fortune--2020-08-14--Fortnite maker accuses Apple of being “more pernicious than the monopolists of yesteryear” in a laws

Fortnite maker accuses Apple of being “more pernicious than the monopolists of yesteryear” in a lawsuit

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The company behind Fortnite filed an antitrust lawsuit against Apple after the popular game was removed from the app store on Thursday.
Epic’s complaint against Apple comes at a time of rising discontent against the latter from app developers. Apple calls for a 15% to 30% cut on payments and subscriptions made within its apps—a price tag that’s deeply frustrated app makers.
Earlier this year, the European Union opened up a probe into Apple’s App Store after Spotify and Rakuten complained of the high revenue cuts which they believed favored Apple’s in-house products. Others have sought to bypass the issue altogether by not offering in-app purchases, a la Netflix.
“Apple has become what it once railed against: the behemoth seeking to control markets, block competition, and stifle innovation,” Epic’s lawsuit against Apple read. “Apple is bigger, more powerful, more entrenched, and more pernicious than the monopolists of yesteryear.”
The chronology of this particular story is worth attention. While Apple requires direct payments through its apps so that it can take its commission, Epic implemented early Thursday its own payments system that bypassed the usual Apple pipelines, in violation of the rules. Apple removed the game from the App Store shortly thereafter. On the same day, Epic released its lawsuit with media flair. Through the Fortnite Twitter account, Epic tweeted out a copy of the suit paired with a short film that parodied a famous Apple commercial, alluding to George Orwell’s 1984.
And that’s the thing with the tweet and video: Apple owns and created the app store, which will likely be a tenet of any defense. It’s a business the company undoubtedly will guard closely, given that it sits within the tech giant’s second largest segment by revenue. But Epic’s provocative and press-luring argument is catching the crowd and times—especially with the heat over Apple’s distribution rules and practices.
Lucinda Shen
Twitter: @shenlucinda
Email: lucinda.shen@fortune.com
VENTURE DEALS
- Impossible Foods, an alternative protein company, raised $200 million. Coatue led the round and was joined by investors including XN.
- Wildlife, a San Francisco-based mobile gaming companies, raised $120 million in funding led by Vulcan Capital and was joined by investors including Human Capital.
- PayActiv, Inc., a San Jose, Calif.-based employer-sponsored earned wage access and financial wellness platform, raised $100 million in Series C funding. Eldridge led the round and was joined by investors including Generation Partners and the Ziegler Link•Age Fund II.
- Mission Bio, a South San Francisco, Calif.-based developer of single-cell DNA and multi-omics analysis, raised $70m in Series C funding. Novo Growth led the round and was joined by investors including Soleus Capital, Mayfield, Cota, and Agilent.
- Thirty Madison, a startup that offers online health portals for treatment of hair loss, migraines, and acid reflux, raised $47 million. Polaris Partners led the round and was joined by Johnson & Johnson, Maveron, and Northzone. Read more.
- Cecelia Health, a New York-based diabetes and other chronic disease management company, raised $13 million in Series B funding. Rittenhouse Ventures and Endo Investors led the round and were joined by investors including Boston Millennia Partners, SustainVC, and G100 Capital.
- Stream, a Boulder-based maker of enterprise-grade activity feed and chat APIs, raised $15 million in Series A funding. GGV Capital led the round and was joined by investors including 01 Advisors, Knight, and Arthur Ventures.
- Root AI, a Boston-based startup building produce-picking robots, raised $7.2 million in seed funding. Rob May of PJC led the round and was joined by investors including First Round Capital’s Josh Kopelman, Jason Calacanis, and Austin McChord of Outsiders Fund. Read more.
- Cube, a New York-based financial planning and analysis software maker, raised $5 million in seed funding. Bonfire Ventures‘ Brett Queener led the round and was joined by investors including Operator Collective, Clocktower Technology Ventures, Alumni Ventures Group, and Techstars. Read more.
- Mighty Labs, a Salt Lake City, Ut.-based platform for remote and cross-functional teams, raised $4.3 million in seed funding. Investors include Slack Fund, GSV Ventures, Origin Ventures, Album VC, Acadian Ventures, and Village Global.
- Joblist, a San Francisco-based jobs listing platform, raised $4 million in funding from Wilbur Labs.
PRIVATE EQUITY
- L Catterton invested in Public Goods, a membership-based grocery, household, and personal care company. Financial terms weren't disclosed.
- Waystar, backed by EQT, Canada Pension Plan Investment Board, and Bain Capital, acquired eSolutions, a revenue tech company focusing on Medicare billing, in a deal valued at $1.3 billion. Read more.
OTHERS
- TA Associates agreed to invest in Ivanti, a provider of IT management and security software solutions. Clearlake Capital Group backs Ivanti. Financial terms weren't disclosed.
- GFL Environmental, a portfolio company of BC Partners and Ontario Teachers’ Pension Plan, agreed to acquire WCA Waste Corporation, a Houston, Texas-based waste management firm, for $1.2 billion.
- General Atlantic invested in Gymshark, a Solihull, U.K.-based fitness and apparel brand, valuing it at over £1 billion.
- Accel-KKR made a majority investment in Recurly, a San Francisco-based subscription management and billing platform. Financial terms weren't disclosed.
- I Squared Capital is planning to auction off Energia Group, a power firm, €2 billion including debt, Read more.
- Improving, backed by Trinity Hunt Partners, acquired Object Partners, a Minneapolis-based custom software development firm. Financial terms weren't disclosed.
- HealthEdge Software, backed by Blackstone, acquired The Burgess Group, an Alexandria, Va.-based payment integrity software company. Financial terms weren't disclosed.
- A consortium of investors that includes STIC Investments, SoftBank Korea, Korea Investment Partners and Korea Investment Securities, acquired Systran, an AI-based translation technology tool maker. Financial terms weren't disclosed.
- 3Pillar Global, backed by CIP Capital, acquired Isthmus Software, a Costa Rica-based software development firm. Financial terms weren't disclosed.
OTHERS
- Accenture (NYSE: ACN) acquired CreativeDrive, a New York City-based content production company. Financial terms weren't disclosed.
- Thomson Reuters acquired CaseLines, a London-based LegalTech company. Financial terms weren't disclosed.
- AT&T Inc. is seeking buyers for Crunchyroll, its anime video unit, for as much as $1.5 billion, per Bloomberg. Read more.
IPOS
SenseTime Group, a Chinese artificial intelligence company, is weighing a dual listing in Hong Kong and China and is raising $1.5 billion of pre-IPO financing, per Bloomberg. Read more.
- Duck Creek Technologies, a Boston-based provider of software for insurers, raised $405 million in an offering of 15 million shares priced at $27.
- CureVac, a German biotech developing a Covid vaccine, raised $213 million in an offering of 13.3 million shares priced at $16, the high end of the range its range.


