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World News

United Airlines is warning of tens of thousands of possible layoffs as new coronavirus outbreaks across the US slam the airline industry

  • United Airlines said travel demand is falling again, as COVID-19 hotspots break out across the US.
  • The airline expects to warn tens of thousands of workers of impending furloughs and layoffs.
  • United said it expects the airline industry to recover slowly, with demand rising and falling until there's a vaccine for the coronavirus.
  • Visit Business Insider's homepage for more stories.

Just as things were starting to improve for US airlines, the explosion of new coronavirus cases is set to send the industry back into a tail spin.

Complicating matters are government travel restrictions and quarantine orders, which are making people nervous about booking flights.

United Airlines told employees in a recent presentation that new bookings began to slide almost as soon as New York, New Jersey, and Connecticut said that they would require people coming from states with COVID-19 spikes to quarantine for 14 days. Specifically, reservations for near-term travel within the next 30 days began to plummet after steadily rebounding for months. The presentation, which was disclosed by United on Tuesday, was first reported by the Wall Street Journal.

The fall was most severe at the airline's New York City-area hub in Newark, New Jersey, where near-term net bookings were just 16% of the previous year's levels — down from about a third shortly before the tri-state quarantine order was announced. The decrease in demand also coincides with when airlines are largely expected to begin notifying employees of furloughs and layoffs.

While airlines are prohibited from furloughing or laying off workers until October 1 under the terms of the payroll support they received from the CARES Act, most employers are required to give 60 days of notice, where possible, under the Worker Adjustment and Retraining Notification Act, known as the WARN Act.

In the presentation, United told its employees to expect WARN notices in early to mid July, with a final notice about their position's status coming in early August. American Airlines began informing some employees of furloughs in late June.

Airlines including United have tried to limit involuntary layoffs by reducing head count through voluntary measures including buyouts, leaves, and early retirements. But it seems like that wasn't enough for United, and the airline reportedly said on Tuesday that tens of thousands of layoffs were coming. 

Notably, as the coronavirus resurgence has spread across the US, United said it was now clear that the airline industry's recovery will be a slow and protracted one, with many fits and starts.

United "does not expect the recovery from COVID-19 to follow a linear path, as illustrated by recent booking and demand trends," the airline wrote in a filing with the SEC on Tuesday. "[C]onsolidated capacity through the end of 2020 is expected to be generally consistent with August 2020," the filing continued, indicating that the airline does not expect a material improvement in demand until at least 2021.

Henry Harteveldt, an airline and travel-industry analyst, said he was not surprised by the bad news.

"Houston, one of United's major hubs, is a virus hotspot, as is Los Angeles, another major United market," Harteveldt wrote to Business Insider on Tuesday. "Plus, Florida, a popular summer vacation destination, is another Covid hotspot. With the New York metro area and Chicago requiring quarantines from multiple states, including Florida, Texas and California, it's logical that United is seeing a fall-off in reservations.

"Unfortunately, they won't be the only airline affected."

In the SEC filing, United said it expects capacity to fall 65% in August compared to 2019. The airline estimated last week that the drop would be 60%, but United said it made adjustments to that announced schedule "resulting from reduced demand to destinations experiencing increases in COVID-19 cases and/or new quarantine requirements or other restrictions on travel."

As air-travel demand has slowly picked up from lows reached in April, airlines have said most of the demand is coming from leisure and "VFR" travelers — those visiting friends and relatives — as states lift lockdowns and Americans seek to shake off the cabin fever built up after months in quarantine.

Corporate travel, which yields higher margins for airlines than leisure, has not begun to meaningfully return.

Do you have a personal experience with the coronavirus you’d like to share? Or a tip on how your town or community is handling the pandemic? Please email [email protected] and tell us your story.

Get the latest coronavirus business & economic impact analysis from Business Insider Intelligence on how COVID-19 is affecting industries.

