Fintechs Are Zeroing in on Everything Big Banks Aren’t

My north star(s) for philosophy, management, and politics are Star Wars, The Sopranos, and Game of Thrones, respectively. The Iron Bank (GoT) is a metaphor for today’s financial institutions, if present-day banks didn’t need bailouts or to invent fake accounts to juice compensation. Regardless, it was well known throughout Braavos that The Iron Bank will have its due.

If you failed to repay, they’d fund your enemies. So today’s Iron Bankers are the venture capitalists funding (any) incumbents’ enemies. If this makes VCs sound interesting/cool, don’t trust your instincts.

Lately, I’ve spent a decent amount of time on the phone with my bank in an attempt to get a home equity line, as I want to load up on Dogecoin. (Note: kidding.) (Note: mostly.) If Opendoor and Zillow can use algorithms and Google Maps to get an offer on my house in 24 hours, why does it take my bank — which underwrote the original mortgage — so much longer?

How ripe a sector is for disruption is a function of several factors. One (relatively) easy proxy is the delta between price increases and inflation, and if the innovation in the sector justifies the delta. Think of the $200 cable bill, or a $5.6 million 60-second Super Bowl spot, as canaries in the ad-supported media coal mine.

Another, easier (and more fun) indicator of ripeness is the eighties test. Put yourself smack dab in the center of the store/product/service, close your eyes, spin around three times, open your eyes, and ask if you’d know within 5 seconds that you were not in 1985. Theaters, grocery stores, gas stations, dry cleaners, university classes, doctor’s offices, and banks still feel as if you could run into Ally Sheedy or The Bangles.

It’s hard to imagine an industry more ripe for disruption than the business of money.

Let’s start with this: 25% of U.S. households are either unbanked or underbanked. Half of the nation’s unbanked households say they don’t have enough money to meet the minimum balance requirements. 34% say bank fees are too high. And, if you’re trying to get a mortgage, you’d better hope the house isn’t cheap.

Inequity is a breeding ground for disruption, leaving underserved markets for insurgents to seize and launch an attack on incumbents from below. We have good reason to believe that’s happening in banking.

Insurgents

A herd of unicorns is at the stable door, looking to trample Wells Fargo and Chase. Fintech is responsible for roughly one in five (17%) of the world’s unicorns, more than any other sector. In addition, there are already several megalodons worth more than financial institutions that have spent generations building (mis)trust.

How did this happen? The fintechs are zeroing in on everything big banks aren’t.

Example #1: Innovation. Over the past five years, PayPal has issued 26x more patents than Goldman Sachs.

Example #2: Cost-cutting. “Neobanks” offer the basic services of a bank, with one less expensive and cumbersome feature: the branch. A traditional bank branch needs $50 million in deposits to generate an adequate return. Yet nearly half (48%) of branches in the U.S. are below that threshold. Neobanks don’t have that problem, and there are now at least 177 of them. Founders frame these offerings as more progressive, less corporate. Dave, a new banking app, offers a Founding Story on its website (illustrated with cartoon bears) about three friends “fed up” with their banking experience, often incurring $38 overdraft fees. Fed up no longer: Dave provides free overdraft protection and has 10 million customers.

Example #3: Less inequity. NYU Professor of Finance Sabrina Howell’s research found fintech lenders gave 18% of PPP loans to Black-owned businesses, while small to medium-sized banks provided just 2%. Among all loans to Black-owned firms, Professor Howell found 54% were from fintech startups. Racial discrimination is the most likely explanation, as lenders faced zero credit risk.

Example #4: Serving the underserved. Unequal access to banking is a global botheration. Almost a third of the world’s adults, 1.7 billion, are unbanked. In Argentina, Colombia, Nigeria, and other countries, more than 50% of adults are unbanked.

But innovation is already on the horizon: Take Argentine fintech Ualá, whose CEO Pierpaolo Barbieri I spoke with on the Pod last week. In just 4 years, more than 3 million people have opened an account with his company — about 9% of the country — and over 25% of 18 to 25-year-olds now have a tarjeta Ualá (online wallet). Ualá recently launched in Mexico, where, as of 2017, only 2.6% of the poorest 40% had a credit card. This is more than an economic issue — it’s a societal issue, as financial inclusion bolsters the middle class and forms a solid base for democracy.

Interest(ed)

Chase savings accounts are offering, no joke, 0.01% interest. Wells Fargo? The same, though if you keep your investment portfolio with Wells, they’ll double that rate to 0.02%. Meanwhile, neobanks including Ally and Chime offer 0.5% — 50 times the competition.

There is also blood in the water for fintech unicorns that have created a debit, vs. credit, generation: The buy-now-pay-later fintech Afterpay has more than 5 million U.S. customers — just two years after launching in the country. As of February, its competitor Affirm has 4.5 million customers.

Unicorns are also coming for payments. The megasaurus in this space is PayPal, which has built the first global payments platform outside the credit card model and is second only to Visa in payment volume and revenue. Square’s Cash app is capturing share, and Apple Cash is also a player, as it’s … Apple.

Square, Apple, and a host of other companies are taking the “partnership” approach, bolting new services onto the existing transaction infrastructure. Square’s little white box is a low-upfront-cost way for a small merchant to accept credit cards. It’s particularly interesting that Apple teamed up with Goldman Sachs instead of a traditional bank. Goldman is looking to get into the consumer space (see Marcus), and Apple is looking to get into the payments space — this alliance could be the unsullied fighting with air cover from dragons. It should make Wells and BofA anxious.

The Big Four credit card system operators (Visa, MasterCard, Discover, and American Express) are still the dominant payment players, and they have deep moats. Their brands are global, their networks robust. Visa can handle 76,000 transactions per second in 160 currencies, and as of this week it had settled $1 billion in cryptocurrency transactions.

Still, even the king of payments sees dead people. In 2020, Visa tried to buy Plaid for $5.3 billion. Plaid currently helps connect existing payments providers (i.e. banks) to finance software such as Quicken and Mint. But it plans to expand from that beachhead into offering a full-fledged payments system. Visa CEO Al Kelly initially described the deal as an “insurance policy” to neutralize a “threat to our important U.S. debit business.” In an encouraging sign that American antitrust authorities are stirring, the Department of Justice filed suit to block the merger, and Visa walked.

Beyond Banking

Fintech is also coming for investing with online trading apps (Robinhood, Webull, Public, and several of the neobanks) and through the crypto side door (Coinbase, Gemini, Binance). Insurance is under threat from companies like Lemonade (home), Ladder (life), and Root (auto).

In sum, fintech is likely as underhyped as space is overhyped. Why? The ROI on your professional efforts and investing are inversely proportional to how sexy the industry/investment is, and fintech is … boring. Except for the immense opportunity and value creation — for multiple stakeholders. “Half the world is unbanked, but we need to colonize Mars,” said no rational investor ever.

Re: investing in fintech: What has, and will always be, a good rap? The guy/gal who owns the bank.

Life is so rich,

By: Scott Galloway

Source: Fintechs Are Zeroing in on Everything Big Banks Aren’t | by Scott Galloway | Jul, 2021 | Marker

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Why Workplace Empathy Won’t Keep Employees Happy

“Empathy is one of the values we’ve had from our founding.” That’s what Chelsea MacDonald, SVP of people and operations at Ada, a tech startup that builds customer-service platforms, told me when we first got on the phone for this story in June. When the company was in its early stages, with about 50 people, empathy was “a bit more ad hoc,” because you could bump into colleagues at lunch. But that was pre-pandemic, and before a hiring surge.

Now, MacDonald says, empathy is built on communication (as many as five times a week, she communicates in some way to the entire company about empathy), through tools (specifically, one that tracks whom people communicate with most and who gets left out), through intimacy (cultivated through special-interest groups) and through transparency (senior leaders share notes after every meeting). At various points in our discussion, MacDonald describes empathy as “more than just, ‘Hey, care about other people’” and “making space for other people to make mistakes.”

She was one of a dozen executives whose communications directors reached out when I tweeted about the office trend of “empathy.” Adriana Bokel Herde, the chief people officer at the software company Pegasystems, told me about the three-hour virtual empathy-training session the company had created for managers—and how nearly 90% had joined voluntarily.

Kieran Snyder, the CEO of Textio, a predictive-writing company, said the biggest surprise about empathy in the workplace is that it and accountability are “flip sides of the same coin.” “We had an engineer give some feedback that was really striking,” she told me. “She said that the most empathetic thing her manager could do for her was be really clear about expectations. Let me be an adult and handle my deliverables so that I know what to do.”

All of these leaders see empathy as a path forward after 17 months of societal and professional tumult. And employees do feel that it’s missing from the workplace: according to the 2021 State of Workplace Empathy Study, administered by software company Businessolver, only 1 in 4 employees believed empathy in their organizations was “sufficient.”

Companies know they must start thinking seriously about addressing their empathy deficit or risk losing workers to companies that are. Still, I’ve also heard from workers who think it’s all nonsense: the latest in a long string of corporate attempts to distract from toxic or exploitative company culture, yet another scenario in which employers implore workers to be honest and vulnerable about their needs, then implicitly or explicitly punish them for it.

If you’ve read all this and are still confused about what workplace empathy actually is, you’re not alone. Outside the office, developing empathy means trying to understand and share the feelings or experiences of someone else. Empathy is different from sympathy, which is more one-directional: you feel sad for what someone else is going through, but you have little understanding of what it feels like. Because empathy is predicated on experience, it’s difficult, if not impossible, to cultivate. At best, it’s expanded sympathy; at worst, it’s trying to force connections between wildly different lived experiences (see especially: white people attempting to empathize with the experience of systemic racism).

