Good morning.
What was striking about Donald Trump’s economic speech yesterday was that most of it could have been given by Mitt Romney, Paul Ryan, or indeed any other GOP candidate of the post-Reagan era. Cut tax rates, eliminate the “death tax,” reduce regulation, create tax breaks for families, and ignore the impact on the deficit – these are long-time staples of Republican politics. You can credit that to Trump’s new economic advisers Larry Kudlow and Stephen Moore, who have been crafting supply-side economic talking points for GOP politicians for four decades.
But what makes Trumponomics different is his addition of “America first” jingoism – the explicit rejection of the globalization that has powered economic growth since World War II. This is his siren call to the working class: he will “make America great again” by restricting immigration and renegotiating trade deals with China, Mexico, and others – protecting U.S. jobs in the process. “When we abandoned the policy of America First,” he said yesterday, “we started rebuilding other countries instead of our own.”
By coincidence, I had dinner last night with Joy Tan, who runs communications for Huawei – arguably the most global of China’s large companies. She presented the company’s latest “global connectivity index” which rates countries’ tech prowess, arguably the key to future economic growth, based on 40 different indicators. Number one on the Huawei list? The United States, which ranked far ahead of China, at number 23, and certainly Mexico, at 32.
Why does Huawei think the U.S. is winning the global economic battle, while Trump and his followers think we are losing? That’s the paradox of Election 2016. Many – myself included – would argue that relatively open trade and immigration policies are at the very root of the dynamism that has allowed the U.S. to continue to lead the world in the all-important technology race. But Trump – and Clinton, to a growing extent – are appealing to those who feel globalization has left them in the dust.
Which is why, despite Trump’s new supply-side rhetoric, I continue to argue that neither candidate in this race is pushing the agenda of business. Globalization is still at the very center of today’s most successful corporate strategies. But it has been voted off the island of American politics. That’s bad news for business, regardless of who wins.
By the way, Trump is far more entertaining without a teleprompter. I doubt he will make using one a habit.
More news below.
| Alan Murray | |
| @alansmurray | |
| alan.murray@fortune.com |
Top News
• Wal-Mart’s Statement of Intent
Wal-Mart agreed to buy e-commerce company Jet.com for $3.3 billion in cash and stock, in another clear statement of intent to challenge Amazon in the online space. It’s the biggest ever sum paid for an e-commerce startup and more than twice what Jet.com was last valued at. Wal-Mart will also put Jet founder Marc Lore of its online business, replacing its current online boss Neil Ashe, who is leaving the company. Lore spent two years at Amazon after selling his previous venture, Quidsi, to Jeff Bezos’ company for $545 million in 2010. With a record like that for creating value from nothing, the key question will be how long a giant like Wal-Mart can keep Lore satisfied. Fortune
• Qualcomm's Android Chips Not Paranoid Enough
With the pressure in the global chip market unrelenting, it’s a bad time to be suffering the kind of embarrassment Qualcomm just had. Researchers at security firm Check Point said they had discovered flaws in Qualcomm chips affecting 900 million Android devices worldwide that attackers could to gain ‘root access’ to the device: that means gaining control over the phone or tablet and the data on it—a spy’s dream. Check Point said anyone could exploit the QuadRooter vulnerabilities by getting a malicious app onto the victim’s device, and this app would require no special permissions to do its thing. Qualcomm said it had been informed of the vulnerabilities between April and July and had made patches available for all four to customers, partners and the open source community. Fortune
• Stabilization in China, Not in Europe
The world economy has had plenty of sources of instability to worry about so far this year, but one of the biggest appears to be under control for now. Chinese data showed producer prices falling at their slowest rate in over two years (only 1.7% in the year to July, from a trough last year of -6%). Another positive is that capital outflows are now well under control, FX reserves having stayed around $3.2 trillion for four months now after falling by some $600 billion since the start of last year. It’s a different story in Europe, which remains prey to worrying imbalances: the U.K.’s trade deficit his 12.5 billion pounds in June, the month of its EU referendum, while Germany’s trade surplus hit 26 billion euros (the cumulative surplus over the last four months alone is an eye-watering 95 billion euros). Reuters
• NBC Universal Snags Two Big Deals
Comcast’s NBCUniversal announced a big expansion of its partnership with video and photo-sharing service Snapchat to create “shows” related to some of its landmark properties, like The Tonight Show and The Voice. Unlike deals with Facebook and Alphabet’s YouTube, though, this won’t mean just pushing out clips of content that has already appeared on NBC’s channels, the company said. Instead, it will be creating new clips related to those shows that can be shared via Snapchat’s service. It was a much-needed big day for NBCUniversal, given the underwhelming viewing figures for the Rio Olympics so far. It also announced a seven-year deal for the TV and theme park rights to the Harry Potter franchise, allowing it to mimic Disney’s tactic of leveraging movie characters to the maximum effect. Fortune
Around the Water Cooler
• Winds of Change
The renewable energy industry passed a small but important milestone Monday as the first wind turbines were installed off the coasts of the U.S. (Block Island, RI., to be precise). Offshore wind has been one of the biggest sources of clean energy in Europe, but has lagged in the U.S., due to a discouraging regulatory environment, and comparatively high costs. However, technology and finance costs are falling, and the political environment is improving: Massachusetts, which was long in thrall to the owners of coast properties who didn’t want their view spoiled, last week passed an energy bill that includes the largest state commitment to offshore wind in the U.S. to date. Under the law, which the state’s Governor still needs to sign, utilities would have to contract the output from a combined1.6 gigawatts of offshore wind farms in a little over a decade. Fortune
• Fisker’s Reincarnation: It’s Karma
Fisker Automotive, the electric car company that went under after blowing $139 million in federal loans from the Department of Energy, is being reincarnated in China under the new name of Karma Automotive (seriously). The company that bought up the rights to Fisker’s assets is Wanxiang Group, whose billionaire founder Lu Guanqiu has filed plans to build a $375 million factory in Hangzhou to make up to 50,000 cars a year for the world’s biggest and fastest-growing electric vehicle market. The application says the bulk of the planned cars could be the lower-cost model formerly known as the Fisker Atlantic. Fortune
• Jeff Bezos’ Biggest Cash-Out Yet
Away from the Walmart/Jet.com action, over at Amazon itself, founder and CEO Jeff Bezos sold some $757 million worth of stock last week, according to a filing with the Securities and Exchange Commission. That beats the $671 million stock sale he made in May and it means that Bezos has taken $1.42 billion of his money off the table in the last three months. That’s come at a time when investors have been piling into the stock due to the stellar growth of Amazon’s cloud hosting business. The stock has risen 14% during the same three months. Even after the sale, the value of Bezos’ remaining Amazon shares has gone up about $8 billion from his last sale in May thanks to the company’s rising stock price. Fortune
• Delta’s Disaster
Delta Air Lines offered customers $200 vouchers to compensate them for over 650 flights that were delayed or cancelled yesterday morning by a network outage. The Wall Street Journal reported that the outage was due to the failure of a single computer router that malfunctioned at its data center in Dallas. The router governed critical systems and network equipment. The airline’s CEO ED Bastian also apologized via a video message. It remains to be seen how much damage the incident will cause to Delta’s otherwise solid reputation, the one consolation being that it happened soon enough after a similar one at Southwest last month to allow the impression that the problem is not specific to Delta. Fortune, WSJ, subscription required