fortune--2020-08-14--Inside Trump’s war on the postal service

Everything we know so far about the second round of stimulus checks

President Donald Trump admitted Thursday morning that he was intentionally blocking federal funding to the U.S. Postal Service to discourage the use of mail-in ballots in November’s elections.
“Now, they need that money in order to make the post office work, so it can take all of these millions and millions of ballots,” Trump said in an interview with Fox Business Network’s Maria Bartiromo. “Now, if we don’t make a deal, that means they don’t get the money,” he added. “That means they can’t have universal mail-in voting, they just can’t have it.”
The next round of stimulus funding for businesses, local governments and individuals impacted by the virus is being held up largely due to Democrats’ desires to fund the USPS, the president said. House-backed legislation would provide the Postal Service with $25 billion and also undo restrictions imposed on the agency in relation to a $10 billion line of credit recently extended to them by the Treasury.
Trump’s message comes as rapid changes at the Postal Service have left Americans, politicians and even postal workers and their union representatives scrambling to figure out what’s happening, why it’s happening, and what it all means.
A slew of of new policies, staff shake ups, and loan agreements have been instituted in the past month by newly-minted postmaster general Louis DeJoy, making it hard to keep track of what’s shifting and how. The changes also come as the Postal Service, already hemorrhaging funds and predicting potential bankruptcy within a year, posted dismal third quarter returns last week which DeJoy called “dire.”
So what’s going on and what’s changed? Below is a breakdown of what you need to know.
Broken business model
The disappointing third quarter numbers came as DeJoy—a Republican fundraiser and Trump ally—announced a sweeping reorganization plan for the Service just three months after taking on the role. The changes include replacing 23 executives, including the two in charge of day-to-day operations.
Critics of DeJoy say that these shifts are an attempt to consolidate and centralize power around himself. DeJoy, however, claims that these changes must happen because the USPS operates on a “broken business model.”
DeJoy wrote in a memo released Friday that “without dramatic change there is no end in sight and we face an impending liquidity crisis.” DeJoy also announced a hiring freeze amongst managers and is seeking approval for an early-retirement scheme for non-union postal workers.
DeJoy also announced that he would divide the service into three distinct “business units”: retail and delivery operations; logistics and processing; and commerce and business solutions. He added what he called “c-suite” positions to the agency: Scott Bombaugh will serve as the acting chief technology officer, Steve Monteith as the acting chief customer and marketing officer, and Pritha Mehra will serve as the acting chief information officer. The new roles are intended to “reduce our cost base and capture new revenue,” said DeJoy.
But union officials say that the shake ups are adding to mail delivery delays, which were already exacerbated by DeJoy’s decision to curtail overtime hours, multiple truck runs and more. “If we cannot deliver all the mail due to call offs or shortage of people and you have no other help, the mail will not go out,” read an internal USPS memo acquired by Fortune. They also worry about the repeated framing of the Postal Service as a business, and stress that it’s a quasi-government service. By thinking of the USPS as a business, the goal becomes increasing revenue at the cost of servicing Americans, they say.
A restructuring of staff in key leadership positions, rapid reorganization of a massive institution, and hiring freezes will only continue to slow mail delivery ahead of a crucial presidential election where at least 78% of Americans will have the option of voting by mail, said union officials.
Slow downs
Since instituting overtime changes, significant mail delivery delays have been reported in at least 19 states. Some local offices have reported the removal of their sorting machines, further delaying the ability to deliver mail. DeJoy said last week that he was working to fix problems as soon as they occurred. “We will aggressively monitor and quickly address service issues,” he claimed in a speech to the USPS Board of Governors last Friday.
A slowdown in mail delivery, said union leadership, typically leads to a loss in revenue. In late 2011, the USPS announced nearly $3 billion in service cuts that slowed first-class mail delivery for the first time in 40 years. It ended the 2012 fiscal year with a record net loss of $15.9 billion, compared to a net loss of $5.1 billion for the same period the year before.
“Every time we’ve slowed down mail, we’ve lost revenue,” said Mark Dimondstein, president of the American Postal Workers Union. “These seem to be arbitrary decisions. If you slow down mail and packages, people are going to go elsewhere to get deliveries,” he said.
Strings attached
DeJoy, a Trump ally who has contributed more than $2 million to the Trump campaign and other Republican causes since 2016, has also agreed to take a $10 billion loan from the U.S. Treasury, which has previously recommended selling and privatizing parts of the USPS.
In exchange for the loan, the Postal Service agreed to hand over proprietary information about 10 of its most lucrative contracts with third-party shippers like Amazon, FedEx and UPS. The Postal Service works with these shippers to deliver “last mile” deliveries, sometimes at slightly discounted rates, a practice that President Donald Trump has long derided, especially when it pertains to Amazon.
Trump—who has called the agency Amazon’s “delivery boy”—falsely claimed that these types of agreements were the reason the Postal Service has been struggling financially. In reality, these deals only account for a savings of about 5% say experts.
