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Stocks Tumble, Bannon Defiant, Pentagon’s Missing Millions : CEO Daily for February 6, 2018

Good morning.

I’m glad I told you to buckle up yesterday morning, because the stock market took its biggest point dive in history—1175 on the Dow—effectively eliminating all of the market’s gains since the first of the year. The rout continued around the world last night.

Bitcoin also continued its nose dive, falling below $6,000. That means the cryptocurrency has now lost half its value since the first of the year.

Only two stocks rose yesterday. Ready for it? TripAdvisor (up 3.7%) and baking soda manufacturer Church and Dwight (up 2.4%). It’s possible new Fed Chief Jay Powell was using the latter’s stuff to combat indigestion his first day in office. In a comment after his swearing in, Powell said: “Today, unemployment is low, the economy is growing and inflation is low. Through our decisions on monetary policy, we will support continued economic growth, a healthy job market and price stability.” Because of the sell-off, markets are now betting Powell will only raise rates twice this year. On Friday, they were betting on three or four rate hikes.

Still, the Dow only closed down 8.5% from its high—not yet in correction territory, defined as a 10% drop. Blackstone President Tony James said on CNBC that the market could drop by 20% this year.

Separately, why did Volkswagen pay massive fines for its emissions scandal in the U.S., but not so in Europe? Roger Parloff does a deep dive, which you can read this morning, here.

More news below.

Alan Murray
@alansmurray
alan.murray@fortune.com

Top News

European Stocks Tumble

European bourses had a sour start to the day, with the FTSE and Dax falling about 3.5% each on opening. Asian exchanges had it worse on Tuesday—Nikkei down 6.5%; Hang Seng down more than 6%. Fortune

Bannon’s Testimony Defiance

Erstwhile White House senior strategist Steve Bannon will reportedly defy a subpoena that demands he appear before the House intelligence committee, which is investigating claims of Russian interference in the 2016 election. A source reportedly said Bannon does eventually want to meet investigators, but for now there is a “lack of agreement on the scope of questioning between the intelligence committee and the White House.” Guardian

Pentagon’s Missing Millions

The Pentagon’s Defense Logistics Agency failed to properly document more than $800 million-worth of construction projects, Ernst & Young found in an audit. According to a report, the agency has no way to accurately track its spending, due to weak financial management. This raises questions about the billions in extra funding that Trump wants to provide to the Pentagon this year. Politico

Polish Memory Hole

Polish President Andrzej Duda says he will ratify a deeply controversial law that prohibits the implication of Poland in the Holocaust. Protestors reportedly chanted anti-Semitic slogans as they demanded the law’s ratification. The U.S. and Israel have opposed the move, saying it represents an attempt to rewrite history, and to curb free speech. Poland was under Nazi occupation when camps such as Auschwitz were constructed on its soil, but historians say some Poles did actively participate in the ethnic cleansing campaign. Bloomberg

Around the Water Cooler

China’s Pension Tension

China’s aging population has over the last few years forced the government to make up the difference between retiree benefits and workers’ pension contributions. According to a researcher at the National Academy of Economic Strategy, the shortfall will reach 600 billion yuan ($95.6 billion) this year and 890 billion yuan in 2020, creating China’s biggest fiscal risk. South China Morning Post

Suffragette Centenary

It’s 100 years since the suffragette movement succeeded in securing the vote for many women in the U.K. Now, politicians and campaigners want the convictions of those in the movement to be belatedly overturned. More than 1,300 suffragettes were arrested between 1906 and 1914, with many women being jailed for violence. BBC

Victoria’s Secret Bet

L Brands boss Leslie Wexner thinks the Internet won’t kill bricks-and-mortar stores, and people will bounce back from their fascination with smartphones to seek social interaction in malls. “I’ve got 5,000 years of history on my side,” he said. L Brands, which owns Victoria’s Secret and the Bath & Body Works, recently revealed weak holiday results, prompting criticism of a “cultural struggle” within the firm. Wall Street Journal

Powerball Winner’s Dilemma

The winner of last month’s $560 million Powerball is trying to get a court to let her collect her winnings without revealing her identity to the world. “She is a longtime resident of New Hampshire and is an engaged community member,” said her attorney. “She wishes to continue this work and the freedom to walk into a grocery store or attend public events without being known or targeted as the winner of a half-billion dollars.” Washington Post

This edition of CEO Daily was edited by David Meyer. Find previous editions here, and sign up for other Fortune newsletters here.