Space virgin

MARKETS

  • U.S. markets: Apologies for the broken record, but a flood of negative U.S.-China headlines knocked stocks lower yesterday.
  • Workforce: Today, steel yourself for a dose of data on the labor market with August's Job Openings and Labor Turnover Survey, or JOLTS. We'll find out just how many job openings there are in the economy. (Friendly reminder that the Brew has openings.)

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INVESTING

For BlackRock, Time Is a Flat, Green Circle

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BlackRock, the largest asset manager in the world, announced a $20 million fund in collaboration with the Ellen MacArthur Foundation to invest in dozens of companies with hardcore sustainability missions.

Early recipients include Adidas (-1.12%), which is making sneakers out of recycled plastic waste from the ocean; Tomra, which builds reverse vending machines (you put the bottles in and get deposits or refunds out); and Ball Corp (-1.44%), which is manufacturing recyclable cups so you can play apple juice pong with a clear conscience.

BlackRock (-2.37%) is hyped on the "circular economy." It ideally works as follows:

  • Use equipment and infrastructure for longer; reduce harmful outputs like emissions and waste; reuse materials instead of funneling in new resources.
  • A good example: Yesterday, Lego announced a send-in program for unwanted Legos to be distributed through Teach for America.

Got something to prove?

BlackRock is the largest renewables investor...but also the largest fossil fuel investor. With $6.84 trillion in assets under management, it's just a massive investor period.

Alongside fellow index fund powerhouse Vanguard, BlackRock's regularly voted against and criticized climate-related shareholder resolutions. Last year, the two supported just 10% and 12% of those resolutions, respectively.

  • Index funds say they prefer pushing climate-related agendas in private meetings with execs.

By 2020, Deutsche Bank expects half of assets managed by investment companies to have environmental, social, or corporate governance considerations. Index funds control half the stock mutual fund market, which = tons of influence. But so far, they've largely taken a backseat to their portfolio companies' management.

Bottom line: Consumers and governments have been pushing businesses to de-sprawl their sprawling environmental footprints for years. Now, investors are adding top-down pressure across their portfolios to push the needle even more.

In practice, though, the lack of public disclosures, standardized metrics, and enforceable goals makes it difficult to see whether that needle is actually moving.

CHINA

Whatever You Do...Don't Make China Mad

For the second time in a week, a figure in the sports world has caused drama on a global scale by expressing support for Hong Kong's pro-democracy protests.

Yesterday, Blizzard Entertainment booted professional esports player Chung "Blitzchung" Ng Wai from its Grandmasters tournament after he said, "Liberate Hong Kong! Revolution of our age!" in a post-game interview. It's also withholding prize money and banning Blitzchung from playing its game, Hearthstone, professionally for a year.

  • Last Friday, Houston Rockets GM Daryl Morey upended the NBA-China relationship with a pro-protest tweet. Things escalated further yesterday.

Big picture: It's "increasingly difficult for multinationals to navigate commerce in the Communist country," writes the NYT. U.S. companies including Delta, Marriott, and Gap have recently adjusted their (mis)representations of China's territories to meet the Chinese government's wishes.

Who's not sorry? South Park creators Trey Parker and Matt Stone. After their latest episode was erased from the Chinese internet, they commented satirically, "Like the NBA, we welcome the Chinese censors into our homes and into our hearts. We too love money more than freedom and democracy."

+ For a contrarian take, read Tyler Cowen's column for Bloomberg Opinion.

SPACE

Boeing's no Longer a Space Virgin

Boeing plans to invest $20 million for a minority stake in Richard Branson's space tourism company, Virgin Galactic.

We know, in the world of space travel $20 million is what you pay for an oversized suitcase. But the small investment will kick off a longer-term partnership between Boeing and Branson that might lead to a commercially viable hypersonic jet.

