Talking Points
- The Charlie Hebdo blasphemy row became an international incident
- Europe's two largest economies reentered lockdown
- Widespread protests challenged Poland's shocking abortion ban
- Armenia and Azerbaijan shelled one another unabated
- Belarusian workers launched a nationwide strike
- An avalanche of fraud was discovered in US coronavirus relief
- Protests erupted in Philadelphia over another police slaying
- Chileans voted to scrap their junta-era constitution
- LVMH bargained Tiffany down to $15.8b in a long-delayed purchase
- Australian scientists discovered a huge (and healthy) new coral reef
Deep Dive
Haven't the last four years just flown by? Another US Presidential election is upon us, and an even more bizarre one than the last. The global pandemic has warped the campaigns, but that hasn't stopped the parties from dropping a sweet $6.6b on the race. The president's plan was to rehash his barnstorming 2016 campaign. His opponent's plan was to remind people that he isn't Trump. And now America decides.
Rust Belted
They were all wrong in 2016. So in this cycle all the pollsters and pundits have been gyrating in a synchronised dance of backside-covering. Every prognostication comes quadruple-wrapped in caveats, qualifiers, modifiers and hedges. It's undeniably great that some within the Beltway have begrudgingly discovered self-criticism. It's also a definite positive if more people understand that polling abstractions are not as epistemologically sound as they look in snazzy graphs. But even so, it's all feeling a little ethereal. Aggregated national polls show former Vice President and ice-cream-cognoscente Joe Biden leading current President and coronavirus-survivor Donald Trump by 9-12 points. Biden has consistently polled above 51% nationally while Trump's support has remained tethered around 42%. So even if the polls are again as wrong this year as they were in 2016, Biden still wins in a landslide. Let's see how.
First, to the Rust Belt states of Wisconsin, Pennsylvania, and Michigan, which bucked decades of Democratic fidelity in 2016 and wrote in Trump. In a fit of Sophoclean hubris, the Clinton campaign had declined to expend resources in the steadily-blue Wisconsin. The state would end up delivering all 10 electoral college members to Trump by the barest margin of 22,748 votes. But Trump's promise to revitalise local manufacturing has proved easier said than done. And it appears the heavy-handed response to the Jacob Blake protests in Kenosha has not redounded to Trump. Two respected polls this week nodded to a Biden victory there, one by a healthy 5 points, the other by an eye-popping 17 points . It's a similar story in Michigan, where Biden looks likely to claim another 16 electors. But Pennsylvania remains a toss-up. Despite Biden's historical ties to Scranton, his 5 point lead over the president is wavering. And those 20 Pennsylvanian electors may well be the difference in deciding the presidency. Biden may also face a deus ex machina in the form of the Supreme Court (more on that later).
Let's leave behind the gutted industrial core of the 20th century American empire and venture to the muggy beaches of Key West, Florida. Here, the GOP managed to stave off the blue wave and retain the governor's mansion in 2018. But the race this year is far too close to call. Americans use any number of euphemisms for Florida's politics (most are not suitable for sharing) but we'll settle for 'unique'. As Al Gore discovered in 2000, Florida's 29 electors are the ultimate prize for any White House; it's a must-win for Trump. And there's barely a point or two in it. Sailing west across the Gulf we arrive in Texas, the red stronghold that is starting to blush purple. Democrats have been talking about flipping the Lone Star state for decades, but interestingly can no longer rely on a single-issue (immigration) bloc of Latino vote because their policies are functionally the same as the Republicans. Trump is up by 3 points here – an upset is possible.
Other GOP prizes that the Democrats have eyes for include North Carolina (which had its own share of mail ballot funny business ) and Georgia. The latter will be fascinating to watch as the incumbent governor Brian Kemp has transformed it into a state-of-the-art laboratory for voter suppression . As we saw in the 2018 gubernatorial race, Georgia can make hundreds of thousands of Democrat-leaning Black votes vanish thanks to some truly malicious voter registration laws. A Biden victory here would be extraordinary – he is within a point or two of the president. But don't hold your breath.
