fortune--2020-07-07--“Time now to address this crisis”: Why CEOs must make mental health a priority during the pandemic

Karen Lynch, executive vice president at CVS Health and president of Aetna, opened up Tuesday to attendees at Fortune’s digital Brainstorm Health conference about losing her mom to suicide when she was 12 years old, describing how that has made her “incredibly vocal” on the topic.
Today, at the helm of a major U.S. health-care insurer, Lynch is seeing firsthand increases in the number of patients with psychological disorders as the fear and isolation caused by the coronavirus pandemic have taken their toll on millions of Americans’ mental health.
But Lynch says that now, unlike in the past, the C-suite is taking notice.
“If there is any silver lining to this pandemic, it has put mental health on the map,” Lynch said. “For the first time in a very long time, as I’ve been talking to CEOs and in boardrooms, everyone is talking about the impact of the pandemic on mental health…it’s the time now to address this crisis in front of us.”
Lynch was joined in discussion by Dr. Joshua Gordon, director of the National Institute of Mental Health (NIMH), in a panel moderated by Arianna Huffington, co-chair of the conference and the founder and CEO of Thrive Global.
“The data that concerns me the most right now is what we know from responses to previous disasters,” Gordon said. “We know that only half of the people who need help will actually get it.” Gordon said he’d like to see medical providers and companies help make sure Americans are getting the mental-health care they need.
How can employers and medical providers help? Gordon points to the recent success of mental health hotlines and telemental health care, which is “helping to reach people that were previously hard to reach.”
Lynch suggest creating an environment where employees are comfortable speaking up and sharing their mental health experiences—behavior she modeled on Tuesday in speaking about her mother.


fortune--2020-07-07--Messages from our first-ever virtual Brainstorm Health

The NFL ’ s apparent new wokeness might be performative , but it still matters

Good afternoon, readers.
We just wrapped up day one of the first-ever virtual Brainstorm Health conference—a meeting of medical minds in a time when medicine is more important than ever.
It would be easier to describe what we didn’t cover than what we did. Seema Verma, administrator for the Centers for Medicare & Medicaid Services (CMS), spoke to the telehealth industry’s staying power. It’s a force that’s become increasingly important in the midst of the coronavirus pandemic.
“The genie is out of the bottle when it comes to telehealth,” said Verma. (We’ve previously written about the promises and shortcomings of telemedicine despite its new popularity and evolving regulations, including issues as simple as being able to have a reliable broadband connection.)
And with NBA players slated to go to Florida for something resembling the end of a season, we heard from commissioner Adam Silver on the challenges of re-opening a sports league. While repeating that he’d still go to Florida, he addresses a whole lot of nuances about what would happen if an outbreak occurred between the players.
“[I]t’s the right question, and I’m not sure yet,” said Silver. “Certainly, if we had any sort of a significant spread at all within our campus, we would be shut down again.”
Silver went on to say that it would “be concerning if once [the players] sit through our quarantine period, and then were to test positive, we would know that, in essence, there’s a hole in our bubble, that our campus is not working in some way.”
But our conversations throughout the event loomed even larger. From science to community to just, well, everyday life, speakers and panelists spoke to the issues which most affect us at this critical moment, and what we can do about it.
We’ll have much more on this in the next few days (for the fellow biopharma and drug development nerds—former FDA commissioners, drug giant CEOs, and other titans of industry happen to be involved in both today’s and tomorrow’s sessions).
Brainstorm Health wraps up tomorrow afternoon. I hope you’re all doing well during these wild times.
Read on for the day’s news.
Sy Mukherjee
sayak.mukherjee@fortune.com
@the_sy_guy
DIGITAL HEALTH
A bluetooth device for your heartbeat. MobiHealthNews reports that Abbott Laboratories has gained FDA clearance for MyMerlinPulse. This Bluetooth-connected device can record heart rhythms to an app and connect with doctors who can assess if something's wrong enough to warrant an in-person visit. (MobiHealthNews)
INDICATIONS
Science may never be the same. Jennifer Doudna, the pioneer behind CRISPR gene-editing, had a few things to say during today's Fortune Brainstorm Health virtual conference. Here's one that stood out to me: "Sometimes there's a long period of time without a lot of change, and then things accumulate and suddenly there's literally a revolution that changes everybody's thinking, that alters the way we understand our world," said Doudna. "I think we're in that moment right now." One can only hope. (Fortune)
THE BIG PICTURE
WHO admits coronavirus can spread through the air. Under pressure from scientists, the World Health Organization (WHO) has admitted that there is increasing evidence that coronavirus is airborne. "The possibility of airborne transmission in public settings - especially in very specific conditions, crowded, closed, poorly ventilated settings that have been described, cannot be ruled out," said Benedetta Allegranzi, an infectious control lead for the organization on Tuesday. This speaks to the evolving science of the virus and the pressure that public agencies face when determining a nuanced pathogen's effects while it wreaks havoc. (Reuters)
REQUIRED READING
An update on who's received a PPP loan, by Jeff John Roberts
Face masks may have killed of the 'lipstick index', by Katherine Dunn
Self-driving cars are returning to work too, by Jonathan Vanian
Sign up for other Fortune newsletters.


fortune--2020-07-07--Shares of obscure biotech firm Novavax soar 32% on coronavirus vaccine funding

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Investors rushed to embrace Novavax, a little known Maryland drug company, after the U.S. government awarded it $1.6 billion to produce 100 million doses of a covid vaccine.
Novamax shares closed closed near $105 on Tuesday, a 32% increase from their opening price. This latest rally caps a remarkable 2020 for the company, whose stock traded near $5 at the start of the year, and which had been dogged with rumors of an impending bankruptcy.
The government’s decision to grant Novavax such a large contract is remarkable given that Novavax has never brought a drug to market, and because other firms that received money under the same program—known as Operation Warp Speed—include drug industry titans like Johnson & Johnson and Astra Zeneca.
In a statement, Novavax said it will use part of the funding to pursue Stage 3 clinical trials on 30,000 volunteers with the aim of delivering the 100 million coronavirus vaccines as early as this year.
In an interview with Business Insider, Novavax’s CEO Stanley Erck said the government deal does not oblige the company to introduce any future price caps. Erck also stated that two-thirds of the funding will be used for clinical trials, which will include tests on children, while the rest will primarily be used to ramp up manufacturing.
The goal of the Operation Warp Speed program is to accelerate the time it takes to make a COVID vaccine widely available, in part by helping firms to begin manufacturing the vaccine even as clinical trials are ongoing.
The potential vaccine being pursued by Novavax, known as NVX‑CoV2373, is just one of several vaccines the U.S. government has deemed as promising. For now, it’s unclear if any of the drug candidates, including one developed by Moderna—an upstart biotech firm that has recently sparred with regulators—will be suitable as widespread vaccines. Last week, the FDA said any COVID vaccine must help at least 50% of those vaccinated to receive approval.
Tuesday’s pop in Novavax’s share price is part of a broader bull run among biotech stocks. The exchange traded biotech fund known as ETFMG Treatments, Testing and Advancements ETF was up 4% on Monday, boosted by its 6% holding of Novavax.
More must-read finance coverage from Fortune:


fortune--2020-07-07--How IBM Watson supercomputers are speeding up the search for a COVID-19 vaccine

As they search for a coronavirus vaccine, medical researchers and companies are looking for shortcuts to treat COVID-19—and they’re getting an assist from artificially intelligent supercomputers.
At the beginning of the pandemic, IBM deployed its Watson A.I. technology around the world to hundreds of universities, companies, and medical organizations such as the Mayo Clinic and Cleveland Clinic. They “are all running experiments and creating findings from the supercomputers put together,” Paul Roma, general manager for IBM Watson Health, said at Fortune’s Brainstorm Health Virtual conference Tuesday.
While the Mayo Clinic, for one, is studying the use of convalescent plasma—blood antibodies from recovered coronavirus patients—to treat COVID-19, it’s also looking at potential benefits of existing treatments for other diseases, with the help of IBM.
“We know we cannot simply wait for a vaccine,” Gianrico Farrugia, the president and CEO of the Mayo Clinic, said at the virtual event. “We have to work with partners—IBM, others—to be able to create this ecosystem where we can recycle old drugs.”
For example, Farrugia cited Gilead’s experimental drug remdesivir, which was the first treatment to receive emergency authorization from the Food and Drug Administration for use on COVID-19 patients. That drug has been studied for years in trials targeting other viruses such as Ebola. “Remdesivir is not an old drug but it’s not a new one either,” added Farrugia.
The advantage of IBM Watson, said Roma, is the supercomputers’ ability to accelerate the research process. “What would have taken weeks to model and run in a standard and traditional computing environment can literally be done in minutes,” he said. “You can get months’ worth of modeling and work done in the course of a day.”
By partnering with so many institutions pursuing a vaccine, IBM’s technology helps create a sort of network effect with the various data sources, Roma explained: “When you bring it all together, you can actually have the best researchers, you can have a community really engaged in helping people.”