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World News

McConnell Expects New Virus Relief Bill by End of Month

Senate Majority Leader Mitch McConnell predicted Congress will pass one final coronavirus rescue package later this month and appealed to everyone in public life to urge people to wear masks to control the spread.

“This is not over. We are seeing a resurgence in a lot of states,” McConnell said at one of three press conferences he held Monday in Kentucky. “I think the country needs one last boost.”

McConnell said he’s “pretty sure” that a bill will come together in the next couple of weeks. He said it will be crafted in his office with consultation from the administration and then negotiated with Democrats, who endorsed a $3.5 trillion package approved by the House in May. Senate Republicans have dismissed that plan and are discussing a package of as much as $1 trillion in total spending.

Whatever the final number, McConnell said it will be harder to get the unanimous Senate support that accompanied the last bill, the $2.2 trillion Cares Act. “The atmosphere has become a bit more political than it was in March,” he said.

49,199 in U.S.Most new cases today

-6% Change in MSCI World Index of global stocks since Wuhan lockdown, Jan. 23

-1.​047 Change in U.S. treasury bond yield since Wuhan lockdown, Jan. 23

-2.​3% Global GDP Tracker (annualized), May


McConnell reiterated his insistence that the bill must include liability protections for businesses, schools and others that reopen. He said more broadly that he was focused on measures that would help reopen schools, and boost jobs and health care.

That could include additional payments to individuals, McConnell said. He added that the people hit the hardest make about $40,000 or less and work in the hospitality industry.

He said lawmakers will be looking at additional state and local aid, but cautioned that the soaring federal debt is a reason the next bill must be the last one.

On masks and the virus generally, McConnell’s tone differed sharply from President Donald Trump, who has avoided wearing masks in public and has repeatedly tried to minimize the pandemic.

“Look, the single most important thing each of us can do to not only help ourselves but protect our friends and neighbors and everyone around us is not complicated — to wear a mask,” McConnell said. “It ain’t confusing. It’s really simple.”

While McConnell didn’t back a national mask mandate, he said everyone in public life should set an example by wearing masks and urging people to wear them.

“We all need to echo that all across the commonwealth and all across the country,” he said.

McConnell blamed soaring case counts on people not taking the virus seriously enough.

“Clearly a lot of people thought when we started opening up the economy again, let the good times roll,” he said. Still, he added, “We can’t shut the economy down again.”

White House Press Secretary Kayleigh McEnany was asked at her Monday press briefing about Republican lawmakers’ statements that the most important thing Americans can do is to wear a mask in public.

“The president was very clear last week if he were in a situation where he wasn’t tested daily and he was in close proximity and unable to social distance, he would wear a mask,” she said. Trump, who plans an outdoor rally in New Hampshire on Saturday, has made clear that “masks are not only handed out but they are recommended,” McEnany.

Asked about his face-off in November’s election against Democrat Amy McGrath, McConnell noted he is the only congressional leader not from California or New York and said “the fundamental question” for voters is whether they want a senator who will help Kentucky “punch above its weight” or one whose first vote “will be to make Chuck Schumer majority leader.”

— With assistance by Justin Sink

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Categories
Business

UK banks prepare code of conduct on defaulting of Covid-19 business loans

UK banks are preparing a code of conduct for pursuing businesses that default on taxpayer-backed coronavirus loans, amid industry estimates that up to eight out of 10 borrowers could fail to repay in full.

The Guardian understands that the industry lobby group UK Finance and the state-owned British Business Bank have kicked off talks with commercial lenders in an effort to set industry-wide debt collection standards well ahead of repayments falling due.

Loans granted under the coronavirus business interruption loan scheme (CBILS) and bounce-back loan scheme (BBLS) for small and medium-sized businesses have a 12-month repayment-free period, and on the first batch this will run out in the spring of 2021.

