Pretty clear where the power lies these days.
Good morning.
The price of bitcoin hit a new high Tuesday morning, rising above $47,000 for the first time in its history. That was driven by Monday’s revelation that Tesla purchased $1.5 billion of the cryptocurrency to hold on its books. As we reported yesterday, Fortune’s Shawn Tully has questions about the wisdom of that purchase. But I’m sure Musk doesn’t mind—he’s already made a half billion dollars in unrealized profit on the buy. That’s just one more demonstration of the market power that made him Fortune’s Businessperson of the Year.
It also raises the question: Does Elon Musk answer to anyone? Turns out, the answer is yes. Take a look at the language Tesla used in response to the Chinese regulators inquiring about quality issues. In a filing, the company “sincerely accepted the guidance of government departments,” and “deeply reflected on shortcomings.” That’s a far cry from Musk’s belittling the SEC as the “Shortseller Enrichment Commission,” or telling U.S. auto regulators its rules are “anachronistic,” or attacking California health care officials as “unelected and ignorant.” Pretty clear where the power lies these days.
And speaking of China, a report from the Peterson Institute of International Economics finds the trade agreement it signed a year ago with the U.S. turned out to be a flop. The “centerpiece” of the deal was an agreement by China to purchase $200 billion more in U.S. goods and services in 2020 and 2021. But trade-deal-related exports actually fell 40% short of the targeted amounts, due in part to COVID-related problems.
News below.
Alan Murray
@alansmurray
alan.murray@fortune.com
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Pfizer efficacy
Early findings from the U.K.'s COVID-19 vaccination program show one dose of the Pfizer/BioNTech vaccine to offer just under two-thirds protection against the coronavirus, and both doses to provide protection of 79%-84%, depending on age. That's less efficacy than the vaccine demonstrated in clinical trials, but still far from bad. Fortune
Salesforce WFH
Salesforce will have most of its employees work remotely, at least part of the time, and will reduce its real-estate footprint as a result. Chief people officer Brent Hyder: "We’re not going back to the way things were. I don’t believe that we’ll keep every space in every city that we’re in, including San Francisco." Wall Street Journal
Fraught freight
Maersk CEO Soren Skou has warned of a "significant bottleneck" in container shipping, "in terms of lack of capacity and lack of containers, which have driven freight rates higher." Following a pandemic demand slump, "we are trying to deal with a surge in demand which is completely unprecedented, both a surge in demand because the consumers are spending, but also a surge in demand because a large restocking started, as large retailers actually stopped buying stuff in Asia in the second quarter of 2020 and well into the summer." CNBC
Bruised brewer
Heineken is to cut 8,000 jobs, or around a tenth of its workforce, to restore margins amid the pandemic's heavy effects on the drinks industry. New-ish CEO Dolf van den Brink also signaled further investment in technology, as well as further rollout of its low and no-alcohol beers and hard seltzers. Financial Times
Maximizing the impact of technology investments in the new normal What are some of the short and long-term impacts of COVID-19 on technology budgets and spending? Deloitte explores how leaders are approaching technology investments to increase enterprise agility, drive efficiencies, and accelerate growth. Read more
Housing crisis?
The U.S. could soon find itself in a housing crisis, as pandemic rules allowing borrowers to postpone their mortgages run out at the end of March. Mortgage data company Black Knight says there were 1.7 million more homeowners who were seriously delinquent in their payments in December versus a year prior, so even though borrowers won't have to make all their missed payments at once, many will still find themselves in trouble. Fortune
In suburbia
Suburban living will ultimately get a boost from the pandemic, says Simon Property Group CEO David Simon. However, given the changing retail landscape, does that necessarily mean mall developers such as Simon will benefit? Fortune
Robinhood effect
The recent frenzy of trading (e.g. GameStop) on Robinhood showed "the financial market plumbing that is in place works very well during times of market strife," C.J. MacDonald, client portfolio manager at GuideStone Funds, writes for Fortune. "Financial system regulations, such as capital requirements for brokerage firms, strict margin account trip wires, and temporary trading halts, have been put in place over the decades based on painful lessons learned in prior market crises. And this structure worked admirably over the past few weeks to ensure the efficiency and integrity of the financial markets." Fortune
Saving grace
A new expert paper suggests that, far from missing out, young workers are doing the right thing by not saving for their retirement. As Fortune's Geoff Colvin explains: "This is beyond startling. It’s sacrilege in a financial advice industry that has long counseled maximum feasible saving for retirement. But the authors of this new paper base their counterintuitive argument on the indisputable reality that there’s more to life than saving." Fortune
This edition of CEO Daily was edited by David Meyer.
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