fortune--2020-06-26--This is a moment for new names. Follow NASA’s lead.

Good morning, Broadsheet readers! The Dixie Chicks drop the “Dixie,” Carly Fiorina is on board with Biden, and NASA HQ gets a new name. Have a wonderful weekend.
– Welcome to Mary W. Jackson NASA Headquarters. It’s a moment for new names.
NASA this week announced that it’s naming its Washington, D.C. headquarters after Mary W. Jackson, the agency’s first black female engineer who helped U.S. astronauts reach space.
“Mary W. Jackson was part of a group of very important women who helped NASA succeed in getting American astronauts into space. Mary never accepted the status quo, she helped break barriers and open opportunities for African Americans and women in the field of engineering and technology,” NASA Administrator Jim Bridenstine said in a statement.
Jackson, memorably portrayed by Janelle Monáe in the film Hidden Figures, started at NASA’s predecessor organization in 1951, working in a segregated computing unit of what’s now the Langley Research Center. She later worked on NASA’s 4×4 supersonic pressure tunnel and was promoted to engineer after successfully petitioning the City of Hampton to receive additional training alongside white students.
Jackson’s daughter, Carol Lewis, has expressed gratitude that her mother’s accomplishments are being recognized, but also says it’s sad that it took so long and happened after her death.
We denote honor on public figures in a variety of modern ways—building names, street names, statues, and placards. In every medium, women are woefully underrepresented. A few years ago, just 394 of the U.S.’s 5,193 public statues of historic figures were women. None of the 44 maintained by the National Parks Service focused on women specifically. When women are depicted, they rarely get real names. (See: Statue of Liberty.) A 2015 study of street names in seven cities found that of those named after people, nearly three-fourths honored men. As of 2018, no airports were named after women despite so many female contributions to aviation.
Names matter. They dot our physical world, permeate our cultural lexicon, and color our collective memory.
The reckoning with racism is scrubbing away so many names—not from history but from places of prominence. Deciding what goes in their place is a once-in-a-generation opportunity to honor—as NASA did—overlooked heroes, past and present.
Claire Zillman
claire.zillman@fortune.com
@clairezillman
Today’s Broadsheet was curated by Emma Hinchliffe.
ALSO IN THE HEADLINES
- A new rulebook. Accenture CEO Julie Sweet writes for Fortune about how to rethink digital transformation during the coronavirus pandemic. First on her list of 5 rules? Face the "brutal facts." Fortune
- Are we in the clear yet? International Monetary Fund chief economist Gita Gopinath warned the global economy is "not out of the woods." The organization estimated that GDP will fall 4.9% in 2020. Fortune
- Fiorina flips. Former HP CEO and Republican presidential candidate Carly Fiorina will not support her party's nominee for President in November. Fiorina plans to support Joe Biden; although she hasn't changed her political affiliation, she says she considers this election a "binary choice." Washington Post
- Long time gone. So long, Dixie. Hello, Chicks. The band once known as the Dixie Chicks—and known for their political beliefs—dropped the first part of their name; "Dixie" is a "nostalgic nickname for the pre-Civil War South." New York Times
MOVERS AND SHAKERS: Wells Fargo's Titi Cole is joining Citi as head of global operations and fraud prevention for the global consumer bank. StyleCaster's Nikki Brown joined BlogHer as editorial director. The Ms. Foundation for Women hired Raquel Willis, former executive editor of Out magazine, as director of communications. The Estée Lauder Companies promoted group president Jane Hertzmark Hudis to executive group president. TIAA promoted Nuveen CMO Marty Willis to TIAA CMO. Twinlab Consolidation Corporation named Candice St. Pierre head of sales.
IN CASE YOU MISSED IT
- The story of Kayleigh. Curious about Kayleigh McEnany? This is the definitive profile, following her rise from conservative student, to voice of the religious right, to White House press secretary. The Atlantic
- Domestic violence database. The Chinese city of Yiwu has introduced an unusual government project: a database that allows anyone who's getting married to search and find out if their future spouse has a history domestic violence. Incidences of domestic violence have increased during lockdowns. The database will track abuse convictions and restraining orders. New York Times
- What happened next. In 2016, Joanna Strange shared with Bloomberg documents that showed that her employer, WeWork, was falling far short of its financial goals. The first employee to speak out about what was going on inside the beleaguered co-working giant now tells the story of what happened next—including, she says, how WeWork came after her. WeWork declined to comment. Bloomberg
- Dear diary. When she was 17, Little Women author Louisa May Alcott wrote "Aunt Nellie's Diary" in her journal. The story is now being published for the first time. New York Times
ON MY RADAR
How an ousted CEO built a culture of 'covert racism' and fear at Planned Parenthood's largest affiliate Jezebel
HBO’s I’ll Be Gone in the Dark is a testament to Michelle McNamara and ‘survivors’ strength' Fortune
A governor on her own, with everything at stake New York Times
PARTING WORDS
"If we were still just in malls, I don’t think we would be able to survive."
-Panda Express cofounder Peggy Cherng on the effects of the coronavirus pandemic


fortune--2020-06-26--As the U.S. sees record coronavirus cases, the ECB’s Lagarde says the worst is over in Europe

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European Central Bank President Christine Lagarde said the recovery from the coronavirus pandemic will be “restrained” and will change parts of the economy permanently.
While the worst of the crisis might be over, it’ll take time for the “phenomenal” jump in savings to trickle into higher investment and spending, she said in a webinar on Friday. The recovery will also be “incomplete” as trade is unlikely to return to pre-crisis levels and productivity may be weaker.
“We probably have passed the lowest point, and I say that with some trepidation,” Lagarde said. “The airline industries, the hospitality industries, the entertainment industries are going to come out of that recovery process in a different shape, and some of them will probably be hurt irremediably.”
Her remarks follow comments from ECB Chief Economist Philip Lane, who cautioned earlier this week that early signs of economic improvement may not be a good guide to the speed and robustness of the recovery.
The ECB has rolled out a 1.35 trillion-euro ($1.52 trillion) emergency bond-buying program and a suite of other tools including cheaper and looser financing for banks to help steer Europe out of the deepest peacetime recession in almost a century.
Lagarde noted the “massive” increase in government and company debt that she said must be repaid. But she also said monetary policy and fiscal policy are working hand-in-hand, and interest rates are exceptionally low.
This crisis could be transformational because “there will be industries that will arise from those changes,” she said.
The president called on policy makers to be extremely attentive to those that are most vulnerable, including the poor, the young and women, who have been the most affected by the crisis.
“Many work in hospitality, short-term contracts, those jobs will go first,” she said. “And women, they’re always affected more in times of crisis.”


fortune--2020-06-27--Coronavirus telecommuters could face a tax nightmare

Big banks are at a crossroads : Safe enough to skirt some regulation , but risky enough to stress out @ @