fortune--2020-07-07--The coronavirus positivity rate is too high in 28 states

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Too many Americans are testing positive for COVID-19 as a percentage of all those screened for the disease—a worrisome indicator that many states still aren’t testing enough of their infected residents.
Arizona, Florida, South Carolina, and 25 other states all are seeing spikes in their “positivity rates,” the percentage of people who test positive for the coronavirus out of all those tested, according to Johns Hopkins University’s COVID-19 tracking project.
Positivity rates should be under 5% for at least 14 days in areas with adequate testing, according to the World Health Organization. But Arizona now has an eye-popping positivity rate of 25.3%, meaning that one in every four people tested has COVID-19.
Higher positivity rates “may indicate that the state is only testing the sickest patients who seek medical attention, and is not casting a wide enough net to know how much of the virus is spreading within its communities,” according to Johns Hopkins. Lower rates indicate that people with mild and asymptomatic cases are also being screened for the coronavirus and that the state “is testing enough of its population to make informed decisions about reopening.”
Florida’s positivity rate is 18.7%, and South Carolina’s is 16.6%; other states that have recently seen surges in confirmed daily coronavirus cases, including Texas and Mississippi, also have positivity rates above 13%. Connecticut, Maine, and the onetime coronavirus hotspot of New York have the lowest positivity rates, each below or just above 1%, according to Johns Hopkins. Also worrisome, the overall U.S. positivity rate is mounting again. It fell to as low as 4.2% in June, according to the COVID Tracking Project. But it had risen to 7.3% as of July 6, even as the overall number of tests given increased.


fortune--2020-07-07--Professional soccer returns to TV without fans, but with microphones in the turf

ESPN gets back to the business of broadcasting live team sports in the U.S. Wednesday night with the return of Major League Soccer.
While the seats will be empty, fans at home will hear and see fancy new sounds and visuals, including drones capturing the action from above, super-slow-motion replays from cameras behind the goals and microphones buried in the turf.
The match between the league’s two Florida clubs, Orlando and Miami, will showcase new features that the Walt Disney Co.-owned network has been planning almost since the coronavirus shut down live events in March. It’ll be a proving ground for technologies the broadcaster could use when other sports return, including the National Basketball League, which resumes play later this month at the same ESPN Wide World of Sports facility in Orlando.
“You’re going to pretty much hear everything,” said Amy Rosenfeld, who is heading the production for ESPN. “There may be some trial and error here. I’m really curious to experience the turf mics: It could be a dud, it could be incredibly impactful.”
It’s also a risk. The cost of producing the games is more than double what the network would normally spend, Rosenfeld said. That includes a production staff of 160 people and as many as four times the number of microphones typically deployed. A larger crew is necessary because of the grueling schedule, with 54 games slated for one month in the Florida heat, and the possibility of more illnesses.
Virus threat
“This would be daunting even without the pandemic,” Rosenfeld said in an interview.
The virus continues to be a threat to players and staff, particularly in central Florida, where cases have spiked recently. Already 16 players have tested positive for Covid-19, and one team, Dallas, has withdrawn from the tournament, according to the league.
Team members will stay at Disney hotels nearby and be subject to rigorous testing and quarantine precautions for the duration of play, in an area that’s been dubbed “the bubble.”
The network ruled out putting mics on players and referees because it wanted to minimize contact between its crew and the team. The league, meanwhile, decided not to go with fake crowd noises, as other sports have done, hoping the array of microphones might bring a new audio perspective, according to Seth Bacon, the league’s senior vice president of media.
In one aspect of the new catch-up sports era, ESPN is showing games starting at 9 a.m. New York time on weekdays for fans able to multitask or not working. “I really like this idea of wake up, get your coffee and watch a great soccer match,” Rosenfeld said.
The first National Women’s Soccer League game of the season drew over 572,000 viewers on CBS on June 27, a record. Other leagues returning to play can expect a similar bump as sports-starved fans return to live matches, according to Patrick Crakes, a sports-media consultant.
Back to trend?
“Every sport will come out of the box with a strong number, then we get back to trend,” he said. “People are saying, ‘I want to check out the no-fan thing.’”
Bacon declined to comment on league plans for social-justice messages when the games resume. England’s Premier League players wore Black Lives Matter on their jerseys when they returned last month. The NBA is planning similar messages addressing civil rights, the league has said.
Because the games won’t have fans, MLS is skipping the national anthem — meaning players won’t have an opportunity to take a knee in protest.
Rosenfeld said she’s ready for whatever happens on the field.
“Our job is to document the event, and the actions by the players are part of the event,” she said.


fortune--2020-07-07--How Bank of America is thinking about its $1 billion donation toward racial equity

The death of George Floyd reinvigorated a conversation around racial disparity in corporate America. Bank of America, the second largest U.S. bank by assets, is seeking to do the same.
“The whole incident with George Floyd and Breonna Taylor before that—these kinds of deaths were just so riveting and brought to the fore the importance and the emergency of the issues around racial injustice,” said Bank of America vice chairman Anne Finucane during Fortune’s virtual Brainstorm Health conference on Tuesday.
In a conversation with Thrive Global founder Arianna Huffington and Milbank Family Senior Fellow at the Hoover Institution Niall Ferguson, Finucane notes that while the bank previously worked toward dedicating $500 million a year to a racial equality program aimed at small businesses, affordable housing, jobs, and emergency health, that figure doubled to $1 billion to be spent over the next four years following the prominent deaths of Black citizens in the United States.
The death of Floyd, a 46-year-old Black man who died after a Minneapolis police officer kneeled on his neck for nearly nine minutes, sparked a visceral, nationwide outcry against police brutality and a heightened awareness of racial inequalities within corporate America.
For companies, the incident has shone a spotlight on their promises of tackling racism on a corporate level. Giants including Citigroup and Netflix spoke out in support of Black lives following the incident.
Now the question is how to keep the momentum going. Finucane says BofA will be carefully measuring outcomes over time as they disburse that $1 billion. She hopes they will find outcomes include more affordable housing, better job creation—and in the meantime better race and gender diversity within BofA.
“Metrics are important. If you can’t measure it, how can you determine you’re doing better than a year before that?” she says.


fortune--2020-07-07--3 ways science will never be the same after COVID-19

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In Ernest Hemingway’s lauded novel The Sun Also Rises, one character famously tells another how he went bankrupt: “Gradually, and then suddenly.”
That same wry remark could be used to describe how big changes happen in science. At least that’s the view of Jennifer Doudna, a professor of chemistry and molecular and cell biology at the University of California at Berkeley, who spoke Tuesday at Fortune’s Brainstorm Health virtual conference.
Doudna is best known for codiscovering a powerful genetic engineering technology called Crispr-Cas9. The technology enables scientists effectively to “cut and paste” DNA with precision.
This summer, a group of researchers used the technology to treat inherited blood disorders in humans, such as sickle cell anemia, resulting in what one team member described, albeit preliminarily, as a “functional cure.” As with much else these days, that hopeful bit of medical news has been overshadowed by the worldwide COVID-19 pandemic.
Despite the global challenge, good can come out of the crisis, Doudna told the audience of executives who tuned in to the event via videoconference. Indeed, Doudna believes the coronavirus has pushed society toward an inflection point similar to the one Hemingway described in his classic—except this is one that begets, miraculously enough, prosperity rather than insolvency.
Doudna’s observation derives not from the fiction of Papa, but from another old book, one that she picked up in her early twenties while in graduate school: Thomas Kuhn’s The Structure of Scientific Revolutions. In it, Kuhn uses the concept of a “paradigm shift” to describe how revolutions take place—often gradually, and then suddenly—in science.
“Sometimes there’s a long period of time without a lot of change, and then things accumulate and suddenly there’s literally a revolution that changes everybody’s thinking, that alters the way we understand our world,” Doudna said. “I think we’re in that moment right now.”
Specifically, Doudna believes science is changing in three ways. Her list echoed points she made in a recent op-ed for The Economist.
1. More respect
The first change is an increased respect for science. People are gaining a greater appreciation for the discipline—a trend that could lead to new talent entering the field, greater funding for basic research, and more impactful discoveries.
“Why do we have science? Why do we have scientists?” Doudna asked rhetorically. “I think the coronavirus shows us in really close-up detail why it’s critical to understand biology.”
2. More communication
The second trend is better communication. Scientists traditionally reserve their findings for the prestigious pages of paywalled academic journals. But lately, Doudna has noticed more scientists picking up the pace and posting earlier versions of their draft articles, or preprints, online.
As a result of the race to understand the coronavirus and develop potential vaccines, “there’s a desperate need for science to be communicated quickly,” Doudna said. By posting results online early, even before they can be properly peer reviewed, “that allows information to quickly get out into the public sphere” where people can learn from, test, and build on it.
3. More collaboration
The third marked difference is boosted collaboration. Doudna described the combined efforts of corporations, scientists, and public health officials coming together to combat the coronavirus as “extraordinary.”
In her own case, rule changes expedited by state and federal governments allowed her own lab to get approval to convert into a COVID-19 testing facility earlier this year. The lab, housed in Berkeley’s Innovative Genomics Institute, now performs thousands of tests per day.
Partnerships with corporations, such as Salesforce, information analysis firm Third Wave, and lab equipment giant Thermo Fisher, helped get the program up and running in a matter of weeks.
Taken together, these rapid, major changes in the practice of science represent a Kuhnian paradigm shift, in Doudna’s view. “Those are all changes that are likely to stick around because they really are, fundamentally, allowing us to do science in a different way,” she said.
You can bet your money on it.


fortune--2020-07-07--3 ways companies can combat the major public health issue of racism right now

