Former U.S. Vice President Joe Biden and U.S. President Donald Trump speaking during the first presidential debate in Cleveland on Sept. 29.
JIM WATSON, SAUL LOEB/AFP via Getty ImagesThe question on Wall Street Wednesday morning: Which went off the rails faster, the first presidential debate between President Donald Trump and Vice President Joe Biden or the General Motors deal with Nikola ?
It’s hard to top the debate. Moderator Chris Wallace lost control early and never regained it. Biden called Trump a clown while Trump repeatedly talked over the vice president, even taking shots at Hunter Biden’s battle with drug use.
But twists in the potential GM-Nikola partnership are strange too. It would give GM an 11% stake in Nikola in exchange for supplying parts, engineering, and manufacturing support. Then came allegations levied by short seller Hindenburg Research.
The allegations, published Sept. 10, led to the departure of Nikola founder and board chairman Trevor Milton on Sept. 21. Nikola stock is down more than 50% since Hindenburg’s allegations surfaced, which materially changes the value of what GM was set to receive for its services.
Now the deal is delayed, though not off. Options markets imply Nikola stock will move about 35%, up or down, between now and mid-October.
That’s a huge implied move. What happens next is anyone’s guess.
—Al Root
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Biden, Trump Clash in First Presidential Debate
President Donald Trump and former Vice President Joe Biden clashed in a contentious and chaotic presidential debate, focusing on the Supreme Court vacancy, health care, the economy, and the response to the Covid-19 pandemic.
- Moderator Chris Wallace struggled to maintain control and enforce the debate rules. The candidates spoke over each other and traded insults. “Will you shut up, man?” Biden said to Trump at one point.
- Asked about a New York Times report that he paid little to nothing in federal income taxes for years, Trump said he has paid “millions” in taxes. “I don’t want to pay tax,” Trump said. Biden and his running mate, Kamala Harris, each released their 2019 tax returns Tuesday.
- Trump touted the Covid-19 recovery and said Biden oversaw the slowest economic recovery in decades. Biden retorted that the current recovery has been disjointed, overwhelmingly benefiting millionaires and billionaires while working-class Americans struggle.
- Trump attempted to tie Biden to elements of the Democratic Party’s left-wing, including socialized medicine, defunding the police, and the Green New Deal. Biden refuted such stances, pointing to his own plans released on his website. “Right now, I am the Democratic Party,” he said.
- Asked if he would turn to the Supreme Court to decide the outcome of the election, Trump said, “I think I’m counting on them to look at the ballots. I hope we don’t need them.” Biden said he would accept the outcome of the election after all ballots are counted.
What’s Next: The vice presidential debate between Harris and Mike Pence is set for Oct. 7. The next presidential debates are Oct. 15 and Oct. 22.
—Connor Smith
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Disney Lays Off 28,000 Workers as the Pandemic’s Economic Toll Continues
Closures and attendance caps at Walt Disney theme parks across the globe have led the company to begin laying off 28,000 employees, including thousands that had previously been furloughed.
- The layoffs are in its parks, experiences, and consumer products division, the company said, and 67% of those affected were part-time workers.
- The company pointed the finger at California in particular for its inability to retain workers at its two parks there, calling out “the state’s unwillingness to lift restrictions that would allow Disneyland to reopen.”
- In its most recent quarterly earnings report, Disney reported an 85% revenue decline in the division, which includes its theme parks, cruises, and toys and apparel business. The division accounted for more than a third of the company’s $70 billion revenue in 2019.
- The Disney news came the same day as a report that retail bankruptcies, store closures and liquidations hit record levels in the U.S. during the first half of 2020, with 18 retailers filing for Chapter 11 bankruptcy and nearly 6,000 store closures announced as a result of those bankruptcies.
What’s Next: Rising coronavirus cases in the U.S. make it tough to predict when Disney might be able to reopen its California theme parks, which have been closed since spring, or increase capacity at its Florida theme parks.
—Anita Hamilton and Ben Walsh
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Resurgence of Cases Across the Country, Including New York State
For months the state of New York has been extremely successful in limiting the spread of the virus that swept the state in the spring. Now, Covid-19 cases have begun a worrying rise.
- Statewide, 1.6% of the more than 55,000 tests carried out on Sunday, the most recent day data is available, came back positive, well above the seven-day average of 1%.
- Gov. Andrew Cuomo said at a press conference Tuesday that the state had identified 20 ZIP codes out of the more than 1,700 in the state where, on average, the infection rate was 5%, five times higher than the long-run average in the state.
