fortune--2020-06-23--Study finds gay, white men are overrepresented in LGBTQ employee groups

Now that LGBTQ workers are covered by U.S. nondiscrimination law, employers must figure out how to protect them from the biases many of them say they face.
Three in four lesbian, gay, bisexual, transgender or queer employees experienced at least one negative interaction at work related to their sexual orientation or gender identity in the last year, according to a study released Tuesday by the Boston Consulting Group and New York City’s Lesbian, Gay, Bisexual and Transgender Community Center.
The report, titled “A New LGBTQ Workforce Has Arrived – Inclusive Cultures Must Follow,” comes just over a week after the Supreme Court ruled that the 1964 Civil Rights Act protects LGBTQ employees from discrimination.
“Just change in the law is not enough,” said Glennda Testone, an author of the study and the executive director of the community center. “We need to change people’s lived professional equality.”
Researchers surveyed 2,000 LGBTQ and 2,000 straight employees across the U.S. from different socioeconomic backgrounds and company sizes, as well as 50 diversity and inclusion officers. One finding was that workers who identify as LGBTQ are a more diverse group than they used to be, for instance including more racial minorities and more people who identify as bisexual.
The most shocking fact to Pierre Dupreelle, also a co-author and a managing director of the Boston Consulting Group, was the high number of LGBTQ employees who are not out at work. Of those surveyed, 40% said they are not open at work about their sexual orientation or gender identity. In states where discrimination against LGBTQ people remained legal until last week, 55% of the Gen X and baby boomer LGBTQ people surveyed were closeted at work. Many states had forbidden such discrimination before the Supreme Court extended federal protections.
Employers were often ahead of the law, with their own nondiscrimination policies and with initiatives like employee resource groups to unite workers and lobby for policy changes. However, such groups are not always representative of the workforce itself. Gay, white men are overrepresented among LGBTQ groups’ members and leaders.
The study’s authors recommended several steps to address discrimination and disparities, like tying managers’ incentives to inclusion and creating guidelines for pronoun use. Another suggestion was to encourage events and initiatives involving multiple employee resource groups, bridging divides between minority groups and bringing together ideas. “We’re all allies to different groups in different ways,” Testone said.
The report found a generational shift in the attitudes of straight employees. Those under age 35 are 3.6 times more likely join ally programs than older generations and are more likely to find value in colleagues’ self-identifying as LGBTQ.
Corporate culture affects both workers and employers, especially in regard to employee retention and performance. Nearly 60% of LGBTQ employees said they had resigned from a job because of a culture of exclusion.
Employees who are comfortable self-identifying as LGBTQ at work said they feel safer, more empowered and more willing to take creative risks. Having allies and institutional support will be key, Dupreelle said, “to make sure that individuals are more comfortable coming out and just being themselves in all contexts of their work life.”


fortune--2020-06-23--Only 5% of Americans say police reform is unnecessary

Why the C-Suite is now overseeing corporate A.I .
projects

Americans overwhelmingly want clear standards on when police officers may use force and consequences for officers who do so excessively, according to a new poll that finds nearly all Americans favor at least some level of change to the nation’s criminal justice system.
The new poll from The Associated Press-NORC Center for Public Affairs Research also finds there is strong support for penalizing officers who engage in racially biased policing. Americans are more likely now than five years ago to say that police violence against the public is a very serious problem and that officers who cause injury or death on the job are treated too leniently.
“For me, as a Black person, I’m like, this has been happening,” said Kevin Richardson, 38, of Charlotte, North Carolina. “We should’ve been knowing it, we should’ve been seeing this and so now what’s happened is, I’ll be honest, white people are seeing it and saying, ‘This is wrong.’”
The survey of American adults took place after weeks of mass demonstrations against police violence and calls from some politicians and activists to “defund” departments in response to the death of George Floyd, a Black man who died in custody after a white Minneapolis officer pressed his knee into Floyd’s neck for nearly eight minutes.
Americans are largely united behind the idea that action is required: 29% think the criminal justice system needs “a complete overhaul,” 40% say it needs “major changes” and 25% say it needs “minor changes.” Just 5% believe no changes are necessary.
Megan Pecknold, 33, of Spokane, Washington, said the protests have forced her to think about these issues in a way she had the luxury, as a white person, of previously ignoring.
“I had never really given much thought to police use of force. I’m white. I’ve never had a bad encounter with a police officer,” she said. “The last few months have brought to light more of this for me, and now I am educating myself.”
Nearly 6 in 10 Black Americans think the criminal justice system needs a complete overhaul, compared with about a quarter of white Americans who said the same. About 4 in 10 white Americans say major changes are needed; 3 in 10 prefer minor changes.
While Democrats are more likely than Republicans to think the system needs an overhaul, 44% to 12%, Americans across party lines are nearly unanimous in thinking at least some change is necessary. Another 44% of Democrats think major changes are necessary. Among Republicans, 34% call for major changes and 47% for minor changes.
The poll finds overwhelming support for changes in how police departments operate: requiring officers to wear body cameras, establishing clear standards for use of force, prosecuting officers who use excessive force and requiring officers to report misconduct by their peers.
Despite their popularity, body cameras have not always proved to be the fix reformers hoped. But Kimberly Jones, 52, of New York City, said they are at the top of her list.
“You need more seeing what’s going on as they’re pulling up on people,” she said. “You need to know from the start so you can stop something bad from happening.”
Majorities of Democrats and Republicans alike strongly support establishing clear standards for use of force, requiring officers to wear video cameras and requiring officers to report misconduct by their peers. There also is bipartisan support for prosecuting officers who use excessive force and penalizing officers for racially biased policing, though more Democrats than Republicans intensely favor these policies.
Brian Bernard, 54, a Republican and retired IT worker from Baton Rouge, Louisiana, said the bystander video of Floyd’s death was like watching a “9-minute murder.” But he said the problem is one of a bad cop, not a bad system. Banning chokeholds or requiring retraining won’t make a bad officer better, he said.
“Democrats and liberals seem to have a problem of only fixing symptoms,” he said. “They can never see the actual problem, and the problem is just a bad cop.”
While chants of “defund the police” have become a rallying cry at some protests, the survey found that only 25% of Americans favor reducing law enforcement funding. Democrats are somewhat more likely to support than oppose doing so, 41% to 33%, while Republicans are overwhelming opposed.
Bob Haines, 75, a pilot from Oklahoma City who supports President Donald Trump, said he thinks police officers do an excellent job.
“Just like in my profession, most of us do a good job, but there are a few bad pilots,” Haines said. “A couple of incidents have happened, and all of a sudden the sky’s falling, you know?”
Democrats and Republicans divide on whether the justice system should reduce the focus on policing and prosecuting low-level offenses, with 63% of Democrats and 30% of Republicans in favor. Overall, Americans are more likely to be in favor than opposed, 46% to 25%.
To prevent police violence, most Americans also favor requiring all officers to participate in more extensive racial bias training. Majorities of Americans think that police are more likely to use deadly force against a Black person and that Black Americans are generally treated less fairly by police.
Peckhold, who favors moderate changes in the criminal justice system, said those changes should be targeted at chipping away at systemic racist behavior.
“I don’t think Americans really understand how police are taught these tactics to begin with,” she said. “Understanding the details more will help us make smarter changes.”


fortune--2020-06-23--SoftBank unloads a $21 billion stake in T-Mobile US as the great sell-off commences

SoftBank Group Corp., under pressure to raise capital after record losses in its investment business, is unloading part of its stake in wireless carrier T-Mobile US Inc. in a $21 billion deal.
The transaction, along with a plan to sell a 5% stake in its Japanese wireless subsidiary, is part of a broader $42 billion push by SoftBank to unload assets to finance stock buybacks and pay down debt. Masayoshi Son, the company’s founder, is dealing with steep losses in his Vision Fund after writing down the value of investments in the sharing economy from WeWork to Uber Technologies Inc.
SoftBank’s shares gained as much as 3% in Tokyo. The Japanese investment giant will now turn its attention to other assets in its portfolio and may pursue an outright sale of part of its stake in Chinese e-commerce giant Alibaba Group Holding Ltd. Son has said $11.5 billion raised from issuing contracts to sell stock in Asia’s largest corporation was a first step toward unwinding more of its holdings.
SoftBank “needs to further enhance its cash reserves,” the Japanese company said in a statement on Tuesday, citing concerns for “a second and third wave of spread of Covid-19.” The company may invest the proceeds in high-quality securities until they are used for buybacks or debt reductions, it added.
Read more: SoftBank Wraps Up $4.7 Billion Share Buyback in Three Months
The Japanese company is trying to shore up a balance sheet devastated by writedowns that triggered a record 1.9 trillion yen ($18 billion) loss last fiscal year at the Vision Fund. As concerns about investments mounted, Son responded with share repurchases in rapid succession, completing a $4.7 billion buyback program in just three months.
As part of a complex series of transactions unveiled Tuesday, T-Mobile will hold a public offering of 133.5 million shares of its common stock, the carrier said in a statement. It also will grant the underwriters 10 million shares. Additionally, T-Mobile intends to sell as many as 30 million common shares to a Delaware statutory trust.
Five million shares will be sold to an entity controlled by Marcelo Claure, a SoftBank executive and T-Mobile board member, with funding coming from SoftBank. And T-Mobile will have the right to buy almost 20 million shares. Altogether, as many as 198.3 million shares owned by SoftBank will be transferred.
SoftBank secured the stake in T-Mobile US just this year, after U.S. regulators approved the American wireless carrier’s $26.5 billion takeover of Sprint Corp. T-Mobile’s market value is about $132 billion.
Read more: SoftBank’s Vision Fund Loses $17.7 Billion on WeWork, Uber (2)
T-Mobile stock closed at $106.60 Monday in New York, putting the value of the 198 million shares at about $21 billion. They had been up 36% this year through Monday’s close.
Both companies had said earlier they are discussing a possible deal. Even before the transaction, Deutsche Telekom AG was the controlling shareholder of T-Mobile due to how voting rights were structured following the Sprint deal.
The stock offering, due to trade June 24, will be overseen by Goldman Sachs Group Inc., Morgan Stanley, Citigroup Inc., JPMorgan Chase & Co., Barclays Plc, Bank of America Corp., Deutsche Bank AG and Mizuho Financial Group Inc. PJT Partners served as financial adviser to T-Mobile’s board. SoftBank said it will pay T-Mobile $300 million as part of the transaction and will cover all fees and expenses related to the deal.


