The benchmark S&P 500 Index has gained 42.8% from its low on March 23, leaving it down just 1.14% for the year amid what the International Monetary Fund says will be the worst recession since the Great Depression. The foundations of the rally are straightforward. The Federal Reserve’s rapid response to the pandemic-induced shutdown of the economy effectively removed the risk of a financial crisis, while Congress pumped money into households and firms via a variety of fiscal support packages. Government data show personal incomes surged 10.5% in April even as wages and salaries fell by 8%.

Moreover, with support for the economy in place as the lockdowns ease, we will see activity quickly pick up. The May employment report showed just how fast that can happen in the initial stage of the recovery. Instead of shedding 7.5 million more jobs as forecast, employers added 2.5 million while the unemployment rate fell to 13.3% from 14.7%.

Stability in financial markets was always dependent on the ability of investors to look ahead to the other side of this crisis and they can see it with increasing clarity. Indeed, while 2020 earnings per share estimates for the S&P 500 have come down to about $125 from $175 in early January, analysts estimate a rebound to $162 in 2021, according to data compiled by Bloomberg. Even so, the rally was so unexpected and occurred so quickly that even the bulls are getting nervous. So while economic activity appears to have bottomed and has shown improvement, without faith that more federal money is coming it would difficult to justify continuing upward momentum after initial bounce in the data.

The most obvious challenge is that even though initial unemployment claims are off their peak – a turning point for the economy – they continue to run at a weekly rate of 1.88 million. This compares to the highest level of claims during the last recession of 665,000 in March 2009. Even as the economy reopens, Bloomberg Economics estimates that up to six million jobs could be eliminated in the months ahead. Many government jobs are also at risk. State and local governments let go of 571,000 employees with more to come. Without federal aid, for example, New Jersey may have to let go half of its 400,000 workers.

Also note that even though unemployment fell, the percentage of unemployed not on temporary layoff rose from 11.1% to 14.0%. This means that even as some workers are being rehired, others are still be laid off at a rapid pace into a job market with rising rates permanent unemployment. The newly unemployed will find it increasingly difficult to secure work.

Even as the economy reopens, the second and third round impacts of the initial shock will continue to weigh on gross domestic product. A continuation of fiscal support, such as extending the enhanced unemployment benefits and providing aid to state and local governments will boost the pace of recovery and more closely match the rally on Wall Street.

Luckily, the Trump administration continues to warm to the idea that more spending will be needed. At this point, they are said to be looking at keeping the size below $1 trillion. This is well below the $3.5 trillion package already passed by the House. If these represent initial bargaining positions, the actual outcome would fall somewhere in between.

The Fed continues to play a supporting role in the recovery as well. While the central bank likely won’t bring anything new to the table this week, it will reiterate its intention to hold interest rates near zero and continue asset purchases and lending programs until the economy is well on its way to recovery. Moreover, the Fed will confirm that they stand ready to provide additional support should if needed.

It isn’t in the Republican’s interest to risk letting the economy collapse going into the November elections. Still, the near-term path will be more tumultuous for markets than the past month has been because partisan fighting may slow progress on the next spending package. A market priced for perfection is vulnerable to shifting psychology, and Congressional delay on spending could easily trigger that shift. But if Congress follows the Fed and commits to recovery, this equity rally, even extended as looks, would have more room to run.

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Duy is a professor of practice and senior director of the Oregon Economic Forum at the University of Oregon and the author of “Tim Duy’s Fed Watch.”

An executive order is not a law. It doesn’t bind the private sector. It doesn’t require Twitter or YouTube to do anything at all. Many executive orders are orders from the president to his subordinates, directing them to do things. That’s what this one is.

With respect to the communications market (of which the social-media companies are an important part), the most important federal agency is the Federal Communications Commission, an independent agency not subject to the president’s policy control. The executive order signed by Trump on Thursday respects the FCC’s independence. It doesn’t direct the FCC to take action.

Some passages of this executive order read like a fit of pique, or an attempt at punishment. Indeed, the order does not obscure the fact that it is, at least in part, a response to behavior by Twitter that Trump didn’t like: adding fact-check labels to two misleading presidential tweets about voting by mail. Consider this:

Twitter now selectively decides to place a warning label on certain tweets in a manner that clearly reflects political bias. As has been reported, Twitter seems never to have placed such a label on another politician’s tweet. As recently as last week, Rep. Adam Schiff, D-Calif., was continuing to mislead his followers by peddling the long-disproved Russian Collusion Hoax, and Twitter did not flag those tweets.

It’s appropriate for the president to call for reassessments of national policy. It’s not appropriate for the president to use the authority of his office to punish perceived political enemies.

The order attempts to use the power of the purse to threaten social media companies. It directs all executive agencies to review their spending on advertising and marketing on such platforms – and then directs the Department of Justice “to assess whether any online platforms are problematic vehicles for government speech due to viewpoint discrimination, deception to consumers, or other bad practices.”

In the abstract, there’s nothing wrong with that. In context, it looks like an effort to get the companies to act in a way that pleases the president.

The most important provisions of the order involve section 230 of the Communications Decency Act of 1996. That all-important law states: “No provider or user of an interactive computer service shall be treated as the publisher or speaker of any information provided by another information content provider.”

As a result, Twitter, Facebook, YouTube, and others are regarded as platforms, not publishers. If their platform contains defamatory material posted by users, or material that inflicts emotional distress, the platforms themselves cannot be sued (as can, for example, newspapers or television networks when they run defamatory material). There are specified exceptions, as for copyright violations and sex trafficking. (Disclosure: I’ve served as a paid consultant to Facebook on three occasions, totaling about one day of work, since 2012. None of the work involved issues related to the topic of this column.)

