I have several friends in the restaurant business. For the past few weeks, I’ve heard the same story every weekend: business is fabulous, and we can’t get enough help.

This week, several of those restaurant people asked me what was going on with these Covid variants. They were concerned about the impact on their business.

That’s new. Nobody asked me that before this weekend. They asked me when more people were going back to work.

Like my restaurant friends, the market seems to have woken up to the problem of the variants. The markets have been acting like the virus has gone away, but it hasn’t.

The emergence of the delta variant, as well as other variants, is forcing traders to consider the risk that new outbreaks could occur that will, once again, weigh on the economic recovery and on earnings.

The concern is that CEOs will once again start providing much more cautious earnings guidance for the rest of the year.

Another Covid outbreak that may affect earnings was not part of the market narrative.

Up until this week, the market narrative has looked like this:

The virus is slowly going away, and any breakouts will be manageable.
We are at “peak everything”: peak earnings and peak economic growth.
Earnings will continue to grow, but the rate of growth is slowing, implying multiples (P/E ratios) will be coming down.
The “inflation is transitory” debate has not been settled, but lower bond yields imply the Fed still has the upper hand.
How much could earnings be affected? No one knows, but investors are taking down exposure in many sectors, particularly travel and leisure, and global cyclicals like industrials and materials.

“I don’t think we’re going to get a pure lockdown, but what we may get is people being more cautious about the way they interact economically,” Mohamed El-Erian from Allianz said on our air. “We know delta’s more contagious,” he said.

The bigger issue is whether the variants pose a risk to those who are vaccinated.

“The message you hear from public health officials that this is a pandemic of the unvaccinated,” Meg Tirrell, CNBC’s senior science and health reporter, said on our air.

“If you’re vaccinated, the chances that you’ll be hospitalized from the delta variant, or die from infection with the delta variant are very, very small,” she said. “They’re not zero, but they’re very, very small, so the vaccines do hold up incredibly well against this incredibly contagious variant.”