- New York City’s positive test rate rose to 3.25% on Tuesday, the highest that figure has been since June after weeks where the figure hovered around 1%. “This is an inflection point. We have to take more action,” New York City Mayor Bill de Blasio Tuesday.
- A significant portion of the outbreak is tied to Orthodox Jewish communities and Gov. Cuomo and Mayor de Blasio both said they are working to reach out to that community and religious leaders.
- It’s not just New York: Daily case counts are on the rise in 30 states and territories across the country. Some states in the Midwest, most notably North and South Dakota, are seeing 25% or more of Covid-19 tests come back positive.
What’s Next: The U.S. “is not in a good place” heading into the fall, Dr. Anthony Fauci said Monday. The current infection rate is particularly concerning, he said, because the onset of colder weather is likely to cause further increase in transmission of the virus.
—Ben Walsh
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Pelosi, Mnuchin Resume Talks on Coronavirus Relief Package
House Speaker Nancy Pelosi and Treasury Secretary Steven Mnuchin had a 50-minute phone call Tuesday morning to discuss the $2.2 trillion coronavirus stimulus that Democrats unveiled Monday, Pelosi’s office said Tuesday.
- One key sticking point is Democrats’ demand for $500 billion in aid for state and local governments, which the president and his Republican allies oppose.
- House Democrats’ new proposal is smaller than the more than $3 trillion bill the House passed in May, which Senate Republicans opposed on the grounds that it was too broad and too expensive.
- Talks have been stalled for weeks after Republicans rolled out their $1.1 trillion response to the House bill in late July.
- “I’m hopeful,” Speaker Pelosi told reporters, that a deal can be reached this week on another round of economic stimulus.
What’s Next: Pelosi and Mnuchin are set to continue their talks Wednesday. Mnuchin is expected to make a counter offer of around $1.5 trillion, The Hill reports, putting the two sides about $700 billion apart—still a wide gap, but the closest they’ve been to date on a deal.
—Ben Walsh
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European Governments Grapple With Protests Against New Coronavirus Restrictions
Governments trying to contain the resurgence of the coronavirus pandemic are facing increased political opposition to the measures they think are necessary to control an alarming new wave of the pandemic, with the number of new infections nearing all-time-highs in many countries.
- In France, one of Europe’s countries worst affected by the new spike, the local lockdowns decided by the government are criticized by local authorities. In Marseille, the newly-elected mayor indicated the local police would not slap fines on restaurants that remain open in violation of a recent government decree.
- British Prime Minister Boris Johnson is facing unrest within his own camp over his handling of the crisis. Steve Baker, a leading right-winger of the ruling conservative party, asked for Parliament to have “prior approval” of “major measures (...) which take away people’s liberties.”
- In Spain, the center-left central government and the conservative head of the Madrid region are engaged in a mutual blame game over the measures enacted in the Spanish capital, which the government deems insufficient to curb the rising number of infections.
What’s Next: Lockdown fatigue is spreading across Europe and governments find it harder and harder to build even a modicum of consensus on the measures they are taking. The coronavirus dilemma—protect the economy, or protect the population—is becoming tougher to manage, as the economic recovery threatens to peter out.
—Pierre Briançon
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Dear Moneyist,
I am a 52-year-old unemployed homemaker with various health issues that have prevented me from working over the past 10 years. (I do not receive disability). My husband works full time.
I have a sister who is retired, and she and her husband net approximately $15,000 per month from pensions and Social Security. Their home is paid for, and they have zero debt placing them in a secure financial position for which I am grateful.
Eleven months ago our father passed away leaving my sister and me with a trust to divide evenly. However, he had a separate savings account with approximately $100,000 not included in the trust.
Our father put my sister’s name on this account and gave her power of attorney as he, at 94 years old, needed assistance with paying his bills. My father told us that all of his money (including the savings account) was to be split evenly between us, both my sister, and I understood his wishes.
In the past, my father generously assisted me financially when necessary due to my inability to work. He has also helped my sister, but not equally as she rarely needed any help financially. Also, I have children and she does not. He did pay for her graduate-degree program amongst other things.
My sister recently informed me that she is keeping the money in the bank account she was overseeing, and has decided not to share any of it with me. I was shocked! She justifies her decision by claiming that dad spent more money on me and my family than he did on her.
Do I have a legal right to any of that money? Should I pursue legal action or just accept that, while extremely unfair, that money is gone. I feel very bitter, and it hasn’t helped my health issues at all. I do not want to hold on to these negative feelings.
I am grateful for any advice.
—Betrayed Sister
Read The Moneyist’s response.
—Quentin Fottrell
***
—Newsletter edited by Stacy Ozol, Anita Hamilton, Mary Romano, Matt Bemer, Benjamin Levisohn
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