Section 230 goes on to insulate providers of such services from liability for “any action voluntarily taken in good faith to restrict access to or availability of material that the provider or user considers to be obscene, lewd, lascivious, filthy, excessively violent, harassing, or otherwise objectionable, whether or not such material is constitutionally protected.”

If, for example, Twitter restricts access to sexually explicit material, or to material by which one user harasses another, it cannot be held liable.

This is where things get complicated. Trump’s order says that section 230 should not protect companies that “use their power over a vital means of communication to engage in deceptive or pretextual actions stifling free and open debate by censoring certain viewpoints.”

If companies “stifle viewpoints with which they disagree,” the order says, they should not be free from liability. A provider should lose that protection if it is engaged in certain “editorial conduct.”

To implement that conclusion, the order asks agencies to “take appropriate actions” – without saying what those actions might be – and directs the Secretary of Commerce to petition the FCC to make regulations to clarify the meaning of section 230, consistent with the order’s understanding of that meaning.

Here’s the problem. Love it or hate it, section 230 does not allow the president, the FCC, or anyone else to eliminate the immunity that it grants because a social media company has engaged in “editorial conduct.”

Section 230 says flatly that interactive computer services shall not be treated as publishers or speakers. Section 230 also grants companies immunity when they take good-faith steps to restrict access to obscene or violent material. The executive branch and the FCC have no power to say that if Twitter labels misleading tweets, or even discriminates on the basis of viewpoint, it loses its immunity from (say) defamation suits.

The executive order directs the attorney general to develop a proposal for legislation to promote its policy objectives. That’s perfectly legitimate. Many people – Democrats, Republicans, and independents – have questioned the broad immunity conferred by section 230.

To be sure, social media providers should not be treated in the same way as newspapers and magazines. Their unique role is to provide a forum for very large numbers of people. At the same time, it is hardly clear that they should be immunized from liability if (for example) they are put on notice that material on their platform is clearly defamatory, or has been found to be defamatory in state court.

Section 230 was enacted over two decades ago, in what was a radically different communications environment. Rethinking it is a reasonable idea.

It’s unfortunate that serious, substantive issues have been raised by an executive order whose clear motivation is to intimidate and punish those who are daring, even in mild ways, to hold the president accountable.

– – –

Sunstein is a Bloomberg Opinion columnist. He is the author of “The Cost-Benefit Revolution” and a co-author of “Nudge: Improving Decisions About Health, Wealth and Happiness.”

Now, as tensions between the two powers flare over the covid-19 pandemic and the fate of Hong Kong, prospects are rising that the trade and technology war could expand into a volatile new front: finance.

The dimensions of the conflict broadened this month when President Donald Trump moved to prevent a federal retirement fund from investing billions of dollars in shares of Chinese companies. Days later, the Senate unanimously passed a bill that would require Chinese firms listed on U.S. stock exchanges to provide transparency about their finances and ownership to auditors. The measure, if signed into law, could force scores of Chinese firms to delist from the New York Stock Exchange and the Nasdaq.

This week, the stakes ratcheted dramatically higher after U.S. lawmakers proposed sanctioning China’s banks if the ruling Communist Party moved ahead with legislation that would undermine Hong Kong’s autonomy. The Trump administration is expected to respond to China’s passage of a Hong Kong national security law – perhaps by revoking U.S. trade privileges – but it’s not clear if that will take the form of financial sanctions.

After squeezing the flow of trade, technology and visas, U.S. moves to choke off capital could present the biggest challenge of all for a Chinese economy that, despite its size, remains highly dependent on an international financial system dominated by the United States. And in China, an increasingly urgent debate is unfolding about whether – and how – the country could weather that pressure.

In recent months, former Chinese finance minister Lou Jiwei and prominent advisers have warned about the inevitability of Washington escalating its tactics from tariffs and technology restrictions to all-out “financial war.”

Domestic commentary has reached deafening levels, calling on Chinese companies to prepare to be denied international financing and for China to hasten the development of a new digital currency and alternate global payment system with friendly states such as Russia, Iran and Venezuela that would operate beyond the reach of U.S. sanctions.

Hawkish Chinese commentators have revived the perennial threat that China could sell off its $1.1 trillion hoard of U.S. Treasurys, which would roil the U.S. and Chinese economies alike.

“It’s really unfortunate to see the U.S. start warring again not only on technology, but on investment,” said Wang Huiyao, president of the Center for China and Globalization think tank in Beijing and an adviser to the Chinese cabinet. “OK, the U.S. has advantages with its financial system. But that’s not going to last forever. It could be short-term. It’ll only force China to accelerate developing its own system.”

The Chinese concerns are existential. They extend beyond the likelihood that its U.S.-listed companies – totaling more than 150 and worth more than $1.2 trillion in 2019, according to a congressional report – may be withdrawn from NYSE and Nasdaq. In an extreme case, the thinking goes, U.S. restrictions on investment would curb the Chinese economy’s access to dollars, which it increasingly needs to pay off debt and buy everything from foreign companies and computer chips to oil and grain. Although China maintains $3.1 trillion in foreign-exchange reserves – the world’s largest – that war chest has plummeted by 25% since 2014 as the government has tried to prop up the yuan while the economy slows and Chinese firms and families whisk their assets abroad.

Rising aggression from the United States is only reinforcing Beijing’s determination to carve out space for itself beyond the reach of U.S. financial power, Wang said.

