10 BARRON’S September 28, 2020
REVIEW
27,173.
Dow Industrials:-483.
Dow Global Index:-9.
0.66%
10-year treasury note:-0.
MILTON FRIEDMAN 50 YEARS LATER
Correction Relief
Risk assets opened the week down, as
Covid-19 cases around the world rose,
and a struggle over a Supreme Court
seat seemed to insure that a U.S. relief
bill was not in the cards. Stocks wa-
vered and fell as the president refused
to promise a peaceful transfer of
power. Despite rising volatility, the
S&P 500 skirted a correction, and
Treasury Secretary Steven Mnuchin
and House Speaker Nancy Pelosi con-
firmed a resumption of relief talks. On
the week, the Dow Jones Industrial
Average fell 1.7%, to 27,173.96; the S&P
500 slipped 0.6%, to 3298.46; and the
Nasdaq Composite gained 1.1%, to
10913.56.
Battle Over the Court
President Trump appeared ready to
nominate Amy Coney Barrett, a fed-
eral appeals judge, to replace the late
Ruth Bader Ginsburg on the Supreme
Court. Following Ginsburg’s passing,
GOP senators fell in line after Senate
Majority Leader Mitch McConnell
promised a vote on the Senate floor—
without saying before or after Election
Day. In 2016, McConnell famously
declared that no nominees would be
considered in an election year. Sepa-
rately, the House passed a bill to keep
the government operating.
The Tide Rises Again
The U.S. Covid-19 death toll passed
200,000 and cases have been rising
again, with 22 states seeingincreases
for the week. The Centers for Disease
Control and Prevention posted, then
removed from its website, guidance
about the dangers of airborne infec-
tions. The Food and Drug Administra-
tion tightened rules on emergency-use
authorization for vaccines, which
Trump characterized as “a political
move.” Countries across Europe
moved to impose “targeted” restric-
tions, though avoiding lockdowns.
U.K. Prime Minister Boris Johnson
announced a series of measures, in-
cluding curbing pub hours.
True Blue TikTok?
Trump blessed, in concept, a deal for
ByteDance’s U.S. TikTok unit, TikTok
Global, giving Oracle and Walmart
Looking
Beyond Profit
Fifty years ago, Milton Friedman declared that the
social responsibility of a business is to boost profits.
Trouble was that Friedman’s dictum, according to many,
led to companies maximizing short-term profits while
income inequality and global warming increased.
Some 89% of companies disagreed with Friedman’s
statement in a survey conducted for the Test of Corpo-
rate Purpose (TCP), a research and advocacy initiative.
So did 76% of investors. Says Sir Ronald Cohen, the
prominent venture capitalist and impact investor: “The
new New Deal is to bring companies and investors to-
gether to bring solutions rather than create problems.”
Last year, the mighty Business Roundtable declared
that companies serve a host of constituents in addition
to shareholders: customers, employees, suppliers, and
communities.
Results are mixed as to whether Business Roundtable
signatories paid sufficient attention to stakeholders,
according to studies by Just Capital and by TCP. Com-
panies need to understand how purpose drives value,
and quantify their performance, says Bob Eccles, the
Oxford University professor who sits on TCP’s board.
One way to measure performance: Impact-weighted
accounts, in which companies report their negative and
positive impacts on the world. It’s early days, but in Feb-
ruary, France’s Danone, which produces Dannon yogurt
and Evian bottled water, announced earnings per share
reflecting the theoretical cost of its emissions. Danone
earned €3.85 ($4.18) per share in 2019, but adjusted for
emissions, the number was €2.39.—Leslie P. Norton
$311 K
Median U.S. existing-home price
hit in August, up 11.4% from a
year earlier, to the highest ever.
$2 T
Growth in U.S. bank deposits
since February, allowing banks
to buy some $250 billion in
Treasuries and agency paper.
$119 T
Net worth of U.S. households,
up 6.8% in the second quarter,
the highest level ever after a
sharp drop in the first quarter.
50 %
Increase in the wholesale price
of tea since March, to $1.44 a
pound.
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THE NUMBERS
HE SAID
“The president
and I want
more support....”
Treasury Secretary Steven Mnuchin
announcing talks over a new pandemic
relief bill to the Senate Banking Committee.
20% of the business. The parties tried to
sidestep the fact that ByteDance would
remain in majority control. A federal
judge blocked a ban on another Chinese
mobile app, WeChat, and TikTok sought a
preliminary injunction. China, mean-
while, hasn’t approved the deal.
Nikola in the Spotlight
The electric-truck maker’s founder,
Trevor Milton, resigned as executive
chairman following allegations by short
seller Hindenburg Research that the
start-up had overstated its technology.
Nikola recently agreed to sell 11% to
General Motors in exchange for pro-
ducing the company’s hydrogen fuel-cell
pickup, the Badger. Both stocks fell.
Annals of Deal-Making
Gene-sequencer Illumina is paying $7.
billion for Grail, a developer of blood tests
for cancer that it had once owned...After
losing TikTok Global, Microsoft said it
would pay $7.5 billion in cash for video-
game maker ZeniMax Media, the owner
of the Doom franchise...Activist investor
Trian Partners has bought 0.4% of Com-
cast , saying the shares are underval-
ued.... JPMorgan Chase neared a deal to
pay $1 billion in fines over traders en-
gaged in “spoofing” to manipulate prices
for metalsand Treasuries. Illustration by Elias Stein; Graeme Jennings-Pool/Getty Images