The World
The U.S. wealth gap kept widening even before the pandemic, a new Fed report finds. The latest Survey of Consumer Finances reveals low- and middle-income earners were finally starting to see some wage increases as unemployment dropped to 3.5%. Yet the gains weren’t enough to make a dent in the wealth gap: The top 1% own about a third of the nation’s wealth, near the 30-year high for that population. The poorer half of the country, meanwhile, claim roughly 2% of the overall wealth. The richest tenth of households have seen their share of the wealth increase over the past three decades, while the other 90% have seen theirs slide. (Finance 202, Survey of Consumer Finances)
U.S. retail bankruptcies, liquidations and store closings reached records in 1H20, putting it on pace to rival 2010, when 48 retailers filed for bankruptcy. However, JPMorgan predicts a 10% rally for the S&P 500, and U.S. consumer confidence rebounded more than expected in September. Further, the U.S. economy continues to gradually bounce back, though a pick up in virus cases paired with dwindling government support could weigh on the pace of that recovery heading into the cooler months. (Wall Street Journal, CNBC, Reuters, Bloomberg)
The Covid-19 pandemic has claimed the lives of more than 1 million people globally. More than a fifth of the recorded lives claimed worldwide have come in the U.S.; Brazil has suffered the second highest number of deaths, followed by India. “It feels like it’s never going to end,” said Imang Maulana, between digging graves in Jakarta, Indonesia, for its victims. In north-east England, for the first time it will be illegal for people from different households to mix in pubs and restaurants. France’s top doctor said their second wave is “arriving faster than we thought.” German Chancellor Merkel warned top party officials that cases could surpass 19,000 per day. Meanwhile, new cases in Sweden remain surprisingly low. In North America: Quebec moved to its highest alert level; South Dakota beat its active case record for fifth consecutive day; and the Minnesota Vikings and Tennessee Titans suspended activities after three Titans players and five Titans staffers tested positive. (Los Angeles Times, The Guardian, France 24, CBC, Deutsche Welle, New York Times, Rapid City Journal, StarTribune)
U.S. businesses with outbreaks are facing an emerging legal threat from claims that workers brought coronavirus home and infected relatives, which one risk analysis firm said could cost employers billions of dollars. Additionally, as U.S. pension funds have sued Allianz after $4 billion in coronavirus losses, life insurance companies are paying out less than they initially expected as a result of the coronavirus pandemic, in large part because the virus is disproportionately killing America’s uninsured. (Reuters, Reuters-2, Wall Street Journal)
The toll from California’s latest round of wildfires has worsened. Almost 34,000 people have been ordered to evacuate, while more than 14,000 are on leave alert. Pacific Gas & Electric is shutting off power to about 87,500 customers in 16 counties, and the National Weather Service issued a red flag warning for the mountains of Los Angeles and Ventura counties and the Santa Clarita Valley. (Los Angeles Times)
Portugal rejected a U.S. warning of sanctions over its Chinese investments, the latest sign that Washington and Beijing’s Europe rivalry is intensifying. Meanwhile, North Korea has successfully miniaturized its nuclear weapons and continues to build ballistic missiles, and is using a range of ingenious means to dodge sanctions, from smuggled coal and art to dispatching workers overseas. Separately, Armenia and Azerbaijan accused each other of launching attacks, as the UN security council plans emergency talks. And in his first official conversation with Russia’s Putin, Japanese Prime Minister Suga reaffirmed his intent to reach a postwar peace treaty between Tokyo and Moscow based on a 1956 declaration. (South China Morning Post, The Times, The Guardian, Nikkei Asian Review)
At the same time Americans want the government to take a more active role in solving the country's problems, Americans' trust in the federal government remains near all-time lows. Just 48% say they have a "great deal" or "fair amount" of confidence in the government to handle international problems, and 41% say the same about domestic problems. (Gallup)
Financial view of tonight’s first 2020 U.S. presidential debate: No matter who wins, economic policy for the next several years will aim to protect American employment from outsourcing driven by employers seeking lower labor costs, and to reclaim a foothold in industries that the U.S. had given up for lost. Meanwhile, Citigroup sees the election as bullish for municipal bonds no matter who wins. (New York Times, Bloomberg)
Economy
The New York region has seen a 40% bankruptcy surge and is bracing for more, as almost 6,000 city businesses have closed and the recovery hinges on office workers’ return. However, Manhattan offices are nearly empty: About 1 in 10 office workers have returned, far fewer than elsewhere. (Bloomberg, Wall Street Journal)
Mixed results: While 63% of small and midsized businesses said they are likely to lose at least a quarter of their revenue this year, some 78% overall said they feel at least somewhat confident they can handle another surge in cases in the fall and winter, according to a Comcast Business survey. However, a Verizon survey found that 55% of small business owners are worried that limited business capacity will harm their survival chances. (CNBC, CNBC-2)
Earnout provisions are making a comeback in private-equity deals as investors try to address the market uncertainty caused by the pandemic. They let private-equity buyers to defer a portion of a deal’s purchase price and tie the remaining payouts to performance milestones. Although earnouts are most commonly used in life sciences deals, in 2019 they accounted for 22% of deals outside of the life sciences space. (Wall Street Journal)
South Korea’s IPO market is set for best year since 2017. Meanwhile, all seven members of South Korean K-pop group BTS are set to become multi-millionaires, when their label Big Hit Entertainment goes public in October. Soaring demand for shares in Big Hit has given it a market valuation of £3.2bn ($4.1bn), with shares priced at the top of the expected price range. (Financial Times, BBC News)
Technology
Amazon is unveiling its own palm recognition technology today that will be used initially to turn your hand into a personal credit card inside the company’s physical retail stores. Amazon One uses the palm of your hand to identify you, using a combination of surface-area details like lines and ridges, alongside vein patterns to create a “palm signature.” Amazon confirmed that Prime Day will take place on Oct. 13 and 14. (The Verge, Wall Street Journal)
Microsoft is investigating an outage that brought down its cloud-based office services including the meetings software, Teams, worldwide. Microsoft reported issues with authentication for its cloud services at around 9.25pm UTC, meaning people were having issues logging into the online services Teams, Outlook and Office. The outage had affected services worldwide. (The Guardian)
Google is set to win EU antitrust approval for its $2.1 billion purchase of fitness tracker maker Fitbit to take on Apple and Samsung in the wearable technology market. In the UK, Uber can continue operating in London after a judge upheld its appeal against Transport for London. (Reuters, BBC News)
Smart Links
New super-enzyme eats plastic bottles six times faster. (The Guardian)
Record numbers apply to top business schools. (Financial Times)
How to climb the corporate ladder while working remotely. (Wall Street Journal)
Why restrictive immigration may be bad for U.S. entrepreneurship. (MIT Sloan)
Colorado’s burgeoning startup scene is flying high. (Crunchbase)
UAE shoots for the moon: Plan announced a plan to land a spacecraft by 2024. (Deutsche Welle)