Divided government would be good for business
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The financial markets have decided that divided government—with Democrats winning the White House and Republicans holding the Senate—is a good thing for business. (Read this and this.) I’m inclined to agree. A “blue wave,” with Democrats controlling both houses of Congress, would have left a President Biden vulnerable to the anti-business demands of his left wing. A mixed result means if elected, he will have to reckon with Mitch McConnell—which either leads to gridlock, or, more hopefully, to a much-needed effort at reconciliation and more centrist policies.
Infrastructure would be a good place to start. And I’m not just talking roads and bridges. The pandemic has exposed an urgent need for universal broadband, so those in inner cities and rural areas can fully participate in the digital revolution. Investment in green energy would help address the risks of climate change, and has some bipartisan support. A focus on financing public-private training platforms that provide alternative pathways to good jobs for those left behind by the technology revolution should be embraced on both sides of the great divide. Given current low interest rates and ample capital, borrowing to fund such urgent priorities should be a great opportunity for a new President to use whatever limited political capital this fractious election leaves him to make bipartisan progress.
In any event, divided power in Washington likely means the pressure on CEOs to step up on social issues will continue. I talked yesterday with Joshua Bolten, CEO of the Business Roundtable, which last year revised its definition of the purpose of business to give multiple “stakeholders” a standing on a par with shareholders. Bolten says the tumultuous events of the past year have only increased his members’ commitment to that cause.
“All three of the crises—the health crisis, the economic crisis, and the latest chapter in the crisis of racial equity—have prompted the CEOs to revert even more than they had been to the full breadth of their stakeholders. All three of those crises were pan-crises. The pan-crises have made them lean in” to stakeholder capitalism, he said.
And since it is Friday, some feedback—especially to yesterday’s post about the election results. I liked this one, with apologies to Dave Mason:
“Clearly there is NO mandate and the nation is remarkably divided. We the people need to get back to dialogue…There are no good guys, there are no bad guys; there’s only you and me and we just disagree.”
Less conciliatory was this one:
“When you on the Left finally acknowledge your insatiable need to usurp power over all of us maybe then a discussion of ‘sense of community’ can begin.”
And finally this:
“If you ever learned anything from history class, you would understand we have always been a nation divided. Both major parties are to blame.”
More news below.
The Justice Department has filed an antitrust suit over Visa's planned $5.3 billion takeover of fintech player Plaid. The suit alleges that Plaid poses a significant threat to Visa in the online debit market, and its purchase would allow Visa to unlawfully maintain a monopoly in that market, thus harming customers by keeping prices high and stymying innovation. Wall Street Journal
EasyJet, stricken like all airlines are by the pandemic, has sold 11 Airbus jets so it can lease them back. The sale raised $169.5 million, which could help the British budget giant handle what's turning out to be a dismal quarter—thanks to fresh European lockdowns, EasyJet will fly a mere fifth of its planned capacity. Bloomberg
The coronavirus pandemic continues to gather steam in the U.S. Yesterday was the second straight day in which the country recorded at least 100,000 new cases (in this case, over 116,000.) The U.S. has now recorded more cases in the last week (650,600) than Germany has during the entire pandemic (619,100.) Financial Times
The resurgence of the COVID-19 pandemic has led Europe's executive body, the European Commission, to scale back its forecast for a post-pandemic recovery. Its fall economic forecast sees a 7.4% contraction in EU GDP this year, which is better than last quarter's forecast, but 2021's projected growth is down from 5.8% to 4.1%. EU economy chief Valdis Dombrovskis: "This forecast comes as a second wave of the pandemic is unleashing yet more uncertainty and dashing our hopes for a quick rebound." Fortune
AROUND THE WATER COOLER
The U.S. Justice Department has seized around $1 billion worth of bitcoins from "Individual X," who is apparently a person rather than a mid-'90s industrial band. Identity aside, the timing is interesting: the digital wallet holding the virtual coins belonged to a hacker who stole them from the operator of the taken-out Silk Road underground marketplace in 2012, and the coins were shifted in 2015, after which they stayed still. So why did no one touch them in the last five years? Fortune
Abuse of position
Michael Link, the head of the international team of election observers monitoring the U.S. elections, yesterday accused President Trump of "an unprecedented abuse of his position," due to his calls for a halt to the counting of legitimately cast votes. Trump continued in that vein last night, in a speech that claimed the election was being stolen from him—he emitted so many falsehoods that many U.S. networks cut away from the broadcast. Fortune
Belgium has been hammered exceptionally hard by the pandemic, in both the first and second/current waves. Why? As this CNBC piece explains, it's down to politics—conflicts between regional and federal—as well as high population density, and the fact that Belgium reopened very quickly earlier this year. CNBC
Bentley, the British luxury carmaker, will only be selling hybrid or fully electric vehicles by 2026, and only electric by 2030. The Volkswagen-owned company also said its manufacturing will go completely carbon neutral in that timescale. CEO Adrian Hallmark: "Within a decade, Bentley will transform from a 100-year-old luxury car company to a new, sustainable, wholly ethical role model for luxury." BBC
This edition of CEO Daily was edited by David Meyer.