As the COVID-19 outbreak battered Brooklyn in March, Beth and Ryan Carey decided to flee. The two educators and their toddler, Finn, drove nine hours south to stay with family in North Carolina. They have yet to return.
Like many others who left New York during pandemic, the Careys have discovered numerous upsides to leaving the city: a lower cost of living, ample space for Finn and their hound dog, Cash Money, to roam, a more leisurely pace of life. And since both can do their job remotely, the couple are tempted to leave the stresses of New York life behind for good.
But just because they may be ready to part ways with New York doesn’t mean the state is ready to part ways with them.
What is the ‘convenience rule’?
As it turns out, moving to another state—even one 500 miles away—doesn’t mean workers can escape the clutch of New York’s powerful tax collectors. The reason is a controversial tax policy, known as the “convenience rule,” which deems that those who work for a New York company are earning wages in the state even if they are telecommuting. In the view of the Albany tax gnomes, a move to North Carolina, like the one made by the Careys, is one of convenience, not necessity. And that means, for tax purposes, they are are still working in New York.
A handful of other states—Pennsylvania, Delaware, and Nebraska have formal convenience rules of their own—but tax lawyers say those states don’t enforce the rules with nearly the same vigor as the Empire State.
“New York has always had an aggressive tax department,” says Elizabeth Pascal, an attorney with Hodgson Russ, adding the state uses sophisticated auditing software in its hunt for revenue.
The upshot is that many middle-class workers who are contemplating permanent post-COVID relocations could face tax headaches more familiar to affluent earners like hedge fund managers and professional athletes. And many could face the prospect of double taxation.
Edward Zelinsky, a professor at Cardozo Law School, knows this firsthand. The Connecticut resident has battled New York in court for years, saying he is willing to pay tax on the days he is physically present to teach, but that he should not have to pay income tax on the days he works from home. His legal challenges have come up short in New York’s courts, however, meaning Zelinsky has had to pay income tax in two states.
Tax credits for commuters
Zelinsky and other telecommuters caught a break two years ago when Connecticut changed its tax policy to let its residents who paid New York income tax obtain an offsetting credit. But the credit does not entirely reduce the burden since New York tax rates are higher than those in Connecticut.
Meanwhile, most other states do not provide any credit to resident telecommuters who pay under New York’s long-arm tax rules. The reason, says Zelinsky, is that those states don’t believe the New York policy is legitimate. (Unsurprisingly, Zelinsky agrees with this position, arguing New York’s convenience rule violates the Constitution).
In an ideal world, Congress or the 50 states themselves would devise a compact to prevent double taxation and to clarify how telecommuters should be taxed. And indeed, there are pockets of such cooperation—notably in the form of reciprocity agreements among the District of Columbia and neighboring states, and between Illinois and its neighbors.
The broader reality, though, is that many of those who telecommute across state lines will face conflict and confusion. And the situation is likely to get worse as states react to the economic shocks created by COVID-19.
The State of Arkansas, for instance, created a buzz among tax lawyers this May after it issued a legal opinion saying that a computer programmer in Washington State should pay income tax to Little Rock for work done for an Arkansas entity.
As these situations become more common, the nation’s growing telecommuter workforce will face hard choices in the coming tax year.
Exceptions and enforcement of the convenience rule
While New York is aggressive about enforcing its convenience rule, there are three ways to escape it. The clearest exemption is for those employees who transfer to a company’s out-of-state office: A New Yorker who moves to her firm’s satellite office in Boston need only pay taxes to Massachusetts.
In the case of an out-of-state employee working from a home office, though, it’s not so easy to escape New York’s clutches, says tax lawyer Pascal. In order to qualify for an exemption, she says, the worker must be performing a task at the employer’s behest that could only be done out of state. For instance, the employee might require proximity to a special laboratory or factory that doesn’t exist in New York.
The third way to avoid New York’s convenience rule is for telecommuters to avoid setting foot in the state—though there is some debate about what this entails. Pascal says an employee can safely go to New York for a vacation so long as the trip doesn’t have work purposes, but a recent bulletin from Ernst & Young suggests that spending even “one day” a year in the state could trigger the rule.
Zelinsky, meanwhile, says he used to tell people they could go New York for non-work purposes, but that he believes tax authorities will no longer grant such latitude.
Fortune sought clarity from New York’s Department of Taxation and Finance about how and when the convenience rule applies, but did not receive a response.
Some other states, meanwhile, have issued guidance to say they won’t tax those who are working remotely in their states as a result of the coronavirus. But many others have not, and given the dire fiscal situations many states are finding themselves in, it’s unlikely tax authorities will be in a forbearing mood next year.
New York, in particular, could become still more aggressive in seeking income tax revenue. Several tax lawyers have noted the state offered little relief to those who had to relocate in the wake of Hurricane Sandy in 2012. And Zelinsky points out the state has even refused to provide tax exemptions for medical workers who came to the state to assist with the COVID-19 emergency—including many nurses from Tennessee, where there is no income tax at all.
Some middle-class telecommuters may wonder if they can avoid out-of-state tax headaches by simply declaring income in their resident state, and hoping for the best. Tom Corrie, a tax lawyer at Friedman LLP, says that New York has historically targeted high-income individuals for audits, rather than those making $50,000 a year.
But a modest income is no guarantee, of course, that an out-of-state telecommuter will escape an audit by New York tax authorities. This is especially the case given that the state, according to Corrie, is facing a drastic shortfall in sales-tax revenue as a result of the pandemic.
“The state is extremely hungry for money,” he says.


fortune--2020-06-27--Safelite’s CEO on steering the company through crisis—and getting sales back to pre-pandemic levels

In early February, Tom Feeney was basking in the reception of a lifetime as he spoke onstage at Orlando’s luxurious Rosen Shingle Creek hotel to a jubilant audience of his 600 top managers. “2020 will be a year to remember, by far the greatest in our history,” declared the CEO of Safelite AutoGlass. Feeney reminded his troops that he had addressed them at another resort in Orlando in 2009 during the depths of the financial crisis, and on that occasion he had pledged that his radically new “Take care of your employees” mindset would power the enterprise to heights they had never dreamed of.
Now, Feeney intoned, that had happened, lauding that the numbers for 2019 smashed all records. In the decade since his team last met in Orlando, Safelite had multiplied sales fivefold, to $2.4 billion, greatly strengthening the 71-year old stalwart’s dominant position in what’s mainly a mom and pop industry with 40,000 players. Safelite was notching double-digit margins—no need to mention that his managers were reaping all that bounty in the plodding, no-growth world of replacing windshields.
“I told the folks that we’d get to $3 billion in 2020,” Feeney, 68, told Fortune. “I came offstage with great confidence. I believed, and they believed too.” Feeney gave all assembled a $1,000 wristwatch, like the ones they’d received in 2009. Then, it was to express faith in what they could do. This time it was a thank-you for getting it done.
Within weeks of that celebration, says Feeney, business dropped “like someone turned off a light switch.” By the first week in April, Safelite’s revenues had cratered 45%, as its business of replacing windshields generally hinges on how much Americans drive. But what stands out about the company’s story is its highly original, keeping-your-base-intact response to the crisis. Feeney focused on sharply lowering costs to balance the drop in sales. But at the same time, he used furloughs, not layoffs, to ensure that almost all of his 17,000 employees remained on staff and ready to go when the rebound came.
When Feeney saw the coronavirus spreading in China in the days after the Orlando confab, he fretted that production would soon shut down in the nation where he sources half of his windshields. So he secured big advance deliveries from his Chinese suppliers in February and early March, and bought distribution centers that he stocked to the brim. “When I first heard the noise from China about COVID-19,” says Feeney, “I set about to get everybody else’s inventory for the recovery.” Starting in the second week in April, more families got back on the road, and volumes rebounded much faster than Feeney expected.
Feeney was able to quickly meet the surge by ramping up hours for service reps and technicians who’d been working part-time. Keeping people employed and on-call, and windshields set for delivery, enabled Safelite to gain an advantage over rivals that deployed sweeping layoffs and ran out of stocks. Those rivals can’t hire people back fast enough to recapture lost business, so those customers are going to Safelite. “Between the overall recovery and our gains in market share, we’re back to 95% of our 2019 volumes,” says Feeney.
A cheery jingle—and a killer business
Most people know Safelite from its cheery TV commercials. They feature feel-good vignettes like the spot where a mom calls Safelite about a broken windshield just before her daughter is about to start a basketball game at school. “Steve from Safelite” appears in the parking lot to swing the old glass out and the new glass in, just when the game ends, delighting the mom that insurance will pay and high-fiving the teen on her win. As the family drives off, viewers hear kids liltingly singing the four—the only four—words to the famous Safelite jingle, “Safelite repair, Safelite replace.” “That’s my 9-year granddaughter singing in the chorus,” Feeney proudly told me.
Until Feeney took over in 2008, the old Safelite bore little resemblance to the profitable, agile player that exploited the worst recession in recent history to expand its reach. When Feeney arrived in 1988, Safelite was struggling under a ton of high-yield debt imposed by the first of two private equity firms that would own the windshield installer for the ensuing two decades. Still, as a young executive, Feeney spearheaded building what’s still its bedrock business, Safelite Solutions, the arm that serves insurers, and fleet and rental car companies. “I helped get blanket deals with big insurers like Geico and Safeco so that they made Safelite the preferred supplier where windshields were covered by their policies,” he recalls.
Today, Safelite has partnerships with 17 of America’s top 20 insurers. When one of their clients gets a cracked windshield or side glass such as side vents, they have the option of requesting another servicer. “But the consumer usually chooses Safelite because we’re the only national company, and we’re the insurers’ preferred supplier,” says Feeney. He says that insurers furnish around 55% of Safelite’s revenues, while consumers who don’t have coverage for breaks and cracks provide one-quarter, and car and truck rental companies make up the balance.
In 2000, Safelite’s second private equity owner took it bankrupt, and its junk bond backers who had exchanged their debt for equity took charge. “Under private equity, the firms used all the cash flow for debt payments, leaving nothing for investment. When we were owned by the banks and former debt holders, they took out all the cash we generated. For the CEOs and the owners, it was all about milking Safelite for quick gains,” he recalls. By 2008, three CEOs had come and gone.
For Feeney, the problem was as much about culture and incentives as lack of capital to invest. Safelite was jogging in place at around $500 million in sales, and it wasn’t growing for a basic reason: It was rewarding its district managers not for expanding sales in their cities or regions but by how many windshield and side panels each of their technicians installed every month or quarter. “They called it ‘yield management,'” says Feeney. “If a manager had 20 technicians, and they had a high productivity rating because each one did six jobs a day on average, he’d get a big bonus.” But he’d get dinged by reaching for more sales, because it might mean hiring five more technicians who would start off doing four or five daily deliveries.
“The compensation plans had no rewards for growth,” he says. “Managers would sandbag at budget time by saying the threshold for bonuses should be fewer jobs per day than last year’s number, then they’d actually use fewer people who’d do the same number of total jobs as before but get the bosses higher bonuses. Setting budgets was all about setting limitations.” Keeping that tight rein on hiring—the ticket to big bonuses—made it impossible to reach for new orders.
It was a change in ownership, and a new CEO, that set the foundering installer on a steady course. In 2007, Belron, a British company that owns auto glass replacement businesses in over 30 countries, purchased Safelite. Belron, in turn, was controlled by D’Ieteren of Belgium, that nation’s largest auto dealer. (In 2018, private equity firm Clayton Dubilier & Rice, renowned for nurturing its investments for the long term, bought 40% of Belron. Today the remaining shares are held 55% by D’Ieteren and 5% by the family that founded Belron.)
Putting growth first
By mid-2008, the new owners had installed Feeney as CEO. And even though the financial crisis was ravaging sales, they endorsed his view that Safelite had the makings of a star if it shifted from drifting sideways to a vision that put growth first. To keep Safelite from failing, Feeney laid off 750 employees, roughly 15% of the workforce, canceled raises, and scrapped 401(k) contributions. But in a bold move, he decided to reward the workers that remained, even though Safelite couldn’t afford it, betting that the commitment would highlight his new priority of putting his people first.
“I reinstated raises for 2009 and restored the 401(k) match, moves that would cost an extra $3 million for the year, about 15% of the profits we’d been forecasting before,” he recalls. Then, in a big meeting with top managers, he pledged to pay the extra $3 million and still exceed the goal for the year, and announced a target of doubling sales to $1 billion by 2012. “Keep in mind this isn’t a growth business, it’s a flat business,” says Feeney. The CEO of Belron watched Feeney’s pledge in wonder. “He said to me, ‘You must be crazy to put a time stamp on a plan like that.’”
For Feeney, hitting the targets was all about rallying the managers, technicians, and service reps to push for growth. He believed that the best marketing was word of mouth, and that meant getting its technicians to “delight” the folks they were replacing windshields for. “We thought we could beat everything we could write on paper with the right people and right incentives,” he says. The key was convincing the workforce that they could spend their whole careers at Safelite, and make a lot more money, if they joined the march to win new business, and lots of it. “I wanted people to feel safe for a change, so I told them that the only reason anyone would have to leave was if they didn’t buy into the growth plan and culture that would make it happen,” he says. He notes that about 30% of the top 300 managers were “resisters” whom he fired or who departed, usually within a year, but over seven in 10 of the top brass in 2009 are believers still with the company.
The blueprint’s backbone was a new incentive plan tilted heavily toward growth. “I told the district managers not to think about themselves as pushing a fixed number of technicians to do more jobs a day, but as the CEOs of their own business in Columbus or Boston, where making more money for themselves meant making more money for their companies by taking more and more business from competitors.” Today, district managers who show double-digit revenue increases in a year can pocket bonuses that are 150% of base pay, and stars can make $250,000 annually.
Data-driven bonuses
For the 8,500 technicians who drive the trucks and install the windshields, Feeney pays bonuses tied to three metrics. The first is a blend of the Net Promoter Score awarded by the customers and their comments on the technicians’ attitude and professionalism. To rank high, the technicians had better consistently book 9s and 10s, the top ratings on the NPS scale. The second is “warranty,” or re-work, costs. “We tell employees to imagine each job is the only one you’ll do that day,” says Feeney. “The goal isn’t top speed. We don’t want them doing seven jobs in a day and going so fast that three of them need to be redone, so that we have to pay big warranties.” The third metric is the number of customers a technician services in a given week or month.
Big infotech investments lift productivity while also leaving more satisfied customers and less re-work. When a customer with a broken windshield or side glass contacts a customer service rep by phone or on the Safelite website, and requests an appointment, the rep uses A.I. to see if it has the part in stock, determine the location of technicians in the area, and match those factors with when and where the customer wants the work done. In almost all cases, Safelite is able to deliver at the time and place requested by the customer. Feeney says that 15% of the repairs are same day, 30% happen within three days, and all windshields get replaced in no more than four. If side glass is broken, it’s usually because a thief tried breaking into the car. Hence, Safelite fixes almost all side glass the day the customer calls.
At the end of each day, each technician gets feedback on his or her NPS, and customer comments via a smartphone message. Each month, they get a text showing how they fared on all three metrics, and informed of the bonus that corresponds to that overall score. Bonuses are paid in cash monthly. “Many of our technicians make over $100,000 a year,” says Feeney.
Of course, Feeney has no idea for how long or how deeply the COVID-19 downdraft will hammer his business. But surprisingly, given how Safelite played the rebound, he planned for the worst.
On the cost side, he established a plan to break even if sales dropped by 65%. The savings came mostly from reductions in payroll. The trick was to orchestrate the big shrink so that Safelite would re-expand to nearly its old size in a matter of days, like a musician expanding his packed-up accordion. The plan did include some layoffs. “We terminated all of the people who were getting poor performance reviews, around 600 of them,” says Feeney. The furloughs applied to around 2,000 salaried back-office employees, who didn’t work or get paid in the severest part of the downturn but remained on staff and retained health care benefits.
The hourly workforce, the technicians and service reps that make up 85% of Safelite’s 17,000 employees, provided most of the savings. Both frontline groups continued to get full health benefits but were asked to go on flextime, working about one-third fewer hours. It helped that as a regular practice, Safelite guarantees its technicians 10 months a year of work, and allows them to volunteer to take the other two months off without pay. “Employees like it in rural areas especially, because they can go hunting and fishing,” says Feeney. So many of the 8,500 technicians front-loaded their “10-2” schedules on hopes they would return to regular hours when work picked up.
As it turned out, the 45% drop in revenues was far less than the 65% Feeney had planned for. By the second week in April, sales started rising, and they’ve increased every week since. Almost all workers are back to their full schedules and pay. “Using flextime instead of laying people off kept us on the tips of our toes,” says Feeney. Although sales will be down around 20% overall for the year, he says, they’re now running at around the same weekly levels as in 2019.
Which, in the midst of a pandemic and the highest levels of unemployment since the Great Depression, is about as close as you can come to managing a miracle.


