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Mega-mergers are not good for business, finance chief says

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Deciding to merge large companies can be disruptive and will likely cause problems for at least one of the firms involved, the chief financial officer of Zurich Insurance told CNBC Wednesday.

Recent reports have suggested that German firm Allianz could be interested in merging with its peer Zurich. Allianz Chief Oliver Baete told the Financial Times last month that companies should be prepared to merge, and his company in particular was ready for potential talks.

However, George Quinn, the financial chief at Zurich Insurance, told CNBC that these types of mergers are not a good idea.

“The challenge for insurance companies is that our business is typically quite local and I think if you do these large global merger transactions you disrupt at least one, maybe two different business and it is hard to get the full value from them,” he said.

Speaking last week, Zurich CEO Mario Greco made a similar point. He said that there is no need for consolidation between European insurances at this moment in time.

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Floods in Europe and China disrupt global shipping, supply chains

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The floods in China and Europe are yet “another body blow” for global supply chains, the CEO of a shipping firm told CNBC on Monday. 

“Rarely does a week go past without something new,” says Tim Huxley, CEO of Mandarin Shipping. 

Shipping has already seen massive disruptions this year. As parts of the world rebounded from the pandemic, increased spending led to a shortfall of containers, creating delays and driving up prices.

Then in April, one of the world’s largest container ships became wedged in the Suez Canal, halting traffic for nearly a week. The waterway is one of the busiest in the world, with about 12% of trade passing through it.

In June, an uptick of Covid cases in southern China caused more delays at ports in the region, again jacking up shipping prices.

‘Broken railway links’ caused by floods in Europe

Heavy rainfall and flooding have devastated parts of western Europe. Some of the most severe flooding happened in Germany and Belgium. Parts of Switzerland, Luxembourg and the Netherlands have been affected as well.

“This is really going to disrupt the supply chain because the railway links have all been broken,” Huxley told CNBC’s “Squawk Box Asia.”

He said that includes railways coming from the Czech Republic and Slovakia into the German ports of Rotterdam and Hamburg, which have been “seriously disrupted.”

“And so that’s going to delay cargo movements in and out,” he said. “It’s gonna really disrupt the industry.”

Huxley pointed to Thyssenkrupp, noting the German steel making giant could not get raw materials due to the flooding.

“That ultimately will have a knock on effect on industries such as the motor industry, domestic appliances and things like that,” he said.

S&P Global Platts reported, citing a letter to customers, Thyssenkrupp declared force majeure on July 16. A force majeure event occurs when unforeseeable circumstances, such as natural catastrophes, prevent one party from fulfilling its contractual duties, absolving them from penalties.

A source at the firm’s mills told S&P Global Platts that parts of the railway in Hagen are “missing,” adding it’s even more difficult than before to get trucks for delivery. Hagen is a city in Western Germany that is among the worst-hit by the floods.

Flooding in landlocked Henan disrupting supply of wheat, coal

Meanwhile, the disruption caused by the flooding in the Chinese province of Henan is made worse by the fact that the province is landlocked, said Huxley.

Read more about China from CNBC Pro

The disruption of railways is, again, going to cause a “big impact,” he said. 

“Obviously, that will have an impact on shipping, that will force shipping rates up,” Huxley said. 

The distribution of wheat and coal has been affected, according to Huxley, who pointed out that Henan is the “bread basket” of China and has produced 38 million tons of wheat this summer. 

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Moderna says it plans to expand trial for kids 5 to 11

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With her husband Stephen by her side Erin Shih hugs her children Avery 6, and Aidan, 11, after they got their second Moderna COVID-19 vaccines at Kaiser Permanente Los Angeles Medical Center on Friday, June 25, 2021.

Sarah Reingewirtz | MediaNews Group | Getty Images

Moderna plans to expand the size of its clinical trial testing its Covid-19 vaccine in kids ages 5 to 11, the company confirmed to CNBC on Monday.

The U.S. drugmaker is expanding the trial, which began in late March, to increase the likelihood of detecting potential rare side effects, the company said, declining to say how many children it ultimately hopes to enroll. The Food and Drug Administration last month added a warning label to the Pfizer and Moderna Covid-19 vaccines to list a rare risk of heart inflammation, which was reported in young people, as a potentially rare side effect.

“It is our intent to expand the trial and we are actively discussing a proposal with the FDA,” the company told CNBC in a written statement. “At this point, we expect to have a package that supports authorization in winter 2021/early 2022, should the FDA choose to use the authorization avenue.”

The New York Times reported earlier Monday that the FDA asked both Moderna and Pfizer to include 3,000 children in the 5- to 11-year-old trials, citing unnamed sources. One source described that as double the original number of study participants envisioned, according to the Times.

In a statement to CNBC, Pfizer said it has not provided any updates to the previously stated timelines or details for its trial.

The update comes as parents in the U.S. patiently wait for their children to be eligible to get vaccinated. In May, the FDA permitted the use of the Pfizer-BioNTech Covid vaccine for kids ages 12 to 15. Moderna’s vaccine is expected to be authorized for children as young as 12 any day now.

Vaccinating children is seen as crucial to ending the pandemic. The nation is unlikely to achieve herd immunity — when enough people in a given community have antibodies against a specific disease — until children can get vaccinated, scientists say.

Federal health officials will need to balance the risk of potentially rare side effects from the shots against the risks of getting Covid.

In June, health officials said there had been more than 1,200 cases of a myocarditis or pericarditis mostly in people age 30 and under who received the shots. Myocarditis is the inflammation of the heart muscle and pericarditis is the inflammation of the tissue surrounding the heart.

There have been just 12.6 heart inflammation cases per million doses for both vaccines combined, officials said at the time. They added the benefits still outweighed the risks.

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Facebook creates exec team to work on metaverse

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David Paul Morris | Bloomberg | Getty Images

Facebook will create a product team to work on the “metaverse,” a concept that involves creating digital worlds that multiple people can inhabit at the same time.

The metaverse team will be part of Facebook’s virtual reality group, Reality Labs, executive Andrew Bosworth said in a Facebook post on Monday.

“Today Portal and Oculus can teleport you into a room with another person, regardless of physical distance, or to new virtual worlds and experiences,” Bosworth wrote. “But to achieve our full vision of the Metaverse, we also need to build the connective tissue between these spaces — so you can remove the limitations of physics and move between them with the same ease as moving from one room in your home to the next.”

Vishal Shah, the executive in charge of product at Instagram, is among those joining Facebook’s new metaverse group.

Technology companies and executives have started to increasingly discuss building a “metaverse” as a successor technology to smartphones and the mobile internet. Generally, technologists consider a metaverse a virtual world where large numbers of people can gather to play, work and socialize.

The metaverse is closely related to virtual reality and augmented reality technologies currently being developed by Apple, Google, Amazon, and Microsoft in addition to Facebook. Roblox, a game targeted at children whose parent company is valued at over $44 billion, is often considered an example of a metaverse.

Facebook is heavily investing in AR and VR technologies because they offer the company the possibility of controlling its own hardware platform if they end up taking off, instead of being controlled by rules Apple and Google place on their app stores.

In an interview with The Verge published earlier last week, Facebook CEO Mark Zuckerberg said the company’s own metaverse would work on virtual reality headsets, as well as mobile devices and game consoles.

“And my hope, if we do this well, I think over the next five years or so, in this next chapter of our company, I think we will effectively transition from people seeing us as primarily being a social media company to being a metaverse company,” Zuckerberg said in the interview.

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