The president, however, said he wouldn’t approve of any emergency funding for the USPS unless it raised package delivery fees four times, a number that analysts say would bankrupt the agency by making it uncompetitive.
The loan also requires the USPS to deliver the Treasury with monthly and quarterly financial and volume reports.
Previously, the Treasury had attempted to use the loan negotiations to gain control of personnel decisions, third-party contract approvals, package prices and union negotiation strategies but eventually settled for relieving proprietary information.
Democrats have opposed the terms of the loan and have urged the USPS to hold out for potential no-strings attached funding in the next round of COVID-19 stimulus funding, an outcome that is becoming increasingly bleak.
Initially, an agreement was made between Democrats and Republicans to fund the struggling Postal Service with a $13 billion cash influx, but President Trump threatened to veto any aid, ending the deal.
In the most recent round of negotiations, House Speaker Nancy Pelosi, Senate Minority Leader Chuck Schumer, Treasury Secretary Steve Mnuchin and White House Chief of Staff Mark Meadows met with DeJoy privately, but the meeting ended in frustration. On August 6th they sent a letter to DeJoy demanding more transparency.
“At [our] meeting, you confirmed that, contrary to certain prior denials and statements minimizing these changes, the Postal Service recently instituted operational changes shortly after you assumed the position of Postmaster General,” they wrote. “These changes include reductions of overtime availability, restrictions on extra mail transportation trips, testing of new mail sorting and delivery policies at hundreds of Post Offices, and the reduction of the number and use of processing equipment at mail processing plants.”
DeJoy, meanwhile, still holds a multimillion-dollar stake in his former company XPO Logistics which contracts with the USPS.
“The idea that you can be a postmaster general and hold tens of millions in stocks in a postal service contractor is pretty shocking,” Walter Shaub, the former director of the Office of Government Ethics, told CNN. “It could be that he’s planning on selling it, but I don’t understand the delay. He has managed to divest a lot of other things. And if he wasn’t prepared to sell that off, he shouldn’t have taken the job.”
Jacking up the price
Earlier this week, Schumer said that DeJoy had “informed some states that they may need to pay a first-class rate to deliver ballots rather than the normal rate — nearly tripling the cost.” The issues comes down to how states classify ballots, as first-class mail or as marketing mail. Marketing mail costs about 1/3 less than first-class mail but is not prioritized in sorting.
The extra cost comes as state budgets have been severely decimated by COVID-19, limiting funds available to vote-by-mail initiatives. Republicans have indicated that they are uninterested in including extra funding to facilitate elections in their next stimulus package.
“At a time when people will have to vote by mail in record numbers because they can’t or won’t go vote in person, the postmaster general is saying we should triple the rate of cost to vote by mail?” Schumer said. “What a despicable derogation of democracy.”
DeJoy maintained that he wasn’t mandating anything, but instead making a suggestion about ways to ensure that ballots are mailed and received in the most efficient manner.
The 75-year problem
The USPS has been rapidly losing money since a 2006 law, passed with the support of the George W. Bush administration, required USPS to pre-fund employee retiree health benefits for 75 years in the future (some critics say that the actual pre-funding requirement is closer to 50 years). That means the Postal Service must pay for the future health care of employees who have not even been born yet. The burden accounted for an estimated 80% to 90% of the agency’s losses before the pandemic.
Critics call the law “draconian” and say that it was created with the intention of leading the Postal Service toward privatization. No other federal agency bears this burden.
Those losses combined with lower rates of first-class mail and more competition from private mail services have dealt a crippling blow to the Postal Service, which was facing bankruptcy even before COVID-19.
For this fiscal year, which ends Oct. 1, the USPS is predicting a revenue loss of $13 billion due to COVID-19. That’s on top of the nearly $9 billion the USPS had been losing annually before the pandemic. Nearly 40,000 workers have had to quarantine for two weeks after exposure to the virus, according to sources close to the USPS.
Still, third quarter losses were narrower than the second. Quarterly revenue rose to $17.6 billion, from $547 million. Net loss, meanwhile, fell to $2.2 billion from $2.3 billion over the same period last year.
DeJoy says not to worry
In spite of all these hurdles and purposeful slowdowns, DeJoy has said that he believes the Postal Service will be well-prepared to deliver and receive critical ballots at unprecedented rates in just over 80 days.
“Despite any assertions to the contrary, we are not slowing down election mail or any other mail. Instead we continue to employ a robust and proven process to ensure proper handling of all election mail,” he told the Postal Service Board of Governors last week. “Although there will likely be an unprecedented increase in election mail volume due to the pandemic, the Postal Service has ample capacity to deliver all election mail securely and on time, in accordance with our delivery standards, and we will do so.”
Whether it’s Trump’s “they just can’t have it” approach to vote-by-mail or DeJoy’s “everything will be fine” optimism, the facts remain facts: The Postal Service continues to lose money at an alarming pace, mail delivery is slowing, elections are less than three months away, and there is no imminent solution.


