Tuesday's Pocket Change: How is the World's Economy Recovering From COVID-19?
Plus, Microsoft is looking to expand its portfolio.
Microsoft Looking to Buy TikTok’s US Operations; Trump Wants a Slice
Due to national security concerns related to personal data, President Donald Trump said he would sign an executive order to ban popular app TikTok in the United States, owned by Chinese internet company ByteDance.
Trump would approve a sale of the app’s US operations to a US company. There’s a catch, though: he wants the government to be reimbursed for its troubles, and a sale needs to be completed by September 15. Otherwise, the app will be banned.
Because the government has the power to ban the app in the US, thanks to the Committee on Foreign Investments in the US, Trump believes “a very substantial portion of that price is going to have to come into the Treasury of the United States.”
Microsoft said in a blogpost on Sunday:
“Microsoft fully appreciates the importance of addressing the President’s concerns. It is committed to acquiring TikTok subject to a complete security review and providing proper economic benefits to the United States, including the United States Treasury.”
Cloud services and Office 365 lead the revenue train for Microsft, but its gaming (Xbox) and social media (LinkedIn) sectors are no slouches. Microsoft would have an interesting new challenge bringing in the 100 million or so US TikTokers, an audience mostly comprised of younger people.
This is a deal that could make everyone happy: Microsoft gets a new toy, ByteDance cashes out, and TikTok users in the United States can keep on chugging.
Current Worldwide Coronavirus Economic Trends
Unsurprisingly, the US’s gross domestic product contracted at a rate of 32.9% in the second quarter, thanks to the impact of coronavirus. This was an expected mark as cities and states were on lockdown for weeks, and businesses still face gathering restrictions.
Despite this big, scary number, things are getting better in the US. Financially, at least. Thanks to the US’s beefed-up unemployment benefits, personal income increased $1.39 trillion in the second quarter compared to $193.4 billion in the first quarter.
It’s not all sunshine, however. Nearly half of people that were placed on furlough in the spring believe their job will now be lost, up from about 20% in April. Unemployment numbers are going back up.
Outside of the US, it’s even worse. Eurozone’s GDP contracted by 40.3%, a 12.1% decline from the first quarter. Europe as a whole has done a much better job in controlling the virus, however, as the US is just behind India in new daily cases worldwide.
Other notable worldwide trends:
Flights are picking back up, as countries such as Spain reopen borders to international visitors
After dipping below $20 in April, crude oil price has recovered, sitting at $40.27 a barrel as of July 31
While the growth of cases in the US is worrisome, vaccine hopes continue to rise, which will hopefully shine some light at the end of the tunnel.
The Growing Electric Vehicle Market
The worldwide growth of Tesla has been hard to ignore. While they may do it best, the electric vehicle market continues to grow. China-based EV maker Nio saw a drastic rise in deliveries from 2019 to 2020, shooting its stock up nearly 14% yesterday.
Nikola, which has yet to actually produce a vehicle, is set to report earnings today. The company plans to release a fleet of heavy-duty trucks powered by hydrogen fuel-cell. Deutsche Bank gave Nikola a “buy” rating ahead of earnings.
Fellow electric truck company Lordstown Motors will become a public company after being acquired by DiamondPeak Holdings. The deal implied a $1.6 billion valuation.
Lordstown has received intriguing interest from GM and the US government. The deal is expected to be finalized in the fourth quarter of 2020.