Situational awareness: Sheryl Sandberg is still apologizing, this time at the DLD conference in Munich, aka the Davos pre-conference. Rihanna is going to have her own luxury brand. Are you ready for the super blood wolf moon?
Illustration: Aïda Amer/Axios
The best speech ever given to an audience of bankers was delivered by Paul Volcker in December 2009. His famous zinger: "The most important financial innovation that I have seen in the past 20 years is the automatic teller machine."
Volker was right in substance, but he did miss one financial innovation that has been unambiguously positive for the world.
Bogle created a fund-management giant in Vanguard, which is owned by the investors in its funds and therefore has no need to maximize the profits it makes.
Millions of Americans have got the message and have moved their investments to index funds and other passive strategies. The biggest fund managers, including Vanguard and BlackRock (which owns iShares), are built on not picking stocks.
This week, BlackRock was embarrassed by a fake letter from Fink, designed to make him look like an ineffective blowhard. The point of the letter was to show what Fink could achieve if he really wanted to, including divesting from carbon-investing companies even in his "broad indexed funds."
The bottom line: Passive investment is good for millions, but active investment is still necessary. It holds managers accountable for their actions and provides crucial price discovery. Bogle was proud to be a passive investor. Fink, by contrast, seems to want to have it both ways.
Illustration: Sarah Grillo/Axios
Larry Fink's real letter this year hammered home one point in particular. His clients "have decades-long horizons," he wrote, which means that he's looking for "long-term growth" and "a long-term approach" (a phase he used three times, including twice in the final paragraph). To that end, he said, he would like the companies he invests in to have "compensation that promotes long-termism."
The big picture: In general, high-paid employees are much more likely to find themselves in multiyear compensation schemes, which Fink presumably likes. But those schemes have their own downsides.
Be smart: When people like Larry Fink extol long-termism, they encourage companies to lock in executives with contracts that can be worth hundreds of millions of dollars. It's far from clear that shareholders are well-served by such deals.
Analysts were convinced that the last quarter of 2018 was going to be great for earnings — until, suddenly, at the end of the year, they weren't.
The bottom line: The stock market's volatility at the end of 2018 was to a certain degree based in genuinely unexpected fourth-quarter weakness. And 2019 is getting off to a very rocky start. With expected earnings still at or near all-time highs, there's definitely a lot of room for them to be re-rated downwards.
DJ D-Sol's new single
DJ D-Sol released his first original track at the end of December, called "Feel Alive." Full of uptempo house beats, the single weirdly didn't set the tone for how the DJ introduced himself on his first earnings call as CEO of Goldman Sachs.
I'm going to start off this morning by reiterating that I'm fully committed to an active and ongoing dialogue with our shareholders and our broader stakeholders. I'm excited about our new call format... Our overarching priority is to execute our core mission, serving our diverse client franchise.— DJ D-Sol, aka Goldman Sachs CEO David Solomon, introducing the bank's Q4 2018 earnings call
OK, maybe that's more "feel as though you want to stick a fork in your eyeball" than "feel alive," but maybe it's hard to feel too alive when the sticker price for avoiding criminal prosecution in Malaysia is $7.5 billion.
Netflix's quarterly shareholder letter was much more pointed. You thought Netflix's main competitor was HBO? Think again:
We earn consumer screen time, both mobile and television, away from a very broad set of competitors. We compete with (and lose to) Fortnite more than HBO.
This chart was inspired by the wonderful FRED blog, and it shows a lot more slack in the American labor market than the record-low unemployment rate would suggest.
The bottom line: America hasn't run out of workers, not even close. Unemployment might be low, but employment could rise significantly from its current levels.
As Axios' Eileen Drage O'Reilly reports, a child born today is half as likely to die before the age of 5, compared to if she was born in 2000. This isn't general global good fortune; rather, it's the result of targeted interventions, costing hundreds of billions of dollars, from GAVI, the Global Fund, the Global Polio Eradication Initiative and the Global Financing Facility.
Why it matters: These figures are worth remembering next time someone tells you that aid doesn't work and that we should all be investing in disruptive innovation and electric cars instead.
Illustration: Rebecca Zisser/Axios
Thousands of business and government figures will be at the World Economic Forum in Davos, Switzerland, this week, writes Axios' Courtenay Brown. (Jack Bogle pointedly never attended.)
For economy watchers, China has a full-scale data dump later tonight, including retail sales and GDP figures. Any further signs of a slowdown are likely to be bearish for global markets.
The U.S. stock market will be closed tomorrow for Martin Luther King Jr. Day.
Our thought bubble: Tearing down this landmark building, which is effectively only 8 years old, flies in the face of JPMorgan's stated sustainability policy. 270 Park is historically important on multiple levels. It does not deserve this fate.