Nov 8, 2019

Axios AM

🎬 Coming Sunday on "Axios on HBO" ... The life-changing costs of being a whistleblower, told on-camera by five who risked it all (see a clip) ... Uber CEO Dara Khosrowshahi talks to Dan Primack and me about the quest for profit ... and an exclusive poll on America's surging political anger. 

  • "Axios on HBO" also heads to the border for an on-the-ground look at President Trump's "Remain in Mexico" policy, plus exclusive interviews with U.S. immigration officials Ken Cuccinelli and Mark Morgan. Tune in Sunday at 6 p.m. ET/PT. 
1 big thing: Businesses stock up for expected recession

Illustration: Eniola Odetunde/Axios

U.S. companies are holding off on major purchases and investments, paying down debt and stacking up cash as they look to position for an expected economic downturn in 2020, Axios Markets editor Dion Rabouin reports.

  • Why it matters: Firms are trying to protect themselves from a recession, but their spending pullback could weaken the overall economy — and potentially help precipitate the very conditions they fear.

What's happening ... A slew of traditional recession indicators have shown up: The yield curve has inverted, the manufacturing and housing sectors have weakened, and income inequality has spiked to the highest level on record.

  • Business investment has fallen for six straight months, and declined by 3% in the third quarter, the largest drop since 2015.
  • The retrenchment by businesses helped turn Wednesday's U.S. workforce productivity report — a key economic metric that compares goods-and-services output to the number of labor hours worked — negative for the first time in four years.

Companies are taking action:

  • U.S. corporate balance sheets are holding more than $2.2 trillion in cash, according to the latest figures from global accounting firm PwC. It's the highest number in decades.
  • Companies have added to their holdings since that survey, and are "absolutely" preparing for a downturn, PwC's U.S. deals leader Colin Wittmer tells Axios.
  • "They're building cash reserves in their balance sheets like we haven't seen in a long time."

Investors also are getting ready for the good times to end:

  • Data from the Investment Company Institute shows that even though the stock market has risen by nearly 25% this year, investors have been net sellers of stocks, pulling $100 billion out of equity funds.
  • They've moved more than $3.5 trillion into money market funds, which are essentially savings accounts; it's the highest level since 2009.
2. Why Mayor Mike jumped in
Photo: Phelan M. Ebenhack/AP

Mike Bloomberg is jumping into the Democratic presidential race because he believes that Joe Biden is fading, opening the moderate lane next to Elizabeth Warren, sources close to the former New York mayor tell Axios' Margaret Talev and me.

  • Why it matters: "Mike will spend whatever it takes to defeat Donald Trump," a Bloomberg source said. "The nation is about to see a very different campaign than we’ve ever seen before."
  • I'm told there's no way he'll later run as a third-party or independent candidate, partly because of ballot-access hurdles.

Theory of the case: Bloomberg, who according to Forbes is worth $52 billion, will self-fund, allowing him to run an essentially national campaign at a time when the rest of the field is raising money and focusing on early states.

  • Bloomberg, who will make a final decision "soon," isn't expected to seek or accept campaign contributions, according to a second source.
  • Bloomberg had been focused on how he could best influence 2020 from the outside. But he increasingly became concerned that all the leading Democrats have weaknesses Trump could exploit in the general election.
  • Bloomberg sees himself as an anti-Trump: practical and pragmatic, a self-made business leader, committed to issues such as climate and guns, and someone who recognizes the value of multilateralism and coalitions over isolationism.

What's next: The Bloomberg buzz ignited yesterday with the news that he'll file today to qualify for the primary in Alabama, which has an early filing deadline.

  • I'm told he'll quickly ramp up in other states with deadlines approaching, including Arkansas, New Hampshire, Florida, California and Texas.

Reality check: Given the progressive tides in the Democratic Party, there's no sign that a 77-year-old billionaire is what primary voters are pining for.

  • Biden is sucking wind on money, and now Bloomberg is moving into his lane with unlimited cash.
3. Takeaways from impeachment's closed-door phase
Graphic: AP

House Democrats head into next week's public stage of the impeachment inquiry armed with closed-door testimony from witnesses who mostly corroborated each other — and the whistleblower, Axios' Zach Basu writes.

  • Why it matters: Democrats said this week they have no intention of pursuing subpoenas for former national security adviser John Bolton or his deputy, signaling they already believe they have enough evidence to proceed without hearing from White House witnesses who have refused to cooperate.
  • In fact, instead of fighting that defiance in court, Democrats plan to use the refusals as evidence of obstruction for a likely article of impeachment.

Here are the common facts we learned from the six transcripts released this week:

  • Career officials were disturbed by an irregular foreign policy channel toward Ukraine driven by Rudy Giuliani.
  • They largely viewed the allegations that led to the ouster of Ukraine Ambassador Marie Yovanovitch as a baseless smear campaign promoted by Giuliani, his associates and members of the right-wing media.
  • Witnesses acknowledge that there appeared to be a quid pro quo involving a White House visit for Ukraine’s president, conditioned on the announcement of investigations into President Trump's political opponents.
  • They differ on whether military aid was also used as leverage. But key diplomats intimately involved in discussions with Ukraine believe it was.
4. Pic du jour
Photo: Horacio Villalobos/Corbis via Getty Images

Spot, a "nimble robot" from Boston Dynamics that can climb stairs, struts onstage at the Web Summit in Lisbon, Portugal, which draws 70,000 attendees (including Axios' Sara Fischer and Felix Salmon).