China’s years-long ambition of internationalizing the yuan has progressed slowly, with only 2% of all global transactions conducted in the Chinese currency. But after President Xi Jinping designated blockchain one of the country’s top innovation priorities in November, China pushed ahead last month with trials of its new digital currency in several cities, the early tentative steps that could one day lead to freedom from relying on the dollar for international transactions.

“The U.S. may gain a temporary advantage, but they will drive division in the world,” Wang said. “They might regret it.”

For now, the primacy of the dollar and the pivotal role of the U.S. banking system mean China’s banks could be instantly hobbled in the event of U.S. sanctions. That seemed almost unthinkable a few years ago, but in introducing the Hong Kong Autonomy Act this week, Sen. Patrick Toomey, R-Pa., a member of the Senate Banking Committee, explicitly said he crafted legislation that holds leverage over Chinese banks and hence Beijing.

“When business and financial interests realize that this is a tool that can be deployed, I think there’s going to be a whole new level of pressure on the government” to refrain from undermining Hong Kong’s autonomy, Toomey told reporters.

The Chinese economy “for the foreseeable future will be dependent on U.S. dollar transactions,” Toomey said. “So I think these sanctions we’ve proposed are likely to be very, very powerful for a very long time.”

– – –

For now, it’s not clear how far the Trump administration would be willing to go to restrict investment from China or whether it would be feasible. U.S. financial regulators have worried for years that Chinese companies were trading in the United States while flouting disclosure requirements, citing Chinese national security laws that demand corporate secrecy.

But in an interview with Fox Business this month, Trump expressed hesitation about forcing these Chinese companies off U.S. exchanges en masse because they might list instead in London or Hong Kong – a “Plan B” that has already been voiced by prominent Chinese executives such as Robin Li, who heads the internet search company Baidu.

Still, observers say new measures could hurtle unpredictably forward at a time when the attitude toward China is almost universally hostile in Washington.

Just eight months ago, plans to restrict pension investments and delist Chinese companies that do not meet audit requirements were aired by administration officials but quickly fizzled. This month, both proposals moved ahead, with the financial auditing bill sponsored by John Kennedy, R-La., sailing with through the Senate with almost no discussion.

Trump “loves tariffs to death, but on things that would have an impact on financial markets, he doesn’t always like that,” said a former White House economic official, speaking on the condition of anonymity to discuss the president. “But it’s clear there will be more proposals to further weaken financial ties, and in the post-coronavirus climate, things can happen very quickly. It’s almost scary.”

China hawks in Washington, including Sen. Marco Rubio, R-Fla., have pressured market indexes, against which trillions of dollars in passive investments are benchmarked, to exclude Chinese companies, particularly makers of surveillance or defense equipment. Others want to go further to use Securities and Exchange Commission regulations to discourage institutional investors from buying up shares of an economic rival.

In a statement, Rubio said he would “continue to work with my colleagues in a bipartisan fashion to address this issue and ensure that the Chinese Communist Party cannot exploit U.S. capital markets” to undermine the United States.

“There’s a push from the hawks right now to ban pensions, 401(k)s and insurance companies from Chinese equities,” said Stephen Bannon, the former White House chief strategist whose political group, the Committee on the Present Danger, seeks broad economic decoupling from China. Delisting Chinese companies from U.S. exchanges, Bannon said, “is just step one.”

– – –

As talk mounted in Washington this week about potential U.S. measures against China, the party-run Global Times newspaper published a series of stories warning that financial war would be calamitous for the world.

“If Trump takes on China in the financial field, he would roil the global markets as such a war would certainly go beyond Chinese and U.S. markets,” an editorial said Wednesday. “No developed countries could shelter their open financial systems from the shocks. The Trump administration needs to think about consequences before taking any reckless moves, because no one knows how fast market risks could spread and what crisis they may cause.”

Wang Wen, director of the Chongyang Institute for Financial Studies in Beijing and adviser to several ministries, said he believes the Trump administration won’t carry out progressively more extreme measures, such as outright banning pension investments in Chinese stocks, because of the “deep power” of an abiding force in America: Wall Street’s thirst for returns.

“D.C. hawks want to prevent private capital from investing in China, but it’s foolish for them to suppress American profits,” Wang said, noting that China in fact lowered decades-long barriers on foreign capital this year in response to U.S. investor demands.

“The profit-seeking nature of capital determines that China is still one of the most sought-after markets,” he said. “Whoever loses the Chinese market will lose the future.”

In recent days, China’s internet, which is often filled with lively financial commentary, has burst into heated discussion about the implications of a financial struggle against the United States. Some commentators urged businesses to prepare for hardship. Others asked Chinese mom-and-pop investors to plow their savings into the domestic stock market to help the development of the motherland.

Most respected voices were more measured – but anxious.

“If the United States initiates a financial war . . . we have to clearly recognize we don’t have the advantage and take all precautions,” wrote Ren Zeping, an influential economist at the Evergrande property conglomerate. “It’s now necessary to elevate the financial war to the strategic heights of national security.”

Shin Honma, forensic services partner of PwC Thailand, revealed the findings of PwC’s “Thailand Economic Crime and Fraud Survey 2020: Staying on top of a never-ending war”.

The survey, which is conducted every two years, recorded the views of 286 respondents across all business sectors in Thailand about the types of crime that organisations face, who is responsible and the overall impact.

It found that 33 per cent of companies reported economic crime and fraud in Thailand this year, down from 48 per cent in 2018. While on the surface this appears to be a positive development, lower reported crimes can indicate a bigger problem, he warned.

