Starbucks, Omicron and the COVID endemicity endgame: Morning Brief

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Friday, January 21, 2021

Coffee giant rips off the band-aid, clearing a path for others

There was no shortage of market-moving headlines in Thursday’s session: Netflix’s subscriber growth outlook let down investors, while battered tech stocks struggled to claw their way out of correction territory. And Peloton shocked the world (and its investors) by halting production on its high-end exercise equipment, according to a bombshell CNBC report.

However, kudos to Yahoo Finance’s Anjalee Khemlani for honing in on what was arguably the day’s most intriguing theme, which also ties into another surprising development that involved Starbucks (SBUX). In the wake of last week’s Supreme Court ruling that partly struck down the Biden administration’s COVID-19 vaccine mandate, the coffee giant became the first major company to backtrack on its own requirement that workers be inoculated.

Khemlani’s conversation with University of Saskatchewan virologist Angela Rasmussen yielded an insight we at the Morning Brief recently explored — namely, what the arrival of the hyper-transmissive Omicron variant means for society, and for a patchwork of restrictions that are becoming more counterproductive by the day.

Employing the concept of “endemicity” — a highfalutin epidemiological term that, in the interest of full disclosure, I literally just learned how to pronounce a few weeks ago — Rasmussen essentially dashed hopes that we can vaccinate our way out of the pandemic.

“I don’t think that elimination is going to be possible with this virus,” she told Yahoo Finance Live, as the virus moves from pandemic to endemic. That sentiment was reinforced by the World Health Organization’s director of emergency programs, Dr. Mike Ryan.

“We won’t end the virus this year, we may never end the virus. These pandemic viruses end up becoming part of the ecosystem,” Ryan told the World Economic Forum, Khemlani reported.

Previously, the Morning Brief has argued that whatever specious utility vaccine protocols may have enjoyed early on has been upended by the appearance of a variant that’s infected scores of the vaccinated.

Among other things, the debatable efficacy of mandates has isolated the unvaccinated in ways that deprive struggling businesses of patrons, and needed workers of gainful employment. For those reasons, the Czech Republic’s newly-elected government rightly reversed a plan to require vaccinations among citizens there, a move designed to avoid “deepening fissures” among the electorate.

The New York Times hit the nail on the head by highlighting how Starbucks’ move to quickly abandon its employee mandate shows how “retailers and their advocates had been among the most vocal critics of the federal government’s vaccine rule, saying it would have exacerbated their struggles to hire or hold on to workers when millions of unemployed Americans remain on the sidelines of the job market.”

To be certain, the coffee giant and other brands will need to comply with state and federal guidelines, and there’s no indication states like New York and California will back away from their insistence on vaccine restrictions.

Yet both (blue) states have seen an uneven recovery that’s sent many citizens in search of greener pastures in (red) areas — mainly in an effort to escape COVID-19 restrictions (alas, a story for another edition). The variant’s rapid spread among both the vaccinated and unvaccinated have shattered the illusion that the virus can somehow be mandated into submission.

And the unexpected spike in the latest jobless claims data served as a timely reminder that even a white-hot jobs market isn’t entirely impervious to uncertainty stemming from COVID-19 — or, for that matter, ill-advised restrictions that block workers from jobs, or force companies to get rid of them if they don’t comply (looking at you, Jamie Dimon).

By Javier E. David, editor at Yahoo Finance. Follow him at @Teflongeek

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What to watch today

Economy

Earnings

Pre-market

7:00 a.m. ET: Schlumberger (SLB) is expected to report adjusted earnings of 39 cents a share on revenue of $6.09 billion
7:30 a.m. ET: Ally Financial (ALLY) is expected to report adjusted earnings of $1.97 per share on revenue of $2.07 billion

Politics

President Biden’s schedule includes a speech about the ongoing semiconductor shortage at 11:00 a.m. ET. Commerce Secretary Gina Raimondo will also speak. A virtual meeting with the Prime Minister of Japan and a speech to U.S. mayors is also on the president’s agenda.
Today’s program at the virtual World Economic Forum includes a speech by Treasury Secretary Janet Yellen at 11:30 a.m. ET.