Discussions about what happens on defaulted loans then are understood to be in the early stages. However, one banking executive said the industry-wide “code of conduct” around collections would likely result in a “lighter-touch approach” than some banks might be used to with run-of-the-mill commercial loans. Each bank usually has its own policy of what to do in the event of a default.

“That’s really important so that customers get fair treatment and equal treatment. If they have a bounce-back loan with Barclays or HSBC, it doesn’t feel more heavy-handed in one place or another – it’s agreed,” they said.

The BBLS comes with a 100% government guarantee, which means the state will cover a bank’s losses if a customer defaults on their loan. The CBILS, meanwhile, comes with a 80% guarantee, meaning banks will be left to shoulder 20% of potential losses. However, banks are expected to try to recover the full amount before accessing the guarantee. How aggressively they will pursue those debts is at the centre of the discussions.

Industry estimates suggest that anywhere between 40% to 80% of businesses could default on their bounce-back loans, the banking executive said. A portion of that will be down to fraudulent applications, which are believed to account for about 10% to 15% of total BBLS, they added.

A City taskforce warned last month that £36bn worth of government-backed loans could turn toxic by next year, as companies struggle to repay growing debts during the Covid-19 crisis.

Government data released earlier this week showed that banks had approved more than 1m loans worth £42.9bn as of 28 June, including £11bn worth of CBILS and £29.5bn of BBLS. Most BBLS borrowers are small business owners or sole traders that have never taken out a commercial loan.

There is currently no deadline to set a debt collections standard, but one high street banking source said the “the decisions need to be in place fairly quickly. Conversations have started, but we need to get to a point where we know what position we’re in.”

Bankers are desperate to protect their reputations after scandals such as that which engulfed Royal Bank of Scotland’s Global Restructuring Group (GRG), which was accused of “systemic and widespread” mistreatment of SMEs between 2008 and 2013.

“Banks want to make sure that they honour the guarantees offered by the government in the long run, too. They don’t want to do anything that puts that in jeopardy,” the banking executive said. Losing access to government guarantees could leave banks nursing billions of pounds’ worth of losses when companies default.

UK Finance and the British Business Bank – which manages the state-guaranteed loan schemes – are holding a series of meetings with different groups of banks, which will continue over the coming weeks, another source with knowledge of the talks confirmed.

A British Business Bank spokesperson said: “The British Business Bank has regular meetings with lenders, UK Finance, HM Treasury and others to discuss the operation of the government’s Covid-19 response to loan guarantee schemes. Among other topics discussed is the need to treat customers fairly should collection of debts be required in the future.”

UK Finance declined to comment.

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Categories
Business

New York State Doubles The Number Of States Whose Residents Face COVID-19 Travel Quarantines, Adding California

New York, New Jersey and Connecticut have doubled the number of states whose residents will be asked to go into quarantine when they travel to the Tri-State Area due to rising COVID-19 concerns.

California has joined the list of 16 states, as have Georgia and Tennessee. Residents of 16 states will now have to go into 14 days of quarantine if they choose to travel to the New York area. Signs have gone up at airports and along highways. Hotels have been asked to inform their guests of the procedures.

Last week, the limit was introduced for eight states, including Texas and Florida. Aside from Idaho and Iowa, all 16 of the states now on the list are in the southeast and southwest portions of the U.S.

The restrictions come as many parts of the U.S. are seeing big surges in coronavirus infection rates, leading the Centers for Disease Control to issue warnings that the disease may have gotten beyond control. The new limits are a dramatic reversal of the pattern from early on in the pandemic, when travelers from New York were blamed for spreading the virus in Florida and elsewhere. New York was initially the global epicenter of the pandemic, but it has made the most progress in fighting the disease, with the rest of the country heading in the opposite direction in recent weeks.

New York Gov. Andrew Cuomo did not hold a press briefing Tuesday after announcing the expansion of the quarantine measures. At a briefing on Monday, he made note of new COVID-19 clusters that had been identified, including one involving travel to and from Florida by a family living in New York. Despite the significant headway made by New York and New Jersey, they are considered at risk by health officials because of travelers coming from out of state, a particular concern during the summer months.

