President Biden's “supply chain” review looks like the birthing of a national industrial policy.
Good morning.
I’m a day late on this, but President Biden Wednesday signed an executive order on supply chains in response to recent shortages of personal protective equipment and semiconductors. I read the order yesterday—you can find it here—and was surprised by its sweeping scope. A few things to note:
—The order goes far beyond chips and PPE. It calls for a 100-day review of four key product areas: semiconductors, batteries, ‘rare earth’ minerals, and pharmaceutical ingredients. And it also calls for a year-long review of six key sectors: defense industrial base, public health and biological preparedness, information and communications technology, energy, transportation, and agriculture. That’s pretty much the entire economy.
—It involves not one agency, but all of government, including the departments of Defense, Commerce, Agriculture, Transportation, Energy, Health and Human Services, and Homeland Security. It is effectively an order to the entire cabinet.
—The “supply chain” frame masks a broad agenda, looking at any risk related to “defense, intelligence, cyber, homeland security, health, climate, environmental, natural, market, economic, geopolitical, human rights or force labor,” as well as “reliance on digital products that may be vulnerable to failures or exploitation.”
Add it up, and the “supply chain” review looks like the birthing of a national industrial policy—something the U.S. has long shied away from for fear it would lead to excess government meddling in markets. And remarkably, the effort appears to have broad bipartisan support. President Biden met with a group of legislators from both parties before signing the order and afterwards called it “the best meeting we’ve had so far.”
While China isn’t specifically mentioned anywhere in the order, it seems clear a great power rivalry is driving the effort. “China is looking at investing $1 trillion in their digital economy,” Texas Rep. Michael McCaul said in explaining the order. A strong response now seems something both parties can support. Keep an eye on this space.
More news below. And congratulations to JP Morgan’s Thasunda Brown Duckett, who has been picked to be the new CEO of investment firm TIAA starting May 1. That will make her one of two Black women to head Fortune 500 companies, along with Rosalind Brewer, who takes over as CEO of Walgreens next month.
Alan Murray
@alansmurray
alan.murray@fortune.com
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Markets drop
Yesterday's sell-off in the U.S. has continued internationally, as markets reassess the likelihood of interest-rate increases by the Fed (whose Chair, Jerome Powell, is adamant that they aren't appearing anytime soon.) Fortune's Shawn Tully explains what's going on: "In a 24-hour span, the yield on the benchmark 10-year Treasury surged from 1.39% to as high as 1.54% by early afternoon, matching its pre-pandemic level of last February. Wall Street had been pretty much ignoring the uptrend already underway. But the Thursday spike brought fears that this may be the start of something big, front, and center." Fortune
Bitcoin drops
Bitcoin is on track for its worst weekly slide (around -20%) since March last year. The impetus seems to be that wider market turmoil, which is forcing traders to reevaluate their positions across multiple asset classes. Fortune
TikTok settlement
TikTok has agreed to pay $92 million to settle privacy lawsuits in the U.S., though a judge must still approve the deal. The plaintiffs in around 20 consolidated lawsuits claimed the app illegally recorded facial-scan images of users and disclosed private data to third parties. Fortune
Boeing covers
Boeing and the FAA had reportedly been discussing potential fixes for the 777's protective engine covers for a couple years before the recent serious failures, and the plane-maker was planning to strengthen the cowlings to address structural strength concerns. Wall Street Journal
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Vaccine exports
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Sputnik V
Russia's Sputnik V vaccine is reportedly costing the African Union over three times as much as vaccines from Oxford/AstraZeneca and Novavax. The only per-dose price for an authorized vaccine that is higher is for J&J's jab, and that only requires one dose to Sputnik V's two. Financial Times
Hong Kong jabs
Hong Kong's vaccine rollout has finally begun, using China's Sinovac. Pfizer/BioNTech's vaccine will arrive next month, which will be handy as many in Hong Kong distrust the Chinese central government. Fortune
Measuring diversity
Katica Roy, CEO of the diversity-oriented software company Pipeline, writes for Fortune that diversity measurement is crucial to any effort to close gender and racial pay gaps: "If the government won’t act, then it’s up to businesses to take a stand for matters of equity. That’s why I support the new Measure Up partnership between Fortune and financial data company Refinitiv." Fortune
This edition of CEO Daily was edited by David Meyer.
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