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U.S.-China investment flows hit their lowest in 9 years as companies feel the pressure to pull out – CNBC

Posted: September 20, 2020 at 10:51 pm


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A symbol of TikTok (Douyin) is pictured at The Place shopping mall at dusk on August 22, 2020 in Beijing, China.

VCG | Visual China Group | Getty Images

BEIJING The haggling over TikTok is the latest signal of a change in U.S.-China deal-making: rather than buying each other, companies may soon be looking to sell their cross-border holdings.

Amid the shock of the coronavirus pandemic and escalating U.S.-China tensions in the first half of this year, the total value of foreign direct investment and venture capital deals between the two countries fell to a near nine-year low, research and consulting firm Rhodium Group said in a report Thursday. The research said the $10.9 billion in deals for the January to June period was the lowest since the second half of 2011.

The decline continues a trend of the last three years, reversing a flurry of mergers and acquisitions by Chinese conglomerates in the U.S. that included purchases such as the Waldorf Astoria in New York.

Both countries have had a part to play in this development. The Chinese government has sought to limit capital outflows, while U.S. President Donald Trump who is seeking re-election in this November's election has increased scrutiny on Chinese purchases of American assets.

The total announced Chinese divestitures in the U.S. have amounted to $76 billion in the last 20 years, with the bulk occurring in the last two years, according to Rhodium's analysis.

The latest ongoing high-profile case involvesBeijing-based ByteDance, which acquired short-video app Musical.ly in late 2017. ByteDance subsequently merged the users of the U.S.-focused start-up onto one app called TikTok that has exploded in popularity worldwide. Citing concerns about data security, Trump issued an executive order in August requiring ByteDance to divest its interests in the U.S.

After rejecting a bid from Microsoft, TikTok is expected to list its global operations publicly on a U.S. stock exchange, withU.S. software company Oracle and retail giant Walmart set to take stakes, sources told CNBC.

There will likely be more political pressure for Chinese stakeholders to sell out to American businesses.

The Rhodium report noted the Committee on Foreign Investment in the United States (CFIUS) is stepping up its scrutiny of Chinese investments in the country to include a retroactive review of transactions that were not submitted voluntarily.

And companies were far from eager to pursue cross-border deals in the first half of the year.

Completed U.S. direct investment into China fell 31% to $4.1 billion, while Chinese investment into the U.S. would have plunged if not for Tencent's $3.4 billion minority stake in Universal Music, the report said. With the technology giant's purchase,Chinese businesses completed direct investments of $4.7 billion into the U.S. in the first half of the year, up from $3.4 billion a year ago, according to Rhodium.

"Flows are unlikely to recover in (the second half) amidst persisting systemic concerns and US election politics," the authors of the report wrote.

Although they expect some pressure to subside following the election, they said, "systematic concerns driving caution on Chinese investment in high technology, critical infrastructure and personal data assets will not subside."

"China's new 'internal circulation' campaign suggests that Beijing reads the writing on the wall to mean less two-way engagement with the world, especially the US, in the years ahead," they added.

Chinese authorities are also increasing scrutiny on inward flows, according toa separate report co-released this week by the Rhodium Group.

The quarterly review of China's progress on economic reform is called "The China Dashboard" and released by the Asia Society Policy Institute and the Rhodium Group.

Analysts said in the report that regulators "disproportionally targeted foreign firms in their merger reviews" in the first three months of this year.

The share of foreign-involved deals subjected to review soared to 32% the highest on record, the report said, adding that fewer than 10% of domestic deals faced such scrutiny. It noted that deals tied to overseas firms fell 17% year-on-year to 151, while domestic deals declined 9% year-on-year to 324 as a result of the coronavirus pandemic.

In public, China's top government leaders and various departments have emphasized efforts to support foreign direct investment into the country. Data from the Ministry of Commerce showed actual use of foreign capital rose 15% year-on-year in August, bringing the year-to-date change to near break-even at negative 0.3%.

"We had unprecedented access to the Chinese leadership over the last month,"Joerg Wuttke, president of theEuropeanUnionChamber of Commercein China, told reporters last week. He pointed in particular to a conversation a day earlier with Hu Chunhua, a vice premier of China, along with representatives from the American Chamber of Commerce in China and other foreign business groups in Beijing.

American and European business associations have also noted that members generally remain keen on staying in China to access the large domestic market.

Rhodium's report on cross-border flows pointed out that China's agriculture and food sector became a new popular industry for U.S. investment this year, andmany significant American deals for Chinese companies in industries such as finance and energy remain on track.

"In particular, capital expenditure from the ongoing greenfield constructions are baked in for the next few years, so a rapid drop-off like we've seen in the other direction is unlikely to happen for US FDI in China," the report said.

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U.S.-China investment flows hit their lowest in 9 years as companies feel the pressure to pull out - CNBC

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September 20th, 2020 at 10:51 pm

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EU and China to begin next round of investment talks – Foreign Brief

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The 32nd round of the EU-China Comprehensive Agreement on Investment (CAI) begins today as delegations pursue a final arrangement before

Photo: Yves Herman/ Pool/ AP

The 32nd round of the EU-China Comprehensive Agreement on Investment (CAI) begins today as delegations pursue a final arrangement before the end of this year.

The CAI negotiations began in 2014 as an effort to expand access and reduce investment barriers in both markets. The previous round focused on forced technology handovers, state-owned enterprises and transparency surrounding subsidy rules. This weeks meetings aim to resolve the remaining disagreements regarding market access equality and sustainable development.

One obstacle to finalising the CAI is Chinas recent record of human rights violations. The EU has previously attempted to decouple these issues from the negotiations; however, they were brought up at last weeks high-level EU-China Leaders Meeting. No progress was made, delaying the discussion till the upcoming EU-China Human Rights Dialogue.

Anticipate some progress to be made this week as parties negotiate residual investment issues. In the near term, expect EU officials to hold discussions on balancing its aspiration for bilateral investment relations with China and its strong belief in human rights protection in order to conclude the CAI by 2021. Should the EU decide to insert human rights into later negotiations, China will resist any categorical denouncement or regulation of its record, potentially derailing the EUs investment ambitions in Asia.

Wake up smarter with an assessment of the stories that will make headlines in the next 24 hours. DownloadThe Daily Brief.

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September 20th, 2020 at 10:51 pm

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Taysom Hill, weapon or investment? – NBC Sports – NFL

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LIVE

Patriots vs. Seahawks

0:45

Bears' Trubisky entered 2020 with new approach

0:30

Jones explains why Packers are better in 2020

0:29

49ers worried about MetLife Stadium turf in Week 3

0:21

Lock could miss time with shoulder injury

Posted by Mike Florio on September 19, 2020, 4:11 PM EDT

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The Saints gave quarterback-of-all-trades Taysom Hill a two-year, $21 million contract in the offseason. The question is whether the money was spent on a player the Saints plan to use accordingly, or whether the contract represents a downpayment on the ability to make him the starter whenever Drew Brees retires.

Based on the first week of the 2020 season, it seems to be the latter. On the field for 25 percent of the offensive snaps and 36 percent of the special-teams plays, Hill had three carries for 13 yards, one reception for four yards, and a garbage-time pass on a gadget lateral from Brees for 38 yards, to Alvin Kamara.