5. "Midnight self-massacre"
Graphic: Axios

The WashPost's Phil Rucker obtained "A Warning," the book coming Nov. 19 from the author of the N.Y. Times' "anonymous" op-ed. Rucker's lead:

Senior Trump administration officials considered resigning en masse last year in a "midnight self-massacre" to sound a public alarm about President Trump’s conduct, but rejected the idea because they believed it would further destabilize an already teetering government.

🔪 In a review, N.Y. Times nonfiction book critic Jennifer Szalai writes that everything in the text suggests "Anonymous" is "a dyed-in-the-wool establishment Republican":

[T]o judge by the parade of bland, methodical arguments (Anonymous loves to qualify criticisms with a lawyerly "in fairness"), the ideal reader would seem to be an undecided voter who has lived in a cave for the past three years, and is irresistibly moved by quotations from Teddy Roosevelt and solemn invocations of Cicero.
6. 2020 Dems promise clean car agenda

Illustration: Aïda Amer/Axios

While President Trump is moving to ease Obama-era tailpipe emissions rules, Democrats running to unseat him want to accelerate the shift to electric cars, trucks and buses, Axios' Joann Muller and Alayna Treene report.

  • Why it matters: The 2020 presidential race could produce two vastly different outcomes for the auto industry, and that regulatory whiplash is hampering carmakers' long-term investment decisions.

Worth noting: Major pieces of the Democrats' plans, such as expanded electric vehicle tax credits and major new spending on charging infrastructure, would require congressional action.

  • Even if their most aggressive plans don't come to pass, the Democrats would likely reverse Trump's efforts to weaken efficiency and emissions rules.
7. 📱Could be a novel or movie: The night of the wayward texts

If you woke up to a weird text yesterday, you aren't alone: A mysterious wave of messages swept America's phones overnight, delivering puzzling messages from friends, family and the occasional ex, AP's Tali Arbel writes.

  • Friends who hadn't talked in months were jolted into chatting.
  • The best explanation seems to be that old texts sent in the spring suddenly went through.

Mobile carriers offered unhelpful explanations for the weird-text phenomenon, which appeared to be widespread, at least according to social media.

  • A Sprint spokeswoman said it resulted from a "maintenance update" for messaging platforms at multiple U.S. carriers and would not explain further.
  • T-Mobile called it a "third party vendor issue." Verizon and AT&T did not answer questions.
8. "An astonishingly bleak picture for a centrist European politician"
Courtesy The Economist

In his Élysée Palace office, French President Emmanuel Macron spoke to The Economist in apocalyptic terms:

The instability of our American partner and rising tensions have meant that the idea of European defense is gradually taking hold. It’s the aggiornamento [updating] for a powerful and strategic Europe. I would add that we will at some stage have to take stock of NATO. To my mind, what we are currently experiencing is the brain death of NATO. We have to be lucid.

Why it matters, from The Economist's lead editorial: "[I]n a dramatic plea to all Europeans," Macron is warning "that America is cutting Europe loose."

9. Ivanka Trump talks women's economic empowerment in Africa

Ivanka Trump is interviewed by AP's Darlene Superville in Rabat, Morocco. Photo: Jacquelyn Martin/AP

Ivanka Trump told AP's Darlene Superville in Rabat, Morocco, that the whistleblower's identity is "not particularly relevant" to the impeachment inquiry.

  • "This is a third party who was not privy to the [Ukraine] call and did not have firsthand information," Trump said.
  • "Rather than wait, under a year, until the people can decide for themselves based on his record and based on his accomplishments, this new effort has commenced."

The president's daughter and adviser is wrapping up a three-day visit to Morocco, where she's promoting a U.S. program aimed at helping empower women in developing countries.

10. Lin-Manuel Miranda: "All Art Is Political"
Courtesy The Atlantic

Lin-Manuel Miranda debuts in The Atlantic with an essay in the December issue, "What Art Can Do: The power of stories that are unshakably true":

I believe great art is like bypass surgery. It allows us to go around all of the psychological distancing mechanisms that turn people cold to the most vulnerable among us. ...
We keep revisiting Shakespeare’s "Macbeth" because ruthless political ambition does not belong to any particular era. We keep listening to Public Enemy because systemic racism continues to rain tragedy on communities of color. We read Orwell’s "1984" and shiver at its diagnosis of doublethink ... And we listen to Rodgers and Hammerstein’s South Pacific, as Lieutenant Cable sings about racism, "You’ve got to be carefully taught." It’s all art. It’s all political.

How's this for a bio line? "Lin-Manuel Miranda is a Pulitzer Prize–, Grammy–, Emmy–, and Tony Award–winning composer, lyricist, and actor."

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