fortune--2020-08-14--Amazon considers relocating some employees out of Seattle

Amazon.com Inc. is offering Seattle-based employees a choice of smaller offices outside the city, suggesting the Covid-19 outbreak and a new local employers tax have pushed the e-commerce giant to consider alternatives to its hometown.
In a message to employees Thursday, Amazon asked which communities near Seattle — including Tacoma and Redmond, Washington — they’d prefer. The title on the message, which was shared on Reddit and later deleted, was “office workplace options.” Amazon declined to comment on the matter.
Amazon, which reported a total global workforce of almost 877,000 as of June 30, has been expanding beyond Seattle for years. It is building a second major office center in suburban Virginia near the nation’s capital and has satellite locations in cities including New York, Austin and Los Angeles.
Companies across the U.S. are weighing changes to their office footprints after months of employees working from home. Finance firms in Manhattan have looked to New York’s suburbs for space, while Facebook has said as much as half of its employees may be working remotely in the next 10 years.
Amazon has threatened to focus employment growth outside Seattle due to a rocky relationship with city officials and new taxes imposed on big employers. The message suggests Amazon could significantly shrink its presence in its hometown, where it employs about 50,000 people in a mixture of offices it owns and leases. In 2019, it announced it would relocate its worldwide operations division, which oversees Amazon’s shipping and logistics, to nearby Bellevue where it currently employs 3,000 people.
Even before the pandemic, Amazon considered building more satellite offices outside the city, according to a person familiar with the matter. The company plans to expand its Bellevue offices, which it has had since 2017. Such locations are seen as an amenity for employees tired of commuting to Seattle and as a way to reduce the company’s exposure to the city’s taxes targeting big employers, said the person, who asked not to be identified discussing private matters.
Two years ago, Amazon helped defeat an effort in Seattle to raise money for homeless services and affordable housing by levying a per-employee tax on large businesses. The “head tax” would have raised about $47 million a year.
The political climate has since shifted against the company after Amazon’s big spending on a Seattle City Council election backfired last year. In July, the council passed a new levy that will tax large businesses on employees who make at least $150,000 per year. The tax is expected to raise more than $200 million annually and cost Amazon even more than the earlier proposal.


