All of us at Working Capital Review want to wish you and your families the very best this holiday season.
We’d also like to thank our founding sponsor Clayton, Dubilier & Rice, nominated by Private Equity International for two awards: 1) Americas Category: Large Cap Firm of the Year; and 2) EMEA Category: Deal of the Year for SIG plc.
Happy Holidays. Happy and Healthy New Year. And thank you.
The World
Tension within the Republican Party spilled into public view, as Senate Majority Leader McConnell blocked consideration of a House bill that would deliver $2,000 stimulus payments to most Americans — spurning President Trump’s request even as more Senate Republicans voiced support for the dramatically larger checks. Trump leveled attacks at GOP leaders for failing to act, accusing them of being “pathetic” and suggesting they had a “death wish.” New proponents of the $2,000 checks include Georgia’s two embattled Republican senators — David Perdue and Kelly Loeffler. Instead, McConnell provided vague assurances the Senate would “begin the process” of discussing $2,000 checks and two other issues that Trump has demanded: Election security and removing legal protections for social media platforms — a proposal that if voted on has no chance of becoming law. Meanwhile, the first $600 stimulus checks could hit bank accounts starting last night. (Washington Post, New York Times, Politico)
Overwhelmed L.A. County hospitals resorted to placing patients in conference rooms and gift shops, while 94% of the hospitals that take in patients from 911 calls were diverting ambulances away and the state extended stay-at-home orders. Colorado became the first state to confirm that the new, more contagious strain had arrived. Separately, Biden criticized Trump’s vaccination effort, as the U.S. likely will fall short of its goal to vaccinate 20 million people before the end of the year: “The effort to distribute and administer the vaccine is not progressing as it should.” (Los Angeles Times, Denver Post, Washington Post, CNBC)
In the UK, millions more will be under stay-at-home orders, as Prime Minister Johnson extended Tier 4 restrictions amid alarm at the new variant virus’ spread speed — and increasing calls to pause the Premier League season. Spain will register people who refuse to be vaccinated and share the list with other EU nations. A Chinese pharmaceutical company said late-stage drug trials showed that one of its vaccines was effective, delivering positive results that enable the global rollout of hundreds of millions of Chinese vaccine doses. (The Times, BBC News, New York Times)
Prime Minister Johnson will present his Brexit trade deal to parliament today after winning support from hardline Brexiteers, heralding a new relationship of sovereign equals between Britain and the EU. Blue chip stocks climbed to their highest level in almost 10 months as investors cheered the deal.(The Times, The Telegraph)
Meanwhile, it appears that to save time, Brexit deal authors cut-and-pasted text from the original agreement. The current agreement refers to decades-old computer software, including a description of Netscape Communicator and Mozilla Mail as "modern" services. It also recommends using systems that are now vulnerable to cyber-attacks. (BBC News)
An international group of lawmakers shared an apparent list of nearly 2 million Chinese Communist Party members with multiple governments, flagging the fact that many party members are employed by global companies. Separately, a Chinese court sentenced 10 Hong Kong activists who were caught on a boat to Taiwan to between seven months and three years in jail for illegally crossing the border. (Nikkei Asian Review, Reuters)
The Pentagon alerted Congress about plans for a $290 billion arms sale to Saudi Arabia that would include 3,000 precision guided munitions. The State Department's approval in the Trump administration's final weeks comes despite President-elect Biden vowing to end weapons sales to the Saudis. (Axios)
The federal government issued new dietary guidelines that keep current allowances for sugar and alcohol consumption unchanged, rejecting recommendations by its scientific advisory committee. The scientific committee had recommended cutting added sugars to 6% of daily calories from 10% in the current guidelines. The committee also recommended lowering the alcohol limit for men to one drink per day from two, matching guidance for women. (Wall Street Journal)
Amid the pandemic, a rancorous presidential election and social upheaval over police abuses of Black people, Los Angeles endured another crisis in 2020: Homicides rose by 20% in the county, to their highest level in a decade. One week in particular stands out: June 29 to July 5 was the deadliest since 2008. (Los Angeles Times)
