fortune--2020-03-06--The best buys in this overpriced market may be beaten-down big bank stocks

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Hunting for rare bargains in today’s pricey stock market? Rummage through the deep-discount bin, and you’ll find that the best deals may be the marquee-name big banks.
In an overall market that remains pricey despite the big corononavirus-driven selloff, shares of America’s three largest banks—Bank of America, JPMorgan Chase, and Wells Fargo—look incredibly cheap. They’re offering plenty of what Warren Buffett, whose Berkshire Hathaway is a large holder of all three, lauds as “margin of safety.” Put simply, the Big Three are offering such a rich flow of earnings for each dollar paid for their shares, all of which they’re returning to investors, that they can tread water from here and still provide low double-digit returns. If they show even modest growth, and investors embrace them as long-term winners, their returns could prove spectacular.
While the S&P 500 has dropped 8.1% since hitting a record high in mid-February, shares in the Big Three have fallen far more. Their descent started late last year, but the coronavirus panic quickened the fall. Since mid-December, BofA has dropped 21%, JPMorgan 16%, and Wells by 13%. All told, the Big Three have shed a colossal $143 billion in market cap.
The selloff has sunk their price-to-earnings ratios to levels that scream bargain. JPMorgan, BofA, and Wells are selling at multiples of 10.1, 10.2, and 11.2 based on their four-quarter, trailing reported earnings. That’s half the S&P average of over 21. All three are returning at least 100% of their profits to shareholders through buybacks and dividends, and pledge to continue that policy. So let’s examine which vehicle each bank is choosing to distribute those ample earnings, and assess the odds that the flow of profits will wax or wane in the future.
Last year, BofA posted profits of $29 billion and paid out even more. It sent shareholders $6.4 billion in dividends, 22% of the total, and returned $30 billion via repurchases. But let’s assume that in future years, BofA’s earnings simply grow with inflation at an estimated 2% annually, and it pays out 100% of earnings. Its market cap is $244 billion. Investors are getting a dividend yield of 2.6% ($6.4 billion in dividends on total value of $244 billion), up from 2.1% in December.
In addition, investors will reap capital gains that come in two parts, via share buybacks and that 2% earnings growth tied to the CPI. After paying those dividends, BofA has $22.6 billion, or three-quarters of the total, left over for repurchases, which would allow it to buy back 9.3% of its stock. Add 2% from advancing profits, and if the PE, the number you multiply earnings by to get the share price, simply remains steady, the shares will appreciate by the same 11.3% a year. (That’s 9.3% from repurchases, plus 2% from growth in profits.)
Result: In a scenario in which profits simply track inflation, and the PE multiple remains at a paltry 10.1, BofA garners 2.6% from dividends, plus 11.3% in cap gains from buybacks, for a total return of 13.9%. That’s rich, considering that junk bonds are yielding 5.5%, investment-grade corporate bonds 2.5%, and the 10-year Treasury under 1%.
The picture is similar at JPMorgan. That’s remarkable, because investors are awarding little premium over BofA or even Wells to the industry’s longtime champion, superbly managed by the redoubtable Jamie Dimon. Last year, JPMorgan booked earnings of $36.4 billion, an all-time banking record. It returned $11.1 billion, or 30.4% of the total, in dividends, for a yield of 3.6% ($11.1 billion on its total value of a sector-topping $364 billion). It deployed almost all the remainder, over $24 billion, to buy back stock. Once again, let’s predict that JPMorgan follows the same policy of returning all profits to shareholders in the years to come, and simply lifts earnings with inflation. If its PE stays at that modest 11.1, JPMorgan would hand shareholders 3.6% from dividends, 2% from profit expansion, and 6.6% from buybacks—from spending $24 billion–plus in repurchase shares worth $364 billion. Total return: 12.2%.
Surprisingly, Wells Fargo, hammered in recent years by scandals and investigations, looks only slightly cheaper than JPMorgan, and its multiple at 10.2 is a whisker above BofA’s. That picture is deceiving, because Wells’ 2019 earnings of $19.5 billion, under new CEO Charles Scharf, were depressed by restructuring and other one-time charges. So adjusting for what may be a temporary dip, Wells is probably the cheapest of the lot.
Exhibit A is its 5% dividend yield. Wells has by far the lowest market cap of the Big Three at $167 billion, but it distributes a hefty $8.3 billion in dividends, even more than BofA, and three-quarters of JPMorgan’s payout. If Wells devotes its remaining $11.2 billion to annual buybacks, it will add 6.6% in capital gains ($11.2 billion deployed to repurchase shares worth $167 billion). Tacking on 2% earnings growth, assuming its super-low PE remains constant, Wells would return 5% in dividends, 6.6% from buybacks, and 2% from earnings growth, good for 13.6%.
Why are the big-name banks so unloved? Judging from their multiples, investors don’t expect their earnings to even grow with inflation. Instead, they’re predicting years of long, slow decline. Markets aren’t dumb, and a good case can be made that the universal banks face a bleak future. Today’s record-low interest rates shrink margins on loans, economic growth that creates demand for consumer and corporate borrowing is waning, and the Big Three now face competition from a new generation of digital, online-only newcomers. Markets may also be baking in the expectation that the next recession will bring a wave in defaults on consumer and business loans that would sap earnings.
Consider, however, that JPMorgan and Bank of America have been thriving in a low-rate environment for several years because of good loan growth and strong cost discipline. Earnings for both banks have been far outpacing inflation. JPMorgan’s profits rose 12.2% in 2019, while BofA’s jumped 11.2%. And although Wells’ earnings fell in 2019, they’ve been mainly steady over the past several years despite the backlash from the scandals that tarnished the once-vaunted brand.
All three banks have also created their own menus of digital and mobile offerings to appeal to millennials. So it’s by no means clear that the rise of online disrupters spells decline for the traditional leaders, whose gigantic branch networks provide pools of low-cost deposits available for credit card, auto, or commercial loans.
For example, if the big banks simply grow earnings with the economy at 4%, instead of matching inflation at 2%, they’d gain an extra 2%. If that happens, BofA would return 15.9%, JPMorgan 14.2%, and Wells 15.6%. They could also get a bonus bump from higher valuations. By continuing to show decent growth when the coronavirus scare passes and interest rates return to their pre-outbreak, still-well-below-average levels, the Big Three could sway investors to award them much higher PEs.
The case for bank stocks is basic: They can amble along in a no-growth walk, and you can still get double-digit returns. The combination of super-low prices and a policy of sending all cash to shareholders is hard to beat. In this still-frothy market, these unloved stocks could be long-term winners.
More must-read stories from Fortune:
—Coronavirus spreads to a previously healthy sector: corporate earnings
—A Fed rate cut won’t cure what’s ailing the stock market
—How companies like Ernst & Young are going to extremes to avoid infections
—These cities have the most jobs with six-figure salaries
—Credit Karma was acquired rather than pursuing an IPO. Will more companies follow suit in 2020?
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fortune--2020-03-06--Feedback Friday: Jack Welch, automation and Fortune’s paywall

The best buys in this overpriced market may be beaten-down big bank stocks

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Good morning. It’s Friday, so time for feedback.
My post on Jack Welch proved its point: two decades after he stepped down as CEO of GE, he is still a hot topic of conversation. A sampling:
“I happened to be one of Jack’s early certified Six Sigma Master Black Belts…Jack’s commitment to implementing Six Sigma in GE was SO much more than just a return of money to GE’s shareholders… The more subtle, powerful benefits of Six Sigma were the following: 1) creation of one language, mindset and purpose across all functions and levels of GE as well as with customers and suppliers, 2) education and professional growth opportunity for employees, 3) built a strong foundation for the incorporation of other powerful business and process models and 4) instilled loyalty and pride in belonging to GE and established a model for integrity. All the benefits I noted were a perfect fit with the man Jack was.”
—B.L. (I note, because it is relevant, that B.L. is female.)
“I inherited 80 GE shares in the early 1970s. Dividends were reinvested in GE. By 2000 each of the original shares had become 96 via splits…The last sale in March 2000 made the final payment on a newly constructed, no-mortgage home which we called ‘the house that Jack built.’”
—J.M.
“I’d categorize him as the right person with the right approach for his time…Our world has changed. Our world’s societies have different needs. He might not be a great business leader today, and if we look at him only through today’s lens, he may not look like the business genius he proved to be in the 80s. Who knows, those who follow us may write similar commentary about Satya Nadella or Jamie Dimon 20 years after each ends his tenure.”
—D.W.
And then this message, which I sense was sent with some sarcasm:
“If only Jack had been as smart and successful as you.”
—S.W.
On my new obsession with Robotic Process Automation, I received these messages:
“My wife is a social roboticist and used her training to create an ed tech company that uses small inexpensive robots to augment primary education.”
—A.B.
“I am glad you have seen through the mirage of A.I.–it’s nowhere near being a reality. But please don’t fall for the RPA hype as well. It’s nothing more than continued automation of manual tasks, in other words programming.”
—B.M.
And finally, this on Fortune’s new paywall:
“I have been a subscriber to Fortune magazine since I left the U.S. Army in the mid-1990’s and I love your magazine. My dominant professional functional focus has always been pricing. I applaud the management team for moving to a paid model at Fortune. I hope the whole industry moves that way. Free things are treated like barbershop candy. They get lost under the seat of your car because we don’t value ‘free.’ Capitalism forces quality to improve once a dollar value is attached as customers demand more and suppliers deliver more. I appreciate that and believe it is good for Fortune, good for your industry, and good for the country.”
—J.D.
We agree, J.D.! News below.
Alan Murray
@alansmurray
alan.murray@fortune.com
TOP NEWS
Markets drop
Yesterday's coronavirus-fueled selloff in the U.S. (S&P 500 down 3.4%) continued in Asia and Europe today. Nikkei 225 down 2.7%; Shanghai Composite down 1.2%; Stoxx Europe 600 down (at the time of writing) 3.9%. U.S. futures look dim. Analysts say the markets are pricing in further interest-rate reductions this year. Wall Street Journal
Jamie Dimon
Jamie Dimon had emergency heart surgery yesterday, and apparently he is now "recovering well". The 63-year-old JPMorgan Chase chief has placed co-presidents Daniel Pinto and Gordon Smith in charge while he recuperates. Fortune
Grindr sale
Kunlun, the Chinese owner of the popular gay dating app Grindr, has agreed to sell it, in accordance with the wishes of the U.S. government, which has undisclosed concerns (possibly privacy-related) about the gaming company's ownership of the app. The company will make around $608.5 million from the sale to San Vicente Acquisition LLC, in which former Baidu exec James Lu is an investor. Reuters
Korean Air
Korean Air heiress Heather Cho (famed for her 2014 "nut rage" tantrum) is trying to engineer a shareholder revolt against her brother Walter, the chairman and CEO of parent conglomerate Hanjin Group. She backed an activist fund that is trying to depose Walter Cho, who is attempting to fend off the attack by suggesting he will agree to demands such as the sale of non-core assets. The family feud has actually led to a substantial surge in Hanjin's share price, though it fell 7.4% today. South China Morning Post
AROUND THE WATER COOLER
Force majeure
China has issued almost 5,000 force majeure certificates during the coronavirus crisis, giving companies exemptions from around $53.8 billion in contracts. However, while the certificates may carry weight in China, experts warn the companies will mostly find them useless when trying to get out of contracts with international parties. CNBC
Thyssenkrupp lift
Despite market volatility, Germany's Thyssenkrupp has managed to raise €17.2 billion ($19.4 billion) through the sale of its elevators-and-escalators business to private equity firms Advent International and Cinven. That healthily beats Thyssenkrupp's own expectations of €13-14 billion. As the Financial Times notes, the PE firms were "even more attracted" to the business because of the coronavirus outbreak—servicing contracts keep bringing in the cash, downturn or no downturn. FT
Brexit cost
The U.K.'s National Audit Office has calculated that the country has spent at least $5.7 billion on preparations for Brexit. That's less than the money the Treasury had set aside, though it could be an undercount as the NAO said government departments had shared only limited information with it. The money went on staffing, advertising and consultants. Bloomberg
Robinhood outage
Fortune's Lucinda Shen has an in-depth piece on Robinhood's catastrophic outage a few days ago. She writes: "Stock-trading darling Robinhood, which was founded in 2013, had successfully sold itself to millions of users as a digital-native app for Internet-savvy young traders…As Robinhood may be learning, one problem with those Internet-savvy customers is that when things go wrong they know exactly how to vent their frustrations." Fortune
This edition of CEO Daily was edited by David Meyer.


