Finance

Jack Dorsey, CEO of Twitter and co-founder & CEO of Square, speaks during the crypto-currency conference Bitcoin 2021 Convention at the Mana Convention Center in Miami, Florida, on June 4, 2021.Marco Bello | AFP | Getty ImagesSquare plans to buy Australian fintech company Afterpay as it looks to expand further into the booming installment loan market.Jack Dorsey’s payments company announced the $29 billion, all-stock deal on Sunday evening. The price tag marks a roughly 30% premium to Afterpay’s last closing price.”Square and Afterpay have a shared purpose,” said Square’s CEO Dorsey in a statement. “We built our business to make the financial system more fair, accessible, and inclusive, and Afterpay has built a trusted brand aligned with those principles.”Square pointed to consumers eschewing traditional credit, especially younger buyers. The San Francisco-based payments company already offers installment loans, which said it has been a “powerful growth tool” for Square’s core seller business. It plans to integrate Afterpay into both its seller and Cash App ecosystems.Afterpay lets customers pay in four interest-free installments and pay a fee if they miss an automated payment. Its 16 million customers will eventually be able to manage installment payments directly through Cash App. The deal is expected to close in the first quarter of 2022.So-called installment loans have been around for decades, and were historically used for big-ticket purchases such as furniture. Online payment players and fintechs have been competing to launch their own version of “pay later” products for online items in the low hundreds of dollars.Affirm is one of the better-known public companies offering the option to finance items in smaller, monthly payments. PayPal, Klarna, Mastercard and Fiserv, American Express, Citi and J.P. Morgan Chase are all offering similar loan products. Apple is planning to launch installment lending in a partnership with Goldman Sachs, Bloomberg reported last month.Square also announced its second-quarter results on Sunday, ahead of the previously planned release on Wednesday.Gross profit increased 91% from a year ago, which marked a record quarterly growth rate for the payments company. Cash App profit was up 94%, while seller jumped 85% from a year ago. Net revenue excluding bitcoin came in at $1.96 billion for the quarter, an 87% rise year over year.The company’s Venmo competitor, Cash App now has 40 million monthly transacting active customers.Subscribe to CNBC PRO for exclusive insights and analysis, and live business day programming from around the world. More

Traders work on the floor of the New York Stock Exchange (NYSE), July 21, 2021.Brendan McDermid | ReutersU.S. stock futures rose in overnight trading on Sunday as investors geared up for the first trading day of August.Dow futures rose 135 points. S&P 500 futures gained 0.4% and Nasdaq 100 futures added 0.35%.The major averages managed to notch their sixth month of gains in July, although volatility increased amid concerns about the economic recovery in the face of the spreading delta Covid variant. The Nasdaq Composite and Dow Jones Industrial Average added about 1.2% and 1.3%, respectively, in July, while the broad S&P 500 gained close to 2.3% last month.Concerns about inflation also plagued the market, however a key inflation indicator showed lesser-than-feared price pressures on Friday. The core personal consumption expenditures price index rose 3.5% in June year-over-year. It marked a sharp acceleration in inflation, but came in slightly below a Dow Jones forecast of a 3.6% jump.Also on Friday, U.S. second-quarter gross domestic product accelerated 6.5% on an annualized basis, considerably less than the 8.4% rate of growth expected by Dow Jones.Stock picks and investing trends from CNBC Pro:Morningstar names its top picks as investors sell off Chinese stocks Wall Street analysts think these Dow stocks can jump the most over the next 12 monthsSingapore’s largest lender picks 5 stocks that play off Evergrande’s debt crisisOn the earnings front, Amazon sank nearly 7.6% Friday after the tech giant reported its first quarterly revenue miss in three years and gave weaker guidance. The first trading day of August comes in the heat of earnings season. Lyft, Amgen, Uber, CVS Health, General Motors, Roku and Square all report quarterly results this week.Of the 59% of S&P 500 companies that have reported for the second quarter, 88% have beaten consensus earnings expectations, according to FactSet. More

