Why the Trump Bump Hasn’t Become a Slump


The NewCo Daily: Today’s Top Stories

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U.S. stock markets have boomed since Donald Trump’s unexpected victory last November. The conventional explanation is that investors got excited by the twin prospect of business tax cuts, which seemed inevitable given Republican domination of the federal government, and of huge infrastructure spending programs that Trump promised. (If you’re doing the math, you can see that investors did not worry about the government taxing less while spending more. Deficits? What deficits?)

By now, however, it should be clear to everyone that virtually none of the GOP program is going to get enacted any time soon, if ever, given the dysfunction in Washington and the Trump administration’s limp grasp on the levers of power. Yet the markets remain ebullient. What’s up with that?

Ruchir Sharma, global strategist at Morgan Stanley, writes (in The New York Times) that it’s “a mistake to view the markets through an ideologically colored lens.” In the developing world, political turmoil often tanks markets, but in a more mature economy like the U.S.’s — one with “guardrails” in place — political uncertainty rarely infects markets. The Clinton impeachment saga never derailed the late ’90s boom, and, although markets festered during Watergate, that was thanks to stagflation and energy shocks, not a sinking presidency.

According to Sharma, the market is staying strong “for reasons unconnected with the White House.” Maybe investors remember that steady two- percent growth and low inflation used to be considered a much-sought-after “Goldilocks economy.” Sure, the placid surface of these numbers hide a turbulent employment picture, a depressing level of inequality, and a brittle vulnerability to financial crises like the one we barely survived a decade ago.

Sharma says it’s reasonable to fear a China debt bust, or a too-aggressive Fed rate hike program. But a paralyzed, scandal-ridden Trump term? Not so much — for investors, at least.

When Data Stops Flowing, Planes Stop Flying

British Airways canceled a thousand flights and stranded 75,000 people over Memorial Day Weekend in London and around the world, all thanks to “an IT problem.” Operations expert Marcel van den Berg explains what happened (up2v).

Like most technical disasters, this one was a cascading failure. First, a power supply failed at a data center named Boadicea House (because this is British Airways, and data centers should be named after ancient warrior queens). Power was restored, but in “uncontrolled fashion.” That caused a power surge that burned out key pieces of network hardware. That disabled British Airways’ entire corporate messaging system.

We tend to assume that enterprise-scale companies use enterprise-grade systems — lots of backups! No single points of failure! So we’re constantly taken by surprise when these systems suddenly reveal their fragility. That tends to happen on weekends and holidays, of course. BA has outsourced much of its IT management to India’s Tata consultancy, and though the company denied that was a factor in the crisis, remote engineers are never as useful as an on-site team when hardware fails.

With global warming stressing our energy grids and infrastructure systems built on increasingly complex software stacks, we’d better start planning for more of these disasters.

Meeker’s Annual Net Report: Smartphones Slow Down, Voice Speeds Up

For many years, the annual report on internet and technology trends assembled by Kleiner Perkins partner Mary Meeker has been a data geek’s dream and a bullshitter’s nightmare. This year, Meeker’s slides note a slackening off of smartphone sales, a quickening of disruption in media distribution and advertising revenue, and a big rise in voice input over typing.

Internet growth has slowed down over most of the globe — but not in India. The healthcare market is ripe for growth for tech providers. All this and more is in Meeker’s trove of data, which Recode provides here.

The New Science of Brainstorming

When it’s time to brainstorm, get everyone in a room, tell them to propose as many new ideas as possible, and have them turn off their critical brains. That’s the way we’ve all learned to do it since the 1950s — but it doesn’t really work (Art Markman in The Harvard Business Review).

When people work in groups their ideas converge. If you want a bountiful and diverse set of ideas, send people off to work on their own to generate the ideas — then collect everyone to develop and evaluate them. What you want, in other words, is “individual work during divergent phases of creativity and group work during convergent phases.”

Another thing to guard against: Participants who want to rush to agree on a single plan so they can start deliberating on implementation details. These “closure seekers” dislike uncertainty, but their impatience can prematurely limit consideration of offbeat ideas.


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