fortune--2020-06-23--Wirecard’s former CEO arrested in the case of the missing billions

Wirecard AG’s former chief executive officer was detained by Munich prosecutors after 1.9 billion euros ($2.1 billion) went missing from the digital-payment company, in a scandal that has rattled Germany’s financial industry.
Markus Braun, who resigned last week, turned himself in Monday evening in Munich as part of a probe into the company’s accounting practices, prosecutors said in an e-mailed statement. A judge will review whether he can be kept in custody Tuesday afternoon.
The company is fighting for survival after acknowledging the missing funds probably don’t exist. The payment processor said it’s in discussions with creditors and is considering a full-scale restructuring after pulling its financial results for fiscal 2019 and the first quarter of 2020.
“It’s a brutal development — it could hardly have turned out worse,” Oliver Kipper, a defense lawyer who isn’t involved in the case, said before Braun’s arrest. “You should know what happened to 1.9 billion euros of assets you have listed in your books.”
In less than a week, the fintech company once hyped as the future of German finance has lost most of its market value.
“It’s a complete disaster we’re looking at,” said Felix Hufeld, head of BaFin, Germany’s top financial regulator, at a panel discussion Monday. “It’s a shame that something like that happened.”
Munich prosecutors said Braun is suspected of inflating Wirecard’s balance sheet and sales volume by faking income from transactions with so-called third-party acquirers, possibly in cooperation with other perpetrators. That would make the company appear financially strong and more attractive for investors and customers.
Officials at Wirecard and Braun’s attorney weren’t immediately available to comment.
Prosecutors said that they are likely to add additional suspects to the probe.
Braun’s arrest will come as a further shock to Wirecard employees. Interim Chief Executive Officer James Freis told employees on Monday to expect a major restructuring as it tries to salvage the company, people familiar with the situation said.
In his first message to the company as interim chief, Freis said in a pre-recorded video that management is looking at all options, including selling assets, said the people, asking not to be named as the situation is private.
Wirecard is working with investment bank Houlihan Lokey on a financing strategy, while also considering a broad restructuring to keep its business operations going, the company said on Monday.
Wirecard had been championed by German politicians as their own tech giant. It became a favorite of investors, breaking into Germany’s elite DAX index of the largest companies in 2018, at the expense of the then 148-year-old Commerzbank AG.
The Wirecard saga has been under review for months, but prosecutors’ focus is likely to have changed with last week’s developments.
Initially, authorities looked at media reports that caused the stock to tumble, with Wirecard a potential victim of market manipulation. Then, earlier this month, they began an investigation targeting the management board, over how an internal review by KPMG was communicated to the markets.
The arrest of Braun shows, however, that the probes have come full circle, with the former victims becoming the suspects.
“Given the numbers, it’s certainly the biggest accounting scandal in Germany,” said Katie Schroeder, a criminal defense lawyer in Frankfurt. “You’d have to think pretty hard to find a case of such scope.”
Correction and update, June 23, 2020: This post has been updated to correct the headline. Markus Braun is the former CEO of Wirecard.


fortune--2020-06-23--Who will be hardest hit by Trump’s suspension of foreign-worker visas?

The U.S. is temporarily suspending an array of foreign visas, and workers from India and the tech industry may disproportionately feel the repercussions.
On Monday, President Donald Trump signed an executive order to temporarily halt visas for foreign workers through the end of the year. Trump’s order will specifically target H-1B and H-4 visas, which are primarily used by workers in the tech industry and their families. The order also halts the issuance of L visas, used for intracompany transfers, and J visas for seasonal work like camp counseling and study-abroad programs. Trump also extended a ban on applications for green cards, which provide permanent residency to non-U.S. citizens, to the end of 2020.
In a statement, Trump said that the ban was put in place because the U.S. has a “moral duty to create an immigration system that protects the lives and jobs of our citizens.” The administration says that the new order won’t extend to current visa holders or those who have already been issued valid visas.
The coronavirus pandemic had already slowed the issuing of H-1B visas to a trickle this year, since the U.S. State Department suspended all routine immigrant and nonimmigrant visa appointments globally since March. The U.S. Citizenship and Immigration Services (USCIS) issued just 143 visas this May, compared to more than 13,500 in May 2019. News of the latest clampdown immediately drew rebukes from U.S. tech and business communities.
“Putting up a ‘not welcome’ sign for engineers, executives, IT experts, doctors, nurses, and other workers won’t help our country, it will hold us back,” Thomas Donohue, CEO of the U.S. Chamber of Commerce, said in a statement. “Restrictive changes to our nation’s immigration system will push investment and economic activity abroad, slow growth, and reduce job creation.”
If past U.S. government data is any guide, workers from India and the U.S. technology sector stand to be the hardest hit by the suspensions.
H-1B visa program
In 2019, USCIS said the U.S. had 388,403 H-1B visa holders, who work in “occupations that require the theoretical and practical application of a body of highly specialized knowledge.” That sum included both newly approved applicants (which are capped at 85,000 per year), as well as those granted extensions on existing visas.
Of the visa holders, 278,491 or roughly 72% were from India. The second-largest contingent of H-1B visa holders came from China with 50,609 visas or 13%.
The U.S. grants more H-1B visas to Indian citizens than to citizens from every other country combined.
The U.S. tech industry is the top employer of H-1B visa recipients and stands to be the biggest loser amid the freeze.
In 2019, workers in “computer-related occupations” accounted for 65% of all H-1B visa holders in the U.S. According to the USCIS employer data hub, U.S., Amazon accounted for at least 7,500 H-1B applications in 2019, while Google and Apple submitted over 6,500 and 3,500, respectively.
The executive order could also deal a blow to firms based in India.
Tata Consultancy Services, an IT services and consultancy firm based in Mumbai, is India’s second-largest company by market capitalization, with operations in India and the U.S. In 2019, Tata filed roughly 10,000 H-1B applications to bring foreign workers to staff the company’s U.S. offices. Critics have long argued that India’s IT outsourcing companies like Tata have taken advantage of the H-1B visa rule to build their U.S. businesses by paying Indian workers lower wages than American counterparts.
Nasscom, a trade group in India that represents IT outsourcing firms like Tata and Infosys, denies that its members take jobs away from American workers, citing unfilled vacancies in the U.S. IT services sector. The group came out against Trump’s order, saying that it will harm the U.S. economy.
Other visa holders
Indian workers could also be severely hit by the suspension of L visas, which are granted to high-level executives transferring within their companies to U.S. offices. In 2019, Indian citizens accounted for the highest share of the L-1 visas for executives and L-2 visas for executives’ families.
The suspensions of other visas could be felt in a range of business, cultural, and academic spheres in the U.S.
H-2B visas, awarded to seasonal laborers who work in nonagricultural jobs, go mostly to Mexican workers. In 2019, 74% of the nearly 100,000 H-2B visas issued in 2019 went to Mexican laborers. (H-2A visas for temporary agriculture workers are exempted from the suspension.)
The Trump administration is putting a hold on the exchange visitor program, covered by J-1 and J-2 visas, which brings over 300,000 people from 200 countries to the U.S. each year. The State Department says the program’s goal is to promote mutual understanding between Americans and people of other countries, and it includes workers from au pairs and camp counselors to interns, teachers, and academics.
Trump also extended an April ban on green card applicants from outside the U.S. until the end of 2019, which blocks roughly 20,000 applications for the permanent residency card each month.
The business community had lobbied hard against the new suspension of visas. Now that Trump has issued the executive order, it’s left to hope the bans are temporary.
“[I am] disappointed by today’s proclamation—we’ll continue to stand with immigrants and work to expand opportunity for all,” Google CEO Sundar Pichai said on Twitter. “Immigration has contributed immensely to America’s economic success, making it a global leader in tech, and also Google the company it is today.”