There is not one, but two major health issues at the forefront right now.
The tragic reality that Black people are more heavily impacted by the coronavirus is clear—a recent study by McKinsey & Company shows that Black Americans face a higher risk of getting coronavirus, and also have lower access to testing. That inequity is also seen in death rates: Black Americans have been dying at much higher rates than white Americans.
“The pandemic is shining a really bright light on what’s happening with healthcare disparities, specifically when it comes to the minority population [and] the Black population,” Dr. Ashwini Zenooz, the chief medical officer and senior vice president and general manager for healthcare and life sciences at Salesforce, said at Fortune‘s virtual Brainstorm Health conference Tuesday. “That’s not because somebody is Black, it’s because of all of the components that have built up over hundreds of years that have led to the conditions there are today.”
As society works to combat both the pandemics of COVID-19 and racism, employers have a crucial role to play to ensure they are taking care of their employees and addressing the myriad racial inequities within their own workplace.
Focus on your low wage and essential workers
There are many factors contributing to the inequities we see in the health crisis today: “Whether it’s about access to good food, clean air, good water, it’s really about where you live, where you work—All of these things impact your health and wellbeing,” notes Zenooz.
One thing employers can do? “Focus on their low wage employees and see if they’re all getting access to healthcare,” says Zenooz. Of course, she adds, offering healthcare and allowing your employees to work from home if at all possible (even essential employees) are key in combating the health threats.
Meanwhile, providing a safe work environment and safe childcare options for those that have to come in can also help ease the burden for those essential workers with families, Zenooz suggests.
Bring your diversity work out in the open
For many companies, diversity work and commitments aren’t always shared publicly: “A lot of this work tends to happen in the dark—you’re in hush rooms, you’re strategizing, and your people don’t even necessarily know what you’re working toward,” Dr. Erin Thomas, the vice president and head of diversity, inclusion and belonging at Upwork, said Tuesday. But it’s now more important than ever for the business community to work toward solutions together.
Thomas says it’s critical “that we get less precious and proprietary about the work we’re doing within our organizations and start to share what’s working, what’s not, so that we can build collective solutions as we can see more diversity and Black representation throughout different areas of our business [and see] more Black leaders,” she said.
But transparency shouldn’t stop at just practices—it should include data, too, says Thomas. Companies need to acknowledge that “we’ve got a lot of work to do, and that our workplaces are not immune from the inequities we’ve seen in our society or from the inequities that have been unearthed with COVID-19,” Thomas notes. “It’s all connected.”
Leverage technology and data to unearth (and address) inequality
Traditional diversity and inclusion work isn’t so much focused on data—It’s been “pretty soft, pretty squishy,” according to Thomas.
But adopting a data-driven talent plan is “really at the core of an equitable workforce and anti-racist workforce,” Thomas says. That means examining what your workforce representation looks like across different levels (including at the very top)—and digging into data across the organization, from employee sentiment, to business practices, to where you are losing talent.
But it’s not just about using data to find out the what—it’s about understanding the why, too.
“Why is it that we deem [Black employees] as essential workers during a pandemic, and typically not otherwise?” asks Thomas. She offers, “Equity is about getting to the root causes of the patterns that you’re seeing and not stopping short” at what companies can see through analysis, “but rather, why is the context what it is.”
Zenooz echos Thomas: Whether it be acknowledging unconscious biases or looking at diversity in the workplace, using objective data to remove the subjectivity is “the best advice I would give,” she says.


fortune--2020-07-07--NBA commissioner Adam Silver says Orlando league will shut down if there’s ‘a significant spread’

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NBA commissioner Adam Silver did not rule out the possibility of the resumed NBA season shutting down once again if the novel coronavirus pandemic infiltrates the league’s temporary campus in Orlando.
Official NBA games are set to resume on July 30—with scrimmages beginning on July 22—as part of a 22-team tournament taking place at the ESPN Wide World of Sports Complex at Walt Disney World. Strict health and safety protocols, including regular COVID-19 tests for players and personnel, will be in place. The hope is that the virus won’t spread after an initial quarantine period, but Silver—speaking during Fortune’s virtual Brainstorm Health conference on Tuesday—said that even if someone at the site did test positive, it would likely not result in the cancellation of the tournament.
But when asked about what exactly the threshold for having to shut down would be, Silver acknowledged, “It’s the right question, and I’m not sure yet.” He went on to say: “Certainly, if we had any sort of a significant spread at all within our campus, we would be shut down again.”
“It would be concerning if once [the players] sit through our quarantine period, and then were to test positive, we would know that, in essence, there’s a hole in our bubble,” Silver added. “That our campus is not working in some way.”
Silver expressed confidence in the NBA’s medical procedures and team of advisers, led by renowned virologist and researcher David Ho. “We do have the ability to trace, to try and understand where that positive case came from,” he said. “We can analyze the virus itself and try to track whether, if there’s more than one case, if it’s in essence the same virus, the same genetic variation of the virus that has passed from one player to another.”
Optimism about the NBA’s quarantined campus is high enough that Silver himself plans to attend. “There will be an opportunity for some people to move on to the campus having first been tested but remaining very far from the protected people,” such as players and referees, “who are participating in the games,” he said.
“I’ll still be tested in order to come on to the larger campus,” Silver said. “But I will stay far away from players.”


fortune--2020-07-07--Trump administration formally withdraws from World Health Organization

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The Trump administration has formally notified the United Nations of its withdrawal from the World Health Organization, although the pullout won’t take effect until next year, meaning it could be rescinded under a new administration or if circumstances change.
The withdrawal notification, delivered on Monday, makes good on President Donald Trump’s vow in late May to terminate U.S. participation in the WHO, which he has harshly criticized for its response to the coronavirus pandemic and accused of bowing to Chinese influence. The move was immediately assailed by health officials and critics of the administration.
The withdrawal notice was sent to U.N. Secretary-General Antonio Guterres on Monday and will take effect in a year, on July 6, 2021, the State Department and the United Nations said on Tuesday.
Guterres, in his capacity as depositary of the 1946 WHO constitution, “is in the process of verifying with the World Health Organization whether all the conditions for such withdrawal are met,” his spokesman, Stephane Dujarric, said.
Under the terms of the withdrawal, the U.S. must meet its financial obligations to the WHO before it can be finalized. The U.S., which is the agency’s largest donor and provides it with more than $400 million per year, currently owes the WHO some $200 million in current and past dues.
In late May, less than two weeks after warning the WHO that it had 30 days to reform or lose U.S. support, Trump announced his administration was leaving the organization due to what he said was its inadequate response to the initial outbreak of the coronavirus in China’s Wuhan province late last year.
The president said in a White House announcement that Chinese officials “ignored” their reporting obligations to the WHO and pressured the organization to mislead the public about an outbreak that has now killed more than 130,000 Americans.
“We have detailed the reforms that it must make and engaged with them directly, but they have refused to act,” Trump said at the time. “Because they have failed to make the requested and greatly needed reforms, we will be today terminating the relationship.”
The withdrawal notification was widely denounced as misguided, certain to undermine an important institution that is leading vaccine development efforts and drug trials to address the COVID-19 outbreak.
“The administration’s move to formally withdraw from WHO amid the greatest public health crisis that Americans and the world have faced in a century is short-sighted, unnecessary, and unequivocally dangerous,” said UN Foundation President Elizabeth Cousens. “WHO is the only body capable of leading and coordinating the global response to COVID-19. Terminating the U.S. relationship would undermine the global effort to beat this virus—putting all of us at risk.”
The ONE Campaign, which supports international health projects, called it an “astounding action” that jeopardizes global health.
“Withdrawing from the World Health Organization amidst an unprecedented global pandemic is an astounding action that puts the safety of all Americans and the world at risk. The U.S. should use its influence to strengthen and reform the WHO, not abandon it at a time when the world needs it most,” ONE president Gayle Smith said.


fortune--2020-07-07--How Moderna developed a coronavirus vaccine candidate in ‘a few days’

Biotech company Moderna Therapeutics has never had a treatment approved—but is a leading contender in the race for a coronavirus vaccine.
The 10-year-old biotech company was able to develop a vaccine candidate in “a few days” without bringing the virus into its labs, thanks to its mRNA therapeutics technology, enabling scientists to replicate the virus, said CEO Stéphane Bancel.
“The reason we could do a coronavirus vaccine…is it’s not our first vaccine, it’s our 10th,” said Bancel, pointing to the company’s work on treatments for everything from infectious diseases to cancer. Bancel joined Fortune editor-in-chief Clifton Leaf for a conversation during Fortune’s Brainstorm Health virtual conference on Tuesday.
Moderna’s mRNA therapeutics involves “drug candidates that harness messenger RNA, a type of RNA that can transform cells into drugmaking factories by instructing them on what kinds of biological materials, such as antibodies, to create,” as Fortune has reported.
Moderna has reportedly sparred with U.S. government officials who are backing the project as the company oversees its first large-scale human trial, Reuters reported Tuesday.
The company is still on track to proceed with Phase III this month, Bancel said. “The notion that we’d get to Phase III in six months is incredible,” he added. “This has never happened before.”


fortune--2020-07-07--Will the pharmaceutical industry keep collaborating after COVID-19? Novartis and Bristol Myers Squib

Will the pharmaceutical industry keep collaborating after COVID-19? Novartis and Bristol Myers Squibb CEOs say it has to

