Talking Points
- Putin's chief critic Navalny is fighting for his life after being poisoned
- Michigan settled the toxic lead saga in Flint for $600m
- Joe Biden and Kamala Harris accepted their nominations
- Donald Trump gave fringe conspiracy group QAnon a shoutout
- An embattled USPS postmaster general reversed changes
- Justin Trudeau was accused of covering up an ethics scandal
- South Korea targeted a rogue church over a COVID outbreak
- Dozens of migrants died attempting to cross the Mediterranean
- A Hezbollah member was found guilty of the Hariri assassination
- Greenland lost more than one billion tonnes of ice per day in 2019
Deep Dive
Stock markets: at a record high. Apple: worth two trillion dollars. Jobs: disappearing like they're going out of fashion. The American economy: lost somewhere in-between Wall Street and Main Street.
What pandemic?
An aeon ago, in February, the S&P 500 index climbed to a record high of 3,386 points. This week it closed even higher , at 3,390. Given that the index represents more than 80% of the total value of the US stock market, it's a handy indicator of the mood on Wall Street. And that mood – given we're in the middle of a global pandemic – is, in a word, quixotic. It's been dubbed the "everything's awesome" rally; a perplexing foil for the millions of Americans who are sinking into unemployment or underemployment.
It's tempting to think that America's stock markets and the material conditions of its economy have somehow achieved a perfect state of negative correlation. But perception isn't everything. With the exception of the airlines and automakers, the most visible losses in the labour market have come from companies that are either not represented on the indices or that are at least not responsible for its growth. That's because the tech stocks that are propelling stock prices into space have tiny workforces (except, of course, for Amazon) . As one analyst said, "The COVID pandemic has taken existing trends - greater dependency on tech, online shopping, remote working, etc. - and supercharged them ." What the coronavirus pandemic has highlighted (in typically unsparing form) is who is and isn't part of the new American economy.
So, it's a good thing that Americans own stocks, right? If you squint, the 52% of the country who have skin in the game should be benefiting greatly from the bull run. But, unfortunately, that's not the case. Of that 52%, the vast majority do not directly own shares, but rather have access through their retirement 401(k) plans. Plans that a vast number of Americans are dipping into early, to stave off the devastation of this recession. And even if that weren't the case, 52% is still a shocking slide since 2007 when some 66% of Americans had a stake in the stock market. It's clear that the damage of the last economic crisis was borne by the working and middle classes. Don't think this one will be any different.
Apple's pie chart and Uber's brakes
The usual suspects may be behind this rally, but it's really you who are leading it. All this sitting and scrolling and watching is paying off handsomely – for the world's largest tech companies. Facebook has climbed strongly from its March nadir. Amazon's stock price , which seems to only know one direction, has nearly doubled since January 1. Netflix is up, as is Google. The FAANG stocks account for a full 20% of the S&P 500, and Apple has the largest slice of that pie.
This week the device-maker's market capitalisation crept over the $2 trillion mark for the first time. The company founded by two Steve's (and a Ronald, though no one remembers him) was the first US company to enter the trillion dollar club in 2019. Now, just two years later, it has gone one better. As they say, the first trillion is always the hardest. Apple's recession-proof rise has had an outsized impact on the S&P 500 (of which it contributes 7% of the total value ). To put its size in relative terms for our friends in the United Kingdom, Apple is likely a few weeks away from exceeding the value of the entire FTSE 100. Its shares are up 60% in 2020.
Another pair of stars from the new American economy were also in the news this week, though not for their untrammelled growth. Ride-sharing giants Uber and Lyft have been given temporary reprieve from California's judicial sword of Damocles hovering over their necks. In January the state passed AB5, a law that extended workplace rights to gig-workers by forcing such companies to reclassify their drivers as employees. Were that to eventuate, both companies would likely disappear, as their business models are built on not having to pay for the workplace protections that non-gig-working employees enjoy. They've fought tooth-and-nail in the courts to protect that model, and this week the presiding judge delayed judgement until October. Both companies are exploring alternative models, and have threatened to simply leave the state . More to come on this one.
Worldlywise
The Champions League earns its name
The winners of France's Ligue 1 face off against the winners of Germany's Bundesliga on Sunday night. What else could you ask for, really? France's best club, Paris Saint-Germain F.C., have their sights set on a first Champions League trophy . They counterattack with blistering speed thanks to French world cup hero Kylian Mbappé and the talismanic Neymar. Their opposition, FC Bayern Munich, have won their last 20 games , including their last three by an aggregate score of 15-3. They play high up the ground to give Serge Gnabry and the prolific Robert Lewandowski as much of the ball as possible. It is shaping up to be a brilliant game of football.
PSG is a fascinating club and a divisive one, not least because of its ownership. After spending years in the doldrums, it was bought by Qatar Sports Investments in 2011, becoming just the second European club to be snapped up by Gulf princelings (after Manchester City in 2008). With no discernible football culture of its own, the tiny oil-rich kingdom was buying one to bolster its bid for the 2022 FIFA World Cup. If the PSG purchase was nought but an expensive marketing exercise, it's been a successful one: they've won all but one of the last eight Ligue 1 titles and Qatar got its World Cup. Nearly a decade on from that scandalous cash-splash, Gulf money is now ubiquitous in European football .