fortune--2020-06-23--NYSE’s chief commercial officer on direct listings and reopening the trading floor

The market for initial public offerings is surging again, but so is the appetite for its disruption. On Monday, the New York Stock Exchange proposed amending its rules to make direct listings—an alternative to the IPO that has gained some support over the past couple of years—a lot more attractive for startups.
Until now, companies that have gone public via direct listings have been able to sell existing shares directly to investors but not issue new shares in the process. This is how both music-streaming service Spotify and workplace messaging tool Slack, pioneers of the direct listing, went public on the NYSE. The change in rules, though, would enable companies that pursue a direct listing to issue new shares while going public, meaning they would be able to raise new capital. That is, of course, if the Securities and Exchange Commission approves the amendment. (So far, the SEC has declined to allow companies to raise capital via a direct listing.)
The NYSE has an obvious interest in urging more companies to go public, whatever route they pursue. While IPOs are up, relative to the stall in activity in the first few months of this year, the general trend over the past few years is that more and more startups are opting to wait longer before going public. Plenty of founders and venture capitalists are bullish on direct listings, seeing it as a way of providing a cheaper and more efficient way to enter the public markets. But they are also hoping that the traditional IPO path could ultimately be disrupted too. This may happen, especially in light of the changes that the COVID-19 outbreak has forced upon the industry. One small example: The time-consuming (not to mention pricey) so-called IPO road show has gone virtual because of the pandemic.
Which changes stick and which don’t remains to be seen. Fortune recently caught up with John Tuttle, vice chairman and chief commercial officer of the NYSE, for a wide-ranging conversation about some of the ways that recent events, including the pandemic, are already impacting how the exchange operates. Here is an excerpt of the interview. (A note: The interview was conducted before Monday’s amended SEC filing that aims to enable companies to execute direct listings with a capital raise.)
Fortune: You recently reopened the trading floor. How is it running today?
Tuttle: The floor is great, and the NYSE is doing great as well. After a roughly two-month-long temporary shift to electronic trading, we made the decision to have a thoughtful approach to reopening. We’ve engaged several public health experts and felt it was time to reopen the trading floor. We reopened the trading floor to about 25% capacity. In phase 1, we focused first on allowing floor brokers back in. For people like the designated market makers, who help with direct listing, they can do a lot of their functionalities remotely.
No more handshakes allowed on the floor, though, right?
We follow the rules. We have PPE [personal protective equipment]. We do screening and a questionnaire when folks come in.
It’s a bad time to do a lot of things right now, given the job market and other metrics. Is it a good time to go public?
The capital markets throughout this pandemic have remained open. This has provided capital to companies. That’s like oxygen to companies. We’ve kept our market open, and we first saw some secondary offerings [an issuing of shares by a company that has already made an initial public offering]—either defensively or opportunistically. Then we saw IPOs coming back to market, including some health care companies, which makes sense. Now we’re seeing tech with more predictable [enterprise sales] business models that are easy to understand. There’s less risk of customer attrition and more resiliency in a downturn with these.
Lots of companies are taking a stand against racism. How do you see your role in improving economic racial disparities?
We obviously don’t tolerate racism or any discrimination. And we recognize that we have a very visible platform—NYSE companies employ 43 million people. Diversity has been a focus of ours for a long time. We launched a board advisory council, a group made of CEOs from across geographies and industries, to increase diversity across corporate America. [The council, which connects companies with diverse board candidates, was announced in June 2019.] We’ve created an entire database that we’re making available to our listed companies. And now we are opening it up to private companies who are interested in finding independent directors.
How does the move to remote work impact innovation and startups being founded going forward? And how does that, in turn, impact the NYSE?
For thousands of years, people have thrived by coming together to share ideas. To really grow and innovate it requires people to come together. The new normal may require more remote work, but it’s human nature to come together.
We were hearing so much about direct listings before the crisis. What happens next?
We remain committed to providing new and innovative pathways to access the capital markets, including direct listings.


fortune--2020-06-23--Algorithms won’t end racism—they’re making it worse

This is the web version of Business x Design, a newsletter on the power of design. Sign up here to get it in your inbox.
“Computational design” and “inclusive design” have been, for at least a decade now, among the design world’s buzziest terms.
The former has been used to denote a new category of designers and engineers who exploit the power of computers, data, algorithms, and the Internet to roll out complex services to millions at lightning speed. The latter began as a mostly academic effort to make products accessible to users with disabilities, then evolved into a broader discussion about the importance of ethnic, racial and gender diversity in design and how to make large organizations more representative of the communities they serve.
For many years, it was widely assumed that there was a natural affinity between the two approaches. After all, it was often asserted, computers, data, and algorithms are “objective”—tools of logic that could be used to make decisions and serve users without the messy prejudices of humans.
It was hoped that the new methods of design would help promote diversity in a variety of fields including education, job recruitment, credit scoring, criminal justice, and the distribution of health care services.
Alas, just as the Internet, once hailed as a technology that would bring the world together, is now widely reviled for driving us apart, so algorithms increasingly are vilified for turbocharging racism and sexism.
Safiya Umoja Noble, author of Algorithms of Oppression: How Search Engines Reinforce Racism, this week offered a curated reading list on Pocket, exploring how technology can replicate and reinforce racist and sexist attitudes and skew outcomes in nearly all the fields it was meant to improve. I recommend every item. A few highlights:
Google’s image-ranking algorithms reinforce negative stereotypes of “black girls” as sex objects and “black teenagers” as criminals. (Time)
Algorithmic risk scoring in the U.S. criminal justice system has led to racially biased outcomes. One such algorithm, documented by Pro Publica, classified black defendants as having a “high recidivism risk” at disproportionately higher rates than white defendants even though the algorithm did not explicitly use race as a variable. (The Boston Review, Pro Publica)
Algorithms used by hospitals and physicians to guide decisions such as who receives heart surgery, who needs kidney care, and who should try to give birth vaginally are racially biased. (STAT)
Speech recognition systems from Amazon, Apple, Google, IBM and Microsoft misidentify words spoken by black people 35% of the time compared to 19% for white people. (The New York Times)
Tech optimists assert the long-run benefits to society of embracing artificial intelligence far outweigh its current shortcomings. A host of practitioners argue the use of algorithms remains in its early days, and that problems of racial and gender bias can be tweaked and optimized away to achieve more neutral decision outcomes in the future.
But Noble and other critics insist algorithms are inherently biased and bound to perpetuate prejudice—not least because the data upon which they feed is the product of past discrimination.
Is it possible to teach machines to be truly inclusive? Are we capable of devising algorithms that overcome, not amplify, injustice? The early evidence isn’t encouraging.
More design news below.
Clay Chandler
— clay.chandler@fortune.com
NEWS BY DESIGN
Apple's new core
Apple unveiled a slew of changes at its developers’ conference yesterday, including a redesign of the iPhone’s home screen and a plan to ditch Intel chips for ones designed in-house.
"Cultural catastrophe"
Research commissioned by the Creative Industries Federation warns 400,000 creative jobs could be lost in the U.K. this year due to the coronavirus pandemic. That’s equivalent to 20% of creative jobs. The loss marks a stark reversal to the pre-Covid era when the British creative sector was growing at five times the rate of other sectors.
"Systemic racism is by design"
Ideo apologized for sharing an Instagram post of “anti-racism resources” after receiving criticism for not doing enough to directly support black creatives and designers. The concept of “design thinking,” popularized by Ideo, has been criticized for perpetuating racist structures through its suggestion that designers are capable of absolute empathy.
Guggenheim redesign
An open letter, signed by the curatorial department of the Guggenheim Museum and sent to the institution's leadership, called out the museum for maintaining an “inequitable work environment that enables racism, white supremacy and other discriminatory practices.”
Sometimes low-tech is best
The U.K. government abandoned its attempt to develop a “test and trace” app for monitoring the spread of Covid-19. After months of trying to go it alone, the U.K. now says it will use the Google and Apple model. Some of the most effective containment measures have been achieved without an app.
Fraudster found
Inigo Philbrick—the young art dealer who allegedly swindled millions from the art world by stealing work, selling collections he didn’t own, and other fraudulent action—was arrested in the Pacific island nation of Vanuatu. Philbrick, who went on the lam last year, was flown to Guam where he is now held in U.S. federal custody.
EVENTS BY DESIGN
July: Christie’s is planning a semi-virtual auction for July 10. The “first of its kind” event will livestream auctions from four cities—Hong Kong, New York, Paris and London; D&AD’s New Blood Festival—a celebration of upcoming talent in design—will be running online this year, July 6-10. The digital festival marks New Blood’s 40th anniversary.
September: Art Basel in Switzerland—initially rescheduled from June to September—has been cancelled, set to return in June 2021.
Ongoing: Dezeen’s Virtual Design Festival has been extended to July 10
QUOTED BY DESIGN
“The role of social robots like Paro is becoming more important, especially as we see this sector of our population [the elderly] targeted by this virus.”
Sandra Petersen, program director for the University of Texas at Tyler nursing department, discusses the use of robots in social care. Paro, a robotic baby seal designed by Japan’s National Institute of Advanced Industrial Science and Technology, was introduced in 2003 but is finding new pertinence in the era of social distancing. Researchers say Paro has helped lower blood pressure, dependence on drugs and sparked emotional recognition in Alzheimer’s patients.
This week’s edition of BxD was curated by Eamon Barrett. Email him at eamon.barrett@fortune.com


