The World
The K-shaped recovery appears to be in full effect: Consumer spending rose in August, but U.S. household income fell 2.7%, while worker layoffs remained high. However, U.S. stocks had a second consecutive quarter of dramatic gains, continuing a historic stock-market recovery that few predicted in the March downturn. The S&P 500 and Nasdaq Composite hit a string of records in 3Q20. Despite a stretch of volatility that damped momentum in September, the S&P 500 and DJIA gained 8.5% and 7.6%, respectively. Meanwhile, the covid-19 recession is the most unequal in modern U.S. history, as job losses overwhelmingly affected low-wage, minority workers most — Black women, Black men and mothers of school-age children are taking the longest time to regain their employment. Further, 61% of U.S. households with children report facing serious financial problems, including depleting household savings, serious problems paying credit card bills and other debt, and affording medical care. (Finance 202, Wall Street Journal, Washington Post, Harvard Gazette)
Millions of Americans — including half a million in Texas alone — risk losing power and water as massive, unpaid utility bills pile up: More than 179 million people may be at risk for shut-offs as many state protections end. (Washington Post, Dallas News)
Democracy is suffering in several European nations, including Hungary and Poland, as a European Commission audit reflected concerns that the EU has failed to combat democratic backsliding among some of its members. Meanwhile, Brussels is launching legal action against the UK over its Brexit deal breach, and U.S. banks are pulling more assets from London, as London’s position as a gateway to Europe for U.S. banks is being eroded. (Washington Post, European Commission, Financial Times, Wall Street Journal)
Thousands of police officers flooded Hong Kong's streets, stopping and searching people en masse to thwart demonstrations planned for China's National Day. Meanwhile, China’s sabre-rattling over Taiwan rises as U.S. tensions grow, with Taipei and Washington raising an alarm that an increase in military exercises could spark a conflict. Separately, Russia’s top arms-control negotiator rejected the Trump administration’s core requirements for a new nuclear arms-control treaty. (Washington Post, Financial Times, Wall Street Journal)
Young people are as diligent about coronavirus hygiene routines as their older peers but also more stressed out by the pandemic and willing to give up a higher percentage of their income to stop it, according to a global survey of nearly 12,000 respondents from more than 130 countries. Meanwhile, frontline health workers in Moscow report an unprecedented onslaught of work as infections return to levels not seen since May. Yet Russia’s Federal Protective Service has built a virus-free bubble around President Putin that far outstrips the protective measures taken by many of his foreign counterparts. Journalists have not seen him up close since March. The few people who meet him face-to-face generally spend as much as two weeks in quarantine first, while Putin conducts cabinet and Security Council meetings by video link from a spartan room in his residence outside Moscow — which has been outfitted with disinfectant tunnels. (The Guardian, Moscow Times, New York Times)
Insurers are rolling back terms of telehealth coverage, with some UnitedHealth Group and Anthem customers set to face out-of-pocket charges on certain virtual visits starting today. Meanwhile, a record-high 62% of voters support the Affordable Care Act, including 85% of Democrats and 36% of Republicans. 56% of voters say the ACA should be improved and strengthened, while 20% say the law should be struck down and 9% say it should be left alone. 79% of voters support health insurance protections for people with pre-existing conditions, and 61% of voters trust Biden over Trump to protect this coverage. (Wall Street Journal, Morning Consult)
The debates commission plans to cut off mics if Trump or Biden break rules, while Google reported a peak number of searches for “How to apply for Canadian citizenship” following the presidential debate. The search was most popular in Massachusetts, followed by Washington and Michigan. Meanwhile, the TV audience fell short of expectations: The showdown was watched by an average of 73.1 million viewers, well below the all-time high of 84 million from Sept. 26, 2016. (CBS News, The Guardian, Google, Los Angeles Times, Statista)
Economy
American Airlines and United Airlines will go forward for now with a total of more than 32,000 job cuts as lawmakers still can’t agree on a broad relief package. Oil prices fell more than 5% as rising coronavirus cases dampened the demand outlook, and a rise in OPEC output pressured prices. (Wall Street Journal, Reuters)
The Federal Reserve capped big banks’ dividends and halted share buybacks for the fourth quarter. The central bank cited the need to conserve capital during the coronavirus-induced downturn. Meanwhile, the Fed's low-rate strategy stokes fears of asset bubbles. (Wall Street Journal, Wall Street Journal-2)
The holiday shopping season will now begin in October: Amazon's decision to move its Prime Day to Oct. 13–14 this year will pull the whole holiday shopping season forward and help make online retail bigger than ever, as Gap plans holiday hiring to bulk up warehouses and call centers. (Axios, CNBC)
Yesterday was a big day for IPO critics: Asana and Palantir went public via direct listings, joining Slack and Spotify as the only large companies to have done so. The outcome was rather mixed. Asana did pretty well: It opened above its reported private market valuation of $5 billion and climbed steadily from there, closing the day up 7%. Palantir's listing went less well. It opened at $10 per share, then slumped, closing down 5% (although things did recover a little after hours). (Protocol, Crunchbase)
The operating partner of tomorrow: As portfolio companies face disruption from covid-19 and accelerating digitalization, PE firms are hunting for operating teams with more diverse skills. “Past experience may not always lead you to the best answers even if it helps inform a response” Sir Terry Leahy Clayton, Dubilier & Rice. The agility required to navigate such trends could mean a change in the way operating partners approach challenges. (Private Equity International)
Technology
The Senate Commerce Committee voted to authorize subpoenas that could force the chief executives at Facebook, Google and Twitter to testify at an upcoming congressional hearing, escalating lawmakers’ war with Silicon Valley over policies to police content online. Pakistan is considering a TikTok ban over “vulgar content,” as China’s stalwart ally looks to mirror curbs imposed by US and India. (Washington Post, Nikkei Asian Review)
Google's product launch felt like a masterclass in launching products suited to the times. Among the biggest announcements: Pixel 5 is a different spin on a flagship phone; Google' added group watch to duo video chats; Chromecast no longer requires a phone; say hello to Google TV; Nest’s audio speaker delivers stronger sound. (Protocol, The Verge)
Scientists developing a compact version of a nuclear fusion reactor have shown that it should work, renewing hopes that the long-elusive goal of mimicking the way the sun produces energy might be achieved and eventually contribute to the fight against climate change. Construction of a reactor, which is being developed by researchers at MIT and a spinoff company, is expected to begin next spring and take 3-4 years. (New York Times, MIT)
Smart Links
Y Combinator releases data on Black, LatinX and Woman founders. (TechCrunch)
How the SAT failed America. (Forbes)
The International Space Station has an air leak. (MIT Technology Review)
Astronomers discover an Earth-sized “pi planet” with a 3.14-day orbit. (MIT News)
Danish supermarket chain lets customers know the carbon footprint of their groceries. (Washington Post)
Subway sandwiches have too much sugar to be called “bread:” Irish court. (Newsweek)