fortune--2020-04-17--Saving a city: How Seattle’s corporate giants banded together to flatten the curve

Tom Lynch hadn’t expected the world to change—or at least his perception of it—at his Tuesday morning leadership meeting. He had expected to talk about the fiscal year 2021 budget and maybe to get to know his team a little better. It was Feb. 25, and Lynch was just four weeks into the job as director of the Fred Hutchinson Cancer Research Center, so new that as he walked the halls of the Hutch that morning he struggled to find the right conference room.
Lynch had also made time on the meeting’s agenda for Trevor Bedford, an epidemiologist at the prestigious Seattle-based research institute who had been tracking the novel coronavirus known as SARS-CoV-2 since early January. Lynch describes Bedford as “very humble” and “understated,” but that morning, as the quiet computational biologist laid out his grim projections for the virus’s impact on Seattle, he held the room. “People became incredibly quiet and just listened,” says Lynch. “Everyone in the room at the same time got that what he was talking about was something that was going to really change our lives.” Lynch vividly recalls that day. “You remember where you were when you realized what this was.”
What this was was still a completely unfathomable proposition for most in the global metropolis of 3.5 million. “Social distancing” had not yet entered the lexicon. At the time, Seattleites were still making arrangements for March tech conferences and spring fundraising galas; people were looking ahead to attending Seattle Storm games and Patti Smith concerts and the Emerald City Comic Con, a beloved annual gathering of 100,000 superfans slated for mid-March.
If people knew it at all, COVID-19 was a threat that seemed at least an ocean away. The State of Washington had reported just one known case, that of a 35-year-old man from Snohomish County outside Seattle, who had traveled to Wuhan and gotten sick upon his return in mid-January. He’d been treated and recovered. For those keeping score, it was Washington–1, coronavirus–0. But on that morning in late February, Bedford framed the situation quite differently; the virus was an urgent if not yet visible existential threat. Lynch got the message, and the next morning, in a breakfast meeting with Fred Hutch’s board leadership it was Lynch who upended the agenda.
SILENT STREETS: Influential scientists spread the word early here about the virus. Grant Hindsley—The New York Times/Redux
“I think we should spend this entire conversation talking about COVID-19, and what’s very likely to be coming down the pike here in Seattle,” Lynch said to his chair Matt McIlwain, a managing director at Madrona Venture Group, the Seattle-based venture capital firm. McIlwain left and immediately called his VC colleagues: “We need to think through what our strategy is,” he said.
Another person looking at Bedford’s data was Christine “Chris” Gregoire, a former Washington state governor—she served from 2005 to 2013—former Fred Hutch chair, and now head of an organization called Challenge Seattle, which engages 19 of the city’s largest businesses and institutions. Those include a striking number of name-brand Fortune 500 companies and organizations, including Amazon, Microsoft, Starbucks, Costco, Boeing, Nordstrom, Alaska Air, and the Bill & Melinda Gates Foundation, among others. The group was founded to solve some of the region’s more intractable problems surrounding education, affordable housing, and transportation. As it happened, Challenge Seattle had one of its meetings on the night of Feb. 25.
Challenge Seattle chair Susan Mullaney, the president of Kaiser Permanente Washington—which has dozens of health facilities, a leading research center, and more than 700,000 members across the state—had been following, with increasing alarm, her own group’s COVID-19 modeling efforts. She asked Gregoire for some time on the agenda that night; this was something she thought the business community needed to prepare for.
Many attendees now remember the event as their psychological turning point. Earlier in the evening, they’d casually discussed the virus over wine; at dinner, they’d sat—as one did, pre-pandemic—tightly bunched around tables. Though a few were already bumping elbows, many shook hands.
“I gave a brief update on how bad we thought it would be,” says Mullaney. Gregoire went over Bedford’s projections. As the group, which included Weyerhaeuser’s Devin Stockfish, Zillow’s Rich Barton, and REI’s Eric Artz, talked through comparisons to the 1918 flu pandemic, it was lost on no one that the most concerned among the group were its subject-matter experts—Mullaney and Steve Davis, the recently retired CEO of PATH, the global health organization. Some were struck by the assessment that the CDC was six to eight weeks behind on the issue. “The severity of it was sinking into all of us during that dinner,” says Michelle Seitz, CEO of Russell Investments, the Seattle-based global asset manager.
Dr. Thomas Lynch introduces himself to staff and faculty, February 4, 2020, at the Fred Hutchinson Cancer Research Center in Seattle. Robert Hood—Fred Hutchinson Cancer Research Center
Margaret Meister, head of Symetra Financial, an insurance giant based in Bellevue, the Seattle suburb, had been so startled she texted her leadership team that night. “We need to up our game. This is a crisis. This is not some small thing,” she told them.
“Quite candidly, there was absolute shock around the table,” says Gregoire. “That was the day that everybody saw how dire this could be if we didn’t get to work.”
What nobody imagined was how quickly things would turn. Just three days later, public health authorities announced the state’s second confirmed case of COVID-19. It was a stunning one: The infected individual was a local teenager, a high school student also from Snohomish County but who hadn’t traveled anywhere. (His case had been detected only because the Seattle Flu Study, an influenza surveillance effort funded by Seattle-based Gates Ventures and staffed by University of Washington, Seattle Children’s Hospital, and Hutch scientists—Bedford among them—ignored state and federal guidelines and tested samples.)
And then the following night, a Friday, Gregoire got a call. The state had its first COVID-19 death, and there was an outbreak at a local nursing home. The virus was in the community, and it was spreading. The threat they’d all been worrying about had already arrived.
But something else had been spreading too. The networks that knit Seattle together—running from its research hospitals and global businesses to world-eminent institutions, community organizations, and government—were thrumming with the exchange of information and intentions. Gregoire immediately called Mullaney and asked her to prepare another briefing.
There are many ways to tell the story of America’s first COVID-19 outbreak—an epidemic that, in the Greater Seattle area, has to date tragically killed 385 and infected 7,324 (in King County, home to Seattle proper, the numbers are 294 deaths and 4,428 infections). The virus has stolen the livelihoods of hundreds of thousands more. But the story of how Seattle came together can be a model for any city and organization.
In some ways, it’s hard to dream up a city better equipped to manage an outbreak of a new and deadly pathogen. Seattle has few worthy rivals when it comes to public health. In the University of Washington, the city has one of the nation’s leading virology labs and one of its largest infectious disease departments. It’s a town full of influential epidemiologists and disease modelers, many of whom have had their efforts blessed with Gates dollars, from the Hutch’s Bedford—with 200,000 Twitter followers—to the University of Washington’s Chris Murray, whose models are cited by the White House. It’s no accident that Seattle has the world’s first operational trial site for a COVID-19 vaccine candidate, or that it’s the first city in the country doing COVID-19 surveillance with at-home testing kits.
“We have an infrastructure that is 40 years in the making,” says Larry Corey, the man who started UW’s virology program in 1978 (and has since been instrumental in developing AIDS drugs, helmed the Hutch, and led the global HIV Vaccine Trials Network). “We’ve been able to permeate our community…we’re able to influence and be a factor.”
SEATTLE FREEZE: Locals adopted social distancing guidelines seriously—and early on. Jason Redmond—Reuters
Seattle is also a city of staggering wealth, home to a burgeoning tech community as well as the world’s most valuable multinational companies and the world’s two richest men, one of whom, Bill Gates, just so happens to be the planet’s most prominent advocate and funder of pandemic preparedness. Beyond those deep pockets, these enterprises are well connected to expertise—logistical, technical, biomedical—that spans the globe.
It all adds up to a highly educated population—with 62.6% of its residents holding four-year degrees, it was dubbed “America’s most-educated big city” in 2019—with a bias toward data and science. (Some also credit locals’ Scandinavian reserve—which manifests as the “Seattle freeze”—for their success at social distancing.)
Two Twitter hashtags epitomize the city’s collective response. #AllInSeattle—a fundraising banner under which dozens of the city’s millionaires donated $27 million to various nonprofits in four days—and #WeGotThisSeattle, a hashtag that trended on Twitter and was stitched on a flag that now crowns the city’s iconic Space Needle.
That’s not to say the city is out of the woods—Washington State Gov. Jay Inslee has stressed this point repeatedly—but in recent weeks as COVID-19 has continued its devastating spread across the U.S., Seattle has found a bit of a clearing, or in epidemiologist-speak, some “curve bending.” Its hospitals, though constrained by resources, have not been overwhelmed like those in New York and New Orleans. In King County, where Seattle and many of its suburbs lie, COVID-19 cases today are doubling once every 15 days; that compares with every 11.5 days in New York City and every 8.5 days in Chicago. Supplies once destined for America’s COVID-19 ground zero are now being rerouted to new, hotter hot zones.
In that way, the city offers a playbook, one that points to the importance of collaboration. Seattle is a big global city, but as many Seattleites will tell you—powerful ones, at least—“it feels a lot like a small town.” Information, and aid, and solutions were being rapidly passed around Seattle’s tight-knit business community and throughout the ranks of government. Suddenly some of the most cutthroat companies on the planet, like Amazon and Microsoft, weren’t trying to fight for market share, they were on the same side for once, trying to save their city.
Brad Smith hadn’t expected to come home to find an outbreak in his backyard. As Microsoft’s president, he’d been thinking about the virus, certainly—he’d been at a security conference in Munich mid-February, where he’d met a team from the White House who had peppered him with questions: What had the company seen in China? What would be the ripple effect of China’s economic downturn? Smith had then gone to Rome for an event at the Vatican; as the outbreak worsened in northern Italy, the virus was top of mind. He had left Italy the night of Friday, Feb. 28.
On Feb. 29, local public health authorities announced its first COVID death, an outbreak at the Life Care Center in Kirkland—a short drive from Microsoft’s campus. Adding to the urgency, Hutch epidemiologist Trevor Bedford shared an analysis, based on genomic-sequencing data of the virus, that suggested SARS-CoV-2 had been stealthily circulating in the community for weeks, likely infecting hundreds. Smith, a history buff, did two things: He ordered the best-regarded book on the 1918 flu pandemic, John Barry’s The Great Influenza, and he phoned his friend Gregoire, who had called for an emergency meeting of Challenge Seattle members the following day. They discussed the need to gather leaders from both the private and public sectors—and particularly public health experts.
These big companies began acting in concert. I’ve had a career in public service, and I’ve never seen anything like this. Christine “Chris” Gregoire, former Washington state governor and head of Challenge Seattle
The next day Gregoire held the emergency meeting, becoming the first in what is a now an ongoing series of daily COVID-19 crisis calls, open to the entire business community, sometimes with as many as 200 participants. At the beginning though, it was a much smaller group of leaders and King County officials trying to establish the facts and coordinate a response in an effort to “build public confidence,” says Gregoire.