Those are all reductions from the last time we saw Hill, in the wild-card game against the Vikings. Hill participated in 41 percent of the offensive snaps and 84 percent of the special-times play. He ran the ball four times for 50 yards, caught two passes for 25 yards, and threw one pass for 50 yards.

With receiver Michael Thomas expected to be out for several weeks, Hill becomes one of the candidates to replace some of the production of the player who caught 149 passes last year, especially since Thomas operates roughly 25 percent of the time from the slot. But if the plan is to use Hill sparingly in order to keep him healthy and to continue his development during practice as a passer, logic points to seeing him in smaller doses.

If, at some point, Hill will be on the field for every snap, it makes more sense to see him on the field more than once out of every four. Given that hes making $10.5 million per year, it makes sense to see him more often than that.

Regardless of whether hes being groomed to succeed Brees, Hill routinely pops when given the chance to participate. If the Saints hope to move the ball and score points effectively without Thomas, Hill may need to be involved more than he was last Sunday.

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Taysom Hill, weapon or investment? - NBC Sports - NFL

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September 20th, 2020 at 10:51 pm

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3 Moves That Will Slash Your Tax Bill This Year – dbrnews.com

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Say you're in the 24% tax bracket, which means you pay that rate on your higher dollars of earnings. If you put $6,000 into a traditional IRA this year, you'll shave $1,440 off your tax bill, just like that. And of course the higher your tax bracket, the more savings you actually stand to reap.

Not everyone has access to a health savings account, or HSA, but if you're on a high-deductible health insurance plan this year, then it pays to see if you're eligible -- and put in as much money as possible. Your contribution limit for 2020 will depend on whether you're funding an HSA just for yourself or on behalf of a family. If it's the former, then you can put in up to $3,550 if you're under 55, or $4,550 if you're 55 or older. If you're funding an HSA on behalf of a family, these limits increase to $7,100 and $8,100, respectively.

As is the case with traditional IRAs and 401(k)s, the money you put into an HSA is income the IRS can't tax you on. You'll then have the option to use your HSA contributions to pay for qualified medical expenses, or invest the money you don't need immediately so it grows into a larger sum, just like you can invest an IRA or 401(k).

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September 20th, 2020 at 10:51 pm

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Oracle, Walmart fill in details of investment in TikTok Global – Seeking Alpha

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Oracle (NYSE:ORCL) and Walmart (NYSE:WMT) issued a joint statement confirming earlier reporting about their proposed deal with ByteDance (BDNCE) over TikTok's U.S. business.

Earlier, President Trump said he approved the deal "in concept," and Oracle and Walmart say Trump's announced that ByteDance got approval to resolve outstanding issues in the deal.

That now includes Oracle and Walmart together investing to acquire 20% of the newly formed TikTok Global business, designed to provide all TikTok services to users in the United States, and to most of the users in the rest of the world.

A separate Walmart statement noted it's tentatively agreed to acquire 7.5% of TikTok Global (along with commercial agreements to provide ecommerce, fulfillment, payments and other omnichannel services to the company) - suggesting Oracle's in for 12.5%. Oracle will also be TikTok's secure cloud provider.

TikTok global will be "majority owned by American investors" including Oracle and Walmart, the companies say. The five-member board of directors will feature four Americans.

"All the TikTok technology will be in possession of TikTok Global, and comply with U.S. laws and privacy regulations. Data privacy for 100M American TikTok users will be quickly established by moving all American data to Oracle's Generation 2 Cloud data centers, the most secure cloud data centers in the world," the companies say.

And TikTok Global will create more than 25,000 new jobs in the U.S. and pay more than $5B in new tax dollars to the Treasury.

It also plans to build an initiative to develop and deliver an AI-driven online video curriculum for children, and set an initial public offering to be listed on a U.S. exchange within 12 months.

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Oracle, Walmart fill in details of investment in TikTok Global - Seeking Alpha

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September 20th, 2020 at 10:51 pm

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If You Invested $5,000 in Moderna in January, This Is How Much You’d Have Now – The Motley Fool

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Are you the kind of investor who's leery of buying stocks immediately following their initial public offerings (IPOs)? If so, you might likeModerna's (NASDAQ:MRNA) story.

In December 2018, Moderna conducted the biggest biotech IPO ever. If you had bought shares at the close on the company's first day of trading and held on, your return as of the end of 2019 would have been a piddling 5%. But there's more to the story.

How much would you have today if you'd invested $5,000 in Moderna in January of this year? Your return would be a lot higher than just 5%.

Image source: Getty Images.

Moderna's shares opened on Jan. 2, 2020, the first day of trading this year, at $19.57. An investment of $5,000 would have bought 255 shares. (We'll assume no partial shares were purchased.)

By the end of the third week of February, your investment would be in the red. But then the biotech stock took off. What happened? Moderna announced on Feb. 24 that it had shipped the first batch of coronavirus vaccine candidate mRNA-1273 to the National Institute of Allergy and Infectious Diseases (NIAID) to be used in a planned phase 1 clinical study.

Moderna kept on reporting progress with mRNA-1273. And its shares kept on moving higher.

MRNA data by YCharts

Fast forward to today. Your initial investment of $5,000 would be worth close to $17,820. That's a gain of more than 250% in less than nine months. Moderna has been a much bigger winner than it was immediately after its IPO.

You probably noticed in the stock chart above that Moderna's year-to-date gains were a lot higher in July than they are now. Had you invested $5,000 in January and sold at the peak on July 17, you'd now have nearly $24,190.

Why has Moderna given up some of its impressive gains? One factor was that in July the U.S. Patent Trial and Appeal Board (PTAB) ruled against the company and in favor of Arbutus Biopharma in a patent case involving technology used to deliver messenger RNA (mRNA) to cells. Moderna shrugged off the ruling, stating that its approach and manufacturing processes "have advanced well beyond the technology" in the Arbutus patents. But the PTAB decision rattled investors.

Perhaps the biggest issue, though, was that investors realized they might have gotten the cart before the horse a bit too much. Yes, Moderna's mRNA-1273 is very promising. However, the company still has no approved product on the market yet. It also faces other rivals in the coronavirus vaccine race, including several much larger drugmakers.

Moderna's valuation at its peak likely seemed exceptionally frothy to some. A $37 billion market cap for a clinical-stage biotech did (and still does) sound absurdly high.

You might think that it's too late to buy Moderna shares even after the pullback in recent weeks. My view, though, is that investing $5,000 right now could still pay off in a huge way over time.

To be sure, Moderna isn't the kind of stock that will appeal to some investors. It's very risky. If mRNA-1273 flops, the biotech's shares will crater.

However, I think the chances of success for mRNA-1273 are pretty good. Moderna expects to know in November how well the investigational vaccine works. Positive interim results would almost certainly spark a big gain for the stock.

More importantly, in my view, is that good news for mRNA-1273 would bode well for the rest of Moderna's pipeline. The company has over a dozen other mRNA candidates in clinical testing. It also recently announced plans to develop a seasonal flu vaccine. Success for mRNA-1273 would go a long way toward validating the potential for Moderna's mRNA approach.