“We believe that when reported incidences in Thailand are higher, as they were in 2018, this indicates that companies are investing more in fraud detection programmes, specialised staff and technology needed to detect crime.

“When reported incidences fall, like they did this year, this could mean fraudsters are winning the war, evolving their methods and using new technologies to breach defences undetected,” Honma said.

Asset misappropriation the most prevalent crime

The survey shows that asset misappropriation is still regarded as the most prevalent and disruptive of all crimes impacting Thai companies, followed by procurement fraud, bribery and corruption.

Insiders were responsible for 59 per cent of fraud cases in Thai companies, compared with 37 pet cent for companies globally. Another 18 per cent of cases involved collusion between internal and external actors. This illustrates the fact that many fraud cases are highly complex and have multiple parties involved, making them more difficult to detect.

Survey respondents reported that 30 per cent of fraud cases were detected from tip-offs and whistleblowing. Other methods, such as general fraud risk controls (3 per cent), and internal and external audits (7 per cent), were less common forms of detection.

Worryingly, less than 10 per cent of corporate fraud programmes in Thailand follow best practices – indicating that many cases of fraud are undetected and underreported.

“Today’s companies need to take on board that the risk of economic crime isn’t going away any time soon. If anything, companies are becoming even more exposed as the business environment changes to take advantage of new technologies.

“Especially in this increasingly complex world, companies need to focus more than ever on assessing their defences against fraud, and their readiness to respond with effective fraud-fighting measures,” said Honma, who leads an expert team of local and foreign fraud investigators, forensic accountants and technology specialists at PwC Thailand.

PwC’s findings also show that a lack of expertise, resources and management support are impediments preventing Thai companies from implementing the necessary technologies to fight fraud and economic crimes. Many companies admitted that they do not even have basic fraud programmes in place.

For Thai companies, Honma said, “The important question isn’t: Are you a victim of fraud? The question is: Are you aware of how fraud is affecting your organisation? The battle against fraud, corruption and other economic crimes is a never-ending one, and companies can pay a steep price if they leave them. It’s still not too late for us to take appropriate steps to turn the table against fraudsters and start to win the war.”

For the past few decades, college towns have been a pillar of the economy. Universities draw in lots of educated workers, in large part because of their research activities. This in turn lures private capital, which draws in yet more educated workers — a self-reinforcing effect. The result is that college towns and their surrounding areas have been some of the big winners from the knowledge economy. In some cases, universities have even become the seeds for tech clusters, creating thriving new metropolises. Austin, Texas, and the Research Triangle cities of North Carolina are good examples. Some Rust Belt cities such as Pittsburgh have built their economic revivals around top universities. But even when colleges don’t do much research, they can still generate modest but real benefits for declining regions, simply by drawing in and concentrating money and consumers.

But even before the pandemic, this golden age of college towns was under threat. The Great Recession caused most states to make deep, long-lasting cuts in university funding. Even by 2018, with the recovery complete, most states were still spending substantially less than before the recession. Meanwhile, demand for for-profit and private nonprofit schools had fallen, shuttering a growing number of colleges:

This may have been because of a growing realization that the job opportunities available to many college graduates weren’t worth the large amount of debt that many students had to take out to get their degrees.

But if universities were on shaky ground before coronavirus, they will be crushed by this pandemic and the resultant depression. The first blow will come from even deeper cuts in state funding. With tax revenues in free fall, states are already running huge budget deficits while their borrowing ability is limited. Spending will surely be cut. If the 2008 crisis is any indication, cuts to higher education spending will not be quickly restored even when recovery begins.

Tuition also will be crushed. The pandemic itself is already depressing enrollment because students don’t know when classes will be reopened. But even when that threat is gone, mass unemployment will reduce the ability of many American households to pay steep college prices.

Furthermore, the most lucrative group of tuition-payers — international students — will mostly disappear. International students pay top dollar to study at American universities, subsidizing domestic students and helping to support university budgets in the wake of state funding cuts. Even before coronavirus, President Donald Trump’s administration had been working to decrease the inflow of students from overseas. Coronavirus will exacerbate this trend, thanks to travel restrictions related to the pandemic, further tensions with China, the decreased attractiveness of the U.S. job market and further restrictions by Trump.

Big drops in state funding and tuition are already devastating universities’ budgets, forcing salary cuts and layoffs at a rapid rate. Fewer students and university workers will mean reduced demand for local businesses in college towns. And if online classes during the pandemic lead to a long-term shift toward distance education, it will mean even less money gets spent around university campuses.

But the long-term impacts could be even more severe. Budget cuts will make it harder to pay for graduate-student stipends, research-assistant salaries, construction of research facilities and other things that draw in educated workers and private capital. The dearth of international students will also hit science and engineering departments hard because these students make up a majority in many key STEM fields.

Anyone who has worked in a university laboratory knows that graduate students do much of the actual research. It will be impossible for engineering departments to replace many of these lost researchers. That in turn will force many labs to shutter or scale back, making college towns a less attractive investment destination for private companies.

Thus, the golden age of American college towns may be ending. The highly successful model of using tax and tuition dollars to subsidize and plant the seeds for thriving local economies is getting hit from all directions at once. The economic activity that once clustered there will begin migrating out — to big cities, to distributed networks of remote workers, to other countries or simply to nowhere at all. The federal government could partially offset the situation if it chose to by giving big bailouts to states, by reversing restrictions on international students and by taking action to quickly suppress the pandemic. But absent such a rescue, college towns are in for a long period of pain.