fortune--2020-03-06--Jamie Dimon’s emergency heart surgery puts spotlight on JPMorgan’s executive bench

Jamie Dimon steered JPMorgan Chase & Co. through the financial crisis, built it into America’s biggest bank and serves as the industry’s top spokesman.
Now, emergency heart surgery is forcing him to test his lieutenants’ ability to step in — just as the coronavirus creates the most turbulent markets and biggest logistical headaches in years.
The bank’s announcement late Thursday that Daniel Pinto and Gordon Smith will handle Dimon’s responsibilities until he recovers is shining a brighter light on how prepared the next generation is to someday take over permanently. Even with Dimon expected to return, the scare will renew pressure on the board to make sure it has strong options. For now, Pinto and Smith will lean on their two years as co-presidents, which have given them a broader remit beyond the major divisions they run.
“It’s going to be quite a task,” said Louis Tse, managing director at VC Asset Management Ltd. “It’s horrible timing with the virus outbreak. Lots of global economic policies are expected to come out, you have the Fed, the China-U.S. trade war, elections in the U.S.”
While Pinto and Smith are only sitting in for Dimon short-term, the bank has been grooming others who could potentially take over in the future. Management changes last April shifted responsibilities for two of the bank’s top female executives — Marianne Lake and Jennifer Piepszak — to help them gain experience. They’re among the most senior women in banking, an industry that is still dominated by men and keeps pledging to reform.
That pair, both 50, are seen as more likely long-term answers than Smith, 61, or Pinto, 57. Still, Lake and Piepszak are less than a year into their new roles and neither has yet run one of JPMorgan’s four main divisions. Doug Petno, who runs commercial banking, and Mary Erdoes, the asset and wealth management chief, are also among Dimon’s top staff.
Dimon, who’s served as CEO since 2005 and called finding a successor his No. 1 priority a decade ago, has seen several rounds of deputies get tired of waiting for their shot at the top spot. JPMorgan alumni now run major banks including Barclays Plc, Wells Fargo & Co. and Standard Chartered Plc.
Still, Dimon has expressed confidence in the current crop, calling the bank’s leaders “the best team on the planet” at the firm’s investor day last week. He’s been known to rotate senior managers among businesses to ensure there is a cast of people equipped to take over the company whenever he steps down.
“JPMorgan has a deep management bench,” Wells Fargo analyst Mike Mayo wrote in a note to clients. “Nonetheless, his industry leadership will be missed during this crisis-like period.”
Here’s a look at who’s on that bench:
Gordon Smith
Smith runs the consumer bank, which has grown to contribute half of the firm’s revenue and has more employees than any other division. He joined JPMorgan in 2007 from American Express Co. and initially ran the company’s credit-card services business. Smith, who doesn’t enjoy the spotlight like his boss does, has the rare distinction among the bank’s current leaders of having served alongside Dimon through the crisis.
Daniel Pinto
Pinto oversees the corporate and investment bank and has helped JPMorgan surge to the top of Wall Street’s trading and investment-banking ranks. An Argentine, he got his start as a currency trader and has spent his entire 37-year career at JPMorgan and its predecessor firms. He keeps a scorecard in his office that shows how his businesses rank against competitors. He’s known to ferret out areas where the firm’s dealmakers or traders could climb higher, and he has succeeded for the most part in getting them into the top spots.
Marianne Lake
Lake has been CEO of the consumer lending division since May and oversees businesses that produce about a quarter of the bank’s revenue. Before that she served as chief financial officer for about seven years. When Wells Fargo was looking for a CEO last year, both she and Smith appeared on lists of potential recruits.
Jennifer Piepszak
Piepszak is the firm’s finance chief and previously led the credit-card business for two years. She came up through JPMorgan’s investment banking operations and then jumped to the consumer business in 2010. For several years, Piepszak oversaw financing operations for the mortgage business, steering it through a period in which it faced a host of crisis-era settlements with regulators.
More must-read stories from Fortune:
—Why the U.S. is so far behind other countries in coronavirus testing
—Travel insurance is booming, even though it doesn’t help flight changes and cancellations
—H&M wants to help other fashion houses become sustainable—for a fee
—10 journalists who deserve justice immediately
—Fortune Explains: Tariffs and trade wars
Catch up with Data Sheet, Fortune’s daily digest on the business of tech.


fortune--2020-03-06--China worried that coronavirus would cause a market meltdown. Its reaction risks stoking a bubble in

China worried that coronavirus would cause a market meltdown. Its reaction risks stoking a bubble instead

China’s desire to support its financial markets in the wake of the virus outbreak may have moved the needle too far the other way.
It’s taken a sweeping and coordinated effort from top officials to prevent a downward spiral in Chinese stocks. From early February, the central bank and regulators across the foreign exchange, securities, banking and insurance sectors have deployed a number of measures to ensure sufficient liquidity and reduce borrowing costs for companies. Hints of more to come on the monetary and fiscal side have been equally effective.
While a stable equity market and the lowest sovereign bond yields since 2002 are good news for companies trying to raise money, critics caution that the exuberance triggered by such measures could be dangerous. Taking market-support policies too far may encourage the whirlwind trading that fueled massive bubbles in 2015 and 2007.
High leverage in the stock market is one notable sign, as well as surging daily turnover. There’s also been a rush to buy mutual funds, pour money into shiny new ETFs or buy higher-yielding convertible bonds. Perhaps most telling: a gauge of small cap stocks, where speculative trading is rife, has surged more than 20% since its low last month.
“Authorities want a strong market,” said Zhang Yankun, a fund manager with Beijing Hone Investment Management Co. “While we seem to have achieved that for now, there’s the risk of overshooting if gains extend further. There’s still great uncertainty over the pace of an economic recovery.”
The intensifying appetite to buy just about everything in China makes it a prominent outlier against a global backdrop of panic. While mainland shares buckled Friday as a global sell-off accelerated ahead of the weekend, the Shanghai Composite Index held up better than other benchmarks in the region. It still posted its best week in a year.
Attempts from officials in countries like the U.S. and Japan to instil confidence have either not lasted or have fallen flat, leaving investors there with the steepest losses and wildest swings since the global financial crisis.
Policymakers in China have long faced a tricky balance when it comes to supporting growth without fueling bubbles. Capital controls limit investment options for its citizens, which means excess liquidity typically flows in domestic assets such as housing, equities as well as more esoteric choices including garlic, cotton and certain teas.
Back in 2007 the Shanghai equity benchmark quadrupled in a year as the economy boomed and investors sought returns that would beat rampant inflation. The frenzied speculation briefly created the world’s first trillion dollar company after PetroChina Co.’s IPO, before higher taxes on trading shares and a series of interest hikes popped the bubble, with later declines greased by the global meltdown that ensued.
In 2015, officials faced a similar dilemma — and result — when the stock market doubled in value to $10 trillion in about 120 days. Attempts to curb margin trading, including tightening lending and draining cash from the financial system spooked investors, and the Shanghai measure collapsed more than 40% in a matter of months.
It is notable that this time round, the central bank has been cautious about injecting too much liquidity. It’s refrained from adding cash through daily money market operations for 14 days and didn’t follow the Federal Reserve in cutting interest rates this week.
Valuations are also nowhere near 2015 levels — the Shanghai Composite trades at 11 times its members’ projected earnings, versus a peak of 19 times in 2015. In the U.S., the S&P 500 Index currently trades at 17 times profit.
Ensuring stock prices can keep rising at a steady pace has been an effective way to shore up confidence among China’s mom-and-pop investors, who still drive the majority of trading.
“The virtual prosperity we’ve seen in capital markets is much needed at a time when the real economy is suffering,” said He Qi, a fund manager with Huatai-PineBridge Fund Management Co. “You need at least one venue to keep people’s spirits up.”
More must-read stories from Fortune:
—Why the U.S. is so far behind other countries in coronavirus testing
—Travel insurance is booming, even though it doesn’t help flight changes and cancellations
—H&M wants to help other fashion houses become sustainable—for a fee
—10 journalists who deserve justice immediately
—Fortune Explains: Tariffs and trade wars
Catch up with Data Sheet, Fortune’s daily digest on the business of tech.


fortune--2020-03-06--Why are patients who recover from coronavirus testing positive again?

