Markets Fall Amid Worries Over Johnson & Johnson’s Vaccine

New worries about J.&.J.’s Covid vaccine

Federal health officials have called for an immediate halt in using Johnson & Johnson’s Covid-19 vaccine, after recipients in the U.S. suffered blood clots within two weeks of vaccination. It could mark a hurdle for America’s inoculation efforts.

Six women between age 18 to 48 developed a rare disorder involving blood clots. One died and another is hospitalized in critical care. Over all, nearly seven million people in the U.S. have received the J.&J. one-shot vaccine, and nine million more doses have been shipped to states.

The move follows several countries’ limiting the use of AstraZeneca’s vaccine after similar reports of blood clotting. Both shots are based on the same viral vector technology; vaccines from Pfizer-BioNTech and Moderna haven’t been associated with such risks. J&J’s share price fell nearly 3 percent in premarket trading and U.S. market futures turned negative on the news.

It’s unclear how much the J.&J. halt will hurt the Biden administration’s goals, with the White House aiming to have enough vaccines to inoculate all adults in the country by the end of May. F.D.A. officials plan to hold a news conference at 10 a.m. Eastern, and you can listen here.

HERE’S WHAT’S HAPPENING

More businesses take action against efforts to limit voting rights. Will Smith is pulling a forthcoming film production, backed by Apple, out of Georgia following its passage of voting restrictions. And a group of law firms, including Paul Weiss, Skadden and Cravath, plans to “challenge voter suppression legislation.”

President Biden declares semiconductors as infrastructure. At a meeting with tech executives yesterday, Mr. Biden addressed a global chip shortage that has hurt manufacturers, tying the issue to his $2.3 trillion infrastructure spending plans.

Britain’s Parliament will investigate David Cameron’s role advising Greensill. The former prime minister will face an independent inquiry into his work lobbying top government officials on behalf of the now-insolvent lender. Mr. Cameron has denied violating lobbying rules.

Uber shows a strong rebound from the pandemic. The company reported a record number of bookings last month as Covid-19 vaccination rates rose and pandemic lockdowns lifted. But the company still has a problem: a dearth of drivers.

Bitcoin sets a record, again. The cryptocurrency was trading at more than $62,000 this morning, continuing a weeklong run-up. That’s good for Coinbase, the cryptocurrency exchange whose shares are set to begin trading tomorrow at a potential valuation of more than $100 billion.

Behold the biggest SPAC deal ever

Grab — a ride-hailing company, bank and food delivery business all rolled into one — is set to make its debut on the Nasdaq, in the largest offering by a Southeast Asian company on a U.S. stock exchange. The deal announced today values Grab at $39.6 billion, the largest SPAC deal to date by some distance. It includes an additional investment of more than $4 billion, from investors including BlackRock, T. Rowe Price and Temasek.

It’s trying some new things with how SPACs work. The SPAC’s sponsors, Altimeter Capital Management, are holding onto some of their shares for at least three years, matching the span of the financial projections presented in the rollout of the deal. They’re also giving 10 percent of those shares to the company’s recently announced GrabforGood Fund, to share with its workers.

It highlights a flourishing dealmaking scene in Southeast Asia. Bain, the consulting firm, said it expected that the region would have at least 10 unicorns — start-ups valued at $1 billion or more — by 2024.

Meanwhile, the S.E.C. plans to tighten a key rule for SPACs. The agency put out new guidance for warrants, which early investors in blank-check funds can exercise to buy more shares. Those instruments might need to be classified as an accounting liability, which Bloomberg notes poses a headache for both pending SPAC filings and funds that have already struck deals.

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How did Microsoft escape the antitrust crackdown?

Big Tech is under intense scrutiny for its monopoly power, with investigations into Apple, Amazon and Facebook, and a case against Google, underway. But when Microsoft announced yesterday that it would acquire Nuance Communications for $16 billion, analysts appeared confident that regulators would allow it. “We see no major regulatory hurdles to Microsoft getting this deal done,” Daniel Ives of Wedbush Securities wrote in a report.

“Microsoft is on the M&A warpath over the next 12 to 18 months and Nuance could be the first step in an increased appetite for deals,” Mr. Ives wrote. The tech giant was the poster child of antitrust action in the 1990s but has received relatively little attention during the most recent round of antitrust probes, even as it bought ZeniMax for $7.5 billion, bid for TikTok and reportedly looked to buy Discord and Pinterest. Satya Nadella, Microsoft’s chief, was the only Big Five tech C.E.O. who did not testify at congressional antitrust hearings last year.

• After Microsoft completes the all-cash purchase of Nuance, it will still have plenty of money for more deal-making: It ended last year with $132 billion in the bank. “Microsoft right now feels free as a bird,” Mr. Ives told DealBook, in contrast to its Big Tech rivals wary of antitrust attention.

So why hasn’t Microsoft attracted more scrutiny?

• Nuance doesn’t directly compete with Microsoft, which makes it harder to prove that the acquisition would be anti-competitive. The two companies have been partners since 2019, and Nuance’s A.I. and voice recognition technology is mainly focused on the health care industry. Hal Singer, a senior fellow at George Washington University’s Institute of Public Policy, told DealBook that “the proposed acquisition would be considered vertical, as voice assistance would complement Microsoft’s core offering. And the law on vertical mergers is quite weak.”