THE RECENT expansion of the crypto-universe is a thing of wonder. Only a year ago there were about 6,000 currencies listed on CoinMarketCap, a website. Today there are 11,145. Their combined market capitalisation has exploded from $330bn to $1.6trn today—roughly equivalent to the nominal GDP of Canada. More than 100m unique digital wallets hold them, about three times the number in 2018.Holders have become more sophisticated and deep-pocketed, too. Institutions account for 63% of trading by value, up from 10% in 2017 (see chart 1). Skybridge, a hedge fund run by Anthony Scaramucci, provides an illustrative example. Its diversified $3.5bn fund began investing in crypto in November; in January it launched a $500m bitcoin fund. The exposure of its 26,000 clients, which range from rich individuals to sovereign funds, is rising. Bitcoin accounts for 9% of the value of its main vehicle, up from 5% originally, and the dedicated fund is now worth around $700m.This maturation, however, has failed to tame the wild gyrations that characterise crypto markets. Bitcoin sank from $64,000 in April to $30,000 in May. Today it hovers around $40,000, having dipped to $29,000 as recently as July 29th. Every downwards lurch raises the question of how bad the fallout might be. Too much seems at stake for the cryptocurrency to collapse—and not just for the die-hards who see bitcoin as the future of finance. Algorithmic traders now conduct a hefty share of transactions and have automatic “buy” orders when bitcoin falls below certain thresholds. Still, in order to grasp the growing links between the crypto-sphere and mainstream markets, imagine that the price of bitcoin crashes all the way to zero.A rout could be triggered either by shocks from within the system, say through a technical failure, or a big hack of a leading exchange. Or they could come from outside it: a clampdown by regulators, for instance, or an abrupt end to the “everything rally” in markets, say in response to central banks raising interest rates.There are three types of crypto investors, says Mohamed El-Erian of Allianz, an insurer and asset manager: “fundamentalists”, who believe bitcoin will replace government-issued currencies one day; “tacticians”, who reckon its value will rise as more people invest in it; and “speculators”, who want to gamble. Though a crash would come as a monumental upset to the first group, it is least likely to sell out; the third, meanwhile, will flee at the first sign of trouble. To avoid a terminal stampede, the second group must be persuaded to stay. It is unlikely to do so if the price falls to zero.A crash would puncture the crypto economy. Bitcoin miners—who validate transactions in exchange for a chance to earn new coins—would have less incentive to carry on, bringing the verification process, and the supply of bitcoin, to a halt. Investors would probably also dump other cryptocurrencies. Recent tantrums have shown that where bitcoin goes, other digital monies follow, says Philip Gradwell of Chain­alysis, a data firm.The result would be the destruction of a significant amount of wealth. Investors who have held bitcoin for longer than a year, having bought it at low prices, would have less to lose, despite large unrealised gains (see chart 2). The biggest losses would fall on those who bought less than a year ago, at an average price of $37,000. That would include most institutions exposed to crypto, including hedge funds, university endowments, mutual funds and some companies.The total value erased would go beyond the market capitalisation of digital assets. A crash would also wipe out private investments in crypto firms such as exchanges ($37bn since 2010, reckons PitchBook, a data firm) as well as the value of listed crypto firms (worth about $90bn). Payments firms like PayPal, Revolut and Visa would lose a chunk of growing, juicy business, which would dent their valuations. Companies that have ridden the crypto boom, such as Nvidia, a microchip-maker, would also take a hit. All in all, perhaps $2trn might be lost from this first shockwave, a little more than the market capitalisation of Amazon.Contagion could spread through several channels to other assets, both crypto and mainstream. One channel is leverage. Fully 90% of the money invested in bitcoin is spent on derivatives like “perpetual” swaps—bets on future price fluctuations that never expire (see chart 3). Most of these are traded on unregulated exchanges, such as FTX and Binance, from which customers borrow to make bets even bigger. Modest price swings can trigger big margin calls; when they are not met, the exchanges are quick to liquidate their customers’ holdings, turbocharging falls in crypto prices. Exchanges would have to swallow big losses on defaulted debt.The rush to meet margin calls in cryptocurrency—the collateral of choice for leveraged derivatives—could force punters to dump conventional assets to free up cash. Granted, they might give up trying to meet those calls, since their crypto holdings would no longer be worth much, which could contain the sell-off. But other types of leverage exist, where regulated exchanges or even banks have lent dollars to investors who then bought bitcoin. Some have lent dollars against crypto collateral. In both cases borrowers nearing default might seek to liquidate other assets.The extent of leverage in the system is hard to gauge; the dozen exchanges that list perpetual swaps are all unregulated. But “open interest”, the total amount in derivatives contracts outstanding at any one time, provides an idea of the direction of travel, says Kyle Soska of Carnegie Mellon