fortune--2020-08-14--Why this military museum is using a chatbot during COVID-19

The next time people visit the Ontario Regiment RCAC Museum in Canada to see World War II–era tanks and artillery, a virtual avatar named Master Corporal Lana will welcome and screen them for COVID-19.
It’s part of the museum’s plan to open to the public on Saturday after having shut down since mid-March because of the coronavirus pandemic. After all, Lana, who is purely digital, can’t spread COVID-19.
As Jeremy Blowers, the executive director of the museum, in Oshawa, Ontario, explained, the chatbot helps protect staff and volunteers from COVID-19 as well as give a glimpse into the future of how cutting-edge technology can be used for education.
The Ontario Regiment RCAC Museum has more than 140 operational military vehicles including tanks and cargo carriers used in the 20th century up to recent conflicts like the Afghanistan War, he said.
Blowers noted that the museum had been developing Lana before the coronavirus outbreak as a way to stay up-to-date with technological trends like augmented reality that could help attract visitors, particularly younger people. After the coronavirus pandemic hit, forcing the museum to close on March 15, Blowers had a eureka moment, deciding to use Lana as a greeter when the museum finally reopened.
He said Lana has a “welcoming and cool factor” that he suspects visitors will enjoy.
“And youths don’t want to sit at a kiosk,” Blowers said about using a more conventional check-in device.
The museum partnered with business software startup CloudConstable and Intel to develop and operate Lana, which users will interact with via a 3.5-foot digital screen. Cameras that are connected to the screen help Lana recognize and respond to people when they walk up and talk to her.
Lana isn’t the most realistic looking digital avatar; she resembles a character from a mid-2000s video game who has slicked-back brown hair and wears military fatigues. But she gets the job done when it comes to asking basic COVID-19-related questions.
During a typical Lana interaction, which Blowers said will last 54 seconds, the chatbot asks visitors six COVID-19 screening questions, such as whether they’ve left Canada during the past 14 days or whether they or someone in their family have experienced coronavirus-related symptoms.
Unfortunately, Lana can’t pick up on whether someone is lying to her. But Blowers said a human staff member will be near Lana, behind a glass panel, ensuring things go smoothly and that no one is “taking stuff off the walls and leaving.”
Additionally, people talking to Lana will have their body temperature checked as an additional COVID-19 safety measure. Museum staff will follow up with anyone who fails their COVID-19 screening.
Although Blowers is excited about the museum’s reopening, he expects only a fraction of the number of visitors who typically come to see the institution’s collection. The museum normally has 200 visitors on a Saturday or Sunday, but he thinks there will be only about 40 people, who have already bought their tickets online.
And despite the precautions the museum is taking, such as requiring people to wear masks and socially distance, as well as providing hand sanitizer, he’s concerned about contracting the virus.
“It’s frightening,” he said.
But he feels an obligation to be at the museum to let the public in.
“I wouldn’t be in the industry and gone through the trouble if I wasn’t at heart a history nerd and a teacher,” Blowers said. “I love sharing knowledge with the public.”


fortune--2020-08-14--The ‘pipeline problem’ is really a network problem—and 2 organizations want to fix it

