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‘I’m the captain now’
Seasoned investors have been puzzling at the disconnect between the fragile economy and rapidly rising stock indexes. Wall Street increasingly thinks the rally is driven by retail investors, particularly bored bettors looking for action.
Without sports, some gamblers have turned to stocks, The Times’s Matt Phillips writes. The new investors have helped push the market up, some analysts believe: “There’s zero doubt in my mind that is a factor,” said Julian Emanuel of BTIG.
• It’s not clear how big a factor they are, but sports bets topped $13 billion last year, and even a small set of active traders can move stock prices. Others disagree.
• Many believe retail day traders are behind the surge of Hertz, the bankrupt car rental company. Hertz won permission last week to sell new shares — even though stockholders may be wiped out in the Chapter 11 case.
The traders’ patron saint is Dave Portnoy, the founder of the rowdy — and controversial — sports site Barstool, who has refashioned himself into a sort of Jim Cramer for the pandemic era. Mr. Portnoy, who made millions by selling a Barstool stake to the gambling company Penn National, live streams his profanity-laced trading sessions to millions.
• He boasts that he’s outperforming Warren Buffett, and declared on Twitter last week, “I’m the captain now.” (His track record is mixed.)
• One apparent link between Mr. Portnoy and market moves: Penn National shares are up more than 500 percent since mid-March.
Mr. Portnoy has plenty of critics. Peter Cecchini, the former chief markets strategist for Cantor Fitzgerald, recently called “the Portnoy Top” for the market, describing the trader as “emblematic of just how emotional and extreme equity markets are now.” And Bloomberg notes that stock valuations remain near two-decade highs. “It’s definitely the sign of a bubble,” Matt Maley of Miller Tabak said.

Here’s what else is happening
BP plans to write down as much as $17.5 billion of its business, Bloomberg reports. The British oil giant said that the pandemic had not only sapped demand for energy, but may also speed up a shift to greener technologies.
Private equity may not be worth the billions it collects in fees, according to a new analysis by Oxford University. The return for big public pension funds’ private equity investments was about 11 percent, net of fees, over the past decade. After some $230 billion in fees, that’s about the same as public markets.
SoftBank’s circular investing strategy raised eyebrows. The tech conglomerate reportedly invested $500 million in Credit Suisse funds that had invested in the debt of start-ups backed by SoftBank’s Vision Fund, The Financial Times reports.
Quibi’s struggles are straining its top executives’ ties. The streaming service’s founder, Jeffrey Katzenberg, and its C.E.O., Meg Whitman, differ on how to respond to the company’s troubles, The Wall Street Journal reports.
The Major League Baseball players union rejected owners’ proposal for restarting play. The move deepens a dispute over how to bring baseball back, and players are essentially daring the league to force a shortened season on them.
The risks of reopening
Global markets are sharply lower today — and U.S. stocks look set to drop at the open — amid fears of a resurgence in coronavirus infections.
A spate of cases in Beijing led to the closure of some food markets and schools over the weekend, which the authorities described as a “wartime” action. Positive tests of passengers on a flight from Dhaka, Bangladesh, to Guangzhou triggered a “circuit breaker” halting that route for a month.
Several U.S. states have reported spikes in cases. As of Saturday, the daily count was climbing in 22 states, including Arizona, Florida and Texas, according to a Times analysis. Health experts say contact tracing is the best strategy to contain outbreaks, in the absence of reimposing stay-at-home orders. But many efforts to track infection trends fall short.
Europe is opening up to foreign tourists, with border restrictions lifting across the continent this week. President Emmanuel Macron of France declared a “first victory” in a national address on Sunday, accelerating measures like lifting restrictions on restaurants, schools and nursing homes.
Take Note: Second wave warnings
Michelle Leder is the founder of the S.E.C. filing site footnoted*. Here, she recounts warnings of a second wave of infections appearing in company statements. You can follow her on Twitter at @footnoted.
On Sunday, Gov. Andrew Cuomo of New York warned about a “second wave” of Covid-19 cases, pointedly chastising people flouting the state’s reopening rules. He isn’t the only one talking about a resurgence of infections: Dozens of companies have issued warnings in regulatory filings.