Maybe this rosy scenario won't unfold for Moderna. But if it does, an investment of $5,000 is going to turn into a lot more than $17,820 over the next few years.

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If You Invested $5,000 in Moderna in January, This Is How Much You'd Have Now - The Motley Fool

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September 20th, 2020 at 10:51 pm

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Buffett’s IPO Investment and Citigroup’s Next CEO – Motley Fool

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In this episode of Industry Focus: Financials, host Jason Moser and Fool.com contributor Matt Frankel, CFP, discuss the recent news that Citigroup (NYSE:C) CEO Michael Corbat will be stepping down in 2021, and current President Jane Fraser will be taking his place, which will be the first time a woman has been CEO of a mega-bank. Plus, we recently learned that Warren Buffett's Berkshire Hathaway (NYSE:BRK.A)(NYSE:BRK.B) will be taking a stake in Snowflake's upcoming IPO. And finally, the pair tells listeners why Walker & Dunlop (NYSE:WD) and Adobe (NASDAQ:ADBE) are on their radar this week.

To catch full episodes of all The Motley Fool's free podcasts, check out our podcast center. To get started investing, check out our quick-start guide to investing in stocks. A full transcript follows the video.

This video was recorded on September 14, 2020.

Jason Moser: It's Monday, September 14th. I'm your host Jason Moser. On this week's financial show, Citigroup has got a new CEO, Buffett is buying into an IPO, and we've got a couple of stocks for you to keep an eye on. And joining me this week, as always, is Certified Financial Planner Mr. Matt Frankel. Matt, it's looking like you've caught up a little bit on the rest that apparently you lost when you made the big old excursion down to Disney World last week, huh?

Matt Frankel: Yeah, we decided to take the kids. It was a lot of fun. It's really cool to experience Disney without the giant crowds that, you know, if you normally go during the Summer, it's like shoulder-to-shoulder in there. So, it was nice to not have to deal with that. [laughs]

Moser: [laughs] That's great. How long were you guys down there?

Frankel: We spent three days at the park, so it was really nice. We got to do all the rides that we couldn't do when we were in February, because you know a five-year-old doesn't want to wait in line for three hours, so. [laughs]

Moser: Yeah, I guess that's right. Now, your kids are still young enough to where, I mean, they can't go on the big rollercoasters yet, right?

Frankel: No, my daughter can go on most. There were a few she couldn't get on. I mean, the little, I have a two-year-old, and obviously he couldn't do much of anything, but yeah, my daughter's favorite ride there was Big Thunder Mountain Railroad, the rollercoaster.

Moser: Oh, nice. Yeah, I always felt that was fun, like, when my kids got to that age and they could actually jump on those coasters, that was like, that's when you knew that it was getting serious. I mean, when you're a kid and you're hitting those rides, you know, that's when you're experiencing the real world, the real Disney World. And it made me think of, a little while back we took our kids to Universal and we did a lot of the rollercoasters there at Universal, which they have some pretty monster rides there, between like The Hulk and the rock 'n roll and everything, and that was a lot of fun. I enjoyed that period a little bit better than, you know, Small World and stuff like that.

Frankel: [laughs] Yeah, I'm pretty sure. No, my daughter preferred the rollercoasters to all the kids rides.

Moser: That's awesome. Well, we're glad you got back safely.

Frankel: Thank you.

Moser: Let's jump into what we want to talk about this week. And first up here, you know, this was a refreshing headline to see, this was some good news to see, in that, Citigroup is going to be getting a new CEO here soon. Now, Michael Corbat, who's the current CEO of the company and has been with the company for a number of years, I think +30, decades, he is set to retire next February 2021, and set to succeed Mr. Corbat will be the first woman CEO of a megabank here, I think, ever, if I'm not mistaken, Jane Fraser. She's been with the company, I believe, for 16 years now. Jane Fraser will be taking over as CEO of Citigroup in February.

Matt, this was big news for a lot of reasons. I think Mr. Corbat, he feels that he's had his time and it's time to move on and do other things. But to see Citigroup take this step, I mean, it is certainly the right time, it feels like, to be doing this.

Frankel: Well, absolutely. For one, Citigroup is one of the more progressive banks. I don't know if you're aware of this, but out of the six largest banks in the U.S. Citigroup's board has the most gender diversity on it. So, from that angle it wasn't totally a surprise. The reason this was surprising was, because of how early it happened. Jane Fraser was promoted to President not long ago. And at that point it was pretty obvious that she was going to be the successor. But Michael Corbat is only 60, which is younger than most other big bank CEOs. I mean, Jamie Dimon is older than Michael Corbat. So, it was just kind of how early it happened.

But like you said, the overall climate right now probably had a lot to do with it. It does seem like a very right time in history for this to happen and they couldn't have picked a better candidate. I mean, she's currently CEO of the Global Consumer Banking, she was former CEO of, I think, their Latin American division and a few other divisions at certain points in time. So, it seems like the right move and the right timing. And she could be CEO for quite some time, she's only 53. So, she could be CEO for -- I mean, like I said, Corbat retired kind of early for a bank CEO, she could be at the helm for a decade or more if it's going well.

Moser: Yeah, and it feels like. I mean, Citigroup, I believe this is the third largest bank in the world or at least the country by assets. You know, I remember during the financial crisis, I mean, Citigroup is clearly one of the banks that had a tougher time than most. Many of you may recall they actually went through a reverse split at one point, which at the time was just something [laughs] they really kind of needed to do. But to see that they were able to come out on the other side of that in one piece and really able to continue building the business was encouraging.

Now that said, if you look at the year-to-date if you look at the last five years for the stock. I mean, it's not been a good year, and frankly, in the last five years, you look like you're essentially flat, if you're an owner of these shares. And so, it does, it feels like, at least, that Ms. Fraser has a pretty good situation coming in here, in that, the expectations -- you know, Mr. Corbat, for all that he's been able to do their since he's held the position since 2012, I mean, the returns are the returns, and that's ultimately what shareholders are looking at for the most part. And it feels like at least Ms. Fraser is in a pretty good position here to take this company onward and upward.

Frankel: Yeah. And I mean, it's worth pointing out that Corbat has been at the bank for 37 years, but he's only been CEO for eight of those. So, he wasn't in-charge during the financial crisis when that reverse split, you were talking about, happened. So, it wouldn't be fair to blame that part of the history on him.

Moser: Oh, yeah, no.

Frankel: Since then, Citigroup has underperformed the other big banks. And there's a bunch of factors that go into the returns of Citigroup, the big reason they've underperformed recently is that they're a lot more international than the other big U.S. banks. They have a lot more exposure to the European market, for example, than a lot of the big U.S. banks do. So, that's held down returns a little bit. I can't really make the argument that Corbat has done a bad job in his time as CEO, maybe his predecessor I can make that argument for. You know, there's a reason that Citigroup, really, had to do a reverse split and didn't perform very well during the financial crisis era. But in the eight years that current leadership has been in effect, you know, they've underperformed the banking sector, sure. I'm pretty sure they've outperformed Wells Fargo, but don't quote me not. [laughs] I don't want to -- I'm pretty sure.