fortune--2020-06-23--Bending the curve of capitalism

Bending the curve of capitalism

This is the web version of CEO Daily. To get it delivered to your inbox, sign up here.
Good morning.
When the history of stakeholder capitalism is written, Paul Polman will have a lead role. He became CEO of consumer goods giant Unilever back in 2009, and over the subsequent decade he was the leading proponent of a new kind of capitalism–one that focused explicitly on big social problems like climate change and inequality. That’s why I was eager to have him as a guest on our podcast, Leadership Next. He is, in some ways, the embodiment of our theme.
You can hear the full interview with Polman this morning here. But for CEO Daily readers, let me share this excerpt:
“Governments in this world right now have a little bit of a hard time, and global governance is broken. Populism, xenophobia, nationalism…all these things are going in the wrong direction. Meanwhile these issues are piling up. Cybersecurity, financial markets, climate change…coronavirus. These are global issues that need global coordination.
“I believe it is the duty of the private sector to step up and fill that void and be responsible. We are not elected bodies, but we do have to fill that void. And it’s in the interest of business. And increasingly, business understands that.”
Polman takes it a step further than most of his big business colleagues by declaring the current system broken. “There are two forms of a capitalism that live next to each other and frankly they are in conflict,” he said, citing long-term “stakeholder” capitalism as pitted against short-term “shareholder primacy.” It will take “major changes to our economic system to bend the curve of capitalism.”
And a news tidbit out of next week’s episode of Leadership Next, which features an interview with Airbnb CEO Brian Chesky. Chesky told Ellen McGirt and me that bookings in the U.S. in the last couple of weeks have actually exceeded last year’s levels. “It may be pent-up demand,” he said. “We don’t know…(but) it is recovering way faster than any of us imagined.”
That also could mean the home rental company is back on track for an IPO this year. Stay tuned.
More news below.
Alan Murray
@alansmurray
alan.murray@fortune.com
TOP NEWS
Visa suspensions
The Trump administration is temporarily suspending a range of visas, including the high-skilled H-1B, as of tomorrow. The restrictions, designed to protect jobs for unemployed Americans in the context of the coronavirus pandemic, will last through the end of the year. The tech sector in particular is outraged, with Google CEO Sundar Pichai (who comes from India) tweeting: "Disappointed by today’s proclamation—we’ll continue to stand with immigrants and work to expand opportunity for all.” Wall Street Journal
SoftBank assets
SoftBank has announced plans to sell around $21 billion worth of T-Mobile U.S. stock, as part of the Japanese conglomerate's wider effort to reduce its debt load. SoftBank: "Given the current situation where there is a concern for a second and third wave of spread of COVID-19, (SoftBank Group) believes that it needs to further enhance its cash reserves." Bloomberg
Wirecard arrest
Markus Braun, until last week the CEO of German payments hopeful Wirecard, has been arrested on suspicion of false accounting and market manipulation. Wirecard's share price has tanked following the revelation that $2.1 billion of the cash on its balance sheet probably doesn't exist. The company's entire former management board is reportedly under investigation. Financial Times
China deal
White House trade advisor Peter Navarro yesterday appeared to suggest that the trade deal between the U.S. and China was "over", before President Trump stepped in (via Twitter, naturally) to insist that it is "fully intact." Navarro subsequently said his comments had been taken out of context. The episode briefly freaked out the markets, but they soon shrugged it off. Fortune
AROUND THE WATER COOLER
Ben & Jerry's
Ben & Jerry's corporate response to George Floyd's killing stood out for its forthright language—"it was the predictable consequence of a racist and prejudiced system and culture that has treated Black bodies as the enemy from the beginning"—and that's very much in line with the firm's history. Fortune spoke to Chris Miller, the brand's head of activism strategy (now there's a job), to find out more. "There are moments when it feels like it's important simply to go on record—to stand and be counted," he says. Fortune
BeiDou launch
China has launched the final satellite for its BeiDou 3 constellation, which will allow it to no longer rely on the U.S. Global Positioning System (GPS). The third version of the BeiDou Navigation Satellite System (BDS) comprises 35 satellites, providing global coverage. Apart from GPS, other rivals include Europe's Galileo and Russia's GLONASS. BBC
India and China
Some good news on the geopolitics front: India and China have agreed to take measures to stop their soldiers clashing over disputed border territory, following a deadly clash last week. Commanders had a marathon meeting yesterday on the border and reached a "mutual consensus to disengage." Reuters
LGBTQ workers
YSC Consulting CEO Eric Pliner, whose firm was involved in the momentous Bostock case that last week saw the Supreme Court back workplace protections for LGBTQ people, writes for Fortune that it is now up to companies to protect their workers. "Legal protection is a helpful but incomplete precursor to crafting truly hospitable environments for LGBTQ employees and others with historically marginalized identities," he writes. "The court’s decision has opened the door for leaders to engage with these critical components of identity and culture in a much more sophisticated and powerful way." Fortune
This edition of CEO Daily was edited by David Meyer.


fortune--2020-06-23--How Ben & Jerry’s activist history allows it to call out white supremacy and police brutality

Even the ice cream is on a mission for social change at Ben & Jerry’s. Look no further than its pints of Pecan Resist and Justice ReMix’d, which “has something extra awesome under the lid: a sweet swirl of justice.”
But earlier this month, the Unilever-owned ice cream brand made it clear just how serious it is about racial justice when, in the wake of the killing of George Floyd, the company put out a statement that garnered attention on social media for its starkness amid a sea of corporate platitudes.
“The murder of George Floyd was the result of inhumane police brutality that is perpetuated by a culture of white supremacy,” a portion of it read. “What happened to George Floyd was not the result of a bad apple; it was the predictable consequence of a racist and prejudiced system and culture that has treated Black bodies as the enemy from the beginning.”
While perhaps better known for its tongue-in-cheek flavors, the statement is very much in line with Ben & Jerry’s history. The company was started by what Chris Miller, the brand’s head of activism strategy, describes as two “counterculture guys” in 1978 in Burlington, Vt. From the beginning, Ben Cohen and Jerry Greenfield took a triple–bottom line approach to business—valuing planet and people alongside profits—long before it was trendy, Miller says. Even after the cofounders sold the brand to Unilever in 2000, Ben & Jerry’s retained its independent streak and social mission.
The company, which often works with outside partners in its advocacy efforts, has tackled everything from climate change to LGBTQ equality to criminal justice reform. It campaigned at the end of the Cold War to reduce military spending and was one of the first companies to institute same-sex domestic partner benefits and to go on record in support of Black Lives Matter. It works with groups like the Close the Workhouse campaign to shut down a notorious St. Louis jail and the Poor People’s Campaign to fight for economic justice.
Fortune talked to Miller, whose résumé includes a stint at Greenpeace, about the company’s roots in activism and its decision to put out its “We must dismantle white supremacy” release. “This statement has garnered a lot of attention,” Miller says. “While words matter, I don’t want to overestimate or inflate the impact that a single statement can have, because it’s about doing the work.”
Edited excerpts follow.
Fortune: A lot of companies put out statements in the wake of the killing of George Floyd, but some were pretty generic. Yours was really to the point. How did it come about?
Miller: We set off on this work, specifically focused on issues of racial justice, about five years ago. We gather every year as a company in what we call our global franchise meeting. And at one of those meetings in the wake of Ferguson, and the killings of Trayvon Martin, Michael Brown, Eric Garner, and others, our cofounder Ben Cohen came to the stage in a “hands-up, don’t shoot” T-shirt. It sort of spurred a bit of controversy in the room at the time. But for those of us who are charged with the advocacy and activism work in the company, his message resonated with us.
What he basically said was, if we are a company that continues to be committed to the values on which it was founded, we had an obligation to wrestle with some of these issues.
There are moments when it feels like it’s important simply to go on record—to stand and be counted. The events of the past couple of weeks brought us to a place where we felt like we, as a company, had to go on record and talk about these issues of white supremacy, police brutality, and structural racism. Thoughts and prayers and messages of unity are not really sufficient anymore.
Several of the terms that you used in your statement, like police brutality, were missing from a lot of corporate statements. Why is that the case?
For most companies, it’s counterintuitive to think that you want to say something that would be perceived as controversial, or that would put a certain segment of society off.
Companies get it wrong when they try and negotiate some sort of mushy middle—where they want to align themselves and express their point of view, but they’re unwilling to really talk about this in a way that is real.
Do you see this as a broader shift within corporate America, where companies do feel like they need to now weigh in on social issues?
The truth is, corporations are the most powerful entities in society. Centuries ago, it was the church. One hundred years ago it was national governments. And today, for better or for worse—it’s often for worse—corporations are the most powerful entities within society. They more often than not use that to advance their own very narrow self-interest. So corporations are focused on tax policy, labor policy, and trade policy.
Corporations have vast sway over policymakers. It would be a hugely positive development if we either sideline corporations from the political process, or if some of these corporations would be willing and able to match their words that they state publicly with their willingness to use their government affairs team and their lobbying power to promote these policies with policymakers. I think that that could be tremendously influential in making some change.
Was there anything in your statement that got pushback from management or your outside partners?
There was a fair bit of discussion about how directly do we want to engage around the Trump administration. The President has proved himself to be largely irrelevant on these issues. And so the first call to action that we had was calling on the President to create a national process, a truth and reconciliation process for our nation.
I was a strong proponent for calling the President out on these issues. He has not been a unifying force on these issues. He has used his platform and his social media channels to promote racist, nationalist messages.
Part of the problem that exists in this country today is that mainstream, normal people have been unwilling to call the President out on it. Business leaders haven’t. Policymakers haven’t. And that’s not okay. We all have a responsibility to push back, and to suggest that this is not normal and it’s not okay. I’m under no illusion that anything we say—or for that matter, anything anyone else is going to say—is going to change him. But it is important that Americans hear from leaders and respected companies that his approach to this is not okay.
Was there concern at all about alienating a part of your customer base who might disagree with you?
I’ve been at the company now a little over six years. No one has ever said to me, “We’re not doing that, because that’s going to hurt our sales” or “That’s going to piss off a segment of our consumer base.” Our former CEO, Jostein Solheim, was fond of saying, “The more people we piss off, the more ice cream we sell.”
Obviously, that’s not at all why we do these things. But we have grown this business year over year for 42 years. It started in a gas station in downtown Burlington; we’re now in 40 countries around the world. Might we have been bigger if we didn’t do these things? Perhaps. But we are one of the most well-known ice cream brands on the planet. And so this idea that having the courage and being bold, and doing this kind of work is detrimental to your business clearly is not the case.
You’ve noted that you’re a white company in a white state. I’m sure that this is also a moment of self-reflection for you as a company. How are you hoping to change the company going forward?
I’ll give you my point of view as an employee. We do have work to do there. We have three primary parts of the business, and we need to do more work in each one of them.
One is with our corporate headquarters staff and leadership team, which is not very diverse. I think Vermont is the second or third whitest state in the country. We look a lot like the community that surrounds us. We’ve probably used that as a bit of a crutch over the years, which is to say, “Well, this is hard, and we’re not based in Brooklyn, and if we were, we’d probably look different.”
The same is true in our franchise community. While the franchise community is more diverse than our headquarters, again, more work needs to be done. And then the third area is around our suppliers and supply chain.
We had been in the process of kicking off a series of internal working groups focused on franchise community hiring, recruiting, retaining, and supply chain. That had been planned and in the works for months. In some ways, I wish that this work had started earlier. On the other hand, it now has the attention and juice underneath it to really move it forward.
It sounds like the work that you’ve already done allowed you, as a company, to be able to put out a statement like that.
I’ve talked with some of my peers, who sit in companies around the country. There’s been a lot of talk back and forth around who’s doing what and how it’s been received. And I think there has been some hesitancy that some companies feel, like, “Well, we don’t have a pedigree on this. We don’t have a background on these issues. We haven’t built the network.”
And I guess what I would say is, we can’t let what we’ve done in the past limit what we do moving forward. Because if all we’re going to do is do what we’ve done, we’re stuffed.
So you’re an ice cream company, but you’re willing to talk about issues other than ice cream.
Yeah. Somebody asked me the other day, “You’re an ice cream company. What permission do you have to do this?” And I think, Why isn’t everyone else doing it? Yes, an ice cream company can do it, and everyone else can as well. Why not an ice cream company?