Among them is the retail giant Costco, which in its most recent quarterly filing tweaked the language in its coronavirus risk factor to include “additional periods of increases or spikes in the number of Covid-19 cases, future mutations or related strains of the virus in areas in which we operate.”
Retailers like Aaron’s, Dick’s Sporting Goods, Home Depot, Macy’s and Signet Jewelers have added similar warnings in their filings, but other companies have also begun to account for a potential surge in cases. The communications company Keysight Technologies recently warned about “a second wave of infection resulting in additional government mandated shutdowns.” And Deckers Outdoors said in its latest annual report that “even the threat or perception” of a second wave could have a material impact on its business.
What makes for a second wave is open to interpretation, of course, and there is unlikely to be a formal announcement if one starts. News outlets reported over the weekend that we may already be at the start of a new surge in Covid-19 cases — or perhaps still in the midst of the first wave.
But one thing seems clear: Because so many companies didn’t anticipate the severity of the initial outbreak, they’re more sensitive to signs of a second one.
Amazon is regaining lost ground
Online shopping has grown during the pandemic, but Amazon’s U.S. market share has fallen, suggesting that Americans are ordering elsewhere more often. Shira Ovide, who writes the On Tech newsletter, tried to make sense of the latest numbers.
Amazon’s market share bottomed out in April, and it has risen a bit in recent weeks, according to Rakuten, which tracks the emailed purchase receipts of more than one million Americans. But Amazon hasn’t returned to the market share it held early this year.
What’s going on? Shira shared her thoughts with DealBook:
No one should weep for Amazon. It’s still by far the dominant online shopping destination, even as people spend more of their e-commerce budgets with Instacart, Target, Home Depot and Best Buy, the Rakuten figures show. Notably, eBay and Kroger barely gained online market share as more people shopped from their sofas.
The big question is what happens next. Amazon is trying to get back to normal after its early troubles keeping some high-demand merchandise in stock. It’s possible it will easily grab back all the market share it lost — and then some.
If you haven’t already, sign up for the On Tech newsletter, your daily guide to how technology is transforming our lives.
The week ahead
🗣 Jay Powell, the Fed chairman, discusses the central bank’s latest economic report to committees at the Senate (Tuesday) and House (Wednesday). His downbeat outlook spooked markets last week, and he will most likely hint that lawmakers should be as aggressive as the Fed in propping up the U.S. economy.
🏦 In other central banking news, the Bank of Japan isn’t expected to unveil any new stimulus measures at its policymaking meeting on Tuesday, while the Bank of England will probably announce on Thursday a boost to its bond-buying program.
📈 On Tuesday, data for U.S. retail sales and industrial production are expected to show increases in May, following steep declines in April.
📅 Friday is Juneteenth, the annual holiday celebrating the end of slavery in the U.S. It has gained new resonance during the protests against racial discrimination and police brutality. Several companies, including Nike and Twitter, have made it an official company holiday.
💵 We’re headed into a quiet stretch for company earnings, with this week’s noteworthy reports coming from Oracle on Tuesday and Kroger on Thursday.
The speed read
Deals
• Plans to merge Volvo with its biggest backer, the Chinese car company Geely, face scrutiny as Swedish policymakers take a tougher stance on China. (NYT)
• European telecom companies are preparing a wave of mergers after an E.U. court rejected efforts to limit such consolidation. (FT)
• The hedge fund investor Kyle Bass made millions betting against a Texas real-estate lender. Now, that investment is reportedly under investigation. (WSJ)
Politics and policy
• Larry Kudlow, the White House’s top economic adviser, recommended replacing coronavirus-related unemployment benefits with return-to-work bonuses. (WSJ)
Tech
• Amazon’s Ring home-security division has signed 29 new contracts with local police departments since the killing of George Floyd. (Protocol)
Best of the rest
• How hedge funds are using remote-working arrangements to avoid paying a New York City tax. (WSJ)
• Rethinking the logic of pandemic layoffs. (NYT Opinion)
• Relatedly, Mark Cuban urged C.E.O.s to rethink their pay in light of pandemic-related economic troubles. (@mcuban)
We’d love your feedback. Please email thoughts and suggestions to dealbook@nytimes.com.
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Captain of the Day Traders - The New York Times
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