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Stocks are wobbling on the last trading day of the quarter, as the World Health Organization warns “the worst has yet to come” with COVID-19.
But up around 16% and 18% respectively, the Dow
DJIA,
+2.32%
and S&P 500
SPX,
+1.46%
are poised for the best three-month stretch since end-1998, though
that doesn’t quite make up for ugly first-quarter losses. Beating all
comers is the Nasdaq Composite, up 28% as technology stocks have largely
emerged in decent shape from a tough six months.
Our call of the day advises sticking
with the winners for the rest of the year. “We believe that the U.S will
remain the relative regional outperformer and that the style leadership
will firmly return to tech and defensives, post the tactical value
rally seen in [second half] of May and [first half] of June,” says
Mislav Matejka and a team of strategists at JPMorgan Casenove.
Value stocks, often in cyclical industries that perform better
as economies recover, have been bouncing back in recent weeks. Laggards
in the post-financial crisis rally, they have lured in investors looking
for bargains and feeling hopeful about a ‘V-shaped’ recovery.
But Matejka says whatever rotation we’ve seen out of defensive
and techs into cyclicals is over. To keep outperforming, value stocks
need purchasing managers indexes to show signs of economies expanding.
Continued high jobless levels in the second half and fears of a virus
resurgence will stop that in its tracks, he adds.
“Our economists forecast that the worst of the labor market
weakness is likely behind us; however, the projected path is far from a
V-shaped recovery,” and that will make it tough on the consumer, say the
strategists.
And defensive and tech stocks are still attractively priced, says Matejka.
His forecast isn’t far off from an investor survey
conducted by DataTrek Research, which found 52% of respondents expect
technology stocks to beat all other sectors by miles for the rest of
2020.
But Nicholas Colas, DataTrek’s co-founder, says the survey also
finds we are headed into a “convictionless market.” A fifth of
respondents say they expect the S&P 500 will finish the year 10%
higher.
“Every option from ‘really bad’ (down +10% from here) to
‘really good’ (+10%) got basically the same number of votes,” he says.
“And we’re only talking about the next six months.”
At noon, lawmakers will grill Federal Reserve
Chairman Jerome Powell and Treasury Secretary Steven Mnuchin over the
effectiveness of the trillions of dollars in emergency aid doled out
since the pandemic began. Case-Shiller home prices and consumer
confidence data are also ahead.
Uber
UBER,
+0.06%
is reportedly in talks to buy rival San Francisco food delivery group Postmates, in what could be a $2.6 billion deal. Lululemon stock
LULU,
+1.66%
is up after the sports retailer said it will buy in-home fitness company Mirror, for $500 million.
More reopening pauses — indoor dining in New Jersey and maybe New York, and the U.K.’s Leicester. China researchers have identified a new swine flu with pandemic potential.
The EU will on Tuesday lay out rules on who can travel into the 14-country bloc. The U.S, Russia, Brazil and India likely won’t make the cut.
Packaged food group Conagra
CAG,
+3.24%
will report earnings, with results from global shipper FedEx
FDX,
+3.43%
due after the close.
Random reads
California’s Golden State Killer admitted to 13 murders. Iran has sentenced a journalist to death over 2017 protests.
“Buy Apple” started trending after this thread: Need to Know starts early and is updated until the opening bell, but sign up here
to get it delivered once to your email box. Be sure to check the Need
to Know item. The emailed version will be sent out at about 7:30 a.m.
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the year.
with Tonya Riley
A bipartisan commission that unveiled its plan to reduce the risk
of a devastating cyberattack on the scale of the September 11, 2001,
terror attacks should be worried about another threat: Washington.
Those
who worked on the government response to 9/11 predict that today's
policymakers aren't ready to take on ambitious changes – and there's no
sense of urgency with the public fixated on other crises, from the
coronavirus pandemic to the economy.
This could be a huge
challenge for the Cyberspace Solarium Commission, which seeks to shore
up potential government and intelligence blind spots to avert a mass
casualty attack before it happens.
“I don’t want to say they
can’t get the job done, but we had things going for us that they don’t
that made our job much easier,” former congressman Lee Hamilton
(D-Ind.), who co-chaired the 9/11 Commission, told me. “The
whole country’s attention was turned to the events of 9/11 and the
response to it…Cybersecurity is a very important issue, but they won’t
have that public focus.”
Michael Chertoff, the second
director of the Department of Homeland Security, which was created in
the wake of the 9/11 attacks, warned that “there’s always more impetus
when you’ve experienced a disastrous event.” The comments reflect a struggle that has dogged cybersecurity advocates for years.
A major cyberattack targeting parts of the electrical grid or
transportation systems could be devastating for the nation but it’s
tough to focus money and energy on a threat that hasn’t happened yet.
Major
digital attacks that have occurred, meanwhile, such as Russian efforts
to upend the 2016 election and Chinese-linked theft of U.S. security
clearance information have prompted limited changes that don’t address
the full scope of the dangers.
“After 9/11 we learned a lot
about warning signals that weren’t spotted," Sen. Angus King (I-Maine),
co-chair of the Solarium Commission along with Rep. Mike Gallagher
(R-Wis.), told me. “In this case, the signals are gigantic neon signs. This is the longest windup for a punch in the history of the world. We know it’s coming but we just don’t know how or when.”
9/11
Commission Co-Chairmen, former Indiana Rep. Lee Hamilton, left, and
former New Jersey Gov. Tom Kean, testify on Capitol Hill. (AP
Photo/Kevin Wolf)
Solarium commissioners have struggled to implement the boldest changes among their dozens of recommendations.
The
most prominent of those is creating a new White House czar to oversee
cybersecurity policy across the government. Rep. Jim Langevin (D-R.I.), a
Solarium Commission member, introduced a bipartisan House bill that would create the position. But a Senate version is stalled, largely because of White House opposition. Another
top recommendation would streamline the dozens of congressional
committees and subcommittees that deal with cybersecurity to
just one committee each in the House and Senate. That could be nearly
impossible to implement because of congressional turf battles, officials
who worked on the 9/11 response predicted.
Indeed, despite years of efforts, DHS's anti-terrorism work is similarly overseen by numerous congressional panels.
“At
DHS we continually begged Congress to reduce the number of committees
that had jurisdiction over the department, and that [begging] continues
to happen and it continues to not be successful,” the first DHS
secretary and former Republican governor Tom Ridge told me.
Commissioners have had better success with smaller recommendations.
Several of those may be included in a major defense policy bill that is working its way through Congress.
They
include beefing up the role of the Department of Homeland Security’s
top cybersecurity official and requiring cybersecurity risk assessments
from publicly traded companies.
The Solarium Commission was
based on an Eisenhower-era commission focused on how best to counter the
Soviet Union. In addition to lawmakers, its members include top
industry executives and former government officials who’ve been stumping
for the report’s recommendations since its March release.