The huge societal cost of every wasted moment in the quest to find treatments for COVID-19 has unleashed an unprecedented wave of data sharing and other collaboration between pharmaceutical companies. According to the CEOs of two of the world’s largest drug developers, that openness has huge potential benefits in the quest to treat other serious ailments, and they want to see it continue.
“I have never seen the level of collaboration that’s going on today,” said Giovanni Caforio, CEO of Bristol Myers Squibb, Tuesday at Fortune’s virtual Brainstorm Health conference.
“Think about the fact that when experts talk about a vaccine or an antiviral, we’ve always thought about five or 10 years,” Caforio continued. “Now we’re talking about a year or two.
“So how do we take what we’ve learned in the last six months and apply it to cancer?”
More open data-sharing among various private and public researchers has been a key element of that recently increased collaboration. Bristol Myers, Novartis, and others have shared their libraries of pharmaceutical compounds, or drug formulas, that might help treat the symptoms of the coronavirus. Many of those compounds have already undergone some degree of safety testing, and a COVID-19 Therapeutics Accelerator established by the Gates Foundation and others has been screening them for potential effectiveness. Regular meetings between the R&D chiefs of nearly a dozen pharmaceutical companies are also among other examples of high levels of collaboration.
But such actions alone aren’t enough, according to Novartis CEO Vas Narasimhan.
“In the clinic, as you know, we have tremendous fragmentation of data systems, which makes it hard to gather information in real time in credible ways,” he told Brainstorm Health viewers. “Hopefully this [crisis] will also lead to the next step in ensuring that we have very high-quality data that can be linked together rapidly.”
That could help prevent duplication in research efforts, which Narasimhan admits, has been an issue in the fight against COVID-19. “At this moment of crisis, you have thousands of investigators starting their own [research] protocols…Ideally it would be more organized, but also more ideas come out of the chaos of innovation.”
The focus on collaboration and data also informs internal shifts that will survive the crisis. According to Narasimhan, Novartis is embracing distributed work after good results with having much of its workforce at home during the pandemic. It is also crowdsourcing and compiling insights gained during the pandemic from throughout the organization.
Narasimhan and Caforio also cited important lessons for how the world can be better prepared for the next pandemic, when—not if—it comes.
“We need a global surveillance system of the zoonotic hotspots where we know viruses can jump into [humans],” said Narasimhan, referring to places where animals and humans mix closely. Narasimhan also called for greater investment in so-called warm vaccine manufacturing capacity: standby facilities ready to jump into action as soon as a pandemic strikes, and which often require government support.
For Caforio, another major lesson was that pharma needs to be more directly engaged with patients, such as through a grant the company’s foundation made to an emergency food assistance program for immunocompromised patients.
While they have pulled together for a nearly unprecedented global emergency, drugmakers are ultimately competitors, and much remains unclear about how they might maintain their openness under less dire conditions. But Caforio is committed to tackling the challenge.
“We’ve created a virtual table of collaboration that has allowed us to challenge the status quo,” said the Bristol Myers Squibb CEO. “It is our job to make sure we don’t go back to our silos, and keep the same spirit as we think about other health [problems].”


fortune--2020-07-07--Gig workers sound off on the Uber-Postmates deal: ‘It’s like an embezzler buying a bank’

As investors cheered on Uber’s agreement to buy Postmates for $2.65 billion on Monday, another crowd reacted differently: the gig workers who underpin the ride-hailing and food-delivery business.
Edan Alva, a driver who opted for Lyft over Uber during the latter’s years of scandal, called the deal “unethical” and “immoral” because, he said, it will amplify Uber’s ability to suppress worker pay. Drivers and food couriers receive a share of the ride and meal-order fees charged by the app-based companies, which also take a hefty cut.
“It’s like if a large-scale embezzler were allowed to buy a bank,” said Alva, who is also an organizer for Gig Workers Rising, a labor advocacy group.
Alva said he makes roughly $20 to $22 hourly on average ferrying passengers around the Bay Area. But after expenses like gas and unexpected car maintenance costs—he had five flat tires in the past year alone—his take is “definitely well below $15 per hour,” and “possibly closer to the $10 point,” he estimates.
Alva criticized ride-hailing firms’ “predatory tactics” that he said are designed to minimize people’s compensation, including by recognizing their most essential workers, drivers and couriers, as contractors rather than as full-time employees with benefits. Uber and fellow gig-economy companies are currently fighting a law in California that could force them to reclassify their workers as full-time employees.
The companies are shelling out tens of millions of dollars to promote an alternate state ballot initiative that would exempt them from the rule change.
Fighting atop the food pyramid
Ride-hailing and food-delivery businesses are locked in a fierce battle for market share even as the lockdown measures imposed by authorities to combat the global coronavirus pandemic cause their core operations to flounder.
Luis Vasquez, a DoorDash courier who used to pick up passengers for Uber and Lyft before switching to meal delivery amid the onset of COVID-19, said he is concerned about the industry consolidation. “I don’t think it’s gonna be fair or good for the drivers,” he said of the Uber-Postmates deal. “Uber is doing this because they want to take over.”
A combined Uber-Postmates would claim 37% of food delivery market share in the U.S., according to payments-tracker Edison Trends. That would make it the runner-up to the current leader, DoorDash, which has a 44% market share.
Competition continues to heighten, despite the pandemic. DoorDash just last month raised $400 million at a nearly $16 billion valuation. Grubhub, which last month agreed to sell to Netherlands’ Just Eat Takeaway shortly after a rumored deal with Uber fell through, has 17% of the market.
Margins have slimmed as a narrowing band of rivals compete to offer the cheapest, most convenient service.
Vasquez, a single parent, lamented the continual reduction in pay his assignments provide. “When I started it was really good,” he said of his early earnings five years ago.
“Now it’s crap,” Vasquez said.
Robbing Peter to feed Paul
Some drivers blasted Uber for spending billions on Postmates while paying workers a pittance.
Nicole Moore, a part-time driver for Lyft, described Uber’s actions as hypocritical. “They don’t have the money to pay people basic labor standards, but they have the money to buy a whole new company?” she said.
“To me, this is a slap in the face,” said Moore, who is also an organizer for Rideshare Drivers United, another worker advocacy group that is agitating to unionize ride-hailing drivers.
Peter Young, a courier for Postmates, said he sees no upside to the Uber-Postmates deal. “I don’t really see anything getting better for workers after this. I don’t expect pay to rise, or job security to improve, or anything,” he wrote in an email.
Further, Young said, he fears the deal could affect people’s employment status, including his own. After two years transporting riders for Uber, the company “deactivated” him, effectively booting him from its platform, after he got into a “fender-bender” accident last year, he said.
Young said he worries that Postmates could ban him, too, as it gets absorbed by Uber. Though Postmates has assured couriers the acquisition won’t have an immediate effect on their ability to work, that promise, he said, is “only as strong as their word.”
“And their word generally means nothing these days,” Young added.
Ride sharing is caring
Some people looked more optimistically on the deal.
Michael Gumora, a former Uber and Lyft driver who now runs Rideshare Report, a blog about the ride-sharing business, gave an opposing view. He said he thinks the consolidation will be “good for drivers actually” in the long term, because it will force more workers together, making it easier for them “to get together for the purposes of collective bargaining.”
But, Gumora noted, Uber is “not doing [the deal] for the benefit of the drivers at all.”
Uber contends its acquisition of Postmates will offer advantages to their gig workers. A spokesperson wrote to Fortune in an email that with the combined network of restaurants, orders, and opportunities for delivery fulfillment, “we’ll be able to offer even stronger and more predictable earning opportunities to delivery people across meals, grocery, and more.”
Most people Fortune interviewed were skeptical of any possible benefits for gig workers, however. Paul Oh, a Postmates courier who is the administrator of an unofficial Facebook group for his peers, said he sees only “a very slim chance it is a positive thing for couriers.”
“Hopefully, Uber approaches this like Coca-Cola,” Oh said, meaning that Uber ends up offering so many options to consumers—on-demand apps versus soft drinks, in this case—that it basically competes against itself.
Being a courier is like participating in an uncertain economic “game,” Oh said. Fewer potential employers means fewer ways “to play your city,” which means less potential reward.
Losing an appetite, winning the war
If Uber grants Postmates some level of separation and autonomy, allowing drivers, merchants, and customers to switch between apps based on their preferences, it could allow for more choice and flexibility. But the logic for the deal no doubt derives from savings presented by consolidation and economies of scale.
In statement announcing the deal, Uber said it “intends to keep the consumer-facing Postmates app running separately” even after the transaction closes, slated for the first quarter of next year. The company said it also plans to combine back-end operations and cut $200 million in overhead costs.
Wilfred Chan, a freelance writer who supplements his income by delivering meals for on-demand apps like Postmates, summed up his gig-worker peers’ anxieties. The move puts gig workers increasingly at the mercy of a few ultrapowerful players.
“The problem is that it means less choice for workers. It means that these platforms are growing bigger and harder to fight,” Chan said. “As Uber’s hegemony grows, they’re going to have even more leverage against workers and be able to exploit us even more harshly.”


fortune--2020-07-07--These Mayo Clinic doctors offer healing through song amid coronavirus pandemic

These songs of hope couldn’t have come during a better time.
It was March, back when the world was coming to grips with the devastation brought on by the coronavirus pandemic, that two Mayo Clinic doctors released a video that went viral—in the best sense of the word.
The video of doctors Elvis L. Francois and William Robinson covering “Imagine,” John Lennon’s 1971 ode to world peace, captured the hearts of millions, spreading good vibrations during a particularly dark period.
Robinson, who played piano on the track, said Tuesday during Fortune’s Brainstorm Health digital conference that he had no idea that the soulful cover would become a hit.
“This has been one of the most humbling moments in my entire life,” Robinson said.
Francois, whose expressive voice adds an R&B element to the ballad, said that they conceived the music video as a way to convey the notion that “the humanity is often missing in medicine.”
“Finding a way to bring music to the halls of a hospital is a reminder that music truly is medicine, and it heals people in ways that medicine simply can’t,” Francois said.
Francois also shared the origins of his unique first name, revealing that he is, indeed, named after the “King of Rock and Roll.”
“Yes, my mom is a huge Elvis Presley fan, the kind of person who would name her son Elvis,” Francois said.
Check out the medical duo singing the late Bill Withers’ classic “Lean on Me,” as part of Fortune’s Brainstorm Health conference.


