Wednesday's economy & business stories

Stocks close down more than 3%

Photo: Alexi Rosenfeld via Getty Images

Stocks took a hit on Wednesday, with the S&P 500, Dow Jones Industrials Average and Nasdaq dropping more than 3% across the board.

Why it matters: The volatility is a break from the stock market grinding higher in the face of spiking coronavirus cases, a stalling economy and gridlocked negotiations over an additional stimulus package.

Oct 28, 2020 - Podcasts

Pete Buttigieg talks Joe Biden's economic plans

Joe Biden has a very different prescription for America's economy than does President Trump. Not just in terms of how to tax and spend, but also in how to approach trading partners like China.

Axios Re:Cap digs into Biden's economic policies and philosophies with former presidential candidate and current Biden campaign surrogate Pete Buttigieg.

Dan Primack, author of Pro Rata
Oct 28, 2020 - Economy & Business

Joe Biden's private equity plan

Illustration: Sarah Grillo/Axios

We're less than one week away from the election, and hopefully less than one month away from knowing who won the election. In the interim, private equity investors are beginning to contemplate life under a President Biden.

The big picture: Biden would be worse for private equity than President Trump, at least from a structural tax perspective.

Dan Primack, author of Pro Rata
Oct 28, 2020 - Economy & Business

Senior care company Honor raises $140 million

Illustration: Sarah Grillo/Axios

Honor, a San Francisco-based provider of tech-enabled senior care services, raised $140 million in Series D funding co-led by Baillie Gifford and T. Rowe Price.

Why it's the BFD: The pandemic has heightened the importance of home care for seniors, as many have sought to avoid nursing homes or other forms on inpatient services.

Kendall Baker, author of Sports
Oct 28, 2020 - Sports

Women's sports network Athletes Unlimited plans its next moves

Illustration: Aïda Amer/Axios

Athletes Unlimited, a network of women's sports leagues that uses fantasy-style scoring, successfully completed its first season of softball last month.

Why it matters: While most leagues scrambled to create one-off bubble tournaments, Athletes Unlimited didn't have to change too much about its model, which was already designed for short, single-site seasons.

Oct 28, 2020 - Sports

Golf giant Callaway acquires Topgolf in $2 billion deal

Illustration: Aïda Amer/Axios

Golf giant Callaway acquired the rest of sports entertainment company Topgolf in an all-stock deal Tuesday, with the latter valued at ~$2 billion.

The backdrop: Topgolf was founded in 2000, and just six years later Callaway made its first investment, which included an exclusivity deal across all locations. In 2018, Callaway increased its stake to 14%; now it owns the entire company.

Dion Rabouin, author of Markets
Oct 28, 2020 - Economy & Business

Stocks remain at historically high valuations

Data: FactSet; Chart: Danielle Alberti/Axios

The latest mini-selloff in U.S. equities sent the S&P 500's price-to-earnings ratio to a recent low of 21.1, but the metric remains highly elevated by historical standards — above the five-year average (17.3) and above the 10-year average (15.5), per FactSet.

By the numbers: "There has been a lot of volatility in the forward P/E ratio this year, falling as low as 13.1 on March 23," FactSet senior earnings analyst John Butters tells Axios in an email. "However, the forward 12-month P/E ratio has been above 20.0 pretty consistently since May, peaking at 23.4 on September 2. Prior to this year, the last time the forward 12-month P/E ratio was at or above 20.0 was April 10, 2002."

Dion Rabouin, author of Markets
Oct 28, 2020 - Economy & Business

China announces removal of more currency controls

Illustration: Sarah Grillo/Axios

Chinese policymakers are now taking aim at currency controls that have kept the renminbi from weakening in recent years as the currency has rallied to its strongest level against the dollar in years and the country attempts to attract more outside capital.

What's happening: Chinese banks have stopped using the counter-cyclical factor recently, which means Beijing will give up some influence over the exchange rate, Bloomberg reports, citing the website of the China Foreign Exchange Trade System.

Dion Rabouin, author of Markets
Oct 28, 2020 - Economy & Business

Economists throw cold water on Q3 GDP expectations

Reproduced from S&P Global; Chart: Axios Visuals

Tomorrow's GDP report is poised to be one for the record books, but economists warn that the numbers are likely to be deceiving.

What we're hearing: The GDP is likely to catch a lot of attention tomorrow as we expect a historic 29.5% growth annualized," says Beth Ann Bovino, S&P Global's chief U.S. economist. 

Dion Rabouin, author of Markets
Oct 28, 2020 - Economy & Business

Coronavirus surge is sinking consumer confidence

Data: Hamilton Place Strategies, CivicScience; Chart: Axios Visuals

The rise in coronavirus cases in certain parts of the U.S. is stunting confidence across the country, a crop of new reports show.

Driving the news: After stalling during the previous two-week period, overall economic sentiment declined for the first time in two months, according to the Economic Sentiment Index, a biweekly survey from data firm CivicScience and Hamilton Place Strategies (HPS).

Dion Rabouin, author of Markets
Oct 28, 2020 - Economy & Business

The Rust Belt jobs boom that never came under Trump

Photo: Mandel Ngan/AFP via Getty Images

The Rust Belt, the upper Midwest manufacturing hub that was the backbone of U.S. production, has seen jobs and wages erode under President Trump, new data shows — and the decline happened before the coronavirus pandemic hit.

What it means: "While job and wage growth continued nationally under Trump, extending trends that took root under President Obama, the country’s economic weight also continued shifting south and west, according to data from the U.S. Quarterly Census of Employment and Wages that was recently updated to include the first three months of 2020," Reuters' Howard Schneider writes.

Oct 28, 2020 - Politics & Policy

Right-wing misinformation could gain steam post-election

Illustration: Aïda Amer/Axios

With less than a week until the 2020 election, researchers have expressed concern that the information ecosystem today is ripe for an unprecedented level of exploitation by bad actors, particularly hyper-partisan media and personalities on the right.

Why it matters: The misinformation-powered right-wing media machine that fueled Donald Trump's 2016 victory grew stronger after that win, and it's set to increase its reach as a result of the upcoming election, whether Trump wins or loses.

Oct 28, 2020 - Health

Coronavirus testing is a windfall

Expand chart
Data: Yahoo Finance; Chart: Axios Visuals

The sustained coronavirus pandemic is leading to especially large windfalls for labs and companies that make the materials used for testing.

The big picture: Detecting widespread infection and helping set up clinical trials isn't free, and the botched federal response will keep demand for these supplies high for a long time.

Felix Salmon, author of Capital
Oct 28, 2020 - Economy & Business

Africa loses economic hope

Illustration: Sarah Grillo/Axios

The good news is that most of Africa has done surprisingly well in terms of COVID-19 cases and deaths.

  • The bad news is that the pandemic has greatly exacerbated a continent-wide economic crisis. Even before the virus hit, Africa was suffering from weak commodity prices and a devastating plague of locusts.
Oct 28, 2020 - Economy & Business

Trump-appointed USAGM CEO removes agency's firewall protections

Illustration: Sarah Grillo/Axios

Michael Pack, the Trump-appointed CEO of the the U.S. Agency for Global Media (USAGM), has posted a notice to repeal a firewall protection intended to protect the agencies it governs, including the Voice of America, from political interference.

Why it matters: Critics argue that without the firewall, there's nothing stopping USAGM-governed agencies from devolving into a propaganda arm of the administration — a move that's common in authoritarian regimes.