Here’s what you need to know:
Voters in California will decide on a dozen ballot initiatives this election cycle, some of which could have profound implications for business. The state is by itself the world’s fifth-largest economy, and can set regulatory standards that signal how policy winds will blow in the rest of the country.
So it’s worth paying attention to the local political tides, even with the focus on the White House. Some $650 million has been spent on California ballot propositions this election cycle, in what David McCuan of Sonoma State University calls “the second most expensive political exercise in the free world.”
The DealBook newsletter looks at three initiatives that could be consequential for companies beyond California’s borders:
Prop. 15: Tax most large commercial and industrial properties based on market value, instead of purchase price. The Chan-Zuckerberg Initiative, Mark Zuckerberg’s family foundation, gave more than $6.3 million in support, noting that a tenth of landowners would pay more than 90 percent of the tax. The California Chamber of Commerce opposes it, arguing that it would harm small businesses and lead to higher food and energy prices. California capped property tax increases in the 1970s, inspiring similar moves elsewhere; if the initiative passes, local governments desperate for revenue could follow the state’s lead once again.
Prop. 22: Make app-based drivers independent contractors. A consortium of gig companies — including DoorDash, Instacart, Postmates and Uber — has spent more than $200 million to support the proposition, which would allow the companies to avoid classifying their drivers as employees. The fight already serves as a harbinger of wider debates about the flexibility and security of gig work. The Biden campaign cites California’s approach as a model.
Prop. 24: Expand privacy laws and create a state data protection agency. Backers of the plan include the former Democratic presidential candidate Andrew Yang, Mayor London Breed of San Francisco and the real estate tycoon Alastair Mactaggart. Big Tech is mostly quiet about it, but some lawyers for Google and Quora individually signed a letter opposing the initiative. Critics complain that the proposal puts the onus on individuals to opt out and might turn privacy into a luxury item. It would codify an existing law “riddled with problems,” says Eric Goldman, a co-director of the High Tech Law Institute at Santa Clara University.
Stocks rebounded Monday, with Wall Street climbing after suffering its sharpest weekly decline since March and global benchmarks rising ahead of what’s likely to be a turbulent week ahead with the U.S. presidential election.
The S&P 500 rose more than 1 percent in early trading, following similar gains in the Stoxx Europe 600, the DAX index in Germany and the Nikkei in Japan.
Wall Street is coming off its second monthly decline in a row. Shares in the United States and Europe had been dragged lower by rising pandemic cases, new shutdowns and a sell-off in large technology stocks.
The concern that new lockdowns in Europe could dampen economic growth was still evident, however, in energy markets, and crude oil futures extended last week’s loss of more than 10 percent with a small decline Monday.
The coming week will bring several major developments: The presidential election, the latest assessments from the Federal Reserve and Bank of England (both on Thursday), and then the Labor Department’s report on job growth in October (on Friday).
In Britain, business leaders are calling for additional government support after a new lockdown for England was announced Saturday by Prime Minister Boris Johnson. Pubs, restaurants and most retail shops must close beginning Thursday through at least Dec. 2, although the plan must still be approved by Parliament. The government’s furlough program, which provides up to 80 percent of employee salaries and was scheduled to expire on Nov. 1, will be extended another month.
The nation is on edge as the bitter presidential contest finally nears an end, the latest flash point in a bruising year that has included the pandemic and widespread protests over social justice. Anxiety has been mounting for months that the election’s outcome could lead to civil unrest, no matter who wins.
In the retail industry, many companies are not simply concerned about possible unrest — they are planning for it, The New York Times’s Michael Corkery and Sapna Maheshwari report, by boarding up some stores, training staff on how to de-escalate tension among customers, and trying to identify which locations they’ll need to close in case violence does break out.
These are not simple decisions. Retailers can risk alienating their customers by erecting plywood barriers, particularly if the anticipated unrest does not materialize.
But businesses have already sustained at least $1 billion in insured losses from vandalism this year, largely set off by the killing of George Floyd by a Minneapolis police officer in May, according to one estimate. It means 2020 could be the costliest period of civil unrest in history, likely surpassing damages during the 1992 riots in Los Angeles and many of the civil rights protests of the late 1960s.
Here’s what businesses have said, so far, about their preparations:
Nordstrom, the high-end department store chain, said it planned to board up some of its 350 stores and hire extra security for Election Day.
Tiffany & Company, the luxury jeweler, said that “windows of select stores in key cities will be boarded in anticipation of potential election-related activity.”
Saks Fifth Avenue said it was “implementing additional security measures at certain locations in the event of civil unrest due to the current election.”
The iconic Macy’s location in Manhattan’s Herald Square was boarded up on Friday.
Target, with about 1,900 stores, said in a statement, “Like many businesses, we’re taking precautionary steps to ensure safety at our stores, including giving our store leaders guidance on how to take care of their teams.”
A spokesman for CVS, which operates nearly 10,000 stores, said: “Our local leadership teams are empowered to take steps that they determine will best support the safety of our stores, employees and customers. This includes the option to board select store locations.”
Gap Inc., with more than 2,000 stores in North America, said it had “contingency plans set in place for any issues that may arise and will continue to monitor the situation carefully and closely next week.”
Economists are expressing concern over how the World Bank and International Monetary Fund have failed to support less-affluent countries through the pandemic.
Despite promises this year by these two deep-pocketed organizations to help poorer countries through the pandemic, funds have been slow to materialize.