University. This has grown from $1.6bn in March 2020 to $24bn today. It is not a perfect proxy for total leverage, as it is not clear how much collateral stands behind the various contracts. But forced liquidations of leveraged positions in past downturns give a sense of how much is at risk. On May 18th alone, as bitcoin lost nearly a third of its value, they came to $9bn.A second channel of transmission comes from the “stablecoins” that oil the wheels of crypto trading. Because changing dollars for bitcoin is slow and costly, traders wanting to realise gains and reinvest proceeds often transact in stablecoins, which are pegged to the dollar or the euro. Such coins, the largest of which are Tether and USD coin, are now collectively worth $100bn. On some crypto platforms, they are the main means of exchange.Issuers back their stablecoins with piles of assets, rather like money-market funds. But these are not solely, or even mainly, held in cash. Tether, for instance, says 50% of its assets were held in commercial paper, 12% in secured loans and 10% in corporate bonds, funds and precious metals at the end of March. A cryptocrash could lead to a run on stablecoins, forcing issuers to dump their assets to make redemptions. In July Fitch, a rating agency, warned that a sudden mass redemption of tethers could “affect the stability of short-term credit markets”. Eric Rosengren, the head of the Boston Federal Reserve, has noted that regulated investors with liabilities similar to Tether’s are not allowed to invest in many assets, because it would represent “a stability concern”.A cryptocalypse could affect broader sentiment even beyond firesales. The extent of this is unclear: more entities are now exposed to cryptocurrencies, but few have staked big shares of their wealth on them, so losses would be widespread but shallow. Crucially, banks are immune; and most will not rush to hold bitcoin on their balance-sheets any time soon. The Basel club of supervisors recently proposed making banks set aside an onerous $100 for every $100 in bitcoin they acquire.But a worse case is not hard to imagine. Low interest rates have led investors to take more risk. A crypto collapse could cause them to cool on other exotic assets. In recent months the correlation between bitcoin prices and meme stocks, and even stocks at large, has risen. That is partly because punters reinvest gains made on faddish stocks into crypto, and vice versa.A sell-off would begin with the most leveraged punters—typically individuals and hedge funds—in high-risk areas: meme stocks, junk bonds, special-purpose acquisition vehicles. Investors exposed to these, facing questions from their investment committees, would follow in turn, making risky assets less liquid, and perhaps provoking a general slump. If that sounds improbable, remember that the S&P 500, America’s main stock index, fell by 2.5% in a day after retail punters’ infatuation with GameStop, a video-game retailer, wrong-footed a few hedge funds.For general market turmoil to ensue, then, you would need a lot of things to go wrong, including the price of bitcoin to fall all the way to zero. But our extreme scenario suggests that leverage, stablecoins, and sentiment are the main channels through which any crypto-downturn, big or small, will transmit more widely. And crypto is only becoming more entwined with conventional finance. Goldman Sachs plans to launch a crypto exchange-traded fund; Visa has launched a debit card that pays customer rewards in bitcoin. As the crypto-sphere expands, so too will its potential to cause wider market disruption. More

In this articleHOODInvestors may want to start August by lightening up on the reopening trades.Longtime market bear David Rosenberg warns surging Covid-19 delta variant cases paired with the culmination of fiscal stimulus will crush stocks tied to the economic recovery.”We have to be prepared here for the economy to sputter in the next several months,” the Rosenberg Research president told CNBC’s “Trading Nation” on Friday. “You don’t have to basically abandon the stock market, but I definitely would not be in the value reflation cyclical trade.”His warning follows disappointing results on the gross domestic product front. Last week, the Commerce Department reported second quarter GDP grew 6.5%, which was short of the 8.4% Dow Jones estimate.Rosenberg, who is known for serving as Merrill Lynch’s top economist from 2002 to 2009, sees the GDP miss as a glaring red flag.”Now we’ve got the delta variant which is a big unknown,” he noted.Yet, the market has been holding up. The S&P 500 and Dow are less than 1% from their all-time highs while the tech-heavy Nasdaq is 1% away.”If you want to go out and be long stocks, you’ve done great. Go ahead and do it. Just don’t come back and tell me that it had anything to do with the economic outlook,” he added.Rosenberg believes there’s a disconnect between the market performance and the economy that’s being exacerbated by the retail investing crowd.”The stock market has actually, frankly, become a bit of a casino in some