Moser: I think you're right, but you know, I'm looking at the chart here now, as we speak. And I mean, it definitely is a close one until you get toward like the most recent several months, year or whatever, where Citigroup has been able to, sort of, overtake Wells, but yet it's not been -- neither has been lighting the world on fire at this point.

Frankel: No, for sure. And like I said, time will tell what will happen next. Like I said, a lot of the downside has been because of the bank's international exposure more than its actual lending practices or anything troubling like that. But you know, they didn't have any giant scandals like Wells Fargo did. They've just -- you know, their returns have underperformed, no shadiness going on there; as far as we can tell. [laughs]

Citigroup, I know doesn't have the best reviews for things, like, technology. Bank of America generally leads on technology, when it comes to the big four banks. They don't have the best reviews when it comes to customer service. But I wish her well and I think that her leadership might be just what the bank needs right now.

Moser: Yeah, it may be. And I'm glad you brought up the technology and then the service side of things, because I mean, when we talk about these mega banks and all of the advantages that their scale brings them, I mean, in a lot of cases, it really does still just get back down to basics, right? I mean, banking is not rocket science, I mean, the main idea is to build a customer base that trusts you and do right by them. And you know, all banks are in the same boat right now dealing with the current interest rate environment that we have. But you mentioned technology, you mentioned customer service there.

What do you feel like, do you have any inclination as to what one of her priorities might be stepping into this role early next year? I mean, we will, in all likelihood, will at least be looking toward the, you know, the back-half of this pandemic stuff. Hopefully, we'll be coming out of the harder times that that has presented. What do you feel like some of the priorities for her might be for this bank starting in 2021 when she takes over?

Frankel: I think cost-cutting and efficiency. Most banks, Citigroup included, have giant branch networks right now. And there's a lot of redundancy in the branch networks, for example. I mentioned embracing technology, which is a big efficiency thing. It's not just to say I have the coolest mobile app, it's because having a cool mobile app saves the bank money. I mean, Bank of America has said that every transaction done by their mobile app cost them one-tenth of what a teller system transaction does. So, I feel like her focus is going to be on efficiency and cost reductions at first and trying to make sure that the bank is running as efficiently as possible, kind of, bring it into the new fintech era.

Moser: Yeah. Well, that sounds like a good idea there. Yeah, bringing things into the fintech era, efficiency, that's an interesting statistic you presented there in regard to Bank of America, and I fully believe it. I mean, having worked at a banking center for a couple of years. Yeah, you walk out of there, kind of, scratching your head a little bit today thinking, man, you just don't need as much of that stuff today as perhaps we once did. So, we certainly wish Ms. Fraser very well, and we'll be keeping an eye on all of her progress starting next year, 2021. So, congratulations again, and hopefully this bodes well for Citigroup shareholders for the coming years.

Let's jump into another topic here, some news that just came out recently, this was a bit surprising given what we know about Warren Buffett, Charlie Munger, Berkshire Hathaway, their general philosophy on things that we've seen throughout the years. The news that Berkshire Hathaway is actually going to be making an investment in Snowflake, which is an IPO that's coming up. Now, the IPO investment alone is really the part that, kind of, turned everybody's heads. Before we jump into that, Matt, real quickly, for the listeners, what is Snowflake exactly?

Frankel: Well, Snowflake, [laughs] I'll say, it's a company that's not Warren Buffett's wheelhouse. And it's not really a company that's in my wheelhouse either; I'm not a tech guy that much. It's a cloud-based data solutions company. I'll tweet out a good article one of our colleagues wrote about the company. But it's a business that I wouldn't understand that well enough to invest in right off the bat. So, I'm really surprised that Buffett did. But, yeah, it's a play on cloud data, is kind of the short version of it.

Moser: Yeah, that's what struck me initially was, it just doesn't seem like the kind of business that's in his wheelhouse. And while I applaud anyone, any investor trying to expand their circle of competence, I mean, I don't know, for me, this was a bit of a head scratcher, but then you start thinking about it, and seeing how the investing strategy at Berkshire Hathaway has taken shape over the last several years with Todd and Ted doing so much there. Do you feel like this is more Warren Buffett or this is more Todd and Ted?

Frankel: Oh, it's hands down Todd and Ted. So, Buffett himself has actually spoken out against IPO investing. At the 2016 annual meeting, I have the quote right in front of me, you don't really have to worry about what's going on in IPOs, people win lotteries every day. So that's one quote. And then in 2019 he confirmed to CNBC that in 54 years Berkshire has never bought an IPO under his tenure. They came close, StoneCo, the one that we cover. He came close. StoneCo went public October 25th, 2018, and Berkshire bought its stake four days later. So, that's pretty close to investing in an IPO. [laughs] So, I'd put an asterisk next to that statistic. But the last IPO Buffett bought, do you have any idea what it was?

Moser: No, I have no clue.

Frankel: The last IPO Warren Buffett bought was Ford in 1956.

Moser: Wow!

Frankel: So, it's been a while. So, this is very uncharacteristic for Buffett, which is why I'd say all day this is a Ted and Todd investment.

Moser: Yeah, that is fascinating. I didn't realize that about Ford. Now, that certainly seems very much in his wheelhouse, and I can understand that. But yeah, I mean, when you think about Snowflake and what they do, and I agree with you in that, when you talk about any kind of a data analytics company, something involving data, that's a big world, that's kind of like security, kind of like internet security. And it's a difficult industry to fully understand; there is so much involved. And it's difficult to fully understand what the competitive advantages of any one business could be.

Now, it certainly seems like there's a conviction there and the team there feels comfortable in investing in that IPO. And, you know, interestingly I saw Google [Alphabet] is investing in Amwell, which is a telemedicine provider, is going to be going public soon. And it also looked like Google was looking to make an investment in the business, add IPO as well. Separate of the IPO, but investing in the business nonetheless.

And so, it's interesting when you see some of these businesses that pursue these markets that are going to be increasingly relevant, whether it's telemedicine or data management or big data. I mean, those are parts of the market that are going to become increasingly important.

And so, yeah, I guess my only concern there is, just like you said, they don't really invest in IPOs and that's for a reason. I think it's probably for a lot of the reasons that I tend to not invest in IPOs. There's just so much going in there that you don't know about, you need to give these companies a little time to get things going, right, to get their feet under them and live life as a publicly traded company.

I mean, is there something that has you concerned about this move? Or is it going to be something that's relatively meaningless in regard to the actual amount of money that they are investing?

Frankel: Well, they're investing a total of about $600 million in it. So, Berkshire is buying $250 million in the IPO, it's a private placement at the same time. Salesforce, it's also worth mentioning, is also investing alongside Berkshire. So, that's pretty good company ...

Moser: Yeah, I saw that. Yeah, that's a good point there.

Frankel: And they're also buying about 4 million shares of Salesforce from an existing investor. So, all in all, it's going to be a stake of over $600 million, it represents about 2.5% of Snowflake, but by Berkshire standard, it's still a pretty small investment. So, I'm not too worried about it, I'm 99% sure it's coming from Ted and Todd, who are responsible for starting Berkshire's Apple investment, which was really successful. They are responsible for putting Amazon in Berkshire's portfolio, for buying StoneCo, which has been a very successful investment. So, all in all, I'm really not that concerned, these are two guys who are, kind of, more tech-minded than Buffett is, and their early results have been very impressive.