They decided, when possible, organizations—even fierce competitors, like Amazon and Microsoft—should respond in the same way, whether it be on work-from-home policies or protocols around essential employees. Those companies also got a heads-up whenever local or state officials were planning to announce outbreak-related policies. “So these big companies began acting in concert,” says Gregoire. “I’ve had a career in public service, and I’ve never seen anything like this.”
Within days of the group’s first call, many of the city’s largest employers had asked all but their essential workers to stay home. Microsoft went on to announce it would continue to pay its hourly workers—janitors, cafeteria staff—while the campus was closed. Others, like Amazon and Expedia, followed suit.
But the virus didn’t wait for the business community to get its bearings. It had already crossed into Seattle’s corporate sector.
Like many of Seattle’s tech leaders, François Locoh-Donou, CEO of $2 billion F5 Networks, was planning for business as usual as February drew to a close. There was an investor and analyst event in New York, then the company’s annual customer meeting in Orlando mid-March.
But late on Friday, Feb. 28, his HR chief had taken him aside. There had been just three confirmed COVID cases in the whole state of Washington then, but one of them had been in close contact with an F5 employee. That employee—whose own COVID test results wouldn’t be available for a few days—had been coming to work, riding the elevator, and occupying space in the company’s new, 48-floor office tower.
That raised all sorts of questions—familiar now, but quite novel then. Should they close the office tower? Should they forgo their events? Had they themselves been exposed? Working out of a conference room that weekend, F5’s leadership team scrambled to consult experts and formulate a plan. “We had to make decisions really quickly,” says Locoh-Donou. They closed the tower for cleaning, a fact that more or less forced the other decisions: “We couldn’t send 10 executives from F5 Tower to be in a room with investors in New York City,” he says.
King County Executive Dow Constantine addresses media conference at a 140-bed COVID-19 assessment and recovery facility in Shoreline, Wash., April 1, 2020. Jason Redmond—Reuters
The decision hurt nonetheless. The employee tested negative, but the last-minute cancellation of the investor event spooked the market, and F5’s stock price took a beating. For a couple of days, “it looked like a bad decision,” says Locoh-Donou. Of course, he adds, it was the right call.
Within days the city’s other tech companies were dealing with similarly urgent decisions. Amazon emailed employees on Tuesday, March 3, about a confirmed case on its Seattle campus; the individual—one of the company’s 50,000-plus based in Seattle—worked out of the headquarters’ Brazil building and had last been in the office on Feb. 25. The night before falling ill, that employee had eaten dinner at Facebook’s nearby Seattle campus.
Facebook, meanwhile, had its own confirmed case—a contractor who had last been in the company’s local offices on Feb. 21. Microsoft reported a case on its Redmond campus, peopled by roughly 50,000 employees, on March 5.
“People wanted to know what floor they were on or what room they were in,” says Kathleen Hogan, Microsoft’s chief people officer, who got word of the confirmed case on their campus over text. Microsoft benefited from the expertise of Colleen Daly, the company’s global wellness benefits manager, who holds a Ph.D. in public health. Daly was on daily calls with the CDC and World Health Organization and managed the company’s internal contact tracing efforts.
For the city’s tech companies, many of which are in the business of enabling the burgeoning work-from-home economy, issuing swift and sweeping guidance for their employees was relatively straightforward. The calculation was not so simple for some of Seattle’s other large employers.
Having closed down 80% of its stores in China during the outbreak, Starbucks already had experience with COVID-19 when the virus showed up in its hometown. When a staff member in a downtown Seattle store came down with the disease on March 6, the company sanitized the store and resumed operations a few days later. The company phased in other changes—like offering 14 days of catastrophe pay to Covid-impacted workers and removing seating. But as the outbreak intensified across the U.S., employees like Aniya Johnson of Philadelphia grew frustrated that they were being asked to risk their health to serve coffee. “It’s not an essential service,” Johnson told Fortune in mid-March, days after she had, on a whim, started an online petition calling on Starbucks to close stores during the pandemic. The effort attracted 37,400 signatures from baristas and customers by the time Starbucks announced it was moving primarily to a drive-through model. (Starbucks says its decisions were informed by the China experience and grounded by concern about the well-being of its employees and communities, and its desire to support governments in efforts to mitigate the virus’s spread.) Costco—whose stores were deluged nationwide with shoppers seeking toilet paper and canned goods—asked employees at its headquarters, just east of the city, to report to work. That request was dropped after an employee in the company’s travel department died of COVID-19 and others tested positive in mid-March.
Boeing, which employs roughly 35,000 at its largest factory in Everett, just north of the city, and 70,000 in the Puget Sound region, initially kept its plants running. Deemed an essential business, its lines continued to assemble airplanes as COVID-19 cases cropped up in its workforce; it suspended production in the state in late March following the death of a quality inspector named Elton Washington.
While some Seattle employers struggled to strike the right balance, the area’s health care providers were scrambling to prepare for a surge of patients amid a desperate shortage of tests and other critical supplies. The Providence Regional Medical Center in Everett, which had received the nation’s first COVID-19 case in January, had tried to bulk up on supplies for a potential pandemic that month.
“Even being a couple steps ahead in our planning, it was really a challenge,” says Amy Compton-Phillips, chief clinical officer for the system. Starting in January, Providence’s orders from suppliers in China couldn’t be filled because manufacturing lines there were down. Providence staffers were overwhelmed by offers from suppliers they’d never worked with before, and came to understand many of them were profiteers, hawking non-medical-grade goods. “Things got so bad that we just went out to Joann Fabrics and Home Depot and bought supplies,” adds Compton-Phillips. A local Seattle TV station did a news story, featuring footage of Providence’s nurses assembling face shields and surgical masks in a hospital conference room.
250,000 Number of N95 masks procured by microsoft to help fight the seattle-area Covid-19 outbreak
Jeff Kaas, CEO of Kaas Tailored, a local company with 200 employees that makes furniture for Nordstrom and airplane parts for Boeing, heard about the spot on March 18 and immediately texted a doctor friend at Providence: “You know I have a factory, right?”
The next morning at 6 a.m., Providence sent a design and supply team to Kaas’s Mukilteo, Wash., factory. They worked out a surgical mask prototype, and the following day, after some collaboration with a firm in the Netherlands, they were making them. Kaas shared the specs online, which are now being used to produce personal protective equipment (PPE) around the world.
His own factory, staffed by employees, volunteers, his wife, and all four of his children, has been running 16 hours a day, six days a week since. Nordstrom has lent tailors to the effort and placed one of its managers at Kaas’s factory full-time. Providence’s effort has grown into the “100 Million Mask Challenge,” managed by the American Hospital Association.
Outdoor Research, a Seattle-based outdoor- and military-apparel maker owned in part by Dan Nordstrom—he left his family’s department store business in 2002—has also transitioned his operations to make PPE, an effort that was celebrated by Gov. Inslee as the sort of wartime manufacturing effort that’s needed. Local institutions have also stepped up to fill testing and health care gaps. The University of Washington has quickly ramped up its operations to run 2,000 tests per day. The Gates-backed flu study has pivoted to doing COVID-19 surveillance using at-home swab kits that Amazon delivers.
A Seattle-based financier with connections to China reached out to Madrona’s McIlwain in mid-March, offering to set up a video call between ICU and ER doctors in COVID-19-impacted Chinese cities and their counterparts in Seattle. Two days later, with the help of the Hutch, the information-sharing session took place over Zoom at 6:30 a.m. Seattle time, with 300 participants nationwide.
While Challenge Seattle initially focused on synchronizing the actions of the business community, the group’s efforts quickly turned to troubleshooting and supporting the government too.
ALL IN: Workers at Kaas Tailored went from making airplane parts for Boeing to producing personal protective equipment. Chona Kasinger—Bloomberg via Getty Images
When Kaiser Permanente’s Mullaney asked the group in early March, “Can anybody help get basic supplies?,” Costco CEO Craig Jelinek responded, saying he could source 40,000 N95 masks from China in 24 hours. Alaska Air CEO Brad Tilden made a broad offer to transport supplies. “We’ve got a fleet of airplanes that we’ll put at your disposal,” he told Mullaney.
Later, when a representative from Washington State mentioned on a call that it needed to make an advance payment to secure $10 million worth of protective equipment from China, Microsoft that day made available $15 million to the government to assist.
In another instance, a quarter-million N95 masks Microsoft had managed to procure for the state were stuck at a FedEx import facility in Memphis. Smith got wind of this dilemma at 5 p.m. on a Saturday in late March. He made a call to the White House, a contact on the National Security Council. They were released by the next morning.
“Anything the government has asked of these companies they have stood up and said, ‘We can make that happen,’ ” says Gregoire.
When Challenge Seattle asked for help organizing the state’s medical supply distribution center, they got senior managers from Amazon and Microsoft. When King County needed furnishings for motels they had turned into quarantine centers, Gregoire says Starbucks came through with furniture. After Mullaney advised that the state needed a single point person to coordinate its hospitals during the outbreak, her team helped Gov. Inslee find and hire—in roughly 72 hours—Vice Admiral Raquel Bono, a trauma surgeon who set up field hospitals in Desert Storm.
By early April, there were very real signs of hope that these types of moves had helped Seattle had escape the worst-case scenarios. Gov. Inslee sent 400 ventilators Seattle no longer needed to the East Coast. Supplies to turn CenturyLink Field, where the Seahawks play, into a temporary hospital were instead directed to other states.
In assessing the catastrophic toll from the spread of this deadly pathogen, in most places COVID-19 seemed to reveal nothing but weakness: weakness in infrastructure, weakness in supply chains, weakness in preparedness, divisions between government and business. In Seattle the pandemic seems to have revealed something else entirely: a tensile strength that few knew the city possessed. Says Smith: “If you bring us all together and coordinate the right way, you can do so much more together.”
The city’s dense web of partnerships has proved vital in stemming the initial wave of contagion; it’s unclear if it will be as effective in addressing the collateral damage COVID-19 has wrought—a devastated economy, record-level unemployment, and fissures of inequality the crisis has laid bare.
These are new realities with no easy answers, but Seattle has an advantage when everyone is #AllIn.
A version of this article appears in the May 2020 issue of Fortune with the headline “Seattle Under Siege.”
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fortune--2020-04-17--Investors shake off China slump and jobs gloom, sending global markets higher

