began to shift. First came a swift crackdown on the conglomerates, some of which subsequently went bust (for example, hna) or were nationalised (Anbang, a big insurer). Then thousands of privately run shadow banks were shut down. In the past two years came the turn of the tech giants, slapped with regulatory probes, fines and tough new rules on everything from user data to treatment of workers, and of property firms, whose ability to take on new debt the government started to restrict. Look beyond tech and property, though, and things look rather different. Many large private companies “have not only avoided regulatory assault but have also grown bigger”, says Huang Tianlei of piie. Anta, based in the coastal Fujian province, has built a global sportswear empire. Batteries built by catl, another Fujian firm, can be found in many of the world’s evs. Zhifei Biological, a maker of covid-19 and other tests from the central city of Chongqing, has come out of nowhere to land on the Fortune 500 list. Mr Zheng’s firm, Jala, now employs 8,000 people and is one of the largest domestic makers of skincare products. His firm has become an important part of a cosmetics development park called “Oriental Beauty Valley”, where local brands have been encouraged to set up labs and hire scientists.The bosses of these new corporate champions are dislodging tech moguls as owners of China’s biggest fortunes, notes Rupert Hoogewerf of Hurun, a compiler of rich lists (see chart 2). China’s wealthiest man is now Zhong Shanshan, who built Nongfu, which sells bottled water. Many tycoons have greatly added to their personal wealth with direct help from local authorities. Take Muyuan, which has grown into one of the world’s biggest hog producers. The Communist Party of Nanyang city, where the company is based, has an explicit goal of putting it on the Fortune 500 list. In late 2021 the local party told officials to make land available for Muyuan, and to streamline its various applications and inspections. The company is to receive subsidies for farm equipment, and local engineers and other workers are to be connected with the company, the plan ordains. The fortune of Muyuan’s founder, Qin Yinglin, has swelled to $23bn.As for the next generation of entrepreneurs, Mr Xi recently urged them to “dare to start a business”. His message has been one of unwavering support for startups—as long as they are focused on the areas the government has prioritised. These include high-end manufacturing, green energy and cloud-computing. The central government wants to create 1m innovative small and medium-sized firms between 2021 and 2025. Of those, 100,000 will be dubbed “specialised new enterprises” and 10,000 will earn the distinction of “little giant”. The state still takes direct stakes in private companies. But it is finding new ways to influence and guide the private sector, often through industrial parks and a system of state-designated status. Startups are free not to participate but many will find great benefits to becoming part of these ecosystems of talent, capital and market access. Designations such as “little giant” act as endorsements and signal where capital ought to flow. They also make for “good public relations”, says Gu Jie, founder of Fourier, a robotics startup. Obtaining them eases access to places like Zhangjiang Robotics Valley in Shanghai, part of a larger high-tech development zone housing 150 research and development (r&d) centres, more than 24,000 companies and 400,000 workers. The local government owns and runs the zone. Startups benefit in other ways. Mr Gu, whose firm is based in Zhangjiang, notes that securing the metal components for Fourier’s prototypes takes weeks rather than months, because many of the suppliers themselves reside in the technology park. He has also been able to tap the local talent pool, hiring more than 600 engineers and scientists in the past few years. Doing that in Silicon Valley or other global tech hubs would be time-consuming and prohibitively expensive, Mr Gu observes. Fourier has attracted money from SoftBank, a Japanese tech-investment group, and Aramco Ventures, the venture-capital arm of Saudi Arabia’s oil colossus. It has also been backed by several Chinese government funds. These state investments were smaller than SoftBank’s. But they send an message to the market about Fourier’s prospects. Such guidance funds, as they are called, many of them run by local governments, are proliferating. Other government entities have taken over the controlling rights to an average of 50 privately run listed firms each year over the past three years, up from six in 2017 and 18 in 2018, reckons Fitch, a rating agency (see chart 3). The recipients of their largesse do not see this as the first step to nationalisation. Zhou Hanyi, co-founder of Xinzailing, a firm specialising in lift safety, likens it instead to a bank loan without a fixed maturity, which does not typically engender state meddling. The state’s goal in promoting state guidance funds and schemes like “little giants” is to boost r&d and help train new talent. If a particular company fails, its technology and workforce can be absorbed by other firms without too much waste, says Christopher Fong of Welkin Capital, a private-equity firm in Hong Kong (and an investor in Xinzailing). Older businesses, too, are opting to join state-backed innovation parks. Mr Zheng, who built Jala without state help (or even a party membership), has started collaborating with a district government in Shanghai. All this hints that Mr Xi’s ideal private sector might look something like Germany’s Mittelstand, according to Enodo Economics, a research firm in London: “a large stable of small private firms that are innovative, generate high-paying jobs and produce technologically advanced manufactured goods”. Will it work? Some entrepreneurs say bureaucracy is being cut back in professionally managed industrial zones and that the state is meddling less in their operations. Yet there are several reasons for scepticism. In practical terms, Mr Xi’s pursuit of higher-quality growth is easier in some parts of the country than in others. The startup zones in Shanghai are well-tuned machines with professional staff. Some employ former Wall Street bankers. By contrast, an analyst who recently visited an industrial park in the southern Hunan province recounts that it resembled a movie set made to look like Hangzhou without any real innovation taking place. When startups soak up local-government largesse, moreover, they also tie themselves to the fate and interests of local officials. This has always been a risk for companies but is becoming a more pressing concern as local governments’ involvement in business becomes tighter. Last year the local government conducted a sweeping review of the holdings of 25,000 officials and their family members in Hangzhou, another big tech hub and home of Alibaba. The city’s party chief, believed to have links to the e-commerce giant, was put under investigation and expelled from the party. Mr Xi’s vision faces another, more fundamental challenge. As a recent report from the Institute on Global Conflict and Co-operation, a think-tank at the University of California, San Diego, puts it, the idea is ultimately for private firms to “cluster and fill in the rest of the supply chain” around the state sector. In other words, rather than compete in a marketplace for customers who are themselves subject to competitive pressures, private companies are increasingly expected to cater, directly or indirectly, to the state itself. Some may still try to dream up new products and services that appeal to a wide audience. But if more entrepreneurs find cosying up to government a surer road to entrepreneurial success, the private sector may lose some of its dynamism. Deng and his successors understood the flaws of too much state control. Mr Xi seems intent on proving them wrong. As for China’s new tycoons, they will, like pragmatic businesspeople everywhere, adapt in order to prosper for as long as they can. ■ More