Michael Chertoff, the former U.S. secretary of Homeland Security. (Richard Drew/AP)
The commission's efforts are also challenged because cybersecurity is, in many ways, a far more complex problem than terrorism.
Within
government, cybersecurity responsibilities are spread across dozens of
agencies, including the defense, homeland security, commerce and state
departments. And any one of dozens of U.S. industries could be the
target for a devastating cyberattack, including finance, energy,
telecommunications and health care.
“There’s some analogy to 9/11 but the scope of what you’re dealing with with cyberthreats is much more comprehensive,”
Chertoff said. “There are many more kinds of harm that can occur in
cyberspace and it requires a much more integrated approach.”
Commissioners may be helped, though, by the sense of urgency created by the coronavirus pandemic.
The
pandemic began upending American life and prompting quarantine orders
just weeks after the Solarium report came out. But as government and the
public struggle to manage the virus it may drive home the importance of
tackling big challenges before it’s too late.
Commissioners also released an additional set of recommendations
last month focused on new digital vulnerabilities created by the
pandemic, including a large share of the nation working from home.
“One serious lesson out of the pandemic is the importance of having a plan in advance,” Chertoff said.
Former DHS secretary and Pennsylvania governor Tom Ridge. (Matt Rourke/AP)
Hacking has also become so pervasive that it could prompt government to take the issue more seriously.
“All
the actions I’ve taken over the years have been to prevent a cyber 9/11
from happening,” Langevin, a co-founder of the Congressional
Cybersecurity Caucus, told me. “I felt like a lone voice in the
wilderness initially, but people’s awareness has been raised. Ask anyone
who’s had their credit card numbers or medical records stolen, and they
understand this is an issue.”
The pervasiveness of cybersecurity
also separates it from the pre-9/11 era when terrorism wasn't top of
mind for most Americans.
“One observation from the 9/11
Commission that’s embedded in my head is when they talked about a
failure of imagination,” Ridge said. “This [Solarium Commission] report
is saying that based on everything we know we can’t plead surprise
anymore. And before we have a cataclysmic cyber event we’d better get
our act together.”
The keys
A California university working on a coronavirus cure paid more than $1 million in ransom to hackers.
An employee uses a pipette. (SeongJoon Cho/Bloomberg News)
University
of California at San Francisco officials don't believe any patient
medical records or coronavirus research were exposed to hackers, but
paid out the $1.14 million ransom because hackers encrypted some files
that were important to academic work, the university said in a statement. This is the third attack on a university tied to a ransomware gang called Netwalker since the coronavirus pandemic began, Joe Tidy at BBC News reports. The FBI and international agencies have discouraged ransomware victims from paying hackers.
India's government banned TikTok and dozens of other Chinese apps for allegedly stealing user data.
The icon for TikTok. (AP)
India's tech minister said the 59 banned apps were using the data to undermine India's national security, Rajesh Roy and Shan Li at the Wall Street Journal report. The ban comes amid rising military tensions between the two countries over a disputed border. Chinese companies dominate India’s growing app market and the bans could cost TikTok and other companies millions of users. India's actions could also bolster U.S. criticism ofTikTok.
U.S. officials have accused the app of stealing users’ data and
transmitting it in an unauthorized manner. Members of Congress have
called for investigations into the app and many military branches have
banned it. India’s ban also included the popular Chinese messaging app WeChat.
Wisconsin Republicans voted by mail even as they try to restrict the practice.
Voters
observe social distancing guidelines as they wait in line to cast
ballots in the presidential primary election in Milwaukee. (Morry
Gash/AP)
More than 80 percent of Republican members of the
state legislature voted by mail during the state’s April primary, which
was held amid the coronavirus pandemic, the Associated Press reports. That’s up from less than 35 percent in previous elections.
Republican lawmakers blocked efforts
by Democratic Gov. Tony Evers to delay that primary resulting in
thousands of requested absentee ballots not arriving on time and hours
long lines in Milwaukee and Green Bay. “If
absentee ballots are good enough for Republican legislators, they
should be accessible to all Wisconsin voters,” Nicole Safar, executive
director of A Better Wisconsin Together, a liberal advocacy group that
compiled the voting records, told the AP's Scott Bauer. “They risked people’s lives in the April 2020 election and they’re at [it] again.” Many
high-profile Republicans pushing against voting by mail in Washington
also voted that way themselves, including President Trump and Vice President Mike Pence. Meanwhile,
in Georgia, lawmakers voted down a bill that would have barred election
officials from mailing voters absentee ballot applications, the Atlanta Journal-Constitution reports.
Securing the ballot
Democrats say Facebook's guards against election disinformation don't go far enough to protect voting by mail.
Stacey Abrams. (Robert F. Bukaty/AP)
The
social media platform's recent announcement that it will increase
resources to remove false claims about polling conditions in the 72
hours leading up to Election Day, for example, does not do enough to
protect mail voting that can happen weeks earlier, former Georgia
politician Stacey Abrams said.
“In the era of covid-19
voting starts almost 40 to 60 days ahead of Election Day. Seventy-two
hours cannot solve the problem when you have vote by mail sweeping the
country," said Abrams, who founded the voting rights group Fair
Fight and is being discussed as a potential Democratic vice
presidential candidate. Abrams was speaking at an event on disinformation hosted by George Washington University.
Abrams
also criticized Facebook for allowing President Trump to post false and
misleading information about voting by mail. Twitter, by contrast, has added fact checks to some of the president's dubious claims.
Chat room
One
of Trump's recent misstatements drew a phony distinction between
absentee voting and voting by mail. They're actually the same thing, as
several people pointed out. Edward Perez, global director of technology
development at the OSET Institute:
Cars
are fine. A person has to go through a process to get and use a
driver’s license. Automobiles, on the other hand, will lead to the most
dangerous highways in US history! pic.twitter.com/mirFz0Vn3X
Absentee
ballots and mail-in ballots are the same thing, but it won't surprise
you to learn that Paterson, NJ was invoked on Fox News Sunday
afternoon... https://t.co/dCpui3rBpR
Major
universities and tech companies are backing legislation that would
establish a national artificial intelligence research task force.
A man wearing a protective mask walks past an office building with the IBM logo in Sydney. (Loren Elliott/Reuters)
The
National AI Research Resource Task Force Act aims to spur artificial
intelligence research in the United States and to make it easier for
smaller companies and research institutions to take part in it.
University supporters of the measure include Stanford, Princeton and
John Hopkins. Companies include Google, IBM, Microsoft and Amazon. The
bill is spearheaded by Rep. Anna G. Eshoo (D-Calif.) and Sen. Rob
Portman (R-Ohio).
More news from the Hill:
National security watch
The United States will ban high-tech defense exports to Hong Kong.