fortune--2020-06-27--Big banks are at a crossroads: Safe enough to skirt some regulation, but risky enough to stress out

Big banks are at a crossroads: Safe enough to skirt some regulation, but risky enough to stress out the Fed

That dream of a European vacation in doubt as the EU moves closer to a travel ban on the U.S @

For big banks, it was a good news/bad news kind of week.
Despite receiving some good news on the regulatory front this week, Wall Street’s big banks also got a dose of reality in the form of the Federal Reserve’s stress tests.
On one hand, federal regulators finalized their loosening of certain provisions of the Volcker Rule—the Great Recession–era regulation, adopted as part of the Dodd-Frank Act, that prohibited banks from making certain investments deemed overly risky.
The eased restrictions mean that banks can now invest more freely in private equity funds, hedge funds, and venture capital funds—investments dubbed “speculative” that were restricted by Dodd-Frank’s passage in 2010. Additionally, banks are no longer required to set aside cash when making certain derivatives trades.
The revisions may alter rules designed to prevent a replay of the worst financial crisis since the Great Depression, but they will also likely free up billions of dollars of capital on banks’ balance sheets. As expected, investors took kindly to the news, and bank stocks shot up on Thursday afternoon—at least until the Fed spoiled the party.
Later in the day, the central bank released the results of its 2020 stress tests, meant to evaluate how the country’s largest financial institutions would cope with adverse economic conditions. While the tests—which were made more stringent in the wake of the coronavirus pandemic—found that the banks would be able to withstand “even the harshest shocks” to the financial system, they still revealed enough stress for the Fed to step in with some proactive, restrictive measures.
Large banks are now prohibited from pursuing share buybacks in the third quarter of this year. They’re also being forced to cap upcoming shareholder dividend payments “to the amount paid in the second quarter,” and must limit them to “an amount based on recent earnings.” In short, a bank “cannot increase its dividend and can pay dividends if has earned sufficient income” in the third quarter, per the Fed.
It was enough to send bank stocks down in after-hours trading Thursday—a drop that extended into Friday, which was a bad day for the market at large (the Dow was down nearly 3%) but particularly for financial stocks. While the S&P 500 fell 2.4% on the day, the S&P’s financials sector was down 4.3% Friday—the second-sharpest drop of all 11 industry sectors tracked by the index.
Wall Street’s bearish reaction shouldn’t come as a surprise. As the Fed noted, buybacks have represented roughly 70% of shareholder payouts from large banks in recent years, and the central bank’s restrictions will hit investors where it hurts. Wells Fargo and Goldman Sachs, in particular, may be forced to cut their dividends next quarter, analysts at investment bank KBW wrote in a note, while Morgan Stanley analysts pegged Capital One (as well as Wells Fargo) as a potential casualty.
Despite the stock market’s extraordinary rebound since March’s coronavirus-induced correction, it appears that Wall Street is not wholly immune to the economic downturn that has devastated much of the U.S. economy. And just as regulators gave the big banks a gift in the form of a relaxed Volcker Rule, the Fed’s new restrictions show how easily regulators can rain on their parade.


fortune--2020-06-27--That dream of a European vacation in doubt as the EU moves closer to a travel ban on the U.S.