New York state Health Commissioner Mary Bassett warned that the confirmed polio case in an unvaccinated adult and the detection of the virus in sewage could indicate a larger outbreak is underway.
“Based on earlier polio outbreaks, New Yorkers should know that for every one case of paralytic polio observed, there may be hundreds of other people infected,” Bassett said.
State health officials are urgently calling for people who are unvaccinated to receive their shots as soon as possible.

Digitally generated image of 3D molecular model of polio virus
Calysta Images | Tetra Images | Getty Images

Hundreds could have polio after an adult in the New York City metro area caught the virus and suffered paralysis last month, the state’s top health official said this week.
New York state Health Commissioner Mary Bassett warned that the confirmed polio case in an unvaccinated adult, coupled with the detection of the virus in sewage outside the nation’s largest city, could indicate a bigger outbreak is underway.

“Based on earlier polio outbreaks, New Yorkers should know that for every one case of paralytic polio observed, there may be hundreds of other people infected,” Bassett said. “Coupled with the latest wastewater findings, the department is treating the single case of polio as just the tip of the iceberg of much greater potential spread.”
Bassett said it is crucial that children are vaccinated by the time they are 2 months old, and all adults — including pregnant women —who have not received their shots should do so immediately.
“As we learn more, what we do know is clear: The danger of polio is present in New York today,” Bassett said.
New York state health officials confirmed last month that an unvaccinated adult in Rockland County had caught polio and was hospitalized with paralysis. Health officials subsequently found three positive polio samples in Rockland County wastewater and four positive samples in the sewage of adjacent Orange County.
The sewage samples that tested positive for polio are genetically linked to the strain which the unvaccinated adult caught. The findings do not indicate that the individual who caught polio was the source of transmission, but local spread could be underway, health officials said.

“These findings provide further evidence of local — not international — transmission of a polio virus that can cause paralysis and potential community spread, underscoring the urgency of every New York adult and child getting immunized,” the New York State Department of Health said.
Rockland County has a polio vaccination rate of 60%, while Orange County has a vaccination rate of 58%, according to health officials. The statewide vaccination rate for polio is nearly 79%.
The U.S. was declared polio free in 1979 and a case had not originated in the country since then, but travelers have occasionally brought the virus into the U.S., according to the Centers for Disease Control and Prevention. New York last confirmed a polio case in 1990 and the U.S. previously confirmed a case in 2013, according to state health officials.
Children should receive four doses of the polio vaccine. The first dose should be administered by 2 months of age, the second dose at 4 months, the third at 18 months and the fourth by age 6, according to state health officials. Unvaccinated adults should receive three doses.
Polio is a highly infectious, devastating virus that can cause paralysis. The virus struck fear into parents’ hearts in the 1940s before vaccines were available. More than 35,000 people became paralyzed every year from polio during that period. But a successful vaccination campaign in the 1950s and 1960s dramatically reduced the number of cases.