Applied in a corporate setting, the very idea of empathy begins to fall apart. Is it bringing their whole selves, to use an HR buzzword, to work? Is it cultivating niceness? Is it making space for sympathy and allowing people to air grievances, or is it leadership modeling vulnerability? Over the course of reporting this story, I talked to more than a dozen people from the C-suites of midsize and large companies that had decided to make empathy central to their corporate messaging or strategy.

Some plans were more fleshed out and self-interrogating. Some thought an empathy training available to three time zones was enough. Others understood empathy as small gestures, like looking at a co-worker’s calendar, seeing they’ve been in meetings all day, and giving them a 10-minute pause to get water before you meet with them.

But where did this current push for workplace empathy begin? According to Johnny C. Taylor Jr., president and chief executive officer of the Society for Human Resource Management (SHRM) and author of the upcoming book Reset: A Leader’s Guide to Work in an Age of Upheaval, it sort of started with, well, him. In the fall of 2020, he’d been hearing a similar refrain from businesses: everyone was tired. Tired of the pandemic; of stalled diversity, equity and inclusion (DE&I) efforts; of their bosses and their employees.

When he looked at the 2020 State of Workplace Empathy Study, then in its fourth year, the reasons for that exhaustion became clear. People were tired because they were working all the time, and trying to sort out caregiving responsibilities, and dealing with oscillating threat levels from COVID-19. But they were also tired, he believed, because there was a generalized empathy deficit.

Read More: Hourly Workers Are Demanding Better Pay and Benefits—and Getting Them

That “empathy deficit” became the cornerstone of Taylor’s State of Society address in November 2020. “Much of the resurgence of DE&I programming in the wake of the George Floyd killing was supposed to encourage open conversation and mutual understanding,” he said. “But it often bypassed empathy. Well-meaning programs devolve into grievance sessions … rather than listening and trying to relate.”

SHRM is an incredibly influential organization, with more than 300,000 members in 165 countries. So while it’s not as if empathy efforts were nonexistent before, Taylor’s speech encouraged them. Even if members weren’t there to listen to his words, his message—and the data from the study—began to filter into HR departments, leaving a trail of optional learning modules and Zoom trainings in its wake.

The backlash started shortly thereafter. Taylor acknowledges as much. “I see these companies jumping on it,” he told me. “But it’s not an initiative. It’s not a buzzword. It’s a cultural principle. If you make this promise, as a company, if you put this word out there, your employees are going to hold you to it.” He adds that empathy should go both ways: “There’s an expectation that employees can mess up; employers should be able to mess up too.”

In the case of employees, many are frustrated by perceived hypocrisy. (All employees who spoke critically about their employers for this story requested anonymity out of concern for their jobs.) One woman told me her company, Viacom, has been doing a lot of messaging about empathy, particularly when it comes to mental health. At the same time, it has switched to a health plan that’s more restrictive when it comes to accessing mental-health professionals and care.

(Viacom attributes the change to a shift in policy on the part of their insurance provider and says it has worked to remedy it.) Other employees report repeated invocations of empathy from upper management in staff meetings, but little training on how to implement it with those they supervise. As one female employee at a performing-arts nonprofit told me, “In a one-on-one meeting with my boss where I was openly struggling and tried to discuss it, I was told that mental health is important, but improving my job performance was more important.”

A customer-service representative for a fintech company said empathy had been centered as a “core value” of the organization: something they were meant to practice with one another but also with customers. To quantify worker empathy, the company sends out customer-satisfaction surveys (CSATs) after each interaction. It found that dips in CSAT scores, which were measured by an automated system, reliably happened when a customer had a long hold time, which had little to do with whether the representative modeled empathy. Yet employees were still promoted based on these scores.

The central tension emerges again and again: “There’s an irony, because there’s the equity that you want to present to employees—while also giving special consideration and solutions for specific situations,” Joyce Kim, the chief marketing officer of Genesys, which provides customer service and call-center tech for businesses, told me. “Those two are often incongruent.”

Put another way, it’s hard, at least from a leadership perspective, to cultivate equal treatment for everyone while also making exceptions for everyone. If you allow an employee to work different hours, have different expectations of accessibility or have more leeway because of an illness, how is that fair to those who don’t need those things? How, in other words, do you accommodate difference while still maximizing profits?

What companies are trying to do, at heart, is train employees to treat one another not like productivity robots, but like people: people with kids, people with responsibilities, people shouldering the weight of systemic discrimination. But that runs counter to the main goal of most companies, which is to create and distribute a product—whether that’s a service, an object or a design—as efficiently as possible. They might dress up that goal in less capitalistic language, but the end point remains the same: profits, the more the better, with as little friction as possible.

Within this framework, the frictionless employee is the ideal employee. But a lack of friction is a privilege. It means looking and acting and behaving like people in power, which, at least in American society, means being white, male and cisgender; with few or no caregiving responsibilities; no physical or mental disabilities; no strong accent or awkward social tics or physical reminders, like “bad teeth,” of growing up poor; and no needs for accommodations—religious, dietary or otherwise. For decades, offices were filled with people who fit this bill, or who were able to hide or groom away the parts of themselves that did not.

The women and people of color who were admitted into these spaces did so with an unspoken caveat that they would make themselves amenable to the status quo. They didn’t bring their “whole selves” to work. Not even close. They brought only the parts that would blend in with the rest of the workforce. If you were sexually harassed, you didn’t make a fuss about it. If someone used a racial slur, same deal. If there were Christmas celebrations that made the one Jewish employee feel weird, that person was expected not to make waves. Bad behavior wasn’t friction, per se. But a worker whose identity already created a form of friction complaining about it? That sure was.

Historians of labor have pointed out that this posture was particularly prevalent in office settings, where salaried workers were often saturated in narratives of a great, unified purpose. If employees took care of the company, and flattened themselves into as close to the image of the ideal worker as possible, the company would take care of them, in compensation and eventual pension. Which is one of many reasons that white collar office workers have been resistant to unionization efforts, which felt, as sociologist C. Wright Mills has noted, like a crass, almost hysterical form of office friction.

Machinists and longshoremen were laborers and had no recourse other than the big stick of the union to advocate for themselves. Office workers could solve conflict man to man, boss to employee, like, well, the white gentlemen that they were—or at the very least pretended to be.

This mindset began to erode over the course of the 1970s, ’80s and ’90s—first, when massive waves of layoffs and benefit cuts destabilized the myth of the benevolent parent company. But the white maleness of the culture also began to (very gradually) shift in the wake of legal protections against discrimination related to gender, age, disability and, only recently, sexual orientation.

White male workers remained dominant in most industries, particularly in leadership roles. But they began to lose their unquestioned monopoly on the norms of the workplace. Some changes were embraced; others, especially around sexual harassment and racial discrimination, were changed via legal force.

Read More: The Pandemic Reset the Balance Between Workers and Employers. How Bosses Respond Will Shape the Future of Work

The overarching goal of HR departments in the past, going back to the field’s origins in “scientific management” of factory assembly lines, was keeping employees healthy enough to work efficiently. After 1964, their task expanded to include compliance with legal protections, in addition to the continued work of keeping employees healthy and “happy” enough to do their work well. “Unhappiness,” after all, is expensive—according to a Gallup estimate from 2013, dissatisfaction costs U.S. companies $450 million to $550 million a year in lost productivity. Unhappiness, in other words, is friction.

But as the workplace continues to diversify, how do you maintain the worker “happiness” of a bunch of different sorts of people, from different backgrounds, with different cultural contexts? There are some obvious fixes: continuing to erode the power of monoculture (in which one, limited way of being/working becomes the way of being/working to which all other employees must aspire); recruiting and retaining managers who actually know how to manage; creating a culture that encourages taking time off. But usually, the proposed solution takes the form of the HR initiative.

Take the 2010s push for “wellness,” which manifested in the form of mental-health seminars, gym memberships and free Fitbits. You can view these initiatives as part of a desire to reduce health-insurance premiums. But you can also see them as a means of confronting the reality of a workforce that, in the wake of the Great Recession, was anxious about their finances and careers, particularly as more and more workers were replaced by subcontractors, who enjoyed even fewer protections and privileges.

Or consider the push for DE&I programs in the wake of Black Lives Matter protests in 2015. These initiatives aim to acknowledge a perceived source of friction—the fact that a company is very white, its leadership remains “snowcapped,” or the workplace is quietly or aggressively hostile to Black and brown employees—while also providing a proposed solution. The corporate DE&I initiative communicates that we see this problem, we’re working to solve it, so you can talk less about it.

Wellness and DE&I initiatives are frequently unsatisfying and demoralizing, particularly for those workers they are ostensibly designed to benefit. They often lean heavily on the labor of those with the least power within an organization. And they approach systemic problems with solutions designed to disrupt people’s lives as little as possible. (A three-hour webinar will not create a culture of inclusion.) But the superficiality is part of the point.

Contain the friction, but do so by creating as little additional friction as possible, because a series of eruptions is easier to contain than a truly paradigm-shifting one that threatens the status quo and, by extension, the company’s public profile and profitability. According to a 2021 SHRM report, in the five years since DE&I initiatives swept the corporate world, 42% of Black employees, 26% of Asian employees and 21% of Hispanic employees reported experiencing unfair treatment based on their race or ethnicity.