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The European Union moved closer to recommending that travelers from the U.S. shouldn’t be allowed to enter the bloc even after July 1, according to a draft decision being considered by governments.
Diplomats have agreed on a provisional list of 15 countries, including Canada, Japan, Australia and South Korea, that should be allowed into the EU because their level of new Covid-19 cases meets the bloc’s safety criteria, according to a draft seen by Bloomberg. Chinese residents will also be allowed to visit the EU, on the condition that Beijing confirms that it will also allow European citizens to travel to China, according to the document.
Following a meeting of EU ambassadors in Brussels that dragged late into Friday evening, the bloc’s governments have been asked to indicate by Saturday afternoon whether they agree on the proposed text, so that a formal decision can be taken.
The potential decision to extend a ban on incoming visits from the U.S. and Russia, while allowing travel from China could have geopolitical implications. Transatlantic relations have taken a series of hits, from trade to foreign policy. European diplomats are braced for President Donald Trump to take unkindly to Americans being kept away, while the Chinese are allowed in.
Reciprocity
The EU seeks a common approach on the criteria for allowing non-essential travelers back into the bloc as the coronavirus crisis subsides on the continent and governments start easing border controls. Nations are trying to revive domestic economies as the summer tourist season gets underway while guarding against a second wave of infections.
The initial restrictions on leisure travel from outside Europe were introduced in mid-March for 30 days and extended three times through end-June as Europe battled to contain the pandemic. Once the list is agreed upon it will likely be updated every two weeks, said one official, who asked not to be identified because the discussions are private.
One of the agreed criteria includes “reciprocity,” meaning that the EU won’t allow incoming travelers from countries which have barred European citizens from entering. Another condition when deciding whom to bar is the rate of new Covid-19 cases, according to another internal document seen by Bloomberg.
Under one proposed criterion, travelers will only be allowed from countries with a comparable or better epidemiological situation than the average in the EU. Deliberations on the conditions have been painstakingly slow, as the extension of travel bans from the U.S. and Russia will strip many tourism-dependent economies in the continent from two major markets.
EU-U.S. Talks
Earlier this week, Anthony Fauci, the U.S. government’s top infectious-disease expert, told Congress he was seeing a “disturbing surge” in new cases. Florida reported 122,960 Covid-19 cases on Friday, up 7.8% from a day earlier, compared with an average increase of 4.1% in the previous seven days. The one-day increase of 8,942 was the most ever.
Secretary of State Michael Pompeo has said that the U.S. is working with the EU over how to restart travel between the two regions.
The U.S. doesn’t want to reopen in a way that “jeopardizes the United States from people traveling here and we certainly don’t want to cause problems anyplace else,” Pompeo told reporters Wednesday. He said he was confident a solution could be figured out in the coming weeks.


fortune--2020-06-27--Why go public amid a raging pandemic? Albertsons CEO explains

The real reason many Americans aren ’ t sure if they need to wear a mask

Grocery giant Albertsons had big plans to go public in 2015, in what would have marked one of the year’s biggest IPOs. But the grocery giant backed out of its plans, put off by a turbulent retail sector.
Today, as Albertsons and its competitors navigate a global pandemic, the 2015 retail landscape looks tame by comparison. “We are operating in industry that is transforming so rapidly,” says CEO Vivek Sankaran, who joined the company in April 2019 from PepsiCo.
But this time around, the uncertainty and tumult didn’t stop Albertsons from debuting on Friday on the New York Stock Exchange under the ticker ACI. The IPO ended up being relatively disappointing for the retailer: The company priced its shares at $16, below the $18 to $20 range it had previously been seeking. (The company’s shares closed at $15.45, down nearly 3.5%.) The second-largest grocery chain in the U.S. behind Kroger is backed by private equity firm Cerberus, which invested in 2006 and has been looking to exit.
In the last few months, Sankaran has overseen an explosion of the company’s online business as consumers radically change the way they shop. In April, for example, the company reported that its e-commerce sales that month were up 374% over the previous year.
Fortune spoke with Sankaran about Albertson’s IPO and how COVID-19 has impacted the company, which runs more than 2,000 stores under its eponymous brand as well as the likes of Vons, Jewel-Osco, Acme, and Safeway. The following conversation has been edited for length and clarity:
Fortune: The company initially announced its intention to go public in 2015. Why the delay, and why move forward now?
Sankaran: It didn’t work out in 2015. At that time, we brought Albertsons and Safeway together, so the company has spent the last several years getting that integration right, and modernizing the company—putting technology in every aspect of it. There’s been a lot of work to strengthen the company and to get everything right from the governance aspects so we’re ready to be a public company. We felt we were ready from a business and performance standpoint. And surprisingly after a few turbulent weeks, the markets seem to be ready.
You ended up pricing below your target range. What happened?
It’s so difficult to predict what’s happening in the stock market. There’s so much volatility. Some of our investors have been with us for 15 years, so we’ve got to monetize some of that. And we are long-term oriented. We want investors to stay with us for that kind of duration to create value.
How has COVID-19 changed your strategy?
COVID has accelerated our strategy. We pride ourselves on our fresh assortment—our meat and seafood, all of the prepared foods we have behind the counter, the depth and variety of what we provide in our stores. That was always the case. When you’re cooking at home that becomes even more important. You open your refrigerator five days after you went to the grocery store, you want that cucumber to be firm and that’s the advantage we have. Our e-commerce business is growing rapidly. We have so much more headroom there.
What is the role of the physical store going forward?
Your question may come from this notion that everyone is going to buy online, and you may not need a store. I don’t think that’s a reality. It’s not a reality in countries where online has been around for a long time that have even higher density than America.
Also, recognize that a store, at the end of the day, is just another point of inventory. There’s service, there’s ambiance. But it’s also good inventory close to your home for us to bring it to you, or for you to pick it up. So we’re using our stores as a nice foundation for the omnichannel business.
What have been the hurdles with e-commerce?
It’s in the early stages of its evolution—not only for us, but for the industry as a whole. We’re all trying to learn how to meet customer expectations, frankly how to change customers’ expectations. It’s such a dynamic environment, and I think that’s what you have to accept if you want to be in the e-commerce business. You’re always piloting, always trying new things and investing behind it. It’s a big part of our growth agenda. The piece that’s been the most gratifying and somewhat surprising is the amount of new business when you open up e-commerce.
How have customers been shopping differently? What do you view as permanent and what’s just a blip?
Nothing is ever permanent. That’s a dangerous mindset to get into. They’re all coming to the stores less often but buying more when they come to the store. There are two things driving that one. One is safety, or the perception of safety. And the second, is they’re cooking more at home. They’re buying a lot more fresh, baking more at home. More cookies at home, they’re drinking more at home.
People, I think, are enjoying the time they have at home with families. I think some of that will stick. People are rediscovering that, by the way, we can get a lot of work done without having to commute two ways and spend those hours. As these things stick, at-home consumption sticks. It’s hard for me to imagine that all of this just goes away and people jump back to restaurants and their old way of life in an instant.
Are people stocking up to the same extent? Do you view that as an indicator of where we are in terms of a recovery?
People stocking up was more in the months of March and April. We’re starting to see a lot more steadiness. People are engaging more in produce and fresh products, and the supply chains have come along nicely to support that.
What’s been the biggest challenge in making sure your employees are safe?
It’s my No. 1 priority. I spend time on that every day, on keeping our associates and customers safe, and being there for our communities. We are always learning and innovating on how to keep people most safe.
In the early days, we couldn’t get sanitizer. One of our colleagues ended up getting sanitizer in bulk drums and we converted one of our beverage plants to get it into bottles to get it to our stores. Now those things are stabilized. It’s not so much a supply problem. At this point, my message to people is: You start thinking you can relax, but you simply cannot relax when it comes to COVID.
Where are we in terms of recovery?
It’s really unfortunate to see cases spiking up again in this country. I don’t think we’re anywhere at a place where we can declare victory or let alone seeing a path to victory over the virus. That’s how I see it.


fortune--2020-06-27--The real reason many Americans aren’t sure if they need to wear a mask

Airline bailouts highlight the debate over how green the coronavirus recovery should be