In responding to COVID-19, New York, New Jersey and Connecticut have often acted jointly given their shared stake in the New York City metro area, a top travel and commercial hub.

“Our numbers have come way down, probably as much as any American state, but we paid a huge price,” New Jersey Gov. Phil Murphy told NBC’s Today on Tuesday. “We’ve gone through hell. The last thing we want to do is go through hell again.”

On Monday, Murphy indefinitely delayed the return of indoor dining at restaurants in the state. Cuomo has also put the brakes on the reopenings of movie theaters and other parts of the state’s commercial landscape.

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Categories
Economy

Small businesses seeking coronavirus relief have until June 30 to apply for PPP loan

New bill would allow small businesses to apply for second PPP loan

PPP loan recipients may be able to apply for additional aid under a newly proposed bill. FOX Business’ Hillary Vaughn with more.

Small businesses hurting from the coronavirus pandemic and economic lockdown have one more day to apply for a forgivable loan through the government-backed Paycheck Protection Program.

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June 30 is the deadline for small business owners to take advantage of the PPP, a rescue fund established by Congress with the passage of the $2.2 trillion CARES Act at the end of March. Employers with fewer than 500 workers can receive loans of up to $10 million; if at least 60 percent of the money goes toward maintaining payroll, the federal government will forgive the loan in its entirety, essentially transforming the money into a grant.

SMALL BUSINESS OWNERS WITH CRIMINAL PAST CAN NOW APPLY FOR PPP LOAN, SBA SAYS

If the loans are not forgiven, a business will have five years to repay the loan at 1 percent interest.

Small businesses can apply for the money through their local bank, so long as it's an approved SBA lender, or through any federally insured depository institution, federally insured credit union and Farm Credit System institution that is participating.

At least 5,458 lenders participated in the program, according to the SBA. Small banks accounted for the bulk of lenders, with 5,323 distributing roughly $70 billion in aid. Thirty-four large banks with more than $50 billion in assets participated, doling out $92 billion in relief.

The second round of PPP funding began April 27 after the initial tranche of $349 billion expired in just 13 days due to massive demand among small businesses. As of Friday, more than 4.7 million loans worth about $517.9 billion had been distributed through the program. That leaves roughly $130 billion left over in the fund.

SBA COULD RELEASE NAMES OF PPP LOAN RECIPIENTS BY EARLY JULY

At its onset, the program was heavily criticized for granting aid to publicly traded companies that had other avenues for relief — even as small businesses languished. But the SBA and Treasury Department, which jointly administer the program, scrambled to close the loopholes that allowed multimillion-dollar companies tap the fund, including pledging to audit any loan worth more than $2 million.

At least 439 public companies received forgivable loans totaling more than $1.39 billion through the program, according to Washington, D.C.-based data analytics firm FactSquared. Of those companies, 69 returned the money, or roughly $436 million.

In the months since it first launched, it's been lauded as a success in helping businesses survive the worst economic catastrophe since the Great Depression.

It's unclear the overall effect the taxpayer-funded program had on buttressing the economy. At the beginning of June, Treasury Secretary Steven Mnuchin estimated it had saved some 50 million jobs

AT LEAST 4 MEMBERS OF CONGRESS BENEFITED PERSONALLY FROM PPP LOANS

“This economic positioning is the direct result of the Trump administration and Congress working together to pass bipartisan legislation to provide necessary liquidity to workers and markets,” he said during congressional testimony.

There's now a debate in Congress about what to do with the leftover PPP money.

"There's strong bipartisan interest in protecting the funds that have been appropriated to develop a second round, but to have it targeted more to those small businesses that really need the help," Sen. Ben Cardin, the top Democrat on the Small Business and Entrepreneurship Committee, told Bloomberg News.