The ramifications of racial inequity (lost productivity, turnover and absenteeism) over the past five years may have cost the U.S. up to $172 billion. But instead of acknowledging what it is about the company culture that makes it difficult to retain diverse hires, or what might have to change to recoup those losses, companies blame individual workers who were a “bad fit.” DE&I initiatives don’t fail because there’s a “diversity pipeline problem.” It’s because those in power aren’t willing to relinquish any of it.

A similar contradiction applies to the rise of “corporate empathy.” At its heart, it’s a set of policies, initiatives and messaging developed to respond to the “friction” of a workforce unsettled by the pandemic, a continuing racial reckoning and sustained political anxiety, capped off by an uprising, on a workday, days after most of the workforce had returned from winter breaks. Many empathy initiatives are well-intentioned. But coming from an employer, they still, ultimately, say: We see you are breaking in two, we are too, but how can we collectively still work as if we’re not?

Therein lies the empathy trap. So long as organizations view employees with different needs as sources of friction, and solutions to those needs as examples of unfairness, they will continue to promote and retain employees with the capacity to make their personalities, needs and identities as frictionless as possible. They will encourage “bringing the whole self to work,” but only on a good day. They will fetishize “sharing personal stories,” but only when the ramifications don’t interfere with the product or create interpersonal conflict. This is what happens when you conceive of empathy as allowances: Those who would benefit from it become less desirable workers. Their friction is centered, and their value decreases.

Our society is built around the goals of capitalism—and capitalism, and the ethos of individualism that thrives alongside it, is inherently in conflict with empathy. The qualities that make our bodies, selves and minds most amenable to those goals are prized above all else, and it is HR’s primary task to further cultivate those qualities, whether through “enrichment” or “wellness,” even when the most significant obstacle to either is the workplace itself.

Why do the declarations of empathy feel so hollow? Because growth and profit do not reward it. Companies, HR professionals, managers, even the best trained can do only so much. A large portion of the dissatisfaction that employees feel is the result of actively toxic company policy, thoughtless management and executives clinging to the status quo. But a lot of it, too, is anger at systems that extend beyond the office:

The fraying social safety nets, the decaying social bonds, the frameworks set up to devalue women’s work, the stubborn endurance of racism, the lack of protections or fair pay for the workers whose labor we ostensibly value most. We don’t know how to make people care about other people. No wonder workplace initiatives can feel so laughably incomplete. How do you cultivate a healthy workplace culture when it’s rooted in poisoned soil? “It’s not just a workplace empathy deficit,” Taylor told me. “It’s an American cultural deficit.”

By Anne Helen Petersen

Petersen is co-author of the upcoming book Out of Office: The Big Problem and Bigger Promise of Working From Home

Source: Why Workplace Empathy Won’t Keep Employees Happy | Time

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Contents:

Find out how emotionally intelligent you are by taking our emotional intelligence quiz.

And Mind Tools Premium club members and Corporate users can listen to our exclusive interview with Daniel Goleman

Cynthia D. Fisher; Neal M. Ashkanasy. “The Emerging Role of Emotions in Work Life: An Introduction

Hoffmann, Elizabeth A. (2016). “Emotions and Emotional Labor at Worker-Owned Businesses: Deep Acting, Surface Acting, and Genuine Emotions”. The Sociological Quarterly. 57: 152–173. doi:10.1111/tsq.12113. S2CID 145338476.

McQuerrey, Lisa. “Eight Steps to End Drama in The Workplace”. Retrieved 20 April 2014.

“Interview with Harry Prosen M.D. Psychiatric Consultant Bonobo Species Survival Plan”. Retrieved 11 August 2011.

Rosenberg, Marshall B. (2005). “5: Connecting with others empathically”. Speak peace in a world of conflict: what you say next will change your world. Puddledancer Press. pp. 240. ISBN 978-1892005175.

Empathy Definitions by Edwin Rutsch from the Center for Building a Culture of Empathy.

Mirrored emotion by Jean Decety from the University of Chicago.

Empathy and the brain by Gwen Dewar published in Parenting Science.

Empathic listening skills How to listen so others will feel heard, or listening first aid (University of California).

Study: People literally feel pain of others – mirror-touch synesthesia Live Science, 17 June 2007.

Retail Sales For June Provide An Early Boost, But Bond Yields Mostly Calling The Shots

Getty Images

The first week of earnings season wraps up with major indices closely tracking the bond market in Wall Street’s version of “follow the leader.” Earnings absolutely matter, but right now the Fed’s policies are maybe a bigger influence. In the short-term the Fed is still the girl everyone wants to dance with.

Lately, you can almost guess where stocks are going just by checking the 10-year Treasury yield, which often moves on perceptions of what the Fed might have up its sleeve. The yield bounced back from lows this morning to around 1.32%, and stock indices climbed a bit in pre-market trading. That was a switch from yesterday when yields fell and stocks followed suit. Still, yields are down about six basis points since Monday, and stocks are also facing a losing week.

It’s unclear how long this close tracking of yields might last, but maybe a big flood of earnings due next week could give stocks a chance to act more on fundamental corporate news instead of the back and forth in fixed income. Meanwhile, retail sales for June this morning basically blew Wall Street’s conservative estimates out of the water, and stock indices edged up in pre-market trading after the data.

Headline retail sales rose 0.6% compared with the consensus expectation for a 0.6% decline, and with automobiles stripped out, the report looked even stronger, up 1.3% vs. expectations for 0.3%. Those numbers are incredibly strong and show the difficulty analysts are having in this market. The estimates missed consumer strength by a long shot. However, it’s also possible this is a blip in the data that might get smoothed out with July’s numbers. We’ll have to wait and see.

Caution Flag Keeps Waving

Yesterday continued what feels like a “risk-off” pattern that began taking hold earlier in the week, but this time Tech got caught up in the selling, too. In fact, Tech was the second-worst performing sector of the day behind Energy, which continues to tank on ideas more crude could flow soon thanks to OPEC’s agreement.

We already saw investors embracing fixed income and “defensive” sectors starting Tuesday, and Thursday continued the trend. When your leading sectors are Utilities, Staples, Real Estate, the way they were yesterday, that really suggests the surging bond market’s message to stocks is getting read loudly and clearly.

This week’s decline in rates also isn’t necessarily happy news for Financial companies. That being said, the Financials fared pretty well yesterday, with some of them coming back after an early drop. It was an impressive performance and we’ll see if it can spill over into Friday.

Energy helped fuel the rally earlier this year, but it’s struggling under the weight of falling crude prices. Softness in crude isn’t guaranteed to last—and prices of $70 a barrel aren’t historically cheap—but crude’s inability to consistently hold $75 speaks a lot. Technically, the strength just seems to fade up there. Crude is up slightly this morning but still below $72 a barrel.

Losing Steam?

All of the FAANGs lost ground yesterday after a nice rally earlier in the week. Another key Tech name, chipmaker Nvidia (NVDA), got taken to the cleaners with a 4.4% decline despite a major analyst price target increase to $900. NVDA has been on an incredible roll most of the year.

This week’s unexpectedly strong June inflation readings might be sending some investors into “flight for safety” mode, though no investment is ever truly “safe.” Fed Chairman Jerome Powell sounded dovish in his congressional testimony Wednesday and Thursday, but even Powell admitted he hadn’t expected to see inflation move this much above the Fed’s 2% target.

Keeping things in perspective, consider that the S&P 500 Index (SPX) did power back late Thursday to close well off its lows. That’s often a sign of people “buying the dip,” as the saying goes. Dip-buying has been a feature all year, and with bond yields so low and the money supply so huge, it’s hard to argue that cash on the sidelines won’t keep being injected if stocks decline.

Two popular stocks that data show have been popular with TD Ameritrade clients are Apple (AAPL) and Microsoft (MSFT), and both of them have regularly benefited from this “dip buying” trend. Neither lost much ground yesterday, so if they start to rise today, consider whether it reflects a broader move where investors come back in after weakness. However, one day is never a trend.

Reopening stocks (the ones tied closely to the economy’s reopening like airlines and restaurants) are doing a bit better in pre-market trading today after getting hit hard yesterday.

In other corporate news today, vaccine stocks climbed after Moderna (MRNA) was added to the S&P 500. BioNTech (BNTX), which is Pfizer’s (PFE) vaccine partner, is also higher. MRNA rose 7% in pre-market trading.

Strap In: Big Earnings Week Ahead

Earnings action dies down a bit here before getting back to full speed next week. Netflix (NFLX), American Express (AXP), Johnson & Johnson (JNJ), United Airlines (UAL), AT&T (T), Verizon (VZ), American Airlines (AAL) and Coca-Cola (KO) are high-profile companies expected to open their books in the week ahead.

It could be interesting to hear from the airlines about how the global reopening is going. Delta (DAL) surprised with an earnings beat this week, but also expressed concerns about high fuel prices. While vaccine rollouts in the U.S. have helped open travel back up, other parts of the globe aren’t faring as well. And worries about the Delta variant of Covid don’t seem to be helping things.

Beyond the numbers that UAL and AAL report next week, the market may be looking for guidance from their executives about the state of global travel as a proxy for economic health. DAL said travel seems to be coming back faster than expected. Will other airlines see it the same way? Earnings are one way to possibly find out.Even with the Delta variant of Covid gaining steam, there’s no doubt that at least in the U.S, the crowds are back for sporting events.