The
flags of China, left, and of the Hong Kong Special Administrative
Region (HKSAR) are flown in Hong Kong. (Paul Yeung/Bloomberg News)
The
move comes in response to China's new national security law that gives
Chinese communist leadership a tighter grip over the semi-autonomous
province, Matthew Lee at the Associated Press reports.
The move comes as U.S. officials are struggling to limit China's access to U.S. technology over national security fears.
“The
United States is forced to take this action to protect U.S. national
security,” Secretary of State Mike Pompeo said in a statement. “We can
no longer distinguish between the export of controlled items to Hong
Kong or to mainland China.”
More national security news:
Amid a global anti-Huawei effort that has seen mixed results, the U.S.
sets another Chinese tech company in its crosshairs: Nuctech, a
state-controlled firm that is quietly dominating Europe’s cargo and
airport screening market. The Wall Street Journal
Cybersecurity news from abroad:
Officials promised to recruit at least 500 cyberspies and build on the
country’s offensive capabilities to take the online battle overseas. New York Times
Russia’s surrender to Telegram’s Pavel Durov shows the increasing challenges for states seeking to control social media. Isabelle Khurshudyan
Daybook
The House Intelligence Committee will hold
a hearing on U.S.-China relations and its impact on national security
and intelligence in a post-coronavirus world on Wednesday at 12 p.m.
The Senate Judiciary Committee will consider the EARN IT Act, which critics say could undermine encryption, on Thursday at 10 a.m.
Secure log off
Oregon's
secretary of state talks about voting by mail on 60 Minutes. The state
is one of five that votes almost entirely by mail.
“Try it, you might like it.”
Oregon’s
Republican Secretary of State, Beverly Clarno, responds to President
Trump’s claim that vote by mail is dangerous and subject to fraud.
Oregon pioneered the practice in 1998. https://t.co/jZuELMAKYJpic.twitter.com/Y8TjsKyiGK
Take a look at some of the biggest movers in the premarket: Conagra Brands
(CAG) – The food producer reported quarterly profit of 75 cents per
share, 9 cents a share above estimates. Revenue also exceeded consensus
and Conagra gave a current-quarter earnings forecast range that largely
exceeds estimates as the pandemic helps spur a surge in demand. Micron Technology
(MU) – Micron beat estimates by 5 cents a share, with quarterly
earnings of 82 cents per share. The chip maker’s revenue also beat
forecasts and Micron gave upbeat revenue guidance as stay-at-home
workers and students boosted demand for its computer and data center
chips. Simon Property Group
(SPG) – Simon said it would reopen its five remaining closed retail
properties within the next week. The mall operator also said many of its
tenants have reported higher than expected sales since reopening their
doors. Apple
(AAPL) – 5G iPhone shipments in 2020 may be much weaker than expected,
according to sources who spoke to DigiTimes. Those sources put current
estimates at 15 million to 20 million units this year compared to a
prior forecast of 30 million to 40 million. Xilinx
(XLNX) – Xilinx raised its fiscal first-quarter revenue guidance, with
the specialty chipmaker saying its business had been helped by the
loosening of restrictions on sales to Chinese companies. Royal Dutch Shell (RDS.A, RDS.B) – Royal Dutch Shell will take a $22 billion writedown on the value of its assets after the energy producer slashed its oil and gas price outlook. Wells Fargo (WFC) – Wells Fargo said it would cut its dividend to preserve capital,
with the size of the cut set to be announced along with its
second-quarter earnings report on July 14. The Federal Reserve had asked
banks not to increase dividends amid uncertainty surrounding the
pandemic, following bank stress tests. JPMorgan Chase (JPM), Citigroup (C), Bank of America (BAC), Goldman Sachs (GS), and Morgan Stanley (MS) plan to hold their dividends steady. Boeing
(BA) – Norwegian Air canceled orders for 97 Boeing 737 Max and 787
jets, and plans to seek compensation for the grounding of the 737 and
engine troubles related to the 787. Lululemon
(LULU) – Lululemon is buying home fitness company mirror for $500
million, in a move designed to allow the athletic apparel maker to take
advantage of a pandemic-related surge in-home fitness activities. Uber Technologies
(UBER) – Uber is in discussions to buy food delivery service Postmates
for $2.6 billion, according to The Wall Street Journal. Uber had engaged
in ultimately unsuccessful talks last month to buy Grubhub (GRUB) and combine it with its Uber Eats food delivery unit. Herman Miller
(MLHR) – The office furniture maker reported a quarterly profit of 11
cents per share, compared to consensus forecasts of a loss of 10 cents
per share. Revenue was short of Wall Street forecasts, however, as sales
fell 29% from a year earlier amid the Covid-19 pandemic. Crocs
(CROX) – The casual shoemaker was upgraded to “buy” from “hold” at Loop
Capital Markets, which cites brand momentum. Loop also increased its
price target on the stock to $40 from its prior $22.
Trump
and the White House repeatedly denied Monday that the president had
been briefed on the efforts against coalition forces in Afghanistan,
which are believed to have led to the deaths of several U.S. service
members. White House press secretary Kayleigh McEnany said Trump had not been told of the intelligence
because it had not been verified and declined to say if the president
had been briefed since news of the bounties became public.
But on
Capitol Hill, Republican senators demanded more information from the
administration and called for Russia to be punished if reports from the
New York Times, The Washington Post
and other media outlets were deemed accurate. The Republicans took a
notably tougher public tone than Trump did, although they mostly avoided
the question of whether the president should have been aware of the
intelligence.
While the Trump administration has taken some
aggressive measures against Russia, the president’s conciliatory tone
toward Russian President Vladmir Putin continues to be a thorny
political problem for Republicans who have advocated a more hawkish
approach toward the authoritarian leader.
The latest reports
that the Russian bounties may have resulted in the deaths of several
U.S. service members only increase the potential problems for
Republicans looking to take a tougher stance toward Moscow without
appearing to be at odds with a president who has considerable sway with
the party’s voters.
Sen. Cory Gardner (R-Colo.) called the reports
“deeply troubling” and said he wanted the Senate to pass his
legislation that would require the State Department to consider naming
Russia a state sponsor of terrorism. Sen. Thom Tillis (R-N.C.), who like
Gardner is in a tough reelection race this fall, similarly called for
the U.S. government to treat Russia as a state sponsor of terrorism.
“From
propping up the murderous Assad regime (in Syria) and our enemies in
Afghanistan, Putin’s Russia has made clear they are no friend to the
United States,” Gardner wrote Monday on Twitter. “They’ve targeted our institutions and our troops — the US must respond.”
Sen.
Todd C. Young (R-Ind.), a former intelligence officer in the Marines,
said the Russia-financed bounty effort, if confirmed, “deserves a strong
and immediate response from our government.”