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The number of COVID-19 coronavirus cases worldwide reached over 98,600 on Friday, including 233 in the U.S., where 12 people have died. Germany’s health minister called the outbreak, which has spread to at least 84 countries, a “global pandemic.”
Along with the global rise in infections and deaths is an increase in recoveries—more than 55,000 people have recovered from the disease as of Friday. While those recoveries are welcome news for a world on edge, public health officials in China and Japan have reported cases in which patients see their symptoms subside and are discharged from hospitals—only to test positive for the coronavirus again.
On March 2, a man in Wuhan, China, with COVID-19 died after being readmitted to the hospital two days after he was discharged, according to a Chinese news site.
The exact number of these cases is unclear—Japan has had at least one case and China has had several, including the Wuhan man, one man in Sichuan province, and 13 discharged patients from one hospital in Guangdong province.
Being reinfected with COVID-19 is possible, said Sharon Lewin, director of the Peter Doherty Institute for Infection and Immunity in Melbourne, but such an instance would be “surprising.” It’s possible that patients are not actually being reinfected, but that other factors—misdiagnosis, human error, or faulty tests—are giving that appearance.
Testing done with animal models for SARS, a similar coronavirus, indicates that patients who recover from the disease will have immunity from it. “From what we know of other coronaviruses, you recover, you make an antibody response, and you clear the virus, and then if you rechallenge the animal with the same virus they’re protected,” Lewin said.
Lewin put stocks in explanations other than reinfection, but she emphasized that the virus still has too many unknowns and there are too few reported twice-positive cases to conduct a study or draw a definitive conclusion.
Human error and faulty tests
A doctor uses a pipette during coronavirus patient sample detection tests in the virology research labs at UZ Leuven university hospital in Leuven, Belgium. Geert Vanden Wijngaert—Bloomberg/Getty Images
The mysterious double positives could simply be the result of human error. Hospitals have been testing for the presence of the virus using swab samples from a patient’s nose, throat, and sometimes lungs. Swabs can yield different quantities of the virus depending on where the clinician swabs and how they do it, Lewin said. If the swab sample yields too little of the virus, it could lead to a false negative for a patient who is still infected.
Problems with the testing kits themselves can also lead to false negatives or false positives—like the batch of faulty kits the U.S. Centers for Disease Control and Prevention rushed out and then ordered back, a blunder that delayed testing in the U.S. by weeks and may have contributed to the virus’s spread there.
The Wuhan man who died after he was discharged and readmitted had twice tested negative for the virus before being released, though a pre-discharge CT scan indicated a remaining infection in his lungs.
Virus ‘reservoir’
Another possible culprit for double positives is residue virus in a patient’s system following their discharge from the hospital, said Vijay Dhanasekaran, an associate professor of microbiology at Monash University who studies viral pathogens and infectious disease outbreaks.
Since hospitals largely discharge patients based on the reduction of their symptoms, Dhanasekaran said, the virus could be lingering in patients with milder COVID-19 cases who are discharged. (The World Health Organization said 80% of cases are “mild to moderate.”)
One hospital in Wuhan said it would start conducting antibody tests before releasing patients, after multiple discharged patients fell ill again and returned to the hospital, suggesting that a symptom check or swab test is insufficient to determine whether a patient has recovered. (Antibodies are produced by the body’s immune system in response to infection.)
The coronavirus could also be lingering in a “reservoir” within the patient’s body. Ebola virus and HIV are known to sequester in viral reservoirs, though the trait is “not typical of coronaviruses that we know of,” Lewin said. Nevertheless, the reservoir theory is “the sort of thing that would be on my mind in trying to understand [the COVID-19 reinfection reports],” she said.
Real reinfection
Scientists are not ruling out the prospect of reinfection.
Dhanasekaran said reinfections are “possible,” and pointed to influenza and respiratory syncytial virus, two viruses—neither coronaviruses—that patients can get more than once.
“[I]n short, it is possible, but I would suggest in a minority of cases,” said Brett Lidbury, an epidemiologist at Australian National University. “All we can do is speculate at the moment, based on previous experience and prior data.”
“If this phenomenon of being positive-negative-positive is very rare, you need a very large study to capture those people,” Lewin said. What’s needed going forward, Lewin said, is more research into the “natural histories of the disease—so knowing exactly how long people are excreting virus for, how that relates to system improvement or deteriorating, and how that relates to infectiousness.”
“All my ideas around being positive-negative-positive, they’re all theories,” Lewin added. “We don’t have the answer yet.”
More must-read stories from Fortune:
—Testing for coronavirus should be free, but it’s not always that simple
—Coronavirus is mutating: Chinese scientists find second strain
—Coronavirus is giving China cover to expand its surveillance. What happens next?
—The coronavirus is officially claiming its first corporate casualties
—Why the U.S. is so far behind other countries in coronavirus testing
—Travel insurance is booming, even though it doesn’t help flight changes and cancellations
Subscribe to Fortune’s Outbreak newsletter for a daily roundup of stories on the coronavirus outbreak and its impact on global business.


fortune--2020-03-06--JPMorgan CEO Jamie Dimon recovering from emergency heart surgery

JPMorgan Chase & Co. said Chief Executive Officer Jamie Dimon underwent emergency heart surgery and that it’s placing co-Presidents Daniel Pinto and Gordon Smith in charge during his recuperation.
Dimon “experienced an acute aortic dissection” early Thursday, the bank said. “It was caught early and the surgery was successful. He is awake, alert and recovering well.”
Dimon, 63, is the longest-serving head of a major U.S. bank, overseeing a juggernaut of both Wall Street and consumer lending that’s been setting profit records for the nation’s financial industry in recent years. He also serves as chairman and has frequently joked over much of a decade that he plans to keep running the company for five more years.
“We have exceptional leaders across our businesses and functions—led by our outstanding CEO and co-presidents,” the board’s lead director, Lee Raymond, said in a statement. “Our company will move forward together with confidence as we continue to serve our customers, clients, communities and shareholders.”
Dimon was diagnosed with throat cancer in 2014 and underwent radiation treatment and chemotherapy. At the time, the bank’s board emphasized that it works hard to ensure leadership talent is on hand in case of an emergency. At the beginning of 2018, Dimon handed off some responsibilities to lieutenants Pinto and Smith as part of succession planning.
More must-read stories from Fortune:
—Why plunging Treasury yields are so alarming
—Furious Robinhood customers want payback following two day outage
—Why investors suddenly turned on pot stocks
—With stocks down sharply are we approaching”buy” territory? Not by a longshot.
—Why it’s so hard to find the next Warby Parker
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fortune--2020-03-06--Coronavirus fears spur more volatility as 10-year Treasury yield hits an all-time low

This is the web version of the Bull Sheet, Fortune’s no-BS daily newsletter on the financial markets. Sign up to receive it in your inbox here.
Also, subscribe to Fortune’s new pop-up newsletter, Outbreak, which will keep you up to date on the latest news surrounding the coronavirus outbreak and its impact on business and commerce around the world. Sign up here.
Good evening, Bull Sheeters. This is Fortune finance reporter Rey Mashayekhi, filling in this week for Bernhard Warner.
Thursday was a good day for markets in Asia, but investors in Europe and especially the U.S. felt more pain as the global economy continues to come to grips with the coronavirus outbreak.
Markets update
In Tokyo, the Nikkei rose 1%, while Hong Kong’s Hang Seng rallied late in the day to finish up 2%. Markets in mainland China continued to rebound from last week’s losses, with the major indices in Shanghai and Shenzhen also registering gains of 2%.
Perhaps the Asian markets were piggybacking on yesterday’s optimism in the western markets—optimism that faded away virtually from the opening bell on Thursday, despite the International Monetary Fund announcing a $50 billion aid package to help combat the coronavirus’s spread. In Europe, London’s FTSE, Frankfurt’s DAX, and the pan-European STOXX 600 all dropped around 1.5%, while Paris’s CAC 40 slipped nearly 2%.
But the steepest declines were seen in New York, where the market continues to yo-yo in delirious fashion. The buzz from Joe Biden’s strong Super Tuesday performance faded quickly, and the Dow Jones Industrial Average gave back most of Wednesday’s gains, ending down 970 points, or 3.6%. Likewise, the Nasdaq Composite and S&P 500 each fell more than 3%.
Meanwhile, investors responded by continuing to flock to safer, non-equity assets. The benchmark 10-year U.S. Treasury note once again dipped below 1% yield and at one point fell to an all-time low below 0.9%, while gold—another traditional safe haven—rose. Crude oil prices dropped despite OPEC agreeing to a new round of production cuts, and the U.S. dollar slipped.
Banks and travel companies hit hard
Among the industry sectors tracked by the S&P 500, financials fared among the worst, losing 4.9% by the close of trading (only industrials saw a steeper decline). Lower interest rates may be good for borrowers, but they’re a headwind for financial institutions, and bank stocks showed it on Thursday. Shares of JPMorgan Chase and Goldman Sachs each dropped nearly 5%, while regional consumer-facing banks Truist Financial and M&T Bank each lost 8%.
But on a company-by-company basis, no sector felt Thursday’s pain worse than those in the travel industry—with the coronavirus squarely to blame. Airline operators saw double-digit declines in their shares; American Airlines (-13.4%), United Airlines (-13.3%), and Alaska Air (-12.5%) were among the biggest losers, with United announcing on Wednesday that it will be cutting back service both domestically and internationally. (The outbreak was also the final nail in the coffin for beleaguered British airline Flybe, which declared bankruptcy on Thursday.) Cruise lines got hit even worse; Royal Caribbean plunged more than 16%, Carnival fell 14%, and Norwegian lost 13%.
VIX spikes on virus fears
The CBOE Volatility Index, also known as the VIX, is one of the benchmark metrics used to gauge the stock market’s expectations of volatility in the near-term. And look at how the VIX has spiked over the past month, as the coronavirus outbreak has escalated:
The “fear index,” as it’s known, spiked 24% Thursday as the market continued its topsy-turvy fluctuations—and it would appear to indicate that we’re not out of the woods yet. Perhaps the U.S. jobs report for February—which is out Friday morning and expected to show gains—can calm things down a bit.
That’s all for now. Have a pleasant evening and see you tomorrow.
Rey Mashayekhi
@reym12
rey.mashayekhi@fortune.com
Today's reads
Dimon has heart surgery. Late on Thursday evening, JPMorgan Chase revealed that CEO Jamie Dimon is recovering from emergency heart surgery after experiencing an "acute aortic dissection" earlier in the day. "The good news is that it was caught early and the surgery was successful," the bank said in a statement. "He is awake, alert and recovering well." Daniel Pinto and Gordon Smith, JPMorgan's co-presidents and chief operating officers, will handle day-to-day operations while Dimon recuperates.
Robinhood backlash. Fortune's Lucinda Shen has the latest on the situation at popular stock trading app Robinhood, which was hit by an ill-timed service outage earlier this week that prevented users from trading during one of the most volatile stretches in recent memory. As you would expect, many of those users are not happy, and legal action appears an inevitability.
Yield of (bad) dreams. As we covered earlier, U.S. Treasury yields are plunging, and Fortune's Erik Sherman explains why this could mean serious trouble for a huge cross-section of fixed-income investors. "Retirees, savers, insurance companies, pension funds, and others that depend on generating a return over time with little risk are facing a world where they are going to lose money," he writes.
Market candy
57
That’s the number of times that the Federal Reserve’s most recent Summary of Commentary on Current Economic Conditions—more commonly known as the Beige Book—mentions the coronavirus by name. As George Washington University professor Tara Sinclair notes, the virus is name-dropped more times than the terms “labor” and “employment.” Unsurprisingly, the Beige Book, which was released Wednesday, indicated that the coronavirus is weighing on the minds of American businesses.