—

This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

Smith is a Bloomberg Opinion columnist. He was an assistant professor of finance at Stony Brook University, and he blogs at Noahpinion.

On Monday (May 11) Mc Group revealed a first-quarter net profit of Bt77.58 million, down 44.04 percent from the Bt138.65-million profit in the same period last year, as revenue sank under the impact of the virus crisis.

“The company’s revenue from sales dropped by 14.3 per cent to Bt744 million, while gross profit dropped by 14.5 per cent to Bt425 million,” a Mc Group official reported.

“Meanwhile, the company’s net profit from July 2019 to March 2020 was Bt368.76 million, dropping from Bt422.40 million in the same period last year.”

Niwet said the Covid-19 situation had not affected his investment direction, as he expected the outbreak to pressure the company’s stock only in the short term.

“I decided to invest in Mc Group shares because the company was able to recover its performance in the past,” he said. “The company also has strong fundamentals, including low debt, high dividends, and status as an industry leader.”

He added that he had not bought more stocks when the index dropped sharply because the price of stocks that interested him had only dropped slightly.

“I decided to monitor the situation because I am not sure that other companies with cheap stock will be able to recover their business after Covid-19 outbreak is resolved,” he said.

“At the moment, I cannot evaluate the stock market direction because the Covid-19 outbreak has caused the economy to drop to a historic low point.”

What is different about the possibilities ahead of us in Asia Pacific and Japan (APJ) is that they are to be found in a context of new horizons and a new context. Industries and sectors are being created, redefined, or destroyed faster than ever. The criteria for what make a successful business are being redefined. As a result, the opportunities businesses are seeking now are unrecognisable from those they sought a decade ago.

Technology is a driving force behind this change. I have long believed that technology has incredible power for good. This last decade has already delivered tangible examples – whether medical technology, advancing genome research, farming and agriculture, rethinking how entire populations will source food in the future, or in the transformation of how and why we work, creating a new understanding of what it means to work or be employed. The power of technology will see these new horizons and drivers spawn new possibilities that will transform three key areas of business for the region.

Tech leadership means global leadership

APJ has long been a source of innovation in its ability to foster new business models and embrace technologies. Home to more than 60 percent of the global population and predicted to grow to 5.3 billion in 2055, APJ’s power to effect change and emerge as a leader in new technologies is immense. The internet economies in Malaysia, Thailand, Singapore and the Philippines are growing by 20 to 30 percent annually, and 40 percent in Indonesia and Vietnam.

There are specific technologies where the region is already leading. Fifth-generation technology will be a game-changer, with South Korea the first country to launch 5G commercially and Singapore set to follow in its footsteps later this year. In Singapore, Dell Technologies is working with AI Singapore to fund and advance research into applications of artificial intelligence. This research is demonstrating new practical uses of AI, which is advancing deployment of AI on the global stage. Indeed, Singapore and Sydney were recently cited among the top 10 cities best-prepared for AI disruption.

Innovation in emerging technologies is not new for the region. In 2016, REKA, a Malaysian R&D company, was already making strides with autonomous driving. With two passengers in the back seats and no driver, the autonomous car completed a ride from Kuala Lumpur to Malacca. Most recently, Singapore announced its first successful package delivery by drone as part of the country’s push to adopt smart technologies.

Deployments of technology are also advancing fast. The launch of the Asean Smart Cities Network, a collaborative platform where cities from the 10 Asean member states work towards a common goal of smart and sustainable urban development, attests to an openness and acceptance of technology to enable positive change. APJ cities rank highest in global smart or digital city assessments. Globally, cities are looking to learn from the examples and experiences we see in APJ.

Organisations are also taking this approach towards innovation to heart: a recent study found that eight in 10 leaders in APJ believe emerging technologies need to be at the core of their organisation’s transformation. This breeding ground for innovation is also witnessed in the rapid emergence and growth of start-ups – including those on the unicorn and decacorn scale. High-growth technology start-ups from Indonesia alone include e-commerce firm Zilingo and ride-hailing firm Gojek.

Innovation, plus the power of the ecosystem that enables innovation, in APJ will be a global driving force for the next decade and further redefine the boundaries of business.

Innovating sustainably

Many parts of our region are still constrained by environmental degradation and poverty. But many are in a position to drive positive change.

Governments, corporations and citizens across APJ are focusing more and more on sustainable innovation. Governments in APJ, including Thailand and Indonesia, have made advances such as bans on single-use plastics. Governments have an important role to play in bridging the conversations and creating better understanding among their citizens. People expect the same level of commitment from organisations too. Corporates such as Dell Technologies are setting ambitious goals on recycling and the circular economy.

Corporate social responsibility today is a business imperative and an expectation of organisations’ customers and partners. Doing good is as important as doing well. As this intensifies, with organisations being held more accountable and consumer and business awareness increasing, we will see more organisations in APJ incorporate this mindset into every aspect of their business.

I believe this region has a powerful opportunity to use its advantage to contribute to this positive momentum. Its scale and use of technology and innovation sets it apart in terms of finding opportunities to reach new goals and define new horizons.

New horizons for new generations

Tying together much of this change is the next generation that is set to enter the workforce and increase in importance as a spending power. In my work and personal life, I am always curious to learn more about Generation Z, their approach to work and life and the impact they will have on the future of the region, innovation and business. As our future leaders, they will shape our future organisations and society.