Young, who also
heads the Senate Republicans’ campaign arm, called for hearings and for
Trump to rescind any invitation for Russia to rejoin the Group of Seven,
which is composed of the world’s major industrialized nations, as well
as direct sanctions on Putin.
Sen. Ben Sasse (R-Neb.) also called for an aggressive response if the information from U.S. intelligence agencies holds up.
“If
true, what we’re talking about here is putting the target crosshairs on
the backs of American servicemen and women in uniform, and I have heard
from a lot of Nebraskan military families this weekend, and they’re
livid. They have a right to be livid,” he said.
He said Congress needs to find out what Trump was or was not told.
“Who
knew what, when, and did the commander in chief know? And if not, how
the hell not? What is going on in that process?” he asked, adding: “What
are we going to do to impose proportional cost in response? In a
situation like this, that would mean Taliban and GRU body bags.” GRU is
the abbreviation for the Russian military spy unit.
The reaction from congressional Republicans on Monday was markedly different than the comments from Trump, who dismissed
the reports as “possibly another fabricated Russia Hoax” — his
reference to the probe earlier in his presidency led by special counsel
Robert S. Mueller III that examined potential collusion between Trump
associates and Russia. The president has continued to dismiss the
conclusion of U.S. intelligence officials that Moscow interfered in the
2016 presidential election in his favor.
Left largely unaddressed
in many GOP senators’ public comments, however, was Trump’s role in the
matter and what he should do now, with few questions from Senate
Republicans on Monday about the White House’s contention that the
president was left in the dark about an intelligence issue that had
prompted a restricted high-level White House meeting in late March.
Russia and the Taliban have denied the existence of the program.
“Well,
I think the president can’t single-handedly remember everything, I’m
sure, that he’s briefed on, but the intelligence officials are familiar
with it and briefed him,” said Sen. John Cornyn (R-Tex.). “But again
somebody’s leaking classified information and then trying to further a
narrative that isn’t necessarily supported by the facts.”
McEnany
repeatedly said at a White House briefing Monday that there was not a
consensus among intelligence officials about the accuracy of the
information on the bounties.
“When our adversaries have directly
targeted U.S. or coalition partners, the president has not hesitated to
act,” McEnany said. “But this was not briefed up to the president
because it was not, in fact, verified.”
Congressional Democrats
raised alarm about the reports, published over the weekend, and both
House Speaker Nancy Pelosi (D-Calif.) and Senate Minority Leader Charles
E. Schumer (D-N.Y.) called for briefings of their full chambers by
intelligence officials.
A group of House Democrats, led by
Majority Leader Steny H. Hoyer, will be briefed on the issue at the
White House at 8 a.m. Tuesday, according to an aide to the Maryland
Democrat. Hoyer has asked that the following Democrats be included:
Foreign Affairs Committee Chairman Eliot L. Engel (N.Y.), Armed Services
Committee Chairman Adam Smith (Wash.), Intelligence Committee Chairman
Adam B. Schiff (Calif.), Gregory W. Meeks (N.Y.), Brad Sherman (Calif.),
William R. Keating (Mass.), Ruben Gallego (Ariz.), Abigail Spanberger
(Va.) and Elissa Slotkin (Mich.).
But the briefing will not be an
adequate substitute for an all-member briefing, said the aide, who spoke
on the condition of anonymity to discuss a national security matter.
Schumer
suggested that lawmakers should use the national defense authorization
bill, the annual legislation detailing policy priorities for the
Pentagon that senators are working on this week, to punish the Russian
government.
“President Trump, you lose either way,” Schumer said
Monday during a speech on the Senate floor. “If you weren’t briefed on
this important report, how can you run an administration where something
this important is not brought to your level?
“If you were told about the report and did nothing, that’s even worse.”
Some
of the president’s closest allies in the House GOP ranks took a
different stance after a briefing at the White House, with at least one
emerging from the closed-door session and accusing journalists of
damaging an ongoing intelligence investigation.
Rep. Jim Banks
(R-Ind.) lashed out at the New York Times, which first published the
report, by accusing the newspaper of compromising a national security
probe.
“The blood is on their hands,” Banks tweeted.
“Having served in Afghanistan during the time the alleged bounties were
placed, no one is angrier about this than me. Now it’s impossible to
finish the investigation.”
But two Republicans who received the
briefing — Reps. Michael McCaul (Tex.) and Adam Kinzinger (Ill.) —
called for the administration to take “swift and serious action” against
Putin should the intelligence bear out to be true.
Senior Senate
Republican leaders and heads of key committees did not disclose how
much, if at all, they were aware of the intelligence.
Senate
Majority Leader Mitch McConnell (R-Ky.) declined to respond when asked
whether he had been briefed on the matter. Sen. Marco Rubio (R-Fla.),
the acting chairman of the Senate Intelligence Committee, declined to
comment on specifics but said that the “targeting of our troops by
foreign adversaries via proxies is a well-established threat.”
Senate
Armed Services Committee Chairman James M. Inhofe (R-Okla.) signaled
that he was unaware of the intelligence, saying Monday that he had
“asked the administration to share what it knows” and that he expected
to have more information in the coming days.
“We’ve known for a
long time that Putin is a thug and a murderer, and if the allegations
reported in the New York Times are true, I will work with President
Trump on a strong response,” Inhofe said. “My number one priority is the
safety of our troops.”
U.S. stock futures were mostly flat early Tuesday ahead of the final trading day of a volatile month for markets.
Dow
Jones Industrial Average futures traded 68 points lower, or 0.3% and
implied a loss of 34 points at the open. S&P 500 and Nasdaq-100
futures traded just below the flatline.
Shares of Wells Fargo ticked 1.2% lower in the premarket after the bank said Monday it would likely slash its dividend in the third quarter to comply with the Federal Reserve stress test. Bank of America, Citi, JPMorgan and Goldman Sachs said their dividends would stay the same.
Shares of chip stock Micron
jumped 5.3% following the company’s better-than-expected earnings
report. Micron gave strong forward revenue guidance. Shares of Lululemon gained 4% on news it will acquire at-home fitness company Mirror for $500 million.
Federal
Reserve chair Jerome Powell and Treasury Secretary Steven Mnuchin will
testify before the House Financial Services Committee at 12:30 p.m. on
Tuesday. The joint hearing will address the Fed and Treasury’s response
to the coronavirus pandemic. In remarks he will deliver Tuesday, Powell said uncertainty reigns over the outlook for the economy in the wake of the coronavirus pandemic.
“Output
and employment remain far below their pre-pandemic levels. The path
forward for the economy is extraordinarily uncertain and will depend in
large part on our success in containing the virus,” Powell said. “A full
recovery is unlikely until people are confident that it is safe to
reengage in a broad range of activities. “The path forward will also
depend on the policy actions taken at all levels of government to
provide relief and to support the recovery for as long as needed,”
Powell added.
