Nov 1, 2019

Axios Markets

By Dion Rabouin
Dion Rabouin

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Situational awareness:

  • Economists expect today’s U.S. jobs report will show nonfarm payrolls increased by 85,000. (Bloomberg)
  • Billionaire hedge fund manager Leon G. Cooperman wrote a five-page letter to Sen. Elizabeth Warren defending billionaires and the wealthy, in response to a tweet she once sent about him. (CNBC)
  • Altria wrote down the value of its investment in Juul by a third, and reduced the e-cigarette maker's valuation to $24 billion from $38 billion where it invested last year. (WSJ)

(Today's Smart Brevity count: 1,090 words, ~ 4 minutes.)

1 big thing: The global shortage of privacy experts

Illustration: Sarah Grillo/Axios

Axios' Jennifer Kingson writes: It's more important than ever for companies to hire privacy experts to help them navigate the thicket of proliferating laws on how consumers' data can be used — but it's hard to find people with the necessary expertise.

Why it matters: Privacy is a once-and-future battleground. While companies like IBM, AT&T, Microsoft and Pfizer have had chief privacy officers for years, others — like Facebook and Uber — have hired them more recently after learning the pitfalls of data problems the hard way. There's a lot of demand.

  • "Companies around the globe are having trouble finding people," Dominique Shelton Leipzig, a privacy specialist at the law firm Perkins Coie, tells Axios.
  • "I just got a note from somebody in Saudi Arabia who was looking for people in this area."

The big picture: The tests considered the global gold standard to be certified for privacy jobs are written by the International Association of Privacy Professionals (IAPP), based in Portsmouth, New Hampshire.

  • The tests vary by geography. Some cover the requirements of Europe’s General Data Protection Regulation (GDPR), which took effect last year, or the California Consumer Privacy Act, which kicks in Jan. 1.

Interest in taking the tests has risen “supersonically,” says Douglas Forman, who oversees the IAPP’s certification exams. He tells Axios that 2018 was “our biggest year for certification ever.”

  • On LinkedIn, the number of job postings with the title “chief privacy officer,” “privacy officer” or “data protection officer” increased 77% from 2016–2019, according to an analysis that LinkedIn conducted for Axios.
  • More than 20,000 people globally have passed the IAPP's certification exams — but that’s not enough to meet the demand.

Meanwhile, the privacy movement is galvanizing. Alastair Mactaggart — the California businessman who was the driving force behind the state's new privacy law — is redoubling his efforts, aiming to strengthen the law through a 2020 ballot initiative.

In enforcement actions, the Federal Trade Commission has been instructing companies to hire chief privacy officers. One example was Facebook, which named a CPO in July after its $5 billion settlement.

The bottom line: The privacy field is still in its early days, and laws and best practices are changing at warp speed.

  • “Every day is different,” says Forman of the IAPP.
2. High net worth investors are holding a lot of cash
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Data: UBS Global Wealth Management; Chart: Axios Visuals

High net worth individuals and business owners globally say they're getting more optimistic about the economy, but are still holding a large percentage of their wealth in cash, data from a third quarter UBS Global Wealth Management survey shows.

By the numbers: The survey polled more than 4,600 wealthy investors and entrepreneurs in 18 countries.

  • Wealthy U.S. investors are putting more of their money into investments like stocks and bonds while holding 21% of holdings in cash.
  • Globally, investors have 27% of holdings in cash, "much higher than the percentage typically recommended," UBS analysts note. Still, 34% say they are shifting more into cash.
  • 53% of respondents expressed optimism on the global economy and 61% on their own region’s economy.
3. Earnings have been weak, but better than expected
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Reproduced from FactSet; Chart: Axios Visuals

The Q3 earnings season has been a generally mixed bag.

On the other side: S&P 500 earnings are still on track to decline for the third consecutive quarter, with overall profits expected to fall about 2.7% from a year earlier, the sharpest decline since 2016, according to FactSet.

  • The U.S.-China trade war is again rearing its head as companies that make 50% or more of their revenue overseas are showing especially weak totals.
  • Companies also blamed the stronger U.S. dollar and slower global economic growth, FactSet noted.

What they're saying: “Earnings … are truly better than expected,” Peter Vanderlee, a portfolio manager at ClearBridge Investments, told WSJ.

  • “As a result, there hasn’t been a moment where you would say, ‘Look, it is upon us. A recession is nearing.’”
4. The Chicago PMI report was a mitigated disaster
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Data: Investing.com; Chart: Andrew Witherspoon/Axios

Ahead of Friday's ISM manufacturing report, the Chicago Business Barometer, a separate reading that tracks manufacturing companies based in the Midwest, produced its weakest reading in four years and the second lowest in a decade.

Threat level: The details of the report, also known as the Chicago PMI, were even worse.

  • New orders declined to 37.0, the lowest since March 2009.
  • Order backlogs fell almost 14 points to 33.1.
  • Prices at the factory gate fell the third consecutive month.
  • The three strongest categories highlighted in a press release from the Institute for Supply Management — employment rose to 49.8, inventories moved up for a third month to 47.1, and production bounced to 46.8 — were all still below 50, the marker separating expansion from contraction.

Yes, but: The United Auto Workers strike at GM, which included nearly 50,000 workers and idled 34 plants across the country, likely contributed to the weakness.

  • The numbers should improve now that the union has agreed to contracts with GM and Ford.

The intrigue: It also appears business owners who participated in the survey are feeling the sickness but are dubious of the medicine.

  • In response to the question of how government-imposed tariffs would affect their firm’s business, 82.5% of respondents said it would have a negative impact (56.5% noted a little negative impact and 26% indicated a major negative effect).
  • October’s special question asked: “What impact would the latest interest rate cuts by the Federal Reserve have on firm’s business?” The majority (51.1%) expect no impact, while 31.1% state a positive effect.
5. What we learned this week: The dollar may not be bulletproof

The dollar index fell to its weakest level since Oct. 21 on Thursday after the weak Chicago PMI report sent U.S. Treasury yields tumbling.

  • The biggest loss was against the Japanese yen, which strengthened after the Bank of Japan did not add to its stimulus program and kept interest rates unchanged.

Where it stands: Currency strategists and fund managers have been expecting the dollar to weaken for the past two years, but it has remained stubbornly high, raising the ire of businesses (see above) and President Trump (who blames the Fed).

  • But since Sept. 30, when the dollar index hit a two-year high, it has fallen by around 2.1%, nearing its lowest level since July.

The big picture: The dollar has benefited from the fact that even as the Fed lowered U.S. interest rates, other central banks around the globe have done the same.

What to watch: Reports early Thursday that Chinese officials have doubts about a lasting trade deal with the U.S. have damaged sentiment and put the dollar on weakened footing, making today's jobs report even more important.

  • "A stronger payrolls report will have a smaller impact on the dollar than a weak report given the uncertainty around US-China trade relations," Kathy Lien, managing director of FX Strategy at BK Asset Management, said in a Thursday note to clients.
Dion Rabouin