As U.S. COVID cases continue to rise, Apple decided to delay its workers from returning to company’s offices, according to Bloomberg reports.
– We’ve been talking about one of the factors potentially weighing on markets as of late, has been the spread of the Delta variant. Now we’re seeing at least one real world effect of that Delta variant spread. That’s Apple delaying its return to office, reportedly by about a month, until October at the earliest. It had been planning on September getting its employees back to office.
And this guys, as I saw a headline as well, we have the director of the Centers for Disease Control and Prevention testifying in a Senate hearing today, that the Delta variant is now estimated to make up 83% of all of the sequenced to COVID-19 cases in the US. That’s up from 50% just a couple of weeks ago. So you have to wonder if we’re now going to see more disruption to the sort of return to normalcy, whatever normalcy is at this point, as we continue to see the Delta variant spread.
– Yeah, well, I think we should take this in two parts, at least for our audience. So the first part is obviously how the market thinks about it. And I think yesterday we started to see some signs that the market was beginning to consider what if the Delta variant changes the trajectory for the US economy now, as Laura Calvasene and RBC was telling us earlier on in the program. I think it’s kind of a large distance between here and there to say that the whole recovery is going to be derailed on some things taking longer than expected to get back to normal. Pretty big stretch at this point. And I think some of the market action today is perhaps reassuring along those lines.
But you can start to feel it, especially with the Olympics in the background, and we all can talk about kind of a debacle seems to be happening over there in Tokyo, but you can start to feel some of the oh, we’re going to reopen everything and everything is going to be fine and it’s all over. Some of that energy is certainly coming out, at least here in New York area, of just life. I’m on the train this morning coming in, wearing a mask as required, and maybe a month ago, you would have though, oh, by July, we’ll have no masks on the train. And now I’m thinking, it’s probably going to be through at least the winter that we’re masking up there and a lot of other places as well.
– Well, I think the Apple workforce there has proven they can get the job done and continue to create really awesome products, at least for this year. What is the longer term effect of their workforce being out of that office? When is that officially, or does it show up at all in the products they design, the cadence they roll out, how they navigate global supply chains? That’s unclear. But it’s good to see Apple not being tone deaf to this.
The next section we want to watch, do the banks respond? The banks have also been very aggressive getting workers, humans, back into these offices. Do they follow Apple’s lead here and say, you know what? We may need to be more flexible.
– Well, I think with many of the banks, a lot of those folks are already back. So for them, it may have to be more of a reactive than proactive kind of situation where they start to see, are we finding cases in our offices or– and I don’t know how many of the banks it this point have sort of testing regimens in place for their employees, but maybe they’ll have to institute those kinds of testing regimens to get the people– to keep people in office and see what those numbers start to look like.
– Yeah, and I think also part of to that whole, it’s going to reopen, the one way street that I kind of referenced in the morning brief today. Part of that one way street I think is the disassembling of maybe some testing regimens or testing regime or testing protocol that might have been in place, was certainly in place for a lot of offices here in the city that were open. Whether it’s a media office, ours was not, but I know of other companies where they were testing twice a weeks. Banks certainly, had a testing regimen in place for the folks who were coming in on a regular basis. And now a lot of that has been dismantled.
And so that also kind of complicates the situation. You can’t find something if you’re not looking for it. And I think that that is really the challenge here for businesses, is do you want to go back to an expensive and time consuming regimen when Sas, you had kind of thought that that was over. This period, we got through it and then it was like, OK, now we’re done.
– There are going to be some inefficiencies that creep into all businesses. And if you’re an investor, you’re a trader, you’re wondering, how is this reflected in guidance for third quarter? How is it reflected in the fourth quarter? These are I think a lot more as employees come back to the office, that’s more cost. That’s more cost to the business that I don’t think the street has properly priced into, at least the stocks or certainly within earnings estimates.
– Well, and it also you guys, it sort of prolongs and complicates this messy in-between period of the transition back. And I think that potentially is a place where the costs are the highest. You still have the costs of some people perhaps being in office, the cleaning costs, obviously the real estate costs, but then you also have the costs of people being at home. You have the productivity to consider of these sort of hybrid teams. And so if you’re getting a delay of full return to work, then all of those things are going to be in play and can potentially be complicated.