The Fed may have fundamentally altered the nature of risk in the stock market

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.
Happy Friday, everyone. The global markets are climbing even as China reports an historic hit to its GDP.
Let’s head in that direction now.
Markets update
Asia
The major indices are all in the green, with the Nikkei leading the way 3% higher.
leading the way higher. Hong Kong and Shanghai exchanges are climbing too despite China recording its coronavirus-walloped economy contracted by 6.8% in Q1 , the worst performance in decades.
and exchanges are climbing too despite China recording its coronavirus-walloped economy contracted by in , the worst performance in decades. T here’s another dose of bad news in China. Officials on Friday revised up by 50% the Wuhan COVID-19 death toll. Just this week President Trump had cast fresh doubts on the data coming out of China.
Europe
European bourses look to extend Thursday’s gain. The benchmark Stoxx Europe 600 opened 2.1% higher and were gaining, as I type. Europe’s carmakers stand out, with BMW leading the way.
bourses look to extend Thursday’s gain. The benchmark opened higher and were gaining, as I type. Europe’s carmakers stand out, with BMW leading the way. It’s a mixed picture on the coronavirus front, however. New infections ticked up yesterday in Italy, France, Spain and Germany (though the death toll and hospitalization figures continues to show improvement) just as some of these economies plan gradual re-openings.
and (though the death toll and hospitalization figures continues to show improvement) just as some of these economies plan gradual re-openings. And fault lines continue to show in the not-so-united European Union. If the EU is to “hold on” through the crisis, the bloc needs to strike an agreement on “financial transfers and solidarity,” French president Emanuel Macron warned. Fortune‘s Jeremy Kahn reveals how the coronavirus crisis is pulling the EU apart.
U.S.
The Dow , S&P 500 and Nasdaq look to open higher again today, as I type. If they hold these gains, it would break this up-down-up-down cycle we’ve been stuck in over the past week.
, and look to open higher again today, as I type. If they hold these gains, it would break this up-down-up-down cycle we’ve been stuck in over the past week. The coronavirus news flow looks grim. The Wall Street Journal crunched the numbers, and found that U.S. deaths hit 4,591 in a 24-hour span, an ignominious record.
in a 24-hour span, an ignominious record. And then there’s yesterday’s jobless claims. We cover that below.
Elsewhere
If equities are up, then the gold must be… yep, it’s down.
must be… yep, it’s down. The dollar is flat.
is flat. Crude is mixed. WTI crude continues to sink lower; it hit a day-low of $18.31. Brent crude is flat.
By the numbers
1992. You have to go back 28 years to find such bad China GDP numbers. The economy shrunk by 6.8% in Q1, on a year-on-year basis. China is a bellwether. The reopening of its factories, shops and restaurants is being watched the world over for clues on how long it will take for a major economy to bounce back after an extended lockdown. Before the pandemic, the Chinese economy had been steadily growing at a pace of about 6%, so the drop-off is significant. Still, it’s not as bad as some economists were expecting. But it’s reviving a big question: time for another stimulus?
22 million. That’s how many Americans have filed for unemployment benefits in the past month. Yesterday’s jobless claims number came in at 5.2 million, slightly better than economists’ forecasts. The markets must have liked that number as all three indices ended higher yesterday. Still, there’s little to cheer in these numbers. Fortune‘s Lance Lambert calculates the real unemployment rate is now at 17.9% vs. the lagging official unemployment rate of 4.4%.
18.5. Every time I look up this morning at the price of WTI, the American crude oil standard, it falls. Earlier in the week it hit an 18-year-low, and it’s only gotten worse since then. In fact, it’s fallen about 18.5% in the last seven days. So much for that Hail Mary of an OPEC+ deal. Veteran investors will probably recognize how wild it is to see equities climbing and crude falling. The two have completely decoupled.
Postscript
A big thanks to the many Bull Sheet readers who emailed me yesterday with advice on my wife’s Canadian dollar FX conundrum. I learned quite a bit about the merits of currency hedges, among other things. I have passed that information along to her. She’s incredibly grateful. I promise to update you on that story in the future.
Today I want to talk about something much more mundane: hair. I don’t have as much of it as I used to. In normal times, I keep it trimmed short and neat. Nothing special. After leaving my nothing-special ‘do to grow wild over the past two months, I’ve been getting a lot of grief from my fellow cellmates here.
Under lockdown, with barber shops and fancy salons shut, Italians have resorted to downright criminal acts to get a decent trim. The cops continue to bust outlaw hair stylists who do house calls.
Not wanting to risk such trouble, my kids have devised a plan B. They’ll cut my hair. They chatter about it every night at dinner while I roll my eyes. But yesterday there was a big development. A package arrived, a new set of hair clippers. And so last night’s discussion about my hair took on more urgency.
One daughter got up from the table to inspect the back of my head, the uneven curls and tufts behind my ears. The other one fussed with the top of my head, asking me, in Italian, how I want my bangs.
“Ciuffo ribelle?” she asked.
I translated aloud, “Rebel bangs? That’s a thing?”
My wife withheld comment. As the girls chirped about the coiffure possibilities, I pulled out my smartphone and googled “ciuffo ribelle.” I got pictures of Meghan Markle.
I then tried it in English. “Rebel tuft,” I typed. I got this creature, which has its own Facebook fan page.
Apparently, poor little Pipino is in lockdown too.
We never reached a consensus. I just want a neat trim. The girls are convinced this is the start of a whole new me. A rebel me, apparently.
So in addition to DIY pizza, a DIY haircut is on the agenda this weekend. What could go wrong?
Have a nice weekend, everyone. I’ll see you here on Monday, possibly looking a bit different.
Bernhard Warner
@BernhardWarner
Bernhard.Warner@Fortune.com
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Today's reads
The German word for... When German hair salon owner Andrea Mayr asked for a $16,300 state grant to help her business weather the coronavirus crisis, she was surprised to find the money in her account the next day. It's called Kurzarbeit. Business owners in many other countries can only dream of such efficiency, writes Fortune’s David Meyer.
Spending with purpose. How do you get the most bang for your buck if you want to use your $1,200 (or more) stimulus check to help boost the economy? One way is to shop local as that business owner is much more likely to put the proceeds back into the local economy. Another idea is to book travel and airline tickets now (for later in the year), as that could help companies' revenue and cash liquidity, writes Fortune’s Anne Sraders.
The handbag indicator. Sales of luxury goods and cosmetics are showing signs of recovering from the coronavirus slump in China, the biggest market for expensive handbags and fashion. Sales in Louis Vuitton stores in mainland China are up about 50% in the past three weeks compared with a year ago. L’Oreal sales in China are on track for a gain of 5% to 10% this month. Both French companies had a painful first quarter, with LVMH’s comparable sales falling 17% and L’Oreal’s sales down nearly 5%, Bloomberg reports.
Market candy
16
As in 16%. That’s how much Gilead Sciences’ shares surged in after-hours trading Thursday after a report that Covid-19 patients being treated with its drug in Chicago were “seeing rapid recoveries in fever and respiratory symptoms.” Stat, a medical news publication, quoted Kathleen Mullane, a University of Chicago researcher who is helping conduct a trial of Gilead’s drug remdesivir, as saying that most patients had been discharged from the hospital and only two had died.


fortune--2020-04-17--Everyone is using Zoom, but is that what Zoom wants?