We already know some clear facts about this generation. Firstly, they want to work for organisations that are socially or environmentally responsible. Secondly, they want to use technology to do work that can help others or the environment – more so in APJ than anywhere across the world. Businesses and governments need to be cognisant of the fresh demands these citizens will bring, as well as the expectations of organisations that they work for. This decade will see Gen Z wield their power and drive this ethos of working to help others.

These forces combined – the power and ability of the APJ region, its existing credentials in leading innovation, the need for driving change in sustainability, and anticipating the effect of Gen Z as they enter the workforce – will help to define a decade of new horizons. Those horizons may not be in view today, but using the tools at hand to reposition and adapt will enable organisations to seek the new possibilities the future presents.

Amit Midha is president, Asia Pacific & Japan and Global Digital Cities, Dell Technologies.

For decades, the firms, known as primary dealers, have sat at the nexus of the Treasuries market, buying newly issued bonds to disseminate throughout financial markets and trading directly with the Federal Reserve. This relationship has helped the Fed implement its policy goals, yet the implosions of recent months suggest that the group is under duress.

Dominated by big banks such as JPMorgan Chase and Goldman Sachs, the 24 primary dealers struggled to keep money moving within the core of global finance during the coronavirus panic in March. The Fed deployed a series of unprecedented interventions in response, including trillions of dollars’ worth of emergency funds – and inadvertently fueled debate on the need for reform.

One proposed solution: end Wall Street’s near-monopoly on club membership. Bond giant Pacific Investment Management Co. argues that asset managers should be included in the group. That could benefit the Newport Beach, California-based firm and would add trillions of dollars to the collective firepower of primary dealers, further boosting the influence of these investing behemoths.

“Certainly increasing the number of primary dealers would be useful. Instead of increasing it to smaller dealer financial institutions, widening it out to larger asset managers seems a better bang for your buck,” Pimco economist Tiffany Wilding said in an interview. “The Fed’s programs and policies will be more efficiently transmitted throughout the financial system if it opens up its operations to a broader set of counterparties.”

– – –

Because primary dealers are obliged to buy new Treasuries when they’re auctioned, they’ll be critical to helping absorb the record supply of debt the U.S is selling to rescue the economy from the ruin of the pandemic. On Monday, the federal government said its debt load will rise by a record $3 trillion between the end of March and June.

It doesn’t look like money is getting where it’s needed in times of stress – or not without massive intervention by the central bank. In March, Treasuries market makers – traditionally banks, which can no longer trade as freely given post-financial-crisis regulations – were overwhelmed as volatility spiked to levels last seen in 2009, siphoning liquidity from the longest-dated bonds. That seizure came barely six months after convulsions in the repo market, where much of the trading in Treasuries is financed.

The solution for the Treasury market could lie in loosening roles that the New York Fed has cultivated over the decade of recovery from the last recession. That’s how the central bank in 2013 tackled the excess funds sloshing around the system after three rounds of quantitative easing, bringing money managers into the fold as counterparties for reverse-repo operations to help drain some of that cash.

Looking ahead, it might allow asset managers to qualify for operations in which it adds credit to the banking system by borrowing Treasuries and mortgages from primary dealers. Wilding’s among those who say asset managers would be particularly well situated to participate in this, given they have the capacity both to offer securities in bulk to the New York Fed and to distribute the funds.

But for the Fed to expand its trading counterparties, it’d have to be confident in the safety and soundness of that institution. Any asset manager would need sufficient scale, and safeguards against any conflicts across their businesses.

Allowing money managers to jump into its repo operations would be a useful contingency for the central bank in times of stress, said Wrightson ICAP economist Lou Crandall. “Whether the Fed wants to do that in the ordinary course of business is another question,” he added.

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Even though Treasuries became exceptionally difficult to trade in March, that isn’t to say that primary dealers shirked their market-making duties. The surge in trading revenue last quarter across the large banks – including a record for JPMorgan – suggests a big engagement, and daily average volume catapulted to an all-time high exceeding $1 trillion in early March.

But primary dealers have to manage their own risks in a crisis, said Kevin McPartland, director of market structure at research firm Greenwich Associates.

“The fact that the Fed had to intervene at the level that it did tells you there were obviously liquidity issues. We heard anecdotally from the asset mangers there were definitely some challenging moments,” he said. “For market makers and even primary dealers, while their job is to help the markets continue to function, their job is not to catch the falling knife.”

Wall Street has long lobbied against post-2008-crisis regulations that banks say have constrained their market-making function. JPMorgan Chief Executive Officer Jamie Dimon said as much in an October earnings call to explain why the bank didn’t lend into the prior month’s repo turmoil.

One solution the Fed landed on in March to unclog the market was to relax the supplementary leverage ratio, effectively freeing up space on dealer balance sheets. The Fed might consider extending that forbearance.

“I’m not going to be surprised if things don’t improve at the end of March 2021, to see that rule extended or made permanent,” said Alex Li, U.S. rates strategist at Credit Agricole.

That seems quite possible as the Fed reviews how the guardrails put in place over the past decade have served the system in its first crisis since then. For policymakers, there’s a balance to be struck between loosening the leash in a crisis and ensuring that dealers are maintaining appropriate buffers in more peaceful times.

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But for some, adding more primary dealers is a better solution. The New York Fed hasn’t signaled an intention to revise its trading relationships or further expand its primary dealers circle, and it declined to comment for this story. But it has long experimented with the terms of its closest dealer relationships.

In the 1940s, the Fed tightened its inner circle to an 11-strong band of “qualified dealers” that it kept on a short leash in a restricted market, where U.S. interest rates were capped at low levels to finance the war effort. A subcommittee tasked with reframing that role in 1954 noted that “privilege as such is repugnant to the spirit of American institutions.” The qualified-dealer status was scrapped, and for several years the club had no specific membership criteria.

