Fed Tightening Unlikely as Europe Discusses U.S. Travel Ban

Even without restrictions, the recovery in American flight traffic has stalled. In the seven days ending Tuesday, traveler throughput was 73% of 2019 levels, according to official data, below the 85% level reached at the end of July. Americans also aren’t going to the office as much, according to data from Kastle Systems, an office-fob provider. No wonder the yield on the bonds of office provider WeWork has climbed of late, and the stock of its planned acquirer BowX Acquisition Corp. has sagged.

Perhaps, as strategists at JPMorgan believe, the Delta variant’s pressure on the U.S. economy will soon wane. But as Federal Reserve Chair Jerome Powell often says, the central bank remains data dependent.

It seems improbable for Powell to announce on Friday a reduction in bond purchases in this environment. It might not even be realistic for the Fed to follow through on its pledge to start the taper this year.

The market reaction may hinge on precisely what conditions Powell attaches to future action. The 51st record finish for the S&P 500 this year suggests traders are expecting plenty of caveats from Powell.

—Steve Goldstein

*** China has been in the midst of major upheaval. Join Reshma Kapadia, associate editor, and Victor Liu, a fundamental senior research analyst at Causeway, Tuesday at noon for a deep dive into China and investing. Sign up here.

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Delta Air Lines to Employees: Get Vaccinated or Pay $200 Monthly

Delta Air Lines increased the pressure on its 68,000 employees to get vaccinated, saying they could get the shots or face weekly testing and a $200 monthly surcharge for health insurance, starting Nov. 1. Covid hospitalizations have cost Delta about $50,000 per person, CEO Ed Bastian said.

• United Airlines and Hawaiian Holdings are requiring employees to get vaccinated, while Frontier Group is letting workers choose between vaccines or regular testing. Southwest Airlines and American Airlines are both strongly encouraging but not requiring vaccinations.
• The Transportation Security Administration recently extended its masking requirement for travelers, saying people must wear masks aboard airlines, buses and public transit, and in airports and indoor terminals through Jan. 18, 2022. Unruly airline passengers have been fined more than $1 million this year, mostly for not wearing masks.
• Starting Saturday, Carnival Corp. is requiring everyone 12 or older to provide proof of vaccination before sailing from all Atlantic and Gulf ports, except for those with a documented medical condition.
• Florida’s Walt Disney World said both union and salaried workers must get vaccinated to keep their jobs. And World Disney Cruise Lines says all passengers 12 and older must be fully vaccinated to board ships entering any Bahamas cruise ports, including Disney’s Castaway Bay.

What’s Next: American Airlines warned that rising cases of the Delta variant is slowing sales and increasing canceled reservations during August, usually a peak travel month. “This has been, and we expect will continue to be, a very choppy recovery,” chief revenue officer Vasu Raja said Wednesday.

—Janet H. Cho

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Covid Vaccine Makers Push for Full Approval and Boosters

Moderna said Wednesday it had completed filing the paperwork for full approval of its Covid-19 vaccine by the Food and Drug Administration, seeking to become the second two-shot choice as vaccine mandates spread across the U.S.

• Moderna began the process in June and has submitted additional data as it became available. It asked the FDA, which already fully approved the vaccine by Pfizer and BioNTech, for a priority review to speed the approval.
• Pfizer and BioNTech said Wednesday that they had asked regulators to authorize boosters of their vaccine and submitted additional data showing a third dose improves protection against the Covid-19 virus.
• Johnson & Johnson, which has a one-dose vaccine, said Wednesday a study found a second dose generated a strong immune response, supporting the case for a booster shot.
• Boosters currently are only authorized for immunocompromised people who received the Pfizer or Moderna vaccines. The FDA has to authorize extra doses before they can be offered more broadly.

What’s Next: The Biden administration now wants booster shots at six months rather than the eight months previously announced, The Wall Street Journal reported. Approval for boosters for all three Covid-19 shots being administered in the U.S. is expected in mid-September.

—Liz Moyer

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Nearly 800 Colleges and Universities Mandating Vaccines For Students or Staff

Nearly 800 U.S. colleges and universities are now requiring students or employees to get vaccinated against coronavirus, including the State University of New York, City University of New York and University of Minnesota, following the Food and Drug Administration’s full approval of the Pfizer — BioNTech vaccine.