One proposal by Cardin and Sens. Chris Coons, D-Del., and Jeanne Shaheen, D-N.H., would allow businesses with fewer than 100 employees to tap the taxpayer-backed fund for a second time if they can prove that they lost half of their revenue as a result of the outbreak of the virus.

CONGRESS HAS FUNNELED TRILLIONS TO CORONAVIRUS RELIEF. WHERE IS THAT MONEY GOING?

Eligible businesses must have exhausted their initial PPP loan, or be on pace to spend the aid in order to qualify for another loan. The bill would also extend the loan application deadline for businesses from June 30 to Dec. 30 or later. A companion bill has been introduced in the House.

According to a survey released by the National Federation of Independent Businesses last week, 14 percent of the companies that received PPP aid are considering laying off employees once they deplete the money. At least 70,000 of those businesses anticipate laying off at least 10 workers apiece.

"Whether the PPP achieved its main objective of preventing small businesses from firing their staff and closing their doors permanently will take some months to determine," wrote Diego Zuluaga, an associate director of financial regulation studies at the conservative-leaning Cato Institute. "If the same proportion of PPP borrowers and non‐​borrowers ends up shutting down, then the PPP will have been a waste."

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Categories
World News

California University Paid $1.14 Million After Ransomware Attack

The University of California, San Francisco paid criminal hackers $1.14 million this month to resolve a ransomware attack.

The hackers encrypted data on servers inside the school of medicine, the university said Friday. While researchers at UCSF are among those leading coronavirus-related antibody testing, the attack didn’t impede its Covid-19 work, it said. The university is working with a team of cybersecurity contractors to restore the hampered servers “soon.”

“The data that was encrypted is important to some of the academic work we pursue as a university serving the public good,” it said in the statement. “We therefore made the difficult decision to pay some portion of the ransom.”

The intrusion was detected as recently as June 1, and UCSF said the actors were halted during the attack. Yet using malware known as Netwalker, the hackers obtained and revealed data that prompted UCSF to engage in ransomware negotiations, which ultimately followed with payment.

Foundering

Season 1, Episode 2, The Bar Is Now at Your Desk

The WeWork Story, Part 2Forward 15 secondsBack 15 seconds00:00:00

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The WeWork Story, Part 2:

WeWork sold office space, but also it sold something else: fun. Beer flowed freely, members partied at the office, and your work was your life. But getting these offices off the ground was utter chaos, especially for the burgeoning company’s young, inexperienced workers. In this episode, reporter Ellen Huet takes a look at WeWork’s early days, when the company was growing so fast that some buildings opened without doors or functioning bathrooms.













































































































































In exchange, the university said it received a key to restore access to the files, and copies of the stolen documents. The university declined to say what was in the files that was worth more than $1 million, except that it didn’t believe patient medical records were exposed.

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World News

Chinese Professor Found Guilty in U.S. of Economic Espionage

A Chinese professor was found guilty by a judge of trade-secret theft and and an even more serious and rarer charge of economic espionage, marking the latest conviction in the Trump administration’s pursuit of Chinese scientists and engineers.

At an unusual in-person courtroom hearing Friday during the coronavirus pandemic, a federal judge in San Jose, California, announced the verdict against Hao Zhang.

Arrested in 2015 when he flew to Los Angeles for a conference, Zhang was accused of conspiring with a colleague from the University of Southern California to steal and sell American secrets to the Chinese government and military through a shell company in the Cayman Islands.

Zhang was charged during an aggressive U.S. crackdown on Chinese theft of intellectual property that began under former President Barack Obama has continued under the Trump administration, which has applied heavy scrutiny to Chinese scientists doing research in the U.S. He faces up to 15 years in prison for economic espionage and 10 years for theft of trade secrets, according to a court filing.