The Conference Board’s consumer confidence indexwill be released at 10 a.m. on Tuesday. Economists polled by Dow Jones are expecting a read of 91 in June, up from May’s reading of 86.6.
On Monday, the Dow climbed 580 points, helped by a 14.4% gain in Boeing’s stock, as certification flights for the Boeing 737 Max began
Monday. The S&P 500 also registered a gain, climbing 1.5%. Monday’s
gains brought the 500-stock index into positive territory for the
volatile month of June.
The Nasdaq Composite rose 1.2%, helped by gains in Netflix, Microsoft, Facebook and Apple.
“It
wasn’t a day where the sole driving force was simply rising
expectations of continued economic improvement because the best five
sector performances [Monday] comprised two cyclical sectors —
industrials and materials— a growth sector— communication services —
and two defensive sectors — utilities and staples,” Jim Paulsen, chief
investment strategist at the Leuthold Group, told CNBC. Monday “was
characterized by broad participation in a strong rally.”
Monday’s
sharp gains came amid a backdrop of increasing coronavirus cases in the
U.S. and states attempt to reopen from the shutdown. U.S. governors are
walking back or delaying reopening plans as Covid-19 cases climb around
the country. New Jersey Gov. Phil Murphy announced the state will delay a resumption of indoor dining that was planned for Thursday.
Despite
the recent uptick in cases, stocks are headed for a month of gains in
June. The Dow is up 0.8% and the S&P 500 is up 0.3% in June. The
technology-heavy Nasdaq Composite has returned more than 4% this month.
A
detailed view of a Shell gas station sign showing the low price of
$1.69 per gallon, the result of the coronavirus (COVID-19) outbreak on
March 31, 2020 in Jacksonville, Fl.
David Rosenblum | Icon Sportswire | Getty Images
Oil giant Royal Dutch Shell said
on Tuesday it will write down the value of its assets by up to $22
billion in the second quarter, after revising down its long-term outlook
for oil and gas prices.
It comes after the energy company announced in mid-April an ambition to reduce greenhouse gas emissions to net zero by 2050.
Shell
said in a statement to investors that it had reviewed a significant
portion of its business given the impact of the coronavirus pandemic and
the “ongoing challenging commodity price environment.”
It said it would take aggregate post-tax impairment charges in the range of $15 billion to $22 billion in the second quarter.
This
included a write-down of between $8 billion-$9 billion in its
integrated gas unit, a $4 billion-$6 billion write-down in
upstream assets, and a $3 billion-$7 billion write-down in oil products
across its refining portfolio.
Shares of the Anglo-Dutch company were over 2.4% lower during early morning deals.
Earlier this month, U.K.-based energy giant BP
also said it would incur non-cash impairment charges and write-offs in
the second quarter, estimated to be in an aggregate range of $13 billion
to $17.5 billion after tax.
Oil and gas price forecasts
Shell said it expected international benchmark Brent crude prices to average $35 a barrel in 2020, down from a previous forecast of $60.
The
firm also lowered its Brent price forecast to $40 in 2021 and $50 in
2022, having previously said it expected prices to average $60 for each
respective year.
Brent crude futures traded at $41.39 on Tuesday morning, down around 0.7%, while U.S. West Texas Intermediate futures stood at $39.35, more than 0.8% lower.
The
energy giant also said it believes Henry Hub gas prices will average
$1.75 per million British thermal units in 2020, before rising to $2.5
over 2021 and 2022, and $2.75 in 2023.
Henry Hub is a natural gas
pipeline located in Louisiana and serves as the official delivery
location for futures contracts on the New York Mercantile Exchange.
Image copyright
Getty Images
YouTube has banned some prominent white supremacist channels as internet companies face a backlash over racist content.
The Google-owned video platform said the channels had violated its policies that prohibit hate speech.
In recent days social media companies have been been boycotted by a number of major advertisers.
On Monday Ford joined a growing list of global brands that are pausing social media advertising during July.
In
a statement YouTube said: “We have strict policies prohibiting hate
speech on YouTube, and terminate any channel that repeatedly or
egregiously violates those policies.”
"After updating our
guidelines to better address supremacist content, we saw a 5x spike in
video removals and have terminated over 25,000 channels for violating
our hate speech policies,” it added.
The channels that have been banned include some of the internet's most high-profile far-right commentators:
Stefan Molyneux is a Canadian white nationalist activist known for his promotion of conspiracy theories.
Richard Spencer is US white supremacist credited with coining the term "alt-right".
David Duke is the former leader of the Ku Klux Klan.
On Twitter Mr Molyneux described his channel's suspension as an "egregious error".
Also on Twitter, Mr Spencer said that he would appeal the decision and called the suspension a "systemic coordinated effort."
Separately,
Amazon's live video streaming site, Twitch has temporarily banned US
President Donald Trump, citing “hateful conduct” in his posts.
The company pointed to comments made at two rallies for the suspension.
At
a 2016 campaign rally, which was recently rebroadcast on Twitch, Mr
Trump said that Mexico was sending over its bad actors, such as rapists
or drug dealers.
It also highlighted the president's rally in
Tulsa earlier this month, at which he told a fictional story about a
home invasion by a "tough hombre".
Momentum growing
Meanwhile,
social media site Reddit has shut down r/The_Donald, a forum which has
long been a popular online home for Donald Trump supporters, saying that
it violated the platform's hate speech rules.
Also on Monday,
carmaker Ford became one of the latest global brands to announce that it
would halt social media advertising spending for the month of July.
It
joins other household names, including Starbucks, Coca-Cola, Diageo and
Unilever, that have said that they will suspend advertising from some
social media platforms in response to hate speech.
The
announcements follow the launch earlier this month of the Stop Hate For
Profit campaign, which described itself as a "response to Facebook's
long history of allowing racist, violent and verifiably false content to
run rampant on its platform".
Responding to the campaign Facebook
said: "We're taking steps to review our policies, ensure diversity and
transparency when making decisions on how we apply our policies, and
advance racial justice and voter engagement on our platform."
Image copyright
Getty Images
Image caption
Tomas Philipson (top right) says low-wage earners have been hit the hardest by the coronavirus pandemic
The economic impact of the coronavirus has taken a
heavier toll on low-wage earners according to Tomas J Philipson, the
chair of the White House Council of Economic Advisers.
In an exclusive interview with the BBC before his reported departure,
he said: "There's a sort of unique impact of this shock in that its
very regressive, hitting the low wage part of the economy. Low-wage
workers take a bigger hit than higher wage".
The virus has
derailed any progress the US was making in raising the living standards
of those on low pay, Prof Philipson said in an interview for Coronavirus: The Economic Shock,
in which some of the world's leading economists and business leaders
look at how the gravest economic downturn in nearly a hundred years may
change the way we live and work.
