The World
33 economists collectively thought there was a 59% chance that either keeping the payment steady or increasing it to above $600 per week would be most beneficial to the economy. They said there was about a 33% chance that reducing the weekly payment to less than $600 would most benefit the economy, and only a 7% chance that letting the program completely lapse would be most beneficial. The approaching fiscal cliffs “are all so significant,” S&P Global chief U.S. economist Beth Ann Bovino told Finance 202. Amid a sputtering economic rebound, another downturn could force more businesses to shut their doors, and “the impact on the on the economy is not necessarily going to be ‘one and one equals two.’ There could very well be a nonlinear impact this time around.” (FiveThirtyEight, Finance 202)
The potential economic rebound is now being threatened by the surge in Covid-19 cases across many parts of the Sunbelt. The loss of economic momentum is already appearing in high-frequency data related to employment, restaurant bookings and mobility, all of which are flattening. (Financial Times)
China vowed to retaliate, and analysts said it amounted to a relationship downgrade that could cause lasting damage after the U.S. ordered China to close its diplomatic consulate in Houston by Friday, and the FBI said the Chinese government was acting like “an organized criminal syndicate.” A Houston police official said that within hours of the 4 pm Tuesday eviction, witnesses spotted workers inside the courtyard burning papers. (South China Morning Post, New York Times, Washington Post, Houston Chronicle)
Chinese Foreign Minister Wang Yi accused the U.S. of stirring up trouble around the world. Wang also told his Vietnamese counterpart that Vietnam and other Southeast Asian countries should be “highly vigilant” about Washington’s attempts to sabotage stability and unity in the region. Taiwan’s foreign minister said the island may be Beijing’s next target after Hong Kong. Meanwhile, the U.S. is equipping and positioning its forces across Asia for a possible confrontation with China, Defense Secretary Mark Esper said, adding the U.S. would continue to send Navy ships into the region to counter China’s expansionary policies and to sell arms to Taiwan. (South China Morning Post, Wall Street Journal)
Britain and the EU may fail to sign a post-Brexit trade deal, ministers now believe, with just days to go until Boris Johnson’s July deadline for an outline agreement passes. The Telegraph learned the Government's working assumption is that Britain will trade with Europe on World Trade Organisation terms. Meanwhile, the UK also is abandoning hope of a U.S. trade deal by the end of year. (The Daily Telegraph, Financial Times)
The true number of coronavirus cases in the U.S. could be anywhere from six to 24 times higher than the confirmed number, depending on location. Quest Diagnostics, the largest U.S. lab company, warned that it will be impossible to keep up with demand for Covid-19 tests once the fall flu season arrives. Meanwhile, the U.S. virus surge in June was preceded by a May surge in Yelp entries for bars and restaurants. (StatNews, JAMA, Forbes, Reuters)
Economy
Existing home sales surged nearly 21% in June – the highest monthly gain on record. (CNBC)
LinkedIn’s job cuts are a sign of more pandemic pain to come for white-collar workers: The announcement that the jobs site was laying off 960 roles or about 6 percent of its workforce signals that hopes for a quick hiring rebound for professionals may be dimming. (Washington Post)
The rise of the US mega-caps creates shaky ‘top-heavy’ market, as the five biggest stocks dominate benchmark S&P 500 index to greater extent than in 2000. Meanwhile, already weakened by a decade of pressure from Boeing and Airbus to cut prices and invest in new technology, U.S. aerospace firms now face a wave of bankruptcies, restructurings, takeovers and mergers. (Financial Times, Reuters)
European banks are facing as much as €800bn in loan losses and a €30bn hit to their revenue over the next three years as a result of the coronavirus crisis. (Financial Times)
The Business Case Against Gut Decisions: What business leaders can learn from chess players and firefighters about when to rely on intuition. At its core, our intuition is nothing but the recognition of situations that we have experienced before. Researchers Gary Klein and Daniel Kahneman, who did multiple studies on this topic, found that we should trust our intuition only when two conditions are met. First, when there’s an environment of “high validity,” in which the same causes generally tend to produce the same effects. And second, when we have had “adequate opportunities for learning the environment” through “prolonged practice and feedback that is both rapid and unequivocal.” In other words, we should trust it when such situations can truly be recognized, and when we have truly learned the right responses to them. (Marker)
Technology
French authorities told telecoms operators planning to buy Huawei 5G equipment that they won’t be able to renew licenses for the gear once they expire, effectively phasing the Chinese firm out of mobile networks by 2028. Meanwhile, Xi Jinping rallied China’s tech leaders as its U.S. rivalry intensifies, calling on Chinese entrepreneurs to align their business strategies with national needs, while promising continued support for their operations. (Reuters, South China Morning Post)
A small group of ByteDance’s U.S. investors is discussing with the company’s top management the possibility of joining forces to buy a majority stake in TikTok, as it grows more difficult for the Chinese-owned company to keep control of the fast-growing video app. ByteDance was most recently valued at $75 billion by venture capitalists, and at around $95 billion in secondary market trades. Meanwhile, the House voted to bar all federal employees from loading TikTok on their government-issued devices. (The Information, Axios, Politico)
Peacock’s mobile app was downloaded around 1.5 million times across the U.S. App Store and Google Play within its first 6 days on the market. That’s 25% more than the 1.2 million installs Quibi saw during the same period post-launch in the U.S., but only 12% of the 13 million downloads Disney+ generated within its first six days. (TechCrunch)
Snap announced 2Q20 earnings, with its user base up by 9 million people daily over 1Q20, and revenue is up 17 percent YoY, at $454 million. The growth is being positioned as a win amid shrinking advertiser budgets. Further, Snap said it saw 32% yearly revenue growth in the first three weeks of the current quarter, which indicates that the worst of the pandemic’s knock to advertising demand could be over. (The Verge, The Information)
Smart Links
Harvard’s first-year international students won’t be allowed on campus this fall. (Harvard Magazine)
Edtech startups flirt with unicorn-style growth. (TechCrunch)
Apple pledges to be carbon neutral by 2030. (Reuters)
UT-Austin preparing to allow 50% stadium occupancy when football starts Sept. 5 (Texas Tribune)
How to write the perfect recommendation. (Nature)
Here’s your chance: NBA’s Minnesota Timberwolves are for sale, and might not cost more than $1.2 billion. (Star Tribune, Axios)