Feb 7, 2020

Axios AM

By Mike Allen
Mike Allen

Happy Friday! Today's Smart Brevity™ count: 1,174 words ... 4½ minutes.

1 big thing: Virus recovery could give Trump a bump

Illustration: Aïda Amer/Axios

The globe's eventual rebound from the coronavirus could help propel the U.S. economy to new heights right around the time of the presidential election, Axios Markets editor Dion Rabouin writes.

  • Why it matters: With President Trump touting the stock market's performance and jobs growth as key accomplishments, that bounce could become an accelerant in the race.

What's happening: S&P Global expects the outbreak to "stabilize globally in April 2020, with virtually no new transmissions in May."

  • Most economists predict the world will get back to business as usual by the summer — and make up for lost time with accelerated economic growth in the second half of the year.

What we're hearing: "We’re likely to return not just to normal, but above normal because of the U.S.-China trade deal," Kristina Hooper, chief global market strategist at Invesco, tells Axios.

  • "Once contagion is under control and stabilized, I think we’ll see a pop in consumer spending and corporate spending."

The backdrop: U.S. economic data had been strengthening ahead of the outbreak.

  • Consumer confidence has been holding at historically high levels; and a private payrolls survey released Wednesday showed the highest job growth in five years.
  • Both the National Retail Federation and National Association of Manufacturers tell Axios they expect their industries — two of the economy's laggards in 2019 — to see a return of job growth and investment this year.

Between the lines: The bullish expectations are based on the assumption that Trump won't ratchet up tensions with China again or launch a second trade spat with Europe.

2. Trump's head-exploding victory lap
Photos: AP

Suddenly believing the papers, President Trump stunned ministers from around the world by triumphantly brandishing post-impeachment headlines at the National Prayer Breakfast, an event that's usually a rare bipartisan respite:

  • "My family, our great country, and your president have been put through a terrible ordeal by some very dishonest and corrupt people."

Three hours later, Trump held an hourlong post-impeachment celebration/grievance-fest in the East Room, entering to "Hail to the Chief":

  • "We went through hell, unfairly. Did nothing wrong. Did nothing wrong. I've done things wrong in my life, I will admit. [Laughter.] Not purposely, but I’ve done things wrong. But this is what the end result is."
  • Then he held up the front page of the Washington Post, to applause.

Not The Onion ... Here's today's witty WashPost front page:

Speaker Pelosi said at a news conference yesterday: "That was not a State of the Union. That was ... his state of mind."

  • "It's appalling the things that he says, and then you say to me, tearing up his falsehoods, 'Isn't that the wrong message?' No, it isn't. ... I have tried to be gracious with him."
Photo: J. Scott Applewhite/AP
3. 📈 Stat of the day: The stock market's big 5

The five biggest U.S. stocks — Apple, Microsoft, Google's parent company, Amazon and Facebook — have grown so explosively that they account for nearly 18% of the S&P 500 index by market value.

  • Why it matters, from AP's Stan Choe: Never before have five companies held such powerful sway over the index, according to Morgan Stanley strategists.

The history: The last time five stocks controlled this much of the S&P 500 was during the tech bubble at the turn of the millennium.

  • That bubble eventually popped, and stocks like Cisco and GE shrank to become smaller players. Microsoft was also among them, but it has since climbed back to the top.

One difference between this time and the dot-com bubble is that many analysts don't see prices as grossly over-inflated now.

  • Each of today's Big Five is producing strong growth even when the global economy has been stuck in a sluggish pace for years.
4. Pic du jour
Photo: Sergei Ilnitsky/Pool via AP

U.S. astronaut Christina Koch, who was part of the first all-female spacewalk, lands on the steppes of Kazakhstan after returning from the International Space Station in a Russian Soyuz space capsule.

  • Why it matters, from Axios Space maestro Miriam Kramer: Koch's 328-day mission, the longest spaceflight by a woman, is part of NASA's effort to learn more about how the human body responds to long duration spaceflight, ahead of sending people to the Moon and eventually to Mars.
5. Article of the week: Climate models suddenly turn red hot, stumping scientists
Graphic: AP

All at once, several simulators used to forecast planetary warming are saying we have less time than we thought, Bloomberg's Eric Roston reports.

  • Researchers don't agree on how to interpret the hotter results.

Why it matters: These same models have successfully projected global warming for a half century, Bloomberg points out:

  • "If the same amount of climate pollution will bring faster warming than previously thought, humanity would have less time to avoid the worst impacts."

Keep reading.

6. 🎬 Exclusive: Netflix reveals 9 government takedown requests

Netflix has taken down just nine pieces of content around the world in response to written government requests since it was founded 23 years ago, the company revealed for the first time, Axios' Sara Fischer reports.

  • To date, Netlix has received three written requests from the government of Singapore covering five pieces of content, and one each from New Zealand, Vietnam, Germany, and Saudi Arabia. All have been since 2015.

Why it matters: As Netflix aims to grow its business abroad, it wants to be transparent about the way it handles censorship efforts in markets it looks to invest in.

7. With 99% in, Iowa still un-callable

Illustration: Sarah Grillo/Axios

Following the latest batch of Iowa results, Pete Buttigieg leads Bernie Sanders by two state delegate equivalents out of 2,152 counted — a margin of 0.09 percentage points, AP reports.

  • There's evidence the Iowa Democratic Party hasn't accurately tabulated some of its results, including those released late yesterday that the party reported as complete.
  • AP's tabulation of the party's results are at 99% of precincts reporting, with data missing from one of 1,765 precincts, among other issues.

DNC Chair Tom Perez asked the Iowa Democratic Party to conduct a recanvass — not a recount, but rather a check of the vote count.

  • The Iowa party suggested it may not comply, saying it would conduct a recanvass if one was requested by one of the candidates.

Sally Buzbee, AP's senior vice president and executive editor, said:

The Associated Press calls a race when there is a clear indication of a winner. Because of a tight margin between former Mayor Pete Buttigieg and Sen. Bernie Sanders and the irregularities in this year's caucus process, it is not possible to determine a winner at this point.
8. Apple makes debate debut
Tonight's debate stage in Manchester, N.H. Photo: Lorenzo Bevilaqua/ABC News

Apple is partnering with ABC News to co-host tech giant's first-ever political debate tonight (8 to 11 p.m. ET), in an effort to show off its growing investment in news, Axios' Sara Fischer and Fadel Allassan report.

9. Scoop: Impeachment aides leave White House
Senators cast their impeachment votes. Photo: Senate TV via Reuters

Tony Sayegh and Pam Bondi, who ran the White House impeachment war room, are returning to their former jobs following his acquittal, Axios' Alayna Treene reports.

  • Sayegh — who had been a top Treasury Department official for Trump, and has a close relationship with Ivanka Trump, Jared Kushner, Don Jr. and Kimberly Guilfoyle— will return to Teneo as a managing director in New York. Today is his last day at the White House.
  • Bondi, the former Florida attorney general and a member of Trump's defense team​ during the trial​, is due to depart by the end of next week.

Between the lines: Sayegh and Bondi worked behind the scenes to curry favor among Republicans to acquit Trump.

  • Both aides plans to visit Washington often and support Trump from the outside — including on Fox News, where both are regulars.
10. 1 food thing: The future of breakfast

Illustration: Aïda Amer/Axios

America's most popular chains are spending millions and hiring thousands in the battle for the growing breakfast market, Axios' Erica Pandey reports.

  • Why it matters: As consumers increasingly use delivery apps for lunch and dinner, breakfast remains a final frontier for chains that want to build relationships with their diners by actually getting them to come into the store.
Mike Allen

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