Businesses prepare for a recession

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Alright, on to the news:

• 1 politics thing: Former NYC Mayor Michael Bloomberg is preparing to enter the Democratic presidential primary.
• 1 retail thing: Gap Inc. chief executive Art Peck has announced plans to resign after 15 years at the company.
• 1 media thing: Disney has reached a deal with Amazon to put Disney+ on Amazon Fire TV devices, as well as on Samsung and LG televisions.
• 1 trendy thing: Fake meat is the latest American industry vying for access to China's massive market of 1.4 billion consumers.

For more on the news of the day, sign up for one of our Axios newsletters.

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1 big thing: Businesses are stocking up for an expected downturn

By: Dion Rabouin ? Newsletter: Axios Markets (sign up here)

U.S. companies are holding off on major purchases and investments, paying down debt and stacking up cash as they look to position for an expected economic downturn in 2020.

Why it matters: Firms are trying to protect themselves from a recession, but their spending pullback could weaken the overall economy — and potentially help precipitate the very conditions they fear.

• Business investment has fallen for six months straight and declined by 3% in the third quarter, the largest drop since 2015.
• The retrenchment by businesses helped turn Wednesday's U.S. workforce productivity report — a key economic metric that compares goods-and-services output to the number of labor hours worked — negative for the first time in four years.

What's happening: A slew of traditional recession indicators have shown up: The yield curve has inverted, the manufacturing and housing sectors have weakened, and income inequality has spiked to the highest level on record.

• But in contrast to previous economic cycles when businesses spent recklessly, expecting the good times to last forever, today nearly two-thirds of top executives and business owners say they expect a recession within the next 18 months.
• And they're taking action.

The big picture: U.S. corporate balance sheets are holding more than $2.2 trillion in cash, according to the latest figures from global accounting firm PwC. It's the highest number in decades.

• Companies have added to their holdings since that survey and are "absolutely" getting themselves prepared for the downturn, PwC's U.S. deals leader Colin Wittmer tells Axios.
• "They're building cash reserves in their balance sheets like we haven't seen in a long time. There's just an incredible amount of cash there."

Investors also are getting ready for the good times to end.

• Data from the Investment Company Institute shows that even though the stock market has risen by nearly 25% this year, investors have been net sellers of stocks, pulling $100 billion out of equity funds.
• They've moved more than $3.5 trillion into money market funds, which are essentially savings accounts; it's the highest level since 2009.

On one hand: "All the preparation for the end of the cycle could forestall the end of the cycle," John Bilton, JPMorgan's head of global multi-asset strategy, tells Axios.

On the other hand: There are still risks, particularly the rising level of debt, which could portend a bubble.

• "We don't have overbuilt houses, we haven't overdone capital spending. There's no boom, so hard to get to a bust," JPMorgan Asset Management's chief global strategist David Kelly adds.
• "I do think it gives a stability to the real economy, but I don't think it lends a further stability to the financial side of things, necessarily. It's a more complicated story."

Go deeper: Big companies are looking to insulate themselves from recession

Sign up for Dion’s Markets newsletter for more news on the expected economic downturn.

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2. T-Mobile's quid pro quos for the Sprint deal

By: Ina Fried ? Newsletter: Axios Login (sign up here)

Illustration: Rebecca Zisser/Axios

T-Mobile dangled carrots before consumers and legislators on Thursday, promising cut-rate plans along with free 5G service to first responders as well as home broadband for 10 million U.S. families.

The catch: The promises all depend upon a successful close of the company's pending deal to buy Sprint.

The big picture: The Department of Justice approved the deal in July after T-Mobile and Sprint agreed to sell certain assets to Dish Network and help that company create a new fourth national carrier.

• Just this week, the FCC gave its formal approval for the transaction.
• However, a number of states have sued to block the deal, and a federal judge has to approve the DOJ decision as well.