sense,” he said. “We always rely on the beloved S&P 500. But not every single index out there is following the mega caps, which by the way are now starting to roll over. The small cap stocks have been waving the yellow flag on the economic outlook for some time now.”According to Rosenberg, the market is operating in a universe all its own.”The people who are on Reddit accounts and Robinhood accounts and all the speculators out there aren’t buying Treasury notes,” he said. “They are basically buying on speculation, and the Greater Fool Theory and all the narratives that these investors can beat the pros.”To weather the risk backdrop, Rosenberg advises investors to consider adding defensive growth plays to their portfolios — particularly health care, consumer staples and utilities. He’s building his strategy on the what he sees in the bond market.”The bond market is saying we’re going to slow down materially now that the fiscal stimulus is over,” Rosenberg said. “We’re facing the delta. We’re going to have global headwinds. We’re past the easiest point of this especially with respect to fiscal stimulus.”Disclaimer More

A customer shops for groceries at La Tapatia Market during a blackout in Napa, California, on Wednesday, Oct. 9, 2019.David Paul Morris | Bloomberg | Getty ImagesThe electric grid in the West is being tested like never before amid extreme-weather events, including raging wildfires and severe droughts fueled by climate change. Utility companies are struggling to respond. Californians have had power cut preemptively when the risk of fire is high, while rolling blackouts have been implemented when supply is stretched thin.There’s also the danger that aging and poorly maintained infrastructure poses. PG&E filed for bankruptcy after the company’s equipment sparked several wildfires in the past few years, including the 2018 Camp Fire blaze that killed more than 80 people and razed the town of Paradise, California.”The amount of environmental pressures that are on utilities, given aging infrastructure, plus more wildfires and more hurricanes and more pressures like that, when there has been a systematic lack of investment in resiliency and reliability, it does catch up with you,” said Thomas Deitrich, CEO at Itron, which helps utilities manage and analyze energy and water usage. “And that’s what you see in some cases, with certain utilities today.”There are steps that utilities can take toward becoming resilient, including installing tech-enabled sensors for a more accurate snapshot of the conditions around power lines. Further, sophisticated forecasting can help utilities understand what their power needs will be down the line.However, making the necessary updates to infrastructure is a costly endeavor. The electricity infrastructure investment gap is estimated to be $208 billion through the end of the decade, according to the American Society of Civil Engineers.”Even though the grid in any particular area is really one big machine where everything has to work in concert … that machine has millions of individual parts,” said Steven Weissman, a lecturer at the Goldman School of Public Policy at the University of California, Berkeley.”Orchestrating all of this, getting all of these individual players to do their part, is an enormous challenge,” said Weissman, a former administrative law judge for the California Public Utilities Commission.California and the West’s power problems have taken center stage this summer, but there are issues across the U.S. as well. The need to make power infrastructure across the country more resilient has been a focus of President Joe Biden’s spending proposals. The latest version of the $550 billion bipartisan infrastructure plan earmarks $73 billion for investment in power infrastructure, which the plan’s fact sheet says is the “single largest investment in clean energy transmission in American history.”Investing in grid resiliency and reliabilityA hotshot crew from Redding with a strike team from the LAFD work the Dixie Fire near Taylorsville, California, U.S., July 29, 2021.David Swanson | ReutersThere are a number of short- and long-term improvements that utilities are implementing to better manage their systems.One of the most important steps in making the grid more resilient is improving situational awareness— that is, having a better understanding of what’s going on in the network – according to Scott Aaronson, vice president of security and preparedness at Edison Electric Institute, which is the trade association for investor-owned utilities. This includes installing sensor arrays, which provide granular snapshots of what’s going on at every point in the system. Companies can monitor wind speeds and dried vegetation levels so that they’re aware of the areas with the highest fire risk. With enhanced situational awareness, grid operators can also make decisions in near real time about whether to deenergize lines if conditions become too dangerous. The amount of environmental pressures that are on utilities, given aging infrastructure … when there has been a systematic lack