Episode 11: Friday I'm in Love
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The presidential election is less than 100 days away, and Biden is polling a double-digit lead over Trump. A comeback by Trump at this stage of the election cycle would be unprecedented. The President made concerning remarks this week about delaying the election, allegedly due to concerns of voter fraud related to mail-in ballots. In 2020 alone, Mr. Trump has made public comments or posted Twitter messages suggesting election fraud 91 times, raising concerns about a peaceful transition of power should Biden win the election.
It’s official. The US economy is hurting. GDP dropped a record 32.9% in Q2, the largest on record dating back to 1947. In response, Republicans rolled out their proposal for the fifth wave of pandemic relief aid totaling $1 trillion. The proposal, labeled the HEALS Act, is the response to the $3 trillion HEROES Act proposed by House Democrats. The financial gap between the plans means negotiations will be fierce and likely delay anything passing for weeks, if not months. The key sticking points between the two camps (aside from $2 trillion) are three issues: the number of people who would receive a second round of direct stimulus payments; the amount of extra unemployment assistance that’s offered (Democrats favor 100% from the current levels to keep impacted individuals afloat, whereas Republicans are targeting 70% of current levels, so unemployed individuals have an incentive to work); and liability protection for businesses (Republicans are seeking five-year protection for employers from liability exposure related to COVID, whereas the Democrat plan does not have such measures). Both groups appear to be in a race to see if the US can top $30 trillion in debt before the year-end. I would encourage all of you to have a family meeting this weekend and apologize to your kids for our fiscal sins and the financial burden we are creating for future generations.
The war with COVID took a few steps backward this week. Based on rising infections, several areas regressed to earlier forms of lockdown. One week into the abbreviated Major League Baseball season and there is already a COVID outbreak. The NBA resumed its season this week but inside a protective social bubble and without fans. Google was the first tech company to announce that all 200,000 employees would work remotely until July 2021. In NY, fewer than 1/10 employees are back working in an office, despite the city’s green light to reoccupy buildings vacated in March. (I’m happy I don’t own a portfolio of commercial real estate.) There was some positive COVID news. The NIH is collaborating with Moderna for stage three trials of a COVID vaccine. There are 30,000 volunteers in the study, and half will receive the vaccine and half placebo. If successful, this would set the stage for a commercially-available vaccine early next year.
The Four Horsemen of the Apocalypse, otherwise known as the CEOs of Google, Facebook, Apple, and Microsoft, appeared before Congress to make a claim their businesses do not possess monopolistic traits. It was amusing to watch four billionaires whose companies are worth $4.85 trillion collectively, justify their business practices, and talk about how they don’t have a market advantage. Cook testified to Congress that Apple is “in a street fight for market share.” I assume by “street fight,” he meant he’s kicking someone’s ass every day based on the company’s financial performance. Apple stock jumped 10% today alone, based on blowout quarterly earnings. The company’s market cap now stands within a whisker of $2 trillion.
On the lighter side, KFC is testing “fake” fried chicken, using plant-based produce from Impossible Foods and Beyond Meat. Call me crazy, but I’m guessing KFC has been using fake chicken for years. AT&T announced its low-band 5G network is now available to 205 million Americans. That’s a key milestone for the carrier because the Federal Communication Commission qualifies a “nationwide” network as one that’s available to 200 million consumers. Regis Philbin, the former host of several popular TV shows, including “Who Wants to Be a Millionaire,” asked his famous question one final time: (Life) Is this your final answer? Sadly, the response back was “yes.” Philbin passed away at the age of 88.
I. Below are the articles I found interesting the past week:
I can’t imagine how businesses can operate without some form of liability protection around COVID. Legislation needs to be passed to protect companies (absent gross negligence), so they can open and get our economy moving.
Should we shield businesses from COVID-19 lawsuits?
Banks have always played a fundamental role in capitalism, but their role is changing, and government and the capital markets are increasingly financing risk assets (instead of banks) but with much less oversight. The concern is growing of another over leveraging situation that led to the 2007-2009 financial crisis.
Putting the capital into capitalism
Macroeconomics - Governments must beware the lure of free money
If you don’t own a boat (and you live for another 80 years), you probably should buy one.
Sea level rise threatens to crush the global economy
An overview of the lexicon and world of blockchain and cryptocurrencies (and the birth of cryptoeconomics) shows how these platforms and concepts may disrupt our financial and legal systems and change the principles governing our society.
The blockchain economy: a beginner’s guide to institutional cryptoeconomics
I lived in San Francisco during the original internet bubble and remember taxi drivers talking about stock tips. It was the beginning of the end, and there are similar smoke signals happening today. Buyer beware!
Robinhood has lured young traders sometimes with devastating results
II. The rest of the best
David Short’s unified theory of American politics
Why governments are paying people to go on holiday
How lockdown may have changed your personality
How to flatten the curve of the information pandemic
Scared that COVID immunity won’t last? Don’t be
III. Stats that made me go WOW!
- 20% of small businesses (those with fewer than 500 employees) in America have closed since the virus hit. Things are worse for black-owned businesses, which often find it more difficult to get bank loans; 40% of such firms have shut.
- In the first three months of 2020, Robinhood users traded nine times as many shares as E-Trade customers and 40 times as many shares as Charles Schwab customers per dollar in the average customer account in the most recent quarter. They also bought and sold 88 times as many risky options contracts as Schwab customers, relative to the average account size.
- The fastest computer in the US is called The Summit and housed in the US Energy Department’s Oak Ridge National Laboratory in Tennessee. The machine is capable of 200,000 trillion calculations per second and enlisted in the fight against COVID to analyze datasets and divine insights to help researchers advance potential treatment outcomes.
IV. Name that Tune!
As I write this email, I am listening to “Friday I’m in Love" by The Cure.
The Cure is a British band that formed in 1978. Robert Smith, frontman and lead guitarist, is the only original band member to remain with the group over the years. The Cure cuts across several genres—Rock, Goth, Alternative, New Wave, and Pop. The Cure had disdain for the standard rock look and sound of the time, so they pursued a dark and somber style. Smith became so absorbed by the ghoulish persona he projected on stage that he would leave at the end of the concert in tears. This emotional struggle led to a conscious effort in the early 1980s to reinvent the bad and pursue a different, more optimistic genre. These efforts culminated with the release of Kiss Me, Kiss Me in 1987 and marked the band’s first entry into the US Billboard Top 40. However, it was 1989 and the release of the Album Disintegration that the group gained international acclaim. By 1992, Disintegration had sold over three million copies worldwide. The Cure has produced 13 studio albums, but the song “Friday I’m in love,” which appeared on the ninth album, was the band’s last American Billboard Top 40 hit. The Cure is still active with a full tour schedule in 2019, including an outdoor concert at Hyde Park in London to celebrate their 40th anniversary. The Cure was inducted into the Rock and Roll Hall of Fame in 2019 by Trent Reznor at the Barclays Center in Brooklyn, NY, in 2019.