fortune--2020-03-06--What the rising coronavirus death rate really means

Subscribe to Fortune’s Outbreak newsletter for a daily roundup of stories on the coronavirus outbreak and its impact on global business.
The World Health Organization (WHO) said earlier this week that the global coronavirus death rate had reached 3.4%, significantly higher than what the mortality rate is for seasonal flu. But, as with so many public health indicators in a rapidly evolving situation, that number comes with numerous caveats.
The 3.4% figure, per the WHO’s own officials, is a crude estimate. It’s also the first percentage that covers worldwide deaths related to the novel coronavirus and COVID-19, rather than just China, where the outbreak originated.
The coronavirus mortality rate is expected to shift significantly in the coming weeks and months as global health officials gather more data.
Some of the hangups? The difficulty of pooling information from dozens of countries now experiencing novel coronavirus cases and the tardiness of testing in certain nations—including in the United States. The U.S. has had manufacturing issues with certain tests developed by the Centers for Disease Control (CDC) and had only reported 99 total cases and 10 deaths related to COVID-19 across 13 states as of Thursday.
“I think the mortality is going to end up at 1% or below, more consistent with the H1N1 flu outbreak of 2009,” Geoff Porges, director of therapeutics at SVB Leerink, told Fortune.
How does that work? For one, under-testing across multiple nations winds up increasing the mortality rate. There may actually be hundreds or even thousands of more people who have coronavirus but haven’t died from it—which means that only the most severe cases, which may lead to deaths, are being recorded and monitored.
“It’s almost guaranteed that we’ll see a drop in the mortality rate,” said Porges.
Porges also recently sat down with former Food and Drug Administration (FDA) commissioner Scott Gottlieb to discuss the coronavirus outbreak. The conversation was encouraging despite the current testing woes.
“Overall Dr. Gottlieb believed that the actual number of U.S. infections is likely far higher than is currently reported, however he believes the mortality rate in the U.S. is likely to be lower than in other less-developed parts of the world,” SVB Leerink wrote in a note describing the one-on-one conversation.
More must-read stories from Fortune:
—Testing for coronavirus should be free, but it’s not always that simple
—Coronavirus is mutating: Chinese scientists find second strain
—Coronavirus is giving China cover to expand its surveillance. What happens next?
—The coronavirus is officially claiming its first corporate casualties
—Why the U.S. is so far behind other countries in coronavirus testing
—Travel insurance is booming, even though it doesn’t help flight changes and cancellations
—Six states are still not testing for coronavirus
Subscribe to Fortune’s Outbreak newsletter for a daily roundup of stories on the coronavirus outbreak and its impact on global business.


fortune--2020-03-06--Coronavirus drives Austin, Texas officials to cancel South by Southwest

Stocks tumble again as Wall Street gets used to the new norm : volatility

Austin city officials have canceled the South by Southwest arts and technology festival.
Mayor Steve Adler announced a local disaster as a precaution because of the threat of the novel coronavirus, effectively cancelling the annual event that had been scheduled for March 13-22.
Travis County Judge Sarah Eckhardt, the county’s top elected official, said no one in the Austin area has been found to have the COVID-19 virus. However, South by Southwest was expected to have drawn an international audience into close quarters, posing a serious threat of contagion.
Festival organizers said in a statement that they were “devastated” by the necessity of the move.
“’The show must go on’ is in our DNA, and this is the first time in 34 years that the March event will not take place. We are working through the ramifications of this unprecedented situation,” the organizers said in their statement.
The organizers noted that Austin Public Health had stated as recently as Wednesday that “there’s no evidence that closing SXSW or any other gatherings will make the community safer.”
“However, this situation evolved rapidly, and we honor and respect the City of Austin’s decision,” the organizers said.
The announcement comes days after several high-profile companies, including Netflix, tech news outlet Mashable, video-based social media platform TikTok and U.S. chip maker Intel, pulled out of the festival.
More than 50,000 people had signed a petition seeking to get the festival cancelled.
Actor Kumail Nanjiani, who had been scheduled to attend the festival to promote The Lovebirds, said he was disappointed but that he understood.
“Sxsw is one of my favorite festivals,” he tweeted. “Canceling it was the responsible thing to go. I know this sucks for many people for whom this was a massive opportunity. But we’re kind of in an unprecedented situation here and caution is key. Thank you for the making the right decision.”
I know the coronavirus isn’t that scary for a lot of ppl. Many of you are young & healthy & will be able to defeat it without medical help. But think of those who are immunocompromised. Your caution keeps them safe. Wash your hands &, if you’re sick, try & stay away from crowds. — Kumail Nanjiani (@kumailn) March 6, 2020
The festival drew 73,716 attendees last year, 19,166 of whom came from outside the U.S. Combined with SXSW’s gaming expo and education conference, the 2019 event drew 417,400 attendees, organizers said. An economic impact report found it contributed $355.9 million to the local economy.
The U.S. death toll from the coronavirus has climbed to 14, with all but one victim in Washington state, while the number of infections swelled to over 200 scattered across at least 18 states, including at least six cases in the Houston area.
More must-read stories from Fortune:
—Testing for coronavirus should be free, but it’s not always that simple
—Coronavirus is mutating: Chinese scientists find second strain
—Coronavirus is giving China cover to expand its surveillance. What happens next?
—The coronavirus is officially claiming its first corporate casualties
—Why the U.S. is so far behind other countries in coronavirus testing
—Travel insurance is booming, even though it doesn’t help flight changes and cancellations
—Six states are still not testing for coronavirus
Subscribe to Fortune’s Outbreak newsletter for a daily roundup of stories on the coronavirus outbreak and its impact on global business.


fortune--2020-03-06--Stocks tumble again as Wall Street gets used to the new norm: volatility

Where is the stock market headed ?
Wall Street can ’ t make up its mind amid coronavirus outbreak

Wall Street has whiplash.
“Two months ago, I didn’t think there was any chance we’d slip into a recession in 2020,” said Chris Gaffney, president of the world markets division of TIAA Bank. Now? “There is that risk, though personally I think we’ll avoid it,” Gaffney, a self-described optimist, said.
Many other market watchers describe experiencing similar feelings of shock as the market plunges and soars and plunges again. “I don’t recall such a rapid change in sentiment over such a short period of time,” said Steve Sosnick, chief strategist at Interactive Brokers. “Even the [historic] 1987 crash had been preceded by some selling in the prior weeks.”
At Friday’s close, leading U.S. indexes were down for the day, with the S&P 500 having lost 51.54 (1.7%), the Dow Jones Industrials off by 256.50 (0.98%), the Nasdaq having ceded 162.98 (1.9%), and the Russell 2000 off by 29.63 (2.0%).
And at the end of a turbulent week, markets overall were down from where they opened on Monday. The S&P 500 lost 177.77 (3.8%) for the week, the Dow lost 838.54 (3.1%), the Nasdaq slipped 376.55 (4.2%), and the Russell 2000 lost 69.30 (4.6%).
To Sosnick, stocks currently look like they are experiencing a blow-off top: a rapid ascent followed by an up-and-down series of slides and partial rebounds, and finally a big drop as was the case in 2007 to 2009 or 2000 to 2002. Potential signs of such an event have been visible since January.
“People are too freaked out [and] worried about their physical well-being,” Sosnick said. “Until the fear abates and we return to rationality, we’re going to be disjointed.”
In an emotion-laden atmosphere, modeling what will happen is at best difficult and may be impossible. Traders, market strategists, and investors typically depend on hard information to guide their steps. At the moment, though, that is futile.
“Hard data is virtually meaningless,” said Frank Rybinski, director of macro strategy at Aegon Asset Management. Friday morning’s jobs report for February seemed strong with 273,000 jobs added last month combined upward revisions of an additional 85,000 jobs between December 2019 and January 2020.
But the survey takes place in the week that contains the 12th of a month, which meant the second week in February.
The S&P 500 was close to an all-time high the following week and yields on 10-year Treasurys ranged between 1.56% and 1.62%. Today, the S&P is down almost 11% from that high and the 10-year Treasury closed Thursday at 0.92%—a record low and deep into negative real returns after taking inflation into account.
“The bond market is telling you that there’s greater risk of the US economy heading into recession,” said Dean Kim, executive director of equity research at brokerage firm William O’Neil & Co.
“What’s more important than the hard government data we usually use is sentiment data,” Rybinski said—warning statements from companies and consumer and corporate attitudes in surveys. Even the latter is largely lagging in time.
On the plus, there are signs that many investors aren’t succumbing to panic but, instead, looking to quickly mitigate risks.
“In the universe we’ve tracked, people have learned not to over react in the current climate with central banks pumping out money at the drop of a hat,” said Cameron Brandt, director of research at Informa Financial Intelligence EFPR, which tracks global funds flows and asset allocation. He’s seen “larger than average” selloffs of equities but says, compared to other events like the “height of Sino-U.S. tensions last year, they still seem muted.”
The reason may be lessons learned since the Great Recession. “If you bail out of any reasonably credible asset classes, the march upward will continue,” Brandt said. Once investors cash out, they are left with a slow loss of value from inflation.
Even with big sell offs in the last few weeks, “it was more risk assessment than complete capitulation,” Brandt added. People were shifting money to safer assets, like government bonds, where more demand from investors drives down yields.
Gold also became more attractive. “It’s a kind of a fear gauge,” Gaffney said. “When you see [money] go into gold, that’s a longer-term investment typically and it’s an indication to us that the rout is going to have legs.”
That is the main, and discouraging, message.
“There’s going to be, unfortunately, more to come as this virus spreads,” Gaffney said. Many market watchers told Fortune they would not be surprised to see inflation creeping up as well as more rate cuts. “The market is expecting the Fed to cut 25 basis points [or 0.25 percentage points] in April and another 25 in June,” Kim said.
At the end of the day, “You can’t blame everyone for trying to de-risk their portfolios and hide in the safe havens for now until we can get a better handle on the impact this is going to have on the economy,” Gaffney said.
More must-read stories from Fortune:
—Why plunging Treasury yields are so alarming
—Furious Robinhood customers want payback following two day outage
—Why investors suddenly turned on pot stocks
—With stocks down sharply are we approaching”buy” territory? Not by a longshot.
—Why it’s so hard to find the next Warby Parker
Subscribe to Fortune’s Bull Sheet for no-nonsense finance news and analysis daily.