fortune--2020-07-07--Why COVID-19 is worsening the opioid epidemic

COVID-19 might be the most urgent public health problem facing us today— but medical professionals are also calling attention to the other serious health crises the pandemic is making worse.
“There are over 11 million confirmed cases of COVID-19,” says Dr. Jessica Mega, chief medical and scientific officer of Alphabet’s Verily Life Sciences. “But at the same time, I think it’s critically important for us all to think about other ailments that we see that are on the rise.”
Mega, speaking at Fortune’s virtual Brainstorm Health conference on Tuesday, called specific attention to the ongoing opioid crisis and its mounting fatalities since the onset of coronavirus. The isolation and financial stresses of the pandemic have contributed to a spike in overdoses this spring, reversing some hard-fought declines.
Fatal overdoses rose by almost 11.4% from a year earlier, with non-fatal overdoses rising by 18.6%, according to the raw data in a May report from the Overdose Data Mapping Application Program.
“Opioid addiction is one of the key health epidemics of our generation,” says Mega, mentioning the OneFifteen opioid recovery center that Verily opened with partners last year.
Of course, Verily and Google have also been involved in efforts to fight the newer pandemic, under some unwanted scrutiny. In March, the company was in the early stages of building a website to help speed up testing for COVID-19, when President Trump erroneously announced that it had developed a nationwide test site.
Despite that rough start, Verily is now making tests available in more than 13 states and has conducted 320,000 tests for COVID-19, Mega said Tuesday.
“It’s important to note that this is just the tip of the iceberg,” she added. “Testing is going to need to continue expand.”


fortune--2020-07-07--Amgen CEO is ‘optimistic’ about COVID-19 clinical trials

Amgen is testing several drugs from its vast stable of existing pharmaceuticals to see if any can help patients suffering from COVID-19, with some starting clinical trials, CEO Robert Bradway said on Tuesday.
Doctors have already discovered that COVID-19 can set off an overreaction in the immune systems of some patients, leading to serious respiratory complications and death. Amgen owns several drugs aimed at calming the immune system that are used to treat autoimmune disorders like psoriatic arthritis and ulcerative colitis.
“We’re studying a couple of therapies,” Bradway said, speaking at Fortune’s Brainstorm Health virtual conference. “We have a product called Otezla which we think might help to address the overreaction of the immune system and that is a product that’s just getting underway in clinical studies now.”
The company is also looking at so-called TNF inhibitors, which block another type of immune system overreaction, Bradway said. “We’ll watch with interest where those studies wind up,” he said. “We have a couple of different ways to try to help ameliorate what looks to be a maladaptive immune response as the disease gets far advanced.”
Speaking of the potential for immune response treatments overall to COVID-19, Bradway said, “I’m optimistic that through time, we’ll be able to bring down the risk of death.”
The entire pharma industry is focused on combating the pandemic. Drug companies are working on 179 different potential vaccine candidates and more than 260 other treatments to help victims of the highly contagious coronavirus. So far, almost 12 million people worldwide including 3 million in the U.S. have been confirmed to be infected with the disease. More than 500,000 people, including over 130,000 in the U.S., have died.
Amgen acquired Otezla last year from Celgene, which had to sell off the drug to assuage antitrust regulators reviewing its merger with Bristol Myers Squibb. Amgen paid $13.4 billion for rights to Otezla, which is mainly used to reduce psoriasis, a condition also caused by the immune system overreacting.
Overall, Bradway said, he was optimistic about his industry’s response to the pandemic, even if there has been some duplication and lack of coordination.
“The good news is we’re making fast progress, and hopefully some of these therapies will make a difference,” he said. “The challenge is that it’s probably not as well coordinated as it could be.”


fortune--2020-07-07--Movie theaters are suing New Jersey for the right to reopen—claiming they’re safer than church

Movie theater operators AMC Entertainment Holdings Inc., Cinemark Holdings Inc. and Regal Cinemas Inc. sued New Jersey for keeping cinemas closed due to the risk of coronavirus spread while allowing stores, shopping malls and churches to reopen.
The chains, led by the National Association of Theatre Owners, said in a lawsuit filed Monday in federal court in Trenton, New Jersey, that Governor Phil Murphy’s continued closure of cinemas is “neither fair nor reasonable.” They argue that going to the movies is less risky than attending organized religious services and ceremonies, which were allowed to resume in late June.
Most states have already allowed movie theaters to reopen or are planning to allow them to restart operations, the chains say. According to the suit, theaters will be running in 45 states, along with Washington DC and Puerto Rico, by the end of July. The companies say they will comply with safety guidelines like requiring patrons and employees to wear masks, limiting occupancy and staggering show times.
Both places of worship and theaters are regarded as high-risk environments for infection by the U.S. Centers for Disease Control and Prevention. But the owners highlighted differences in how people act at the movies compared to church.
No Hugging, No Singing
“Unlike attendees of at places of worship, movie theater guests generally do not engage with those outside their immediate groups to have conversations, hold or shake hands, hug, sing, provide verbal responses, do responsive readings, or engage in other forms of contact regularly engaged in at houses of worship,” the companies said in the suit.
“Indeed, speaking or singing during the performance is not allowed in movie theaters. Nor are there shared books or documents or frequent standing, sitting or kneeling in movie theaters.”
Movie theater chains have been hit hard by the pandemic. AMC reported a loss of more than $2 billion in the first quarter of 2020, even before all of its theaters were closed. In addition to lockdown orders, theater chains have been hurt by studios’ decision to release many major movies online through streaming services.
Murphy last week doubled New Jersey’s outdoor gathering limit, to 500, while indefinitely delaying the lifting of a ban on indoor dining, citing “knucklehead” non-distancing behavior at New Jersey outdoor establishments and the recent nationwide surge in cases.
Outdoor religious services and political activities, such as demonstrations, have no cap. Indoors, the crowd maximum remains 25% of a space’s capacity, with 100 people at most.


fortune--2020-07-07--With $17.2 billion in real estate holdings, Zara founder’s empire extends far beyond clothing

After making a fortune in clothing, Amancio Ortega turned his attention to real estate.
The Spanish billionaire’s property holdings have soared to 15.2 billion euros ($17.2 billion), his firm revealed Tuesday for the first time, giving him the largest real estate portfolio among Europe’s super-rich.
Ortega, 84, the founder and owner of fashion label Zara, invested 2.1 billion euros in real estate last year through various subsidiaries of his holding company Pontegadea, according to an emailed statement. Pontegadea, which owns 59.3% of Zara parent Inditex SA, had a net income of 1.8 billion euros for 2019, including 1.64 billion euros in Inditex dividends and 621 million euros from real estate assets.
Ortega, Spain’s richest man, has diversified his fashion fortune to preserve his sizable wealth, investing more than $3 billion in U.S. real estate in recent years.
Acquisitions include landmark properties like Manhattan’s historic Haughwout Building and Miami’s tallest office tower. Last year, his investment firm completed a $72.5 million deal for a downtown Chicago hotel, which followed purchases of a building in Washington’s central business district and two Seattle office buildings.
Fortune slumps
As well as being landlord to tech giants such as Amazon.com Inc. and Facebook Inc., Pontegadea also counts Inditex rivals Hennes & Mauritz AB and Gap Inc. as tenants.
The son of a railroad worker, Ortega has a net worth of $58.5 billion, according to the Bloomberg Billionaires Index, the bulk of which comes from his majority stake in Inditex. His fortune has slumped more than a fifth this year in the wake of the coronavirus pandemic, which has forced Inditex to close stores. The company’s shares fell 22% this year through Monday.
Aside from real estate, Ortega has also invested in energy and telecommunications, buying a 5% stake in Enagas last year. In 2018, Pontegadea acquired a 9.99% stake in Telefonica SA’s tower unit for 378.8 million euros.
Pontegadea said the COVID-19 crisis may affect its income from rents and dividends this year. It expects to receive 646 million euros in dividends from Inditex in 2020.


fortune--2020-07-07--Medicare chief Seema Verma reflects on lessons learned from the COVID-19 front lines

As COVID-19 infections soar to 3 million cases across the U.S. and the death toll crosses the 130,000 mark, Seema Verma, administrator for the Centers for Medicare & Medicaid Services and a senior member of the White House Coronavirus Task Force, is already looking ahead.
The proliferation of this deadly pandemic, she said at Fortune’s digital Brainstorm Health conference on Tuesday, has highlighted disparities and issues in the health care industry that need to be addressed. But, she added, it has also pushed the U.S. system to finally take action to do just that.
Two of those major issues brought to the forefront by COVID-19 include data accessibility and telemedicine.
“Data to me is integral to everything we’re doing here, and the United States’ handling of data is not as robust as it should be,” said Verma who oversees programs that provide health care to more than 130 million Americans and sets safety and quality standards within the health care system.
Americans should be able to easily access their health data on their phones, she said, pointing to those stranded on cruise ships during the early days of the coronavirus crisis who were unable to gain access to their medical records.
Beyond personal data, real-time data and reporting from hospitals also need to be improved to aid in the immediate reallocation of protective personal equipment and medical devices to the emergency centers most in need.
Real-time data about responses to clinical trials for COVID-19 treatments should also be readily available and shared openly across the country, but instead, she said, the data is “trapped in electronic silos.”
One bright spot on the medical landscape has been the increase in telemedicine, where patients chat via video or phone with their doctors instead of coming into the office for appointments. The advancements in telemedicine have saved money, PPE, and the health of countless medical professionals and Americans who don’t have to go into an office and risk exposure to the deadly virus.
“The genie is out of the bottle when it comes to telehealth,” said Verma. “Long before the pandemic [President Donald] Trump was trying to make it more widely accessible.” The perfection of systems will have long-lasting effects on those who are immunocompromised, live in rural areas or in areas with little access to professional health care.
Telemedicine is not a panacea, and doctors do sometimes need to see people in person, but it’s a powerful tool that can help to end “long-standing problems in the health care system,” said Verma, calling upon Congress to make telehealth more readily available to those in the Medicare program.
Verma will meet with White House officials Tuesday to discuss the reopening of schools in the fall, and she told the conference audience that she was optimistic about the possibility.