The group’s size peaked at 46 firms in 1988 and shrank to 17 in 2008 after Bear Stearns, Countrywide Financial and Lehman Brothers dropped out. The downfall of independent broker-dealer MF Global, which became a primary dealer in 2011 and was bankrupt by the end of that year, didn’t exactly embolden policymakers to relax criteria for entry.

Though the central bank lowered a capital threshold in 2016 to encourage smaller firms, it has admitted only one since: Amherst Pierpont, a smaller broker with expertise in mortgages, joined last year. A giant may be waiting in the wings, as Ken Griffin’s Citadel Securities, one of the largest trading firms in the world, has made no secret of its interest.

Another push to add capacity at this point might have appeal as the Treasury’s supply projections explode and the Fed wades deeper into unconventional policy – including the possible return of WWII-era yield-curve control.

Those who weathered the recent volatility are putting their faith in the Fed’s next steps.

“It was challenging, a little more challenging than I remember the financial crisis,” said Gemma Wright-Casparius, a fixed-income portfolio manager at Vanguard and member of the Treasury Market Practices Group, which advises the U.S. government on bonds. “You could find liquidity – and we did – but you had to navigate around the market to do that,” she said. “The Fed has been aware of those issues.”

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Years before covid-19 reared its hideous head and gave the world an urgent reason to shop from home, retail influencers were livestreaming inside of boutiques, offering product closeups and even trying on clothes, shoes and jewelry for an online audience. In 2017, livestreaming marketplace ShopShops sold a viewer a second-hand Birkin bag for $14,500 – no returns accepted.

Livestream shopping has been wildly popular – in China, that is. People there are used to watching other people livestream almost everything they do: cook, play or just sit and eat dinner. Smartphone viewing offers a form of entertainment and human connection.

Now, people everywhere else on Earth find themselves wanting those same two things. As we all grow more accustomed to watching, working, talking and buying online, livestream shopping may prove to be the best way to reach consumers in a post-covid-19 world.

It’s a future many retailers might not have time to consider at the moment, preoccupied as they are with staying afloat in the face of a brutally abrupt economic stoppage. U.S. retail sales fell 8.7% in March. But it’s something that any survivors should be thinking seriously about for the long term.

Is it finally the moment to embrace livestreaming in retail? What about virtual and augmented reality and other new technologies?

Reasons to say yes have never been stronger: For many goods and services, online shopping is now the only kind of shopping that exists, and that could last well into next year – or until a coronavirus vaccine is widely available. Consumers are being pushed beyond their comfortable analog habits and toward video communications. Just look at the speed at which millions have adopted Zoom, BlueJeans and other platforms to work with colleagues and talk with friends.

This profound shock has also taught retailers how essential it is to be prepared for unexpected crises.

“Those retailers that were not entirely prepared to take their entire stock offerings online are in a state of shock and deep regret,” says Doug Stephens, the founder and CEO of consultancy Retail Prophet, who foresees retailers investing in digital technology much more rapidly. “Brands and retailers are interested in not finding themselves in this level of vulnerability ever again.”

It seems certain that e-commerce will expand faster than it would have absent the pandemic. Over the past decade, it’s grown steadily from about 4% to more than 11% of all retail sales in the U.S. Over the coming decade, thanks to lessons learned from covid-19 about the importance of having an internet business, online purchases are expected to account for most retail sales.

So far, e-commerce has favored the simplest purchases and those easiest to ship: electronics, clothes, household tools and more recently groceries. Harder things to sell online are real estate and cars and hard-to-ship items such as lumber and other building materials. But considering there was a day when no one expected people to buy clothing or shoes unless they could try them on in a store, it’s a good bet that barriers to all kinds of other products will soon come down.

One way to accelerate this is with new technologies, such as virtual and augmented-reality software that let shoppers digitally try on clothes or see how a new sofa would look in their living room. Such technology has been in use for a while, especially in China, where Alibaba uses virtual reality to allow shoppers to browse merchandise in stores half a world away. Amazon and Walmart have been following in the Chinese company’s footsteps.

Today’s crisis makes livestreaming look even more advantageous than virtual reality, because it offers a sense of community as well as entertainment – two things we’re yearning for right now and two essential aspects of shopping. People buy things not just because they need or want them, but because it’s fun to hunt around for them – often with friends and family – and talk with store clerks who can explain the merchandise in detail. (Talented sales associates have made Nordstrom’s popular for more than a century.) Livestreaming can provide something like the same experience when we can’t (or are too reluctant to) go to a store in person.

It’s no surprise then that since covid-19’s assault on China, Alibaba’s Taobao Live livestreaming platform has surged – the number of merchants using it for the first time grew by 719% from January to February. Consumers are shopping for real estate and cars on the platform. Shanghai Fashion Week in late March was fully livestreamed on it: Viewers could pre-order the clothes the models were wearing on the catwalk, as well as buy pieces from the designers’ existing collections. Even farmers have been using the channel to sell mangoes and other crops. The company was hoping to bring hundreds of thousands more retailers into livestreaming; now that seems inevitable.

Livestreaming will take hold outside China to the extent that retailers believe it can keep their businesses going in a time when people want to avoid crowds. Some may find other ways and technologies to do that. For example, George Watson, a marketing professor at Portland State University, suggests that stores could set up appointments for shopping in order to limit the number of people who inhabit a space at one time. This could be paired with no-checkout systems like Amazon Go and expanded use of digital wallets such as Apple Pay to further assure social distancing.