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Bed Bath & Beyond is discontinuing Wild Sage, a private brand of bedding, decor and furniture that it launched about a year ago.
Led by former CEO Mark Tritton, the retailer made an aggressive push into exclusive brands and touted them as a linchpin of its turnaround strategy.
The move is likely just the start of bigger changes for Bed Bath’s merchandising approach, as the company tries to reverse declining sales, appease activist investors and win back shoppers.

A person enters a Bed Bath & Beyond store on October 01, 2021 in the Tribeca neighborhood in New York City.
Michael M. Santiago | Getty Images

Bed Bath & Beyond is axing one of its private labels, Wild Sage, about a year after the company made an aggressive push into exclusive brands, at the time touted as a linchpin of its turnaround strategy.
A spokeswoman for the home goods retailer confirmed the brand is being discontinued.

The move is likely just the start of bigger changes for Bed Bath and its merchandising approach as it tries to reverse declining sales, appease activist investors and win back shoppers. The retailer has run into inventory and supply chain problems, initially missing out on hundreds of millions of dollars of sales due to out-of-stock items and, more recently, a glut of unwanted products lingering in warehouses and on store shelves.
Bed Bath is also looking for a new leader, after the board announced in late June that CEO Mark Tritton and Chief Merchandising Officer Joe Hartsig had left the company. Its chief accounting officer also departed in June.
In a company statement, Bed Bath & Beyond said private labels — which it calls “owned brands” — “have a place in our assortment.”
“Customer response has been positive, and we are very pleased with the strength of several owned brands, such as Simply Essential, which delivers opening price points,” the company said. “At the same time, we recognize our customers want a better balance of owned and national brands, and are making necessary changes to the assortment to improve the customer experience and drive sales and traffic.”
Bed Bath said it will provide more updates to its strategy this month. Its spokeswoman did not say whether the company is considering phasing out other private brands.

Private labels became a central piece of Tritton’s vision and a dominant part of Bed Bath’s stores. Tritton, a Target veteran, joined Bed Bath in 2019 and rolled out a playbook similar to the one used by the cheap chic retailer. He oversaw the decluttering of stores and the debut of lines of bedding, kitchen supplies and more that couldn’t be found anywhere else.
Bed Bath launched nine private labels starting in spring 2021. One was Wild Sage, a brand that the company described as “stylish, eclectic, free-spirited bedding, decor, furniture, bath products and table linens created for young adults (and the young at heart).” The first collection launched in June 2021, just in time for back-to-college season.
Yet some shoppers found the new brand names disorienting — and less appealing. Instead of seeing large displays of big-name national brands, they saw displays of bedding, furniture and platterware under a name that they didn’t recognize.
Same-store sales plummeted 27% for the Bed Bath & Beyond banner in the most recent quarter, ended May 28.

Fast change, alienated customers

After the company’s most recent earnings report in late June, board member and interim CEO Sue Gove said the company’s sales results were “not up to our expectations.”
Jason Haas, a retail analyst at Bank of America Securities, said the retailer alienated its customers by moving too quickly. It also phased out its popular 20%-off coupons, a move that it has since reversed.
“If they rolled out those brands at a more measured pace and layered them in [with national brands] and the customer got a little more familiar with seeing them on the shelf, it would have been more successful,” he said.
Plus, he said, Bed Bath wound up compounding Covid pandemic-related supply chain issues. Nearly every retailer coped with congested ports and trucking shortages, but private-label merchandise tends to have longer lead times since it’s produced and shipped from overseas. National brands tend to have merchandise that can get to stores more quickly from U.S. warehouses, Haas said.
On Bed Bath’s website, there are signs of the end of Wild Sage. Its merchandise is available at deep discounts, including a tie-dye robe for $7, marked down from its original price of $35, and a 16-piece terracotta dinnerware set for $16, down from an original $80. Many other Wild Sage items are out of stock after being listed for as much as 90% off.
As Bed Bath pivots to more national brands, though, it may run into a different kind of problem. Vendors may be reluctant to work with the retailer or request advance payments as the company’s coffers quickly dry up.
Bed Bath reported roughly $108 million in cash and equivalents in its fiscal first quarter, down from $1.1 billion a year prior. Its net losses swelled to $358 million from a loss of $51 million in the same period in 2021.
For now, the company is still able to draw on its existing $1 billion asset-based revolving credit facility from JPMorgan Chase, according to a quarterly filing with the Securities and Exchange Commission.
As of May 28, Bed Bath said it had $200 million of borrowings outstanding under the loan.
Still, analysts believe the home goods retailer is going to need to more cash to weather its turnaround.
Bed Bath’s chief financial officer, Gustavo Arnal said in a June conference call that the company still had “sufficient liquidity” with its credit facility, and that it had enlisted consultants from Berkeley Research Group as well as financial advisors to look for additional capital.
“There are avenues that we’re exploring to even increase further our liquidity and navigate through the working capital cycle, particularly in the next two quarters, given the seasonality of our business,” he said on the call.