"We had enormous success in
growing lower wages before the pandemic struck, so this has taken a very
regressive toll on the economy," he argues.
This has political
implications for the upcoming November election as President Trump
enjoys far higher support among non-college educated voters - often used
as a proxy for low vs high wage earners - than among those who have
college degrees. Prof Philipson also plays down the chances of a
rapid economic recovery. "I'm not saying we are going to have a v-shaped
recovery, in fact the data shows a sort of gradual response."
However,
he also defends the United States' response to the pandemic and places
some of the responsibility Covid-19 in the US at the doors of state
governors.
"We were the first country to introduce travel bans
from China and were criticised for that. Many state governments run by
Democratic governors did not act before the federal government, even
though they were free to do so."
He disagrees that a rise in US
economic nationalism has been harmful to the world economy. "I think
China was justifiably demonised in the sense that we treated them a lot
better selling stuff here than they treated us selling stuff there. I
think the president has done a lot to balance that". Niall Ferguson, professor of history at Stanford
University says the virus has seen economic tensions between the world's
two biggest economies become more than a trade dispute. "It seems to me
pretty clear that we're now in 'Cold War Two'.
"It's going to be
different from 'Cold War One', not least because the US and the Soviet
Union were never as economically interdependent as the US and China have
become over the last 20 years.
"It's hard to think of a better
illustration of the downsides of globalisation than the extreme
vulnerability it exposed to a virus that originated in in China."This
has, he believes, huge economic implications for the entire
interconnectedness of the world economy and therefore the size and the
health of the global economy. Globalisation has been credited with lifting
hundreds of millions of people out of poverty but has also been blamed
for deepening inequality within countries. The virus has operated like
an X-ray on the global economic body and its revealed weaknesses and
imbalances along economic, gender and ethnic fault lines.
Ursula
Burns was the first African American woman to sit on the board of a
Fortune 500 company and she now sits on the boards of Nestle, Uber and
ExxonMobil. She says business is emerging as an unlikely and welcome
ally in the fight against inequality that she says the pandemic has laid
bare.
"Amazingly enough, business is starting to be at the centre
of that conversation. At the centre because governments around the
world are not articulate enough or sensitive enough or informed enough
to contribute positively to this conversation. So out of nowhere,
businesses start to change the discourse in the world."
Will
business step up? Or will the fight for survival mean savage
cost-cutting and mass redundancies compounding the problems of
inequality?
The International Labour Organization estimates that the equivalent of 305 million full-time jobs could be lost worldwide
in the second three months of this year. The ILO says 1.6 billion
workers in the informal economy -nearly half of the global workforce -
are in immediate danger of losing their livelihoods. In developing countries, where government safety
nets are weak and where economies are particularly vulnerable, things
may be particularly tough.
It is a point made by Tony Elumelu,
who is one of Africa's most influential businessmen. He is a billionaire
banker and founder of the Tony Elumelu Foundation, which invests in
start-ups and SMEs (small and medium-sized enterprises) across the
continent.
"We have endemic poverty in Africa. Over 80% of our
population live from hand to mouth. They go out, they die of Covid. They
sit at home, they die of hunger. Then what is better for them to do? It
is a bad situation but it gives us all the opportunity to re-set."
Big
business - global corporations - seem ready to reset too. The chairman
of Tata Group, Natarajan Chandrasekaran, and Nissan's chief operating
officer, Ashwani Gupta, both believe global business is in the midst of a
long-term rethink on how employers organise their workforce and how
supply chains and resources will operate. They suggest sustainability
may become more of a focus. In a remarkable broadcasting moment, Mr
Chandrasekaran - a titan of global business - looked out across Mumbai
and reflected on the change. "You can hear the birds. We can breathe
fresh air… on a clear day we can see the stars."
So will the world
grasp this opportunity to change how the world economy works and
address pressing challenges that include global inequality and climate
change?
Or when the health crises passes will things return to
way they were? Will we miss an opportunity to change how the global
economy functions for the welfare of us all? Coronavirus: the Economic Shock
is presented by Simon Jack and produced by Kirsty MacKenzie. It
includes the thoughts of Nissan's COO Ashwani Gupta, Nobel prize-winning
economists Joseph Stiglitz and Paul Krugman, Facebook founder Mark
Zuckerberg, Cisco CEO Chuck Robbins, Tata's chairman Tata Natarajan
Chandrasekaran; former UK prime minister Tony Blair, and Krishnamurthy
Subramanian, the chief economic advisor to Indian PM Narendra Modi. It
is broadcast on BBC Sounds and BBC World Service.
Image copyright
Getty Images
Image caption
There was a sharp fall in consumer spending at the end of March, the ONS said
The UK economy shrank more than first thought
between January and March, contracting 2.2% in the joint largest fall
since 1979, official figures show.
The Office for National
Statistics (ONS) revised down its previous estimate of a 2% contraction,
with all the main economic sectors dropping.
There was a significant economic impact in March, as the coronavirus pandemic began to have an effect.
The data comes as the prime minister is set for a major speech on the economy.
Jonathan
Athow, deputy national statistician at the ONS, said: "Our more
detailed picture of the economy in the first quarter showed GDP shrank a
little more than first estimated.
"Information from government showed health activities declined more than we previously showed.
"All main sectors of the economy shrank significantly in March as the effects of the pandemic hit."
The first-quarter contraction is now the joint biggest drop since the July-to-September period in 1979.
Mr Athow said: "The sharp fall in consumer spending at the end of March led to a notable increase in households' savings."
When
compared with the same three-month period a year ago, the economy
shrank by 1.7%, worse than the previous estimate of a 1.6% contraction.
But with the coronavirus lockdown only coming into force on 23 March, the second quarter will show the full hit on the economy.
Recent ONS monthly figures showed the economy plummeted by 20.4% in April - the largest drop in a single month since records began.
That contraction was three times greater than the decline seen during the whole of the 2008 to 2009 economic downturn.
Samuel
Tombs, chief UK economist at Pantheon Macroeconomics, said the latest
figures could be summed up in one line: "The biggest contraction for 40
years, even though Q1 contained just nine lockdown days."
The data "was just the prelude" to the worse to come, he added.
Later on Tuesday, Boris Johnson is set to make a keynote speech on the economy with a promise to "build back better".
Speaking
in the West Midlands, the prime minister will say he wants to use the
coronavirus crisis "to tackle this country's great unresolved
challenges".
As part of what he is expected to call a "new deal",
Mr Johnson will set out plans to accelerate £5bn of spending on
infrastructure projects.
Image copyright
AFP
Image caption
Protests rocked Hong Kong last year, sparked by a bill intended to enable extraditions to the mainland
China has passed a controversial security law giving
it new powers over Hong Kong, deepening fears for the city's freedoms,
the BBC has learned.