of investment in resiliency and reliability, it does catch up with you. Thomas DeitrichCEO at ItronGround fault interrupters can also automatically cut power so that if a line breaks because of high winds, it doesn’t spark. Utilities are also implementing network segmentation so that when power does go out, it affects the fewest number of people possible.”These are investments that companies all throughout the West are making to both get better situational awareness and to have more automated controls,” said Aaronson.Weissman of the University of California, Berkeley noted that separating equipment from vegetation is the most critical factor, and if that can’t be guaranteed, upgrades need to be made on the infrastructure itself. Embattled PG&E said earlier this month that it will put 10,000 miles of power lines in high fire-threat areas underground. The announcement came after the company said its equipment might have sparked the Dixie Fire, which has burned more than 240,000 acres since July 13 and is still active.Risk mitigation measuresOther infrastructure safety upgrades include replacing wooden poles with those made from steel, as well as coating wires to reduce fire risk. Erik Takayesu, Southern California Edison’s vice president for asset strategy and planning, said the company takes a 360-degree view of its infrastructure. In addition to utilizing ground patrols, the company also deploys drones and helicopters to take high-resolution images in an effort to detect even the smallest anomalies.”We’ve had operational practices around wildfire mitigation for years. But as things intensify with the wildfire risk we’ve stepped up our wildfire mitigation strategy,” he said. This year, the company, which supplies roughly 15 million people in central, coastal and southern California, plans to spend around 20% of its budget on wildfire mitigation. This includes a team of meteorologists and fire science experts that are constantly monitoring conditions.”We see the effects of it [climate change] now, and we know if we don’t get control of this, the effects are only going to get worse,” Takayesu said.Power infrastructure is ubiquitous, and implementing these changes is costly. Investor-owned utilities serve about 75% of all customers across the U.S. These companies must seek regulatory approval before raising prices on consumers. While they’re encouraged to invest in new capital infrastructure, there are incentives to underspend on operation and maintenance.”It is very much a relationship between the utility and the utility commission,” said Itron’s Deitrich. “They’re trying to balance rates to consumers, and how much risk to take on the resiliency and reliability side of things.”Problems on the supply sideFallen power lines touch the ground on Camino Diablo road in Lafayette, California, U.S., on Monday, Oct. 28, 2019.David Paul Morris | Bloomberg | Bloomberg | Getty ImagesUtilities are also facing issues on the supply side of the equation as climate change raises temperatures and widespread drought reduces the available hydropower. Unlike public safety power shutoffs, which occur because of safety risks, rolling blackouts are implemented when the grid doesn’t have enough supply.Already this summer the California Independent System Operator has asked residents to conserve power on multiple occasions in order to cut unnecessary usage when demand is expected to spike. One of these flex alerts was issued as recently as Wednesday, July 28.The state is the largest power importer in the country, according to the U.S. Energy Information Administration. With record temperatures and severe drought occurring all over the West, some of the out-of-state power that California has traditionally relied on has been compromised. Record wildfires this summer throughout the West have also threatened key transmission lines between states.As renewable energy becomes a greater portion of power generation, new problems also arise for grid operators. When the sun goes down, all of the consumers who were using panels to power their homes during the day tap the grid at exactly the same time. Utilities are incorporating more and more grid-scale battery storage to smooth out inconsistencies when demand exceeds supply, but these batteries aren’t yet capable of storing power over multiple days.”I think anything we can do to make the demand curve more consistent ultimately makes power generation or power delivery more reliable,” said Aaronson. “Being able to have a more consistent, knowable demand allows for system planners to make sure there’s enough power online for those customer needs.”Gaining better visibility into demands on the grid is one of the areas that Itron helps utilities manage. The company offers demand response software that reduces load during peak usage, and also provides forecasting services that help utilities model their future power needs. This includes population growth and usage patterns as well as increased electrification as things like EVs move onto the grid. The grid was initially built as a one-way system, but with consumers increasingly turning to on-site solar and storage as a way to guarantee power resiliency even if the grid goes down, utilities also have to adapt to power flowing both ways.The rolling blackouts instituted in California in 2020 were the first in nearly two decades, demonstrating the struggles the grid faces as weather patterns change and extreme climate events become more regular. The grid wasn’t built with climate change in mind and — as companies in the West have seen more and more in recent summers — companies need to factor in the impacts to ensure long-term viability.Become a smarter investor with CNBC Pro. Get stock picks, analyst calls, exclusive interviews and access to CNBC TV. Sign up to start a free trial today More