fortune--2020-03-06--Apple encourages Silicon Valley staff to work from home due to coronavirus

Apple Inc. is encouraging employees in Silicon Valley to work from home as an “additional precaution” against the outbreak of coronavirus, joining other major technology companies, including Alphabet Inc. and Microsoft Corp.
The iPhone maker has two main headquarters in Cupertino, California, — the Apple Park campus and its original Infinite Loop set of buildings — in addition to offices elsewhere in Santa Clara County. Apple also is offering workers in Seattle the option to work from home. The company employs engineers in Seattle on machine-learning technology.
The work-at-home policy is in effect for Friday, Apple said in a statement. The company didn’t comment on future plans.
Apple retail stores in the San Francisco Bay Area remain open, but the company is limiting some “Today at Apple” classes in the region and in the Seattle area, which has the largest number of confirmed coronavirus cases in the U.S. The iPhone maker also is spacing out Genius Bar service appointments throughout the stores so people are not as close to one another.
Apple’s supply chain has been impacted by the virus as well, with devices like the iPad Pro and replacement iPhones seeing shortages, Bloomberg News has reported. The company has also restricted employee travel to China, South Korea and Italy.
More than 100,000 cases of the virus known as Covid-19 have been confirmed, resulting in 3,405 deaths. There are 126 illnesses in the U.S., according to data compiled by Bloomberg.
More coronavirus coverage from Fortune:
—Testing for coronavirus should be free, but it’s not always that simple
—Coronavirus is mutating: Chinese scientists find second strain
—Coronavirus is giving China cover to expand its surveillance. What happens next?
—The coronavirus is officially claiming its first corporate casualties
—Why the U.S. is so far behind other countries in coronavirus testing
—Travel insurance is booming, even though it doesn’t help flight changes and cancellations
—Six states are still not testing for coronavirus
Subscribe to Fortune’s Outbreak newsletter for a daily roundup of stories on the coronavirus outbreak and its impact on global business.


fortune--2020-03-06--Publisher cancels plans to release Woody Allen memoir

Woody Allen’s publisher has decided to cancel the planned release of his memoir “Apropos of Nothing.”
The announcement Friday by Hachette Book Group followed days of criticism focused on allegations that Allen sexually abused his daughter Dylan Farrow. On Thursday, dozens of Hachette employees staged a walkout.
“The decision to cancel Mr. Allen’s book was a difficult one. At HBG we take our relationships with authors very seriously, and do not cancel books lightly,” the publisher announced.
“We have published and will continue to publish many challenging books. As publishers, we make sure every day in our work that different voices and conflicting points of views can be heard.”
Allen’s book was scheduled to come out next month.
Allen’s agreement with Hachette meant that he briefly shared a publisher with one of his biggest detractors, his son Ronan Farrow, whose “Catch and Kill” was released last year by the Hachette division Little, Brown and Company.
“Hachette’s publishing of Woody Allen’s memoir is deeply upsetting to me personally and an utter betrayal of my brother whose brave reporting, capitalized on by Hachette, gave voice to numerous survivors of sexual assault by powerful men,” Dylan Farrow said in a statement Monday hours after details of the book were released by The Associated Press.
Ronan Farrow followed up a day later, calling Hachette’s decision “wildly unprofessional.” Both he and his sister complained that the publisher had not reached out to fact check their father’s book.
More must-read stories from Fortune:
—How psychedelic drugs may revolutionize mental health care
—The coronavirus is officially claiming its first corporate casualties
—7 reasons you’re not hearing back about your job applications
—Why investors suddenly turned on pot stocks
—WATCH: Dwyane Wade opens up about his business ventures and new documentary
Subscribe to Fortune’s Outbreak newsletter for a daily roundup of stories on the coronavirus outbreak and its impact on global business.


fortune--2020-03-06--Where is the stock market headed? Wall Street can’t make up its mind amid coronavirus outbreak

Which side of the Street are you on?
While many on Wall Street see the current turmoil as an overreaction, others have begun to worry there’s no cure for what’s ailing stocks. Major indices plunged over 10% last week in the biggest one-week sell-off since 2008. And although indexes saw something of a (meager) rally this week, markets have been topsy-turvy in their move lower, with the Dow barely up 0.5% from Monday. A Fed rate cut of 50 basis points on Tuesday once more stoked worries about the state of the economy, and U.S. ISM manufacturing data on Monday is showing some signs of weakness, hovering just above contractionary levels (at 50.1 for February, down from 50.9 the month before).
“The outlook is uncertain, or rather certainly bearish in the near term as quarantining spreads around the world, but with considerable doubt as to the duration and depth of the economic fallout,” strategists at MRB Partners wrote in a note.
But is last week’s massive sell-off enough to signal a bear market is on its way? For many analysts, the answer is: not necessarily.
“The U.S. and global economy looked like it was turning up, so that should provide a little bit of a buffer to push against some of the slowdown,” says Mark Hamrick, senior economist at Bankrate.com.
But even if we are to see a bear market plunge in the coming weeks or months, those like Northwestern Mutual’s Brent Schutte note that bear markets that don’t coincide with a recession are typically sharp, but short. “I would still believe it’s more the latter” this time around if we are to see one, he says.
According to Hamrick, we’re seeing a “bit of a ‘sell first and ask questions later’ kind of a mentality” in the markets. To wit, Hamrick thinks “It’s not a slim possibility” that we could see a 20% drop in securities (a technical bear market), as he believes “tail risks are elevated at this point and it could go either way.”
What to watch
One of the biggest things to keep an eye on, say analysts, is the new case count of the coronavirus.
Last year, Northwestern Mutual’s Schutte says he would wake up every morning and read President Trump’s tweets to gauge what might happen in the markets. Now, “I wake up every morning now and look at the daily new cases to think about how the coronavirus may impact the market.”
In light of the correction last week, sparked by new cases in more countries worldwide, analysts say the rate and spread of new cases of coronavirus is going to be a key sign to watch. (There are currently 225 confirmed cases in the U.S. in at least 16 states, and over 100,000 cases around the globe, including now 163 cases in the U.K.)
“There’s some increased tail risks,” BMO Wealth Management’s chief investment strategist Yung-Yu Ma tells Fortune. “Europe is not just Italy–France, Germany, and Spain are also starting to accelerate their case counts.” If new case counts continue to rise, that gives the virus more room to wreak havoc on the economy and individual companies.
Subscribe to Fortune’s Outbreak newsletter for a daily roundup of stories on the coronavirus outbreak and its impact on global business.
Consumer confidence and spending
Another area analysts are eyeing? The all-powerful consumer, who has so far been what’s holding up the U.S. economy. Despite the spread of coronavirus, The Conference Board said its consumer confidence index was up to 130.7 last month from 130.4 in January. However, “If consumer confidence were to really fall off a cliff, drop 10 points and stay down, that would be concerning,” Ma notes.
For Morgan Stanley’s Lisa Shalett, that key consumer metric “needs to hold up to sustain current valuations,” Shalett wrote in a note on Monday.
Fed cuts
Per the market bump on Monday and dip on Tuesday, investors are betting a lot on Fed cuts—and the sell-off on Tuesday could be a sign that investors are “wondering whether [the Fed] did enough, and if it would actually matter,” says Schutte.
Despite the 50 basis points cut on Tuesday (before the Fed’s March meeting), Canaccord Genuity’s Tony Dwyer maintains that recession odds are growing, he said on CNBC’s “Trading Nation” on Tuesday.
And still others worry that the Fed’s power, specifically in reaction to coronavirus fears, won’t be enough to change the tides. “You can’t open a closed factory with a rate cut. I don’t think it’s quite the right medicine for what’s ailing the global economic picture tied to the virus,” Jeffrey Kleintop, chief global investment strategist at Charles Schwab, tells Fortune.
Shalett suggests that even before the coronavirus, stocks and Treasury bond correlations hit four-year highs, noting that stock moves were “increasingly contingent on lower rates for longer”—putting more pressure on the Fed, she wrote.
Volatility index
Others like Northwestern Mutual’s Schutte are taking note of the Cboe Volatility Index, or the VIX—which tracks fear on the Street. Last Friday, the VIX hit 49—its highest level since 2009 in the financial crisis. That’s an obvious sign investors are on edge.
Oppenheimer’s Ari Wald, head of technical analysis, see us in something of a stage-two (of three) in the sell-off. “To keep kind of trading expectations in check, very often there’s these bottoms that play out in three stages—one, you have the high-intensity low which I think was achieved on Friday just given the surge in the VIX and extreme levels and the daily RSI and stocks below their moving average,” Wald said Monday on CNBC’s “Trading Nation.” After a low, he says, markets tend to see an “oversold bounce” (like we’ve seen on Monday and Wednesday in the markets).
Of note: the S&P 500′s relative strength index, or RSI, hit 38 on Tuesday, up from as low as 19 last week. Readings below 30 suggests oversold conditions, suggesting we may have hit that already. But the third stage, Wald suggests, is “signs that selling intensity is abating. You’re looking for a less intense low.”
Whether or not we see a 20% drop in the next few weeks, the larger impacts of the coronavirus on the health of the global economy is front and center in some analysts’ minds.
“Bull markets don’t die of old age. They die of fright,” Sam Stovall, chief investment strategist at CFRA Research said on CNBC on Monday. “What they’re most afraid of is recession, and this is the biggest challenge to the global economic expansion to date.”
More must-read stories from Fortune:
—Coronavirus spreads to a previously healthy sector: corporate earnings
—A Fed rate cut won’t cure what’s ailing the stock market
—How companies like Ernst & Young are going to extremes to avoid infections
—These cities have the most jobs with six-figure salaries
—Credit Karma was acquired rather than pursuing an IPO. Will more companies follow suit in 2020?
Subscribe to Fortune’s Bull Sheet for no-nonsense finance news and analysis daily.