Supreme confidence
In the eventuality of a fair Trump victory you'll be within your rights to demand a blood tribute from the pollsters. But the word 'fair' carries a lot of weight in that sentence. Of the few paths that lead Trump back to Pennsylvania Avenue, most involve extraordinary interference. The first of these paths would be by nullifying the turnout. That's what killed the Clinton campaign in 2016. Trump won the election with fewer Republican votes than Mitt Romney had lost with just four years earlier. America's 2020 election is shaping up to have the highest turnout in recent decades. At time of writing, more than 84 million Americans had already cast their votes . There is an argument that those who would vote on election day are simply getting in early to mitigate the risks of contracting coronavirus (cases are rising in 48 states). But this doesn't hold up. Some counties in swing states have already recorded more mail ballots this cycle than the total votes cast in 2016. And so, American psephologists expect a historic mobilisation of voters, and for those extra voters to pass judgment on the current president's non-existent coronavirus plan.
So Trump's best bet is to ensure those votes aren't counted. Thanks to the wonders of America's federalist system, every state has its own procedures for receiving, tallying, and recounting mail ballots. Some states count them on election day, while others won't open them for several days afterwards. And each state has a unique dynamic between electoral authority and statehouse, and disparate sets of laws that govern their interactions. Luckily for the Republicans, they hold the statehouses in a number of crucial swing states. Wisconsin is an exemplar of this: their GOP government has fought tooth and nail to narrow the window for mail ballots. An earlier federal court ruling held that Wisconsin election officials could continue counting mail ballots that were postmarked November 3 as long as they were received before November 9. This was challenged in the Supreme Court, which on Monday threw out the ruling (5-3) and declared invalid any mail ballot that arrived after election day. Wisconsin Democrats have spent the week frantically chasing down the 300,000 mail ballots that had been sent but not returned.
A similar case from Pennsylvania Republicans fell over in the Supreme Court on Wednesday, but the door was left wide open for a post-election challenge . This is where things become truly chaotic. It has long been the tradition that Americans wake up to a clear result the morning after Election Day. Many races are called between midnight and dawn. This will not be the case in 2020, and it's those crucial days afterward that hold the key for an unlikely Republican win. Supreme Court Justice Brett Kavanaugh reaffirmed the ballot deadlines "to avoid the chaos and suspicions of impropriety that can ensue if thousands of absentee ballots flow in after Election Day and potentially flip the results of an election". Here we see a dubious legal argument that reifies the perception of a result while dispelling the reality of a result. It was rebutted by Justice Kagan, though her dissent will be nothing more than a footnote of history if a conservative-majority court enforces what Kavanaugh described as the need to "definitively announce the results of the election on election night, or as soon as possible thereafter".
For Biden, a sizeable victory has been forecast. But he'll be wanting an unassailable lead on Election Night. For Trump, victory requires a great deal of luck (once again) so that critical results in swing states go his way. He'll likely also need a large number of votes to be invalidated in the Supreme Court.
Our money's on Biden.
Worldlywise
Ex-ante and post-Ant
Luck comes in many shapes and sizes. You might find a $20 bill on the ground. Or you could discover the world's second largest oil reserve under the desert your family has been intermittently ruling since the 1700s. Last year, Saudi Aramco, the oil giant and private coffer for the House of al-Saud, made good on that luck and went public with the world's largest Initial Public Offering (IPO) of $29.4b. But if a stroke of cosmic luck delivered that, what could possibly be behind a $34.4b IPO ? Just ask Jack Ma, the legendary Chinese business mogul.
Ma not only claims the next-largest listing behind Saudi Aramco – ecommerce giant Alibaba's $25b debut on the New York Stock Exchange in 2014. He is now besting both with Ant Group . The Alibaba affiliate company runs Alipay, China's largest digital payment platform, and boasts one billion customers (which is faintly ludicrous when you think about it). The FinTech behemoth has cemented itself as one of the world's largest companies without even breaking through the consciousness of many in the Western world (you can pin that one on a parochial press). The company announced plans for a dual listing on the Shanghai and Hong Kong stock exchanges and sought to raise $17.2b on each.
This week, Ant oversubscribed its retail book on the mainland some 872 times. It was the opportunity of a lifetime for Chinese and Hong Kong investors to get in on a company that has revolutionised how China pays. Ant Group's products are used by a substantial fraction of the world's population – it's dual listing speaks volumes of where the locus of financial power will sit in the coming century. Jack Ma is well aware of the clash – just this week he challenged US banking rules that he believes are stifling the development of a Chinese cryptocurrency. Ant Group will be on the frontline of the battle over the hegemony of the US dollar, and trading is set to begin on November 5.