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Early stage Varda Space Industries has signed a pair of agreements with NASA, the company announced Friday.
The agreements secure Varda access to key technologies the company will need for the first demonstration of its space factory system.
Varda’s goal is to develop a new method for manufacturing materials in space, an opportunity to build products that are useful on Earth more efficiently in space’s microgravity.

Varda co-founders
Varda Space Industries

Early stage Varda Space Industries has signed a pair of agreements with NASA, the company announced Friday, securing access to key technologies the company will need for the first demonstration of its space factory system.
Varda’s goal is to develop a new method for manufacturing materials in space, an opportunity to build products that are useful on Earth more efficiently in space’s microgravity. The International Space Station has served as a test bed for the technology – but Varda wants to produce materials at a greater scale. A recent McKinsey report highlighted the potential for making things from semiconductors to pharmaceuticals and more.

“These partnerships with NASA are a great way for us to accelerate development,” Varda co-founder Delian Asparouhov told CNBC.
Varda’s system uses a three-piece vehicle: A spacecraft, a manufacturing module, and a heatshield-protected capsule to reenter through the atmosphere and land. Founded in late 2020, Varda has raised $53 million to date and recently moved into a 61,000-square-foot headquarters in El Segundo, California.
Its first mission is set to fly on a SpaceX launch, called Transporter-8 – planned for the second quarter of next year. Rocket Lab is supplying the spacecraft for the first four missions, with Varda making the manufacturing module and capsule in-house.
Varda’s pair of Space Act Agreements signed with NASA – one with the Ames center in California and the other with the Langley center in Virginia – gives the company access to reentry and heatshield technologies needed for its mission. This type of NASA partnership varies in scope, but typically gives space companies access to the agency’s technology at little to no cost.

A flight vehicle that the company designed, built and tested in less than 18 months from the team’s first day on the job.
Varda Space Industries

The partnership with NASA’s Ames will allow Varda to purchase heat shield material, which Asparouhov noted “is a highly sort of proprietary material that is quite difficult to get from NASA given the limited inventory.”

In addition to purchasing material for at least Varda’s first two missions, the agreement also gives the company the know-how to make the heat shields itself – which co-founder and CEO Will Bruey described as a “big vertical integration move for us.”
“It’s a great reciprocal relationship, because with the tech transfer from NASA we can also commercialize at the heat shield level and help them develop it further,” Bruey said.
Varda’s agreement with NASA’s Langley gives the company access to atmosphere reentry data, another crucial piece for its system.
“Basically getting access to a data model of how objects enter into the atmosphere,” Asparouhov said, adding that “it’s incredibly important” for winning approval from the Federal Aviation Administration when returning the spacecraft to Earth.

Varda engineers brainstorming on the company’s shop floor next to a prototype.
Varda Space Industries

Varda’s first version of its reentry capsule will be 90 kilograms (or about 200 pounds) in total, the company said. It represents a minimum viable product to prove the system works, and will return a few kilograms of manufactured material. Varda has yet to announce what material will be manufactured on the initial missions.
The first capsule version will fly Varda’s first four missions and will return up to 10 to 15 kilograms of manufactured material per flight. The company aims to move to a second version of the vehicle near the end of 2025, designed to increase the amount of material returned to up to 100 kilograms at a time.

The company opening its new headquarters in El Segundo, California.
Varda Space Industries

Varda’s new headquarters gives the company the manufacturing capability to produce between “six to eight flights per year,” Asparouhov said. The company is currently in the middle of its testing campaign for the first mission, conducting drop tests and working on integrating the vehicle with Rocket Lab’s spacecraft.
“It’s now all execution risk, my favorite type of risk to have,” Bruey said.
Asparouhov, who is also a principal at Peter Thiel’s Founders Fund, noted that Varda is “pretty confident” that it can “get through the first mission easily without further fundraising.”
So far the company says its plan has progressed better than expected and its team has grown faster than previously forecast to more than 60 people.

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