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The World
As new unemployment applications fell to the lowest levels since March, the U.S. economy sees "slight to modest" growth this fall, the Fed's Beige Book says — another indication that the economic recovery is proceeding on separate tracks: Manufacturing, residential housing and banking industries report steady growth, while consumer spending and commercial real estate remained weak. Meanwhile, as a top Fed official warned that the U.S. economy would face a substandard and uneven recovery without additional government spending, roughly three-quarters of Senate Republicans oppose a big relief deal, as Pelosi says a stimulus deal is ‘just about there.” Poll: 79% of registered voters say Congress should pass another package, including 86% of Democrats, 78% of Independents, and 72% of Republicans. Separately, analysts found that Biden's plan to raise corporate taxes would have a modest impact on profits at the big U.S. banks and probably not before 2022. (Wall Street Journal, Washington Post, CNBC, YouGov/Yahoo, Reuters)
The return to lockdowns: Scotland was told to “prepare for Christmas on Zoom;” Ireland is set to become the first country in Europe to impose a second national lockdown; the Czech Republic, which held a “farewell” party for the virus over the summer, announced similar plans. Britain, France, Germany and Spain have set regional restrictions this month, prompting demands for nationwide action. Holland is closing bars and restaurants for at least a month. Meanwhile, the EU cut Canada from its safe traveler list, but added Singapore. (The Times, Washington Post, Reuters)
The offensive weapons the U.S. offered Taiwan are capable of hitting mainland Chinese coastal areas, in the first such sales in more than four decades. Military experts said the latest US arms sales were intended to enable Taipei to counter the increasingly modernized firepower of Beijing, which considers Taiwan its territory and has vowed to take the island. Meanwhile, the U.S. labeled six more Chinese media companies operating in the U.S. as foreign missions. China called the U.S. an “empire of hacking” following an NSA advisory accusing Chinese hackers of exploiting cybersecurity bugs. (South China Morning Post, CNN, South China Morning Post-2)
The UK pound jumped by its most since March as upbeat signals from UK and EU boost hopes that a Brexit deal will be struck. (Financial Times)
Gunshots rang out and smoke rose from at least two fires in Lagos as authorities struggled to contain anger over a crackdown on anti-police protesters. Delta halted all flights to Nigeria. Israel and Sudan are said to reach a final agreement to normalize ties. In Lebanon, former Prime Minister Saad Hariri was nominated as the next premier a year after he quit the position, a move that risks angering many who sought a complete overhaul of the political system they blame for the deadly Beirut explosion. Former U.S. National Security Agency contractor Edward Snowden has been given permanent residency in Russia. (Reuters, Atlanta Journal Constitution, Times of Israel, Wall Street Journal, CNN)
The Senate Judiciary Committee approved the nomination of Judge Amy Coney Barrett to the Supreme Court, clearing the way for the full Senate to vote next week. Meanwhile, in Sunday’s upcoming 60 Minutes interview, Biden said he would appoint a commission to study the U.S. court system and make recommendations for reform. President Trump posted his 60 Minutes interview. (Washington Post, 60 Minutes)
Airlines’ losses are mounting as revenues plunged during what is typically their most lucrative season: Southwest lost nearly $1.2 billion during3Q20 — its biggest quarterly loss ever. American Airlines lost $2.4 billion; Alaska Air lost $431 million; while rivals United Airlines Delta Air Lines reported massive losses last week. (Wall Street Journal)
Brain scans reveal that hot-button words trigger conservatives and liberals differently, driving “neural polarization.” Researchers scanned the brains of more than three dozen politically left- and right-leaning adults as they viewed short videos involving hot-button immigration policies. Their findings show that liberals and conservatives respond differently to the same videos, especially when the content being viewed contains vocabulary that frequently pops up in political campaign messaging. The good news: “These differences do not imply that people are hardwired to disagree. Our experiences, and the media we consume, likely contribute to neural polarization.” (UC Berkeley, Proceedings of the National Academy of Sciences)
Economy
In the Hamptons, sales of homes priced at $5 million-plus jumped 291% in 3Q20, as New Yorkers flee the city. The median sales price for a Hamptons house skyrocketed by 40% to $1.2 million. More broadly, September existing home sales jumped 9.4%, but ‘prices are rising too fast’ as supply remains tight: The inventory of homes for sale fell 19.2% annually to just 1.47 million homes for sale at the end of September — a 2.7-month supply at the current pace. (Wall Street Journal, CNBC)