Moser: Yeah. And you said $600 million total. They have somewhere in the neighborhood of $180 billion, is that right?

Frankel: They had $147 billion in cash on the balance sheet at the end of the second quarter. And Berkshire has actually made some pretty big moves in the past month or two. If you remember, they bought the natural gas business from Dominion; they put another $2 billion into Bank of America stock; we talked about that on the show; did a new IPO; they bought those Japanese companies, they have 5% stakes in those Japanese companies. So, Berkshire has been pretty active lately. And that wasn't all Ted and Todd, I mean, the Dominion deal especially, we know was probably Buffett or Munger, other Berkshire leadership. Same with the Japanese companies, where Buffett was quoted in the press release as that being his investment. So, it looks like all around Berkshire, people are just, kind of, finally seeming to be ready to put some money to work.

Moser: Yeah, I mean, it doesn't sound like they're firing that elephant gun, so to speak, but they are taking a lot of little shots there that are starting to add up. It seems like every week or so we're starting to see another headline of a new investment that's been made. And, yeah, I mean that's great to see, I mean, it doesn't need to be an elephant gun, you know, let's see what they're investing in.

Frankel: Yeah, just do something. [laughs]

Moser: [laughs] Yeah, just do because something. Exactly.

Frankel: I mean, anything is better than just leaving a pile of money. I mean, we're not trying to be like Scrooge McDuck here with a giant bin of money. I mean, we want to put our money to work. From the shareholder's perspective, if you could take that $147 billion and even earn half the historic returns of the S&P, it's better than just leaving it sitting there in cash from an earnings perspective.

Moser: I concur. Well, and it probably also raises the question, the longer you leave it there then, you know, I mean, the shareholders, just the drumbeat for a dividend just continues to grow, right? I mean, if you're not going to do anything with it then, you know, do something with it. And so, hey, at least they're doing something with it and that's good. I mean, I definitely like the tailwinds in the market that Snowflake participates in, so I guess it remains to be seen whether this is a company worthy of the investment dollars, but certainly it seems like Berkshire feels pretty good about it. So, I think that should get it on a lot of investors' radar. So, we look forward to that IPO and digging more into Snowflake to see exactly what the team there at Berkshire sees.

Frankel: Yeah. And I'm excited to see where it goes. I mean, I'm just more excited to see that they're actually making some moves now. And I want to see that $147 billion number go down, because it's been a while since we've seen that go anywhere but up.

Moser: That's very true. Well, hey, let's do this, you know, let's wrap up the show today with our ones to watch. We have a couple of stocks to put on investors' radar for the coming week. And, hey, you know, maybe someone at Berkshire is listening and they catch an idea from us, Matt. We can only hope. But what is your one to watch this week?

Frankel: Well, everyone knows I love real estate stock, so I'm going to go with a real estate stock I haven't mentioned on our show yet called Walker & Dunlop that I recently added to my portfolio. The ticker symbol is WD. If you're not familiar, they're a commercial real estate finance company. They specialize in multifamily properties; so, apartment buildings things like that. Right now, they have about a 6% market share. They're one of the leaders, especially when it comes to government-backed loans, like Fannie Mae and Freddie Mac. They have a very ambitious CEO who's delivered great returns for investors in his tenure. He's actually the grandson of one of the co-founders. You know, the company was co-founded, I think, in the '30s and he's third-generation leadership.

And I mean, the execution has just been fantastic when it comes to acquisitions and growing market share. And they have a mortgage servicing business as well. And that portfolio just reached $100 billion, and that's just steady, predictable income. And they're well off their highs, and I mean, I don't think they deserve the discount they're trading for right now.

Moser: Yeah, interesting one there. I think Willy Walker, the gentleman heading up the operation there, I think that Mr. Walker actually came and spoke at Fool HQ at one point. Tom Gardner, our Co-Founder and CEO and, I believe, Mr. Walker know each other. And that's been a company that's been in our universe here at The Fool for a while now. So, good to hear you getting that on your radar.

I am going to be taking a look at Adobe. Actually, earnings come out tomorrow for Adobe on Tuesday. And so, for me, really, you know this is a business I've talked about a lot on a number of our shows. And Adobe, to me, is interesting from a number of perspectives. It's primarily, it's really a digital content, digital media company. They have a really interesting side of the business in document management and have always been referred to as a competitor of companies like DocuSign. But really, for me, Adobe's real strength stands out in its digital content strategy and the role that they serve for so many creators out there. A subscription model, which is really attractive; software company; super, super margins. Just love to see those types of margins. Gross margins touching the 90% range in some cases.

And with earnings coming out, I mean, I'm really just curious to see how they see things looking in the near- to mid-term. Last quarter they did not offer full-year guidance, but they did offer quarterly guidance. And so, we'll see how business comes in compared to that guidance that they offered.

And I compared a little bit to another company, I follow Autodesk. We saw Autodesk's earnings, this most recent quarter, they've seen some tightening of budgets around the world. They've been pushing out pricing a bit to be as customer-centric as possible, given the challenges that everyone is facing out there. So, yeah, it's just going to be, I think, a good indicator of where we are in this pandemic economy today.

The stock has had a great year so far; up a little bit more than 40%, just a tremendous business. They generate a ton of cash. And I personally own shares in it myself. That was one of the positions I built up during the great bear market of March 2020, Matt. [laughs] So, I'll look forward to those earnings tomorrow.

Frankel: What's the ticker symbol, again, on that one?

Moser: The ticker on Adobe is ADBE. But I think that's going to do it for us this week, folks. Remember you can always reach out to us on Twitter @MFIndustryFocus, or you can drop us an email at IndustryFocus@Fool.com. Tell us what your one to watch is. It can be anything, it doesn't have to be financials. You got one that you're watching, one that you think we need to be watching, reach out to us on Twitter, drop us an email, let us know, we'll read it on the air. We're always looking for great ideas and we want to know the stocks that you, our listeners, are looking out for too.

But, Matt, it is really nice to catch up with you. Glad you guys had such a great time at Disney World, glad you got back safely. I think we're one step closer to maybe being able to meet each other again at Fool HQ one of these days and perhaps even tape a show and grab a burger and a beer afterwards.

Frankel: I hope so too. Any word on when that might happen, you know, 2022, 2023?

Moser: [laughs] Let's hope it doesn't take that long. Let's hope it doesn't take that long. [laughs] But I'll make sure and keep you up to speed; it's a little while ago, but hopefully not that long.

But, as always, people on the program may have interests in the stocks they talk about, and The Motley Fool may have formal recommendations for or against, so don't buy or sell stocks based solely on what you hear.

Thanks, as always, to Tim Sparks for putting the show together. For Matt Frankel, I'm Jason Moser, thanks for listening and we'll see you next week.