fortune--2020-03-06--Can Joe Biden attract the Latinx vote?

Can Joe Biden attract the Latinx vote?

This is the web version of raceAhead, Fortune’s daily newsletter on race, culture, and inclusive leadership. To get it delivered daily to your inbox, sign up here.
A federal appeals court delivers some good news for certain asylum seekers, Latinx voters have questions for Joe Biden, and it’s time to bridge the gender pay gap once and for all.
But first, here’s your COVID-19 filled week in review in Haiku.
Go wash your hands! Like
you ate a plate of hot wings
and now you need to
take your contacts out.
Go wash your hands! Like you just
got your keys back from
a deep dark sewer.
Go wash your hands! Like you’re the
ambitious wife of
a clueless Scottish
general. Go wash
your hands! Like you are
Doogie Howser with
something to prove. Stay strong, stay
calm, stay clean, stay kind.
For more on how the coronavirus is impacting global business, please subscribe to Outbreak, Fortune’s newest daily newsletter. It’s a temp, like we hope the outbreak will be.
Ellen McGirt
@ellmcgirt
Ellen.McGirt@fortune.com
On Point
Can Joe Biden attract the Latinx vote? Health, consumer, and civil rights activist Aracely Panameño does the voter math on this important question, taking care to note that voters of Latinx heritage are not a monolith, nor is immigration their only issue. When it comes to Biden, Obama’s record is a sore point. “Obama promised to deliver a comprehensive immigration reform and instead got the moniker of ‘deporter-in-chief,’” she notes. Latinx homeowners lost 66% of their wealth in the housing market collapse in the Great Recession, and have yet to fully recover. And data show that Latinx Democratic voters want the government to actually provide important services like health care. “These are issues that the Sanders campaign has been speaking to for years while Biden has been focused on speaking about his electability and beating Trump like a drum.”
Latino Rebels
Federal appeals court blocks part of Trump’s “Remain in Mexico” provision The administration’s plan forces asylum seekers to stay in Mexico while they await the processing of their claims. On Wednesday, the 9th Circuit Court of Appeals in San Francisco said it was “very clear” that the Migrant Protection Protocols, or MPP, may violate the law. "It is equally clear," the court said, "that the MPP is causing extreme and irreversible harm to plaintiffs." The ruling upholds a similar one from a lower court; the 9th Circuit indicated that their ruling would likely apply only to asylum seekers near the Arizona and California borders.
NPR
It’s time to make the gender pay gap a thing of the past Lorraine Hariton, the president and CEO of Catalyst, says if companies want to bridge the gender equity gap, leaders need to address another gap first—between what they say and what they do. “Instead of supporting the concept of equal pay in principle, companies must act decisively to close the pay gap,” she says in this opinion piece. She brings an array of fresh stats on the woeful underrepresentation of women in executive leadership broken down by race and asks white men to do better. “Because (mainly white) men are overrepresented in decision-making roles, it is essential for men to be gender partners to advocate for equality.” She offers some proven strategies for building an equity-driven culture and a more profitable venture. “The businesses that will lead in this new world are the ones that close the gap between talking about inclusion, and making it happen.”
Fortune
The Fortune 500 will soon have another female CEO Sonia Syngal has been named as CEO of Gap Inc., with the change taking effect on March 23rd. Syngal, who started at the company in 2004 and worked her way up, oversaw a $1 billion increase in Old Navy's sales over a three-year period, writes Fortune's Phil Wahba. The brand's e-commerce sales also grew under Syngal's tenure—now a $1.6 billion business.
Fortune
On Background
The barbershop as health care provider and counseling center The barber and their iconic shops have become part of an increasingly popular strategy to deliver important health information to Black men within their own communities, both in real life and popular film. But does it work? This study seeks to determine how comfortable Black men are with getting this information in this setting and how confident the barbers feel in delivering it. There’s a lot to build on: Barbers tend to have to similar rates of education and poverty as their customers, and most frequently serve men 18-39 years old. But when asked, they’re not sure they have much influence; only 33% said they made a difference in the lives of younger men, and say they’re unlikely to influence anyone over age 40. The paper, published by The Journal of Community Health, is from researchers at the University of Chicago and Northwestern. Non-subscribers can download a pdf for $39.95. (Note: Springer Nature is making SARS-CoV-2 and COVID-19 research free.)
Springer
Reclaiming the term “redneck?” The original term was an inclusive one, and it dates back to 1921 when Black and white coal miners in West Virginia rose up against exploitative mine owners and protested brutal and unsafe working conditions. The march, precipitated by a series of strikes, turned into a war, quite literally, becoming one of the bloodiest labor conflicts in U.S. history. Mine operators had long sought to sow racial discord by breaking strikes by importing lower paid Black miners, but the United Mine Workers union fought against segregation and for pay equity. The miners faced a paid army of mercenaries, including private planes who dropped bombs on the workers. Miners wore red bandanas to identify each other while fighting.
The Guardian
Blessed are the seekers, for they shall know happiness What makes for a happy life? Seeking the next thing. Neuroscientist Jaak Panskepp argues that of seven core instincts nestled in the human brain (anger, fear, panic-grief, maternal care, pleasure/lust, play, and seeking), seeking is the most important, and all mammals are similarly wired. The reward is dopamine, a neurotransmitter linked to reward and pleasure, but is also linked to planning activities. This may be the reason why we spend so much of our lives at work, living for the rush of the perfectly executed executive retreat, or the best of all possible product launches.
Quartz
Tamara El-Waylly produces raceAhead and manages the op-ed program.
Quote
“I think I would have made a better president than either one of them, that’s why I was running... I thought it was worth fighting for another approach.”
—Elizabeth Warren, in an interview with the Boston Globe, after dropping out of the presidential race.


fortune--2020-03-06--Tesla sent incomplete worker safety injury reports, California regulator says

For years, Tesla Inc. has refuted concerns about worker safety at its main assembly plant by describing reviews from a California regulator as vindication.
But new documents and statements from the agency contradict those claims. Tesla omitted hundreds of injuries that the company listed in logs at its factory from annual summary data that the company sends to the government, according to a memorandum the state’s workplace-safety agency sent in December. California’s Division of Occupational Safety and Health, or Cal/OSHA, also hit Tesla with a citation that month for failing to properly record other injuries in its logs since 2015.
The documents, some of which were obtained through a public records request, undermine statements Tesla executives have made about its plant in Fremont, Calif. Chief Executive Officer Elon Musk dedicated a portion of an October 2018 earnings call to brief investors about workplace safety efforts. He said Cal/OSHA had investigated the company and concluded it had not been underreporting injuries. Last month, Tesla said a review by the agency showed its record-keeping was 99% accurate.
But Cal/OSHA wasn’t focused on verifying the overall accuracy of Tesla’s injury record-keeping in the first place in 2018, according to Frank Polizzi, a spokesman. The agency also can’t verify the claim that Laurie Shelby, Tesla’s environmental, health and safety vice president, made in the February blog post. Tesla didn’t respond to requests for comment.
Tesla’s workplace safety faded from the headlines as the company emerged from “production hell,” Musk parlance for the period when he struggled to ramp up the Model 3 sedan. But the Cal/OSHA documents suggest the carmaker overstated the strides it was making in improving injury rates after reports by the Center for Investigative Reporting and others called attention to the issue.
Government officials rely on accurate summary data from companies to determine which workplaces need the closest scrutiny in the future, said Deborah Berkowitz, the former chief of staff for the U.S. Occupational Safety and Health Administration.
“If companies don’t report accurately, it has really an impact on where the agency ends up using its scarce resources,” said Berkowitz, who directs the worker safety and health program at the National Employment Law Project, a pro-labor nonprofit. “It’s very important to the agency that the summary data be accurate so that it doesn’t portray a workplace that’s safer than it really is.”
In retrospect, Tesla’s handling of the workplace safety scrutiny appears similar to how it dealt with a National Highway Traffic Safety Administration investigation into Autopilot in 2017. The agency concluded the controversial driver-assistance system wasn’t defective and didn’t need to be recalled partly based on a finding that Teslas with Autopilot installed were crashing 40% less than those without. But a study released last year said Tesla handed over data to NHTSA that was incomplete or contradictory. The agency has said it stands by the finding.
In its December memorandum, Cal/OSHA said the 2018 summary data Tesla provided to the government was missing roughly three dozen incidents that were listed in its logs, or 4% of the total. For 2016, 44% of the incidents weren’t included.
The $400 citation Cal/OSHA issued that month was for 14 injuries or illnesses the agency said the company failed to properly record in its logs. Four of those occurred in 2019, and the others were between 2015 and 2018. Tesla is appealing the citation, and the agency said it’s reviewing additional evidence the company has provided.
Cal/OSHA said in its December memorandum that disparities sometime arise when companies learn about incidents and add them to their injury logs after they’ve sent their summary to the government. But the agency said that when there are “significant numerical disparities,” a company should consider whether its processes are “adequate to verify accuracy.”
The government uses the annual summary logs to calculate total work-related injury and illness rates, measured as the number of incidents per year per hundred full-time employees. For 2018, the Bureau of Labor Statistics said the overall rate for automobile manufacturing was 6.1. The figures Tesla reported on its summary log for 2018 add up to a rate of 6.2; including the additional 36 incidents that Cal/OSHA says were omitted would raise Tesla’s rate to 6.5.
Tesla’s Fremont plant produces the Model S, X, and 3 and is just starting to build Model Y, a new crossover slated to begin customer deliveries this month. The company began making the Model 3 at a new factory near Shanghai in December and aims to begin construction of a plant near Berlin this year.
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—What’s next for a self-driving car startup poised to make history
—Toyota recalls another 1.1 million vehicles, Lexus models included
—Who is Luca de Meo, Renault’s new CEO?
—Can Tesla keep growing without critical tax incentives?
—How Renault is navigating disruption in the auto industry
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fortune--2020-03-06--5 things the CEO of Barry’s Bootcamp always packs when traveling