It is set to criminalise secession,
subversion and collusion with foreign forces, but will also effectively
curtail protests and freedom of speech.
The move follows increasing unrest and a widening pro-democracy movement.
Veteran activists have already said they will march on Wednesday, despite the risk of arrest under the new law.
But the Demosisto pro-democracy organisation, spearheaded by one of Hong Kong's most prominent activists, Joshua Wong, announced on Facebook on Tuesday it was ceasing all operations. Mr Wong had earlier said he was leaving the group.
China
has not yet officially confirmed the law has been passed and no draft
was made public beforehand, meaning residents are still unclear of the
measures they will have to abide by. The law could be implemented as
early as Wednesday.
Hong Kong was handed back to China from
British control in 1997, but under a special agreement that guaranteed
certain rights for 50 years.
So the law has drawn harsh
international condemnation and also sparked demonstrations in Hong Kong
since it was announced by Beijing in May.
China says the law is needed to tackle unrest and instability and rejects criticism as interference in its affairs.
What does the new law do?
The BBC has been
told that the law went through unanimously in a session of the Standing
Committee of the National People's Congress in Beijing.
It is
expected to be added to Hong Kong statute books later in the day and
comes a day before the 23rd anniversary of the handover from Britain to
China - a date usually marked by pro-democracy protests.
It would
make criminal any act of secession, subversion of the central
government, terrorism and collusion with foreign or external forces.
A
new office in Hong Kong would deal with national security cases, but
would also have other powers such as overseeing education about national
security in Hong Kong schools.
In addition, the city will have to
establish its own national security commission to enforce the laws,
with a Beijing-appointed adviser.
Hong Kong's chief executive will
have the power to appoint judges to hear national security cases, a
move which has raised fears about judicial independence.
Importantly,
Beijing will have power over how the law should be interpreted. If the
law conflicts with any Hong Kong law, the Beijing law takes priority.
How will it change Hong Kong?
For many, the law undermines the freedoms that set Hong Kong apart from the rest of China and helped define its character.
People
in Hong Kong prize civil liberties such as free speech, the right to
protest and an entirely independent and robust judiciary, as permitted
in its mini-constitution, the Basic Law, agreed when the territory's
sovereignty was returned to China in 1997. In recent years, Hong Kong has seen waves of
protests demanding more rights. Last year, rallies over a now-scrapped
law permitting extraditions to the mainland turned violent and fuelled a
broad pro-democracy movement.
Chief Executive Carrie Lam says the new law is a "responsible" move to protect the law-abiding majority.
She has said that Hong Kong's freedoms, vibrancy and core values will be preserved.
'A tool to suppress political agitation'
Analysis by Stephen McDonell, BBC China correspondent
Hong Kong's sweeping new security law is a frighteningly open-ended tool to suppress political agitation.
Like
similar laws on the Chinese mainland it appears that it can be
manipulated to meet the needs of the Communist Party as required to
crush almost any action deemed threatening.
Unlike elsewhere in
China, Hong Kong has an independent judiciary. For this reason, the
Party's leadership was not going to leave interpretation of this law in
the hands of just any old judges.
No. Those who'll be allowed to
preside in these matters will be hand-picked by Carrie Lam, the city's
leader who was effectively installed by Beijing.
So, prior to the
new security bill, which actions by activists - no matter how subversive
- could not be dealt with under existing laws? What were "extremists"
getting away with to warrant this new legislation?
Bomb making?
No. Smashing up buildings? No. Meeting with international NGOs to talk
about the city's deteriorating freedoms? Ahhhh. Perhaps. Publicly
advocating Hong Kong independence? Almost certainly.
The more that
Beijing, under Xi Jinping's leadership, has sought to control Hong
Kong, the more it has driven residents into the pro-democracy camp.
But
he is playing a long game. Sure, handover promises to the UK were made
but he was not going to let some Western attachment to liberty trump
loyalty to the motherland. Not on his watch. Enter the security law.
What has the reaction been?
Democratic Party leader Wu Chi-wai said he would defy a police ban on Wednesday's "handover day" march.
He
will be joined by Figo Chan, of the Civil Human Rights Front, who urged
people to take to the streets, saying: "We are aware of the risks of
being prosecuted. But we insist on taking the lead, as we want to tell
Hongkongers not to fear."
Police plan to have 4,000 riot officers on standby, the South China Morning Post reports.
Rights group Amnesty International has described the law as "the greatest threat to human rights in the city's recent history".
Taiwan on Tuesday even warned its citizens of risks in visiting Hong Kong.
Media playback is unsupported on your device
Media captionThe identity crisis behind Hong Kong's protestsBut there was widespread international criticism even before the law was passed.
The European Parliament voted to take China to the International Court of Justice in The Hague should the law be imposed.
The
UK said it would change its immigration rules and offer millions of
people in Hong Kong "a route to citizenship" if China went ahead with
the legislation.
Washington on Monday began moves to end Hong Kong's special status trade relationship with the US.
On Tuesday, China said it would respond to the removal with unspecified "countermeasures".
A boycott of advertisers on social media
is gaining momentum, and Facebook is the primary target. Marketers are
expressing unease with how it handles misinformation and hate speech,
including its permissive approach to problematic posts by President
Trump. Who’s doing what. The boycotts have followed a call by the advocacy group Stop Hate for Profit, which is keeping a running list of participating companies. Over the weekend, Starbucks and Diageo
said they would pause advertising on all social media platforms.
They’re among the biggest spenders on Facebook ads: Starbucks spent $95
million and Diageo $23 spent million on the platform last year. Other
companies have boycotted Facebook specifically, including Honda America,
Levi Strauss and Patagonia. Who’s next? Procter & Gamble, the world’s largest advertiser, said it wouldn’t rule out a pause on Facebook ads. (Its big rival, Unilever, is stopping ads on Facebook, Instagram and Twitter through the end of the year.)
Big ad agencies generally take their orders from clients, but they also
have leeway to steer spending to certain platforms over others.
• Claiming censorship by major social media platforms, many right-leaning pundits, lawmakers and others have decamped to the upstart network Parler. That may cost Facebook some high-profile users — and an outsized source of engagement on its platform.
Can Facebook turn it around?
Its stock price tumbled last week, as ever-bigger advertisers joined
the boycott. (It’s poised to fall at the open today.) On Friday, it rolled out new measures to flag problematic political posts and expand its policies around hate speech.
• It’s worth remembering that Facebook collected more than $17 billion in advertising revenue in the first quarteralone:
Losing big brand ads is painful, but the bulk of the company’s sales
come from millions of smaller businesses that rely heavily on the
platform.
