July 13, 2020
what we are reading...
empowering you with insights and information from the edge of today’s headlines
Trade
The European Union has been aggressive at regulating US technology companies, and now the EU is going after their wallets. The EU already has one of the strictest online privacy laws, GDPR, and it has proposed several restrictions on AI and data usage. Now the EU plans to levy a digital services tax between 2-6% on local revenues for digital platforms. The UK and France have planned to launch their own digital taxes, in a push to spur a global tax mandate.
The European nations don’t have a large base of home-grown, technology companies, and as a result, are missing out on the tax revenues while the big technology companies (like Facebook and Google) play a significant role in their economies.
While the US and EU governments continue to negotiate over a tax treaty, the US has threatened tariffs on imports: duties of up to 25% on French luxury items were announced but not expected to go into effect for 180 days. So stock up on your champagne and Chanel while the time is right.
Speaking of tariffs, in the past two years, the US has raised taxes on imports from China by over 500%. This move has actually reshaped the supply chain — Chinese companies are shipping goods to Vietnam, Taiwan and Thailand and then sending them on to the US in an effort to avoid the taxes. A new report estimates that about 10% of Chinese imports have been rerouted to third party shippers.
The US and China continue to battle over trade negotiations, and held somewhat secretive talks in Hawaii last month. As a result, China made the largest, daily purchase of US corn in over 20 years (1.4M tons). Yet, US farmers are still in pain and the administration continues to hold the coronavirus as a block to more negotiations. Neither country is on track to meet the terms of the Phase One deal, so we blame the pandemic and the elections, and we wait for someone to blink.
Something to think about: The Trump administration mused with the idea of selling Puerto Rico and buying Greenland over the past few years. Trade a hurricane ravaged, Caribbean island for an island strategically placed in international shipping lanes (that may open further due to polar melting). We don’t necessarily think the administration thought of it as a trade, but we prefer the sunshine (and helping our fellow citizens in times of need). But hey, since US passports are essentially worthless, as travel outside of the US is essentially banned, maybe traveling to Greenland ain’t such a bad idea.
Business Snippets
US Bankruptcies were up 43% in June, as the coronavirus shuts down large swathes of the US economy. Some notable consumer-based Chapter 11s from the past few months: Muji, Brooks Brothers, Hertz, JC Penney and 24 Hour Fitness. Since the pandemic has acted as an accelerant, we’d expect the bankruptcies to continue especially in the food service, travel and hospitality sectors.
On the flip side, WeWork may actually report its first profit after a series of restructurings. Following its botched IPO attempt, WeWork cut costs by selling buildings and renegotiating rents. While working in a community office might not seem like ideal for freelancers in a pandemic, corporations looking to expand their existing office space or allow employees to work closer to home have signed leases, boosting the company’s bottom line.
The Washington Redskins is expected to announce its new name later today. The sports book continues to favor the Redtails and the Generals.
George Soros’s Open Society Foundation is investing $220M in racial justice initiatives in an effort to support criminal justice/policing reform and achieve racial equality.
Technology
TikTok continues to be in the news, as last week Amazon announced (and then quickly retracted) that it was banning TikTok from employee devices. Amazon initially stated that the app was a security threat, but then decided against the move.
While we recognize that most US technology companies siphon off as much data as TikTok from our phones, we must point out that they are not sharing this data with the US government (that we know of or unless under subpoena) and they do not have the power to put us in prison for our online activities. If TikTok is truly acting as Chinese surveillance, this would be the equivalent of the NSA reading through our phones. If we are letting China in, shouldn’t we let Snowden back too?
What we are watching: Sick of watching Zoom calls that look like the Hollywood Squares or Brady Brunch opening sequence? Microsoft just launched an update to its Teams platform that places each participant in a virtual auditorium. The platform uses AI to cut out the participants’ images, and hopes that one simple background will reduce the Zoom fatigue of critiquing (and staging) our home offices.
Design
As we get more sophisticated and cheap, we are concerned about saving our wines and saving the planet. We’ve changed our minds about what is déclassé. Wine bottles with a screw top; ok. Wine in a box; getting there. Whiskey in a carton; we’ll see. Johnnie Walker will be introducing a paper bottle (aka milk carton) for its whiskey in early 2021. Does that mean we don’t have to wrap the whiskey in a paper bag on our social distancing walks?
Culture
Since artists and engineers have been locked indoors with the pandemic, some have been putting their creative juices to good and eccentric use. These are some of our favorites in a series we’ll call Pandemic Art.
Missing the feel of a theme park roller coaster? One engineer created the “Roner Coasters,” a virtual simulation of a roller coaster whose tracks match the coronavirus curves of several countries. (Unfortunately, there is no way to get off the US curve/ride.)
Everything is a cake.
Residents and care takers of Sydmar Lodge Care Home in the UK have been beautifully recreating classic album covers to pass the time.
Not to be outdone: The conspiracy theorists are also using their pandemic time to stir the pot. This weekend Wayfair, the furniture e-commerce retailer, was accused of child trafficking. The claims stemmed from the fact that several of Wayfair’s cabinets had the same names as missing children, and the overpriced listings were accused of being a means of getting children shipped to your door. The conspiracy was quickly refuted and denied. Maybe stop naming industrial cabinets after people and stick with the indecipherable names from IKEA? Plus the USPS outlawed sending children through the mail in 1920.
— Lauren Eve Cantor
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