fortune--2020-06-23--Did Trump’s latest Tweet just save the markets rally?

This is the web version of the Bull Sheet, Fortune’s no-BS daily newsletter on the markets. Sign up to receive it in your inbox here.
Good morning, Bull Sheeters. There were all kinds of fireworks after the bell yesterday—the figurative kind—when Peter Navarro, President Trump’s trade advisor, declared to a Fox News anchor the U.S.-China trade deal to be “over.” U.S. futures immediately sunk. The yuan went haywire; the Asian markets followed. And then Trump took to Twitter to say, no, no, no. It’s fully intact.
Crisis averted?
Let’s check in on the action.
Markets update
Asia
Asian stocks started the session with a thud. Hong Kong, Shanghai and Tokyo all fell at the open, only to recover following the Trump tweet.
and all fell at the open, only to recover following the Trump tweet. Navarro too did his part to clean up the mess. He went on another news program—NBC News— to say that his “ it’s over ” Fox News comments had been “taken wildly out of context.” … Capite?
too did his part to clean up the mess. He went on another news program—NBC News— to say that his “ ” Fox News comments had been “taken wildly out of context.” … Capite? Boris, you’re on the clock… Japan is giving the UK six weeks to cut a post-Brexit trade deal, the Financial Times reports. For a country that hasn’t cut a new trade deal in 40 years, that’s not much time.
Europe
The European bourses gained at the open after a blue Monday. Germany’s Dax was up 0.8% . 90 minutes later, it was up near 2% after better-than-expected PMI figures point to a big rebound in manufacturing in the UK and in the Eurozone.
gained at the open after a blue Monday. was up . 90 minutes later, it was up near after better-than-expected PMI figures point to a big in the UK and in the Eurozone. Sparks flew on the E.U.—China video-conferenced summit yesterday. Europe unloaded its opposition to the Hong Kong -focussed security law and China’s restrictions on foreign investors . Ominously, there was no joint statement afterwards.
video-conferenced summit yesterday. Europe unloaded its opposition to the -focussed security law and China’s . Ominously, there was no joint statement afterwards. The E.U. also has the U.S. in its sights. The trade bloc is planning to target red-state industries such as coal producers, farmers and fisheries with an $11.2 billion round of tariffs.
U.S.
The Dow , S&P 500 and Nasdaq all started the week on a high note yesterday. Futures point to further gains as investors will see if the Nasdaq can extend its rally to an eighth straight trading session.
, and all started the week on a high note yesterday. Futures point to further gains as investors will see if the Nasdaq can extend its rally to an eighth straight trading session. T-Mobile shares are 1.7% lower in premarket trade after cash-strapped SoftBank agreed to sell off $21 billion worth of shares in the American mobile carrier. Most of those shares will be sold to the public, T-Mobile confirms.
lower in premarket trade after cash-strapped agreed to sell off in the American mobile carrier. Most of those shares will be sold to the public, T-Mobile confirms. Gilead won emergency FDA approval for its COVID-19 treatment, paving the way for the next round of clinical trials. The stock dropped on the news yesterday.
Elsewhere
Gold is up
is up The dollar is down.
is down. Crude is climbing this morning, with Brent hovering above $43/barrel.
Eight straight?
The Nasdaq is cruising. After seven straight days of gains, the tech-heavy index has notched its longest rally of the year.
YTD, the Nasdaq is up an impressive 12%. If your portfolio is weighted to tech stocks you’ve fared well through this pandemic. If instead you’re long on energy, finance and industrials, you’ll be grumbling at what I’m about to say.
And that is… the Dow (-8.8%) and S&P 500 (-3.5%) are both down for 2020.
For weeks now, market observers have been calling out the growing decoupling underway. It’s not an exaggeration to describe the markets action as Big Tech, and everything else.
This phenomenon is most pronounced between the FANG stocks and the broader global equities market, as this chart, courtesy of MarketEar, shows:
The all-equity MSCI World (in white) is seeing something like a square-root symbol—or, take your pick, a radical sign. Meanwhile, the FANG+ index (in blue) is seeing a proper “V.” With a capital V, that is.
Each day through this run, the likes of Apple, Amazon, Facebook and Microsoft have hit one all-time high after another. Meanwhile, Alphabet’s Google is just a tick below its historic peak. Yesterday, shareholders shrugged off the news that Google would see a decline its ad business for the first time in 16 years.
As I type, the Nasdaq futures are showing that an eighth straight day of gains are imminently achievable.
Investors just can’t get enough of Big Tech.
***
Have a nice day, everyone. I’ll see you here tomorrow.
Bernhard Warner
@BernhardWarner
Bernhard.Warner@Fortune.com
A note from my Fortune colleagues on a timely new initiative:
Many companies are speaking out against racial injustices right now. But how do they fare in their own workplaces? Black employees in the corporate world, we want to hear from you: Please submit your anonymous thoughts and anecdotes here. https://bit.ly/WorkingWhileBlack
As always, you can write to bullsheet@fortune.com or reply to this email with suggestions and feedback.
Today's reads
Cheese bulls. The wholesale market for cheddar goes through phases that sound a bit like the cheese itself. It's either mild or sharp. It's definitely not the former these days. As the New York Times reports, cheese prices have hit a 20-year high on the Chicago Mercantile Exchange. It's nearly twice as costly as it was in early 2019. Yes, the pandemic is to blame... Has anyone noticed this at the deli counter?
Whisky a no-go. Tariff wars have claimed another proud American industry: whiskey distillers. In the past two years, America's bourbon, rye whiskey and Tennessee whiskey makers have lost about $300 million in export revenues since getting pulled into the tit-for-tat tariff war between the United States and the E.U.
Some of these stories require a subscription to access. There is a discount offer for our loyal readers if you use this link to sign up. Thank you for supporting our journalism.
Market candy
Call in the sopranos
Puccini fans (I can't be the only one here), you'll like this one. Barcelona's Liceu opera house reopened yesterday to a full house. Of plants. As NPR reports, the performance of Puccini's "Crisantemi" was "also made available to human listeners via livestream."