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Forgive the American people if they’re in a fog about face masks. President Donald Trump and the federal government have done a number on them.
First there was the don’t-do-it phase. Then the nice-but-not-for-me dissonance. Followed by the local-rules-don’t-apply exceptions. Topped off by Trump’s stated suspicion that some people wear masks just to troll him.
It has all added up to a murky message about one of the critical tools in the fight against the coronavirus pandemic. And the politicization of the to-wear-or-not-to-wear debate is clear in recent public polling.
To be clear: The Centers for Disease Control and Prevention recommends that people wear cloth face coverings in public settings where other social distancing measures are difficult to maintain. Some states and local communities require them.
But the messaging disconnect from Washington was evident as recently as Friday, when Vice President Mike Pence defended Trump’s decision to stage two big mask-scarce gatherings in the past week in states with big surges in infections and, in one case, local rules requiring masks.
“We just believe that what’s most important here is that people listen to the leadership in their state and the leadership in their local community and adhere to that guidance whether it has to do with facial coverings or whether it has to do with the size of gatherings,” Pence said.
Vice President Mike Pence wears a face mask as he arrives for the Senate Republicans lunch in the Hart Senate Office Building on Wednesday, June 24, 2020. Bill Clark—CQ-Roll Call, Inc/Getty Images
Early on, the government’s no-mask message was unequivocal. As the first known COVID-19 infections were identified on U.S. soil, top public health officials insisted masks should be reserved for front-line workers.
Later, the CDC issued its recommendation for cloth face coverings in public settings where other social distancing measures were difficult to maintain. But Trump immediately undercut that guidance by flatly stating that he wouldn’t be following it.
He told The Wall Street Journal this month that some people wear masks simply to show that they disapprove of him.
Now, the mask debate is heating up in the South and West, where infections are surging to levels the country hasn’t seen since April, when the Northeast and Midwest were particularly hard-hit.
In Arizona, Florida, and Texas, with GOP governors and huge spikes in infections, there’s been a hesitance to require people to wear masks in public spaces.
But in California, Nevada and North Carolina,- with Democratic governors and increasing infection levels, rules requiring masks took effect this past week.
The divide on masks is stark even within Republican-leaning Sun Belt states, where some big city Democratic mayors have imposed their own mask rules.
Further complicating the messaging is that as Trump questions the effectiveness of masks and refuses to wear one in public, Surgeon General Jerome Adams has taken to Twitter to declare that “I show my patriotism by wearing a face covering in public!”
That would be the same surgeon general who tweeted on Feb. 29: “Seriously people- STOP BUYING MASKS! They are NOT effective in preventing general public from catching #Coronavirus, but if healthcare providers can’t get them to care for sick patients, it puts them and our communities at risk!”
The dithering over face masks has unnerved public health experts as studies suggest that the coverings could have a dramatic impact on limiting the virus’ death toll.
“The public health community, I think, has been very clear that face masks can help reduce the spread of the virus,” said Ayaz Hyder, an epidemiologist at Ohio State University. “The problem is you send mixed messages when the person at the top of the federal government is saying, ‘Nah, I’m OK.’”
The political calculations of the debate are playing out all over the country, and evident in public polling.
While most other protective measures such as social distancing get broad bipartisan support, Democrats are more likely than Republicans to say they’re wearing a mask when leaving home, 76% to 59%, according to a recent poll by The Associated Press-NORC Center for Public Affairs Research.
In Texas, GOP Gov. Greg Abbott this month issued an executive order prohibiting municipalities from imposing fines or criminal penalties on people who refuse to wear masks. But he has not opposed efforts by some Texas cities and counties to require businesses to impose face mask rules for their employees.
In Arizona, Republican Gov. Doug Ducey said mayors, not the state, would decide their own mask mandates. Richard Mack, president of the Constitutional Sheriffs and Peace Officers Association, declared at an anti-mask rally in Scottsdale this past week that mask mandates were government overreach and wouldn’t be enforced.
“We do have a pandemic in America and in Arizona,” Mack said. “But it’s not the coronavirus. The pandemic is one of universal corruption, the pandemic is one of the destruction of our Constitution.
In Florida, which reported nearly 9,000 new COVID-19 cases on Friday, Republican Gov. Ron DeSantis has rejected Democrats’ pleas for a statewide mask order, saying “you can catch more flies with honey than vinegar.”
On Friday, Bruce Owens, 66, of Lakeland, Florida, wore a white surgical mask as he walked around downtown St. Petersburg. He said he’s been disappointed by the disparate responses of Florida’s elected officials to the outbreak.
In Lakeland, he says, officials opted against a face mask mandate, while the mayor of the larger St. Petersburg signed an ordinance Monday that requires masks inside public places.
“They’ve handled it extremely poorly,” Owens said of state officials. “They haven’t really listened to the experts.”
Charles Kyle Durr, of Groveland, Florida, said he would wear a mask if required, but questioned the need for a broad government mandate. “I don’t think everyone needs to wear a mask,” Durr wrote to the AP. ”Only a person with symptoms of Covid or someone who’s been diagnosed with Covid needs to wear a mask.”
The presumptive Democratic nominee, Joe Biden, is eager to turn face masks into a campaign issue. He told a Pittsburgh television he “would do everything possible” to require Americans to wear face masks in public settings where social distance can’t be maintained.
Tim Murtaugh, a Trump campaign spokesman, responded that “people should follow CDC guidelines.”
But on Tuesday, Trump was in Phoenix for a Students for Trump event at a megachurch, where few attendees wore masks. The president declined to wear one despite the Democratic mayor urging him to do so.
Appearing before a House committee that same day, Dr. Anthony Fauci, the government’s top infectious disease expert, was asked about Trump’s refusal to wear a mask.
Fauci avoided taking direct aim at the president but said he personally wears a mask “not only because I want to protect others and to protect myself, but also to set an example.”
On Friday, members of the White House coronavirus task force once again urged Americans to practice social distancing, frequently wash their hands, and wear face coverings in public spaces.
But Pence sidestepped questions about whether the president’s refusal to wear a mask and his large campaign gatherings were sending conflicting messages.
“Even in a health crisis, the American people don’t forfeit our constitutional rights,” Pence said.


fortune--2020-06-27--Delayed primary results are just a preview. Presidential election results could be slow, too

Voters in New York cast ballots on Tuesday, June 23, in a variety of state and national primaries. But they’re not expected to know the final outcome of those races until well into next week. States including Kentucky, Pennsylvania, and Georgia are seeing similar delays. That’s largely owing to a surge in demand for absentee ballots as voters seek to avoid the risk of coronavirus infection at the polls, as well as jurisdictions that aren’t well prepared to process them.
Unless decisive action is taken, experts say, the delayed results are just a preview of bigger problems in the upcoming presidential election—and potentially a threat to American democracy itself.
“I think we have to assume there’s going to be long delays [for election results] in November,” says Charles Stewart, a political science professor at MIT who specializes in voting technology. “The worry is that this delay is going to be the source of fomented distrust of the vote-counting process.”
Stewart is alluding to a recent surge of tweets and other statements from, above all, President Donald Trump. The President has repeatedly made false claims that voting by mail increases the risk of election fraud.
To speed up results and protect trust in the process, election officials across the country will need to swiftly address what experts identify as the two main issues slowing down current primary results: outdated technology and equally outdated legislation.
Mail-in ballots are typically processed manually in many of the jurisdictions seeing delayed primary results. But there are also usually far fewer of them. In New York, for example, mail-in ballots are expected to account for a majority of votes in this week’s primary, compared with a normal proportion of around 5%.
Election workers processing mail-in ballots in Reading, Pa., on June 3, 2020. Pennsylvania is among the states scrambling to update election systems to cope with an expected flood of mail-in ballots in the November presidential election. Ben Hasty/MediaNews Group—Reading Eagle via Getty Images
Election workers process those ballots by manually opening envelopes, reviewing voter signatures, and sorting ballots. For the most part, according to Stewart, compensating for the surge in the short term has meant simply hiring more workers.
But to prepare for November, many jurisdictions are hoping to automate more of the process, drawing in part on the robust mail-in voting infrastructure of jurisdictions including Oregon and Washington State. There, much of the process is already automated, with machines used to extract and sort ballots, and even to review signatures.
It remains to be seen, though, how many jurisdictions will be able to adopt those processes. Amber McReynolds, head of the National Vote at Home Institute and a former election official in Denver, is worried that production and supply issues may mean the needed high-tech equipment won’t be available in time, especially if state and local officials are indecisive.
“This is not a July or August decision,” says McReynolds. “That’s something election officials have to make a decision on right now.”
There are also budget constraints: According to Stewart, a single sorting machine can cost roughly a million dollars. While the CARES Act provided about $400 million in additional election funding this year, states have faced barriers in accessing those funds.
The second factor in delayed tallies are rules that, according to experts, unnecessarily slow down the processing of mail-in ballots.
In most states, according to McReynolds, mail-in ballots go through signature review and other verification processes when they’re received, allowing votes to be tallied quickly on election day.
“In Denver, on election night, you’ll see 50% of all results posted right at 7 p.m.,” says McReynolds, “because they’ve processed [mail-in ballots] weeks in advance.”
But in a relative handful of states including Pennsylvania, Michigan, and Wisconsin, rules prohibit even preliminary processing of ballots prior to election day. In New York, officials can’t tally mail-in votes until a week after in-person voting. Though the rules were originally intended to protect election integrity, the rationales behind them are largely no longer relevant.
“The regulations and laws related to mail balloting were designed for the old-fashioned, excuse-required absentee ballot process,” says Stewart. Many absentee voting rules have been modified as a result of the coronavirus, but rules about processing haven’t been updated to match, in part because they’re politically contentious. Legislative efforts to update them by November have gained steam, but are expected to have uneven results.
“I’ve been told there’s likely to be success in Pennsylvania on [revising mail-in ballot rules],” says Stewart. “And in Michigan it’s not going to happen. This is trench warfare—it’s going to be state by state.”
With both practical and political obstacles to quick reform, there’s a good chance that some major battleground states will not have decisive election returns for days, or perhaps weeks, after in-person voting on Nov. 3.
Elaine Kamarck, a senior fellow studying elections at the Brookings Institution and a former Clinton administration official, says this means Americans should adjust how they think about election night.
“We’re accustomed to staying up late for results,” says Kamarck. “Television does a good job of making it very dramatic as the returns come in. This time, that won’t be the case.”


fortune--2020-06-27--Mark Zuckerberg sheds $7 billion as Facebook shares plunge amid growing advertiser boycott

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Mark Zuckerberg just became $7.2 billion poorer after a flurry of companies pulled advertising from Facebook Inc.’s network.
Shares of the social media company fell 8.3% on Friday, the most in three months, after Unilever, one of the world’s largest advertisers, joined other brands in boycotting ads on the social network. Unilever said it would stop spending money with Facebook’s properties this year.
The share-price drop eliminated $56 billion from Facebook’s market value and pushed Zuckerberg’s net worth down to $82.3 billion, according to the Bloomberg Billionaires Index. That also moved the Facebook chief executive officer down one notch to fourth place, overtaken by Louis Vuitton boss Bernard Arnault, who was elevated to one of the world’s three richest people along with Jeff Bezos and Bill Gates.
Companies from Verizon Communications Inc. to Hershey Co. have also stopped social media ads after critics said that Facebook has failed to sufficiently police hate speech and disinformation on the platform. Coca-Cola Co. said it would pause all paid advertising on all social media platforms for at least 30 days.
Zuckerberg responded Friday to the growing criticism about misinformation on the site, announcing the company would label all voting-related posts with a link encouraging users to look at its new voter information hub. Facebook also expanded its definition of prohibited hate speech, adding a clause saying no ads will be allowed if they label another demographic as dangerous.
“There are no exceptions for politicians in any of the policies I’m announcing here today,” Zuckerberg said.