Los Angeles County Regional Food Bank workers help with food distribution in Willowbrook, California on April 29, 2021.FREDERIC J. BROWN | AFP | Getty ImagesMillions of jobless Americans are poised to lose Covid-era income support in about a month’s time.This impending “benefits cliff” appears different from others that loomed this past year, when Congress was able to keep aid flowing after eleventh-hour legislative deals.There doesn’t seem to be an urgency among federal lawmakers to extend pandemic benefit programs past Labor Day, their official cutoff date.”There’s almost nobody talking about extending the benefits,” said Andrew Stettner, a senior fellow at The Century Foundation, a progressive think tank.Who’s impacted?The cliff will impact Americans who are receiving benefits through a handful of temporary programs.They include aid for the long-term unemployed, as well as the self-employed, gig workers, freelancers and others who are generally ineligible for state benefits.  More than 9 million people were receiving such assistance as of July 10, according to the Labor Department.About 7.5 million will still be collecting benefits by the time they end Sept. 6, Stettner estimates. They’d lose their entitlement to any benefits at that time.Others who are eligible for traditional state unemployment insurance can continue to receive those weekly payments past Labor Day. Roughly 3 million people are currently getting regular state benefits.However, they’ll lose a $300 weekly supplement.  The average person would have gotten $341 a week without that supplement in June, according to Labor Department data. (Payments range widely among states — from $177 a week in Louisiana to $504 a week in Massachusetts, on average.)More from Personal Finance:What to know about applying for federal rental assistanceThese states will still ban evictions after national moratorium liftsMany investors get it wrong when it comes to fees they payState benefits replaced about 38% of pre-layoff wages for workers in the first quarter of 2021, according to the Labor Department.The CARES Act expansions of unemployment benefits were unprecedented in the history of the unemployment insurance program, which dates to the 1930s.Congress has expanded payments in past recessions, too, to varying degrees.During the Great Recession, for example, workers were able to collect up to 99 weeks of unemployment benefits — far more than the traditional 26 weeks (or less in some states). That aid ceased in December 2013, at which time 1.3 million workers lost benefits.During the pandemic, workers were poised to lose extended benefits last December and again this past March, but Congress intervened in both cases, most recently with the American Rescue Plan.”This is so many more people than have ever been cut off from something like this,” Stettner said of the looming cliff relative to past cutoffs.A recovering economyOf course, the economy has recovered more quickly than in past recessions. It’s now larger than it was before the pandemic, according to Commerce Department data released Thursday.Hiring is also up over the past few months. The economy added 850,000 new jobs in June, after 583,000 in May and 269,000 in April. However, the U.S. has yet to recover almost 7 million lost jobs versus pre-pandemic levels.Critics of expanded benefit programs believe they’ve led workers to stay home instead of looking for work, which has made it harder for businesses to fill openings and contributed to muted hiring.There was about one unemployed person for every job opening in May, according to the Bureau of Labor Statistics.Twenty-six states ended their participation in federal unemployment programs over June and July, to try to encourage recipients to return to work — effectively moving up the benefits cliff for residents by about two to three months.”Businesses across the state continue to say they would grow and expand, if it wasn’t for the lack of workers,” Marcia Hultman, secretary of the South Dakota Department of Labor and Regulation, said in May. “Ending these programs is a necessary step towards recovery, growth and getting people back to work.”With the $300 supplement, almost half of jobless workers (48%) make as much or more money on unemployment benefits than their lost paychecks, according to a recent paper published by the JPMorgan