fortune--2020-06-23--Former Unilever CEO Paul Polman wants business leaders to accelerate corporate responsibility effort

Former Unilever CEO Paul Polman wants business leaders to accelerate corporate responsibility efforts

Our mission to help you navigate the new normal is fueled by subscribers. To enjoy unlimited access to our journalism, subscribe today.
Paul Polman—former CEO of Unilever and founder of Imagine, a collective of chief executives committed to speeding and scaling up corporate social responsibility efforts—joins Fortune CEO Alan Murray on the latest episode of Leadership Next. One of the pioneers of stakeholder capitalism, Polman has spent many years thinking about the changing role of business leadership.
The past three months, Murray notes, have shed light on Polman’s argument that capitalism as-is is not working for America—or the world. The coronavirus pandemic and the recession that has accompanied it have laid bare the glaring inequalities in society, in areas from health care to climate change.
Polman said he believes that this will help to accelerate the shift to a model of capitalism that focuses on addressing the pressing issues at hand today, regardless of the financial strain put on many companies.
“More and more companies understand that things need to change, and they want to be part of it,” he said.
When he became Unilever’s chief executive at the height of the financial crisis in 2008, he was charged with turning things around for the struggling company. And as he planned to do that, he included a pivot to stakeholder capitalism and baked social responsibility and action into the strategy.
“Businesses can not survive in societies that fail,” he said. “So we have a responsibility to be sure that these societies function.”
With that belief in mind, Polman founded Imagine. “Global governance is broken,” he said, and many of the global issues facing humanity today—the coronavirus, the climate crisis, cybersecurity—need global responses. He believes that the private sector must step up to the plate. Around the five-minute mark, he goes into the initiative’s specifics.
Polman says the issues that first must be addressed by Imagine and the private sector at large are finding a way to live sustainably on earth without heating up the planet, shifting financial markets to a more long-term outlook, and making our economic systems more inclusive.
To hear the rest of this episode, including specifics from Polman’s time at Unilever and insights from his longtime friend and collaborator Dov Seidman, CEO of LRN, listen to the episode below.


fortune--2020-06-23--Trump says China trade deal is ‘fully intact’ after adviser’s comments roil markets

President Donald Trump is tweeting that an initial trade agreement with China is still on after a top White House adviser’s comments seemed to suggest it was over, spooking markets late Monday.
Trump tweeted: “The China Trade Deal is fully intact. Hopefully they will continue to live up to the terms of the Agreement!”
The Trump administration has been extremely critical of China’s efforts to contain the novel coronavirus early on and the president repeatedly blames China for the pandemic in his remarks, leading to questions about future cooperation in areas such as trade.
Peter Navarro, director of trade and manufacturing policy at the White House, told Fox News “it’s over,” when asked a question that was focused on the China trade deal.
“(Trump) obviously really wanted to hang onto this trade deal as much as possible. And he wanted them to make good on the promises, because there had been progress made on that trade deal, but given everything that’s happened and all the things you just listed, is that over?” Navarro was asked.
“It’s over, yes,” Navarro replied.
But when contacted by The Associated Press, Navarro said his comments had been taken out of context and had nothing to do with the deal.
“I was simply speaking to the lack of trust we now have of the Chinese Communist Party after they lied about the origins of the China virus and foisted a pandemic upon the world,” said Navarro, a longtime critic of the Asian country.
In January, the U.S. and China reached an interim trade deal to reduce tariff tensions. China agreed to buy massive amounts of U.S. products.
United States Trade Representative Robert Lighthizer testified on Capitol Hill last week that he is confident China will live up to its purchase commitments even though its economy has been weakened by the coronavirus pandemic and the lockdowns and travel restrictions imposed to contain it.


fortune--2020-06-23--Economists are increasingly optimistic about China’s economic recovery and GDP growth

Economists upgraded their forecasts for China’s economic growth this quarter and for 2020, signaling more optimism that the country is on track for a gradual recovery.
Gross domestic product will expand at 1.5% in the second quarter from a year earlier, according to the median estimate of economists in a Bloomberg survey last week. That’s faster than 1.2% growth seen in the last survey in May. Economists also dialed up their full-year growth projection to 1.8% from 1.7%.
The results indicate the world’s second-largest economy will be able to escape a technical recession that some economists had envisioned after a historic slump of 6.8% in the first three months of the year amid the coronavirus shutdowns. At the same time, while industry has returned to growth, households are still wary and consumption remains in contraction.
“The Chinese economy has continued to regain growth momentum,” said Aidan Yao, senior economist at AXA SA in Hong Kong. “With industrial production and services output both resuming growth, we now expect a positive GDP growth print for the second quarter.”
Policy makers have pledged a record amount of government debt sales to help boost domestic demand, and banks have been told to extend more credit to businesses as well as offer interest-payment holidays.
By contrast, China Beige Book, which surveyed more than 3,300 firms in the country, said the economy contracted again in the three months to June and is heading for a full-year recession.
Key metrics including manufacturing profits, capital expenditures and retail sales volumes remained at historically low levels and barely improved from those in the first quarter, CBB International said in a quarterly report.
Economists surveyed by Bloomberg expect growth in industrial output and fixed-asset investment to continue to accelerate and reach a pace similar to the pre-virus level in the second half, the survey showed.
Meanwhile, headwinds will remain in place especially on the demand side. Concerns about job stability and the resurgence of Covid-19 cases in Beijing will likely weigh on consumption, which economists forecast to remain in contraction for 2020. Factory deflation will stay throughout the year and consumer inflation will likely soften significantly on lack of demand, survey showed.
More monetary easing will likely come to shore up demand and guide borrowing costs for businesses lower. Economists expect the People’s Bank of China to cut the nominal reserve ratio for major banks to 11.5% from the current 12.5% in the third quarter, as well as slashing the key 7-day reverse repo interest rate to 2.05% from the current 2.2%.
A separate survey polling traders and market analysts showed more modest expectations for the policy outlook, in which reserve ratios are expected to be lowered to 12% and the 7-day reverse repo rate to 2.1% by September.
The focus of monetary policy is shifting to credit easing from the rapid reduction of interest rates previously, according to Ming Ming, head of fixed-income research at Citic Securities Co. in Beijing. “The recovery momentum in economic fundamentals will be kept up in the third quarter under the support of special sovereign and local bonds, which means bond yields will fluctuate at a high level,” he said.
Other findings from the surveys include:


fortune--2020-06-23--The pandemic’s economic crunch is fueling the rise of the resale market

Subscribe to How to Reopen, our weekly newsletter on what it takes to reboot business in the midst of a pandemic.
Americans holed up at home for months during the pandemic-related lockdowns and looking for new clothing at good prices in a hard economic climate have developed habits that are speeding up what had already been fast growth in the resale market, according to a new study released on Tuesday.
The U.S. resale market for clothing—excluding what is sold at thrift stores like Goodwill—will go from $7 billion this year to $36 billion by 2024, the study drafted by research firm GlobalData for leading resale site ThredUp found. Its previous forecast had called for the market to hit $23 billion by 2023.
A mix of factors beyond the low prices—such as environmental concerns and a lack of truly new fashion trends—has also fed what had already been a fast growing area of retail.
“For some time there was a question, Is it a flash? Or is it a fad? But every year it becomes clear this will be part of the next normal,” ThredUp CEO James Reinhart tells Fortune.
While the resale market initially declined sharply at the start of the pandemic—when lockdowns and the abruptness of the economy shutting down frightened consumers, as Fortune reported in March—it is now recovering, particularly at the lower and middle tiers. The RealReal said last week sales were still in decline compared with those a year ago but getting closer to normal levels again. And shoppers’ increased appetite for secondhand clothing is likely to be permanent.
The resale market has gotten a lot of validation in the past year: The RealReal went public last June, Poshmark has continued to grow, and others—such as StockX, Vestiaire Collective, and Depop—have established themselves as important players.
Meanwhile, big established retailers are taking a closer look at this area of clothing retail: ThredUp recently signed a partnership with Walmart to list 750,000 items on that retailer’s massive website, and Neiman Marcus took a stake in online secondhand handbag seller Fashionphile. In addition, ThredUp has opened shops at many Macy’s and J.C. Penney stores and has struck deals to take secondhand clothes from chains like Gap.
“You’re seeing the old guard get involved, and that’s always an indicator of their perception that this is here to stay as part of the consumer experience,” says Reinhart.
The growth of resale is coming at the expense of other retailers, particularly department stores, luxury stores, and clothing chains, and GlobalData expects secondhand apparel sales to eclipse fast-fashion’s by the end of the decade. Across the industry, sales of new clothing are expected to fall 4% through 2024, while resale will nearly quintuple.
The two other ways of buying clothes expected to boom the most, in addition to resale, are clothing rental services like Le Tote and Rent the Runway and subscription services, according to GlobalData.
Thrift stores will also continue to grow, rising from $21 billion in sales this year to $28 billion by 2024, contributing to the overall “shift to thrift,” as ThredUp president Anthony Marino puts it, that is fueling the whole resale market.
Whatever reluctance consumers may feel about wearing clothes worn by someone else, Reinhart says, younger shoppers, who are fueling the surge in resale, have different notions of secondhand clothes compared with their elders.
“People will always want to buy new stuff,” says Reinhart. “What’s really changing [is] the line between it’s brand-new versus it’s new to me.”


