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. 233 – Tuesday Reads

Address To The Nation By President Akufo-Addo On Updates To Ghana’s Enhanced Response To The Coronavirus Pandemic – “The cynics question our capacity for the maintenance of discipline in this period, and in its aftermath; however, I am confident that we will prove them wrong.”

Masayoshi Son Talks WeWork, Vision Fund And SoftBank Under Siege – “Look at a shadow. Even within 24 hours, the length of your shadow differs dramatically, even though your height in 24 hours is unchanged. People get scared or overconfident looking at the length of the shadow.”

The Truth About Isaac Newton’s Productive Plague – “Doing the work was what mattered, and Newton did it as a student in Cambridge before the plague, he persisted at Woolsthorpe, and he kept going upon his return to college.”

Jamie Dimon Letter to Shareholders – “We know that too many people are being left behind – particularly in the black community. The Civil War ended more than 150 years ago, and we still have not come even close to parity. We need to do more as a nation, and we have more to do as a firm.”

New data methods are helping the Government of Ghana fight COVID-19 – “Understanding changes in mobility patterns is important for the government in order to establish whether the current restrictions are likely to contain the spread of the disease, and whether more, or different, interventions should be put in place in the coming days or weeks. This work shows the power of data and is a good example of how it can benefit everyone.”

No. 181: 3 Thoughts: Cashless| Amazon|Masayoshi Son

Smaller institutions should embrace, not oppose, fintechs

I’ve been increasingly bothered by the specter of establishments going cashless. We’ve all had opportunities to give some cash to folks who don’t have money at the time for their next meal. Where do they use that cash in a world where it’s not just SweetGreen or ShakeShack going cashless, but it’s also Starbucks, 7-Eleven, and the mom-and-pop corner store going cashless?

While Nathaniel Hoopes’ piece focuses on fintech lenders and how smaller banks shouldn’t be fighting them, it brought to mind community banks and credit unions as potential good partners for fintechs in solving the access problem for folks without resources to get the tools they’ll need to navigate that world. A couple solutions that could work are debit card dispensary kiosks or Lifeline phones to have near field communications. Here’s to not boxing folks further out of society than they already are.

What is Amazon?

Fascinating piece that crystallizes one of the four or so defining companies of this technological era. The piece starts with Wal-Mart which perfected the art of putting the bounds around its marketplaces aka Wal-Mart stores and optimized everything inside of them. With the onset of the internet, Amazon didn’t need to make that optimization. It rather optimized for eliminating bottlenecks to satisfying the customer. Now, it’s gotten so big that has a growing problem of optimizing for sellers who don’t have the same incentives Amazon has internally to be hyper-focused on the customer. This is a must-read if you think about platforms and/or customers.

My job is to work with government agencies in elevating the voice of their customers into their decision-making so I did take some umbrage with Kanter’s assertion that the DMV would remain in stasis, at best. With Deloitte’s new customer strategy & applied design offering in the mix, that’s not a foregone conclusion. **Steps down from soap box**

SoftBank’s Masa Son: We’ve already invested $70B in Vision Fund

Masayoshi Son has carved out a space to shape the future of technology and it’s worth spending time understanding his worldview. This interview is helpful in that effort, though David Faber tosses a wiffle ball soft question on the Vision Fund’s relationship with the Saudi Arabian government.

One worldview I think needs examining is what the world looks like when the Singularity arrives. More than a few technological optimists including people like Kai-Fu Lee argue that the onset of mature artificial technology will enable us to focus on art or work that requires caring like nursing. I don’t see historical proof of this. With broad onset of new technologies, more often than not, policy has had to come into play to ensure folks were well taken care of. What makes us think artificial intelligence will foster all of this benevolence?