fortune--2020-07-07--Microsoft’s Peggy Johnson claims a spot on the tech industry’s glass cliff

Peggy Johnson, formerly Microsoft’s head of business development, has been named CEO of augmented-reality startup Magic Leap. The move was announced Tuesday, with Johnson starting in her new role in August.
Johnson, who spent more than two decades at Qualcomm before joining Microsoft in 2014, is perhaps best known for spearheading the Seattle giant’s $26.2 billion purchase of LinkedIn—still its largest-ever acquisition.
The announcement has already garnered attention in tech circles, due largely to the industry’s fascination with Magic Leap. The startup, founded a decade ago, has raised nearly $3.5 billion in funding and been the subject of much hype and speculation. Yet it didn’t release its first augmented-reality headset until 2018, and even then the product posted disappointing sales. The company has since revised its strategy—pivoting from consumers to businesses—but it’s far from clear that the shift will solve Magic Leap’s problems.
In an interview with the New York Times, Johnson said that becoming a CEO has been a longtime professional goal. “I chose this,” she told the Times. “It really says something that at this point in time I would leave Microsoft to go to this space, because Microsoft is doing quite well.”
The Times story also makes mention of the “glass cliff”—the phenomenon in which women and BIPOC are given a shot at a top job only when the company is crisis, and therefore face much slimmer odds of success.
Johnson’s aspiration to the corner office adds context to her decision to step into the role at Magic Leap—cliff or not. While women are dramatically underrepresented in CEO jobs across industries, the dearth of female chiefs is particularly acute in technology. There are currently just four women at the head of Fortune 500 tech companies: AMD’s Lisa Su, Oracle’s Safra Catz, CDW’s Christine Leahy, and SAIC’s Nazzic Keene. They’re significantly outnumbered by women leading companies in sectors like retail and financial services, and account for 0.8% of all Fortune 500 CEOs. The tech industry, meanwhile, accounts for nearly 9% of the list. (Looking beyond the CEO role, it’s also notable that Johnson’s departure will leave Microsoft’s executive team with two female members.)
The situation isn’t much better in the startup world. According to 2019 Crunchbase data published in Fast Company, female-led companies make up less than 3% of artificial intelligence, 1.8% of robotics, and 1.2% of wireless startups.
As the statistics show, the odds that a female executive will find herself with the opportunity to run a “hard tech” company are vanishingly low. For those with the ambition to hold such a job, the type of risky, well, leap Johnson is about to take may be price of admission.


fortune--2020-07-07--1 in 4 men think women’s equality has come at their expense

Roughly one in four U.S. men say that the progress women have made toward equality has come at the expense of men, according to a new report released Tuesday by the Pew Research Center.
Ahead of the August centennial of the ratification of the 19th Amendment, which granted some women the right to vote, Pew took a big-picture look at the state of gender equality in America. In a survey of more than 3,000 U.S. adults conducted in March and April of this year, men and women shared their feelings on the progress women have—or haven’t—made in the last century.
The most jarring finding may be that a significant portion of men—28%—think women’s progress in society, from gains in the workforce to political representation, have come at the expense of men. That sentiment was particularly strong among Republican men (38%), who are twice as likely as Democratic males (19%) to see men’s status as undermined by the progress of women. A quarter of Republican women agree with their male political peers.
However, most respondents—57%—think that the push for gender equality hasn’t gone far enough. Among those who agree that more progress is needed, sexual harassment is seen as the biggest obstacle facing women, followed by “women not having the same legal rights as men,” societal expectations for women, and a shortage of women in positions of power. Family responsibilities—a major concern for many working women with schools and childcare centers closed during the coronavirus crisis—come in fifth as a factor holding women back.
More U.S. adults now think additional progress is needed on gender equality than thought so three years ago. In 2017, only half of respondents believed the U.S. hadn’t gone far enough to advance gender equality.
Another gender gap appears when it comes to questions about how optimistic respondents are that gender equality is within reach. Thirty-seven percent of men who believe the country has not gone far enough to achieve equal rights believe reaching that milestone is very likely, compared to only 26% of women. Democratic women are among the least likely to expect men and women will ever achieve equal rights.
What would a future with gender equality look like? Full equality, for many Americans, would be most apparent in the workplace. Survey respondents cite equal pay and the end of discrimination in hiring and promotions as hallmarks of a society that has achieved gender equity; women older than 50 are more likely to point to equal pay as a top indicator of equality. One in 10 respondents say equal representation of women in leadership—throughout both business and politics—will reflect gender equity.
Part of the report addressed not just the state of gender equality, but also the feminist movement that has pushed for it. Survey respondents think that white, Black, and Hispanic women have all benefited from the feminist movement—but a racial gap appears when respondents are asked how much women of different racial backgrounds benefited. More, at 32%, say that white women have benefited “a lot” from feminism, compared with those who say the same of Black (21%) and Hispanic (15%) women.
Women who responded to the survey also reflected on their own personal gains, compared to societal advances for women at large. Four in 10 women say the feminist movement has benefited them personally; Democratic women, women who have a bachelor’s degree, and women under the age of 50 are the most likely to agree.
The most important milestones in women’s progress, according to survey respondents, were the beginning of women’s suffrage and the passing of the Equal Pay Act, followed by the passage of the Family and Medical Leave Act and the introduction of the birth control pill. White people were more likely to cite the 19th Amendment as a crucial milestone.
The report also found that most Americans support adding the Equal Rights Amendment to the U.S. Constitution—an issue currently tied up in court, which recently earned the support of American businesses—but most don’t think the amendment will make much of a difference to women’s equality in day-to-day life.


fortune--2020-07-07--Deutsche Bank agrees to $150 million penalty for Jeffrey Epstein dealings

Deutsche Bank has agreed to pay $150 million to settle claims that it broke compliance rules in its dealings with the late sex offender Jeffrey Epstein, New York state announced Tuesday.
The penalty was announced in a release by Superintendent of Financial Services Linda A. Lacewell.
“Despite knowing Mr. Epstein’s terrible criminal history, the Bank inexcusably failed to detect or prevent millions of dollars of suspicious transactions,” Lacewell said.
According to the release, the agreement marked the first enforcement action by a regulator against a financial institution for dealings with the financier.
Epstein killed himself last August in a Manhattan federal jail while awaiting trial on sex trafficking charges.
His ex-girlfriend, British socialite Ghislaine Maxwell, was arrested last week and brought to New York City to face charges she recruited girls for Epstein to sexually abuse in the 1990s. In civil lawsuits, she has denied involvement. Her Manhattan federal court arraignment is likely next week.
In a statement, the German bank said the settlement with New York state “reflects our unreserved and transparent cooperation with our regulator.”
The bank said it had invested almost $1 billion to improve its training and controls and had boosted its staff overseeing the work to more than 1,500 employees “to continue enhancing our anti-financial crime capabilities.”
In a statement, New York Gov. Andrew Cuomo, a Democrat, said the bank failed to prevent millions of dollars in suspicious transactions.
Lacewell said the bank failed to properly monitor Epstein’s account activity despite publicly available information about Epstein’s crimes.
The financier with U.S. residences in Manhattan, Florida and New Mexico, along with homes in Paris and the Virgin Islands, had pleaded guilty to criminal sex abuse charges in Florida over a decade ago and was a registered sex offender before his July 2019 arrest on federal sex crime charges.
Lacewell said the bank processed hundreds of transactions totaling millions of dollars that, “at the very least, should have prompted additional scrutiny in light of Mr. Epstein’s history.”
She said some payments that should have drawn scrutiny included money paid to people publicly alleged to have been Mr. Epstein’s co-conspirators in sexually abusing young women; settlement payments totaling over $7 million and over $6 million in legal fees for Epstein and co-conspirators.
Other payments went to Russian models and transactions for women’s school tuition, hotel and rent expenses, she said, along with suspicious cash withdrawals totaling over $800,000 in a four-year stretch.


fortune--2020-07-07--5 important ways that a Joe Biden White House could address systemic racism