Good morning, Broadsheet readers! Kamala Harris rules the headlines, a Princess Di musical is headed to Netflix, and new networks aim to take the excuses out of diversifying corporate America. Have a relaxing weekend.
Today’s essay comes to us from Fortune Senior Writer Michal Lev-Ram:
Look harder. My kids do this really annoying thing where they open the refrigerator, stare at the space right in front of their eyes and yell, “Mommy, I can’t find the orange juice!”
“Look harder!” I usually yell back.
Indeed, the orange juice is almost always there. And yet, they’ve clung on to this faulty and absurd line of reasoning: If it’s not right in front of my eyes, it’s not there.
Object permanence, or the understanding that things exist even when we don’t see them, happens to be an important developmental milestone for babies (and yes, my children should have mastered this by now). But even some adults have struggled with this breakthrough, as it turns out.
Remember back in 2015, when Sequoia Capital’s Michael Moritz said his Silicon Valley firm didn’t employ more women because qualified female investing partners were hard to find? Well, it turns out there are qualified female investing partners out there, because Sequoia (and many other venture capital firms) have since hired some. To be sure, the so-called pipeline problem is not a complete work of fiction. But the barrier to better representation of women and people of color in the business world has long been more of a network problem.
“People used to go to their networks to find candidates for speakers, board seats, and executive positions,” says Sukhinder Singh Cassidy, founder of theBoardlist, a platform that connects companies with potential female directors. “They didn’t consciously realize that these networks were homogenous.”
Earlier this week, theBoardlist announced that it would add men of color to its service, an effort to increase not just gender but racial diversity on corporate boards. (Women of color already made up 20% of theBoardlist’s database.) The move came after several months of Singh Cassidy’s inbox getting flooded with emails asking, “Sukhinder, do you know someone?”
All Raise, another organization that aims to advance women in tech and investing, is also trying make it easier to find diverse candidates—in this case, for speaking opportunities. Its upcoming speakers bureau will be made up of female founders, funders, and startup operators interested in more exposure at events.
At their core, databases like theBoardlist and All Raise’s speakers bureau eliminate the network problem at scale. Sending one-off “Do you know someone?” emails is great but inefficient—not to mention, it often puts the onus of finding that someone on those who are underrepresented. These easy-to-search, ready-to-use networks are growing, as are funds that invest in underrepresented founders, and resources for diversifying networks in so many different ways (check out this list of Black economists). In other words: There is no longer any excuse for not finding the orange juice. It was there all along, right behind mommy’s bottle of rosé. Don’t judge, there’s a pandemic going on.
Michal Lev-Ram
michal.levram@fortune.com
@mlevram
Today’s Broadsheet was curated by Emma Hinchliffe.
ALSO IN THE HEADLINES
- Getting nasty. Well, that didn't take long. In the wake of Kamala Harris joining the Democratic ticket, President Trump has begun "sorting women into two categories," reports the NYT: good "suburban housewives," whom he thinks will vote for him, and the "nasty" women who won't. New York Times
- Businesses backers. Speaking of Harris—while progressives may not be thrilled about Biden's choice of VP, it seems that Wall Street, Silicon Valley and L.A. (or at least the music biz) are.
- Warren's watching. Elizabeth Warren is calling for an ethics investigation after Postmaster General Louis DeJoy bought stock in USPS competitor Amazon after being appointed to the job.CNBC
- Meaning of a meme. Agnes Chow, one of Hong Kong's best-known democracy activists, was arrested this week under the new national security law Beijing has imposed on the city. Since her arrest, supporters have turned her in a Mulan meme. The social media campaign at once elevates Chow and criticizes Liu Yifei, star of Disney's new live action film who's voiced support for Hong Kong police. New York Times
IN CASE YOU MISSED IT
- Do no harm. Michele Harper, a Black emergency room physician and memoir author, writes about standing up for her patients to the police—something she says many of the white doctors and nurses in her ER with have refused to do.The Cut
- 100 for 100. In celebration of the 100th anniversary of the 19th Amendment, USA Today just unveiled its list of the '100 Women of the Century: USA Today
- Door knocking goes virtual. Politico is running a series on the Michigan re-election campaign of Rep. Elissa Slotkin. This story in the project looks at how the Democrat is trying to reinvent door-to-door campaigning amid the pandemic.Politico
- A singing, streaming princess. A musical based on the life of Princess Diana was supposed to open this spring, but got shut down due to COVID. The show's official debut has now been pushed to 2021, but good news for Lady Di fans—there are plans for it to appear on Netflix first, though an actual date has yet to be confirmed.The Guardian
ON MY RADAR
The devastating impact of the COVID abortion ban in Texas The Cut
With her dreamlike self-portraits, Djeneba Aduayom seeks to create an escape from reality Washington Post
What to do about Ellen Slate
Raven Leilani’s début novel deconstructs domesticity The New Yorker
PARTING WORDS
I say this with humility and as someone who is not a believer: There’s something very Christ-like about her.
-Jad Abumrad, host RadioLab, on the cross-cultural appeal of the subject of his other podcast, Dolly Parton’s America.


fortune--2020-08-15--Back-to-school uncertainty prompted these 2 employers to give parents new perks