Chase & Co. Institute.The extra funds had a small impact on job-finding among workers, but didn’t significantly hold back the job market, according to economists Fiona Greig, Daniel Sullivan, Peter Ganong, Pascal Noel and Joseph Vavra, who authored the analysis.”We conclude that unemployment supplements have not been the key driver of the job-finding rate through mid-May 2021 and that U.S. policy was therefore successful in insuring income losses from unemployment with minimal impacts on employment,” they found.And though it’s still early, evidence so far doesn’t suggest the state policies immediately pushed people back into the workforce.Some economists argue pandemic-related factors, not benefits, are the primary reasons workers may not be returning to the workforce as quickly as anticipated.For example, parents may still not have adequate child care; those who can’t work from home may still be cautious for health reasons; workers may have relocated away from jobs, or changed industries, during the pandemic.At the same time, the delta variant threatens to complicate the recovery. The Covid strain is significantly more contagious than the original one and may make people sicker than other virus variants, according to a Centers for Disease Control and Prevention document reviewed by CNBC.There was a seven-day average of more than 62,000 new Covid cases as of Thursday, up from about 47,000 a week earlier, according to CDC data. The overwhelming number of hospitalizations and deaths are occurring among the unvaccinated. But it appears vaccinated individuals with breakthrough cases can still transmit the virus to others, according to the CDC. More

In this articleAMZNTXRHGILDPGPVHHOODIn this photo illustration an Amazon logo is displayed on a smartphone with stock market percentages in the background.SOPA Images | LightRocket | Getty ImagesCheck out the companies making headlines in midday trading.Amazon — Amazon shares fell 7.6% after the tech giant’s second-quarter report missed Wall Street revenue estimates for the first time in three years. The company also gave weak third-quarter guidance. However, Amazon beat on earnings, reporting profit of $15.12 per share versus analysts’ expectation of $12.30 per share, according to Refinitiv. The June quarter reflected the last full quarter of founder Jeff Bezos’ tenure as CEO.Procter & Gamble — Shares of the consumer products giant rose 2% after the company beat analysts’ expectations in its fiscal fourth-quarter earnings report. P&G reported earnings of $1.13 per share on revenue of $18.95 billion, while analysts expected earnings of $1.08 per share on revenue of $18.41 billion. The company warned commodity and freight cost pressures could weigh on future profits.Caterpillar – The industrial giant’s shares dropped 2.7% even after the company reported better-than-expected profit and revenue in the second quarter. Caterpillar beat estimates by 20 cents with adjusted quarterly earnings of $2.60 per share, according to Refinitiv. The stock has already risen more than 12% this year.Chevron, Exxon Mobil – Chevron and Exxon Mobil each reported quarterly earnings topping analysts’ expectations, but saw their shares edge lower. Shares of Chevron fell 0.8% and Exxon’s stock lost 2.3%.Pinterest — Shares of the social media company tanked 18.2% after Pinterest reported that its number of monthly active members shrank in the second quarter. Analysts from JPMorgan and Evercore ISI downgraded the stock following the report.Robinhood — Shares of the newly public stock trading app ticked nearly 1% higher in its second day of trading on the Nasdaq. Robinhood sunk nearly 8.4% in its IPO on Thursday, after pricing at the low end of its range.Ralph Lauren — Retail apparel stocks trended higher after U.S. consumer spending rose 1% in June, more than expected. The University of Michigan’s latest survey of consumers report also showed consumer sentiment edged upward at the end of July. Ralph Lauren’s stock gained about 3.2%. Shares of PVH — whose brands include Tommy Hilfiger and Calvin Klein — added 1.1%, while Gap and Under Armour shares both edged higher as well.Capri Holdings — Shares of Capri Holdings jumped 12.5% after the company reported better-than-expected quarterly earnings. Capri, whose luxury brands include Michael Kors and Versace, earned an adjusted $1.42 per share for its latest quarter, well above the 80-cent consensus estimate. Revenue also exceeded forecasts, and Capri raised its annual outlook for the second time this year.Gilead Sciences — Gilead’s stock fell 2.2% after the biotechnology company’s quarterly earnings report came in ahead of estimates. On Thursday, the company reported an adjusted quarterly profit of $1.87 per share, 14 cents higher than estimates. However, sales of Gilead’s flagship HIV drugs fell 2% during the quarter.Texas Roadhouse — Texas Roadhouse shares fell 6.6% despite the restaurant chain beating estimates by 9 cents with quarterly earnings of $1.08 per share. However, the company said it expects food costs to continue to rise. Texas Roadhouse reported earnings on Thursday.Restaurant Brands International — The fast food corporation’s shares jumped 5.1% after it reported quarterly earnings of 77 per share, which beat Wall Street estimates by 16 cents, according to Refinitiv. The Burger King parent said digital sales grew 60% from the same time a year ago and Popeyes was the only one of its three brands to report same-store sales declines.— CNBC’s Maggie Fitzgerald, Yun Li, Jesse Pound and Tanaya Macheel contributed reportingBecome a smarter investor with CNBC Pro. Get stock picks, analyst calls, exclusive interviews and access to CNBC TV. Sign up to start a free trial today More