fortune--2020-06-27--Airline bailouts highlight the debate over how green the coronavirus recovery should be

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What is an airline bailout for?
By nature, the bailouts are rescue packages designed to save businesses that are often symbols of national pride, at a time when the coronavirus pandemic has placed the aviation sector in mortal peril. But in some cases they are also policy tools, wielded to make these flag carriers shape up and improve their environmental ways.
This is the tack the French and Dutch governments are taking in their bailout measures—comprising $7.9 billion and $3.8 billion, respectively—for Air France–KLM. The deals will force Air France and KLM to halve their CO2 emissions per passenger kilometer by 2030, compared with 2005 levels. Short-haul routes will need to be cut where more environmentally friendly rail connections can take people where they need to go instead.
Similarly, when the French government stumped up $16.8 billion for the country’s aerospace sector earlier this month, it insisted that a tenth of the package be spent on speeding up the development of a carbon-neutral, hydrogen-powered plane by 2035.
The French and Dutch moves come against the backdrop of widespread calls for a green pandemic recovery—and warnings of environmental disaster if those calls are not heeded.
‘A unique opportunity’
“As they design economic recovery plans, policymakers are having to make enormously consequential decisions in a very short space of time,” wrote Fatih Birol, executive director of the International Energy Agency, as the IEA presented a “sustainable recovery plan” last week. “Governments have a unique opportunity today to boost economic growth, create millions of new jobs, and put global greenhouse gas emissions into structural decline.”
“The COVID crisis is a massive societal and humanitarian challenge, but it is a pivotal moment for the climate agenda: We will either see a step back or a jump forward,” says Hauke Engel, a partner at McKinsey & Co.’s Frankfurt office.
As Engel points out, “We are seeing an extraordinary mobilization of public money” that could set back the climate agenda if it is spent on “high-carbon economic structures” that effectively lock in the status quo. On top of that, the recovery’s enormous impact on public debt could leave governments less money for fighting climate change in the coming years.
“The message it sends is also important,” Hauke says. “Many stakeholders are closely monitoring the political agenda, to see if the climate is a fair-weather topic. You could get a multiplier effect from green stimulus: You spend the public money well, but also reinforce to the private sector that the climate is important.”
‘Why rebuild the old world?’
The green-recovery phenomenon is most obvious in Europe, where the European Commission’s existing plan for a “Green Deal”—aiming for net-zero emissions by 2050—has dovetailed with the EU’s new coronavirus rescue strategy.
The EU’s 750 billion–euro ($841 billion) recovery package, announced a month ago, includes 40 billion euros to help EU countries go climate-neutral. A 15 billion–euro rural-development boost is partly aimed at helping farmers get greener, and the package’s core 560 billion euros for investments and reforms is also bound to green objectives, with cash flowing to building and infrastructure renovation, renewable and hydrogen energy projects, and the deployment of a million electric-vehicle charging points across the region.
In the words of Commission Vice President Margrethe Vestager this week: “Why rebuild the old world, when we wanted a new one?”
According to a recent study from a team at Oxford University, green stimulus delivers higher short- and long-term returns than conventional stimulus measures. This analysis is mostly based on stimulus packages delivered in the last financial crisis, which fed into high-speed train rollouts in China and building-efficiency programs in Europe, Canada, and Australia.
“The difference between this time and last time is it’s less in terms of the nature of the ideas, and more the fact that governments are ready and are doing it at scale,” says Cameron Hepburn, the Oxford study’s lead author and director of the university’s Smith School of Enterprise and the Environment.
Hepburn highlights the German government’s earmarking of 40 billion euros, out of a 130 billion–euro stimulus package, for climate-related spending such as subsidies for electric-vehicle purchases (both Germany and France are refusing to subsidize fossil-fuel–powered cars), making buildings more energy-efficient, and developing hydrogen infrastructure.
“What we’re doing is bringing forward many years’ worth of investment,” says Hepburn. “We’re doing it now, for good reasons, [but] what that does mean is that we’ll be doing less of it in five years’ time.”
So is it really a case of now or never? Hepburn says that depends on how long the recovery takes: “If…we’re having a quick recovery, then yes, it is now or never. My expectation is we’re nowhere near done yet, and, if so, then there is a risk of a fairly long and relatively deep recession. In which case the ‘now’ is not three months—it could be a year or a year and a half of intervention.”
However, there is not universal approval for recovery cash being linked to environmental goals.
Quid pro quo
While the Air France–KLM bailouts come with bright green strings attached, the same cannot be said for the German government’s 9 billion–euro bailout of Lufthansa, which shareholders approved Thursday.
The German government insists that the deal does come with “clear environmental requirements,” telling Fortune that Lufthansa has “committed to fulfill its environmental and ecological responsibility and will therefore, in particular, renew its fleet in order to reduce emissions, provided the economic conditions allow it.” It also says the carrier will work harder on the development of alternative fuels. But that’s a far cry from telling Lufthansa which routes it should cut and insisting on clear carbon-reduction goals, as the French and Dutch did.
“In order to advance climate protection, instruments that function as far as possible on an industrywide and international scale are particularly suitable,” a government spokesperson said.
“In Germany the approach appears to be more around allowing airlines to meet their own sustainability objectives through their own management processes,” says John Grant, a senior aviation analyst at OAG. “For every airline, sustainability and environmental credentials remain high on their list of objectives and ambitions, but the most important thing is survival. They will begin to return to those commendable things in the future.”
Grant argues that the conditions attached to the Air France bailout are not well thought through, because people who want to avoid a lengthy rail journey will just be able to turn to the carrier’s foreign competitors, such as British Airways, which are not obliged to cut their routes within France. “You’re just scoring an own goal,” he says.
“The first thing every airline needs to do is stabilize its network and revenues,” Grant adds.
Oxford University’s Hepburn disagrees. “For the most part, the aviation bailouts have not had conditions attached to them, which I think is a significant missed opportunity,” he says.
“When you’re going to get a lot of public money, it makes sense for public objectives to be the quid pro quo.”


fortune--2020-06-27--Roche says demand for COVID-19 tests exceeds production

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Roche Holding AG’s production of coronavirus tests is falling behind in meeting the outsize global demand for them.
“The PCR tests that detect acute Covid infection, the demand exceeds our production,” Roche Chairman Christoph Franz said in an interview with Swiss daily newspaper Tages Anzeiger.
The Swiss pharmaceutical giant said it prioritizes sending tests based on medical needs and where the highest infection rates are, according to the paper. In some countries lacking the tools for analysis of the testing, the focus is on trying to supply diagnostic devices as quickly as possible, the chairman was quoted as saying.
Roche has formed working groups to look into various ideas for a new drug against Covid-19, but it’s uncertain whether they will result in a vaccine and how long any vaccine’s immunity to the coronavirus will last, the newspaper said.
Roche is also ramping up production to meet growing demand for antibody tests. Demand for antibody tests is much higher in countries like Switzerland where the costs are reimbursed, Franz said in the interview.
The chairman also said the economic consequences of the coronavirus include declining demand in some areas of standard care because the virus has prevented people from visiting doctors and hospitals.


fortune--2020-06-27--Texas, now Florida: States reclose bars as coronavirus cases spike