Most entrepreneurs dream of having an unexpected flood of new users. For Eric Yuan, the 50-year-old founder and CEO of Zoom, adding 90,000 schools—and having to educate them on how to use his product—has become a bit of a nightmare. “We thought their IT teams could help, but we were wrong,” he says in an early April interview over Zoom. “We are like the IT team for them.”
It’s hard to feel too sorry for him. After all, he is a multibillionaire several times over. He leads one of the few companies whose prospects have soared as a result of the pandemic. Still, Yuan looks drained, his face wan against the backdrop of a glimmering—and fake—image of the Golden Gate Bridge, a standard option in his product’s “choose virtual background” feature.
His frustration is understandable. A month has passed since Yuan ordered his 2,500-person company to work from home, preceding California’s statewide lockdown by 12 days. In the weeks that followed, as the COVID-19 outbreak spread around the world, the San Jose–based company’s popularity took off exponentially as well. To “Zoom” quickly became a verb, the new-normal way to convene for everyone from yoga instructors to Fortune 500 executives suddenly forced from their workplaces. Zoom’s users soared from 10 million a day in December to 200 million in March. Its stock price is up 80% on the year, giving the company a market value of $35 billion.
But the rapid growth has exposed challenges far greater than the CEO’s crammed calendar. As it turns out, the main reason Zoom was able to zoom past the competition, its ease of use, has proved to be a thorn in its side. Not requiring passwords as a default setting gave rise to yet another new phrase in the pandemic lexicon, Zoombombing, or the intrusion of uninvited and often offensive guests to private meetings. Zoom also has proved a target for hackers, forcing the company to patch software that could have allowed remote users to control the cameras of unwitting users, among other nefarious tricks.
Janine Pelosi, CMO of Zoom, bottom row, hosting a marketing team “happy hour.” Courtesy of Zoom Video Communications
The explosion of attention caught Zoom off guard. After all, for a decade it had been focusing on business users, not the masses. Yuan has embarked on an apology tour, penning a contrite blog post and granting numerous media interviews. “I’m ashamed,” he says of the security flubs. “I blame myself.” He’s adding more defensive features, such as mandatory password protection of meetings, while acknowledging that such moves will make Zoom less click-button simple to use. “For sure, it will have some impact,” says Yuan. “But we have to win back trust.”
Winning trust isn’t Zoom’s only hurdle. Counterintuitively, the surge in usage isn’t necessarily a boon to its business, because so many of its new users aren’t, and may never be, paying customers. That challenge, at least from an investment perspective, may be an even bigger concern than security slipups. “I don’t think it’s sustainable to give your product away for free for too long,” says Alex Zukin, an analyst with RBC Capital Markets.
In other words, Zoom may have become a beloved household name even as it faces unexpected scrutiny for its less-than-perfect security. But its success when the world returns to normal is anything but assured.
Zoom flew under the radar right through its successful initial public stock offering in April 2019. It raised $357 million at $36 per share, and the stock quickly charged over $100, making it a bright spot in Silicon Valley after the disappointing debuts of buzzier startups like Uber and Lyft. Its early users were typically universities and other smaller technology companies. And it wasn’t like videoconferencing was a particularly new idea. “For a long time, everyone thought that it was a crowded market, and that there’s nothing going on there,” says Dan Scheinman, a former head of corporate development at Cisco and Zoom’s first investor.
For Cisco, Zoom is in many ways the one that got away. In 2007 the networking equipment giant bought Webex, a business-focused videoconferencing company, where Yuan was the vice president of engineering. He stayed on at Cisco for four years and then left to build his own version of Webex, taking 40 engineers along with him. “To be able to scale video is a hard problem to solve,” says Oded Gal, Zoom’s chief product officer and one of the Webex refugees. “The engineers who followed Eric had built the best screen-sharing technology out there, and there are not a lot of people who can do that in the world.”
The entrepreneurs didn’t simply try to re-create Webex. Yuan believed a more modern take on the industrial-grade product the Cisco unit offered should be easily accessible from phones and laptops while on the go. It also needed to work on spotty Internet connections and cellular networks and to do it better than existing videoconferencing systems, which sucked up huge bandwidth and still didn’t do a particularly good job of replicating a phone call. “Eric spent two years building Zoom’s core architecture,” says Santi Subotovsky, a general partner with Emergence Capital, another early investor in Zoom. “He did the hard work, and he didn’t take any shortcuts.”
Yuan’s goal was to make Zoom scalable and reliable. He also wanted to make it much easier to use than existing videoconferencing software, which typically led users through a series of clicks (and downloads) before any video started streaming. Because there were plenty of simple alternatives in the marketplace, from Google’s Hangouts to Microsoft’s Skype to Apple’s FaceTime, Zoom would have to stand out to succeed. “We were in a market full of gorillas,” says Janine Pelosi, Zoom’s chief marketing officer and another former colleague of Yuan’s. (Half of Zoom’s 12-member management team worked with him at Cisco.)
Zoom’s embrace of “freemium” pricing—free to most users, upsells for added features—made the company popular with business users. The free version the world has become familiar with allows calls of up to 40 minutes for as many as 100 people and unlimited one-on-one exchanges. Zoom’s paid accounts start at $15 a month per user, enabling longer-duration calls and various administrative controls. Versions targeting big and small businesses offer even more capacity and additional bells and whistles.
True to its business-focused roots, Zoom already was earning a modest profit by the time it went public. For the year ended Jan. 31, 2019, it made nearly $8 million on sales of $330 million. Sales nearly doubled to $623 million a year later, and profits nearly tripled to $22 million, handily beating Wall Street estimates. “They’ve been executing wonderfully,” says Zukin, the RBC analyst. “Even pre-COVID, the stock had been on a significant tear.”
Indeed, Zoom was producing some of the fastest revenue growth rates in the software industry well before the effects of the pandemic began to be felt in China, where Zoom had proved popular. The company removed time-limit restrictions for Chinese users as the country began locking down. When workers in the U.S. began to follow suit in March, Zoom transitioned in a span of weeks from Silicon Valley success story to global phenomenon. And that’s when things got out of control.
While Yuan is publicly apologizing and reevaluating Zoom’s features, his larger, deep-pocketed competitors are seizing the moment. Webex, his former employer, is also seeing huge upticks in usage—more than tripling its volume of average meeting minutes per month in the U.S. in March. And it is actively marketing what it says is an emphasis on privacy and security to customers, both old and new. “That differentiation helps at this time,” says Sri Srinivasan, head of Cisco’s collaboration unit, which includes Webex. Microsoft Teams, a business-focused product that includes videoconferencing and complements the company’s consumer-oriented Skype service, also has been gaining. Microsoft says 500,000 organizations use Teams, which it bundles with subscriptions to its Office 365 productivity software.
Even smaller players, like Internet telephone provider RingCentral, are trying to make their move while Zoom is in the hot seat. In early April, RingCentral announced it was launching its own video product after seven years of relying on Zoom to provide “white label” videoconferencing tools to its customers. “We get to control our destiny,” says Vlad Shmunis, founder and CEO of RingCentral, referring to ending his company’s reliance on Zoom’s video tool.
That alone might not make a dent in Zoom’s current growth trajectory. The company’s chief financial officer, Kelly Steckelberg, says that revenue from customers like RingCentral represents less than 10% of Zoom’s overall sales. What’s more, it’s not clear whether the current scrutiny of Zoom’s security issues will end up eating away at its new growth at all. Consumers can be forgiving of security flaws in an overwhelmingly useful product. Just ask Facebook.
200,000,000 Number of Zoom’s daily meeting participants in March. In December, before locked-down Chinese users flocked to Zoom, the number was a mere 10 million
But there’s another question looming over Zoom’s newfound role as the public’s favorite videoconferencing tool: Just how many of its new users will become paying users? Unlike Slack, another collaboration-tool software maker, Zoom doesn’t break out the percentage of its account holders who pay. It also doesn’t say how successful it is in converting nonpaying users to paying subscribers. The company warned that usage growth would erode margins, but it hasn’t quantified the risk.
Investors, who have watched Zoom’s market value equal that of auto giant General Motors, are concerned. “We have reservations about Zoom’s long-term ability to monetize,” Morgan Stanley analyst Meta Marshall wrote in a report. Credit Suisse’s Brad Zelnick, who downgraded Zoom’s stock April 6 to “underperform,” was more direct. “We expect much of the recent surge will prove ephemeral, and/or comes from free users or education, which are difficult to monetize,” he told clients.
As for Zoom’s Yuan, he sounds as though he rues the day his company became a consumer hit at all. He’s focused right now on putting customers at ease, not wowing them. Already he has paused the development of all new features—that Snapchat-like makeup filter you’ve been pining for will simply have to wait—opting to devote his team’s time to fixing security loopholes. “We will review everything,” says the CEO. “Anything that might have negative impact to security and privacy, we will turn it off.”
In the process, Yuan needs to make sure he doesn’t turn off users who think his product has made getting through a global crisis just a little bit easier. After all, like Yuan, most of us plan to someday return to our office. When we do, he needs to make sure we still want to Zoom.
Not quite overnight
For many, Zoom seems to have appeared out of nowhere. In fact, it was a private startup for eight years as it became popular for its ease of use among business customers.
2011: Zoom incorporates under the name Saasbee Inc.
2012: Changes name to Zoom Video Communications
2013: First public release of Zoom Meetings, which supported 200 million annual meeting minutes by year-end
2014: Launched Zoom Chat, Zoom Video Webinar, and Zoom Rooms
2015: 100th employee hired
2016: Reached 6 billion annual meeting minutes
2017: Launched Zoom’s developer platform and hosted first user conference, Zoomtopia
2018: Announced Zoom Phone and a marketplace for third-party apps
2019: Exceeded 5 billion monthly meeting minutes. Oh yeah, and went public.
A version of this article appears in the May 2020 issue of Fortune with the headline “How Zoom Zoomed.”
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fortune--2020-04-17--Ventilators are in short supply. So are the people and resources needed to repair them

