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I am not the first to ask the obvious question: How can the stock market be doing so well when the economy is doing so badly?
The Information’s Jessica Lessin wondered last week specifically about tech stocks. The Economist devoted a cover story to the topic. This weekend, Fortune’s Anne Sraders wrote a smart piece encapsulating all the arguments why stocks have been so resilient in the face of a massive and rapid economic contraction.
I’ll boil the key points down to two, with the proviso that the first makes sense as far as it goes and the second doesn’t hold up. First, because the Federal Reserve Bank has injected so much capital into the U.S. economy, most big companies that need capital have access to it. With money cheap, investors need to buy stock to earn returns. Second, as Sraders explains well, the market already plunged on the horrible news of widespread destruction. Now it is focused on the inevitable recovery.
This strikes me as wishful thinking. The virus is loose on the land, where 25 million people are out of work. Factories are shutting, planes are grounded, and government budgets large and small are busted. If you think everything is peachy simply because folks in a few states are getting haircuts again, you really shouldn’t be buying stocks.
The effects of an economy that likely will be down at least 5% on the year won’t vanish once a few more people get sick. Tech companies sell their wares in the real economy, the one where there are food lines and uninsured and unexpectedly unemployed people. And just because there’s a recovery doesn’t mean it will be like it was before. But I hope I’m wrong about this.
Adam Lashinsky
This edition of Data Sheet was curated by Aaron Pressman.
NEWSWORTHY
How soon is soon. A defiant Elon Musk tweeted that he was reopening Tesla's factory in Fremont, Calif., before local county authorities okayed the move. “I will be on the line with everyone else,” Musk wrote. “If anyone is arrested, I ask that it only be me.” Gov. Gavin Newsom approved the restart of manufacturing in the state as of May 8, but Alameda County, where the Tesla factory is located, had other ideas. Tesla filed a lawsuit against the county over the weekend in an effort to open the plant sooner.
There was this devastating satirical piece on that on the op-ed page of the Times. Speaking of mean tweets, Twitter said on Monday that it's implementing a new policy on harmful and incorrect posts about coronavirus. Some will be removed, others labeled as wrong. Asked whether the policy would apply even to the oft-misleading Twitterer-in-chief, the company said labels would go on "regardless of who the speaker is."
Full speed ahead, Mr. Parker, full speed ahead. Returning to the land of overhyped startups, the troubles at short video service Quibi are starting to gain attention. Former Dreamworks boss Jeffrey Katzenberg talked to the New York Times for a story in today's paper. It's not nearly as entertaining as the Adam Neumann chronicles yet, but there are still some luscious bits. What went wrong, KBerg? “I attribute everything that has gone wrong to coronavirus." Why is TikTok so successful, KBerg? "That’s like comparing apples to submarines. I don’t know what people are expecting from us. What did Netflix look like 30 days after it launched?" What, indeed?
Picture perfect. A.I. apps have gotten really good at learning from images, so Intel and Microsoft developed a clever new way to uncover rogue malware programs. The project, dubbed Static Malware-as-Image Network Analysis, or STAMINA, converts binary computer code into greyscale images and looks for patterns. The project accurately caught over 99% of malware samples, the companies say.
Future perfect tense. Futures contracts linked to bitcoin have been trading successfully for a few years now, so it's time for derivatives on the next most popular cryptocurrency, it seems. Digital currency exchange ErisX, which already offers bitcoin contracts, said it launched Ethereum futures contracts trading on Monday.
FOOD FOR THOUGHT
Researchers at Indiana University wondered about whether the designs of web sites have gotten more or less diverse. They studied over 1,000 top sites to determine if they were starting to look more similar—and they were. Sam Goree, one of the researchers, explains the study in an essay for The Conversation.
On the one hand, adhering to trends is totally normal in other realms of design, like fashion or architecture. And if designs are becoming more similar because they’re using the same libraries, that means they’re likely becoming more accessible to the visually impaired, since popular libraries are generally better at conforming to accessibility standards than individual developers. They’re also more user-friendly, since new visitors won’t have to spend as much time learning how to navigate the site’s pages.
On the other hand, the internet is a shared cultural artifact, and its distributed, decentralized nature is what makes it unique. As home pages and fully customizable platforms like NeoPets and MySpace fade into memory, web design may lose much of its power as a form of creative expression. The Mozilla Foundation has argued that consolidation is bad for the “health” of the internet, and the aesthetics of the web could be seen as one element of its well-being.
ON THE MOVE
The Libra Association, Facebook's digital currency effort, is getting a new boss with plenty of experience in regulatory matters. Stuart Levey, HSBC’s chief legal officer and a former undersecretary of the U.S. Treasury, will take over this summer...Zoom added former national security advisor H.R. McMaster to its board of directors...Lyft hired Sacha Arnoud to lead its advanced development team working on self-driving car technology. Arnoud joins from Waymo where he led the perception team and worked on machine learning infrastructure...entrepreneur Jeff Ma joined Microsoft as manager of its effort to reach out to startups. Ma previously worked as VP of analytics and data science at Twitter.
IN CASE YOU MISSED IT
Working from home during coronavirus is going so well that this Fortune 100 company is going to keep doing it—permanently By Lee Clifford
A look at the tech troubles plaguing the stimulus check and PPP small business loan portals By Rey Mashayekhi
Say Amazon actually buys AMC Theatres. What would that be like? By Aric Jenkins
How the coronavirus crisis influences Melinda Gates’ $1 billion commitment to gender equality By Emma Hinchliffe
How Mastercard’s CEO is working toward financial inclusion during the pandemic By McKenna Moore
Do U.S. markets still have an appetite for Chinese IPOs? By Lucinda Shen
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BEFORE YOU GO
If you have thus far not seen Lin-Manuel Miranda's hyper-entertaining and historically informative musical Hamilton, your wait may soon be over. Miranda took to Twitter this morning to announce that the movie version of Hamilton is finally near release: July 3, coming to a streaming platform near you.
Aaron Pressman