For example, the baseball All-Star Game this week was packed. Big events like that could be good news for KO when it reports earnings. PepsiCo (PEP) already reported a nice quarter. We’ll see if KO can follow up, and whether its executives will say anything about rising producer prices nipping at the heels of consumer products companies.

Confidence Game: The 10-year Treasury yield sank below 1.3% for a while Thursday but popped back to that level by the end of the day. It’s now down sharply from highs earlier this week. Strength in fixed income—yields fall as Treasury prices climb—often suggests lack of confidence in economic growth.

Why are people apparently hesitant at this juncture? It could be as simple as a lack of catalysts with the market now at record highs. Yes, bank earnings were mostly strong, but Financial stocks were already one of the best sectors year-to-date, so good earnings might have become an excuse for some investors to take profit. Also, with earnings expectations so high in general, it takes a really big beat for a company to impress.

Covid Conundrum: Anyone watching the news lately probably sees numerous reports about how the Delta variant of Covid has taken off in the U.S. and case counts are up across almost every state. While the human toll of this virus surge is certainly nothing to dismiss, for the market it seems like a bit of an afterthought, at least so far. It could be because so many of the new cases are in less populated parts of the country, which can make it seem like a faraway issue for those of us in big cities. Or it could be because so many of us are vaccinated and feel like we have some protection.

But the other factor is numbers-related. When you hear reports on the news about Covid cases rising 50%, consider what that means. To use a baseball analogy, if a hitter raises his batting average from .050 to .100, he’s still not going to get into the lineup regularly because his average is just too low. Covid cases sank to incredibly light levels in June down near 11,000 a day, which means a 50% rise isn’t really too huge in terms of raw numbers and is less than 10% of the peaks from last winter. We’ll be keeping an eye on Covid, especially as overseas economies continue to be on lockdowns and variants could cause more problems even here. But at least for now, the market doesn’t seem too concerned.

Dull Roar: Most jobs that put you regularly on live television in front of millions of viewers require you to be entertaining. One exception to that rule is the position held by Fed Chairman Jerome Powell. It’s actually his job to be uninteresting, and he’s arguably very good at it. His testimony in front of the Senate Banking Committee on Thursday was another example, with the Fed chair staying collected even as senators from both sides of the aisle gave him their opinions on what the Fed should or shouldn’t do. The closely monitored 10-year Treasury yield stayed anchored near 1.33% as he spoke.

Even if Powell keeps up the dovishness, you can’t rule out Treasury yields perhaps starting to rise in coming months if inflation readings continue hot and investors start to lose faith in the Fed making the right call at the right time. Eventually people might start to demand higher premiums for taking on the risk of buying bonds. The Fed itself, however, could have something to say about that.

It’s been sopping up so much of the paper lately that market demand doesn’t give you the same kind of impact it might have once had. That’s an argument for bond prices continuing to show firmness and yields to stay under pressure, as we’ve seen the last few months. Powell, for his part, showed no signs of being in a hurry yesterday to lift any of the stimulus.

TD Ameritrade® commentary for educational purposes only. Member SIPC.

Follow me on Twitter.

I am Chief Market Strategist for TD Ameritrade and began my career as a Chicago Board Options Exchange market maker, trading primarily in the S&P 100 and S&P 500 pits. I’ve also worked for ING Bank, Blue Capital and was Managing Director of Option Trading for Van Der Moolen, USA. In 2006, I joined the thinkorswim Group, which was eventually acquired by TD Ameritrade. I am a 30-year trading veteran and a regular CNBC guest, as well as a member of the Board of Directors at NYSE ARCA and a member of the Arbitration Committee at the CBOE. My licenses include the 3, 4, 7, 24 and 66.

Source: Retail Sales For June Provide An Early Boost, But Bond Yields Mostly Calling The Shots

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Critics:

Retail is the process of selling consumer goods or services to customers through multiple channels of distribution to earn a profit. Retailers satisfy demand identified through a supply chain. The term “retailer” is typically applied where a service provider fills the small orders of many individuals, who are end-users, rather than large orders of a small number of wholesale, corporate or government clientele. Shopping generally refers to the act of buying products.

Sometimes this is done to obtain final goods, including necessities such as food and clothing; sometimes it takes place as a recreational activity. Recreational shopping often involves window shopping and browsing: it does not always result in a purchase.

Most modern retailers typically make a variety of strategic level decisions including the type of store, the market to be served, the optimal product assortment, customer service, supporting services and the store’s overall market positioning. Once the strategic retail plan is in place, retailers devise the retail mix which includes product, price, place, promotion, personnel, and presentation.

In the digital age, an increasing number of retailers are seeking to reach broader markets by selling through multiple channels, including both bricks and mortar and online retailing. Digital technologies are also changing the way that consumers pay for goods and services. Retailing support services may also include the provision of credit, delivery services, advisory services, stylist services and a range of other supporting services.

Retail shops occur in a diverse range of types of and in many different contexts – from strip shopping centres in residential streets through to large, indoor shopping malls. Shopping streets may restrict traffic to pedestrians only. Sometimes a shopping street has a partial or full roof to create a more comfortable shopping environment – protecting customers from various types of weather conditions such as extreme temperatures, winds or precipitation. Forms of non-shop retailing include online retailing (a type of electronic-commerce used for business-to-consumer (B2C) transactions) and mail order

How Investing in Strategic Partnerships Can Help Grow Your Business

How Investing in Strategic Partnerships Can Help Grow Your Business

The best entrepreneurs understand the power of people. Whether thinking about accessible healthcare or, more broadly, startup success, collaboration and partnerships have always been vital, even before the pandemic strengthened the need for a collective approach.

Of course, for entrepreneurs looking to scale their business, cash is a critical piece of the puzzle. For obvious reasons, access to capital enables a business to grow, whether that’s investing in research and development (R&D), expanding overseas, or hiring top talent.

But capital shouldn’t be treated as a silver bullet. Instead, founders should turn their attention toward creating strong, strategic partnerships to drive business growth. Working with other established organisations builds credibility, allowing businesses to make further connections and expand their operations.

Entrepreneurs, though, should learn exactly how to unlock beneficial relationships that will ultimately set them up for long-term victory. Partnerships must be win-win and goals aligned so that everyone comes out as beneficiaries.

Why connections matter.

When executed wisely, strategic partnerships can foster business growth. With the potential to form a critical part of any growing business, these partnerships benefit startups and corporates alike. For large corporations, startups and scaleups can fuel innovation; for early-stage founders, big companies can enable fresh revenue, scaling possibilities and credibility.

With established partners come established networks. Existing knowledge, suppliers and customers can make selling products on a larger scale much easier to achieve. This empowers startups to scale quickly, with that revenue used to reinvest in operations and innovation, fuelling further growth and making it easier to establish new business relationships with a wider pool of organisations.

What’s also important, particularly if operating in a crowded space such as healthcare, is the potential for impact. Healthcare solutions – rightly or wrongly – are often judged by the number of patients using them. So, establishing key strategic partnerships – as we’ve done with Microsoft, Allianz and Portuguese healthcare provider Médis – provides an avenue to millions of patients.

Infermedica experimented with different business models, but eventually settled on a B2B strategy over B2C as we had the potential to reach more patients through a partnership network. This accelerated on our goal to bring more accessible healthcare to all. Strategic partnerships enable startups to quickly build credibility and cut through loud crowded markets.

Investor partnerships can play a role as well. Relationships don’t need to simply need to be between providers, but investors can bring knowledge, connections and consultancy which can help startups to overcome growing challenges and open doors that may otherwise remain closed until certain milestones around size, revenue and customers have been reached. What’s key is ensuring both sides remain committed to moving forward together.

How to unlock the opportunity.

But what’s the best way to go about creating these relationships? For founders, the first step to achieving this is to remember that although partnerships are sealed between companies, they’re created by people and that human connection has to be built first. Talk to the potential partner to understand what they are truly trying to achieve and how a partnership could help them solve it.

Similarly, founders must understand their own goals and what they need from any relationship to ensure they keep progressing towards it. When discussions are open and the people are looked after, great relationships are forged.

Developing a partner program at an early stage: creating a network of trusted resellers and innovative partners also allows entrepreneurs to explore opportunities in their immediate area and beyond. Indeed, European founders shouldn’t simply look within their own country or continent for partnerships, by looking further afield they open themselves up to new ways of thinking and opportunities.

Partner programs and ecosystems establish a feedback community, each organization provides feedback which improves each other’s offerings, leading to greater growth and credibility for all. This also drives thoughts around integration, how compatible one offering is with another to ensure it truly adds value in a real-world environment. Collaboration with partners enables entrepreneurs to see how their product fits into the bigger picture which fuels wider innovation.

For example, Infermedica’s partner program enables organizations from all aspects of healthcare to collaborate with us and access our AI technology, enhancing and diversifying services which offer better end-user outcomes. Of course, there is still some way to go and things will never stop evolving. The top SaaS companies have on average around 350 integrations as they understand all of the potential engagement points and are establishing ecosystems that reflect them. The key takeaway: when creating partner ecosystems, always keep in mind how an end-user could potentially interact with your offering.

Take your time.

As in life, building a long-last relationship takes a lot of time and effort. So, while it can be tempting to rush into an exciting partnership or program, it’s vital to take your time to build trust and establish clear boundaries. Drawing on our own experience, it took more than a year to establish partnerships with Microsoft and Allianz, and it’s an ongoing process of building mutual trust and finding new ways to collaborate.