For years, manufacturers of ventilators and other medical equipment have kept a tight grip on the ability of hospitals to service and repair those products, prompting lawsuits and under-the-table sharing of repair manuals and software passwords.
Now, in the midst of the COVID-19 pandemic, the need for product information to keep ventilators up and running is at an all-time high.
Modern ventilators are typically serviced either every six months or 2,000 hours of use and can last for 10 years if maintained properly. But now nearly every ventilator is being called into near-constant service in hot spots, with some pulled out of storage after eight years on the shelf. When any ventilator breaks down amid the surge of cases, waiting two weeks for a repair can mean patients die.
While some manufacturers have made limited concessions to help hospitals and third-party service providers maintain equipment during the crisis, many biomedical equipment technicians, known in the field as “biomeds,” are facing roadblocks in evaluating and servicing ventilators desperately needed for patient care.
“Manufacturers have been in more of a protective mode, making sure they’re protecting their market share and the quality of their services,” said Ken Ottenberg, vice president of medical equipment management for Denver-based service provider HSS. “Saving lives and taking care of patients is what we’re trying to do. Are we not going to meet the demand at this time because of a business decision, instead of a quality-of-care decision?”
AdvaMed, a trade group for medical device manufacturers, has argued against allowing third-party servicers to work on complex equipment without proper training and oversight, and maintains that even during the current crisis, there is no evidence of a shortage of qualified manufacturer-trained technicians.
“The bottom line is that medical technology companies or their designated representatives are best equipped to service their products and keep patients who use them safe,” said AdvaMed spokesperson Jim Jeffries. “They are effectively serving the needs of patients and health care providers to respond both to the COVID-19 pandemic and other ongoing health care needs.”
Part of the equation is economic. Many manufacturers add to their revenues by controlling the servicing and repair of the equipment they sell. They restrict access to equipment information to only those technicians who complete a manufacturer’s training course. And as machines have become more computerized, companies use software locks to prevent repairs without permission.
“If you can’t get the access to the software, then all you have is a bunch of metal there,” said Bill Bassuk, president and CEO of the College of Biomedical Equipment Technology in San Antonio. “If they sold the equipment and it belongs to the hospital, then whomever that hospital wants to work on that equipment should be allowed to work on it.”
Right to repair
That’s prompted a “right to repair” movement for medical technology, seeking to break up the manufacturers’ monopoly on service and repair. Similar battles have been fought over cars, farming equipment, and cell phones.
“When the only company to fix it is the company that made it, that’s another incentive for them to get you to buy a new one instead,” said Nathan Proctor, director of the Right to Repair campaign for the public interest advocacy group U.S. PIRG.
So far, at least 20 states have considered right-to-repair legislation. Colorado was scheduled to vote on a bill this year, but the legislature was shut down early because of the pandemic.
Proctor argues that manufacturers should allow access to service information at least during the current crisis. Once the pandemic abates and lives are no longer at stake, the industry could have a more measured discussion about the right to repair.
Some manufacturers have made allowances during the past month as demand for ventilators and servicing spiked. Medtronic, for example, released the schematic designs for an older ventilator model so that new manufacturers can refer to a proven design.
But technicians said they are still having trouble accessing service manuals for Medtronic’s top-of-the-line ventilators.
“They need to move from a service model to an information-sharing model,” Proctor said. “There needs to be training, and there needs to be access to service information and passwords.”
In a statement emailed to Kaiser Health News, Medtronic spokesperson John Jordan said the company provides service manuals to hospital biomeds to help them with basic troubleshooting and testing when requested but, to date, had received fewer than 10 requests.
“Currently, our hospital customers are more concerned about having or receiving a ventilator than servicing one,” Jordan said. “Publishing service manuals broadly would not help increase the number of available ventilators.”
Manpower issues
In Colorado, Ottenberg said, one ventilator manufacturer, which he declined to name, has just two service technicians for the state.
“In any given normal month, those technicians can service all the equipment as needed for scheduled maintenance,” he said. “Now we get into COVID, there’s no way.”
Marty Fulkerson, director of operations for clinical engineering at the Centura Health system, which includes 17 hospitals in Colorado and Kansas, said that when one manufacturer’s service technician in Colorado was quarantined for two weeks after a COVID-19 exposure, the company pulled senior officials with repair experience out from behind their desks to meet the demand.
Third-party service providers say manufacturers may have no choice but to loosen their restrictions, as they cannot handle the increased need for service.
Ottenberg said the industry has had a shortage of technicians for the past two years at least, and with the pandemic, many of the technical schools have stopped training new biomeds. Now, biomeds say, service calls are scheduled out at least one to two weeks, leaving some equipment offline.
“It’s insane. It’s unacceptable if they can’t get out there for one to two weeks,” Bassuk said. “They’re trying to recruit enough to have a proper workforce, but they’re pretty much going to be overworked now.”
While in-house and third-party biomeds are willing to take on the extra work, they have not been able to attend in-person training sessions because of restrictions on travel. Some manufacturers are holding online training to help biomeds trained on one model of ventilator troubleshoot other equipment from the same company.
Burning the midnight oil
Jean Roberts, a biomed with the University of Vermont Medical Center, has been working six to seven days a week to maximize the availability of his facility’s ventilators.
“Thankfully, we biomeds are pack rats by nature,” he said. “Anything not in use, but not defective either, we scurried away to a warehouse for times like this.”
During the crisis, he has pulled 14 older ventilators out of storage and worked to replace the batteries and perform required maintenance. He then had to find the disposable components for those ventilators and train staffers who had never used those old-school machines before.
“They’re used to a touchscreen,” he said.
The University of Vermont hospital had more than 100 ventilators scheduled for preventive maintenance in April. Roberts and another senior biomed put other tasks aside in early March to work solely on ventilator maintenance, knowing a surge in demand was likely coming.
But finding replacement parts has been a challenge.
“We’re getting a lot of partial orders where we get all but one part we need,” he said.
The arrival of new ventilators from other hospitals or from a stockpile can mean biomeds need to get up to speed quickly on unfamiliar equipment. Roberts said that when Vermont ordered new ventilators, three of the four models available were ones the University of Vermont hospital had never used.
Some of the stockpiled ventilators haven’t been used for six to eight years and require immediate maintenance before they can be pressed into service.
Seeking help
When manufacturers are unwilling to share maintenance procedures, biomeds sometimes turn to online forums, such as MedWrench or iFixit, for help. The forums are inundated with requests for service manuals or software passwords for ventilators from technicians all over the world.
Frank’s Hospital Workshop, a website run by a German biomed living in Tanzania, created a site with manuals for older medical equipment that finds its way to hospitals in developing regions. Those hospitals have little choice but to try to make repairs on their own and eke out additional years of life from the aging equipment. Still, manufacturers have prohibited the download of some service manuals on the site, arguing that the equipment can no longer be safely repaired.
“For a premature child, the downside of it not working is a lot bigger than the repair quality,” Proctor said. “It’s not that complicated a device.”
Roberts has tried to help other biomeds posting on forums by directing them to manufacturer websites, but he said he won’t go so far as to share service manuals or passcodes, even during the current crisis.
“If you weren’t doing the maintenance to begin with,” Roberts said, “now’s not the time to learn.”
These unprecedented conditions, however, may be biomeds’ time to shine.
“The work that biomeds do has been historically largely confined to the dark corners of the basement or the lower recesses of the hospitals,” said Richard Gonzales, director of the College of Biomedical Equipment Technology. “But they do truly keep the lights on in the hospital.”
Correction: An earlier version of this story stated that “at least 20 states have passed right-to-repair legislation.” It has been updated to more accurately state that “at least 20 states have considered right-to-repair legislation.”
Kaiser Health News (KHN) is a nonprofit news service covering health issues. It is an editorially independent program of the Kaiser Family Foundation that is not affiliated with Kaiser Permanente.
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fortune--2020-04-17--Singapore has a plan for the world’s empty cruise ships