That said, it's not like Bayern are struggling to rub two coins (or trophies) together. They are valued at over €3b. The Bavarian club is run by an aktiengesellschaft (a public limited company); a separate organisation that counts Audi, Adidas, and Allianz among its owners. But while these leading lights of the German economy have a seat at the table, their combined share is 25%. The club owns the rest. It's also a recipe that works – they've won eight consecutive Bundesliga trophies and a Champions League since 2012. Which creates a tantalising match-up : a club that owns (most of) itself against a club that has struggled to shake-off the tag of being a Gulf monarchy's plaything.
And now for something completely different
It's 2012, and Mali is at war with Tuareg rebels. Much of the north of the country has fallen under Tuareg sway . The fighters, many who've cut their teeth in the Libyan civil war, are asking questions of the Malian army that have no ready answers. As the security situation worsens, the Malian army turns inwards and launches a bloody attack on the government in Bamako. A chorus of international condemnation falls on deaf ears; President Touré is detained and deposed. New elections are called, and the following year Ibrahim Boubacar Keïta is sworn in as the president of Mali.
It's 2020, and Mali is at war with Islamist rebels. Much of the north remains under the rule of five major Islamist groups who wrested it from the Tuareg years ago. The French have returned to their former colony to hunt jihadists from the sky with drones, but the under-equipped Malian army is suffering the human casualties of this war. The story of Keïta's presidency is one of diminishing economic returns, and despite winning reelection in 2018, the country has stagnated under his rule. Public opinion turned against the presidential palace, and hurried delegations from neighbouring West African nations attempted to defuse the situation. They could not. And so on Tuesday night the army did what the protesters could not – it seized the capital by force and toppled Keïta .
The international community, led by the African Union , has been strident in its criticism, calling for a swift return to democracy. But the protests are not shared by many Malians, who view the coup as a corrective measure. The country, or at least some of it, is now under the command of one Colonel Assimi Goita , who has promised a transitional government and new elections. We hope the past decade will represent a rhyming couplet in Mali's history, and no more: Malians deserve an uninterrupted period of competent civilian rule .
The Best of Times
Shrewd as snakes, fast as cyclists
The majestic Somali sengi has been rediscovered after a 50-year hiatus. It had apparently thrown off the shackles applied to it by taxonomists and moved over the border to Djibouti. There it has presumably been minding its own business, zooming around the Djiboutian highlands (actually zooming, it can run at 30kmph). Good for it. As you can tell, elephant shrews share a nasal protuberance with their pachyderm namesakes. That and the fact they ought be protected at all costs.
Britain introduces legally-binding environmental targets
Remember, folks: if those sustainability initiatives aren't enforceable by law then they aren't worth dust.
The Worst of Times
Fires blacken the Golden State
350,000 acres of California has been burned by (at least) 367 wildfires in a matter of days this week. Last year’s wildfire season, thought to be the state’s worst in recorded history, swept through 410,000 acres in over a month — destroying 150 homes. This time, the wildfires have destroyed 105 homes, and forced 60,000 people to flee. Extreme heat and 11,000 lightning strikes in one 72-hour period are the main culprits for this wave of destruction.
Coronavirus hits California's prison firefighters
When wildfires burn California, state prisoners are sent in to put them out. These incarcerated firefighters are thrown into some of the most dangerous workplace conditions imaginable and are paid anywhere from $2-5 per day when working at the fire camps (with a generous $1 extra per hour if they’re sent to the fire-front). This year, though, coronavirus outbreaks in prisons mean that only 30 of the 77 prison crews are able to help fight the wildfires. This is an abominable practice and one that should horrify American civil rights activists.
Weekend Reading
The image
The quote
"There is no new election until you kill me."
– Belarusian President Alexander Lukashenko issues an ultimatum to a nation that is admittedly pretty damn close to taking him up on the offer.
The numbers
50%
- Female-led countries have had half as many coronavirus deaths as male-led countries, according to this study of 194 countries. Those countries have also had fewer cases and more ‘decisive’ responses to outbreaks . Keep this in mind next election day.
900,000
- The estimated number of unintended babies that will be born because women and girls cannot access contraceptives and abortion services during lockdowns. A further 1,500,000 women and girls are expected to undergo unsafe abortions.
The headline
"Why we're all hypocrites in the end" – The Financial Times .
The special mention
Whoever made off with a heavy safe containing 1m yen from Iga-ryu Ninja Museum . Achieving this deft theft in the space of a few minutes would've no doubt earned a nod of appreciation from the covert spies and assassins the museum was dedicated to.
A few choice long-reads
- Foreign Affairs catches the thieves who bankrupted Lebanon
- Bloomberg roots out the spies in Twitter's ranks
- The Economist on how viruses reshape the world
EDITOR'S NOTE:
Tom Wharton
