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Labor Markets, Brief Shutdown, Asian Sell-Off: CEO Daily for February 9, 2018

Good morning.

Bain & Company has an interesting report out this week looking at the three mega-trends that will disrupt labor markets over the coming decades: rapidly aging populations, accelerating automation, and rising inequality.

“You can’t think about any one of those issues separately,” Karen Harris, author of the report, told me. “They push and pull on each other.” Analyzed together, “they lead to some startling results.” Among them:

  • Automation may eliminate 20-25% of jobs in the U.S.—or 40 million—by 2030.
  • That will boost productivity and growth, but the benefits will flow to the top 20% of workers, plus the owners of capital.
  • The growth effects of rising productivity will be offset by a shrinking workforce in developed countries that could cut $5 trillion from GDP by 2030.
  • The reskilling and retraining of workers required by automation “could take several decades,” making a shortage of skilled workers a critical problem for business in the meantime.

Bottom line: it’ll be a period of considerable business, economic and political turmoil. You can read the full report here.

Meanwhile, global stock markets continued their meltdown yesterday and last night, with U.S. markets now firmly in correction territory. The passage of a bipartisan budget deal—while an encouraging sign of functioning government—is nevertheless adding to the market’s woes because it will increase the budget deficit and put upward pressure on interest rates.

More below.

Alan Murray

Top News

Brief Shutdown Ends

The U.S. government shut down again for a few hours, after Senator Rand Paul refused to allow a speedy vote on a bipartisan budget bill before midnight. The bill passed the Senate after midnight and won the approval of the House in the early hours of Friday morning, 240 votes to 186. Even though it was only a disruption of a few hours, it was the second shutdown of the federal government in all of three weeks. Politico

Asian Stocks Down Again

Stock market benchmarks in Japan, Hong Kong and Shanghai have followed their U.S. counterparts in heading towards correction territory. The Nikkei finished Friday down 2.3%, the Hang Seng 3.1% and the SSE Composite Index 4%. Short sellers are to blame, said BNP Paribas’s Kyoya Okazawa. However, the sell-off slowed down in European markets, where early losses were mitigated. Wall Street Journal

Bear Market Fears

Veteran investor Jim Rogers thinks the next bear market will be “the worst in our lifetime.” According to the 75-year-old, “debt is everywhere, and it’s much, much higher now” than it was at the time of the financial crisis. He didn’t say the bear market was immediately imminent, though. Alibaba Group Holding president Mike Evans said Rogers has been talking about severe corrections for decades. “I’m sure he’ll be right at some point,” he said. Bloomberg

Drone Rules

The U.S. Federal Aviation Administration will this year reportedly come up with rules for identifying drones and their pilots, so that it’s possible to figure out who’s responsible for mishaps. “From the law enforcement standpoint, at least in our country, that’s pretty fundamental,” said FAA Acting Deputy Administrator Carl Burleson, who suggested that this added to the regulator’s challenges in addressing drone safety. CNBC

Around the Water Cooler

Oxfam Haiti Scandal

An investigation by the U.K.’s The Times newspaper led to claims that Oxfam covered up the reasons why certain senior aid workers left the charity—reasons that allegedly included the downloading of pornography, and the use of prostitutes in Haiti during relief efforts there. Oxfam insists that there was no cover-up and that it “treats any allegations of misconduct extremely seriously.” Telegraph

The Deflationary Angle

While everyone is worrying about the prospect of inflation, former Quizlet CEO Dave Margulius has a warning about the effects of deflation that he says has become structural. Deflation has hit sectors from fossil fuel extraction to ecommerce, and is about to whack the service sectors, he argues: “At some point, deflation’s implied low margins should catch up with the valuations of all but a small handful of dominant companies. Whether that’s triggered by higher rates or some other catalyst is hard to say.” Fortune

Unclear Clearances

Dozens of White House employees still don’t have permanent security clearances after months on the job, including the president’s son-in-law, Jared Kushner. There seems to be disagreement over how unusual this is: national security lawyer Mark Said said people often work with interim clearances for months; but a former White House official said it’s unusual. Washington Post

North Korea’s Ivanka

The South China Morning Post has a profile of Kim Yo-jong, the little sister of North Korean dictator Kim Jong-un and the woman known in South Korea as “North Korea’s Ivanka.” Kim Yo-jong is notable for two things in particular: she’s the propaganda chief who is responsible for the north’s attempted charm offensive, and she has now become the first member of the Kim family to set foot on southern soil (she’s in Pyeongchang for the Olympics). SCMP

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