Details: Here's what T-Mobile is offering:

• A 10-year commitment to provide free unlimited 5G access to every state and local police, fire and EMS agency in the U.S.
• A program to offer free service, free hotspots and discounted WiFi devices to 10 million households over 5 years, an effort to close the so-called "homework gap" among homes that don't have internet access.
• A $15-per-month prepaid plan, which T-Mobile says is half the price of its lowest current option.

Between the lines: T-Mobile has held a number of similar "Uncarrier" events (named for the company's branding) in the past, where it has offered customers additional perks.

• While the past "Uncarrier" moves were aimed at luring customers from AT&T and Verizon, this one appeared aimed at the regulators and legislators who are weighing the merger.
• Consumers have no say in the merger's approval, although T-Mobile would certainly like to see them weigh in with regulators and legislators.
• It's almost as if the company were proposing a quid pro quo: Give us the deal, and we'll give everyone these goodies!

What they're saying:

• T-Mobile CEO John Legere: "We have definitively put a stake in the ground around the kind of company the supercharged Un-carrier will be and the ways we can put this radically better 5G network to work doing GOOD for this country."
• Rich Brome, editor-in-chief of mobile news site PhoneScoop: "I give T-Mobile credit for aggressively going after specific concerns of the state AGs. But the one complaint they didn't address: There is no way Dish will be a 'serious' 4th competitor."
• Freelance journalist Karl Bode: "T-Mobile is out here desperately making promises in the hopes of getting state AGs to back off their merger lawsuits. ... [T]hese telecom mergers than I can count, these promises will evaporate in about two years, just as pink slips arrive."

Separately: T-Mobile said it would turn on its nationwide 5G network on Dec. 6, covering 200 million Americans in more than 5,000 cities and towns.

• (Caveat: T-Mobile is doing most of that through low-band spectrum that offers strong coverage, but not the ultra-fast speeds possible delivering 5G using high-frequency spectrum.)

Go deeper: T-Mobile-Sprint merger deal approaches next hurdles

Sign up for Ina's daily Axios Login newsletter for more on the biggest tech news — including the T-Mobile-Sprint merger.

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3. China makes the first big 5G move

By: Kaveh Waddell ? Newsletter: Axios Future (sign up here)

Illustration: Sarah Grillo/Axios

China switched on a massive 5G network Friday, bringing 50 cities online in one of the largest-ever single rollouts of the super-fast mobile networks.

Why it matters: Right now, this means some Chinese smartphone users can access super-fast internet. But in the long run, experts worry the deployment could help China vault past the U.S. not only in the critical 5G technology itself but also in the new applications it's expected to support.

The big picture: If AI and quantum computing are driving the U.S.–China tech competition, 5G networking is close behind.

• Yes, it allows for faster Netflix streaming or video game downloading, but it also enables quicker decision-making for robots, or easier communication with dispersed military units or drones.
• The U.S. and Europe have some consumer 5G networks up and running already, but they're considerably more limited in scope.

"This launch demonstrates the effectiveness of China’s massive government push to 5G," says Paul Scharre, director of the Technology and National Security Program at the Center for a New American Security.

• The U.S., which lags in some facets of 5G networking but maintains an advantage in the fundamental technologies that back it up, has hit Chinese networking giant Huawei with bans and sanctions.
• Scharre says the U.S. government also needs to actively promote homegrown U.S. competition in 5G, where Huawei has dominated until now.
• The early Chinese launch could help Huawei continue commanding the international market.

5G is seen as both an economic multiplier in addition to a potential military tool, which means a wider rollout could pump new life into industries that depend on wireless communication — which today is nearly every one.

• "If 5G is so revolutionary that it unlocks incredible new kinds of economic growth and tech development, then a slower rollout in the U.S. could harm our competitiveness and could hollow out tech companies," says Bateman of the Carnegie Endowment.

What's next: This week President Trump said the U.S. would cooperate with "like-minded nations" on developing 5G and has urged allies to swear off Huawei equipment, Reuters reports.

Go deeper: China is eroding the U.S. edge in AI and 5G

Sign up for Axios Future for more from Kaveh on the race for 5G.

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Thanks for reading. We'll be off on Monday for Veterans Day and back on Wednesday.