Such technologies have so far been adopted only slowly in countries like the U.S. But that was in a world where their main virtue was convenience. Now that high-tech retail also offers safety, its appeal is much greater. Plus, a new set of customers are now used to technology-assisted browsing and buying. Soon more entrepreneurs will create livestream shopping platforms for stores of all kinds. Some of the bigger stores and chains may create systems of their own, too. Then, retailers can start crafting livestream experiences too entertaining to resist.

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This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners. Duenwald writes editorials on energy, health care and science for Bloomberg Opinion. For more articles like this, please visit us at bloomberg.com/opinion

The link between economic and physical health also happens to be at the core of America’s decade-old Affordable Care Act. There’s now enough data showing that the job market in states initially refusing and subsequently embracing the health-care law’s most controversial safety net outperformed states still opposed to it. That’s a lesson the governors of ACA holdout states like Florida, Georgia and Tennessee should remember, especially as they press to free their economies from the coronavirus restrictions that are intended to save lives and to make any recovery that much stronger.

Obamacare was designed to allow the entire population to gain private or public health care funded with corporate, federal and state revenue that combined would reduce the national burden and strengthen the economy. It specifically allowed children to remain insured on a parent’s policy until age 26, required the equal treatment of people with preexisting conditions, and prohibited annual or lifetime coverage limits. Most important, it expanded eligibility for Medicaid, the government program for people of all ages whose resources are insufficient to pay for health care.

The coronavirus is making it clear, in Benjamin Franklin’s words, “We must all hang together, or most assuredly we shall all hang separately.”

That was also the conclusion of two former national security officials — Michele Flournoy, undersecretary of defense for policy between 2009 and 2012, and Michael Morell, former deputy director of the CIA — in a Washington Post essay earlier this month. Former Treasury Secretary Robert Rubin said recently in the New York Times that bringing the economy back to life after the coronavirus pandemic “should also pursue universal health care coverage, preferably through a public option, while at the same time reducing our system’s overall costs, which far exceed other developed economies’.”

With Obamacare, the nation’s uninsured rate dropped to a record-low 10.9% in 2016 from a record-high 16.7% in 2010. It has since climbed to 13.7% under President Donald Trump, who called Obamacare “really bad health care” as he eliminated some of its safeguards and celebrated a 2018 decision by a U.S. judge in Texas agreeing with 20 states challenging its constitutionality.

When Obamacare became effective in 2013, its increased eligibility for Medicaid was welcomed by 27 states, led by New York, whose uninsured rate declined to a record-low 4.7%, and California, where the rate declined to 7.2%.

The 23 other states, all of whom voted for Trump in 2016 and were led by Republican legislatures, initially opposed the Medicaid expansion program, which today insures 1 in 5 Americans. But nine of these red states adopted the Medicaid expansion in 2014, providing an opportunity to compare their labor participation and employment rates over two five-year periods (2010-2014), (2015-2019) with the rates of the 14 still resisting its adoption.

While employment is simply the number of jobs, labor participation is the measure of workers with jobs and the number of people seeking work divided by the total working-age population. When labor participation rises, more people have jobs or are seeking them or both.

For the nine states that belatedly embraced the Medicaid expansion, the labor participation rate during the five years before 2014 declined an average 2.2%, according to data compiled by Bloomberg. During the next five years, the labor participation rate rose an average 0.7%, amounting to an improvement of 2.9 percentage points. Kentucky improved 5.4 percentage points, followed by Arizona, at 4.4 percentage points, and Michigan, which improved 3.1 percentage points.

The average labor participation rate for the 14 states refusing Medicaid expansion declined 2.2% in the five years before 2014 and fell another 0.2% in the subsequent five years, representing an inferior improvement of 2 percentage points, according to data compiled by Bloomberg.

Texas experienced an initial 1.5% drop followed by another 0.3% decline, for a total gain of 1.2%. Florida saw a 2.2% decline in the first five years and 0.2% drop in the ensuing five-year period. Wisconsin fell 1.5% initially and an additional 1.2% in the second five years, for an improvement of 0.3%.

While Arizona, Kentucky and Michigan saw their labor participation rates climb since 2014, Florida, Texas and Wisconsin showed only a smaller average rate of decline.

Employment growth shows a similar dichotomy. Total employees for the nine states that voted for Trump and adopted the Medicaid expansion in 2014 increased 4.9% in the five preceding years and 6.5% in the subsequent five years, an improvement of 1.6%. Kentucky jobs gained 2.1% in the initial period and then tripled in the five years ending in 2019, a favorable difference of 4.2 percentage points.

In Texas, the second-most populous state where employment increased 13.4% to 12.5 million during the five years before the end of 2014, the job growth decelerated by 3.4 percentage points during the next five years, according to data compiled by Bloomberg.

Obamacare in its fullest incarnation shows that when people know their health care is secure, more of them have jobs and more of them will find them in a robust economy.

That’s gone now in the dark days of the coronavirus. But when the recovery begins, augmenting the Affordable Care Act may be something even capitalists and socialists can agree on.

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Winkler is co-founder of Bloomberg News (1990) and editor in chief emeritus; Bloomberg Opinion columnist since 2015; co-founder of Bloomberg Business Journalism Diversity Program in 2017. During his 25 years as editor in chief, Bloomberg News was a three-time finalist and winner of the Pulitzer Prize for Explanatory Reporting and received numerous George Polk, Gerald Loeb, Overseas Press Club and Society of Professional Journalists and Editors (Sabew) awards.