With cruise ships around the world being idled after hundreds of infections occurred during their voyages, they might have found a new purpose in Singapore.
The city-state is studying using cruise ships to temporarily house foreign workers who have recovered from the coronavirus and tested negative, as it tries to limit the spread after cases soared in the last week.
The potential measure could complement other interim facilities such as military camps and vacant public housing, the tourism board said in a statement on Friday. The move comes as the country grapples with a surge in infections among foreign workers who live in often-cramped dormitories and facilities.
Singapore had its worst day in the outbreak Thursday as it posted 728 new cases of the virus, a single-day record that contributed to a doubling of its infection count over the past week. The majority of cases occurred at migrant dormitories, where more than 200,000 workers live.
The move to contemplate housing foreign workers in cruise ships comes with a fair bit of irony. The government in March stopped port calls for all cruise vessels, where hundreds of infections had occurred during voyages elsewhere.
Cruise ships are being looked at as they have “readily available rooms and en-suite toilets to minimize person-to-person contact,” the tourism board said. The two ships being assessed for this purpose — Genting Cruise Lines’ SuperStar Gemini and SuperStar Aquarius — can hold up to 2,000 foreign workers, and will allow health measures to be implemented more effectively in existing dormitories by lowering the number of workers there.
With about 10 people sharing a single room, according to Singapore charities that support migrant workers, the crowded conditions at dormitories have emerged as one of Singapore’s biggest challenges in its fight to contain the spread of the coronavirus.
Cruise Ships
The workers’ current living conditions have drawn comparisons among health experts to challenges on cruise ships, some of which have shown to be hotbeds for the virus during their voyages. Cruise ships have tight quarters and narrow walkways, making it hard to enforce social distancing.
The cruise industry has suspended operations for the moment, with some operators canceling certain voyages until the end of this year. More than 800 cases of Covid-19 infections occurred during outbreaks on three cruise ship voyages, according to a March 27 report by the U.S. Centers for Disease Control & Prevention. Since then, more cruises have reported coronavirus infections among crew and passengers.
One of the first highly-publicized outbreaks occurred on Carnival Corp.’s Diamond Princess, where some 700 passengers and crew became infected — even as 3,700 on board were subjected to a two-week quarantine off of Yokohama, Japan.
The virus was found on surfaces in cabins of infected passengers on the Diamond Princess up to 17 days after the cabins were vacated but before they were disinfected — suggesting that the virus might live longer on ships’ surfaces than what’s been reported in other studies.
Ship Assessment
Genting’s SuperStar Gemini, which arrived April 17 from Hong Kong, is currently berthed at Marina Bay Cruise Centre where it will undergo an assessment to determine its suitability for temporary housing, according to Singapore’s tourism board.
The assessment will consider, among other areas, the ship’s ventilation systems, security protocols and infection control measures, and will only be used to house foreign workers if it passes the assessment, it said. SuperStar Aquarius may be activated for assessment at a later date.
Should the cruise ship proposal by Singapore go ahead, the low-wage workers will be allowed scheduled outdoor time and provided mobile phone connectivity and wireless Internet surfing, the tourism board said.
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fortune--2020-04-17--China’s historic GDP decline signals demand for more stimulus—but will Beijing act?

China’s gross domestic product contracted 6.8% in the first quarter of 2020, the National Bureau of Statistics (NBS) said Friday, revealing the extent to which the economy has been battered by the COVID-19 virus. The negative growth marks China’s first annual quarterly decline since at least 1992, when records began. With declines likely to continue into the second quarter, eyes are on Beijing to see what fresh stimulus measures state leaders dish out.
Round one
China’s economy was put on hold for much of two months this year, beginning with the weeklong national holiday at the end of January being extended by another week in order to help contain the spread of the deadly coronavirus. Many factories remained closed or severely short-staffed throughout March as swaths of the population were ordered to stay inside.
With the outlook obviously bleak, China began deploying stimulus measures in mid-February to get the economy back on track. China’s central bank, the People’s Bank of China, slashed reverse repo rates and reserve ratio requirements to their lowest in years, injecting hundreds of billions of dollars into the market.
Other banks were instructed to be lenient on loan defaults, too, while local governments issued $144 billon in special bonds to raise funds for infrastructure spending. Factories were offered tax breaks and subsidies to return to work, and some local governments handed out coupons for citizens to spend on consumer goods.
Round two
The steep retraction seen in the first two months of the year generally slowed in March, according to the NBS, but the relative gains fall far short of what stimulus measures should have achieved. According to Bo Zhuang, chief China economist at financial advisory TS Lombard, the slowing decline is just a sign of the economy restarting naturally.
“If you look at infrastructure investment, it hasn’t really picked up very strongly. Only utilities have recovered, but other infrastructure spending, such as railway development, is still down nearly 20%, which means they have resumed existing projects but have yet to start new projects,” Zhuang says.
Alicia Garcia Herrero, senior research fellow at economic think tank Bruegel, anticipates more regional governments will issue consumer vouchers and that China’s shadow banking system—credit lines kept off the books of official banks—will be deployed to increase investment in infrastructure as a second round of stimulus.
Beijing is considering further stimulus, such as raising the deficit-to-GDP ratio and issuing further special sovereign bonds too. However, the government remains reticent to enact major fiscal measures.
Wait and see
“The government doesn’t know what to do because the National People’s Congress has not been held,” Zhuang says, referring to the annual two-week meeting of China’s state legislature, where party leaders set policy directions for the coming year.
The NPC was supposed to convene in March but has been postponed indefinitely. Zhuang says Beijing is waiting to see how the U.S. and the EU react to the pandemic before convening the NPC and announcing its own policy moves.
The U.S. and the EU account for 34% of China’s export purchases, so China’s recovery from COVID-19 will be heavily affected by the recovery of these two regions. Exports in the first quarter plummeted 11.4% as demand dried up overseas. With much of the EU and U.S. still under lockdown, the decline is likely to extend into the second quarter.
There’s little Beijing can do to counter that.
For the year ahead, Beijing will primarily be concerned about unemployment rates, says Oxford Economics lead economist Tommy Wu. Official data for March showed urban unemployment at 5.9% and said joblessness was “generally stable” in the first quarter—despite some 460,000 companies going bust already this year.
Wu called the unemployment figure remarkable and questioned whether the data—which is based on a government survey and has hovered around 4% to 5% for years—is representative of the labor force. He expects the government will hand out more wage subsidies to employers in order to keep jobs open.
“I expect the government’s approach now will be to keep employment up, keep the economy going, and look forward to next year,” Wu says.
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fortune--2020-04-17--Why Wuhan’s coronavirus death toll just jumped 50%

Wuhan’s coronavirus death toll rose 50% on Thursday after officials in China revised their counting methods and added previously unreported deaths.
The death toll for Wuhan, the first epicenter of the coronavirus pandemic, now stands at 3,869, up from 2,579. The total case count for the city also increased by 325, bringing Wuhan’s total confirmed cases to 50,333.
According to state news agency Xinhua, Wuhan’s coronavirus prevention and control task force said the jump in numbers was due to previously unaccounted deaths, like people who died at home instead of in hospitals, and people whose deaths were not counted or miscounted in the chaos of an overwhelmed medical system and staff.
The revised numbers come amid concerns that China is underreporting its COVID-19 infections and deaths. U.S. government officials have criticized China’s reporting of the disease’s spread within its borders; Secretary of State Mike Pompeo accused China of waging an “intentional disinformation campaign” about the virus.
Some Wuhan medical workers have also described “hidden” cases that contradict city and central governments’ recent claims of no new cases, the Financial Times reported.
As of Friday, the death tolls in the U.S., Italy, Spain, France, the U.K., Iran, and Belgium were each higher than the total for Hubei province, where Wuhan is located, and the total for China as a whole.
The death count in New York City, which has become a major coronavirus epicenter, also jumped on April 14 after officials added presumed positive cases—people who had not been tested for the virus but likely had it when they died—to the total number. The revision in New York led to a 3,700-person increase in the city’s death count.
In February, Wuhan’s COVID-19 cases also jumped dramatically when officials said they would include “clinically diagnosed” patients who had not been tested but had been diagnosed with the disease using a CT scan. One week later, Wuhan officials changed tack again and said only lab-tested positive cases would be counted, and others would be deemed “suspected” until tested.
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fortune--2020-04-17--The coronavirus is pushing the crisis-marred EU to a new breaking point