Stefani Reynolds/Bloomberg via Getty ImagesThe IRS began issuing another 1.5 million tax refunds this week to people who received unemployment benefits in 2020. That adds to the nearly 9 million refunds, worth about $10 billion, the agency sent since May.Funds delivered by direct deposit this week started hitting bank accounts on Wednesday, and paper checks were mailed beginning Friday. The average refund is $1,686.But those who got a refund, and also continued to collect unemployment benefits in 2021, shouldn’t expect a similar break on their federal taxes next filing season, according to financial experts.Jobless benefits are generally treated as taxable income, but federal lawmakers waived tax on a portion of benefits received in 2020, after the Covid-19 pandemic led an unprecedented number of people to tap the unemployment system.More from Personal Finance:What to know about applying for federal rental assistanceDelays for unemployment benefits persist, over a year into pandemicAnother wave of students may opt out of college this fallThe economic situation is such that lawmakers may not feel compelled to offer the same tax assistance next year. More than 13 million Americans were receiving benefits as of mid-July, according to the Labor Department.”That provision came up in a year when we had record levels of unemployment,” Janet Holtzblatt, a senior fellow at the Urban-Brookings Tax Policy Center, has told CNBC. “Fortunately, the economy has improved, which really reduces the probability it would be extended.”The American Rescue Plan, which President Joe Biden signed in March, excluded up to $10,200 of unemployment benefits collected in 2020 from federal income tax, per person. (Only those with less than $150,000 in income were eligible.) Some states followed with their own tax breaks.However, these tax waivers came after millions of people had already filed their annual tax returns. The IRS is now refunding any tax overpayment that may have occurred as a result.The agency has since sent over 8.7 million unemployment compensation refunds. The funds issued this week represent the fourth round of payments. The IRS will continue reviewing and adjusting tax returns in this category this summer.The Century Foundation estimates about 40 million people collected jobless aid last year. Some would have gotten a bigger tax bill, or a surprise one, for 2020 without the partial federal tax break.That’s because states, which administer unemployment benefits, are supposed to offer recipients the option to withhold 10% of benefits to cover part or all their tax liability. But cash-strapped jobless workers, many of them new to the unemployment system, may not have elected to withhold.Last year, there were so many people unemployed for the first time in their lives.Janet Holtzblattsenior fellow at the Urban-Brookings Tax Policy CenterSome states also didn’t offer the option to workers for certain pandemic-era unemployment programs, according to The Century Foundation.As a result, fewer than 40% of unemployment payments last year had taxes withheld, the group projected.”Last year, there were so many people unemployed for the first time in their lives,” Holtzblatt said. “They were really caught up with this big surprise at the end of the year.”Steps to takeThere are steps that those getting unemployment pay can take to prepare for a potentially hefty bill during tax season in early 2022.For one, recipients should elect to have the 10% tax withheld if they can afford to, Andrew Stettner, a senior fellow at The Century Foundation, has told CNBC.They may complete Form W-4V, Voluntary Withholding Request and give it to the state agency paying benefits, according to the IRS.”If you can’t afford it, at least have in your mind that when you go back to work you need to save for it,” Stettner said.However, even a 10% withholding rate may not be high enough to fully cover taxes, depending on one’s income and other factors.Recipients who haven’t had taxes pulled from benefits or believe they’ve been underpaying may opt to make quarterly estimated tax payments, according to the IRS.Families who started getting advance payments of the child tax credit — up to $300 a month per child — in July may also set aside some of those funds, he said.”I don’t think it’s a done deal,” Stettner said, of not having another tax break. “People should always prepare for the worst-case scenario instead of the best case.” More