Remember that there should be no A and B side in partnerships. Each party brings their own benefits to the table. Combining knowledge and resources makes the relationship greater than the sum of its parts, delivering greater value to customers, industry and economy.

At all times, specificity is key to success. Be sure that the partnership is truly feeding into your overall strategy and that you have all the necessary resources to support you on your journey. Plan it well and take your time. It’s a long-term strategy that requires patience, commitment and perseverance. Rome was not built in a day, but the foundations of a long lasting relationship could start tomorrow.

Keep your goals in mind and ensure you’re going into every conversation with completely open eyes because when you find those strategic connections that just work, the opportunity for growth is truly great.

By: Tomasz Domino / Chief Operating Officer, Infermedica

Source: How Investing in Strategic Partnerships Can Help Grow Your Business

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Critics:

A strategic partnership (also see strategic alliance) is a relationship between two commercial enterprises, usually formalized by one or more business contracts. A strategic partnership will usually fall short of a legal partnership entity, agency, or corporate affiliate relationship. Strategic partnerships can take on various forms from shake hand agreements, contractual cooperation’s all the way to equity alliances, either the formation of a joint venture or cross-holdings in each other.

Typically, two companies form a strategic partnership when each possesses one or more business assets or have expertise that will help the other by enhancing their businesses. This can also mean, that one firm is helping the other firm to expand their market to other marketplaces, by helping with some expertise.

According to Cohen and Levinthal a considerable in-house expertise which complements the technology activities of its partner is a necessary condition for a successful exploitation of knowledge and technological capabilities outside their boundaries. Strategic partnerships can develop in outsourcing relationships where the parties desire to achieve long-term “win-win” benefits and innovation based on mutually desired outcomes.

No matter if a business contract was signed, between the two parties, or not, a trust-based relationship between the partners is indispensable. One common strategic partnership involves one company providing engineering, manufacturing or product development services, partnering with a smaller, entrepreneurial firm or inventor to create a specialized new product. Typically, the larger firm supplies capital, and the necessary product development, marketing, manufacturing, and distribution capabilities, while the smaller firm supplies specialized technical or creative expertise.

References

SoftBank Invests $200 Million In Brazil’s Largest Crypto Exchange

Brazil’s leading cryptocurrency exchange, Mercado Bitcoin raised $200 million from the SoftBank Latin America Fund, Mercado’s parent company 2TM Group announced today. The investment values 2TM Group at $2.1 billion and is SoftBank’s largest capital injection in a Latin America crypto company.

Following closely on the tails of SoftBank’s investment in the $250 million round raised by Mexican cryptocurrency exchange Bitso in May, the deal shows a growing interest in bringing bitcoin and other cryptocurrencies to Latin America.

“This series B round will afford us to continue investing in our infrastructure, enabling us to scale up and meet the soaring demand for the blockchain-based financial market,“ says Roberto Dagnoni, executive chairman and CEO of 2TM Group. “We want to be the main solution provider for corporate players.”

The São Paulo-based exchange aims to increase the number of listed assets (the exchange currently lists approximately 50 tokens) and grow its 500-member team to 700 by year’s end. Further plans involve regional expansion with focuses on Mexico, Argentina, Chile and Colombia and growth acceleration across 2TM Group’s portfolio, which also include digital wallet provider MeuBank and digital custodian Bitrust (both are subject to regulatory approval).

Founded by brothers Gustavo and Mauricio Chamati in 2013, Mercado Bitcoin has become the largest cryptocurrency exchange in the country. In January, it scored its first financing round co-led by G2D/GP Investments and Parallax Ventures with participation from an array of other investors.

Like many of its counterparts, Mercado Bitcoin has seen significant growth over the past year, with its client base reaching 2.8 million in 2021 – more than 70% of the total number of individual investors on Brazil’s stock exchange B3. Approximately 700,000 clients signed up just between January and May.

Over the same period, trade volume on the exchange had increased to $5 billion, surpassing the total for its first seven years combined. “Every single month [of this year], we are trading the full volume of 2020,” says Dagnoni.

“Mercado Bitcoin is a regional leader in the crypto space and the leading crypto exchange in Brazil. They are tapping into a huge local and regional addressable market measured by potential use cases for crypto,” says Paulo Passoni, managing partner at SoftBank’s SBLA Advisers Corp. (which manages the SoftBank Latin America Fund).

“At SoftBank we look to invest in entrepreneurs who are challenging the status quo through tech-focused or tech-enabled business models that are disrupting an industry – Mercado Bitcoin is doing just that.”

Despite the rapid growth of the local crypto market, Brazilian regulators have been lagging behind. In 2018, Brazilian antitrust watchdog, the Administrative Council for Economic Defense (CADE), opened an investigation into the country’s largest banks for allegedly abusing their power by closing accounts of crypto brokerages. The probe was ongoing as of last year.

In April 2020, Senator Soraya Thronicke proposed an extended set of rules for Brazil’s “virtual asset” businesses, custodians and issuers, consumer protection, crypto taxation and criminal enforcement, however no apparent action has been taken on the bill so far. Nonetheless, Dagnoni says the nation’s regulatory environment is favorable, and the company is closely working with regulators “to build a consistent framework for alternative digital investments in Brazil, in line with its vision of a convergence of the traditional and blockchain-based financial markets.”

Follow me on Twitter or LinkedIn.

I report on cryptocurrencies and emerging use cases of blockchain. Born and raised in Russia, I graduated from NYU Abu Dhabi with a degree in economics and Columbia University Graduate School of Journalism, where I focused on data and business reporting.

Source: SoftBank Invests $200 Million In Brazil’s Largest Crypto Exchange

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Critics:

SoftBank Group Corp. is a Japanese multinational conglomerate holding company headquartered in Minato, Tokyo. The Group primarily invests in companies operating in the technology, energy, and financial sectors. It also runs the Vision Fund, the world’s largest technology-focused venture capital fund, with over $100 billion in capital, backed by sovereign wealth funds from countries in the Middle East.

The company is known for the leadership by its founder and largest shareholder Masayoshi Son. It operates in broadband, fixed-line telecommunications, e-commerce, information technology, finance, media and marketing, and other areas.

SoftBank was ranked in the Forbes Global 2000 list as the 36th largest public company in the world, and the second largest publicly traded company in Japan after Toyota.

The logo of SoftBank is based on the flag of the Kaientai, a naval trading company that was founded in 1865, near the end of the Tokugawa shogunate, by Sakamoto Ryōma.

Although SoftBank does not affiliate itself to any traditional keiretsu, it has close ties with Mizuho Financial Group, its main lender.

See also

 

Five Things You Need to Know to Start Your Day

Delta fears are growing, central banks face challenges and the shape of the U.K. and Europe post-Brexit continues to form. Here’s what’s moving markets.

Delta Fears

Concern about the more contagious Delta coronavirus variant is growing and those fears helped fuel a rise in Moderna shares to a record high after the drugmaker said its vaccine produces protective antibodies against the strain. The medicine was approved for restricted emergency use in India, where little more than 4% of the population is so far fully vaccinated. The variant is rippling through emerging markets, with more curbs in Indonesia and warnings of a potentially “catastrophic” wave in Kenya. A widening gap in vaccination rates in the U.S. also shows the risks faces to certain regions.

Policy Challenges

The major challenge for central banks is going to be how to wean the global economy off the unprecedented support they have deployed to deal with the disruption Covid-19 has caused. U.S. and European confidence data is soaring, underlining the rebound the economy is experiencing, while China’s central bank has also struck a more positive tone. Some more data points will arrive for policymakers to mull over on Wednesday, led by U.K. GDP and European inflation numbers.

Brexit Shifts

Paris is JPMorgan’s new trading center in the European Union post-Brexit as the U.S. banking giant inaugurated a new headquarters in the French capital. It is a victory for France in the ongoing race with other European countries to lure business from London after the referendum to leave the EU. It comes as the U.K. government unveiled a system of overseeing subsidies to companies, promising “more agile” decisions. And the U.K. is expecting to reach a truce in the so-called “sausage wars’’ with the EU over post-Brexit trading rules in Northern Ireland.

OPEC+ Delay

OPEC and its allies have delayed preliminary talks for a day to create more time to find a compromise on oil-output increases. It comes with crude oil prices on track for the best half of a year since 2009. Surging commodity prices are creating all sorts of headaches for policy makers, from rising inflation expectations that could move the hand of central bankers to a higher cost in shifting to more sustainable energy sources. This has initially led to a surge in profit for commodity trading houses but will end up hitting consumers down the road through higher prices.

Asian stocks mostly rose following a record close in the U.S. on signs that vaccines can protect against the delta variant of the coronavirus. European and U.S. stock futures are steady. The earnings calendar is relatively thin but watch for the reaction to two long-running takeover sagas moving toward a conclusion.

EssilorLuxottica, the eyewear giant, decided to go ahead with the acquisition of smaller peer GrandVision and the board of France’s Suez has backed its takeover by rival Veolia. And the Organization for Economic Cooperation and Development meets in Paris to finalize plans to overhaul the global minimum corporate tax.

What We’ve Been Reading

This is what’s caught our eye over the past 24 hours. 

And finally, here’s what Cormac Mullen is interested in this morning

With just one more day of trading in the first half of 2021 to go, global stocks are on track for their second-best performance since 1998. If the MSCI AC World Index’s gain of about 12% through June 29 holds, it would be beaten only by a 15% rise in 2019. The global stock benchmark closed at a record on June 28, and has risen almost 90% since its pandemic low in March 2020.