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August is fast approaching, and with it comes presumptive Democratic presidential nominee Joe Biden’s self-imposed deadline for picking his running mate. Biden has said that he’ll announce the “veepstakes” winner at the start of the month and that the pick will be a woman.
As his advisers enter their final stages of vetting, speculation has run rampant: Will it be Sen. Kamala Harris? Stacey Abrams? Sen. Tammy Duckworth?
It’s still unclear who the former vice president will make his own second-in-command. Many Democratic influencers are making the case for a Black woman to take on the role, especially as the killing of George Floyd by a white police officer has led to national unrest over structural racism.
A recent Politico/Morning Consult poll found that in the wake of ongoing protests, 46% of Democrats now say it’s important for Biden to choose a candidate of color as his running mate, up from 36% in early April.
“Biden has been characterized as a bridge to the next generation of leadership, and this is an opportunity to do that,” said Aimee Allison, founder and president of She the People, a national network elevating the political power of women of color.
But that bridge doesn’t just include the VP position. There are a number of other significant roles that Biden could fill with diverse picks that would have a significant impact on the future of the country.
“There have to be people of color in positions that are visible and that are at the table, period,” echoed Moe Vela, former senior adviser to Joe Biden and current chief transparency officer of TransparentBusiness, a people management service.
Over the past 20 years, Vela has noticed a pattern in which the secretary of Housing and Urban Development and secretary of Labor tend to be the go-to roles for minority appointees in both Republican and Democratic administrations. “I hope that those kinds of predictable minority placements will be shattered in the Biden administration,” he said.
Here are five ways that could happen should Biden win.
It starts with the transition team
The transition team is the group that sets the priorities for the first 100 days in office and takes care of staffing at all levels of the administration. That makes it the entry point for incorporating diverse voices and perspectives throughout a possible Biden White House. By filling the team with women and people of color across the spectrum, the campaign would signal that Biden’s pledge of diversity isn’t just chatter.
The Trump administration left a number of positions unfilled, something the U.S. is now feeling the repercussions of as key agencies meant to deal with health crises are woefully understaffed. But, said Allison, that gives the Biden campaign an opportunity. “I think the transition team could identify what those positions are very early on and make sure that experts from a variety of communities are tapped to fill those roles,” she said.
Late last month Biden announced that he had officially begun forming his transition team. Leading it is former Delaware senator and longtime political ally Ted Kaufman, who also led his vice presidential transition team in 2008. Joining him is Yohannes Abraham, who worked in the Obama administration and will handle the day-to-day of the team.
“Vice President Biden’s transition—like his administration to follow—will prioritize the following core values: diversity of ideology and background; talent to address society’s most complex challenges; integrity and the highest ethical standards to serve the American people and not special interests; and transparency to enable trust and visibility at every stage,” Kaufman said in a statement.
Other members who will soon join include Avril Haines, former principal deputy national security adviser and deputy director of the CIA; Gautam Raghavan, chief of staff to Rep. Pramila Jayapal; Angela Ramirez, chief of staff to Assistant Speaker Ben Ray Luján and former Congressional Hispanic Caucus executive director; Evan Ryan, who worked with Biden in the White House; and Julie Siegel, Sen. Elizabeth Warren’s senior counsel for economic policy.
“We’ve been cut totally out of the current administration,” said Allison, about President Trump’s inner circle, which is overwhelmingly white and male, with one Black cabinet member and one Black domestic policy adviser. The White House does not disclose how many Black staffers work in the Trump administration, and public promises of efforts to increase diversity have fallen flat.
“It’s important to fill roles by proactively reaching out to communities of color and different groups who have been attacked and denigrated over the last four years and saying, ‘Look, we want you to see yourselves as part of this administration, and we will act and listen,’” said Allison of how the Biden campaign can counter that. “I think that’s going to be very important to signal early on.”
Create a secretary of Racial Justice
Recent protests against racial injustice and police brutality have extended across the country and into everyday life. This presents a Biden White House with the opportunity to acknowledge that unrest and create a cabinet-level position to deal with it in a permanent way, says Allison.
She points to a piece of legislation by Rep. Barbara Lee (D-Calif.) that would create a “Truth, Racial Healing, and Transformation Commission” to act as an advisory body on legislation and policy impacted by systemic racism.
A similar sort of advisory board could be set up in the White House to ensure that executive policy focuses on equity and equality. The secretary (or Obama-style czar) would be charged with analyzing current policy to correct for racial disparities and even creating new government agencies to focus on that. “Having someone in the administration to work in concert with that would be a great thing,” said Allison. “Now is the time to think expansively about how to create the country we really want.”
Attorney general
The Department of Justice has the greatest capacity to move the needle on issues such as law enforcement misconduct and the disproportionate levels of incarcerating Black people in federal prisons.
“It all leads back to the Department of Justice,” said Vela, who was the first Hispanic person to serve in two senior executive roles in the White House, under vice presidents Al Gore and Biden. “It is the platform for the vast majority of what needs to be addressed. It can either further the divide or it can actually begin to heal the divide.”
Just two Black Americans and two women have previously held the role. Eric Holder and Loretta Lynch both served under President Barack Obama, and Janet Reno served under President Bill Clinton.
Committing to appoint a minority or female to the head of the Department of Justice would send a “wide” message and also work to increase the safety of and diminish tensions between communities of color and police officers.
Treasury secretary
The Treasury has never had a Black or female secretary, and appointing one would be groundbreaking and symbolic.
Racial injustice is historically linked with economic injustice, and the agency that collects taxes, supervises banks, and enforces federal finance laws could make an immediate impact on ending systemically racist practices like redlining by banks.
There’s also the Jackson issue. During the Obama administration there was a commitment by the secretary of Treasury to replace President Andrew Jackson—who oversaw the forced relocation of 60,000 Native Americans—on the $20 bill, which current Secretary Steve Mnuchin has not acted on.
“In some ways it was a precursor to what we see now with monuments coming down,” said Allison. “It’s more than symbolic; it’s around the role of government in reflecting the diversity of the people starting with the money.”
Senior advisers
Secretary-level positions are important, but behind-the-scenes roles are just as crucial to a functioning White House.
The vice president “would be well-served by senior advisers and the executive team that he surrounds himself with that reflect all of these diverse voices,” said Vela. These roles include public outreach coordinators, policy directors, congressional relations directors, and deputy chiefs of staff.
Transition team aside, it’s quite unlikely that a campaign that has not yet announced its vice presidential pick will start making promises about other positions, but Allison says it could happen as November approaches.
“I was an advocate of coming out in force with an Avengers-type model: This is the depth and breadth of our leadership, and here’s what we’re offering America, and we’re already going to be operating as one,” she said.


fortune--2020-07-07--Face masks may have killed off the ‘lipstick index.’ What’s the lipstick index?

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In a financial crisis, the theory goes, people cut back on gym memberships, eating out, and holidays. But on a bad day (and during a financial crisis, those bad days are legion), a consumer will still reliably reach for retail therapy: picking up a cupcake, a magazine, or, famously, a tube of lipstick.
This financial crisis might be different. After all, why wear lipstick when no one can see your smile anyway?
The humble mask could finally imperil the “lipstick index” theory, a shaky, but compelling economic view coined just after the Sept. 11 attacks by Leonard Lauder, chairman emeritus of the international cosmetics company Estée Lauder. (The mask-plus-cosmetics mashup isn’t just messing with contemporary economic thought; it’s smearing faces.)
Lauder’s theory—backed up, reportedly, by the company’s own lipstick sales—was that in times of economic uncertainty, affordable luxuries like a striking lipstick shade help prop up select retailers even through downturns.
The theory itself is widely cited, but conveniently hard to prove: reliable lipstick sales are not typically published as a stand-alone metric, leaving serious economists unable to measure this effect in an economic downturn. And as Fortune wrote in 2010, there are indications the lipstick business is not quite as robust as we might think: In 2009, at the height of the last economic crisis, sales declined nearly 10%, according to research group NPD.
There’s more to the argument that cosmetics, as a whole, are a robust sector. A McKinsey report from May, citing statistics from Euromonitor, showed that sales for the global beauty and cosmetics sector have risen every year since at least 2005, including through the global financial crisis.
COVID-19, however, could be a different crisis altogether. McKinsey estimates that global beauty sales could fall by 20% to 30% in 2020, and by as much as 35% in the U.S. if there is another wave of COVID-19 later in the year. (On Monday, Dr. Anthony Fauci, the country’s top epidemiologist, said the country is still “knee deep” in the first wave.)
While cosmetics are expected to rebound quickly, the market may also be fundamentally changed, the consultancy warned. The closure of the department stores, emporiums, and airport boutiques that sell the bulk of cosmetics hit sales this year, pushing brands to sell on digital platforms.
But it has also shifted our relationship with makeup, at least for the time being. In April, just as lockdowns were going into effect globally, demand shifted. With little need to wear makeup outside, demand for cosmetics dropped, while demand spiked for skin care products, creams, and DIY home beauty treatments.
Lipstick in particular took a hit. Amazon sales in the U.S. tracked by McKinsey in the four weeks up to April 11 showed “lip care and color” saw the steepest decline in retail sales of any segment, with sales falling 15% and prices falling 28%.
Meanwhile, hair coloring product sales, likely spurred by salon closures, spiked by 172%. Nail care products, meanwhile, rose the most of any product area, by 218%, a trend that was also reported at European e-retailers.
If the “lipstick index” has any economic weight then, McKinsey proposed, there was now an alternative: the “nail-polish effect.”


fortune--2020-07-07--Some of the oddest PPP loan recipients: From Kanye to Jeff Koons