  • Hypersonic is a bigger deal than supersonic. Hypersonic means traveling at 5x the speed of sound...or faster.
  • Virgin Galactic claims that a hypersonic jet could take you from Los Angeles to Tokyo (5,400+ mi.) in two hours. Today, that trip takes ~11 hours.

Zoom out: Both companies are planning to launch commercial space flights next year. Boeing will send astronauts to the International Space Station...Virgin Galactic will send really rich people to a place where Elizabeth Warren can't reach them.

Looking ahead...Virgin Galactic wants to go public this year on the NYSE via a merger with investment firm Social Capital Hedosophia. If all goes according to plan, Virgin will be the first public company for human spaceflight, per CNBC.

ECONOMY

World Economic Leaders: At Least They're Honest

Newly-minted leaders of the International Monetary Fund (IMF) and World Bank (World Bank) channeled their new-job moxie into some gloomy economic diagnoses yesterday.

What they said:

  • Kristalina Georgieva, who took over at the IMF at the start of October, said the fund now expects global economic growth to fall to its lowest rate since the beginning of the decade.
  • David Malpass became president of the World Bank in April, and in June his organization predicted the global economy would grow 2.6% in 2019, the slowest rate in three years. Yesterday, Malpass said he planned to downgrade the downgrade.

The causes: Play the hits. Brexit, the U.S.-China trade war, and a wounded Europe.

The cures: Georgieva said central banks shouldn't go too crazy slashing interest rates...but governments could kick up their spending. Malpass encouraged developed countries to gear their tax and spending policies toward growth.

And don't forget Jerome Powell. At a conference in Denver, the Fed chair 1) said he'd add to the Fed's roster of government-backed securities to soothe overnight lending markets and 2) left the door open for yet another interest rate cut.

MUSIC

Soaring Eagles Spotted in California

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Yesterday, the rock band Eagles announced the details of their 2020 tour of North America. A summary: Take it anything but easy.

The Eagles will perform their 1976 album Hotel California with the help of a 22-voice choir and a 46-piece orchestra. 77 musicians in total will be onstage.

  • The tour kicks off in Atlanta on Feb. 7 and concludes in Los Angeles (where it all began) in April.

The backstory: Consider this a victory lap. In 2018, the Eagles's first compilation album, Their Greatest Hits 1971-1975, topped Thriller as the bestselling album of all time.

ATTN: dads. Tickets go live on Ticketmaster Friday.

WHAT ELSE IS BREWING

  • Nissan named Makoto Uchida, the head of its China unit, its new president and CEO.
  • The U.S. is blacklisting China's top AI companies over their alleged participation in human rights violations. We're pretty sure Emerging Tech Brew will have something to say about that later today.
  • Domino's (+4.65%) pointed to competition in the third-party delivery market as it scaled back its sales growth outlook yesterday.
  • Robinhood is launching a new cash management account less than a year after its first foray into banking faceplanted.

BREAKROOM

For the 'Gram
It's Wednesday, so it's time to dust off your editing chops. Here are four sentences about the joys of domestic life from WSJ editors. Can you spot the grammar or style errors in each?

  1. As more couples delay marriage, their happy unions often come with a catch: dogs and cats who profoundly loathe one another.
  2. The couple spent years arguing over finances and recently had their worst-ever blow up.
  3. He spends about 3,000 Hong Kong dollars (US$387) a month on skin care and cosmetics.
  4. At the Supreme Court, Mr. Roberts noted the Eminem lyrics included, "Da-da make a nice bed for mommy at the bottom of the lake."

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Breakroom Answers


For the 'Gram
1. It should be pets "that" loathe one another. The WSJ uses "who" for animals only if it's specifying the animal's gender or its name.
2. Should be blowup, per the WSJ stylebook.
3. 3,000 Hong Kong dollars, or nearly US$400, a month. The WSJ's stylebook says that when the original figure is rounded, the conversion should be, too.
4. It should be Justice or Chief Justice Roberts.

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Oct 11, 2019
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