As we begin the second half, investor focus will soon switch to the upcoming earnings season. The second quarter could well mark peak earnings growth so comments on the outlook will be key for stock performance as will the impact of rising costs on margins. Outside of that, the same themes that dominated the first half will monopolize the second, and whether we get an equally strong next six months will likely depend on the path of other asset classes most notably bonds.

By: and

Source: Stock Markets Today: Delta Variant, Central Banks, Brexit Changes, OPEC+ – Bloomberg

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Critics:

A financial crisis is any of a broad variety of situations in which some financial assets suddenly lose a large part of their nominal value. In the 19th and early 20th centuries, many financial crises were associated with banking panics, and many recessions coincided with these panics. Other situations that are often called financial crises include stock market crashes and the bursting of other financial bubbles, currency crises, and sovereign defaults. Financial crises directly result in a loss of paper wealth but do not necessarily result in significant changes in the real economy (e.g. the crisis resulting from the famous tulip mania bubble in the 17th century).

Many economists have offered theories about how financial crises develop and how they could be prevented. There is no consensus, however, and financial crises continue to occur from time to time. Negative GDP growth lasting two or more quarters is called a recession. An especially prolonged or severe recession may be called a depression, while a long period of slow but not necessarily negative growth is sometimes called economic stagnation.

Some economists argue that many recessions have been caused in large part by financial crises. One important example is the Great Depression, which was preceded in many countries by bank runs and stock market crashes. The subprime mortgage crisis and the bursting of other real estate bubbles around the world also led to recession in the U.S. and a number of other countries in late 2008 and 2009.

Some economists argue that financial crises are caused by recessions instead of the other way around, and that even where a financial crisis is the initial shock that sets off a recession, other factors may be more important in prolonging the recession. In particular, Milton Friedman and Anna Schwartz argued that the initial economic decline associated with the crash of 1929 and the bank panics of the 1930s would not have turned into a prolonged depression if it had not been reinforced by monetary policy mistakes on the part of the Federal Reserve,a position supported by Ben Bernanke.

See also

Specific:

 

 

The Pandemic Revealed How Much We Hate Our Jobs

Until March 2020, Kari and Britt Altizer of Richmond, Va., put in long hours at work, she in life-insurance sales and he as a restaurant manager, to support their young family. Their lives were frenetic, their schedules controlled by their jobs.

Then the pandemic shutdown hit, and they, like millions of others, found their world upended. Britt was briefly furloughed. Kari, 31, had to quit to care for their infant son. A native of Peru, she hoped to find remote work as a Spanish translator. When that didn’t pan out, she took a part-time sales job with a cleaning service that allowed her to take her son to the office. But as the baby grew into a toddler, that wasn’t feasible either.

Meanwhile, the furlough prompted her husband, 30, to reassess his own career. “I did some soul searching. During the time I was home, I was gardening and really loving life,” says Britt, who grew up on a farm and studied environmental science in college. “I realized working outdoors was something I had to get back to doing.”

Today, both have quit their old jobs and made a sharp pivot: they opened a landscaping business together. “We are taking a leap of faith,” Kari says, after realizing the prepandemic way of working simply doesn’t make sense anymore. Now they have control over their schedules, and her mom has moved nearby to care for their son. “I love what I’m doing. I’m closer to my goal of: I get to go to work, I don’t have to go to work,” Kari says. “We aren’t supposed to live to work. We’re supposed to work to live.”

As the postpandemic great reopening unfolds, millions of others are also reassessing their relationship to their jobs. The modern office was created after World War II, on a military model—strict hierarchies, created by men for men, with an assumption that there is a wife to handle duties at home.

But after years of gradual change in Silicon Valley and elsewhere, there’s a growing realization that the model is broken. Millions of people have spent the past year re-evaluating their priorities. How much time do they want to spend in an office? Where do they want to live if they can work remotely? Do they want to switch careers? For many, this has become a moment to literally redefine what is work.

More fundamentally, the pandemic has masked a deep unhappiness that a startling number of Americans have with the -workplace. During the first stressful months of quarantine, job turnover plunged; people were just hoping to hang on to what they had, even if they hated their jobs.

For many more millions of essential workers, there was never a choice but to keep showing up at stores, on deliveries and in factories, often at great risk to themselves, with food and agricultural workers facing a higher chance of death on the job. But now millions of white collar professionals and office workers appear poised to jump. Anthony Klotz, an associate professor of management at Texas A&M University, set off a Twitter-storm by predicting, “The great resignation is coming.”

But those conversations miss a much more consequential point. The true significance isn’t what we are leaving; it’s what we are going toward. In a surprising phenomenon, people are not just abandoning jobs but switching professions. This is a radical re-assessment of our careers, a great reset in how we think about work. A Pew survey in January found that 66% of unemployed people have seriously considered changing occupations—and significantly, that phenomenon is common to those at every income level, not just the privileged high earners.

A third of those surveyed have started taking courses or job retraining. Pew doesn’t have comparable earlier data, but in a 2016 survey, about 80% of people reported being somewhat or very satisfied with their jobs.

Early on in the pandemic, Lucy Chang Evans, a 48-year-old Naperville, Ill., civil engineer, quit her job to help her three kids with remote learning while pursuing an online MBA. Becoming “a lot more introspective,” she realized she’s done with toxic workplaces: “I feel like I’m not willing to put up with abusive behavior at work anymore.” She also plans to pivot into a more meaningful career, focused on tackling climate change.

The deep unhappiness with jobs points to a larger problem in how workplaces are structured. The line between work and home has been blurring for decades—and with the pandemic, obliterated completely for many of us, as we have been literally living at work. Meanwhile, the stark divide between white collar workers and those with hourly on-site jobs—grocery clerks, bus drivers, delivery people—became painfully visible. During the pandemic, nearly half of all employees with advanced degrees were working remotely, while more than 90% of those with a high school diploma or less had to show up in person, CoStar found.

Business leaders are as confused as the rest of us—perhaps more so—when it comes to navigating the multiple demands and expectations of the new workplace. Consider their conflicting approaches to remote work. Tech firms including Twitter, Dropbox, Shopify and Reddit are all allowing employees the option to work at home permanently, while oil company Phillips 66 brought back most staff to its Houston headquarters almost a year ago. Target and Walmart have both allowed corporate staff to work remotely, while low-paid workers faced potential COVID-19 exposure on store floors.

In the financial industry, titans like Blackstone, JPMorgan and Goldman Sachs expect employees to be back on site this summer. JPMorgan CEO Jamie Dimon recently declared that remote work “doesn’t work for those who want to hustle-. It doesn’t work in terms of spontaneous idea generation,” and “you know, people don’t like commuting, but so what.”

There’s a real risk that office culture could devolve into a class system, with on-site employees favored over remote workers. WeWork CEO Sandeep Mathrani recently insisted that the “least engaged are very comfortable working from home,” a stunning indictment that discounts working parents everywhere and suggests that those who might need flexibility—like those caring for relatives—couldn’t possibly be ambitious.

Mathrani’s comments are yet another reminder that the pandemic shutdown has been devastating for women, throwing into high relief just how inhospitable and precarious the workplace can be for caretakers. Faced with the impossible task of handling the majority of childcare and homeschooling, 4.2 million women dropped out of the labor force from February 2020 to April 2020—and nearly 2 million still haven’t returned. Oxfam calculates that women globally lost a breathtaking $800 billion in income in 2020. Women’s progress in terms of U.S. workforce participation has been set back by more than three decades.

Despite Mathrani’s assertion, there’s little evidence that remote employees are less engaged. There is, however, plenty of evidence that we’re actually working more. A study by Harvard Business School found that people were working on average 48 minutes more per day after the lockdown started. A new research paper from the University of Chicago and University of Essex found remote workers upped their hours by 30%, yet didn’t increase productivity.

All this comes at a moment when business and culture have never been more intertwined. As work has taken over people’s lives and Americans are doing less together outside the office, more and more of people’s political beliefs and social life are defining the office. In thousands of Zoom meetings over the past year, employees have demanded that their leaders take on systemic racism, sexism, transgender rights, gun control and more.

People have increasingly outsize expectations of their employers. This year, business surpassed nonprofits to become the most trusted institution globally, according to the Edelman Trust Barometer, and people are looking to business to take an active role tackling racism, climate change and misinformation.

“Employees, customers, shareholders—all of these stakeholder groups—are saying, You’ve got to deal with some of these issues,” says Ken Chenault, a former chief executive of American Express and currently chairman and managing partner of General Catalyst. “If people are going to spend so much time at a company, they really want to believe that the mission and behavior of the company is consistent with, and aligned with, their values.”

Hundreds of top executives signed on to a statement that he and Ken Frazier, the CEO of Merck, organized this year opposing “any discriminatory legislation” in the wake of Georgia’s new voting law. Yet those same moves have landed some executives in the crosshairs of conservative politicians.

That points to the central dilemma facing us all as we rethink how we work. Multiple surveys suggest Americans are eager to work remotely at least part of the time—the ideal consensus seems to be coalescing around three days in the office and two days remote. Yet the hybrid model comes with its own complexities.

If managers with families and commutes choose to work remotely, but younger employees are on site, the latter could lack opportunities for absorbing corporate culture or for being mentored. Hybrid work could also limit those serendipitous office interactions that lead to promotions and breakthrough ideas.