Barry’s Bootcamp CEO Joey Gonzalez never aspired to become chief executive of any company, let alone one that throws down hour-long, high-intensity workouts against a backdrop of bass-thumping, cranium-pounding music.
But after trying his hand at acting in his teens and early twenties, Gonzalez eventually became disenchanted with the Hollywood scene and began taking Barry’s Bootcamp classes once, sometimes twice, a day. His healthy obsession paid off: Gonzalez became a Barry’s Bootcamp instructor in 2004 and worked his way up to COO in 2006 before becoming CEO in 2015.
Today, Gonzalez, who lives in Los Angeles with husband Jonathan Rollo and their two children, spends at least one week per month traveling for work as the fitness chain expands beyond its 80 or so current locations in the U.S. and around the world, to locales including Melbourne and Doha, Qatar. The popular fitness chain is reportedly also exploring a sale this year that could value Barry’s Bootcamp at nearly $700 million, according to Bloomberg in October 2019. (Barry’s Bootcamp declined to comment on the report.)
“I’m fortunate to be in a position where work is my pleasure,” says Gonzalez. “I absolutely love traveling to cities that have Barry’s, one of my favorites being the Hamptons. My family and I try to spend a little time out there every summer, where we not only disconnect and enjoy the laidback lifestyle, but also where I’m able to teach classes and connect with clients that I don’t get to see often.”
Here are the five essentials the fitness-focused chief executive never travels without:
Think of the Dyson Supersonic as the Ferrari of hair dryers. The critically acclaimed device sports a digital motor that spins up to 110,000 revolutions per minute, pumping out 13 liters of air each second in a controlled fashion, making for fast hair drying. Meanwhile, the Supersonic’s heat control feature measures airflow temperature to minimize heat damage to your hair.
“Dyson is pretty much all I use at home, and luckily we have them in the locker rooms at Barry’s as well,” Gonzalez says. “My schedule while traveling can be overwhelming, so I make a concentrated effort to be efficient in all aspects of life, personal hair care included.” SRP: $400.
Meditation has been proved time and again to offer a slew of benefits, such as reducing stress, managing anxiety, and increasing attention span. And as people spend more time on their devices, they’re also seeking ways to manage feelings of well-being. Calm, which is backed by investors such as actor Matthew McConaughey and carries a reported $1 billion valuation, has well over 1 million subscribers, who pay for the app’s meditation and music audio tracks aimed at helping people focus, relax, or sleep.
“Calm is my meditation app of choice,” Gonzalez says. “I do it 10 to 15 minutes every day. It has helped me tremendously to focus my efforts on what’s really important.” SRP: $70 a year.
One of Gonzalez’s secrets to cutting a toned figure? Intermittent fasting. The Barry’s Bootcamp CEO is a staunch believer in cycling between periods of fasting and eating, which has been claimed to be an effective routine for weight loss.
“I’m a huge fan of intermittent fasting, so I always make sure to have almonds on me in the event I need something healthy to break the fast,” Gonzalez explains. “It really helps with all your systems, from nervous to digestion. The theory is that your body needs a certain time to do certain things, and if you are eating throughout the day, your body’s focus is primarily on digestion even as you sleep.” SRP: $9 per pound, on average.
When he travels, Gonzalez prefers donning a pair of Adidas Ultraboost 20 running sneakers, which pair high performance with extreme comfort. The sneakers feature a knitted, reinforced upper half that hugs the foot with a sock-like fit, while the elastane midsole and heel deliver a good level of comfort and support.
“I usually wear my Adidas Ultraboosts on the plane,” adds Gonzalez. “They’re the perfect intersection between fashion and fitness.” SRP: $180.
Fitness companies including SoulCycle frequently offer their own lines of workout apparel, and Barry’s Bootcamp is no different. The company’s Stronger As One line, created in collaboration with Lululemon and released in July 2019, serves up activewear pieces in a fierce color palette of reds, maroons, muted pinks, grays, and blacks that cut a striking look. They’re also built to last, thanks to breathable mesh and abrasion-resistant fabrics. SRP: $58–$188.
More must-read stories from Fortune:
—The most essential travel apps you need to know about
—One of Bordeaux’s most revered estates is launching a new high-end wine in Napa
—Inside a sleep and wellness hotel that rents out minimalist “cocoons”
—Behind the scenes of the Dalai Lama’s early history with the CIA
—WATCH: Can San Francisco Be Saved?
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fortune--2020-03-06--What to watch in theaters and stream at home this weekend