Image
The spotlight is now on Mark Zuckerberg, who holds all the power at Facebook. His complicated relationship with Mr. Trump is at the center of the controversy,
and how it plays out will determine how damaging the boycott will be
for his company. Here’s what Andrew has to say about how it could play
out:
Mr. Zuckerberg is often criticized for policies
that are viewed by his detractors as unprincipled and craven, driven by
business interests more than any moral code. But the truth, based on my
years of reporting on him, is that his policies have always been driven
less by profits and more by an overarching view of what he thinks is
right. (Even when he is arguably wrong).
If he were always trying
to placate advertisers, the boycott wouldn’t have happened. Of course,
you could argue that his recent reversal on misinformation is proof of
malleable principles. (By extension, his prior permissiveness could be
seen as placating the Trump administration in hopes of keeping
regulators at bay.) But I think it is fair to say that anyone who knows
Mr. Zuckerberg knows that he believes in his positions — until he is
forced to abandon them.
Image
Credit...Lindsey Wasson/Reuters
Here’s what’s happening
Coronavirus cases surpassed 10 million worldwide. Global deaths from Covid-19 have hit 500,000, doubling in less than two months. If that isn’t grim enough, Health and Human Services Secretary Alex Azar warned that “the window is closing” to suppress a flare-up in cases in the South and West.
Chesapeake Energy filed for bankruptcy protection.
The fracking pioneer helped pave the way for the U.S. energy boom, but a
coronavirus-induced drop in oil demand and a huge debt load forced its hand. Boeing can start test flights for the 737 Max. The F.A.A. gave the company permission to begin flights
to demonstrate that the troubled jet is safe. It was grounded in March
last year in the wake of two crashes that killed 346 people. The E.U. is preparing to bar most Americans from entry when it reopens for travel on Wednesday. The U.S. has been lumped together with Russia and dozens of other countries that have been unable to contain their coronavirus infection rates. We know who’s using the Fed’s corporate bond-buying program. The central bank named 794 companies whose investment-grade bonds it will buy to support debt markets.
Image
Credit...Mark Lennihan/Associated Press
How private equity spreads its cash around
The private equity industry is flush with cash, even after investing $700 billion last year. A new report
on that spending by its main lobbying group in Washington, the American
Investment Council, shows how it’s trying to distribute those funds in
politically advantageous ways.
Three-quarters of investments last year were spread across 20 states,
according to the council, including California, Texas, Florida, New
York and Illinois. Compare that with venture capital, where 80 percent of dollars were invested in three states: California, New York and Massachusetts, according to PwC and CB Insights. It’s a reflection of the power of the industry, which has plenty of money to spend and companies willing to sell themselves to escape the glare of public markets. It’s also a sign of the industry’s efforts to win political support,
as it faces opposition from progressive lawmakers who want to impose
higher taxes and criticize its reputation for burdening companies with
debt and cutting jobs.
• The trade group noted which lawmakers’
districts benefited the most from private equity dollars. Topping the
list were those of Representatives Carolyn Maloney of New York, Gwen
Moore of Wisconsin and Debbie Wasserman Schultz of Florida, all
Democrats.
• Marriott warned in its first-quarter earnings report
that it had $17.4 billion of goodwill and other intangible assets on
its balance sheet — largely tied to its 2016 acquisition of Starwood for
$13 billion — and that “any future impairment of these assets” could be
“material.”
Of course, it doesn’t always take a pandemic for
companies to write off goodwill from an earlier merger. In late 2018,
Verizon wrote off $4.6 billion related to its purchase of Yahoo in 2016,
essentially saying that the premium it paid for the business was worthless.
But
the number of deals struck in recent years, combined with the
uncertainty tied to the coronavirus, makes it highly likely that
Covid-19 will become a common excuse for companies to revisit overly
optimistic merger math.
Image
The N.B.A. figured out how to fight inequality
A
new video by The Times’s Opinion team examines how the N.B.A.’s rules
on revenue sharing, salary caps and the draft have made the basketball
league more equal. It’s fun, informative and only five minutes long. Check it out here.
The league knows how important it is to make sure everyone gets a fair chance.
The lengths it goes to address inequality and promote competition are
noteworthy in a country skeptical of socialism, says Binyamin Appelbaum,
who reported the story for the “America We Need” series:
They
haven’t abolished winners and losers. They haven’t abolished capitalism
or wealth or profit. They just keep teams from using those profits to
rig the system and spoil the game for everyone. That’s not socialism.
It’s just fair play.
The week ahead
💸 The biggest U.S. banks publish their capital plans after the market closes today, responding to last week’s stress tests
by the Fed. Regulators forced banks to forgo share buybacks in the
third quarter, and put a limit on dividends that analysts think will be toughest on Wells Fargo.
🗣
The House Financial Services Committee holds a hearing tomorrow to
review the government’s coronavirus response programs, featuring
testimony from the Fed chairman, Jay Powell, and Treasury Secretary Steven Mnuchin. It is also the last day to apply for loans from the Paycheck Protection Program, the $660 billion program aimed at small businesses that has been revised several times, and still has well over $100 billion left to lend.
🇺🇸🇲🇽🇨🇦 The “new NAFTA” — formally known as the United States-Mexico-Canada Agreement, or U.S.M.C.A. — comes into force on Wednesday. The trade agreement hasn’t exactly spurred greater continental camaraderie: the U.S. recently threatened to reimpose tariffs on Canadian aluminum.
📈 Thursday is a big day for economic data, with monthly payrolls and weekly unemployment claims coming
out. Economists expect that the U.S. economy added a net 3 million jobs
in June, following the unexpectedly strong 2.5 million gain in May. At
the same time, the latest week’s unemployment claims are forecast to
come in at 1.3 million, the 15th week in a row above one million.
🗓 Noteworthy corporate earnings include the chip maker Micron Technology and the high-end office furniture seller Herman Miller today; Mrs. Butterworth’s parent, Conagra, and the package deliverer FedEx tomorrow; and the Corona brewer Constellation Brands, the cereal giant General Mills and the troubled department store chainMacy’s on Wednesday.
The speed read
Deals
• PG&E raised $5.5 billion by selling equity as it prepares to exit from bankruptcy protection. (Reuters)
• Investors sued the mattress seller Casper over its disappointing I.P.O. (Bloomberg) Politics and policy
• How Obamacare is facing its biggest test for survival amid a recession and a pandemic. (NYT) Tech
•
The harassment of a blogger by former eBay employees, as detailed in an
indictment, reflects an extreme version of Silicon Valley’s penchant
for no-holds-barred reputation management. (NYT) Best of the rest
• How fast-casual chains like Applebee’s are trying to coax diners to return — by pitching safety, not breadsticks. (NYT)
• Bill Gates’s eldest daughter, Jennifer, opens up on being “born into a huge situation of privilege.” (Business Insider) We’d love your feedback. Please email thoughts and suggestions to dealbook@nytimes.com.
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