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Buffett's IPO Investment and Citigroup's Next CEO - Motley Fool

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Mike Bloomberg’s investment in Florida could decide the election outcome – CNN

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On Sunday, The Washington Post revealed that Bloomberg, who made a brief run for the Democratic nomination himself earlier this year, will spend at least $100 million of his own fortune to support Biden's campaign in Florida, mainly through television ad buys. By injecting such an enormous amount of financial resources into the Sunshine State so close to the election, Bloomberg has the potential ability to single-handedly determine the outcome of the 2020 election and alter the course of American history. Bloomberg's investment in Florida is key because of its weight in the electoral college. Florida, now Donald Trump's home state after transferring his residency from New York last year, figures heavily in both the Biden and Trump camps' calculus for winning the November election. If Biden were to secure the state's 29 electoral votes, Trump's pathway to winning another term could become nearly impossible, given a battery of recent polls in so-called "swing states" favoring Biden. Moreover, in the arc of Republican national politics, it has been nearly a century since a Republican has won the presidency without winning Florida. In six of the last seven presidential races, Florida has been decided by less than five percentage points, and recent polling in Florida has Biden and Trump in a dead heat. The race will likely stay very close until Election Day, giving even more significance to Bloomberg's unprecedented investment. Importantly, Bloomberg's TV and online ads don't even need to reach all of the state's voters -- just a few key pockets of votes among the state's more than 3.5 million registered voters without any party affiliation -- a group that has grown by nearly 20% since 2016. Florida has 10 major media markets, making it the most expensive of all the swing states. That's one reason why campaigns often shy away from heavy investment in the state -- despite its prodigious electoral bounty (Florida has the fourth largest number of electoral votes in the country at 29). But Bloomberg's money puts Biden in play in every possible demographic where votes can be harvested. And if the President's Twitter feed is any indication, the Trump campaign is already plenty worried, with Trump himself tweeting that "I thought Mini Mike was through with Democrat politics after spending almost 2 Billion Dollars, and then giving the worst and most inept Debate Performance in the history of Presidential Politics." Bloomberg's media buys could help boost Biden's sagging poll numbers with Florida's enormous population of Latino voters, a nuanced group who can't be reached in full by simply running ads in Spanish. But Bloomberg's political technology apparatus, a company he financed called Hawkfish, builds data and tech infrastructure for Democratic candidates and will likely give him the ability to, for example, micro-target at scale small pockets of millennial Nicaraguan Americans, Black Panamanians, and first-generation Ecuadorians, and many other niche demographic across Florida with laserlike precision. These ads can appeal to them with the messages they find most compelling, and importantly, those messages worth turning out to vote for. And that's why Bloomberg's nine-figure investment is so key. It's more than just a stack of cash he is doling out; it's what investors like to call smart money. Unlike other political benefactors who can also write very large checks (although very few as large as his), Bloomberg has a skilled and experienced political technology apparatus to lean on that enables him to effectively deploy his capital for maximum impact, targeting on the fence 2016 Trump voters, undecideds and independents. These are groups he and his team already know very well, given that at various points during his political career, Bloomberg was a Republican and later an Independent before returning to the Democratic Party. Trump -- who often uses a shiny object strategy to distract the voting public from his failures -- now must contend with a very real $100 million-dollar distraction of his own. At a minimum, Bloomberg's focus on Florida will force his campaign to funnel many more resources towards defending the state than it had originally planned, opening up its flanks in other key swing states. There is another scenario in which, even if Trump is able to eke out a win in Florida -- despite Bloomberg's investments -- he goes on to lose the general election because of all the resources Bloomberg's Florida effort drained from the Trump campaign's efforts in other states. Earlier this year, just after Bloomberg announced that he would be making a run for the Democratic nomination, Kevin Sheekey, the former mayor's longtime political adviser, said "Mike Bloomberg is either going to be the nominee or the most important person supporting the Democratic nominee for president." We now know it's the latter.

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Mike Bloomberg's investment in Florida could decide the election outcome - CNN

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PERSPECTIVE: To beat the COVID-19 recession, invest in roads, bridges, broadband and more – Colorado Springs Gazette

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As a state and a nation, we are working our way through an unprecedented public health emergency and economic crisis. Slowly but surely, we are turning the tide against the COVID-19 pandemic, businesses are opening their doors again and people are returning to work.

There is more reason for hope than panic or despair, but at the same time, we must not underestimate the scale of the challenge ahead. To slow the spread of the virus, governments at all levels federal, state and local mandated an effective shutdown of the private economy. The shutdown came without warning and without a clear sense of how long it would last.

To prevent a complete economic collapse, Republicans and Democrats at the federal level joined forces and took swift action in the form of trillions of dollars of economic aid for the unemployed, struggling businesses and households. This was not a government bailout triggered by a failure in the private economy. This was the government facing the consequences of its decisions and doing something about it.

Leaders of both major parties deserve credit for the speed and scale of this action. But even under the best of conditions, it will likely take years to regain what was lost. Therefore, as the impact of short-term stimulus fades, our government must develop a longer-term strategy to repair the damage that was caused to the private economy and lay the foundation for stronger and faster growth once the pandemic is finally over.

There are different ideas about what this long-term strategy should look like, of course. But one idea stands head and shoulders above the rest: infrastructure; because it represents an area of government neglect owing to the political inaction or inability of Congress to prioritize critical work in the area of this core government function.

Fixing our crumbling roads, bridges, transportation systems and other arteries of commerce across our nation is an idea so good, even President Donald Trump and Nancy Pelosi agree about it. Before the COVID-19 crisis, President Trump and Speaker Pelosi identified the need for between $1 trillion and $2 trillion in infrastructure investment. More recently, Trumps opponent in the coming election former Vice President Joe Biden has also declared his support for modernizing our infrastructure, from roads and bridges, to energy grids and schools, to universal broadband.

What explains the broad appeal? Well, for progressives, infrastructure shows the value of the public sector and how it can provide support for the economy. Meanwhile, for conservatives, maintaining roads, bridges and other critical pieces of infrastructure fits within their vision of limited government, in which the public sector does fewer things, but does them well. And for progressives and conservatives, better infrastructure makes it easier to move people, goods, ideas and services.

Research conducted from very different points of the political spectrum also bears this out. The Georgetown University Center on Education and the Workforce has estimated 11.4 million jobs would be created across the economy under a $1 trillion infrastructure package. Not only that, the Georgetown study predicts a federal infrastructure program of this scale would revitalize the blue-collar economy because about 55% of the jobs would go to workers with a high school diploma or less.

Meanwhile, the Business Roundtable a coalition of CEOs from the nations leading companies is also in favor of infrastructure investment. The most compelling rationale for infrastructure investment is long-term economic growth driven by productivity, the Business Roundtable concluded in its study on the issue. These gains are broadly distributed, meaningful in scale and built over time increasing economic efficiency and prosperity nationwide. After crunching the numbers, the study concluded: Investing in infrastructure pays for itself several times over. Every additional $1 invested in infrastructure delivers roughly $3.70 in additional economic growth over 20 years.

You wont find a better argument for increased federal infrastructure investment than the State of Colorado both in terms of our actual infrastructure challenges and the willingness of people from very different walks of life to work together to find solutions.