Goldman Sachs is seizing tens of millions of dollars from top executives — including CEO David Solomon, his predecessor Lloyd Blankfein, and other current and former executives — after agreeing to a costly settlement to resolve multiple government investigations into its role in a Malaysian bribery scandal. It is also in discussions to recoup money from former exec and Trump economic adviser Gary Cohn. Meanwhile, Hong Kong fined Goldman Sachs a record $350m over 1MDB — while British regulators fined Goldman 96.6 million pounds ($126 million) — noting ”serious lapses” in risk compliance. Authorities state the U.S. bank lacked adequate controls to monitor staff and detect misconduct in its day-to-day operation, and allowed the bond offerings to proceed when numerous red flags had not been properly scrutinized. (Wall Street Journal, Financial Times, South China Morning Post)
Chinese renewable-energy stocks have soared as investors believe the country’s drive to become carbon neutral will fuel heavy investment in wind farms and solar parks. Last month, President Xi Jinping said China’s carbon emissions will peak in 10 years and it will strive for carbon neutrality by 2060. Meanwhile, SPACs may have a tough time cleaning up on renewables, they face less of a direct incentive for going public. (Wall Street Journal, Wall Street Journal-2)
Hiring is one of the fastest-growing workplace AI applications, but imperfect algorithms leave qualified women and candidates of color out — and can ultimately build weaker teams. To address this, MIT professor Danielle Li built a new algorithm using a Fortune 500 company's data, because “to find the best workers over time, firms must balance ‘exploitation’ (selecting from groups with proven track records) with ‘exploration’ (selecting from under-represented groups to learn about quality).” The researchers built a resume screening algorithm “that values exploration by evaluating candidates according to their statistical upside potential… This approach improves the quality (as measured by eventual hiring rates) of candidates selected for an interview, while also increasing demographic diversity, relative to the firm's existing practices. The same is not true for traditional supervised learning based algorithms, which improve hiring rates but select far fewer Black and Hispanic applicants.” In one test, Li’s algorithm increased the share of Black and Hispanic candidates selected for first-round interviews from 10% (with human evaluators) to 23%. The share of women selected went from 35% to 39%. (National Bureau of Economic Research, Axios)
Technology
Video startup Quibi told investors it will shut down, a dramatic collapse in just six months ago. Investors—from Quibi CEO Meg Whitman to Google, Facebook and J.P. Morgan—are facing losses and figuring out what they may recoup. Quibi revealed that, after paying its outstanding bills, it would have only about $350 million left to return to shareholders, out of the $1.75 billion it raised. (The Information, Katzenberg/Whitman Open Letter)
As the remote work/tech services marketplace grows, Slack shares fell sharply amid heightening concerns about competitive risks from Microsoft, Zoom Video Communications, Alphabet’s Google unit, and others. Morgan Stanley analyst Keith Weiss cut his Slack rating, citing increasing competitive pressures in collaborative communications software. (Barron’s)
Republicans on the Senate Judiciary Committee voted to authorize subpoenas for Facebook CEO Mark Zuckerberg and Twitter CEO Jack Dorsey to testify about their handling of a recent unverified New York Post article about former Vice President Joe Biden’s son. (CNBC)
Google spent more than $1.9 million in lobbying in 3Q20, a 14.2% quarterly increase, as regulators their antitrust lawsuit. from the prior quarter. Former CEO Eric Schmidt defended Google, criticizing the government’s antitrust suit as misguided, unduly influenced by politics and a distraction from more serious issues facing the technology industry and the country. Meanwhile, Australia’s top competition enforcer signaled that it also will look into antitrust action against Google. (CNBC, Wall Street Journal, The Information, Statista)
The Coalition for App Fairness, a newly formed advocacy group pushing for increased regulation over app stores, more than doubled in size with 20 new partners — just one month after its launch. The organization, led by top app publishers and critics, including Epic Games, Deezer, Basecamp, Tile, Spotify and others, debuted in September to fight back against Apple and Google’s App Store control. (TechCrunch)
Smart Links
MBA applications to top 25 business schools are up an average 22.6%. (Forbes)
Remote work moves beyond white-collar jobs, allowing physical work at a distance—from surgery to seeding. (Wall Street Journal)
NASA to make major announcement of “exciting news” about the moon… on Monday. (The Independent)
Southwest Airlines will put passengers back in middle seats starting Dec. 1. (Dallas Morning News)
Peloton downgraded at Goldman, as stock has rallied too far too fast. (MarketWatch)
Airbnb hires famed former Apple designer Jony Ive as creative consultant ahead of IPO. (The Information)
How MIT, Harvard keep COVID-19 numbers low. (Cambridge Chronicle)
Chris Christie: I should have worn a mask. (Wall Street Journal)