Read More: As China Anxiety Rises in U.S., Fears of New Red Scare Emerge

Friday’s verdict comes amid worsening ties between the world’s two biggest economies. Despite meetings that U.S. Secretary of State Mike Pompeo held with his Chinese counterpart in Hawaii last week, relations remain soured over issues from China’s handling of the coronavirus to its move to enact legislation restricting Hong Kong and its treatment of ethnic minorities in Xinjiang province.

39,972 in U.S.Most new cases today

-9% Change in MSCI World Index of global stocks since Wuhan lockdown, Jan. 23

-1.​065 Change in U.S. treasury bond yield since Wuhan lockdown, Jan. 23

-2.​3% Global GDP Tracker (annualized), May







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    The Pentagon this week published a list of 20 Chinese companies it said were owned or controlled by China’s military, potentially exposing them to further sanctions in the U.S. On Thursday, the U.S. won an arrest warrant for the former president of China’s state-owned chipmaker as part of the Trump administration’s “China Initiative” targeting trade-secret theft, hacking and economic espionage.

    Zhang’s lawyers argued that his work at one of China’s most prestigious technical universities to develop radio-filtering technology used in mobile phones was about advancing scientific knowledge -- and not for the benefit of the Chinese state.

    Zhang and his lawyers chose to make his case before U.S. District Judge Edward Davila instead a jury in what legal experts called a “damage control” defense. His lawyers conceded evidence including emails that prosecutors said contained trade-secret data and admissions he made while being questioned by the FBI. In closing arguments, his lawyers also made a strategic choice to focus on the more serious espionage charges instead of the trade-secret theft allegations.

    Prosecutors said the secrets Zhang stole came from a former employer, Skyworks Solutions Inc., based in Woburn, Massachusetts, and San Jose-based Avago Technologies Ltd., which acquired Broadcom Inc. in 2015. The technology at issue filters out unwanted signals in mobile phones and other devices, which has become more difficult as wireless products have become ubiquitous.

    Zhang went to work for Skyworks after earning his doctorate in electrical engineering at the University of Southern California in 2006. At USC he met Wei Pang, who went on to work at Avago and, according to prosecutors, was Zhang’s key co-conspirator. Both men returned to China to teach at Tianjin University, a premier technical school.

    At TJU, the professors allegedly used stolen information to refine radio-filter technology, apply for patents in the U.S. and China, and sell it through a company incorporated in the Cayman Islands. Zhang was the first of six defendants to go to trial -- and probably the only one because the others are in China.

    Davila said during Friday’s hearing that the evidence presented at trial -- much of it agreed to by both sides -- showed Zhang knew the information at issue was a trade secret. “He filed patent applications using the stolen secrets and listing himself as the inventor,” the judge said.

    In support of his finding Zhang guilty of economic espionage, Davila cited evidence that professor’s plan was sponsored by TJU.

    Zhang’s lawyer had no immediate comment on the verdict. Sentencing is set for Aug. 31.

    The case is U.S. v. Zhang, 15-cr-00106, U.S. District Court, Northern District of California (San Jose).

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    Markets

    Stocks’ Covid Angst Takes Violent Turn After Simmering for Days

    First the animal spirits left the building. Now everyone’s heading for the exit in the stock market.

    It’s a story that has been brewing under the surface for days: simmering skepticism that the coronavirus crisis was anywhere near under control. Conspicuously, starting a couple weeks ago, automated tech stocks were back on top — a reliable sign of worry among an investor class that earlier this month was willing to buy anything it saw.

    On Wednesday, uneasiness morphed into fright. By noon, the S&P 500 had plunged 3%, after data showed virus cases spiking in Florida and Texas. New York, Connecticut and New Jersey said visitors would face a mandatory quarantine.

    The change is a marked shift from the spirit that ruled as recently as June 8, when the S&P 500 turned positive for the year, leaving its pre-pandemic high the only milestone left to breach. Now that date is shaping up as a possibly sinister landmark — the day worries of a second wave became a reality, a concern that is increasingly difficult to dismiss.