fortune--2020-06-23--University of Michigan cancels October presidential debate

The University of Michigan is withdrawing its offer to host the second presidential debate in October over coronavirus concerns, the Detroit Free Press reported Monday.
President Donald Trump and Democratic nominee Joe Biden were slated to face off in Ann Arbor on Oct. 15. The Free Press, which cited unnamed sources, said an official announcement would be released Tuesday.
Rick Fitzgerald, a spokesman for the university, said Monday night that he didn’t “have any information to share.”
The Free Press said the decision was made out of concerns about bringing so many people to Michigan’s campus amid the Covid-19 pandemic.
Michigan has had more than 67,500 cases of coronavirus and almost 6,100 deaths.


fortune--2020-06-24--One of the world’s richest families is fighting over a letter dividing their $11.2 billion fortune

How the U.S. should incentivize innovation during the coronavirus pandemic

A letter signed by the four Hinduja brothers is at the center of a legal dispute over the future of the family’s $11.2 billion fortune.
The 2015 document says that the assets held by one brother belong to all, and that each man will appoint the others as their executors. But now Srichand Hinduja, 84, the patriarch of the family, and his daughter, Vinoo, want the letter declared worthless.
The dispute between the U.K.-based family came to a light in a ruling delivered Thursday by a London judge, who said that the three other brothers, Gopichand, Prakash, and Ashok, used the letter to take control of Hinduja Bank—an asset that was in Srichand’s sole name.
Srichand and Vinoo want the court to rule that the letter should have “no legal effect” and cannot be used as a will, the judge said. She said that Srichand had insisted as early as 2016 that the July letter doesn’t reflect his wishes and that the family’s assets should be separated.
A lawyer for Srichand didn’t respond to messages seeking comment. An attorney for the three other brothers couldn’t immediately comment.
The three brothers said that if the claim succeeds then all assets in Srichand’s name would pass to his daughter and her immediate family, including the entire shareholding in Hinduja Bank, according to the ruling. The judge said that Srichand lacks capacity to give instructions to his lawyers and appointed Vinoo to act on his behalf.
The Hinduja family are among the world’s richest. The bulk of their fortune derives from Hinduja Group, the closely held conglomerate whose origins trace back more than a century that today has investments spanning finance, media and health care in almost 40 countries, according to its website.
The Bloomberg Billionaires Index values the family fortune at $11.2 billion.
The four Hinduja siblings now help to run the Mumbai-based group, which suffered in the economic turmoil stemming from the pandemic. Shares in Ashok Leyland Ltd., the Indian truck-maker controlled by Hinduja Group’s automotive unit, fell more than a third in March. The global slowdown in travel also hurt the group’s Gulf Oil International.
This month, India’s central bank pushed back on the brothers’ plan to raise their stake in IndusInd Bank Ltd., which has lost more than 70% of its market value this year, according to people familiar with the matter.


fortune--2020-06-23--The Segway rolls into the sunset

The Segway rolls into the sunset

One of the world ’ s richest families is fighting over a letter dividing their $ 11.2 billion fortune

It’s the end of the Segway era.
Production of the two-wheeled, self-balancing personal vehicle with handlebars will end July 15, and 21 employees will be laid off from the Bedford, N.H., plant that makes it, according to Fast Company.
It will end a disappointing run for what was, before its debut, one of the most anticipated gadgets of all time. Creator Dean Kamen and his team did a masterful job of building anticipation for the Segway, concealing what it was until the last possible moment. Leaks touting its potential to radically transform how people moved led to fevered speculation, including the theory that the Segway (code name: Ginger) was an antigravity device. Time described it at the time as the most hyped high-tech product since the Apple Macintosh.
Back then, Kamen predicted that the hype and his technology would make Segway the fastest company in history to reach $1 billion in sales. But it didn’t quite work out that way: According to Fast Company, only 140,000 Segways were ever sold.
The pitch for the vehicle was, in essence, that it would turn sidewalks into supplementary roadways, cutting automobile traffic and helping everyone move faster. But in practice, the Segway mostly found less transformative applications, particularly with tour groups, private security, and law enforcement.
Both the company and brand name behind the devices will carry on. Kamen sold Segway in 2009 after the device failed to reach stratospheric success, and it’s now owned by Chinese company Ninebot. Current Segway products include an array of electric scooters, hoverboards, and even self-balancing skates. Segway recently introduced the S-Pod, a self-balancing chair for use in theme parks, campuses, and other closed environments.
Still, there’s some irony to the original Segway ending its run at a time when the “micro-mobility” concept—scooters and bike rental services included—becomes an increasingly powerful force both in the technology industry and in city planning.
In 2020, bicycles and scooters have been deployed in vast numbers worldwide to help tackle the so-called last-mile problem of connecting commuting hubs to residences. Lime, a startup that provides rental bikes and electric scooters, was recently valued at $510 million despite serious economic headwinds. And given that enclosed public transit increases one’s risk of being exposed to the coronavirus, cycling and bike-sharing programs have seen a broad spike in use.
The Segway’s failure to get there first can be attributed to many factors. When it debuted, it cost $5,000—as much as a decent used car. Segway’s current president told Fast Company that the Segway was too durable, damping repeat sales. And it remained intimidating for many riders compared with bikes and scooters.
But that may not be the whole picture. A number of difficult, dangerous, and strange-looking transportation gadgets have followed in the Segway’s (gentle) wake. They include the Onewheel, a single-wheeled skateboard that has attracted a passionate following among extreme sports types and uses gyroscopic stabilization similar to the Segway’s. Even stranger are self-balancing electric unicycles—including one made by Segway.
Those aren’t necessarily going to replace your Honda, but they inspire passion in a way the original Segway never did.
“We’ve learned the micro-mobility space is about much more than just technology and functionality,” says Onewheel community lead Jack Mudd. “People choose micro-mobility products that connect them with the experiences they love and speak to the type of person they are and want to be.”
The Segway mostly failed to capture the sense of innovation and adventure that it initially promised and that may have made it more of a success. Instead it came to stand for terminal unhipness, best encapsulated by comedian Kevin James repeatedly falling off of one in the lowbrow comedy Paul Blart: Mall Cop.
Still, you can’t dismiss the Segway’s influence, and its legacy isn’t going anywhere—Segway-Ninebot says its products make up 70% of the global shared e-scooter market. That might not be exactly the future Kamen got us excited about 20 years ago, but it’s still a future he and his strange little invention helped create.


fortune--2020-06-23--How the U.S. should incentivize innovation during the coronavirus pandemic