The World Bank has doubled its lending over the first seven months of 2020 compared with the same period last year, but it has been slow to distribute the money, according to research from the Center for Global Development. Of the $280 billion lent out by the I.M.F., only $11 billion has been sent to low-income countries.
Economists are warning that immense relief is required to prevent humanitarian catastrophes in poorer countries, and to ensure that the 60 percent of the world that is classified as an emerging market by the I.M.F. does not incur lasting damage.
If no serious steps are taken, the pandemic could push 150 million people into extreme poverty by next year, the World Bank has warned, the first increase in two decades.
“A lost decade of growth in large parts of the world remains a plausible prospect absent urgent, concerted and sustained policy response,” concluded a recent report from the Group of 30, a gathering of international finance experts.
A resurgence of the coronavirus in France risks setting off a deeper-than-expected downturn in the country just as it was starting to see a fragile recovery, the International Monetary Fund said Monday.
New restrictions to keep the virus from spreading, including curfews and a second nationwide confinement announced last week, are likely to keep economic activity lower than where it was before the pandemic, the fund said in its 2020 report on France, the eurozone’s second-largest economy.
“The outlook has weakened in the face of a second wave of infections and downside risks are large,” the organization said. Should a third wave of the virus hit the country going forward, the prospects for a rebound would be even more difficult, the fund cautioned.
France has suffered one of the worst downturns of any country in Europe as the breadth and durations of lockdowns dealt a blow to activity, especially tourism and the auto and aerospace sectors, which make up a large swath of activity.
The government put in place an emergency support program worth around 500 billion euros (about $582 billion) to keep businesses from collapsing and to prevent mass unemployment. The aid helped the economy bounce back in the summer, but “additional fiscal stimulus, through temporary and well-targeted measures, may be needed as the situation unfolds,” the fund said.
Even with the assistance, the economy is expected to contract in the fourth quarter, and output will probably decline by around 10 percent over all in 2020, the fund said.
The economy could rebound next year by 5 to 6 percent, at which point the government should rethink its aid program to avoid allowing “zombie firms” that have grown dependent on financial aid from dragging down an overall recovery, Jeffrey Franks, the head of the I.M.F. mission for France, said during an online media briefing.
As the economy recovers, the private sector, rather than the government, should probably take the lead on deciding which firms are viable and which ones are headed for bankruptcy, he added.
The depth of any recovery will depend on the evolution of the measures used to contain the pandemic, the I.M.F. added. Other risks, it said, include a potentially severe economic fallout from Brexit, rising social tensions and the acceleration of de-globalization developments.
In the meantime, France isn’t creating enough jobs to offset the numbers of people looking for work. The fund urged the government to do more to lift employment, especially for low-skilled and young people who are vulnerable to being shut out of the labor force for long periods.
Whether you’re pulling for four more years or a new occupant in the Oval Office, you may be feeling anxiety how the election results might affect your wallet. But it’s no time to act rashly when it comes to personal financial decisions, writes the “Your Money” columnist Ron Lieber.
Mr. Lieber spoke to financial planners who had, in previous careers, worked in government jobs under both Republicans and Democrats. They offered a few helpful pointers:
Hold off on any major decisions. “Emotions are really good at raising questions and really bad at answering them,” said Zach Teutsch, a financial planner in Washington. It’s true in life, and it’s certainly true with financial decisions. Try not to make any big ones anytime soon.
Don’t overestimate change. It’s easy to overestimate how much change is possible in the first year of any presidential term, especially for things that can hit you squarely in the wallet, like taxes, retirement rules or health care. It would be foolish to, say, fundamentally alter your retirement savings strategy in anticipation of a change to some or another tax rule.
Remember why you invest in the first place. Stocks can lose a lot of value in a short period. But over decades, they tend to deliver enough growth to allow you to achieve long-term goals, like being able to retire and live off the money. That, however, happens only if you have the courage (and discipline and leftover income) to save regularly and don’t yank money out when you think something scary is going to happen.
Safeguard money you know you’ll need soon. If you have money in stocks that you will need in the next few years, you should rethink that — but not because of what could happen on Tuesday or because of the way politics or policy might affect the markets. It’s simply better to put money you know you’ll need soon into something less volatile.
Consider charity. If the stock market has been good to you — from the Obama administration into the Trump administration — maybe there is some money left over for others whose paths have been rockier.
You may have heard that Tuesday is Election Day in the United States. Here’s a look at the timing of results. (The New York Times will be hosting a live, four-hour broadcast of “The Daily” starting at 4 p.m. Eastern). Believe it or not, there are other things happening …
It’s another big week for corporate earnings, with a quarter of S&P 500 companies opening their books. Noteworthy reports include PayPal on Monday; Saudi Aramco on Tuesday; Qualcomm on Wednesday; Alibaba, AstraZeneca, General Motors and Uber on Thursday; and Marriott and Toyota on Friday. (Watch for unexpected announcements from companies looking to bury bad news amid the electoral distractions.)
On Thursday, economists expect the Federal Reserve to leave interest rates the same, but provide clues about the strength of the recovery. The same day, the Bank of England may introduce new stimulus measures as lockdown begins and Brexit (remember that?) looms.
Ant Group, which raised more than $34 billion in the biggest initial public offering on record, begins trading in Hong Kong on Thursday. (It’s not clear when trading will begin in Shanghai.) Based on the rush to buy shares in the Chinese fintech giant, it could be a frenzied first day.
The U.S. jobs report on Friday is expected to show a gain of 600,000 jobs in October, the fourth consecutive month of slowing growth in payrolls, which remain more than 10 million lower than before the pandemic.