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📷 Buckle up: "Axios on HBO" is back with an exclusive Steve Bannon interview at his monastery in Italy. Tune in Sunday at 6pm.
Today's Smart Brevity count: 1,077 words, ~5 minute read.
Okay, let's start with ...
1 big thing: Relying on the Fed posse
The long jobs boom, a pillar of confidence in the U.S. economy, has hit what economists say is a self-inflicted hiccup: President's Trump's multiple trade wars.
- And, as Americans have done for a decade and longer, they — along with Trump himself, running for re-election next year — will likely rely on the Fed to come to the rescue.
Driving the news: In numbers released today, the Bureau of Labor Statistics said the economy created just 75,000 jobs last month, fewer than the 80,000-100,000 needed to absorb new entrants to the work force, like high school and college graduates.
- In addition, the BLS revised down its March and April figures by 75,000 jobs — meaning that the May figures were a wash. The unemployment rate held at 3.6% — the lowest in almost a half-century — but it still was as though no jobs were created last month at all.
The big picture: Economists say today's figures, combined with other indications of economic deterioration, suggest that the economy is downshifting to slower growth. Beyond the impact on ordinary Americans and businesses, there are political ramifications:
- Analysts blame Trump: "Whatever stress there is [to economic conditions] is largely man-made, and the man in question has an office on Pennsylvania Ave.," said Scott Clemons, chief investment strategist at Brown Brothers Harriman.
- Despite the chaos, they think Trump is likely to keep up his trade fight through the November 2020 election, because it plays to his base. So to make sure there is no recession come Election Day next year, they think he will turn to the Fed to lower interest rates and stimulate the economy.
- "There is significant and growing risk a recession will start in the second half of 2020 just in time for the election," said Joseph Brusuelas, chief economist at RSM. "One should anticipate a new White House offensive against the Fed to be imminent."
As we reported yesterday, the tension with China and Mexico is playing havoc with the U.S. and global economy. A report this week, for instance, said U.S. manufacturing for May was the weakest since October 2016 — before Trump won office. And in another report, LinkedIn said that overall hiring actually dropped last month by 0.9% year-on-year.
Against these winds, Wall Street has decided it is time for a buying spree: All three major U.S. indexes rose today by more than 1%. What's that all about? At the FT, Gillian Tett writes that investors are convinced that, whether it is because of pressure from Trump or not, "the Fed will do whatever is needed to avoid a downturn."
Thought bubble from Axios markets editor Dion Rabouin: "Lost in much of the discussion about the jobs report and the Fed is the fact that globally central banks are still easing policy. That is, they continue pumping hundreds of billions of dollars into the economy. This has been going on for a decade. At some point, someone is going to have to raise the possibility that more easy money in the banking system may not be achieving the desired result."
What is that desired result? "A healthy economy that does not require stimulus and can stand on its own."
2. Possible salvation for B&N
Barnes & Noble got a lifeline today with the news that it will be bought out and taken private. No longer will the long-struggling book chain be subject to the brutality of the quarterly analyst meeting.
But what is not known is whether long-form readers will fare as well after Elliott Management's $476 million buyout of B&N.
- One outlook is that Elliott, which already owns the U.K.'s Waterstones chain of bookstores, will use its management expertise to sort out what ails B&N.
- The other is a continued, slow shriveling up of the neighborhood U.S. bookstore that has been under way for two decades.
Experts contacted by Axios mostly embrace the first scenario — at least as a hope:
- "Clearly Barnes & Noble has been on a slow boat to nowhere for quite a few years. Maybe as a private company it will be able to enact changes which would not be possible or practical as a public company — even if those changes lead to a slow and orderly liquidation," said Mark Cohen, a professor at Columbia.
- "Part of the reason they are getting bought out is they were not making it. They faced tremendous competition from Amazon," said Chester Spatt, a professor at Carnegie Mellon. "It gives Barnes & Noble a chance to be successful."
I asked Axios' Dan Primack whether the deal is positive, negative or not-sure on the long-term survival of B&N. "Odds are better today than yesterday, but they remain long," he said.
- "Waterstones bucked the odds by continuing to grow in the age of Amazon. Now the man credited with keeping Waterstones afloat, CEO James Daunt, will oversee both businesses. So Elliott’s bet is partially on letting Barnes & Noble operate privately, but more about letting it be led by James Daunt."
3. What you may have missed
Did the week just never get out of first gear? Never mind — here is the top of Future:
1. Advertisers want to mine your brain: Brain scan, anyone?
2. The 2020 campaigns are not ready for deepfakes: Waiting for armageddon
3. When companies act like governments: Corporate power in the new age
4. The 2020 trade war president: Trump's re-election to play a big role in talks
4. Worthy of your time
The relentless hacking attack on U.S. cities (Scott Calvert, Jon Kamp - WSJ)
Big Tech unfazed by antitrust threat (Kim Hart - Axios)
Coffee: The secret to health and happiness (Wendell Steavenson - FT)
The inner world of fungi (The Economist)
Did the universe really have no beginning? (Natalie Walchover - Quanta)
5. 1 fun thing: Back to cards
A couple of weeks ago I wrote how I lost my wallet but found that, between Apple Pay and Venmo, it was so easy to live without a credit or debit card that I never went to the bank to get a new one, Erica writes.
Yesterday, one day shy of my two-month anniversary without cash or cards, I found my Achilles heel.
- I'm traveling to Seattle next week (email me at email@example.com if you want to meet up!), and I can't think of a way to get around the fact that I need a physical card to give the hotel for incidentals.
- So my experiment is over. And I'm back to relying on the plastic just like everyone else.