Closing the wealth gap—the growing divide between rich and poor—is critical to a global recovery, even as the ongoing Covid-19 pandemic exacerbates the problem, according to experts at a Barron’s conference this past week.
“Inequality holds growth back,” said Kristalina Georgieva, managing director of the International Monetary Fund. History shows that pandemics deepen inequality, according to IMF research: Five years after the 2003 SARS outbreak, unemployment was greater among poorer parts of the world population.
The pandemic is “not just a health crisis, it’s also a wealth crisis,” said Joyce Chang, the director of global research at JPMorgan, with the decline hitting minority families much harder than white families, in terms of consumption and outlays on health care and other goods and services.
Bank of America CEO Brian Moynihan reiterated that financial institutions are “creatures of a community…[and that] helping all the people succeed in that community” is important. BofA has a $1 billion initiative to address economic and racial inequality on a local level.
The most dramatic solution proposed at the conference to close the gap: $10 trillion to $12 trillion in direct payments to Black Americans descended from slaves. Duke University economist William Darity said reparations are “something that should be the obligation of the federal government.” On Wednesday, California Gov. Gavin Newsom signed a bill forming a task force to study how the state might provide reparations for slavery.
A spate of mergers drove stocks higher as the week began. But data on cooling labor markets and falling incomes, with no sign of a relief bill and a chaotic presidential debate weighed on the market. Stocks then bounced, before finishing down on Friday in the wake of the president’s positive Covid-19 test. On the week, the
Dow Jones industrial Average
closed up 1.9%, to 27,682.81; the
gained 1.5%, to 3348.42; and the
also advanced 1.5%, to 11057.02.
White House Quarantine
President Trump, the first lady, and top aide Hope Hicks tested positive for Covid. The president entered Walter Reed National Military Medical Center. The worldwide Covid death toll passed the million mark. House Democrats put forth another relief bill, at $2.2 trillion, as talks continued with the White House.
said it would lay off 28,000 workers at its theme parks, cruise lines, and stores; and, without congressional relief,
and United Airlines will proceed with 32,000 layoffs.
Clash in Cleveland
Trump and former Vice President Joe Biden met in Cleveland for their first debate, which turned into a wild evening of insults and interruptions. Moderator Chris Wallace struggled to keep control.
Battle Over the Court
Trump nominated Amy Coney Barrett to fill Ruth Bader Ginsburg’s seat on the Supreme Court, setting off a confirmation battle. Senate Republicans unveiled an expedited schedule that includes confirmation hearings beginning on Oct. 12, and a vote before Election Day. Democrats stressed the threat to the Affordable Care Act of another conservative judge.
The Taxes Emerge
The New York Times published details of Trump’s tax returns, revealing massive losses and years of either little or no payments. Trump responded by saying he paid million of dollars in federal taxes. The paper also claimed that many Trump properties are losing money, and that he will face over $400 million in debt payments in the next few years. The Times did not disclose the source of the tax returns, which have been the subject of multiple lawsuits.
Annals of Deal-Making
Data miner Palantir Technologies and software maker Asana both went public through direct listings, ending with valuations of $21 billion and $4.9 billion….A federal judge blocked a Trump administration ban on TikTok in the U.S., giving ByteDance moretime to negotiate a sale….Cleveland-Cliffs said it would pay $1.4 billion for ArcelorMittal USA, making it the biggest flat-rolled steel maker in the U.S.….Devon Energy agreed to buy
in a $12 billion all-stock merger. The deal could kick off further consolidation….Caesars Entertain engaged in talks with London-based betting company
at 272 pence a share, a 25% premium….Activist investor Trian has taken big stakes in asset managers Invesco and Janus Henderson.
Write to Leslie P. Norton at [email protected]