Yet if it’s done correctly, there’s a chance to bring balance back into our lives, to a degree that we haven’t seen at least since the widespread adoption of email and cell phones. Not just parents but all employees would be better off with more flexible time to recharge, exercise and, oh yeah, sleep.

There’s also a hidden benefit in a year of sweatpants wearing and Zoom meetings: a more casual, more authentic version of our colleagues, with unwashed hair, pets, kids and laundry all on display. That too would help level the playing field, especially for professional women who, over the course of their careers, spend thousands of hours more than men just getting ready for work.

There are glimmers of progress. During the pandemic, as rates of depression and anxiety soared—to 40% of all U.S. adults, quadruple previous levels—a number of companies began offering enhanced mental-health services and paid “recharge” days, among them LinkedIn, Citigroup, Red Hat and SAP.

Some companies are offering subsidized childcare, including Microsoft, Facebook, Google and Home Depot. More than 200 businesses, along with the advocacy group Time’s Up, recently created a coalition to push for child and eldercare solutions. It’s essential that these measures stay in place.

We have an unprecedented opportunity right now to reinvent, to create workplace culture almost from scratch. Over the past decades, various types of businesses have rotated in and out of favor—conglomerates in the ’60s, junk bonds in the ’80s, tech in the ’00s—but the basic workplace structure, of office cubicles and face time, has remained the same.

It’s time to allow the creative ideas to flow. For example, companies are stuck with millions of square feet of now unused office space—sublet space soared by 40% from late 2019 to this year, CoStar found. Why not use that extra space for day care? Working parents of small children would jump at the opportunity to have a safe, affordable option, while having their kids close by.

Now would also be a good time to finally dump the 9-to-5, five-day workweek. For plenty of job categories, that cadence no longer makes sense. Multiple companies are already experimenting with four-day workweeks, including Unilever New Zealand, and Spain is rolling out a trial nationwide. Companies that have already tested the concept have reported significant productivity increases, from 20% (New Zealand’s Perpetual Guardian, which has since made the practice permanent) to 40% (Microsoft Japan, in a limited trial).

That schedule too would be more equitable for working moms, many of whom work supposedly part-time jobs with reduced pay yet are just as productive as their fully paid colleagues. Meanwhile, the 9-to-5 office-hours standard becomes irrelevant, especially when people don’t have meetings and are working remotely or in different time zones.

While we’re at it, let’s kill the commute. Some companies are already creating neighborhood co-working hubs for those who live far from the home office. Outdoor retailer REI is going a step further: it sold its new Bellevue, Wash., headquarters in a cost-cutting move and is now setting up satellite offices in the surrounding Puget Sound area. Restaurants might get in on the act too; they could convert dining areas into co-working spaces during off hours, or rent out private rooms by the day for meetings and brainstorming sessions.

Some of the shortcomings of remote work—the lack of camaraderie and mentoring, the fear of being forgotten—may ultimately be bridged by new technology. Google and Microsoft are already starting to integrate prominent remote-videoconferencing capabilities more fully into meeting spaces, so that remote workers don’t seem like an afterthought. Augmented reality, which so far has been used most notably for games like Pokémon Go, could end up transforming into a useful work tool, allowing remote workers to “seem” to be in the room with on-site workers.

There are plenty of other ideas out there, and a popular groundswell of support for flexibility and life balance that makes sense for all of us. Will we get there, or will we slide back into our old ways? That’s on us. Companies that don’t reinvent may well pay the price, losing top talent to businesses that do.

“We aren’t robots,” Kari Altizer says. “Before, we thought it was impossible to work with our children next to us. Now, we know it is possible—but we have to change the ways in which we work.”

By Joanne Lipman

Source: COVID-19 Changed Work Forever | Time

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References

Why Stocks Soared While America Struggled

You would never know how terrible the past year has been for many Americans by looking at Wall Street, which has been going gangbusters since the early days of the pandemic.

“On the streets, there are chants of ‘Stop killing Black people!’ and ‘No justice, no peace!’ Meanwhile, behind a computer, one of the millions of new day traders buys a stock because the chart is quickly moving higher,” wrote Chris Brown, the founder and managing member of the Ohio-based hedge fund Aristides Capital in a letter to investors in June 2020. “The cognitive dissonance is overwhelming at times.”

The market was temporarily shaken in March 2020, as stocks plunged for about a month at the outset of the Covid-19 outbreak, but then something strange happened. Even as hundreds of thousands of lives were lost, millions of people were laid off and businesses shuttered, protests against police violence erupted across the nation in the wake of George Floyd’s murder, and the outgoing president refused to accept the outcome of the 2020 election — supposedly the market’s nightmare scenario — for weeks, the stock market soared. After the jobs report from April 2021 revealed a much shakier labor recovery might be on the horizon, major indexes hit new highs.

The disconnect between Wall Street and Main Street, between corporate CEOs and the working class, has perhaps never felt so stark. How can it be that food banks are overwhelmed while the Dow Jones Industrial Average hits an all-time high? For a year that’s been so bad, it’s been hard not to wonder how the stock market could be so good.

To the extent that there can ever be an explanation for what’s going on with the stock market, there are some straightforward financial answers here. The Federal Reserve took extraordinary measures to support financial markets and reassure investors it wouldn’t let major corporations fall apart.

Congress did its part as well, pumping trillions of dollars into the economy across multiple relief bills. Turns out giving people money is good for markets, too. Tech stocks, which make up a significant portion of the S&P 500, soared. And with bond yields so low, investors didn’t really have a more lucrative place to put their money.

To put it plainly, the stock market is not representative of the whole economy, much less American society. And what it is representative of did fine.“No matter how many times we keep on saying the stock market is not the economy, people won’t believe it, but it isn’t,” said Paul Krugman, a Nobel Prize-winning economist and New York Times columnist. “The stock market is about one piece of the economy — corporate profits — and it’s not even about the current or near-future level of corporate profits, it’s about corporate profits over a somewhat longish horizon.”

Still, those explanations, to many people, don’t feel fair. Investors seem to have remained inconceivably optimistic throughout real turmoil and uncertainty. If the answer to why the stock market was fine is basically that’s how the system works, the follow-up question is: Should it?

“Talking about the prosperous nature of the stock market in the face of people still dying from Covid-19, still trying to get health care, struggling to get food, stay employed, it’s an affront to people’s actual lived experience,” said Solana Rice, the co-founder and co-executive director of Liberation in a Generation, which pushes for economic policies that reduce racial disparities. “The stock market is not representative of the makeup of this country.”

Inequality is not a new theme in the American economy. But the pandemic exposed and reinforced the way the wealthy and powerful experience what’s happening so much differently than those with less power and fewer means — and force the question of how the prosperity of those at the top could be better shared with those at the bottom. There are certainly ideas out there, though Wall Street might not like them.

How the stock market boomed when American life soured

Many on Wall Street, like many people in America, were in denial about the realities of Covid-19 when it first began to take hold internationally in early 2020. In an interview with Vox last April, CNBC host Jim Cramer recalled wondering whether “another shoe will drop on this coronavirus outbreak” in early February, only to see stocks keep rising steadily. “But nothing happened. The market kept quiet,” Cramer told Vox. Indeed, stocks continued to reach record highs.

While stocks often rise slowly, they also fall fast. And once Wall Street caught on to the realities Covid-19 might bring, the market tumbled, wiping off some 30 percent of its value from mid-February to mid-March. “No one had any idea of what the future was going to be, how deep this is, how long it would be, how wide it would be,” said Howard Silverblatt, senior index analyst at S&P Dow Jones Indices.

The S&P 500 bottomed out on March 23, just a week into New York’s shutdown, and after that, it made a remarkably strong recovery, month after month.

Most analysts and experts point to the Fed as the most important factor in supporting market confidence. The central bank announced a series of big measures to help support the economy and markets in March 2020, including saying that it would buy both investment-grade and high-yield corporate bonds (basically, debt that is risky and debt that is not).

“Not dissimilar to the global financial crisis, the Fed stepped in, and that was really a catalyst for a stock market recovery,” said Kristina Hooper, chief global market strategist at Invesco. “The Fed can be very, very powerful, almost omnipotent, when it comes to the stock market.”

Throughout the crisis, the Fed and Chair Jay Powell have made clear they will support markets and use every tool in their toolkit to do it. Powell has taken an extremely dovish tone and repeatedly said the Fed won’t raise interest rates — which would presumably slow down the economy and markets — preemptively. Basically, the markets let the Fed take the wheel.

Even if it didn’t buy bonds itself, the knowledge that it would if necessary reinforced the markets — private investors swept in to take up corporate bond offerings from companies such as Boeing and Nike. Continued confidence in a dovish Fed has only reinforced market bullishness; while a bad jobs report may be bad for businesses and workers, to investors, it’s also more reassurance that low interest rates aren’t going anywhere.

The issue is, the Fed is a much more powerful force on Wall Street than it is Main Street. Its programs to help small and midsize businesses and states and cities have been far less effective than those set up to help corporations and asset prices.

“It now feels like policy, be it the Fed or something else, that the stock market should really never go down,” said Dan Egan, vice president of behavioral finance and investing at Betterment.

To be sure, the Fed’s role is monetary policy, and it would have been bad if markets were allowed to crash or a litany of major corporations went bankrupt. And luckily for many struggling people and businesses, Congress stepped in with fiscal policy that could be more effective in helping the broader economy — a move that, no doubt, also helped markets. It’s good for corporations that people have money to spend.

