Delta Doom

Southwest Airlines wants investors to know: the Delta variant is having an impact, especially on the travel and leisure industry. The company’s earnings were a touch below what analysts expected.

Fortunately for most investors, they already expected some bad news. Investors sold airlines and other travel stocks as the Delta variant ramped up. In the last three months, the SonicShares Airlines, Hotels, and Cruise Lines ETF has tumbled 5.7%. Falling prices came even amidst a period of strength in travel figures. After all, TSA checkpoint travel numbers have risen steadily since the vaccine was approved. 💁‍♀️

However, yesterday’s report could add to investors’ concern. Southwest lowered its guidance for next quarter because some passengers are cancelling their flights. Last week, Frontier Airlines issued its own warning. Plenty of other companies (Disney included) are taking new precautions, too. 

So why is everything messed up? Well, COVID’s Delta variant affects regions with low vaccination levels and no mask mandates, but Delta still represents a threat to vaccinated communities. More on that below.

Yes, you’re probably tired of hearing about the Delta variant. We’re sorry, but this is the news: vaccine stocks fell today after a new study indicated that vaccines’ effectiveness is not as strong against the rising Delta variant as previously indicated.

The study indicated that the Pfizer and Moderna vaccines sharply declined in effectiveness against the Delta variant as it raged throughout June and July. Moderna’s vaccine was 76% effective and Pfizer’s, 42%.

Ironically, Moderna took the brunt of that bad news. $MRNA has appreciated significant gains since joining the S&P 500, but lost 16% today. 😥

Pfizer, which hasn’t felt nearly as much love as Moderna, lost about 4% today. Their partner in ‘rona-related business, BioNTech, also fell in sympathy with Moderna. $BNTX decreased 13.7% today.

This news comes with a big asterisk, of course: the study is a pre-print and has yet to be peer-reviewed. But this isn’t the first time researchers have underscored vaccines’ weakness against the Delta variant. With scientists worried about new variants, the need for a booster vaccine is likely. 

Coinbase’s latest earnings report shows some big moves taking place in the crypto economy. 😌 🥳

Ethereum’s trading volume outstripped Bitcoin’s for the first time ever on Coinbase, accounting for 26% of trading volume. Bitcoin trading represented 24%. Together, the two cryptos represent half of Coinbase’s Q2 trading volume.

Bitcoin’s decline also came at the cost of hundreds of new assets, which represented the other half of volume on the exchange. 

Though trading volume is not necessarily predictive of price movements, Ethereum’s rise against Bitcoin is one way of measuring demand. Whether it sticks or not is untold, but it’s a pretty bullish indicator for the cryptocurrency as it preps its next big update, Eth2.

Coinbase’s report crushed analyst predictions. The company earned a whopping $2.03 billion in revenue, exceeding analysts’ predictions of $1.88 billion. 

Another day, another bit of M&A news.

The world’s largest anti-malware software company will merge with its biggest competitor. NortonLifeLock is bringing Avast into its fold as part of an $8 billion deal. Ooh la la. 🤑

Avast shareholders will own between 14-26% of NortonLifeLock’s shares after the deal closes, giving shareholders an option to choose between receiving more cash or more shares.

The combined company will now own a quarter of the anti-malware market. 🥵 That’s a huge consolidation for the tech security market. Symantec, which owns Norton, represents a 13.1% share of the anti-malware market as of May 2020, which edged those of Avast (12.6%). 

NortonLifeLock rose 8.7% on the news. Avast, which trades on the London Stock Exchange, glowed up 3.1% before word got out. ✨ We’re anticipating more action when the LSE opens tomorrow.

Last month, the Department of Justice launched a probe into the Tether stablecoin. The stablecoin, which has been around since 2014, has become one of the most valuable and pervasive digital assets. As of today, Tether is the 4th-largest crypto by market cap and boasts some $62.6 billion in circulation — that figure has prompted concern among regulators, because Tether isn’t backed dollar-for-dollar by Bitfinex. 🤔

Unfortunately, regulators are getting a new bone to pick thanks to USD Coin, which is issued by a consortium of companies called Centre. Coinbase and Centre assured the public that, unlike Tether, USDC was backed dollar-for-dollar in “a bank account.” But USDC wasn’t. 😬

The consortium’s first disclosure of assets last month revealed that USDC assets were held in “commercial paper, corporate bonds, and other assets that could experience losses.” That might not seem like a big deal, but the issuers of USD Coin lied about the way they back their stablecoin, which is a slap in the face to many investors. Those assets are not like the liquid cash you have in a bank account.

That’d be a problem if billions in USDC were ever redeemed, as it would be hard to liquidate cash alternatives fast enough. But ultimately, a lie is a lie. And unfortunately, misleading investors is likely to catch regulatory attention. These are things to consider next time you swap your coins for USDC. 🚨