Economy
Investment banks globally generated a record $124.5bn in fees this year as companies raced to raise cash in order to survive the pandemic and capital markets businesses were boosted by the frenzy of share and debt sales. Separately, unions blasted a $47m bonus secured by GE CEO Larry Culp this month, after his pay package was rewritten earlier this year to reduce the risk that he would miss out on a windfall. (Financial Times, Financial Times-2)
Even as investment banking from home thrived under Covid-19, however, some fear losing their touch and plan to hit the road as soon as possible. (Reuters)
With the vaccine rollout, businesses are dusting off return-to-office plans — but widespread return isn’t likely until late spring or early summer of 2021 and the office world will look a lot different. In what is called the “hub-and-spoke” strategy, businesses that are highly competitive for top talent will likely begin opening small satellite offices in metropolitan areas and offering employees the option of working there, at home or in centralized headquarters—or a combination of the three. (Wall Street Journal)
Fujitsu has drawn up a shortlist of 20 acquisition targets as part of a $5.8bn investment drive to capitalise on a pandemic-induced increase in demand for its digital services. Takahito Tokita, chief executive, said the mergers and acquisitions push would accompany an acceleration in the disposal of non-core assets to sharpen the Japanese group’s focus on tech and consulting services. (Financial Times)
Activist hedge fund Third Point LLC is pushing Intel Corp to explore strategic alternatives, including whether it should keep chip design and production under one roof. Were it to gain traction, Third Point’s push for changes could lead to a major shakeup at Intel, which has been slow to respond to investor calls to outsource more of its manufacturing capacity. (Reuters)
As recently as 1978, virtually no housing was privately owned in China. Creeping experimental reforms led to the beginning of wholesale privatization of the public housing stock in 1988. Now, the Chinese housing market has boomed, outstripping the rampant growth of the economy itself — and the real-estate industry accounts for about 7% of Chinese GDP. (Wall Street Journal)
Technology
U.S. smartphone activations on Christmas Day fell 23% YoY as iPhones dominated the top 10 activated smartphones and budget devices, like LG K30, surged. (Flurry)
New images and video purporting to show an Apple Watch prototype, concealed by a security case that resembles a tiny iPod, offer a rare look behind the product-development curtain of the notoriously secretive company — our first look at the device turned on and running Apple’s own internal development apps on a pre-watchOS 1.0 software build. (The Verge)
One of the oldest and most well-known iPhone suppliers has been accused of using forced Muslim labor in its factories, according to documents uncovered by a human rights group, adding new scrutiny to Apple’s human rights record in China. (Washington Post)
UK technology companies attracted a record $15bn (£11.2bn) in venture capital funding in 2020, including the creation of seven “unicorn” firms valued at more than $1bn. The firms raised more money from VC investors than the rest of Europe combined. (The Guardian)
The People’s Bank of China concluded its second digital-currency pilot program, as the central bank moves closer to a formal rollout that would make China the first major world economy to introduce such a system. The trial in Suzhou also expanded the scope of the pilot program by testing the digital yuan on online stores and by introducing an electronic-payment method that doesn’t require an internet connection. (Wall Street Journal)
Movie ticket sales fell 80% in 2020, the lowest domestic box office tally in nearly 40 years. (CNBC)
Smart Links
Pandemic leads dozens of universities to pause Ph.D. admissions. (Wall Street Journal)
After being grounded for two years, the first Boeing 737 Max took off from Miami. (Miami Herald)
American Airlines expects to fly less than half of 2019 schedule through February. (CNBC)
A frigid air mass in Mongolia may have just crushed a world record for surface air pressure. (Washington Post)
Donald Trump, Michelle Obama most admired in 2020. (Gallup)
Pandemic drives UK towards greenest year for electricity. (The Times)
Peyton Manning ranks his favorite movie quarterbacks. (Wall Street Journal)