• “Microsoft is not perceived as predatory in the same way” as other Big Tech firms, said Matt Stoller, the director of research at the American Economic Liberties Project. “It hasn’t been displacing whole industry segments, whereas the other four have.” He added that government agencies “have to pick something to focus on, and Amazon, Apple, Google and Facebook are the pace-setters of the economy.”

But those expecting the deal to sail through could be wrong. Rebecca Slaughter, the acting chair of the F.T.C., has called for a tougher approach to vertical mergers. Last month, the agency sued to block a $7.1 billion deal in the drug industry that would be only the second such case involving a vertical merger in the past 40 years.

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Positioning Bitcoin for legitimacy

Coinbase, the largest U.S. cryptocurrency exchange, goes public tomorrow at what is expected to be an eye-popping valuation. The debut is a major milestone in the mainstreaming of digital money, but barriers to acceptance will remain as long as crypto maintains a reputation for facilitating illicit activity. The exchange and its allies are working to dispel that impression.

A former C.I.A. leader called concerns about crypto “significantly overstated” in a new report. Michael Morell said he had begun his “call it as I see it” investigation suspicious of crypto, but concluded that officials are not sufficiently informed about the technology. “Most illicit activity still takes place in the traditional banking system and not via cryptocurrency,” he wrote.

• Notably, the research was commissioned by the Crypto Council for Innovation, a new trade association with four members: Coinbase, Fidelity, Paradigm and Square. It’s one of several overlapping crypto trade groups lobbying lawmakers in Washington, a subject that DealBook will soon cover in more depth — get in touch with any tips.

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Wells Fargo invests in five more Black-owned banks

Wells Fargo announced equity investments in five Minority Depository Institutions today. It’s part of Wells Fargo’s pledge to invest up to $50 million in Black-owned banks; it invested in six other lenders in February.

“The capital came in handy for us to deploy immediately,” said Cynthia Day, the C.E.O. of Citizens Trust, one of the banks receiving an investment. The Atlanta-based bank, which was founded in 1921, issued more than $60 million P.P.P. loans to small businesses during the pandemic. Ms. Day said she expected the bank’s partnership with Wells Fargo to help with technology in particular.

• “These partnerships allows us to be able to expand and stay independent,” Ms. Day said of the rapid consolidation of regional banks as compliance costs rise and fintech firms compete for customers.

The idea came with a change of leadership at Wells Fargo. Charlie Scharf joined the bank as C.E.O in 2019 and Bill Daley as head of public affairs shortly thereafter. “Considering the depth of the issues of this place,” Mr. Daley said, the bank’s leaders discussed “how to get engaged in a different way in lots of communities.” It announced the investment plan in March last year, before the protests over the police killing of George Floyd that spurred a number of similar pledges (sometimes at much larger scales). “That was a little uncomfortable period there,” Mr. Daley said. “And we just said, ‘No we’re on pace to do what we’re going to do — and it’s not about getting that press release out, but getting the relationship done.’”

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PNC gives up revenue to tame overdraft fees

PNC announced a move today to reduce its share of the $17 billion in overdraft fees that Americans pay every year. It’s expected to cut customers’ overdraft fees about 60 percent, and its own annual revenue by $125 million to $150 million. It comes as PNC prepares to close its deal with BBVA, making it the country’s fifth-largest retail bank.

Overdraft fees are paid largely by people who can least afford them. Eight percent of American families account for three-quarters of the fees, according to the Consumer Financial Protection Bureau. “Overdraft is an expensive fee they charge only on those people who run out of money that goes straight to short-term profits,” said Aaron Klein, a senior fellow at the Brookings Institution.

“We weren’t doing the best we could do by our clients,” PNC’s chief executive, William Demchak, told DealBook. Over the long term he expects that the move will help it gain market share. “In the short run, if it cost us 100 million bucks or something — so what?”

How it works: PNC’s app will feature a “low cash mode.” It sends alerts when an account is low, and when it goes negative the customer has at least 24 hours to fix it, including by reviewing pending payments and deciding which to prioritize.

“I think it will change the industry,” Mr. Demchak said. For the largest banks to adopt a similar approach is a matter of technology — and desire. Overdraft fees help drive revenue: $35.61 per account annually for JPMorgan Chase on the high end and $4.90 per account for Citi on the low end, according to Mr. Klein. PNC fell in the middle, with $14.96 per account.

THE SPEED READ

Deals

• Despite owning over $100 million in stock, Archegos never publicly disclosed its holdings as S.E.C. rules generally require. (NYT)

• When Wall Street banks’ earnings start coming out tomorrow, they’re likely to show a big reliance on deal-making for profits, thanks in large part to SPACs. (Bloomberg)

Politics and policy

• The U.S. budget deficit hit $1.7 trillion in the first six months of its current fiscal year, setting a record as the government spent trillions on pandemic aid. (NYT)

Tech

• Nvidia plans to roll out a line of general-purpose C.P.U. chips, its most direct challenge yet to Intel. (FT)

• A key technical standards organization is trying to get rid of computer engineering terms that evoke racist history, like “master,” “slave,” “whitelist” and “blacklist.” (NYT)

Best of the rest

• Reuters named Alessandra Galloni as its new editor in chief, the first woman to hold the role in the news agency’s 170-year history. (NYT)

• GameStop is looking for a new C.E.O., as the video game retailer overhauls itself after being at the center of the meme-stock frenzy. (Reuters)

• The New York Stock Exchange’s first NFTs memorialize the initial trades of six stocks, including Spotify, DoorDash and Coupang. (CNBC)

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