The U.S. is facing a path diverged.
During the third month of the COVID-19 pandemic, Americans are rightfully wondering not only how long this health and economic crisis will last, but what the other side of this tragedy will look like.
When it comes to supporting the economy and the American business owner, how much of what we’ve implemented during the crisis will remain? What support strategies will disappear?
Or, perhaps more broadly, how can the U.S. leverage the obvious resurgence of American innovation during this crisis to compete on a global scale in ways we never have before?
While this crisis has certainly held certain aspects of the U.S. economy hostage, particularly the manufacturing industry, it has also put a spotlight on our country’s ability to adapt quickly and innovate rapidly.
Congress has admirably reacted quickly to help American taxpayers and businesses in the short term through multiple phases of COVID-19 relief. Where we are failing, however, is the need to look long term.
It’s clear that we face two choices in our path forward as a country.
One route is to shift back into our old way of thinking, where temporary incentives and weak policies continue to half-heartedly support America’s educational system, workforce training initiatives, and business innovation measures—leaving China and others with an open track to continue harnessing control over global supply chains.
Or instead, we can seize on this opportunity to acknowledge the hare-paced surge in innovation that American businesses have leaned into during this pandemic and offer comprehensive, sustainable, long-term support to prohibit that pace from tapering out.
I vote for the latter, and I know it’s possible to get there, as we’ve done it in the past with the Economic Recovery Tax Act of 1981. Then, we offered a tax credit to businesses who were improving their products or processes. This legislation helped the American auto industry compete at a more global scale, and drove the unemployment rate in automotive back to pre-recession levels.
This credit is proven and continues to work today. (Alliantgroup offers a variety of consulting services, including tax credit support, for small and medium-size businesses in numerous industries, including those described in this article.) Congress is now looking to accelerate the credit’s impact with the proposed bipartisan FORWARD Act, which Alliantgroup endorses.
While American companies have shown incredible ingenuity by addressing our health care needs during this crisis, much more needs to be done to sustain those efforts.
And although innovation tax credits are essential, our country needs to embrace systemic changes at a deeper level to come out of this crisis with an eye toward sustainable growth, and the ability to weather the next storm.
This includes creating systems that bring technical labor back to the U.S., encouraging the implementation of advanced manufacturing technologies so we aren’t left relying on others for necessities, such as PPE in times of crisis.
This starts with how we educate our youth, placing a heavier emphasis on STEM subjects in order to direct American students toward careers in medicine and engineering—fields that countries like China and India are increasingly dominating. But, most critically, this technological sea change needs to be driven by a change in the nation’s mindset concerning automation.
Certainly, in an environment where millions are out of work, there isn’t a single person who would want to bring on tools that could replace human labor. But, contrary to popular belief, that isn’t the case with automation.
These technologies bring opportunity for new jobs, including for those who need to develop, maintain, repair, redesign, and integrate the tools necessary to compete on a global scale. If we don’t move now, other countries will run away with what has become critical in geopolitics: control of the global supply chain.
China already took its fate into its own hands when it launched the Made in China 2025 initiative in 2015. This multifaceted plan is the country’s moonshot to lead the world in high-tech industries, from robotics to medical devices.
So far, it’s working, as evidenced by China’s grip on manufacturing in a variety of sectors, including drugs and active pharmaceutical ingredients.
We are currently in a new age of discovery. One that brings industrial evolutions, such as automation, led by engineers and software developers instead of the untouched territories discovered by frontiersmen. And, although it seems America’s focus on using that explorer mentality to climb to the top of global competition has waned in recent years, this can be a time to reignite that flame.
The American workforce is incredibly flexible, but the businesses that make up the backbone of our economy need a thriving market, trained workforce, and available capital in order to compete.
Legislation like the FORWARD Act incentivizes domestic manufacturing through increased tax credits that provide a long-term solution, but the same types of policies should be created that reward companies for their training programs, schools that produce necessary domestic technical labor, and businesses that invest in new technologies to give our country a leg up.
These will be plans for long-term growth. Plans that have the potential to give the U.S. the fighting chance it needs in battles that rage abroad, such as the race to 5G. It’ll create a system that is sustainable for more than just short-term crisis survival—and the key will be aligning incentives correctly.
This doesn’t mean that an open market shouldn’t be at the core of this strategy. It simply means that incentives can be the vehicle for change.
America needs to develop policies that keep our modern-day explorers, the technical labor that drives industries forward, here. The timing is mission critical. The opportunity for change is wide open.
Let’s embrace the abnormal and dive headfirst into an era of constant change where our country has repeatedly proved to be a force to be reckoned with.
Rick Lazio is a former U.S. representative and senior vice president of Alliantgroup.


fortune--2020-06-23--T-Mobile tries to back out of promise to create 1,000 California jobs

Two and a half months into the life of the “new” T-Mobile, the self-proclaimed maverick mobile-phone carrier is already asking to roll back commitments it made in exchange for approval to buy its smaller rival Sprint.
T-Mobile — now the second-largest U.S. wireless carrier because of the April 1 merger — is asking California’s Public Utilities Commission for a waiver of job mandates and network-speed milestones.
While T-Mobile promised to create 1,000 full-time jobs in California, T-Mobile said Tuesday that the state can’t dictate hiring. The Covid-19 crisis “makes the imposition of a mandate to create additional jobs infeasible and unwarranted,” it said in a filing with the commission.
And instead of delivering wireless-connection speeds of 300 megabits per second to 93% of the state in four years, the company said that the documents should have said six years.
“We appreciate the willingness of the commission’s staff and the commissioners to work with us to resolve our outstanding concerns and clarifications,” T-Mobile said in a statement.
Lone Holdout
As the lone holdout among the states, California had granted conditional approval only in mid-April, two weeks after the merger.
The enlarged T-Mobile is off to a rocky start. Last week, as many as 68 million customers were hit with a daylong service outage, which drew a federal investigation. That same week, it pulled the plug on its T-Mobile TV venture, writing down $218 million in costs.
T-Mobile also recently started shuffling its retail stores. Thousands of Metro and Sprint store employees are being displaced as they face the prospect of searching for different jobs at T-Mobile or leaving the company.
That’s a different picture than the one then-CEO John Legere presented when he announced the merger two years ago, touting the pact’s job-growth potential.
“We will be adding thousands of new jobs early on, and I can easily envision this leading to tens of thousands over time,” he said. Legere left his job in April.


fortune--2020-06-23--Macy’s trades big July Fourth fireworks show for short, multiday displays as concession to pandemic

Our mission to help you navigate the new normal is fueled by subscribers. To enjoy unlimited access to our journalism, subscribe today.
Macy’s annual Fourth of July fireworks show is a go after all this year, but the extravaganza will look very different because of the COVID-19 pandemic.
Rather than the massive 25-minute display broadcast in primetime that has been a fixture of July Fourth celebrations for years, Macy’s said on Tuesday that its fireworks event will consist of short five-minute shows on each night between June 29 and July 4 in each New York City borough at unannounced times and from undisclosed launch sites to avoid having crowds gather and break social distancing protocols.
That will lead up to July 4’s televised grand finale, which will feature the “best of” the previous five nights’ displays in a nationally televised show that will be hosted by John Legend.
“Producing the show in this fashion is the safest way possible for us to continue this more than 40-year tradition,” Macy’s spokesperson Orlando Veras told Fortune.
That approach salvages a key marketing event for Macy’s, whose Thanksgiving Day parade is also a major annual event. In addition to the 1 million people who gather in New York along the East River to watch the fireworks, another 10 million watch them on television. And Macy’s could use the exposure at a time when it is trying to rebuild its business following several weeks this spring during which all of its stores were closed: The company recently said its operating loss in the first quarter was close to $1 billion, while revenue plunged by nearly half.
The show also fulfills a pledge by New York Mayor Bill de Blasio in April, at the height of the pandemic in the city, that the Macy’s event would happen “one way or another,” something for which he was criticized at the time, given that he had canceled other large gatherings scheduled for the summer.
“These past few months have been some of the most difficult in our city’s history, and New Yorkers are looking for a break,” de Blasio said in a statement on Tuesday.
Whether New Yorkers are eager for that break to take the form of fireworks at unannounced times is an open question. Residents across the city have been contending with unauthorized fireworks exploding at all hours of the night in recent days, fraying nerves.
According to media reports, the New York Police Department fielded 11,535 complaints about illegal fireworks between Jan. 1 and June 21, compared with 54 over the same period. In addition to the Macy’s announcement on Tuesday, de Blasio said the city would create a task force to crack down on illegal fireworks.


fortune--2020-06-23--Stimulus Round 2: Trump floats more checks and senator proposes ‘vacation voucher’

President Trump has fueled further speculation that another round of stimulus checks could be on the way.
After floating the possibility of a second round of direct stimulus payments to Americans in an interview with Scripps this week, the President is reportedly advocating the measure in conversations with White House aides, the Washington Post reported Tuesday.
Trump is said to believe that additional stimulus checks would bolster the economy and strengthen his chances of reelection this fall, according to the Post. However, some White House officials and congressional Republicans are reportedly wary of the idea—particularly given the significant amount of deficit spending already undertaken by the government via its coronavirus stimulus measures.
The initial round of stimulus payments—part of Congress’s $2.2 trillion coronavirus aid bill—provided a one-time payment of up to $1,200 for Americans earning up to $99,000 per year, with married joint-filers earning up to $198,000 combined receiving up to $2,400.
The payments, as well as expanded unemployment insurance, have been widely lauded for helping to cushion the economic blow for tens of millions of Americans who have been forced out of work as a result of the coronavirus pandemic. But there are concerns that as some of those unemployment benefits expire and the impact of the stimulus payments fades away, more people could find themselves under economic duress.
Congressional Democrats have been at the forefront of floating further stimulus measures—most notably suggesting additional, more generous direct payments under a proposed $3 trillion follow-up stimulus package known as the HEROES Act. Meanwhile, Sen. Kamala Harris (D-Calif.) teamed with fellow former Democratic presidential candidate Sen. Bernie Sanders of Vermont on an even more drastic proposal, which would see some Americans receive up to $2,000 per month for the duration of the pandemic.
But some on the right side of the aisle have also offered stimulus ideas of their own. Sen. Martha McSally (R-Ariz.) introduced a bill this week designed to support the struggling tourism industry by incentivizing Americans to travel within the U.S. The American TRIP Act, as it’s known, would provide a $4,000 tax credit to individuals and an $8,000 credit to joint-filers (plus an additional $500 credit for dependent children) for travel-related expenses until 2022.
McSally’s proposal is similar to one pitched by the U.S. Travel Association, a travel industry group, which itself took a cue from an “Explore America” tax credit suggested by President Trump during a White House roundtable in May.
But some critics have questioned whether a tax credit incentivizing travel would do enough to help working Americans in need of financial assistance during the pandemic, not to mention the wisdom of encouraging travel in the next year or two—especially as McSally’s home state has witnessed a surge in COVID-19 cases in recent weeks.