Colorado Concern an alliance of the states top business executives convened the Colorado Infrastructure Committee in early April, during the depths of the COVID-19 lockdown. While we were grateful for the swift passage of the Coronavirus Aid, Relief and Economic Security Act in late March, it seemed likely that even greater support from the government would be needed over the long haul to overcome the economic impact of rolling shutdowns in Colorado and the rest of the country.

The committee brought together a diverse group of more than 70 business and civic leaders from across the state to explore a critical question: If the federal government moves ahead with a major infrastructure program in response to the COVID-19 recession, how much of the investment could take place in Colorado and what could those investments actually look like?

Despite the polarizing nature of our politics today, we succeeded in bringing together different constituencies that frequently view issues of public policy in very different ways: Business and labor, environmental groups and energy interests, small business owners and university administrators, state and local officials, leaders from urban centers and farming communities, and yes, Democrats and Republicans too.

For example: The committees work on water infrastructure was led by Brian Jackson, an official with the Environmental Defense Fund, and Terry Fankhauser, executive vice president of the Colorado Cattlemens Association. Our education work was spearheaded by a former Democratic president of the Colorado State Senate, Peter Groff, and a former Republican House majority leader, Tim Foster, who is the president of Colorado Mesa University.

Immediate, enduring and equitable investmentsFor more than three months, the members of the Colorado Infrastructure Committee immersed themselves in research reports and project inventories, identifying areas where federal infrastructure dollars could put Coloradans back to work and at the same time help us overcome decades of under-investment.

The committee prioritized immediate, enduring and equitable investments in infrastructure to help pull our state out of the recession faster, while also making our economy much stronger and more resilient in the years and decades to come. Then, working with a bipartisan team of consultants and policy advisers, the committee published its findings as an advisory document for state officials and members of the Colorado congressional delegation.

The 148-page report, Together We Build: How Federal Infrastructure Investments Can Put Coloradans Back to Work, outlines $16.95 billion to $20.25 billion of recommended investments in the states transportation, education and broadband infrastructure, among other key areas of our economy.

Before diving into the specifics, however, its worth discussing how the committee arrived at $16.95 billion to $20.25 billion and how these numbers fit into Colorados and the nations debate over infrastructure needs and other budget priorities.

At the very outset, the Colorado Infrastructure Committee examined the history of federal infrastructure investment in our state and was disturbed to find a long-term, structural shortfall.

By one critical measure investments from the Highway Trust Fund federal funding for Colorados transportation infrastructure has persistently trailed behind our share of the U.S. population. From 1999 to 2018, for example, Colorados share of national highway funding exceeded our share of the national population only once, in 2014.

Even when the federal government attempted to catch up on unmet infrastructure needs, Colorado was shortchanged again. The biggest public works program in recent memory was the $831 billion American Recovery and Reinvestment Act, a measure designed to jolt the U.S. economy out of the Great Recession of 2007-2009. But the Recovery Act did not provide a long-term fix for Colorados infrastructure problems or anything close to it.

Our states share of the 2009 stimulus was just 0.87% of the national total roughly half of Colorados share of the national population at the time. And despite the public perception of the 2009 stimulus as an infrastructure bill, only a small percentage of the package was actually devoted to infrastructure. Therefore, when the committee examined research from the American Society of Civil Engineers, it found that Colorados infrastructure has been stuck in the poor to mediocre category for the past decade, struggling to cope with the demands of our growing population.

This backlog of unmet needs served as the starting point for the Colorado Infrastructure Committees deliberations. The $16.95 billion to $20.25 billion of investments identified is not an exhaustive list, nor would it solve Colorados infrastructure problems overnight. Instead, the committee limited its recommendations to a population-based share 1.75 percent of a roughly $1 trillion investment in federal infrastructure.

The Colorado Infrastructure Committee did not propose exactly how this investment should be made, either as a stand-alone bill or a series of smaller measures. Nor did the committee recommend ways to finance this level of investment, because as the organizers of this effort, Colorado Concern did not ask them to. We wanted and received an honest assessment of what a federal infrastructure program in Colorado might look like assuming our elected leaders in Washington, D.C. decided to move in that direction, now or in the future under more normal circumstances.

Return on investment and value for moneySpeaking only for myself as a former Republican state legislator and the serving president and CEO of Colorado Concern I am worried about the impact of COVID-19 relief measures on the national debt. I know others on the Colorado Infrastructure Committee who feel the same way. But concern over the debt is no excuse for paralysis when it comes to creating solutions to solve the problem of crumbling infrastructure. It sounds like a slogan, but its true: Americans dont run from challenges we confront and overcome them.

Therefore, Congress should consider the real and measurable growth dividend that will come from a future infrastructure program between $3 and $4 in extra economic growth for every dollar invested, based on the Business Roundtables estimates.

Using those estimates as a starting point, our leaders in Washington should be able to develop a business plan for fixing our nations crumbling infrastructure, i.e. how much money can we responsibly invest, and what kind of return will that investment bring in terms of jobs, wages, business incomes and increased tax revenues. State legislatures and local governments do this all the time when they use general revenues or issue bonds to pay for road construction and other infrastructure projects, and usually under much tighter budgeting rules than you will find in the nations capital. Its perfectly reasonable to ask Congress to do the same.

To be sure, giving a higher priority to infrastructure in the federal budget may involve some tough choices and cuts to less urgent programs. But resetting priorities in this manner is long overdue and the correct response to the moment we face as a country.

Even after we defeat COVID-19, life in America will never return to normal without a strong economic recovery that keeps getting stronger in the months and years ahead. Putting people back to work, while also catching up on decades of under-investment in roads, highways, airports and other infrastructure that Americans use every day, will support this recovery in the immediate, medium and long term. Infrastructure is expensive, no question, but in return the American people will get real value for their money.

Whether the federal government chooses to tackle our nations infrastructure challenges in a single sweeping measure, or a series of smaller initiatives, the Colorado Infrastructure Committee identified five major areas of need in our state.

The objective was to achieve the maximum public benefit possible with the broadest support possible from policymakers and other key stakeholders in Colorado. Rather than simply list all the states unmet needs, the members of the committee set priorities and made commonsense judgments about how to upgrade Colorados infrastructure to better meet the demands of our growing and changing population.

Transportation: The committee identified $7.68 billion to $10.98 billion of proposed infrastructure investments across roads, rail, aviation and transit. These investments are critical because the Colorado economy depends heavily on trade and tourism. For our economy to function, the efficient movement of people and goods is paramount, but every year, this becomes more difficult.

Starting with full funding of the Colorado Department of Transportations statewide 10-year plan, (which is a legislative focus of Colorado Concern for the upcoming session of the General Assembly) the committee worked with state and local officials and users of the transportation network on a high-impact inventory of projects for the benefit of motorists, transit riders, cyclists, airport travelers and business owners. The project inventory includes the modernization of I-25, which directly serves roughly 85% of the states population, as well as other major arteries such as I-270 and choke points on I-70 like Floyd Hill and Vail Pass. There is also an unprecedented investment in rural roads and support for municipal and county governments to upgrade their road networks and pedestrian, cycling and public transportation systems.