The global financial crisis buckled but didn’t break the European Union. The coronavirus pandemic may tear it to shreds.
As the death toll in Italy soared during late February and March, the 27-nation bloc, founded on the ideal of solidarity among European nations, failed to mount a collective humanitarian response and struggled for weeks to agree on a package of economic aid.
Disagreements over that rescue deal laid bare fissures only likely to grow in the coming months as additional financial assistance becomes necessary.
French President Emmanuel Macron, in an interview with The Financial Times, warned that the EU will collapse as a “political project” unless the bloc supports Italy and other economies stricken by the coronavirus pandemic through a commonly issued and guaranteed funding mechanism.
When Italy invoked an EU framework meant to facilitate the sharing of vital medical supplies between members, not a single European country responded. Only weeks later, on March 22, did the European Commission approve a €50 million ($54.6 million) grant to Italy to help it produce ventilators and personal protective equipment.
Instead of mutual aid, an every-nation-for-itself mentality gripped the Continent. Denmark, Poland, and the Czech Republic closed their borders, with Germany shuttering crossings with France, Austria, and Luxembourg. Many EU nations imposed export restrictions on medical supplies. France nationalized its entire supply of face masks while Germany blocked shipments of masks intended for Austria, sparking outrage.
Into the void stepped China, Cuba, and Albania, delivering medical supplies, doctors, and nurses. Russia sent a far more provocative aid package. It dispatched eight brigades of soldiers trained in chemical and biological warfare to deliver supplies and construct field hospitals. Given that the EU was originally formed, in part, as a bulwark against Moscow’s designs on Western Europe, the irony was acute.
“A heartfelt apology”
Last week, the EU approved a €500 billion ($545 billion) rescue plan for the countries hit hardest by crisis. Then, this past Wednesday, it unveiled a coordinated-if-somewhat-vague plan for how members of the bloc can gradually restart their frozen economies. And on Thursday, European Commission President Ursula von der Leyen offered Italy “a heartfelt apology” for failing the country in its hour of need.
But the damage may already be done. “The EU has suffered over the past decade a series of crises that have created new institutions but that have weakened the project politically,” Heather Conley, the Europe director at the Center for Strategic and International Studies in Washington, D.C., says. “The pandemic will accelerate those trends.”
More than two-thirds of Italians now believe being part of the union is a disadvantage for their country, according to a survey conducted last month by Tecne Institute, up from 47% in November 2018. Another poll by the same researchers this week found 49% of Italians would vote to leave the EU if there were a referendum.
The U.K.’s 2016 decision to leave the union shook the bloc to its core. It is unlikely the EU could also survive the defection of the third-largest eurozone economy.
At €500 billion, the EU’s emergency funding falls well short of the €1.5 trillion the European Central Bank says may eventually be needed to prop up the region’s shattered economies. And the fight between Italy and the Netherlands over the size and scope of the aid package foreshadows further strife.
The main points of contention are over what conditions will be imposed on those countries that access EU funds and whether responsibility for paying for any economic help will be shared equally among all the bloc’s members.
During the global financial crisis, richer European nations, such as Germany, insisted that countries taking bailout money, such as Greece and Ireland, make deep cuts to public spending to bring budget deficits in line with the bloc’s 3% cap and to begin to reduce public debt-to-GDP closer to the EU’s 60% ceiling.
The Netherlands initially insisted on similar requirements for Italy, which had a debt-to-GDP ratio of close to 135% even before the pandemic hit, to access rescue funding. The Dutch were eventually persuaded to drop those demands, but the issue is likely to reemerge in the future with Italy’s debt-to-GDP ratio now on track to exceed 150% once coronavirus aid packages are taken into account.
The eurobonds debate
A group of nine EU nations, led by Italy—but also including Belgium, Greece, France, Ireland, Luxembourg, Portugal, Slovenia, and Spain—have been pushing the EU to issue special euro-denominated “coronabonds” to fund additional stimulus across the bloc. The idea has met stiff resistance from the Dutch and Germans, who insist that any additional debt should be the obligation of each member state requiring funding, not the EU collectively.
The coronavirus has also brought to a head the EU’s creeping crisis over Hungary, an EU nation that strayed far from the democratic norms, such as the guarantee of an independent judiciary, free press, and civil society, required for membership in the bloc. Prime Minister Viktor Orban has lurched further toward authoritarianism during the pandemic, using the outbreak as an excuse to impose sweeping and indefinite emergency powers.
Already, Hungary’s actions, as well as moves in Poland to limit the independence of judges, had opened up an East-West fissure within the EU, with bitter battles over the Western states’ efforts to punish illiberal members by limiting their access to EU funding.
The extent of this East-West divide over liberalism as well as the renewed North-South division over deficits will be tested this summer when the EU enters final negotiations over a seven-year long-term budget, known as the multi-annual financial framework (MFF). This will be one of several milestones that, Conley says, that may well indicate whether the EU survives. In February, before the coronavirus’s terrible economic toll was apparent, the bloc floundered in its efforts to resolve many outstanding issues concerning the MFF—simply papering over disputes and pushing a hard reckoning off to the summer.
Another test will come in June over the renewal of EU sanctions on Russia. Those sanctions, in place since Russia’s annexation of the Crimea in 2014, have to be renewed every six months by unanimous consent of all EU members. More than merely scoring propaganda points, Russia’s decision to send troops to assist Italy was aimed at convincing Rome to vote against sanctions renewal, according to Nigel Gould-Davies, a senior fellow for Russia and Eurasia at London’s International Institute of Strategic Studies.
A final breaking point may come if the fiscal cost of the pandemic eventually pushes Italy into insolvency—unable to service its debt or issue more, Conley says. “That will be the clarifying moment of whether Europe and its institutions can overcome some of their birth defects,” she says, adding that the scenario is an extreme one that she hopes does not come to pass.
Others see the situation as far less grave. Maria Demertzis, deputy director at the Brussels-based think tank Bruegel, says that the EU will “unequivocally” survive this latest crisis. “We are just like a family fighting with each other,” she says. “We come to dinner and we are all fighting with one another. We are still a family though.”
She says that Brexit shocked Europe—but also had a galvanizing effect, strengthening feelings of European solidarity among the remaining members of the bloc and emphasizing how important it is to prevent another member from departing.
Even opinion polls showing Italians’ disillusionment with Europe are not a sign of serious trouble, in Demertzis’s view. “Go to Italy and ask someone, is Europe good for them? They will say no,” she says. “But ask that same Italian if they want to go back to the lira, and they will say never.”
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Subscribe to Outbreak, a daily newsletter roundup of stories on the coronavirus pandemic and its impact on global business. It’s free to get it in your inbox.


fortune--2020-04-17--Coronavirus sees China’s GDP record first contraction since at least 1992

China’s economy recorded the first contraction in decades in the first quarter as the coronavirus outbreak shut down large parts of the world’s second-largest economy and dimmed the global outlook.
Gross domestic product shrank 6.8% in the first quarter from a year ago, the worst performance since at least 1992 when official releases of quarterly GDP started, missing the consensus forecast of a 6% drop. Factory output fell 1.1% in March, retail sales slid 15.8%, while investment decreased 16.1% in the first three months of the year.
The sharp contraction underscores the pressure that Chinese policy makers face as they attempt to revive the economy without nullifying efforts to contain the virus. The continued spread around the world also threatens to add fresh downward pressure on China’s exporters in a feedback loop that could throw millions out of work.
“The economic loss is unprecedented,” Pacific Investment Management Co. economists wrote in a report before the data. “The global recession will hit exports primarily in the second and third quarters of 2020, domestic demand is still hampered by quarantine curbs, and stimulus transmission is weak amid spreading bankruptcies and job losses.”
China’s economy was forced into a paralysis in late January as the epidemic that first started in Wuhan spread across the country. The economy remained shuttered for much of February with factories and shops closed and workers stranded at home. The process of resuming business has been disappointingly slow and the return rate only inched up to around 90% at the end of March, Bloomberg Economics estimates.
To cushion the economic blow, China has unveiled a range of support measures, although not on the scale of other nations.
That includes 3.55 trillion yuan ($502 billion) in low-cost funding provided to financial institutions, 1.29 trillion yuan in pre-approved local government special bonds, and 1.6 trillion yuan in cuts to various fee taxes, according to the nation’s cabinet.
The central government is also mulling other policies like raising deficit-to-GDP ratio, issuing special sovereign bonds and increasing the local government special bond quota, in order to fuel a faster economic recovery, according to a recent article from a senior official
Exports fell less than expected in March as production capacity was gradually restored, but economists warn bigger headwinds lie head as the rest of the world shuts down and external demand diminishes.
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Subscribe to Outbreak, a daily newsletter roundup of stories on the coronavirus pandemic and its impact on global business. It’s free to get it in your inbox.


fortune--2020-04-18--China now has more leading coronavirus vaccine candidates than any other country

Is a $ 1,200 stimulus check enough ?
For many , it ’ s ‘ chump change in the long @ @

