No. 263 – The Federal Reserve Hasn’t Emptied Its Clip

Fed Chair Jerome Powell’s 60 Minutes interview on economic recovery from the coronavirus pandemic – Federal Reserve chair Jerome Powell gave an interview on 60 Minutes this past Sunday and the conversation was quite interesting. Early in the conversation, when the question of unemployment came up, Chair Powell talked about how heartbreaking it was and then immediately pointed to how African American unemployment had been at its lowest point and how the US economy was benefiting from a tight labor market where there was lots of opportunity. I couldn’t help but notice that the report the Federal Reserve released on the economic health of U.S. households didn’t break out the data by race, though it did account for race in its sampling. I wonder what data the Federal Reserve has seen on the impact this pandemic is having on the black community. It can’t be good. 

The other interesting thing was his response to whether we’re entering a second Great Depression. He highlighted how the financial system is strong due to the 10 years of work that has gone into strengthening our financial system. Dodd-Frank and other regulations helped ensure that financial institutions were more sound. It’s refreshing to have a government official acknowledge that the strength of this country doesn’t happen in a vacuum but on a continuum.  

Chair Powell’s conversation on the path forward was fascinating as well. His statement on the scale of the tools the Federal Reserve has to keep the economy moving was kind of jaw dropping:

Well, there’s a lot more we can do. We’ve done what we can as we go. But I will say that we’re not out of ammunition by a long shot. No, there’s really no limit to what we can do with these lending programs that we have. So there’s a lot more we can do to support the economy, and we’re committed to doing everything we can as long as we need to.

Look at the line on Federal Reserve Treasury purchases in the chart above. It’s incredible to consider the Fed can do more.

The last thing that caught my eye was how he stressed the importance of building a more inclusive economy on the other side of this pandemic. Earlier, he said the economy was fine before this pandemic. The reality is that it wasn’t. While unemployment in the black community was decreasing, income inequality was surging. As we come out of this pandemic, we need as many people as possible maximizing their abilities, not just being employed. 

Softbank Group Earnings Results – Softbank, the holding company controlled by billionaire Masayoshi Son, reported earnings yesterday morning and they were tough. The company lost nearly $18B from losses in its Softbank Vision Fund 1. Over the past several years, the company invested $88 billion in tech companies like WeWork, Uber, and Doordash. WeWork and Uber, in particular, have not done well due in large part to the behavior of their founders. Son has this vision of building an altruistic future full of artificial intelligence. These losses are forcing him to pump the brakes on pushing towards that vision. The company had been working on raising a second fund, but he announced this morning that they had failed in that effort so will be making future investments off of Softbank’s balance sheet for the time being. Masayoshi Son has been going big since 1995 and this isn’t the first time he’s had blood in the mouth from taking a hit. Let’s see if he’s able to fight his way back from these losses. It would be a shame for Softbank Vision Fund 1 to be known as Softbank Vision Fund Only.

Black doesn’t mean criminal. Conservatives should know that by now. – Imagine a world where the minority and majority leaders in the Senate and House are all black. That would be a healthy thing for this country. Last week there was debate within the black Republican community around Ahmaud Arbery and provocateur Candace Owen trying to smear him. You had Candace trying to paint him as a criminal, insinuating that he deserved death. Darrell Scott, Shermichael Singleton, and others went after her for doing that. 

Hopefully, that conversation within the black Republican community continues. This thread of black Republicans who see themselves as free-minded just for being Republican makes no sense, and I’m not really seeing their influence in the party. 

Across the political spectrum of where black folks are, we see how important it is for black folks to ensure the way we’re playing this political game is tight. Joe Biden wouldn’t be the Democratic nominee were it not for the black vote, yet black candidates for that job somehow don’t come up in too many conversations. More comfortable names come up like Klobuchar and Warren. Comfortable can’t happen.

COVID-19 and ‘Locust-19’ threaten perfect storm for Africa – African Development Bank president Akinwumi Adesina gave an interview to the Financial Times last week where he talked through the economic impacts of the COVID-19 pandemic across Africa. The bank is estimating that GDP declines countries are seeing total anywhere between $150B-$212B. In order to work its way out of this, President Adesina estimated the continent will need $115B-$154B in financial assistance. The AfDB has a $10B facility to contribute to closing that gap. Further, he pointed out that if G20 countries cancelled debt owed by least developed countries that would free up $130B-$150B across Africa. 

He also talked about locust swarms across East Africa. It hasn’t gotten a lot of coverage in U.S. media, but the devastation is real bad. President Adesina worries that 30 million people could be pushed to hunger due to the invasions.

African leaders have their hands full in navigating the COVID-19 pandemic, and several have the added burden of locust swarms. More vim to them navigating this situation well.

China injects US$2.25b into local chip firm – My post on Sunday highlighted how there’s this race going on in the world of chip development. China is putting serious money into quickly ramping up its domestic chip development now that the U.S. is putting restrictions on Huawei’s ability to source from U.S. companies.  It’s going to be interesting to see what kind of chips come out of China after this investment and the extent to which they push artificial intelligence development and other technologies. 

No. 248 – Wednesday Reads

Source: World Food Programme

WFP Chief warns of hunger pandemic as COVID-19 spreads – According to the head of the World Food Programme, well over 800 million people around the world are chronically hungry, dealing with starvation. He projects an additional 265 million people will face the same struggle by the end of the year. It’s hard to wrap my mind around that number. It shouldn’t be like this.

Once Bankrupt, a Tiny Broadband Company Thrives in the Trump Era – My first thought when I saw that Ligado Networks finally secured approval to build its wireless network was, “Got to play the long game.” For nearly a decade this company has been trying to build a wireless network. At first it was to be a 4G network. Now, it’s 5G and billed as a buttress against China’s advances in the space. The rapid reversal the FCC did to approve this doesn’t inspire confidence in our ability to go toe-to-toe with China in 5G development. They’ve got a strategy they’re executing on. Ours is coming together, I think.

‘I’m not Huawei’s spiritual leader. I’m a puppet leader,’ founder Ren Zhengfei says – Speaking of China, this is a peak into Huawei CEO Ren Zhengfei’s life. He’s been running that company since the year after I was born. To be in a battle with the United States at this point in his life must be exhausting.

Facebook Invests $5.7 billion in India’s Jio Platforms – Several years ago, Facebook launched its Internet.org initiatives to try and connect more of the world to the internet. Some of these efforts morphed into Free Basics, an effort to provide limited Facebook in developing countries. Both efforts got a lot of pushback from developing countries because it felt paternalistic and countries were concerned about Facebook determining the amount of access poor folks got to the internet. India went so far as to ban Free Basics. To see Facebook come back and put $5.7B into Jio, owned by the richest man in India, is something else. I think it says something about India knowing its worth. Similar to the Ligado story, it also says something about Facebook playing the long game to build the world it wants to see.

Nigerian media startup, Stears raises $600k seed to build Africa’s Bloomberg – Kudos to the Stears team on their raise. I’ve enjoyed reading their content over the past few years. More broadly, it’s nice to see more and more firms focused on leveraging data to move Africa forward. Off the top, firms like Fraym, Paga, Ajua, 54gene, and Cellulant come to mind. I’ve got a blindspot for who is doing similar work in southern Africa. Will work on that.

No. 219: Podcast Interview – AI + Africa

Thanks to Kwabena Sarkodie for having me on his podcast, Insights from the Sahara, to discuss all things artificial intelligence and Africa.