    “The latest coronavirus news is not positive for the stock market which was betting the worst of the pandemic recession was behind us,” said Chris Rupkey, chief financial economist for MUFG Union Bank. “Hopes of investors looking for a better economy to improve the bottom lines of companies shut down in the recession have been dashed.”

    The S&P 500 fell 2.7% as of 1:43 p.m. in New York, after the International Monetary Fund downgraded its growth outlook for the world economy and data showed California had a record 7,149 new cases. An equal-weight version of the index that gives all members the same significance was down 3.3% while the Nasdaq 100 dropped 2.1%, the least of the major benchmarks.

    Divergences like that have been common in recent days, even when equities were rising. All of the sudden, so-called stay-at-home stocks were leading the market, while cruise lines and airlines struggled anew. The Nasdaq 100 notched a new high versus the S&P 500 as investors gravitated toward large companies with strong balance sheets. After weeks when investors applauded widening equity participation, they began to fret the pace couldn’t continue.

    The rally was getting more concentrated — hearkening to days in March and April when the market’s contour reflected a belief that companies that thrived in a stay-at-home economy were the only ones to own. Through Tuesday’s close, the Nasdaq Composite Index, a de facto proxy for this appetite, had gained for eight straight days, the longest winning streak of the year. At the same time, less than 45% of stocks in the S&P 500 has reclaimed their average price over the last 200 days. According to Sundial Capital Research, such a discrepancy hadn’t materialized since 2000.

    Sundial analysts also highlighted that while many index components hadn’t breached their trend-lines, the broader S&P 500 was trading well above its 200-day moving average as of Tuesday. The only other times the gauge traded above the mark and fewer than 45% of its members did simultaneously were 2007 and 1999 — neither of which are years that evoke fond memories for investors.

    At the same time, on top of worries about the spread of coronavirus, markets are now facing a variety of policy uncertainties, including an upcoming election and the potential imposition of tariffs, according to Brian Nick, chief investment strategist for Nuveen.

    “That’s a lot to cope with for a market that is still relatively fragile, is back to a relatively narrow leadership,” Nick told Bloomberg Television. “Staying sort of growth-y, defensive, high quality, avoiding sort of existential risk when it comes to sort of these longer-impacted Covid-related industries is still the way to go.”

    Wednesday afternoon, an equal-weight gauge of stay-at-home stocks that includes Zoom Video Communications Inc., Lowe’s Companies Inc., and General Mills Inc. was down a relatively modest 1.8, data compiled by Bloomberg show. Meanwhile, an index representative of the winners in a reopening, including airlines, hotel operators and cruise lines, plunged more than 6%. Small companies bore the brunt of the selling, with the Russell 2000 down 3.7%.

    There were signs exchange-traded fund investors were already on edge in recent days, shunning products that should outperform in a strong economic recovery, while running back to safety. They swapped small and mid-cap focused funds for the security of large-cap ETFs. The value style also looks to be losing its allure at the behest of growth.

    So far this week, investors have poured $3.9 billion into the SPDR S&P 500 ETF Trust (ticker SPY) after two weeks of outflows. The SPDR Portfolio 500 Growth ETF (SPYG) has taken in $472 million, on track for the fund’s largest weekly inflow on record.

    At the same time, the iShares S&P SmallCap 600 Value ETF (IJS) has lost $137 million, on track for its worst week in over a year, while the Schwab Fundamental U.S. Small Company Index ETF (FNDA) has lost more than $200 million.

    Particularly worrisome to investors is the reality that nowadays, it seems easier for stocks to get spooked than it did, say, two weeks ago. If the fastest 50-day rebound on record is now reverting to alarm, there’s reason to wonder what equities — a forward-looking mechanism — see in an economic rebound now.

    “You’re seeing the market say OK, it’s been a great run, now we have factors coming into the market suggesting we could see selling,” said Quincy Krosby, chief market strategist at Prudential Financial Inc. “That’s what you’ve got right now.”

    — With assistance by Amena Saad

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