Florida banned alcohol consumption at its bars Friday as its daily confirmed coronavirus cases neared 9,000, a new record that is almost double the previous mark set just two days ago.
The Florida agency that governs bars announced the ban on Twitter just minutes after the Department of Health reported 8,942 new confirmed cases, topping the previous record of 5,500 set Wednesday.
Meanwhile, Miami-Dade County Mayor Carlos Gimenez announced he would sign an executive order closing beaches in the county over the Fourth of July weekend.
“I have decided that the only prudent thing to do to tamp down this recent uptick is to crack down on recreational activities that put our overall community at higher risk,” he said in a statement.
State officials have attributed much of the new outbreak to young adults flocking to bars after they reopened in most of the state three weeks ago, with many of them ignoring social distancing restrictions aimed at lowering the virus’s spread.
Bars, like restaurants, were supposed to limit patrons to 50% of their normal capacity, under the state’s emergency orders. Patrons had to sit at tables, with groups 6 feet (2 meters) apart. No congregating at the bar or on the dance floor was permitted.
The new order prohibits any establishment that makes more than 50% of its revenue from alcohol sales from serving alcohol for consumption on site. Bars are still permitted to sell alcohol in sealed containers for consumption offsite. Restaurants that primarily sell food can still serve alcohol to customers seated at tables.
Business and Professional Regulations Secretary Halsey Beshears said he issued the order because too many bars and patrons were breaking the rules, overwhelming his department’s inspectors.
“This was more than we could keep up with,” Beshears said.
He said people got tired of being cooped up and maybe thought the threat of coronavirus had lessened because news coverage shifted to the protests caused by the Minneapolis police killing of George Floyd.
“People in general just wanted to get out and experience a normalcy,” he said. He said there is no timetable for rescinding the order.
“Sadly, 90% are getting it right. It’s the other 10% that are ruining it for everybody,” he said.
The state had suspended the license of a popular Orlando bar near the University of Central Florida earlier this week after at least 13 employees and 28 patrons tested positive. The bar may have been linked to 150 cases, state health officials said at the time.
More than 24,000 new cases have been reported statewide since Saturday, more than a fifth of the 111,724 cases confirmed since March 1. The death toll climbed Friday to 3,366, a one-day increase of 39.
Gov. Ron DeSantis said Friday that he still doesn’t plan to issue a statewide order requiring masks. He said that is best handled at the county and city level. Miami, other cities and several counties including Broward, Palm Beach, Hillsborough, Pinellas and Orange are requiring masks in public places.
DeSantis said the median age for people testing positive has dropped from in the 60s early in the outbreak to 33 now. He said that has helped decrease the fatality rate — the disease hits older people harder — but may be increasing the spread as younger adults are more likely to be asymptomatic and to congregate. He urged younger people to wear masks to avoid spreading the disease to their older family members and others who have underlying medical conditions.
“While this may not be affecting you negatively, you can pass it along to other folks,” he said.
State officials have said the youth of the newly infected may be why the rising infection total hasn’t been accompanied by an increase in deaths, which have averaged about 35 per day for a month. Dr. Rajiv Bahl, who works in an Orlando emergency room, said treatment methods are also improving.
Tampa bartender Colleen Corbett said she is worried about being unemployed again, but thinks the state’s action is “the right move since no one could follow the guidelines and everyone was getting sick.” Most of her bartender friends have been infected and she is awaiting test results.
Corbett, 30, said the two bars where she works have been packed. She said staff weren’t required to wear masks and almost no customers did.
“It was like they forgot there was a pandemic or just stopped caring,” Corbett said.
Bruce Owens, 66, wearing a mask as he walked Friday in St. Petersburg, said he isn’t surprised by the state’s skyrocketing case numbers. He blamed it on state officials.
“They’ve handled it extremely poorly,” he said. “They haven’t really listened to the experts.”


fortune--2020-06-27--Country music reckons with racial stereotypes

When country singer Rissi Palmer was working on her debut album, she wanted a song like Gretchen Wilson’s “Redneck Woman,” a song that would introduce her and tell her story to fans.
On her 2007 debut single, “Country Girl,” she celebrated her country roots while explaining that she didn’t have to look or talk a certain way to call herself a country girl.
“I said that I am not white in the first verse, and the label was like, ‘No, no, no,’” said Palmer, who then rewrote the lyrics to make it feel more universal. “It was very intentional when I wrote that song to talk about all the women, or all the people, that might not necessarily fit in the box, but are still of the same mindset.”
The country music industry has long been hesitant to address its long and complicated history with race, but the death of George Floyd in police custody and the protests it sparked in the U.S. and around the world became a sound too loud for the genre to ignore.
Over the past weeks, country artists, labels and country music organizations posted about Black Lives Matter on social media, participated in the industry wide Blackout Tuesday or denounced racism outright. On Thursday, Grammy-winning country group, The Dixie Chicks announced it would drop “dixie” from its name. The group said in a statement that it wanted to meet “this moment.”
But Black artists say the industry still needs to address the systematic racial barriers that have been entrenched in country music for decades. Stereotypes that country music is just for white audiences, written by white songwriters, and sung by mostly white males are reinforced daily on country radio, playlists, label rosters and tour lineups. In recent years, however, the conversations about country music have shifted to a broader acknowledgement that non-white artists have always been in the genre, even if they aren’t always recognized.
Artist/scholar Rhiannon Giddens received a MacArthur Foundation grant for her work to reclaim Black contributions to country and folk music. And artists like Darius Rucker, Kane Brown and Jimmie Allen have all had No. 1 country hits in recent years, while Mickey Guyton just released an unflinching song called “Black Like Me.” But that ingrained culture of exclusivity remains a struggle to change.
“You can look at the reviews of my first album. I was called colored, like, ‘I didn’t know colored people like country music,’” said Palmer, who had three singles reach the Hot Country Songs Chart. “I used to get messages all the time on MySpace, saying, ‘I am so sick of you. Why are you trying to be white?’ or ‘Why are you trying to take over country music?’”
Change hasn’t been easy. After Grammy-winning country group Lady Antebellum announced they were changing their name to Lady A, they later had to apologize to a Black singer who had been using that stage name for years.
Atlanta-based country rapper Breland also wanted to address, with a wink and a smile, country music’s racial blinders with his TikTok-fueled song “My Truck.” The music video starts with a white guy in a black cowboy hat singing as smoke billows across a dusty landscape, then Breland abruptly shoves him out of the frame to announce, “Don’t touch my truck.”
“I just felt like it was time for people to change their perspective on what country music is and what country music can be, because there is an audience of country music listeners under 30 who believe Black Lives Matter,” said Breland, whose song reached No. 26 on Billboard’s Hot Country Songs chart and has been remixed with Sam Hunt.
Like Lil Nas X’s genre bending “Old Town Road,” Breland playfully fuses trap rhythms with country tropes about horses, do-si-dos and beer on his self-titled EP and sings with country artists Chase Rice and Lauren Alaina. Breland said country music labels can’t just continue to focus on one type of audience.
“There’s a group of country listeners who love country music because of the way it sounds, but don’t love some of the politics that they know are going on behind the scenes,” he said.
Historically country music was created by and played in both white and Black communities in the South, but the music became marketed along racial lines in the Jim Crow era, said Amanda Marie Martinez, a historian and writer who is studying country music and race. White country music was stigmatized early on as “hillbilly music” so the industry started pushing it toward the rising white middle class as a way to make the genre more respected and hugely profitable.
“In the process, they’ve also prioritized the white, middle income, relatively conservative listener as their demographic, kind of the opposite of youth culture,” Martinez said.
But there were periods of diversity, such as the post-Civil Rights era, when Black artists like Charley Pride, Linda Martell, O.B. McClinton and Stoney Edwards were having success, alongside Johnny Rodriguez and Freddy Fender, who were singing in English and Spanish.
Black artists today are also reclaiming spaces that have been overwhelmingly white domains.
Claude Kelly and Chuck Harmony, who work as a duo called Louis York, were already hit-making songwriters and producers behind pop songs like “Party in the USA” by Miley Cyrus and “Grenade” by Bruno Mars when they moved to Franklin, Tennessee, a Nashville suburb that is home to historical sites of a major Civil War battle and plantations where slaves were once held. There they set up their Weirdo Workshop artist collective and have worked with Jimmie Allen and noted author/poet Caroline Randall Williams.
“We knew that if we were to make our mark in this town as musicians and as Black musicians that playing the Grand Ole Opry would be the pinnacle for that,” Harmony said.
They got a standing ovation at the Opry, but more importantly for Harmony, he wanted the audience to learn about country music’s roots.
“I just wanted their unbiased, undivided attention, so that they can make the correlation between the music that they came to see and the music that we make as Black people,” Harmony said.
Both the Academy of Country Music and the Country Music Association started diversity task forces more than a year ago when country music was being criticized for a lack of female voices and women were being left out of major categories like entertainer of the year.
Becky Gardenhire, a top executive at talent agency WME in Nashville who leads ACM’s diversity task force, said they are looking at ways to recruit and retain diverse voices, both in the boardroom and on the stage, with efforts like mentorships, networking and outreach to build up a pipeline of future leaders and artists.
“We’re hungry for diversity. We want the candidates to come and knock on the door, but we have to also show them that the door is open for them,” said Damon Whiteside, CEO of ACM.
But just as country artists outwardly reflect a predominantly white image, there are few Black country music executives working behind the scenes. Candice Watkins got one of her first big breaks in country music working as the day-to-day manager for Keith Urban between 2009 and 2011.
“That changed my life because obviously he’s a superstar,” said Watkins, who is now the vice president for marketing for Big Loud Records, whose roster includes Jake Owen and Morgan Wallen.
But in that manager’s role, she realized that she was often the only Black person at the boardroom table. Watkins said her label supports her and values her opinion, but she knows that might not be the same for other minorities and their companies.
“How is a young A&R person empowered to come back to the table and maybe pitch a Black artist or person of color? Culturally speaking, do they feel free to do that or do they automatically know this is dangerous ground for them to even bring up?” Watkins said. “There’s a dismantling of culture that needs to happen.”
Palmer, who is recording a podcast that focuses on the experiences of women of color in country music, said she feels optimistic that the current discussions about race and country music can lead to progress, if real changes are implemented.
“I love country music, always have, always will. It’s healing music. It’s beautiful music at its core. It’s heartfelt. It’s spiritual,” Palmer said. “And it would be a shame if not everybody got to enjoy it because of the outward package.”


fortune--2020-06-27--Universities should support their most vulnerable students to champion education equity

