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Good morning.
NYU tech guru Scott Galloway wins the prize for getting the first book to market on the post-Corona economy. He quickly and correctly zeroed in on what makes this economic crisis so distinct from those of the past: it was an accelerant, not a retardant. “A virus one four-hundredth the width of a human hair grabbed a sphere weighing 13 billion trillion tons and set it spinning ten times faster.”
Galloway completed his manuscript in August, and while some of his predictions seem obvious—big tech is a big winner; work from home is here to stay; cash is king—others may prove premature. Like Andrew Cuomo, he might have been prudent to let the crisis play out before penning a book.
But I was taken by his chapter on higher education. The virus, he points out, “has been especially hard on industries whose customers consume the product sitting shoulder to shoulder, like sports, airlines, restaurants, events—and…universities.” In the case of higher ed, it is hitting a sector already overripe for disruption. College tuition has increased 1,400% in the last four decades, demographics is about to deliver a body blow to demand, online higher education is finally maturing, and the best companies—as I’ve said here before—are working hard to retool their hiring systems to focus more on skills, less on college credentials. A pandemic that shuts down campuses could—and probably should—create a perfect storm.
By the way, in a separate chapter, Galloway refers to the “founder-worship era” in the venture capital business. That was the topic of a brilliant piece by Charles Duhigg in last week’s New Yorker, focusing on the spectacular collapse of WeWork. The fundamental problem, says Duhigg, is not the emergence of a charismatic cult leader like Adam Neumann—it is the VC culture that enabled and encouraged Neumann to do his thing, with no constraints. This week’s must-read.
More news below. And an early warning: Fortune announces its Businessperson of the Year on Wednesday. Who should win? Send in your predictions.
Alan Murray
@alansmurray
alan.murray@fortune.com
A correction, courtesy of Heidrick & Struggles, which told us last week that only 3% of new CEOs appointed between March 11 and June 30 in the U.S. this year were women. In fact, they missed one. The number was actually 6%, compared to 12% in the five months before the pandemic.
TOP NEWS
Wall Street data
Two of Wall Street's biggest data providers may merge, as S&P Global is reportedly close to buying IHS Markit for around $44 billion in stock. London-based IHS Markit's market value is around $37 billion, and S&P Global's around $82 billion. Fortune
Biden team
More on President-elect Biden's economic-team appointments: Center for American Progress chief Neera Tanden is reportedly going to head up the Office of Management and Budget, Princeton economist Cecilia Rouse will chair the Council of Economic Advisors (and be the first Black person to do so), and Janet Yellen's top deputy at Treasury will be Adewale Adeyemo. In short, expect more aggressive fiscal stimulus, and more government spending on issues such as education, infrastructure and the green economy. Wall Street Journal
China blacklist
President Trump will reportedly add China's top chipmaker, SMIC, to the U.S. blacklist of companies with alleged ties to the Chinese military. Ditto the oil and gas producer CNOOC. For the companies, that will mean less access to American investors. And of course it's likely to exacerbate tensions between the U.S. and China. Reuters
Wet iPhones
Italy's competition authority has fined Apple around $12 million for claims it made about the water-protection of its iPhones. The AGCM said Apple had claimed various levels of water resistance for models from the iPhone 8 on, but the claims only stood up under lab conditions involving still, pure water. It also noted that the devices' warranties are voided in cases of damage involving liquids. Business Insider
AROUND THE WATER COOLER
Lloyds CEO
The U.K.'s Lloyds Banking Group (the country's biggest lender) has named HSBC wealth chief Charlie Nunn as the replacement for outgoing CEO Antonio Horta-Osorio. Nunn has been at HSBC for nearly a decade, before which he worked for Accenture and McKinsey. CityAM
5G progress
The Swedish telecommunications equipment giant Ericsson predicts that there will be 220 million 5G subscriptions by the end of this year, up from an earlier forecast of 190 million. The increase is mostly down to China. Reuters
Australian wine
China's new tariffs on Australian wine—as much as 212%—will have a "devastating impact" on Australia's smaller wine producers, according to the country's national association of wine and grape producers. Beijing claims Aussie producers dump their product on the Chinese market, but the dispute is really part of a wider argument, relating to a variety of issues, that is rapidly escalating (see also: China's foreign ministry spokesman tweeting a doctored picture of an Australian soldier holding a knife to the throat of an Afghan child.) CNBC
Student debt
What would happen to the U.S. economy if President-elect Biden cancelled most federal student loan debt, as Senate Minority Leader Chuck Schumer hopes will happen? According to research conducted a couple years back, the result would be higher GDP, slightly lower unemployment, more than a million new jobs, and slightly higher Fed interest rates. Fortune
This edition of CEO Daily was edited by David Meyer.
