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"You'll never say hello to you until you get it on the red line overload. You'll never know what you can do until you get it up as high as you can go." - See who said it and why it matters at the bottom.
Illustration: Sarah Grillo/Axios
More than two years after Amazon announced its search for a second headquarters and cities around the U.S. bent over backwards to offer the megacompany as much free cash and incentives as they could, new research confirms what economists have been saying for years: Such programs are a waste of money.
Driving the news: A new paper from researchers at Princeton and Columbia Business School found "no evidence" that business tax incentives given to individual companies increased broader economic growth at the state and local level.
Why it matters: It's not just Amazon's highly publicized HQ2 that has attracted massive tax subsidies from city and state governments.
Details: In 2014, the study found that about $7 billion — or about a third of total state incentive spending that year — "went to .0072% of new firms and 1.41% of all jobs created by those firms."
The intrigue: New York offered Amazon $800 million more in incentives than was previously known and was even prepared to pay part of some employees’ salaries, WSJ reported Sunday.
Between the lines: Co-authors Cailin Slattery and Owen Zidar wrote in the study that they found a slightly negative effect on housing markets for municipalities that attract new companies with incentives, "seeing, on average, a 4% decrease in house prices."
Japan's service sector saw the largest contraction in more than three years, which, combined with other data, indicates its overall economic growth contracted in Q4. (Reuters)
China will direct money from the nation’s $10 trillion household savings into funds that invest in equities, which is expected to translate into a huge windfall for its stock market. (SCMP)
Facebook will remove deepfakes and other manipulated videos from its platforms, but not parody or satire. The company didn't elaborate on how it would decide the difference. (Axios)
The Pentagon plans to send additional U.S. troops and B-52 bombers to the Middle East as tensions rise in Iran and Iraq. (WSJ)
The soon-to-open American Dream megamall in New Jersey has a 90% lease rate for its 3.3 million square feet of space, bucking the theme of the retail apocalypse. (Bloomberg)
After the Trump administration signed the "phase one" trade deal to halt new tariffs that were expected to hit Chinese imports on Dec. 15, the number of Americans who say they are seeing higher prices due to tariffs stalled in December.
Of note: CivicScience also found that the number of U.S. respondents who said they were concerned about the impact of recent trade policies and tariffs on their household expenses declined for the second month in a row, while the number who said they were not at all concerned increased slightly.
In contrast to the blowout returns of their U.S. counterparts last year, European banks delivered uninspired returns to investors.
What happened: U.S. banks like Citigroup and JPMorgan drove a 32% return for the S&P financial sector, slightly edging the S&P 500's 31% rise.
Why it happened: The ECB's shift didn't help, but banks' troubles weren't all a result of monetary policy, experts say.
By the numbers: The eurozone grew at 0.2% in both the second and third quarters of 2019, and EU policymakers expect the bloc grew by just over 1% last year.
The bottom line: "Europe’s banks worked through the dreariness of 2019, in some cases admirably," WSJ's Rochelle Toplensky writes. "That is about the best investors can hope for in 2020 as well."
The continued decline in prices paid by manufacturers could be a major impediment to European policymakers' desire for higher inflation in the eurozone, and data released Monday shows things are not improving.
What happened: The producer price index for the eurozone fell for the fourth straight month in November.
Why it matters: The ECB has cited lagging inflation as a major risk to growth and stability in the region and inflation's inability to rise to the central bank's 2% target as a reason for increasing its bond-buying program and cutting interest rates late last year.
What's next: Eurostat will release its preliminary PPI estimate for December today.
"The U.S. shadow banking sector is alive and well, growing at a fast pace and remains opaque," MarketWatch's Greg Robb writes, citing top economists at the University of Chicago, Harvard and the Fed.
Why it matters: The sector might not cause the next downturn, but Dallas Fed president Robert Kaplan says he's worried it could be “an accelerant” to a recession that does come.
What's happening: "The shadow banking sector, now called by the more polite term 'private debt market’ has roughly tripled in size over the past few years and one estimate puts the size around $1.2 trillion," Robb writes from the American Economics Association conference in San Diego.
Kenny Loggins, the man who took us on the highway to the "Danger Zone," was born on Jan. 7, 1948.