The Weekly Scan August 2, 2021

Welcome to the Weekly Scan. Here’s what we’re following for the week of August 2, 2021.

Spending and mending. Fueled by a rebound in consumer spending, the U.S. economy grew by 1.6% in the second quarter of 2021, compared to an increase of 1.5% in the first quarter of 2021. On an annualized basis, the second quarter growth increase was 6.5%. The most recent growth rate reportedly returns the U.S. Gross Domestic Product (GDP) to its pre-pandemic size. The pandemic-induced recession lasted from March to April 2020, the shortest on record, but it resulted in the loss of approximately 22 million jobs.  

• The takeaway: In addition to a 2.8% increase in consumer spending in the most recent quarter, vaccinations and federal spending have helped fuel the reopening of the economy. While cyclical industries such as travel have rebounded, the recovery has been uneven due to labor shortages and supply chain challenges, which have constrained manufacturing and production in some sectors. A spike in inflation and a resurgence of Covid-19 infections due to the spread of the highly-contagious Delta strain may also put a damper on growth, and may necessitate new closings of parts of the economy. 

NYT and Reuters

The Avenger. Scarlett Johannson, one of the highest-paid actresses in Hollywood as of 2018, is suing Walt Disney for breach of contract. The star of the action drama Black Widow reportedly claims in the suit that her contract with Disney’s Marvel Studios stipulated only a theatrical release. Disney allegedly released Black Widow simultaneously on Disney+, its streaming platform, for $30 when the film hit theaters in July, 2021.

• The takeaway: Johannson’s compensation for the film is reportedly tied only to box-office performance, which would not include earnings from Disney+ viewers. The star, who reportedly earned $20 million for the film, claims in the lawsuit that Disney has hidden behind Covid-19 restrictions, which include closures of movie theaters, to increase its streaming audience. In 2020, numerous studios released new films first on streaming sites. Disney is locked in a streaming battle for customers with many other competitors, including Netflix, HBO, and Amazon. Disney has reportedly called the suit meritless.

CNBC and Reuters

Electric charging. Trevor Milton, founder of electric truck company Nikola, was indicted on securities fraud charges last week. Prosecutors reportedly charged Milton with misrepresenting facts to investors and not adhering to all of the rules associated with Special Acquisition Purpose Companies (SPACs)¹, a structure the company used to go public in 2020. Milton was reportedly taken into custody in New York on July 29, 2021, and later released on $100 million bond. The Securities and Exchange Commission  (SEC) filed a civil complaint against Milton the same day. Nikola itself faces neither criminal nor civil charges. 

• The takeaway: A record number of companies went public through SPACs in 2020.  Spacs are shell companies with no operations of their own, typically set up by wealthy investors or hedge funds. They list on an exchange, and then acquire or merge with a functioning private company to go public. In contrast to traditional IPOs, executives of SPAC companies aren’t as limited in what they can say about their companies. Milton abruptly left Nikola in September, 2020, following a report from a short-selling research firm. General Motors acquired an 11% share of Nikola prior to Milton’s departure.

CNN  and WSJ

Here’s what we covered in last week’s Scan: 

• Covid-19 vaccine producer Moderna joins the S&P 500.
• An executive order restrict non-compete agreements
• A powerful new battery that can store energy for days, using rust.

Check out longer reads from Stash Learn: 

• Safer Summer Travel as Vacation Planning Heat Up
• Congrats, Grad! Here are Six Financial Goals Now That You Have That Degree

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