At a time when colleges and universities across America are typically reflecting on the achievements and milestones of the prior semester, capped by a celebration of the accomplishments of another talented class of graduates, they are instead reflecting on one unlike any other.
In an effort to help mitigate the spread of COVID-19, presidents at institutions large and small had to send students home, shift to virtual instruction, and postpone commencement exercises. As they look to the fall semester, much more uncertainty lies ahead in the wake of likely state budget cuts, impacted endowments, and the decisions of current and prospective students who might reconsider their college choices. And, of course, college leaders continue to grapple with the implications of how to offer classes in the midst of a pandemic.
As leaders of the American Talent Initiative (ATI)—an alliance of 131 colleges and universities with graduation rates of at least 70% that have committed to ensuring the graduation of 50,000 additional lower-income students by 2025—we urge colleges and universities to meet the needs of low- and moderate-income students even as they chart an uncertain financial future. We issue this appeal with added urgency as the nation seeks to address issues of systemic racism and the impacts of police violence on communities of color.
In the midst of this crisis, our most vulnerable students will lack access to stable broadband, quiet study spaces, and other critical support services that campuses reliably provide. With the loss of on-campus jobs and the onset of new family hardships, they are now at risk of losing ground in their academic journeys, incurring additional costs to make up credits, and potentially dropping out of college altogether.
Even in a typical academic year, some 12,500 low- or moderate-income high school students do not end up attending the strong colleges for which they are qualified, despite having excellent academic credentials. Additionally, students from the top of the economic ladder are already far more likely to earn a postsecondary degree than those at the middle or lower rungs, exacerbating an opportunity gap that only threatens to widen during the current crisis.
Among ATI institutions, we have seen more than 20,000 additional low- and moderate-income students enroll in our colleges during the first two years of the initiative, but have also seen that curve of collective progress flatten in year three. At a time when that curve threatens to either remain stagnant or bend back in the other direction, we must redouble our efforts. Fortunately, we are encouraged by examples of progress, from institutions in our coalition and many others, that illustrate how higher education can lead the way in expanding access and opportunity for America’s young people.
Schools across the University of California system, for example, made immediate public commitments to accept additional pass/fail credits in the transfer process and suspend student payments on all of its education loans. And Ohio State increased its Pell student enrollment through innovative strategic financing practices, dedicated fundraising for need-based aid, and an emphasis on recruiting and retaining transfer, veteran, and other students from nontraditional pipelines.
Smaller institutions, too, illustrate how it is possible to make transformative commitments to equity, even with finite resources. Davidson College issued a groundbreaking commitment to defer all tuition payments for up to one year in support of its students and their families. And Colby College, with its Pay It Northward initiative, has deployed its full alumni and professional network to connect each and every graduating senior with a postgraduate opportunity.
These institutions and others prove what is possible, even in the midst of chaos and tragedy. All of higher education should follow their lead and double down on their commitments to their most vulnerable students.
But that’s also not enough.
We need to pair colleges’ enduring commitment to equity with a significant federal investment in higher education—a G.I. Bill for the 21st century—that not only mitigates the impacts of the coronavirus pandemic, but provides the resources that every student needs. Community colleges and other parts of the sector that create educational opportunity for millions of people must be included as well. Individual institutions alone cannot solve this crisis, but a shared vision and bold investment can.
We know that as colleges and universities face increasingly difficult financial decisions and budgetary constraints, the opportunity for additional investments will only continue to narrow.
However, America’s future depends on our ability to nurture the talents and capabilities of our young people. Stepping back now—when the need is greatest—would be shortsighted. At a moment like this, there is a sense of moral urgency involved in the task of providing our young people with education and hope. Coming together and taking a collective leap for equity will be instrumental to that future.
Michael V. Drake is president of the Ohio State University.
Daniel R. Porterfield is president and CEO of the Aspen Institute, and previously was president of Franklin & Marshall College.


fortune--2020-06-28--Confessions of a foodie, locked down in London

When should you sell your stocks ?
Only in these cases

On a hot Tuesday last week, I climbed a hill in north London that winds lazily towards Highbury Fields, a neatly manicured park surrounded by stately townhouses, when it became clear—something had changed.
The day before, non-essential shops had opened in London. Every door front had a feeling of gentle, purposeful activity. Makeshift cocktail stands were assembled near open doors. People busied themselves with spring cleaning—entire families roped into paint jobs and window washing, floor sweeping and half-finished DIY. Though it has been warm in London for months, with an Easter of scorching summer temperatures, the street, plastered with handwritten signs—WE’LL BE BACK!—felt as if was emerging from a long hibernation, bruised, and gingerly hopeful. After all, what choice did they have?
A lentil, apple and preserved lemon salad with herbs and radishes, from the British food writer Diana Henry.
From March onwards, my life has largely shrunk to a neighborhood—perhaps it was the same for you—with nearly every open shop, café, greengrocers, and restaurant taking on outsized significance, each loaded with tender memories of “before,” signposts from a relationship I had been so sure would never end. Here was the pub where I used to pay absurd sums of money for a watered down drink and a dish of chili nuts pulled from a communal jar. Here was the restaurant where I split an appetizer with a friend, and we both agreed it was fine to double dip, and then used our hands.
But I miss those memories, even if some remain blurry. I miss restaurants. I miss packed tables, and loud music, and eavesdropping on the people at the next table, or trying to be more interesting because, you know, they’re also eavesdropping on you. I miss that part of my old life.
I’m not proud to admit it, but lockdown offered me something I wouldn’t have gotten any other way: a truly captive audience of diners.
In the pre-lockdown days, I often fantasized about what my perfect weekend looked like. It usually involved bringing all my closest friends to a large house somewhere somewhere remote, with no dining options nearby, and serving them a series of elaborate, perfectly executed menus. In the hours leading up to these meals, I imagined myself reigning over the kitchen, a friend or two completing menial prep tasks and serving me occasional drinks, while eagerly committing to doing the washing up afterwards. In the fantasy, I was different, too: calm and absurdly competent, in control but not “controlling”—a kind of gourmet savant who, once we were all sitting in front of my glorious spread, was also capable of “letting go.”
An early attempt at bagels on my patio in North London.
If it needs saying—I am none of these things. But in lockdown, as traffic slowed to a dull memory and my boyfriend and flatmate’s only escape was the ability to pace around the block, I realized I had an opportunity to put myself into boot camp for my glorious, but totally amateur, culinary future. I needed the inspiration—although I am an obsessive cook; until relatively recently, I was also a famously bad one—and I had competition. From China to Italy to California, everyone else was also upping their game, out of necessity, boredom, anxiety, or all three. My neighborhood WhatsApp cooking group, although undoubtedly a source of companionship and cultural exploration, seemed to double as a gathering place for the local A-types. I took to posting only when I had made something that involved deep frying—or a pastry.
So, I cooked. In my house, we all started cooking, actually. Despite my singular ambition, the sheer frequency of meals—they never seemed to stop!—demanded a running rota among the three of us. Managing the hours of a childless lockdown, and the mounting anxiety, produced a frenetic spiral of culinary excess: over two months, we rarely made the same meal twice. There were bagels, there was Korean Fried Chicken (that one produced a hot oil burn), there was banana bread (of course), and chocolate Guinness cake and pancakes and a vast universe of curries, cheesy stuffed flatbreads, homemade bao, vegetarian ramen, fish tacos and pad thai, and, one night, not long after my boyfriend, exhausted, requested one evening a week where he could stay in the bedroom and “eat crap,” there were a series of frozen supermarket pizzas, which we all confessed we had missed.
Other than Sainsbury’s frozen pizza, we were both eating better, and spending less money on food than we had in years, and all it required was that we spend at least a quarter of our waking hours on a heavily seasoned merry-go-round of chopping, cooking, and cleaning. The remaining hours, when I wasn’t working, became colonized by cooking, too: reading cookbooks, staring into my fridge, calculating, strategizing. I had no ambitions of going professional—the hardship restaurants are currently facing drove that home—but I did want to come out of lockdown as a good cook. When my family tasted this pasta, or ate this soup, they wouldn’t even recognize me, I thought, with the determined glee of a woman in the midst of a manic transformation. Nothing good may come out of this pandemic, but my God, I will know how to improvise a sauce from scratch. In the mean time, while lockdown seemed like it would last forever, I privately worried it wouldn’t last quite long enough for me to master homemade ravioli that wouldn’t burst at the seams.
But amid this frenetic culinary effort at finding some control amid a global pandemic, I was also finally gaining a sense—in a packed, exhausting city—of the rhythms of food, the rhythms that restaurants were tied into when I relied on them relentlessly: of marinating, soaking, proofing, seasoning. These rituals, more so than the Michelin-starred efforts to push myself to new culinary heights, were soothing. Thinking about the day when I would be able to serve these dishes to my family in Canada, to my friends was, as the months wore on, more soothing still.
A cauliflower and paneer salad with cilantro sauce, from the Californian food writer Nik Sharma.
As the U.K. continues to reopen—next week: pubs and cinemas—there are options beyond staying inside and cooking with an insane intensity. There are delis, and picnics, and takeaways emerging from cafés and restaurants up and down my block, painted and primped and inching towards some uncertain, post-lockdown future. I no longer have to cook all the time, and my boyfriend and flatmate no longer have to stay inside and eat my food.
And I’ve found myself missing restaurants, too. I miss the packed tables and the loud music and the people watching. I miss the idea of multiple dipping sauces, and starters, and I miss the ritual of ordering two desserts between two people, to share. I miss so many things that won’t, for some time, be on offer.
In other words, I miss restaurants, but I no longer miss restaurant food.