• Ohio State University is requiring all 66,000 students and 30,000 faculty and staff members to get their first shot by Oct. 15 and their second shot by Nov. 15, with limited exceptions, in addition to wearing masks indoors, President Kristina Johnson announced.
• The University of Virginia recently disenrolled 238 students after sending “multiple emails, calls, text messages and, in some cases, calls to their parents” to get them fully vaccinated for the 2021-22 school year, spokesperson Brian Coy told CNN. Students who get vaccinated can re-enroll.
• Eighteen students have filed a lawsuit against Rutgers University protesting its vaccine mandate, and Rutgers University football player Peyton Powell tweeted on Tuesday that because of the school’s mandate, “I have no other choice” but to transfer out.
• Birmingham-Southern College in Alabama is passing along the roughly $50 cost of weekly Covid testing to its unvaccinated students.

What’s Next: New York Gov. Kathy Hochul called on state health officials to enact a universal mask mandate in public and private schools and said she wants to require school employees to get vaccinated or regularly tested. New York state United Teachers supports a statewide mask mandate.

—Janet H. Cho

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Retailers Are Boosting and Reinstating Dividends

Dick’s Sporting Goods, Williams-Sonoma, and Ulta Beauty kept the ball rolling on what’s shaping up to be a stellar earnings season for retailers. Dick’s and Williams-Sonoma also had dividend announcements, following Macy’s, which last week said it reinstated its dividend.

• Dick’s stock surged 13% on Wednesday. Aside from crushing analyst expectations for sales and earnings, the company also announced a special dividend of $5.50 per share.
• Williams-Sonoma beat earnings estimates and increased its quarterly dividend by 20% to 71 cents. It also raised its existing stock repurchase program to $1.2 billion from about $500 million.
• Ulta’s sales surged in the July quarter, solidly beating even results from 2019’s prepandemic period. Comparable sales growth hit 56.3%, driven by a 52.5% increase in transactions and a 2.5% increase in average ticket size.
• Such reports stood in contrast to earnings results from Nordstrom and Urban Outfitters. For Nordstrom, second-quarter sales came in below 2019 levels. Urban Outfitters flagged supply chain concerns.

What’s Next: Gap reports results after today’s close, followed next week by American Eagle Outfitters.

—Connor Smith

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Western Digital in $20 Billion Chip Merger Talks, According to Reports

U.S. data storage and semiconductor company Western Digital is in talks to merge with Japan’s Kioxia Holdings in a $20 billion deal, in a bid to create a group to better compete with industry leader Samsung Electronics in the fast-growing NAND memory market.

• The all-stock transaction could be announced by mid-September, according to The Wall Street Journal, and the merged entity would be led by current Western Digital CEO David Goeckeler.
• Samsung accounts for more than a third of the global NAND market, according to Reuters. Western Digital has a 19% market share and Kioxia 15%. NAND chips are used in smartphones, TVs and data center servers.
• Kioxia, which last year ditched plans for an initial public offering, was a Toshiba unit until 2018 and the Japanese conglomerate retains a 40% stake in the chip maker.
• Korea-based Samsung earlier this week announced a $200 billion-plus investment plan over the next three years, part of which to be spent to expand further in the semiconductor industry.

What’s Next: Western Digital shares were up nearly 8%, but the deal will be closely scrutinized by regulators in the U.S., Europe and China. Whatever happens to these merger plans, the fast consolidation of the global chip industry is likely to continue.

—Pierre Briançon

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‘I’m 60 and I’m considering paying off the $250,000 mortgage on my home. I have $1 million in company stock and $1 million in my 401(k), and I plan to work until I’m 67, at which point I’ll receive a pension of $8,000 per month. Should I sell the company stock to pay off the house?’

“Should I pay off my mortgage in full?” is one of those all-time, classic questions up there with “Who’s on first?” and “Wherefore art thou Romeo?”

I say this not to poke fun at you or your situation, but to drive home how common a question this is. Indeed, you’re not the only reader who has written me recently asking some variation of this query. I polled financial planners to get their take on this age-old quandary, and time and again they told me that they have clients dealing with this very issue, especially as they’re staring down retirement.

The common wisdom with previous generations was to avoid retiring with any debt. But boy, have the times changed. “Historically, it was taboo to go into retirement with debt, but that made sense when you had mortgages with rates upward of 7% or 14%,” said Marianela Collado, CEO and senior wealth advisor with Tobias Financial Advisors, a wealth management firm based in South Florida.

Read more here.

—Jacob Passy

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—Newsletter edited by Liz Moyer, Mary Romano, Callum Keown, Rupert Steiner