Environment and energy: To support Colorados outdoor recreation and tourism sectors, and make critical upgrades to the power grid, the committee identified $3.6 billion of proposed infrastructure investments. They include expanding our state park system, improving wildfire prevention and mitigation programs, supporting grants to local governments for trails, open space and other projects that improve public access to the great outdoors, and bolstering programs that will boost the reliability and flexibility of the states electrical infrastructure.

Additionally, shortly after the committee recommended more than $500 million to address the backlog of deferred maintenance on federal lands in Colorado, Congress passed and President Trump signed the Great American Outdoors Act sponsored by our states junior senator, Cory Gardner, which will use billions of dollars of offshore oil and gas revenues to tackle the national inventory of these infrastructure projects.

Water infrastructure: The committee identified $3 billion of infrastructure needs in the water sector. With rapidly rising demand from communities and our continued need for a robust agriculture sector in Colorado, the responsible use of Colorados water resources will be critical to economic growth and our standard of living in the decades to come. For this reason, the committees two major priorities in this area are critical upgrades to local drinking water and wastewater treatment facilities, and a year of full funding to jump start the Colorado Water Plan, which aims to close an estimated 560,000 acre-feet gap between available water supply and the forecasted level of demand in our state in 2050.

Broadband integration: The committee identified $770 million to support local economies by completing the full rollout of broadband access to every community across the state. Remote learning, telehealth, public safety, telecommuting, e-commerce and entertainment all depend on the ability to send and retrieve data securely at high speeds. Colorados Broadband Fund exists to make 100% broadband access a reality but finding enough funds at the state level has been a persistent challenge. But with assistance from the federal government, our state can close the digital divide in rural Colorado and also in those urban areas without reliable access.

Schools and universities: Education institutions are some of the hardest hit by COVID-19, and for this reason the committee recommended $1.85 billion of infrastructure investments in this sector. The recommendations include new construction and renovation projects across K-12 public schools and the higher education sector, investments in remote learning equipment and teacher training, and construction debt relief for universities to reduce the need for staffing cuts or tuition increases. In addition to the roads, bridges, telecommunications and other infrastructure that support our system of commerce, we need gateways of opportunity for our children and for workers who need new skills.

Its easy to be overwhelmed by the scale of the challenge before us. And its tempting to settle for a bare-minimum recovery from COVID-19 and the recession it has caused. But after all we have been through, and all we have sacrificed, the American people shouldnt have to settle. When the government asked, the people answered the call. Its appropriate now for the government to respond in kind.

Our government can do two things at once: put people back to work and deliver the kind of infrastructure that taxpayers deserve. Building better infrastructure of all kinds will help families, businesses and communities recover more quickly from the crisis and prosper in the years and decades to come.

If we encourage, rather than hinder, the movement of people, goods, services, information and ideas across Colorado and the rest of the country, our communities can innovate and grow like never before.

Mike Kopp is the president and CEO of Colorado Concern, a coalition of more than 135 CEOs and senior business and community leaders from across the state. Kopp served as a co-chair on the Colorado Infrastructure Committee and was a co-author of the committees July report, Together We Build.

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PERSPECTIVE: To beat the COVID-19 recession, invest in roads, bridges, broadband and more - Colorado Springs Gazette

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Now Is the Time to Invest Outside the U.S., Managers Say. Heres What Theyre Buying. – Barron’s

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Though valuations abroad look enticing, veteran global investors at Morningstars investment conference on Thursday said the case to look overseas goes well beyond valuations, highlighting some of the more innovative companies that make going abroad worthwhile.

Here are highlights of Morningstars discussion with Rob Lovelace, vice chairman of Capital Group; Artisan International Small-Mid fund (ticker: ARTJX) manager Rezo Kanovich; and Rupal Bhansali, chief investment officer of international and global equities at Ariel Investments.

Valuations abroad are cheaper than the U.S., but Lovelace mentioned a lot of that comes down to the composition of these markets. The U.S. is heavily tilted toward information technology, health care, and discretionaryhigher valuation and higher growth sectors, while Europe is heavier on financials, energy, and commoditiessectors where multiples have been low.

But Ariels Bhansali warned that price/earnings multiples in the U.S. are a head fake when the world is awash with debt. As companies load up on debt, the better metric is enterprise value to earnings before interest and taxesand on that basis the S&P 500 has already exceeded levels traded in 1999 and looks close to a bubble.

Market Data Center: EMEA and Asia

The other metric to watch carefully is free-cash-flow conversionand here international markets look better. Companies like Amazon.com (AMZN) or Tesla (TSLA) that have faster growth are capital-intensive and their free cash flow conversion isnt that great, Bhansali says.

While international companies may be slower growth, they may convert more of their earnings into free cash flow, she adds. And that is reflected in the higher dividend yield in international marketsone reason she is overweight international equities in the Ariel Global fund (AGLOX).

As U.S. companies have rushed to borrow in the months after the pandemic, Bhansali warns equity investors could be vulnerable to a possible deluge of downgrades and defaults. With rates at zero and no scope to go lower, servicing that debt could be problematic for companies. The notion that the Fed put will protect companies against all evils and sins is misguided, she says. They have said they would only buy the debt of solvent companies, not insolvent companies so its still a buyer beware marketplace.

Its one reason Bhansali sees opportunity in Japan, where companies and the economy have been whittling down debt for two decades.

The American Funds New World fund (NEWFX), which can invest in local companies in emerging markets and large developed multinationals that do a lot of business there, has lately been shifting toward those domiciled in emerging markets. Much of that is going into China amid an explosion in areas like biotech and software as people move back from the U.S. or Europe and set up innovative companies, Lovelace said.

A morning briefing on what you need to knowin the day ahead, including exclusive commentary fromBarron's and MarketWatch writers.

Artisans Kanovich hunts among smaller companies abroad and has been picking up companiesmany of which are self-fundedthat have become larger by being disrupters and playing in new industries. That includes the likes of British online fashion company Boohoo Group (BOO.UK), and Japanese enterprise software company Hennge KK (4475.Japan)

Many of these smaller companies are dominating in niche industries or taking advantage of their agility to fill gaps as industries go through major shifts, like Kornit Digital (KRNT), which enables direct-to-garment printing of color in ways similar to inkjet printing on paper that lets clothing manufacturers to custom build clothes in small batches. The company is facilitating a trend toward instant fashion, Kanovich says.

The technologies give shoppers quick personalized clothing and changes the economics for producers, making fashion brands much higher return on capital businesses. They collect customers money upfront, carry almost no inventory, and sell most of their merchandise at full price, Kanovich says.

Corrections & Amplifications:

Artisan International Small-Mid fund manager Rezo Kanovichs holdings include Boohoo Group and Hennge KK. An earlier version of this article incorrectly included Wuxi Biologics as a holding. Kornit Digital enables direct-to-garment printing of color in ways similar to inkjet printing on paper that lets clothing manufacturers to custom build clothes in small batches. The article identified the wrong company.

Write to Reshma Kapadia at reshma.kapadia@barrons.com

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Now Is the Time to Invest Outside the U.S., Managers Say. Heres What Theyre Buying. - Barron's

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