The World
Fed Chief Jerome Powell is set to deliver a ‘profoundly consequential’ speech at the Fed’s annual Jackson Hole conference on Thursday, changing how the Fed views inflation. He is expected to outline what could be the central bank’s most active efforts ever to spur inflation back to a healthy level — “average inflation” targeting means the Fed will allow inflation to run higher than normal for a period of time. (CNBC)
Long-term unemployment helped define the Great Recession. Now economists fear it’s happening all over again. Many of the jobs that were stuck in purgatory are being lost forever. About 33% of the employees put on furlough in March were laid off for good by July. Only 37% have been called back to their previous employer. Meanwhile, American Airlines announced it will cut 19,000 jobs, shrinking its workforce by 30% as travel continues to slump. Separately, eliminating the payroll tax could deplete the Social Security trust fund by 2023 if there's no alternative source of revenue, according to the agency's chief actuary. (Washington Post, Wall Street Journal, CNN)
In response to the coronavirus, many governments deployed draconian tactics never used in modern times: severe and broad restrictions on daily activity that helped send the world into its deepest peacetime slump since the Great Depression. Five months later, the evidence suggests lockdowns were an overly blunt and economically costly tool. They are politically difficult to keep in place for long enough to stamp out the virus. The evidence also points to alternative strategies that could slow the spread of the epidemic at much less cost. As cases flare up, some experts are urging policy makers to pursue these more targeted restrictions and interventions rather than another crippling round of lockdowns. (Wall Street Journal)
The U.S. and China reaffirmed their commitment to the phase-one trade deal, demonstrating a willingness to cooperate even as tensions rise over issues ranging from data security to democracy in Hong Kong. President Xi said China is keen to work with “U.S. states, local councils, businesses,” indicating a desire to ensure business with American companies as China’s recovery gains momentum, positioning it to further close its gap with the U.S. economy. Separately, India is phasing out equipment from Huawei and other Chinese companies from its telecoms networks over an escalating border dispute. (Bloomberg, South China Morning Post, Wall Street Journal, Financial Review)
Ant Financial revealed a $2.6 billion profit and filed for an IPO in Hong Kong and Shanghai, after years of speculation and anticipation, in what could be the largest IPO of all time, topping the $29 billion raised last year by Saudi Aramco. It's also a potential escalation of China-U.S. tensions, with Ant snubbing New York. (Financial Times, Axios)
Large protests continued in downtown Kenosha in response to the shooting of Jacob Blake, as all exit ramps off I-94 to the Illinois state line in Kenosha County were closed and Gov. Tony Evers deployed Wisconsin’s National Guard. (Kenosha News, Milwaukee Journal Sentinel, Crain’s)
Houston again, as Hurricane Laura poses biggest threat to U.S. oil in 15 years. (Houston Chronicle, Reuters)
Economy
JPMorgan’s 60,950 employees in the firm’s corporate and investment bank will cycle between days at the office and at home, keeping the ability to work remotely on a part-time basis in a move that may remake Wall Street. (CNBC)
Sales of newly built homes surged 36% in July — jumping 13.9% compared with June — the strongest one-month pace since 2006. However, U.S. consumer confidence fell for second straight month in August, dropping to 84.8 from 91.7 in July. (CNBC, Reuters)
Asset managers have closed more exchange-traded products than they have launched this year. So far this year, 188 exchange-traded products, including funds and notes, have been shut down, the most on record. (Wall Street Journal)
Companies are finding virtual shareholder meetings to be cheaper and less time-consuming, but shareholders complain they don’t get as much time to ask their questions. Faced with the option to postpone the meeting until later, 87% of S&P 500 businesses opted for a virtual event compared with 23% of meetings held remotely in 2019. Executives and investors usually like that they can dial into these meetings from their homes. But despite the ease of access, shareholders say remote events offer less scope for participation as many companies ask for questions in advance, respond only to a select number of them and don’t disclose how many queries were received. (Wall Street Journal)
Boards—And CEOs—Should Expect Greater Scrutiny On Pay: The shareholder rejection of Electronic Arts’ compensation plan earlier this month is a not-so-subtle reminder that compensation models will be under much heavier scrutiny this year because of complications caused by the Covid-19 pandemic. With so many companies suffering losses in stock price value, filing for bankruptcy and laying-off employees, shareholders will be extremely interested to see how “pay-for-performance” models compensate key executives and board members. Corporate boards may want to re-evaluate their current compensation models to make sure that they don’t unfairly enrich executives who are responsible for long-term shareholder value. (Chief Executive)
Technology
Epic Games won a temporary restraining order against Apple, as Apple can’t retaliate against the company by terminating the developer account used to support the company’s Unreal Engine. But in the same ruling, the judge decided that Apple will not be required to bring Fortnite back to the App Store. (The Verge)
Agtech sector blooms as more dollars and startups rush in: This year has been particularly busy for the agtech innovation sector, with at least $2.6 billion invested globally in the space so far in 2020. Also strong: Biotech IPOs are on a tear. So far in 2020, at least 37 venture-backed North American life sciences companies have carried out IPOs (see list), raising a total of $6.7 billion. By comparison, in all of 2019, the same cohort pulled in just $5 billion across 51 public offerings. (CrunchBase-1, CrunchBase-2)
Amazon has carried out an unprecedented physical expansion during the pandemic. While its hundreds of vast suburban fulfillment centers still comprise the largest chunk of its U.S. physical footprint, openings of smaller facilities—delivery stations that operate like local post offices just for Amazon packages—have increased more rapidly. Since March, the number of Amazon delivery stations in the U.S. has surged 71% to 278, outflanking the expansion in the number of fulfillment centers and other distribution facilities. By the end of this year, that number will rise to about 415. The expansion of these smaller facilities, which use contract drivers instead of the U.S. Postal Service to pick up and deliver packages, could reduce revenue Amazon pays to the struggling postal agency and change the type of workers Amazon needs. (The Information)
Big-box stories, worried about Amazon, were ready for coronavirus. Walmart, Target and others had been adding curbside and delivery services, and cashed in when coronavirus pushed sales online. (Wall Street Journal)
Coronavirus breaks the telecom bundle: Consumers are adopting stand-alone broadband services at a much higher rate than just two years ago, and analysts predict that the economic downturn prompted by the pandemic will accelerate the trend. (Axios)
Smart Links
Why mega venture funds aren’t slowing down. (Crunchbase)
Google has a plan to disrupt the college degree. (Inc.)
The case for increased transatlantic cooperation on AI. (Harvard Belfer Center)
How the U.K. restarted its restaurant industry: Paying half the bill. (New York Times)
Podcasting seen as more trustworthy than traditional media’s pandemic coverage. (PodNews)
One year ago, the Business Roundtable pledged to reshape the culture of business. Has anything changed? (Fast Company)