Sink your FAANGs into this
It's time to visit everyone's favourite anti-competitive corporations (note: Congress's words, not ours) and see how they fared in the September quarter. Apple had a bite taken out of its iPhone sales in the last quarter because it didn't release any new handsets in China , but it still managed to post a new revenue record of $64.7b. It beat the market expectations but not to the extent that the rest of those at the top of the Nasdaq did. Amazon, which has doubled its workforce since the beginning of the pandemic, posted a startling increase in net sales (up 37% to $96.1b). We do not recommend googling how much Jeff Bezos's wealth has increased this year.
Alphabet rode high with $11b in profit as clients flocked back to its digital advertising platform. Keep an eye on this as US regulators take aim at its search market share and sweetheart deal with Apple . Facebook's Mark Zuckerberg happily reported expectation-busting revenue of $25.1b but had few answers for why millions of Americans and Canadians are leaving the platform. Remember the Facebook ad boycott? Neither do we... As we mentioned last week, Netflix missed its subscriber targets and has responded by hiking its prices in the US – it should be noted that neither we nor Congress include Netflix in the anti-competitive sin bin.
What's fascinating about the business press is that it doesn't just pick local favourites at the expense of international coverage (a la Ant Group), it can also sometimes obscure what's happening at home. Take the formulation above. FAANG stocks are really all that get chirped about in the day-to-day churning of the news – they are the innovators and disruptors, so it goes. But lionising innovation means we ignore success of a different type, like that of boring old Microsoft. If you had to catch a yawn there, you're not alone. But that attitude means we might overlook Microsoft's $13.9b quarterly profit . Profit! The old timer of US tech has adapted to the world of cloud computing and the horizon looks just like one of their idyllic background photos.
The Best of Times
Neutral benefits
Two of the world’s biggest economies committed to being carbon neutral by 2050. They may just be pledges, but it's the ambition that counts: Japan and South Korea are two of the world’s worst emitters. When we talk about the Asian Century, this is what we mean.
Moonslaker
Not only do we now definitively know about the existence of water on the moon, we also know the two places to find it . If and when we go to the moon again, we can brave the cold of the moon’s poles and find ice water, or stay in the sun and find molecular water in Clavius crater .
The Worst of Times
Vietnam's postdiluvian nightmare
The biggest storm to hit Vietnam in two decades left 1.7m people without power, and tore through 56,000 homes. Typhoon Molave hit Vietnam with 150km/h winds, and killed at least 35. After Molave, a triplet of landslides struck Quang Nam, a province still reeling from the effects of flooding that just weeks ago had killed 136 and destroyed hundreds of thousands of homes .
No ice, but not neat
Arctic sea ice has yet to begin forming this year — the longest delay for the process on record. It’s yet another example of the feedback loop created by climate change: Siberia’s record temperatures in July, and warm Atlantic waters creeping into the Arctic, make ice formation difficult. The delay brings the possibility of an ice-free Arctic ocean one step closer — with the thawed permafrost releasing methane into the atmosphere .
Weekend Reading
The image
The quote
" Patients can go from being in a nursing home, unable to communicate, to returning to work, to being able to drive . "
– Mayo Clinic neurologist Eoin Flanagan describes breakthroughs in treatable neurology that has helped reverse some sub-types of dementia .
The numbers
7.4%
- US arms manufacturer Raytheon's stock price took a tumble this week when the Department of Justice began a probe into the Pentagon's books . Missile builders building unlawfully-cosy relationships with the military? Dwight Eisenhower gets proven more correct with every passing year (do yourself a favour and listen to his presidential farewell address).
$10,000,000,000,000,000,000
- Scientists have discovered an asteroid made entirely of iron and nickel floating somewhere in a belt between Mars and Jupiter. It's 140k in diameter, so this hunk of metal would be worth $10 quintillion. That's nothing to sneeze at.
The headline
"How witchcraft became a multi-billion dollar industry." – The Conversation . The answer is right there in the headline.
The special mention
The prize this week goes to any multi-level marketer that achieves the top rank in their scam/scheme. We've always wondered what the view is like from the top of a pyramid.
A few choice long-reads
- How do you travel at warp speed? By spending $18b in less than a year? Bloomberg Businessweek peeks inside America's super-secret operation to develop a vaccine.
- At the end of the day, a single vote counts for next to naught. The Economist argues that even so, yours ought to be for Joe Biden.
- What happens when a global pandemic smashes into a system riddled with criminal neglect? The Atlantic draws on a powerful personal account of death and sorrow in South Texas.
Tom Wharton