Two U.S. banking giants are rolling out more benefits to parents juggling childcare and homeschooling while keeping the companies running through the pandemic.
Citigroup Inc. will offer employees discounts on test preparation and tutoring services as many continue to work from home while their kids start the new school year. Bank of America Corp. is extending backup childcare payments for staff with children as old as 12.
Workers at Citigroup can get help finding an educational caregiver to supervise their children’s online learning, Sara Wechter, the bank’s head of human resources, said on LinkedIn. If employees decide to try small-group learning at home, it can also help them find families and educators to join their pod.
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“I can’t believe it’s already time for back to school,” Wechter said in the post. “I know that I’m not alone feeling some anxiety around balancing work and my children’s education.”
The world’s largest employers have been grappling with how to help workers who remain at home to stem the spread of the deadly coronavirus pandemic. This fall, many employees will split daylight hours between doing their jobs and helping their children with school work as districts across the country stick with remote learning — so any aid companies provide may also help their own productivity.
At BofA, eligible employees can get daily childcare reimbursements of $75 or $100, depending on their compensation, while they’re working from home or in the office through Dec. 31. The bank is also providing online resources on finding childcare and virtual learning, and will help employees get access to discounted childcare and tutoring.
“It’s going to be a very fluid situation” for working parents, BofA’s Chief Human Resources Officer Sheri Bronstein said in an interview on Bloomberg Television. “I had one of my own team say to me, ‘Gosh, I need a Ph.D to figure out when my four kids are going to school in the fall.’”
JPMorgan Chase & Co. still has about 150,000 people working remotely and is trying to be “very flexible” about that structure, Chief Executive Officer Jamie Dimon told CNN in an interview this week.
“We’re going to try to enhance childcare benefits, or let people know where the childcare is,” he said.


fortune--2020-08-15--Why Trump’s WeChat ban scares U.S. companies more than his TikTok crackdown