China now has more COVID-19 vaccine candidates approved for human testing than any other country in the world.
On Tuesday, Chinese health authorities approved vaccine candidates developed by two Chinese companies—the state-owned Wuhan Institute of Biological Products and the Beijing-based biotech firm Sinovac—for phase I testing on humans, according to China’s state-run media outlet Xinhua News. This follows an April 10 announcement that CanSino Biologics, a biotech firm based in Tianjin, China, and its partners at the Academy of Military Medical Sciences, were the world’s first vaccine makers to move into phase II trials for vaccine development.
China has thus far moved at record speed in the global hunt for a vaccine, yet the extraordinary pace doesn’t necessarily mean China will develop the world’s first cure, nor does it mean China is shortening the timeline for seeing a vaccine through to market. It’s still working on the 12- to 18- month schedule that experts say is realistic—if not overly optimistic. At least three companies based elsewhere have entered phase I trials; a fourth won phase I and phase II approval at once. Yet the Chinese companies are near the pole position for vaccines against the pandemic, and they may gain more prominence as candidates inch closer to the finish line in coming months. (The three companies did not return Fortune‘s requests for comment.)
This is what we know about them so far:
CanSino Biologics
CanSino Biologics was founded in 2009 by Yu Xuefeng, a Chinese national who spent most of his career in Canada working for the vaccine and pharmaceutical giant Sanofi Pasteur. Yu says that he founded the company to connect what he saw as a booming vaccine research and development market in China with international markets and collaborators. In line with this mission, he recruited three other native-Chinese scientists with overseas pharmaceutical experience to launch the company.
CanSino has worked on developing vaccines for a number of different infectious diseases, such as meningitis and tuberculosis. It was thrust into China’s national spotlight in 2017 when domestic authorities approved the company’s vaccine as China’s first candidate for Ebola. The vaccine was developed in partnership with the military-run Academy of Military Medical Sciences in Beijing.
CanSino says its current vaccine efforts are based on the technologies it developed in producing the Ebola vaccine, and Chinese media has heralded the company’s efforts as a demonstration of the country’s “strong research capabilities.“
Yu has signalled openness in cooperating internationally in finding a vaccine, and on Monday signed on to a World Health Organization statement urging more global coordination in COVID-19 vaccine development efforts. At the same time, Dr. Chen Wei, a Chinese general who is leading the military vaccine team partnering with CanSino, has described the quest in militaristic and nationalistic terms, equating finding a vaccine with providing China a ‘bio shield’ from outside threats.
Sinovac Biotech
Sinovac Biotech was established in Beijing in 2001 on the heels of work conducted by CEO Yin Weidong and his team to develop China’s first domestically-produced hepatitis A vaccine.
Since then, the company has developed six other commercially-viable vaccines, and the firm now has a market value of over $400 million.
The company gained particular prominence in 2009 when it developed the world’s first approved vaccine to tackle H1N1 swine flu, the only pandemic the world had grappled with since the 1918 Spanish Flu until the coronavirus hit.
Sinovac’s efforts to produce a coronavirus vaccine are based on platforms the company used to address China’s Severe Acute Respiratory Syndrome (SARS) epidemic in 2004, according to a vaccine tracker run by the Milken Institute, a U.S.-based think tank. At the time of SARS, Sinovac created the first vaccine candidate to enter human trials. And though initial trials proved promising, further trials were suspended as the threat of SARS subsided.
For now, the company seems intent to showcase to the world that coronavirus isn’t the first pandemic it’s battled. “Sinovac has always been committed to developing vaccines for global use when facing pandemics,” Yin said in a company statement on Tuesday.
Wuhan Institute of Biological Products
Less is known about the Wuhan Institute of Biological Products. Founded in 1950, it traces its roots almost all the way back to the founding of modern-day China. The institute now operates as an affiliate of the state-owned China National Pharmaceutical Group—also known as Sinopharm—which is the largest pharmaceutical company in China with annual revenue topping $60 billion in 2019.
The institute has a sprawling campus in Wuhan with nearly 1,000 employees, according to the company’s website. The company, however, has released little information about its past or ongoing vaccine development efforts.
Located in the city at the center of China’s coronavirus outbreak, the institute has become the subject of unfounded conspiracy theories that suggest the pathogen leaked from its labs. Such theories have largely targeted the Wuhan Institute of Virology, but some have drawn connections between the two institutes, inserting them into the unproven narrative that the Chinese government played a role in creating the virus. The U.S. government is currently investigating the possibility that the virus originated in a lab, but hasn’t yet drawn any conclusions. Scientists say that the virus most likely started in bats and spread to other animals before passing to humans, but its specific origin is not yet known.
The Institute of Biological Products has had to overcome a scandal of a different kind in recent years. In 2018, the Chinese government found that the institute produced over 400,000 defective DPT vaccines—which protect against diphtheria, pertussis, and tuberculosis—and sacked six local government officials in the wake of the crisis.
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Subscribe to Outbreak, a daily newsletter roundup of stories on the coronavirus pandemic and its impact on global business. It’s free to get it in your inbox.


fortune--2020-04-17--Is now the time to find a career coach—or a therapist?

China now has more leading coronavirus vaccine candidates than any other country

Damian Birkel has seen what can happen to people whose lives have been upended by a layoff. Since starting a nonprofit support group called Professionals in Transition in 1982, Birkel says he has dissuaded more than a few from terrible decisions, most memorably one executive some years ago: “I had to persuade him to take a gun out of his mouth and lay it on the table.”
At the moment, as the COVID-19 pandemic continues to ravage the economy with no end in sight, Birkel’s organization is overrun with new members looking for guidance about their next career move. Many just need some smart advice on expanding their networks and strategizing for the future. A few, however, “have become completely unhinged” by a job loss, Birkel says. “They need help that’s way beyond what a career coach or a support group can handle. That’s when it’s time for psychotherapy.”
These days, both coaches and therapists report they’re being deluged with inquiries from current and former clients. “Everyone is scared,” notes Kathi Elster, a partner in New York City-based K Squared Enterprises, which offers both coaching and therapy. “Many people do not do well with uncertainty.”
If you’re one of those people, and think you’d benefit from some professional advice, which kind should you choose? The answer lies in an essential difference between what coaches and therapists do. A career coach is trained (and often certified, by an organization like the International Association of Coaching, the Society for Human Resource Management, or GetFive) to brainstorm with you about your overall work goals and how to reach them. The discussion is entirely about your professional life.
By contrast, therapists (who are required to be licensed in all 50 U.S. states) focus on helping you address emotional baggage from your past, and any resulting psychological disorders, that may be getting in the way of achieving what you want in your career.
Since emotional problems can have a sneaky way of lurking just below the surface of our conscious minds, it’s not always easy to see what the real problem is. Often, career coaches come across a psychological issue a client is struggling with, and refer that person to a therapist for a closer look at it.
One example, from executive coach and author Lois Frankel, PhD: The head of a thriving national nonprofit was an accomplished public speaker—except that, when it came to talking to her own organization’s all-male board of directors, she became mysteriously tongue-tied. Says Frankel, “It turned out she had an older brother who teased her mercilessly as a child,” leaving her with a deep-rooted anxiety. Frankel coached her on effective communication techniques, while also referring her to therapy “to deal with that underlying cause.”
If all you need is some savvy advice on tactics for moving your career to the next level, a seasoned coach is your best bet. But it’s wise to recognize, too, that you may need to dig deeper. Signs of career-damaging emotional trouble can be subtle, like a pattern of overreacting to relatively minor work setbacks, or an inability to accept less-than-great feedback (even when your rational mind knows that it’s accurate).
Particularly common is clinical depression, which even in good times affects about 6% of the U.S. population—and, at times like these, starts to skyrocket. (Curious about whether you suffer from depression? The diagnostic quiz that doctors use is online here.)
A common symptom of depression, says longtime clinical psychologist Sherry Benton, PhD, is “the feeling of being paralyzed or ‘stuck,’ unable to move forward with what you know you need to do.” If that describes you now, Benton says, get treatment as soon as possible, to head off “episodes that can get more frequent, and more severe, for the rest of your life and career.”
Luckily, both coaching and therapy are available online, and both kinds of practitioners recommend choosing a professional by contacting two or three and asking whether they have experience in dealing with situations similar to yours. Ask for referrals to past clients. To find an online therapist, Rachel McCrickard, a veteran therapist who is now CEO of therapist-training site Motivo, recommends 7 Cups, BetterHelp, TalkSpace, or Open Path Collective.
As McCrickard sees it, we could all use some professional help. She points out that the pandemic has produced so much stress and upheaval that millions of people around the world are showing symptoms that meet the standard for “adjustment disorder.” The malaise is defined by the Mayo Clinic as a combination of depression and anxiety that causes “nervousness, worry, difficulty concentrating or remembering things, and feeling overwhelmed.”
In a normally functioning world, people sought therapy for this “only if the symptoms were especially chronic or severe,” McCrickard says. And in this pandemic? “Almost everyone is struggling with adjustment disorder now.”
More must-read careers coverage from Fortune:
—How Fortune 500 companies are stepping up during the pandemic
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