Whether you’re standing in the theater lobby or curled up in bed, deciding what to watch next is often the most difficult part of any pop-culture junkie’s day. And with dozens of films in theaters on any given weekend, plus virtually endless layers of streaming purgatory to sort through in search of your next binge-watch, there’s more out there—and tougher decisions to make—than ever.
Fortune‘s here to help you navigate the week’s latest offerings, boiling all the entertainment out there down into three distinct recommendations: should you see it, stream it, or skip it? Find out below.
SEE IT: ‘Swallow’ (In limited theaters)
There’s no limit to the terrors women face on a day-to-day basis, from the world at large and certainly at the hands of men who claim to love them.
Horror movies have reflected this truth for far longer than popular culture has deigned to publicly acknowledge it, working themes of motherhood, sexual awakening, loss of agency, and the chill of domesticity into all manner of nightmares removed (if only to a degree) from reality.
Swallow, from writer-director Carlo Mirabella-Davis, follows in the tradition of films like Rosemary’s Baby and Safe with its thoughtful, provocative portrayal of a young woman fighting to reclaim a sense of selfhood in a world that’s already shown it will control and predetermine her every action. As we meet Hunter (Haley Bennett), she plays the role of a perfect housewife to her affluent husband (Austin Stowell), whose callous treatment of her suggests a man in search of a trophy rather than a bride. Sequestered inside their sprawling and remarkably cold home in upstate New York, she has no choice but to serve, either by preparing appetizers for dinner guests or twirling dutifully in any number of expensive dresses for the approval of her in-laws, who’ll never grant it.
After discovering that she’s pregnant, Hunter becomes fascinated with a red marble that’s been left out in her home; carefully, she places it in her mouth and swallows it. Later, after it travels through her, Hunter picks her prize out from the toilet, cleans it, and places it on a tray in the bedroom, where it serves as a queasy memento. Soon, it’s joined by other items—a stickpin, a lock, a AA battery, a thumbtack—as Hunter undertakes a daring and increasingly dangerous mission of self-reconstitution.
It’s worth noting at this juncture that Hunter is not set on suicide, despite how self-destructive her addiction—stated to be pica, a real eating disorder that involves eating inedible objects—starts to become. Instead, Mirabella-Davis stages her swallowing of objects as a silent revolt, a way of wresting control back from the rich and entitled monsters invading her space. The strikingly saturated aesthetics of the film, redolent of films by Douglas Sirk, complement Hunter’s profound isolation; trapped within the red-and-blue panels of her impossibly cold domicile, she’s half model in a catalog, half bug in amber.
Mirabella-Davis, who identifies as male, approaches the psychology of Hunter with a bold curiosity that at times reminds of Oz Perkins, another director tantalized by what’s dim and unknowable to him about the inner workings of the female psyche. Bennett carries the ambiguities of Mirabella-Davis’s script in a performance that’s at once formidable and heartbreaking; as Swallow becomes a far different film in its second half, the actress never loses control of her impeccably impassive features or lets us forget Hunter’s under-siege humanity. Swallow may face criticism, understandably so, for its explicit coding of the eating disorder that afflicts Hunter as pica, given that it’s simultaneously implied to be an impulse-response to marital discontent, and thus tied directly to her womanhood in a way the real disorder is not. But the film’s choice to do so allows it to look also at how psychiatric diagnosis, functioning beneath patriarchy, can be just as effective as a tool of oppression as gaslighting or emotional abuse. Living within limits as restrictive as hers, Hunter’s swallowing exists as both liberation and annihilation, conviction through compulsion, a final stand others can’t help but see as a cry for help. If she can’t prevent the world from handling her like an object, she can at least restore a measure of dominance to her consumption of others. It’s a sharp, tricky metaphor, and one that lodges uncomfortably in your throat for days after.
STREAM IT: ‘Devs’ (FX on Hulu)
Alex Garland has emerged as one of the most essential filmmakers of our time, and undoubtedly the most important in the field of science-fiction.
Across his cerebral 2015 debut Ex Machina and gorgeously ambitious 2018 follow-up Annihilation, Garland’s pursued a form of emotional, existential sci-fi storytelling that marries posthumanist speculation to a real preoccupation with human nature. Both films explored creation and self-destruction as natural processes within the individual and the collective; in each, phenomena ranging from the engineering of artificial intelligence to the introduction of alien life proved wholly transformative to any humans factoring into the equation. “It’s not destroying,” as Natalie Portman’s biologist in Annihilation so memorably mused, describing the extraterrestrial Shimmer’s impact on the landscape across which it’s spreading. “It’s creating something new.”
Garland would write Black Mirror episodes if he wasn’t too smart and empathetic for that. Rarely veering into gotcha-isms and chilly twist endings that underscore the often devastating impact of futuristic technology, Garland prefers to pose the big questions, suggesting how they might disturb, rouse, and reform the human psyche, and chart the way such quandaries overwhelm his characters. He’s not much for easy answers, and never one to give the game away.
That brings us to Devs, Garland’s eight-episode series debuting this week on FX on Hulu. Enigmatic and visually mesmerizing in the extreme, it finds the writer-director (who pulled double duty on every episode) turning his reliably perceptive eye on the tech shamans of Silicon Valley. Within the heavily guarded perimeters of his main research facility, secured like a military base amid the California redwoods, thought leader Forest (Nick Offerman, sporting a gloriously sage beard) is developing something new through his company Amaya, a technological breakthrough that remains a mystery to near all of his sworn-to-secrecy workers. Two, Lily (Sonoya Mizuno) and Sergei (Karl Glusman), are dating; and when Sergei is promoted to work on Forest’s initiative, he’s stunned by what he discovers there.
Soon, Lily is forced to go on the run, from both government forces and a chillingly effective fixer in Amaya’s employ. But despite the threats she faces, it’d be dishonest to describe Devs as a true thriller. The mood is heavy and hypnotic, as well as sometimes slow in a way that recalls FX’s similarly mind-bending Legion and Mr. Robot; Garland, in teasing out a complex logic-box of a narrative across eight hours, moves at a pace decidedly unfriendly to modern consumers’ binge-watch viewing patterns. This feels highly intentional; what Devs is really about lingers as one of the series’ overriding mysteries. And as characters debate ideas of free will and determinism, Garland is deliberate about how he works theoretical contradictions into the overarching narrative, challenging the viewer to work out their own existential worldview while considering his.
In much the same manner as Ex Machina and Annihilation, Devs is a series about the art and artifice of creation and destruction, beginnings and endings, as well as the semblances of control we exert over our lives to distract from the fact that so very little is left to us in the four-walled panopticon of modern society. It feels more contemporary than Annihilation, less morally vexed than Ex Machina, and simultaneously like an advancement of the same ghosts-in-the-machine intellectualism both so excelled at conjuring. Devs is oblique and obsession-worthy sci-fi storytelling of the highest order, and that it somehow puts its characters first—despite framing them within a dazzling hall of techno-existential mirrors—speaks volumes about the human heat still rising, however improbably, from Garland’s electric daydreams.
SKIP IT: ‘Run This Town’ (In limited theaters)
It should come as little surprise the lurid details of former Toronto mayor Rob Ford’s final year in office have finally made their way to the big screen. For those who remember that uncomfortable chapter in the city’s recent history, Ford exists in the cultural memory as a larger-than-life if not wholly mythic figure, his frequently intoxicated and racist antics offset by a gregarious, sometimes endearing persona that made him the kind of high-profile trainwreck you couldn’t tear your eyes from.
Ford’s downfall, hastened by the emergence of a video that showed him smoking crack cocaine, was stranger-than-fiction stuff, which perhaps accounts for why Run This Town—an ambitious but flawed debut by writer-director Ricky Tollman—bills itself as a fictional take on a true story.
And Run This Town certainly takes liberties with the Ford story, most notably in its invention of a cub reporter played by Ben Platt (Dear Evan Hansen), who stands in for three journalists and their dogged efforts to cover Ford’s misdeeds. Platt’s Bram Shriver, a college grad new to fictional Toronto newspaper The Record, is the one to investigate rumors of Ford’s behavior and uncover the existence of that crack cocaine tape. Young, white, and male, Bram spends much of the film bemoaning the lack of opportunities in his failing field; this, coupled with the hapless way in which he approaches his reporting, makes the character a truly unsympathetic creation. Platt digs in, but Tollman’s script still seems to find him more likable than I did. In reality, that now-infamous footage was made public in part due to the efforts of three reporters from the real Toronto Star, who watched the video and broke the story. Conspicuously, the college graduate in the newsroom was not Platt’s upstart but award-winning female journalist Robyn Doolittle.
Erasing Doolittle from the film’s narrative makes for an odd, tone-deaf contrast with its focus on exploring white male privilege and the least savory moments of Ford’s time as mayor, including his verbal harassment of female staffers. Another composite character, played by Nina Dobrev, bears the brunt of his mistreatment, especially during a tough-to-watch scene in which (as in real life) Ford returns to the office in a drunken stupor and lobs lewd comments in her direction.
Stranger still is Tollman’s choice to cast Damian Lewis (of TV’s Homeland) as Ford; the Scottish actor is nowhere near a physical match for the blustering, heavyset politician he’s playing. Consequently, he’s encased in an unconvincing tub of latex that recalls Mike Myers’s Fat Bastard from the Austin Powers movies, in a manner that might be lightly comical if it weren’t so persistently distracting. Usually a strong performer with savvy instincts, Lewis appears too out-of-breath to convey his usual range of emotions, which sinks the film in moments when Ford’s confronted with evidence of his wrongdoings.
Run This Town‘s shortcomings can be generally grouped under that banner of a writer-director aiming much higher than he’s currently equipped to deliver. Tollman clearly worships at the altar of Aaron Sorkin, and he manages in a few scenes to successfully imitate that West Wing screenwriter’s ratatat dialogue and wiry political wit. But it’s a thin magic trick, and peering closely at the actual content of the conversations (“He thinks I’m speaking Parseltongue.” “That’s because you’re a fucking spin wizard!”) often reveals an unfortunate lack of insight, an overeagerness to sound clever without saying much.
Where Run This Town is much stronger is in its depiction of perhaps irreparably poisoned ecosystems, across both newsrooms and government offices, where those in seats of power feel secure in belittling and terrorizing their subordinates. In Ford’s offices, his special assistant Kamal (Mena Massoud) struggles to make a name for himself and Tollman’s film gestures in the direction of a richer character drama about a son of immigrants enabling an often xenophobic mayor for his own professional gain. When Ford insists on pronouncing his name “camel,” it’s a slight that stings most in its credibility. Though Platt plays his fictional-composite journalist as such a stuttering sad-sack that it’s difficult to muster much sympathy for him, higher-ups played by Scott Speedman and Jennifer Ehle do pick at him with sometimes exceptionally unprofessional cruelty.
Power’s a harder drug than anything Ford was putting up his nose, and it’s especially intriguing to contemplate the character of Kamal, one of several who enabled Ford’s misconduct while insulating him from consequences. In one scene, he speaks with investigators about the video and asks for the chance to clarify the nature of his position within the offices. Officially, he was “special assistant” to the mayor, Kamal says. And, he’s asked, what about unofficially? “Mayor,” he replies. Massoud plays this admission with a guilty pride flickering across his features that, at the last moment, complicates our sympathies. Run This Town is after a lot, and it correctly frames the Rob Ford scandal as an early harbinger of what was to befall American politics in subsequent years: that his story was one of ascendant populism, abuses of power and the villages enabling it, lack of accountability within institutions, and a sputtering news corps’ struggle to keep up with any of it. But ambition only goes so far, and Run This Town simply lacks the screenwriting smarts to keep up with itself.
The best of the rest:
It’s a oddly muted week of premieres for Apple TV+, which rolls out Amazing Stories on Friday. One of the streaming service’s earliest and most-hyped offerings back when Apple first teased its foray into original programming last March, it’s an update of Steven Spielberg’s time-capsule NBC series, which first aired back in 1985. The original—which drew its name from a science-fiction magazine—was something of a star-studded Twilight Zone, cloaked in Spielberg’s already iconic aesthetic of high wonder and pure imagination.
This revival, which Spielberg executive-produced, will premiere a five-episode first season, with five more episodes landing at a later date. Bizarrely, only the first installment, “The Cellar,” was sent out to critics for review; and given that Amazing Stories, by definition, is meant to be consumed as a collection of tall tales, it would be premature to judge the entire revival on the strengths and weaknesses of its first episode out of the gate. Handsome, measured, and small-scale, the episode at least successfully replicates one element of Spielberg’s original formula—star power—by casting Dylan O’Brien (The Maze Runner) and Victoria Pedretti (The Haunting of Hill House) as young lovers out of time in more ways than one. One wishes Amazing Stories could have heeded the warnings of Jordan Peele’s Twilight Zone revival by maintaining the original’s half-hour runtime (both updates have stretched episodes out to an hour in length); “The Cellar” moves at too stately a pace, especially before getting to the time-travel mechanics of its main plot, but it’s strongly acted and focused on human responses to the unreal in a way that feels true to Spielberg’s model.
Meanwhile on Netflix, Spenser Confidential (streaming Friday) reunites Mark Wahlberg with director Peter Berg, his chosen partner-in-crime for high-octane tales of macho patriot types battling the odds. Now on their fifth collaboration, the pair take a break from their typically gritty, ripped-from-the-headlines thrillers (see: Lone Survivor, Patriots Day, Deepwater Horizon, Mile 22) to put their stamp on the Boston-bred private eye created by crime author Robert B. Parker. Berg’s direction is kinetic and eye-popping, even if the criminal conspiracy theory Wahlberg’s punch-drunk Spenser uncovers will feel overly familiar to any fans of the genre. Watch for Post Malone in a cameo role as a jailed skinhead who trades barbs with Spenser in the film’s best, perhaps funniest scene.
More must-read stories from Fortune:
—First Cow director Kelly Reichardt on 19th-century Oregon and bovine headshots
—Alex Garland’s Devs aims to mix quantum mechanics with ‘elegance’
—Pamela Adlon wants you to know she has your back
—How the Beach Boys became two separate, warring factions
—Contagion writer, scientific adviser reflect on film’s newfound relevance amid coronavirus crisis
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