Long day yesterday, beginning with a discussion between Larry Summers and Glenn Hubbard on productivity at the New York Fed. The breakfast was off the record, so I can’t share details. But my takeaways:
–We under-measure productivity gains, and probably by more than we did in the past.
–Measurement problems notwithstanding, U.S. productivity is in an historic slump, holding back increases in wages and living standards.
–Technologies like mobile computing, big data, internet of things, machine learning, etc., are transforming businesses of all stripes, which should produce productivity gains in the future, but probably with a significant lag.
–Improvements in policies – tax reform, regulatory reform, infrastructure investment, etc. – can help, but it’s not clear by how much.
–The best way to grow productivity is to grow the economy.
Separately, we begin today publishing pieces from Fortune’s annual Investment Guide, including our recommendations of stocks to buy for tough times. Among them: Delta, Virgin America, DuPont, Charles Schwab, Microsoft and even battered Exxon Mobil. Details here. (Warning: Like all stock pickers, our record is less than perfect – last year’s choices were down 7%, hurt by a premature bet on a pickup in oil and mining. Index funds, anyone?)
More news below, including the latest on the horrific shootings in San Bernadino.
| Alan Murray | |
| @alansmurray | |
| alan.murray@fortune.com |
Top News
• 14 killed in San Bernardino shooting
A massacre in San Bernardino, California, left 14 people dead and 17 more wounded after a reported testy exchange at a holiday party turned deadly, resulting in the deadliest mass shooting in the United States since the Sandy Hook Elementary School shooting in Connecticut nearly three years ago. Mass shootings have become increasingly more common in the U.S. – there was a separate event in Georgia on Wednesday that didn't generate as much major news coverage. In fact, through Nov. 27, there have been 351 mass shootings in the U.S. resulting in 447 deaths and 1,292 injuries (a mass shooting is described as four or more people shot, possibly including the shooter). In California, the shooters have been identified as a couple, Syed Rizwan Farook and Tashfeen Malik, who led police on a chase before they were killed. Their motive remains unknown. CNN
• Redstone chairman role questioned by investors
Two of the largest shareholders in MTV and Nickelodeon parent Viacom are raising questions about whether Executive Chairman Sumner Redstone is fit to remain at that role at the media company. Reuters reports Mario Gabelli, Viacom's second-largest stakeholder after Redstone, and Salvatore Muoio, whose firm is the seventh-biggest voting shareholder, both are concerned after an ex-girlfriend of Redstone filed a lawsuit alleging the 92-year-old mogul was mentally incompetent. There are worries that litigation could hurt the company's ability to recover from a drop in TV ratings, even though Redstone isn't involved in the day-to-date management of Viacom. Reuters
• American Eagle names new CEO
Teen retailer American Eagle named Jay L. Schottenstein chief executive, a post he has held on an interim basis since early 2014. Schottenstein previously led the company from 1992 through 2002, but was asked to come back in January 2014 after American Eagle ousted Robert Hanson after just two years at the helm of the retailer. With the CEO appointment news, American Eagle said the company's holiday season was off to a "solid start." It also credited Schottenstein with a swift recovery. Wall Street Journal (subscription required)
• EU to probe McDonald's tax affairs
European Union regulators have confirmed they have opened an investigation into the fast-food giant's tax affairs in Luxembourg, a move that ensnares a fourth U.S. multinational company into a widening tax probe that has become a priority in Europe but has drawn criticism from the U.S. government. The EU has also been looking into whether companies including Amazon.com and Apple have benefited from illegal tax deals in Europe that allegedly shift profits from one division to another to avoid tax. WSJ
• What's next for SpaceX
Elon Musk's space company SpaceX plans to return the company's Falcon 9 rocket to flight later this month, aiming to try to land the first stage booster back on solid ground. If successful, it would be SpaceX's first terrestrial rocket landing after two failed landing attempts at sea. The mission will be the first for the company since a June launch of an unmanned rocket broke apart mid-flight. What's SpaceX trying to achieve? It is aiming to develop a reusable rocket for commercial space launches. Conventional rockets are built for one-time use, and as one can image, that's very expensive. Fortune
Around the Water Cooler
• Avon shares jump on Oprah rumor
Avon Products shares jumped on Wednesday after rumors began to swirl that media mogul Oprah Winfrey might buy a stake in the direct-seller of beauty products. Though Winfrey's team reportedly said the rumors were "not true," investors are excited about the prospect of a savior, as the stock price had plummeted 60% in 2015 alone. As a reminder of Winfrey's Wall Street Midas Touch, her 10% stake in Weight Watchers earlier this year gave the weight-loss company's shares a 90% boost when that news was announced. Fortune
• The key takeaways from Yellen's speech
On Wednesday, Fed Chair Janet Yellen gave a speech at the Economic Club of Washington, D.C., a notable event as her comments come just a few weeks before the Federal Reserve's final meeting of 2015 – when interest rates could finally see an increase. Some key takeaways? It isn't time to declare the job market as healed, but even with those worries about the labor market, the Fed will likely go ahead and raise rates anyway. Additionally, Yellen said the markets should expect the pace of interest rate increases to be as fast as they have been during previous tightening cycles. Fortune
• Food giants to try new labeling method
More than 30 food makers – including Pepsi, Campbell Soup, ConAgra, and Hershey – have signed on to participate in a barcode initiative that will give consumers more information about ingredients, allergens, and whether food contains genetically modified organisms. The information can be obtained by using a smartphone to scan a code on the label, but some proponents of mandatory GMO labeling say the information still won't be readily available for consumers. Fortune
