If you could tell the next U.S. president to focus on one thing, what would it be?
That’s the question I asked GM CEO Mary Barra and Salesforce CEO Marc Benioff at the end of a wide-ranging conversation at about how technology is transforming business and changing the nature of leadership. (You can read more about the conversation, which took place at Benioff’s Dreamforce conference, here.)
They both gave the same answer: education. New technologies will both destroy jobs and create them, they agreed. The key is to make sure Americans have the skills to fill the new ones.
“There are many problems that need to be solved,” Barra said. “But the one piece of advice I’d give is to partner with business to solve them. And education is at the top of the list.”
Barra said she thinks STEM education, in particular, “is incredibly important. With all this technology disrupting industry, people are going to need strong math and science skills.”
Both Benioff and Barra are working in their local communities to address education problems. Benioff said his goal is to make the San Francisco area number one in the country in education. Barra later said her goal is to do the same in Detroit. We’ll see if that issue gets any attention at the presidential debate Sunday night.
Benioff also made it clear why he wants to buy Twitter, even though his shareholders disagree.
More news below.
• Hurricane Matthew Heads North
Matthew, the first major hurricane threatening a direct hit on the U.S. in more than 10 years, lashed Florida on Friday with heavy rains and winds, after killing at least 339 people in Haiti on its destructive march north through the Caribbean. Although the hurricane was downgraded to a Category 3 storm as it approached the U.S. mainland, winds gusts of up to 70 miles per hour and heavy downpours were still reported across coastal communities in Florida, the National Hurricane Center said in an advisory. The NHC’s hurricane warning extended up the Atlantic coast from southern Florida through Georgia and into South Carolina. Those three states and North Carolina have all declared states of emergency. More than 12 million people in the U.S. are under hurricane watches and warnings, according to the Weather Channel.
• A Different Sort of Hard Pounding
A 6% ‘flash crash’ in sterling underlined how badly markets have been shaken this week by the Conservative Party’s apparent prioritization of tighter immigration controls over free trade with the EU as part of the Brexit process. A ‘fat finger’ in a period of low overnight liquidity seemed to be responsible for a brief drop to a new 31-year low of $1.2035 but, tellingly, the pound is still over 2 cents below where it was before the incident, and volatility has continued well into the European morning. The trigger appeared to be some hawkish words about the U.K.-EU divorce settlement by French President Francois Hollande, a man who will almost certainly have no influence on the process, given his poor chance of re-election in May. That’s a good illustration of how fear is stalking what is supposedly the most rational of markets.
• The Dollar Marches On Pre-Payrolls
It’s Payrolls Day! Wall Street reckons that the economy will have added 175,000 non-farm jobs in September: any more will strengthen expectations of an interest rate rise even before the election by a Federal Reserve that may feel the need to show its independence after fielding accusations of partisan bias from GOP nominee Donald Trump in recent weeks. The flip side of that argument is of course that the Fed would expose itself to charges of giving in to pressure from the other side. The unemployment rate is expected to stay at 4.9% while average hourly earnings are slated to edge up by 0.2% after a 0.1% rise in August. With the market scare over the ECB ‘tapering’ its QE program now over, a strong labor market report could also send the dollar back into appreciation mode vis-à-vis the euro, which is also suffering from some (ultimately Brexit-driven) Angst. The single currency slid to its lowest level in nearly two months against the dollar overnight.
• Wal-Mart Braces for an Expensive Migration
Wal-Mart said it would significantly slow the pace of new store openings and concentrate resources on building up its online operations as it uses its acquisition of jet.com to try to close the gap on Amazon.com. Wal-Mart’s online business, worth $14 billion, is still barely one-sixth the size of Amazon’s. The need for heavy investment (including, possibly through the acquisition of a stake in India’s Flipkart) is likely to depress cash flow for some time: the company told Wall Street analysts it expects its capital spending to rise to $11 billion next year. Earnings per share are expected to be flat next year, than rise 5% in 2018. The market didn’t like the news much, driving Wal-Mart’s shares down 3.2% to a four-month low.
Around the Water Cooler
• China’s Capital Outflows Resume
After a few months of relative calm, here’s another worrying sign of the impact of a changing interest rate and trade environment. China’s foreign reserves fell by $19 billion in September, the biggest monthly decline since May and more evidence that the central bank is having to work harder to keep the yuan’s exchange rate (more or less) where it wants it. Some analysts estimate it spent $40 billion to support the yuan last month—a fact that will no doubt be ignored by those who prefer to trash the country as manipulating its exchange rate to give its exporters an unfair advantage. Despite the increase, capital outflows are still well below their peak of last year, but concerns about the health of China’s banks will ensure that any actual increase in U.S. rates is a real test for Beijing’s system.
• Verizon Wants A $1 Billion Discount On Yahoo
Suspicion that Verizon would try to revise the terms of its acquisition of Yahoo’s Internet business hardened. The New York Post reported that Verizon wanted a $1 billion rebate on the $4.8 billion it agreed to pay before news of a massive data breach in 2014 leaked out. Verizon may have further reasons to ascribe a lower value to the Yahoo accounts it agreed to buy, in view of disclosures that Yahoo agreed to a new variant of mass surveillance by U.S. law enforcement. In other news, Verizon’s long-awaited divestment of its cloud data centers appears to be close to becoming reality, with a sale to Equinix for around $3.5 billion being mooted on Wall Street.
• Mars Buys Buffett Out of Wrigley
Eight years after they teamed up to buy the world’s most famous gum maker for $23 billion, Mars and Berkshire Hathaway are parting ways. The privately-owned maker of M&Ms and Snickers is buying Warren Buffett’s firm’s 19.4% stake for a still-undisclosed amount. Mars Chocolate and Wrigley will continue to operate separately for the time being, but Mars did indicate it will combine the two businesses to form Mars Wrigley Confectionery. That bigger business will be steered by 30-year Mars veteran Martin Radvan.
• Germany’s Blue-Chips Rally Round Deutsche Bank
The newspaper Handelsblatt reported that some of Germany’s blue chip companies could subscribe to a capital increase at Deutsche Bank to ensure the survival of the country’s only globally relevant financial institution. World champions in export, German companies don’t like the idea of being dependent on U.S. banks (or French or British ones for that matter) for financial support to penetrate world markets. The irony here is that Deutsche spent most of the last 20 years divesting a raft of stakes in some of the same companies, in order to fund its expansion in a business model that has now apparently reached the end of its natural life. Separately, Bloomberg reported that the bank is talking to potential underwriters about raising some 5 billion euros ($5.6 billion) through the sale of new share. Deutsche stock is up 0.9% in Frankfurt at a three-week high.
Summaries by Geoffrey Smith
E-mail: email@example.com Twitter: @geoffreytsmith