The government’s small business lending program has benefited millions of companies, with the goal of minimizing the number of layoffs Americans have suffered in the face of the coronavirus pandemic. Yet the recipients include many you probably wouldn’t have expected.
Kanye West’s clothing line. The sculptor Jeff Koons. Law firms and high-dollar hedge funds. The Girl Scouts. Political groups on both the left and right.
All told, the Treasury Department’s Paycheck Protection Program authorized $520 billion for nearly 5 million mostly small businesses and nonprofits. On Monday, the government released the names and some other details of recipients who were approved for $150,000 or more.
That amounted to fewer than 15% of all borrowers. The Associated Press and other news organizations are suing the government to obtain the names of the remaining recipients.
Economists generally credit the program with preventing the job market meltdown this spring from becoming even worse. More than 22 million jobs were lost in March and April. But roughly one-third of them were regained in May and June — a faster rebound than many analysts had expected.
The government acted quickly in early April, with Treasury lending the first $349 billion in just two weeks. The program got off to a rocky start, one marked by confusion and difficulty for many companies that sought loans.
“The process was messy, and they couldn’t target it as much,” Diane Swonk, chief economist at accounting firm Grant Thornton, said of Treasury.
Here are seven unlikely recipients of the PPP loans:
Jeff Koons
Koons, a modernist sculptor, is known best for his work with large, metallic balloon-like animals. His “Rabbit” sculpture fetched $91 million at auction last year.
Koons’ studio was approved for $1 million to $2 million, the government’s data shows. (The data shows only ranges for the amounts of approved loans.) His studio said it employed 53 people before the pandemic. The PPP loans can be forgiven if employers use most of the money to keep their workers on the payroll.
Wall Street and private equity
Nearly 600 asset management companies and private equity firms were approved for money from the PPP, according to government data.
Financial firms were generally not badly hurt by the coronavirus pandemic. Their employees were largely able to keep working, and they weren’t among the industries that had to be shut down by government orders. In addition, of course, investment managers and private equity employees tend to be exceedingly well-paid occupations.
According to the data, those 583 companies reported supporting roughly 14,800 jobs collectively with the money from the program. That’s an average of 25 employees per company.
One other notable financial company that borrowed from the program: Rosenblatt Securities, which commands one of the largest physical presences on the floor of the New York Stock Exchange. Rosenblatt borrowed between $1 million and $2 million.
Kanye West’s clothing line
Kanye West’s clothing-and-sneaker brand Yeezy received a loan of between $2 million and $5 million, according to the data released by Treasury. The company employed 106 people in mid-February before the pandemic struck.
Yeezy, best known for its $250 sneakers, just announced a major deal with Gap that will have the rap superstar designing hoodies and T-shirts to be sold in the chain’s 1,100 stores around the world. (A representative for Yeezy didn’t immediately respond to a request for comment.)
Last weekend, West, a notable fan of President Donald Trump, tweeted that he was running for president.
Some other well-known fashion and retail names whose businesses were pummeled by store shutdowns were also approved for loans. The list included high-end designers Oscar de la Renta and Vera Wang and suit maker Hickey Freeman. All their loans were in the $2-million-to-$5 million range.
Political groups
The Americans for Tax Reform Foundation, the nonprofit arm of the anti-tax lobbying group Americans for Tax Reform, was approved for a loan of up to $350,000. ATR, led by the anti-tax activist Grover Norquist, who has long supported a smaller federal government, said it didn’t oppose the PPP. It described the program “as compensation for a government taking during the shutdown.”
The Center for Law and Social Policy, a research and advocacy group focused on policies supporting low-income Americans, was authorized for a loan of up to $1 million, according to government data.
The Girl Scouts
More than 30 Girl Scout chapters across the country received PPP loans, the Treasury said. The Girl Scouts of Montana and Wyoming were approved for between $350,000 and $1 million.
Billionaire governor Jim Justice
West Virginia Gov. Jim Justice’s family companies received at least $6.3 million from the program.
Justice, a Republican, is considered to be West Virginia’s richest person through his ownership of dozens of coal and agricultural businesses, many of which have been sued for unpaid debts. At least six Justice family businesses were approved for loans, including The Greenbrier Sporting Club, an exclusive club attached to a lavish resort that Justice owns called The Greenbrier.
Justice, a billionaire, acknowledged last week that his private companies received money from the program but said he didn’t know the dollar amounts. A representative for the governor’s family companies didn’t immediately return emails seeking comment.
Restaurant chains
TGI Fridays and P.F. Chang’s China Bistro were among the major restaurant chains that were approved for loans.
Dallas-based TGI Fridays, which has around 500 restaurants nationwide, obtained between $5 million and $10 million in loans from the program. In 2014, TGI Fridays was bought by the the New York private equity firm TriArtisan Capital Advisors. That firm also owns P.F. Chang’s China Bistro, which was also approved for a loan.
Though the PPP program was designed to help small businesses, big hotel and restaurant chains were also allowed to apply. A message seeking comment was left with TGI Fridays.
P.F. Chang’s China Bistro says a PPP loan helped it keep 12,000 workers employed and transition its restaurants to carry-out-only during the coronavirus pandemic. Scottsdale, Arizona-based P.F. Chang’s, which has more than 210 restaurants around the country, was approved for between $5 million and $10 million from the PPP program, according to the government data.


fortune--2020-07-08--Facing a massive income tax hit, Britain puts the heat on bankers to get back to the office

Move over Nasdaq .
This exchange has been killing it over the past month

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Bankers who waited out Britain’s lockdown beyond the U.K.’s borders are being told by their employers that it’s time to return.
Unless they leave vacation homes in France or their parents’ place in Poland soon, they risk complicating their residency status and, more importantly for a government running up historic peacetime deficits, depriving the Treasury of tax payments. Firms could also become liable for paying into national insurance systems in multiple countries.
While the issue isn’t unique to London, the stakes are highest in the U.K. Financial services contributed 75.5 billion pounds ($95 billion) of taxes in the 2018-2019 fiscal year — about 42% of the healthcare budget, according to data from TheCityUk, a financial-industry lobby.
“Keeping temporary pandemic work arrangements in place for longer than is necessary means authorities may argue it was always intended to be permanent and this may cause tax problems, for both employers and employees,” said Nicholas Greenacre, a London-based attorney at White & Case who leads their employment and compensation practice.
Likewise, regulators at the Financial Conduct Authority have indicated to banks in recent weeks that it’s time to bring back staff —from traders to sales staff to advisers—who have been working in another jurisdiction for an extended period. Britain locked down in mid-March and has been opening in stages, with pubs the latest to welcome patrons again.
Bankers’ Choice
Bankers with at least four international institutions have been told in recent weeks to get back to the U.K. One mergers specialist who has been working out of a second home in southern Europe was told by his employer to return due to concerns expressed by the FCA and tax authorities. Another banker was given the option of returning to the U.K. or taking leave to stay abroad.
Britain’s tax agency, HMRC, didn’t immediately respond to requests for comment. A representative at the FCA said that “all firms should ensure that they are capable of being effectively supervised.”
Officials at banks in the U.S., Europe and Japan have discussed the issue internally and asked bankers to come back to the U.K. In contrast, UBS Group AG was among the lenders which didn’t let their bankers leave during Covid-19 unless the individuals had specific reasons for it other than wanting to work from abroad. A spokesman for UBS declined to comment.
Financial hubs in Europe and the U.S. are getting ready to welcome workers in the next few months, after offices were closed to slow the spread of the coronavirus. Fears of a second wave have slowed some plans: Citigroup Inc. is pulling back on plans for returning employees to offices across the U.S. as coronavirus cases surge in many states.


fortune--2020-07-08--Wild stock markets swings have exposed a fatal flaw in this classic hedge fund strategy

Facing a massive income tax hit , Britain puts the heat on bankers to get back to the office

The world’s most popular hedge-fund strategy is no longer working.
Lansdowne Partners this week shuttered the long-short equity fund that made it famous, raising fears about the future of peers who make money by betting on winning stocks and shorting losers. Sloane Robinson also called it a day after more than 25 years of buying and selling equities.
The closures reinforce the bruising reality that such funds have captured most of the market’s downside in recent years, but very little of the upside. They also beg the question: If the arrival of a deadly pandemic that’s pummeled the world’s economies can’t work in short-sellers’ favor, then what can?
“The existential crisis is real,” said Andrew Beer, founder of New York-based Dynamic Beta investments. “This is not a new phenomenon, but has gotten worse over time. When markets go down, hedge fund stocks go down more.”
Investors diversify into hedge funds because the ability to short helps soften the blow from declining share prices. But when the market tumbled in March, 87% of equity hedge funds in a Bloomberg index lost money, with half declining by more than 10%.
Stocks recovered — but 70% of the funds were still down in the first half of the year, according to data available as of July 7.
Lansdowne’s reasons for dumping its flagship strategy are painfully familiar to hedge fund offices around the globe. For one, it’s hard to imagine worse future conditions for companies than the impact of coronavirus, and yet their share prices are still holding up. Secondly, interest rates are forecast to stay close to zero for a very long time, which will inevitably act as a tailwind for all stocks.
Hedge funds of all shades have struggled amid quantitative easing since the last financial crisis. But equity strategies have been hit the hardest, with many losing more than the broader market when stocks have tumbled.
“Given the unprecedented level of support received by the market following Covid-19, equity long-short investing is becoming increasingly more challenged as a strategy,” said Nicolas Roth, head of alternative assets at Geneva-based private bank Reyl & Cie. “The short book can quickly become a drag on performance.”
Equity long-short hedge funds tracked by Hedge Fund Research Inc. lost more on average than the S&P 500 index in the first five months of 2020, according to data compiled by Bloomberg. Last year, when the index surged 31.5%, long-short funds captured less than half of those gains. In 2018, they also lost more than the index.
Investors are losing patience: they pulled $44 billion from long-short funds in 2019, the most withdrawals of any strategy, according to eVestment. After hoping for much of this year that shorts would come good, they yanked a further $5.1 billion in May — again the most.
“Not only are allocators being disappointed by managers unable to protect during downturns and recoup during strong rebounds, investors are also starting to find more predictable value in other strategies,” said Reyl & Cie’s Roth.
The future of long-short equity hedge funds is crucial for the $3 trillion industry, as the strategy controls about 28% of its assets, the most of any peer group, according to latest data compiled by Hedge Fund Research Inc.
While it’s still possible to prosper in the long-short space, there’s increasing evidence that successful funds tend to have concentrated portfolios and focus on certain sectors. Stock-picking funds led by Chase Coleman, Philippe Laffont and Andreas Halversen, for example, have notched double-digit gains in the first half.
And some high-profile backers are still giving money to such funds. Rami Abdel-Misih is set to spin out of Moore Capital Management with about $1 billion from the firm’s billionaire founder Louis Bacon.
By contrast, London-based Lansdowne’s main hedge fund tumbled 13% in March’s rout, the biggest monthly decline since it started trading almost two decades ago. It was down 23.3% in the first half of the year. Sloane Robinson, which began investing in 1994 and is also London-based, will shut at the end of 2020 and wind down its Global Opportunities and Global Compounder portfolios.
“It is much harder to see opportunities in the short book, either in terms of generating specific value or as a hedging offset to the long investments,” Lansdowne said in a letter to investors seen by Bloomberg.