Still, some wonder whether the Fed couldn’t have tried to go further to make sure its programs to support corporations flow to people other than shareholders. “Obviously it was good, the Fed needed to do something,” said Alexis Goldstein, senior policy analyst at Americans for Financial Reform. “But the criticism I would weigh was that there were no real conditions that workers were protected or rehired, that all the gains just didn’t go to the top.”

Goldstein pointed to a September report from the House of Representatives’ Select Subcommittee on the Coronavirus Crisis that found the Fed bought corporate bonds from at least 95 companies that issued dividends to shareholders while also laying off workers. “Surely the Fed is also so powerful that it can say, look, we need you all to prioritize rehiring your workers or we’re not necessarily going to rescue you, we’re going to rescue other companies, and that should be impactful,” Goldstein said.

Companies have been ruled by the mantra of shareholder primacy, where maximizing profits for investors is the end-all, be-all, for decades. Worker pay has severely lagged gains in productivity. Those trends were unlikely to change during a pandemic.

“Shareholder primacy means the job of corporations is to increase their share prices for this very small elite, and that means downward pressure on costs, including workers, where possible,” said Lenore Palladino, an assistant professor of economics and public policy at the University of Massachusetts Amherst. “The fact that the stock market is booming is because of the financialization of our goods- and services-producing companies, not because the real economy is doing so well.”

The market felt better about the pandemic than you probably did

Jack Ablin, the founding partner of Cresset Capital, recalls calling clients in the spring of 2020 and telling them they didn’t know how long the lockdowns and virus would last, but they were “confident” that within a year, it would be done. “Of course, it wasn’t,” he told Vox. But the general attitude remains: The markets figured things would get better, sooner or later. “Part of it was saying, look, this is temporary, we will eventually get back to business. So we were trying to look past the valley to the other side of normality.”

Not everything had to break in Wall Street’s favor for the market rally to continue — as mentioned, between the Fed and the future promise of corporate profits, investors had plenty of reasons to be confident — but it doesn’t hurt that it kind of did. The vaccine, which at the outset of the pandemic some experts warned might be years away, appeared by the end of 2020. Donald Trump did not want to accept the results of the 2020 presidential election, which some investors feared would spark chaos before voting day, but by and large, the US saw a peaceful transfer of power (with the exception of a riot at the Capitol, that, while disturbing, didn’t have anything to do with the Dow).

Investors also seemed confident that Congress would come through with more fiscal support for the economy. This, too, was not a given. The $900 billion package passed in the lame-duck session in December for months seemed highly unlikely. Had Democrats not taken both US Senate seats in Georgia, the $1.9 trillion American Rescue Plan, signed into law in March, would not have happened. While neither provided direct support to the markets, they did support the broader economy that the markets have for months been bullish on. Putting money in people’s pockets means they’ll spend it. It’s good for Wall Street that Main Street America doesn’t fail.

Some people in the industry point to a certain level of faith in America, like the type legendary investor Warren Buffett channeled during the financial crisis and Great Recession when he told people to “buy American.”

“You have to have an existential faith in America in order to be in stocks over the long term,” said Nick Colas, the co-founder of DataTrek Research.

“What has happened in the last 14 months or so is we’re believing in America again, we’re believing in our companies,” said Brian Belski, chief investment strategist at BMO Capital Markets. “From every bear market and every depression, we transition from despair to hope, and the hope was defined by American companies.”

It does look like the US is poised to emerge from the pandemic much before the rest of the world and spend its way to an economic recovery that many other countries could not. Now, it’s the investors who sold out of the market when it was falling last year who have been left out.

“There are two lessons to be learned over the past year. The first is that economic headlines are lagging and not leading indicators of the market; and second, market timing is a losers’ game,” said Saira Malik, chief investment officer of global equities at Nuveen, an asset manager.

Nuveen is currently interested in emerging markets for potential investment possibilities on the horizon — including countries such as Brazil, which continues to be ravaged by the pandemic. “We do feel like in the near term they are going to struggle. But the vaccines are becoming more and more available, and while they’re lagging a bit behind, we do think they’ll catch up, and they’ve tended to have the cheaper valuations to go with that,” Malik said.

At this point, it’s hard to wonder what, if anything, will truly unnerve investors.

There are still plenty of risks to the market, including that in the US, President Joe Biden and Democrats may take steps to raise taxes that would mean a hit for the bottom lines of corporations and investors. When chatter of the president’s capital gains tax proposal kicked up in late April, the markets took a small dip, but it was hardly catastrophic.

“We have an administration that clearly has ambitions and wants to pay for them by taxing capital, taxing corporate profits, now taxing capital gains. The resilience of the market in the face of all that is kind of interesting,” Krugman said. “There may be a little bit of determined resilience; there may be some element of when people are determined to be optimistic, facts don’t matter.”

Hooper, from Invesco, offered up the explanation of the Fed. “I do think on a short-term basis, we could see a sell-off if there is a risk that appears imminent, but we have to recognize that all current risks are being cushioned by this incredibly accommodative Fed, which does have an impact. It’s a powerful upward force on stocks that can counteract the downward forces.”

What the stock market does and doesn’t represent

How the stock market does matters to a lot of people. A little over half of all Americans report owning stocks, including in their retirement or pension plans. And during the pandemic, plenty of people got into day trading, for better and for worse. But some groups have much higher stakes in the market than others. More than 80 percent of stocks are owned by the wealthiest 10 percent of Americans, meaning when markets go up, they’re the ones who reap the most gains. White people are also the overwhelming majority of market beneficiaries — by Palladino’s estimates, 92 percent of corporate equity and mutual fund value is owned by white households, compared to less than 2 percent each by Black and Hispanic households.

“People often forget how concentrated corporate equity holdings are,” Palladino said. “They’re held mainly by wealthy white households.” Those are the people who disproportionately reaped the benefits of the stock market’s pandemic run, while people of color disproportionately suffered the health and economic consequences of the disease.

If the US wants to create a fairer, less extractive economy where corporations and shareholders aren’t living a very different reality than people trying to pay their rent or find a job, there are ways to do it. The federal government could raise corporate taxes and tax income from investments in the same way it does income from labor and seek to rein in CEO pay.

It could also clamp down on shareholder primacy and make sure companies base their decisions not only on making their investors rich but also on the well-being of their workers, customers, communities, and suppliers. In 2019, the Business Roundtable, a major business lobbying group, issued a statement that it would redefine the “purpose of a corporation” as one that fosters “an economy that serves all Americans.” The government and the public could find ways to hold them to it. Palladino, in her work, has outlined a number of proposals that would curb shareholder primacy, including requiring corporate boards to have worker representatives, banning stock buybacks, and boosting unions.

Beyond policy fixes, there’s also just the reality that the market measures very one specific thing — how investors think (rightly or wrongly) corporate profits are going to be in the future. And for many people, that measure is meaningless. “If you can assess that the economy is good when we’re in one of the worst economic moments of American history, then it’s a useless measure,” said Maurice BP-Weeks, co-executive director of the Action Center on Race and the Economy.

The past year has been a truly wild ride in America and for the stock market, though in different directions. Investors are reaching almost exuberant levels, from the GameStop saga to the crypto craze. Stocks are continuing their bull run, with no clear end in sight. There are plenty of warnings that investors are out over their skis, but then again, there always are.

It’s a far cry from a little over a year ago, when billionaire hedge funder Bill Ackman went on TV to warn that “hell is coming” because of Covid-19. Or maybe it did — just not for Wall Street.

Source: Why the stock market went up during the Covid-19 pandemic and high unemployment – Vox

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References

 

Saefong, Myra P.; Watts, William (28 February 2020). “U.S. oil futures suffer largest weekly percentage loss in over a decade”. MarketWatch. Dow Jones & Company. Archived from the original on 1 March 2020. Retrieved 15 March 2020.

Apple key In Effort To Commercialize Aluminum Production Without Greenhouse Gas Emissions

Aluminum is Apple’s go-to material for making many of its products sleek and durable, and now the company is taking serious steps to ensure using its favorite metal is also good for the planet.

Two major aluminum producers are announcing a “joint venture to commercialize patented technology that eliminates direct greenhouse gas emissions from the traditional smelting process,” and Apple played a key role in getting to this step.

Alcoa Corporation and Rio Tinto Aluminum have formed a new joint venture called Elysis that is working to further develop and share a process for creating aluminum that uses a method which releases oxygen instead of greenhouse gases.

Elysis is focused on making the new process fit “for larger scale production and commercialization, with a package planned for sale beginning in 2024.”

Apple played a crucial role in bringing the two aluminum producers together, and the company is part of a $144 million investment to support development of the clean aluminum production process along with Elysis and the Governments of Canada and Quebec.

Apple’s involvement in the effort started three years ago when the company sent engineers in search of a cleaner way to produce aluminum. The team discovered Alcoa Corporation which knew how to produce aluminum using a method that eliminates greenhouse gas emission, but recognized that Alcoa needed a partner to bring the method to the rest of the world.

Members of Apple’s business development team introduced Rio Tinto Aluminum as a partner with a “robust worldwide presence as well as deep experience in smelting technology development and international sales and commercialization.”

After orchestrating the creation of the new joint venture and making a financial investment into its development, Apple says it will remain involved in the effort:

Apple will continue to provide technical support as well. The patent-pending technology is already in use at the Alcoa Technical Center, outside Pittsburgh, and this project will invest more than $30 million in the United States.

Read more about the ongoing development process in Apple’s Newsroom announcement.

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