Last week, U.S. President Donald Trump signed a pair of executive orders banning the apps WeChat and TikTok from the U.S., arguing that the Chinese-owned apps pose a national security risk to the United States.
“[WeChat’s] data collection threatens to allow the Chinese Communist Party access to Americans’ personal and proprietary information,” the WeChat order states. The Chinese government has denied allegations that WeChat and TikTok feed user data to central authorities.
The U.S.’s decision to ban TikTok, a video-streaming platform owned by the Chinese firm Bytedance, arguably has garnered more attention due to the app’s popularity among American users. But Trump’s ban of WeChat, a messaging app owned by the Chinese company Tencent, is the one worrying large U.S. companies.
In China, WeChat is not just a messaging app but a vital part of daily life. For the app’s 1.1 billion users, it’s Facebook, WhatsApp, Uber, Postmates, Amazon, Expedia, and a mobile wallet all rolled into one, with additional mini programs that host dozens of other functions.
On Thursday, the Wall Street Journal reported that a group of U.S. companies including Walmart, Apple, Disney, and at least nine others raised concerns to the Trump administration that the WeChat ban could undermine their ability to do business in China.
The White House hasn’t clarified whether the ban will be applied to U.S. companies operating in China, and companies may not find out until September when U.S. Secretary of Commerce Wilbur Ross identifies which transactions will be covered by the order. As it stands now, however, the ban threatens to cut off an indispensable tool for any American business operating in China.
How exactly do U.S. companies use WeChat in China? Walmart, the retail giant that’s No. 1 on Fortune‘s Global 500 list, provides a good example. It’s part-customer relations platform, part-mobile payment system, part-e-commerce site, says Yuwan Hu, research director at Daxue Consulting in Shanghai.
When Walmart posts on its public WeChat account, the messages regularly attract hundreds of thousands of views, a figure that indicates the company has a “large base” of WeChat followers in comparison to other brands, Hu says.
The Trump administration has targeted the Tencent-owned WeChat over national security concerns, which the platform says are unfounded. Jay L. Clendenin—Los Angeles Times/Getty Images
The company has also built its own mini-program on WeChat. It allows consumers to place orders for delivery from home and scan and pay for items when shopping in stores through WeChat Pay, the app’s mobile payment system. In 2019, Walmart said 30% of all its transactions in China came via WeChat Pay.
Ultimately, losing those functions could reduce Walmart’s competitiveness amid stiffening competition, Hu says. Rivals include Alibaba’s Hema supermarket chain, which launched in 2018, and more established Chinese retailers like Haorun Wanjia and Lianhua.
Walmart did not respond to Fortune‘s request for comment.
“Chinese consumers are not as loyal as Western consumers,” says Hu. “If a service doesn’t meet their expectations, they will switch to other retailers or providers that [offer] better quality service.”
In fact, Chinese customers are loyal—to WeChat. And that’s at the heart of the problem for U.S. firms; consumers in China would rather ditch a retailer or service provider than give up WeChat’s all-encompassing ecosystem.
A recent, unofficial survey conducted on Weibo, a Twitter-like platform in China, found that 95% of users wouldn’t buy a phone that didn’t have access to WeChat. The results no doubt caught the attention of Apple. If the U.S. ban means Apple is no longer able to offer WeChat on its devices, the company’s China business, worth some $44 billion, is at risk.
If companies are cut off from WeChat, they can replicate some of its functions elsewhere, but other aspects of the app are harder to replace.
WeChat Pay, for example, can be swapped in many use cases for its main competitor Alipay, the mobile payment arm that is associated with Chinese tech giant Alibaba. Retailers usually offer both services, says Chelsey Tam, a Tencent analyst at Morningstar, but availability varies across regions and retailers. In 2018, for instance, Walmart signed an exclusive relationship with Tencent that saw it drop Alipay and only use WeChat Pay for mobile payments in Walmart’s stores in western China.
Apple is considered especially vulnerable if the WeChat ban covers U.S. companies in China, since Chinese consumers are thought to be more loyal to the app than they are to devices. Budrul Chukrut—SOPA Images/LightRocket/Getty Images
It would be harder for companies like Walmart, Apple, Nike, and Costco to replace the megaphone of their public WeChat accounts or the seamlessness of mini-programs that operate within the larger WeChat environment. Again, Alibaba is the closest alternative; it supports mini-programs and online stores for specific companies, says Tam, but as of now WeChat’s ecosystem “completely dwarfs” Alibaba in number of mini-programs and people who use them.
Tencent launched its internal WeChat mini-programs in January 2017, getting a year head start on Alibaba, which launched a similar service on Alipay in July 2018. Mini-programs rapidly expanded on both platforms. By June 2019, the Chinese research firm QuestMobile found that WeChat had over 2.3 million mini-programs while Alipay had 200,000. The report also found that WeChat mini-programs had nearly 700 million monthly active users in June 2019 compared to Alibaba’s 400 million.
Ultimately, no other apps can match WeChat’s reach and marketing power in China, says Jeffrey Towson, a private equity investor and finance professor at Peking University in Beijing. “WeChat is the primary mechanism for reaching and engaging with Chinese consumers,” he says.
The untold cost of losing such a tool is why U.S. companies are “encouraging Washington to think through [the ban] a bit more,” says David Ahlstrom, management professor at the University of Hong Kong.
The U.S. government still has to explain the scope of Trump’s order and specify whether the WeChat ban will only cover users of the app in the U.S. or also apply to U.S. companies using the platform in China.
The order states that “any transaction that is related to WeChat” will be off-limits for any U.S. resident, citizen, or “entity organized under the laws of the United States.”
Dan Wang, a technology analyst at the research firm Gavekal in Beijing, says that, as it’s written, the ban allows the U.S. government to “limit the interactions” of U.S. companies with WeChat, which suggests that cutting American multinationals in China off from the platform is certainly within the range of possibilities.
WeChat’s owner, Tencent, says it expects the U.S. to interpret the ban narrowly. In an earnings call on Wednesday, Tencent Chief Financial Officer John Lo said the ban “very clearly” specifies that it would only apply to the U.S. “Consequently we don’t see any impact on companies advertising on our platform in China,” Lo said.
But in a speech in Prague on Wednesday, U.S. Secretary of State Mike Pompeo hinted at a looser interpretation of the WeChat and TikTok bans. “If you read [the bans], it’s broader even still than that,” he said. “We’re going to make sure that American data does not end up in the hands of an adversary like the Chinese Communist Party.”
Towson says he ultimately expects the White House to make exceptions on the WeChat ban for U.S. businesses operating in China as it would “make no sense” for the U.S. to so thoroughly undermine American business interests in the country.
The U.S. says it will start enforcing the WeChat and TikTok bans on Sept. 20. It’s possible that until then, U.S. companies and even individual citizens who rely on WeChat in China may exist in a state of uncertainty.
“I use [WeChat] 50 times a day,” says Towson. “As an American citizen in China, I’m not totally sure what this ban means for me.”


fortune--2020-08-15--Europe is suffering from a fresh wave of coronavirus infections. Is the sacred summer vacation to bl

Europe is suffering from a fresh wave of coronavirus infections. Is the sacred summer vacation to blame?

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If this summer was supposed to offer hope that coronavirus was under control in Europe, spikes in cases across the continent and ensuing travel chaos have given governments a worrying reality check.
From France down to Ukraine, the number of positive tests for COVID-19 is rising sharply as more people seek vacations and after lockdown measures were eased to allow citizens to congregate. Germany reported the most new cases since May, while France said the situation is worsening, particularly in the cities of Paris and Marseille.
The British government added France and the Netherlands to a list of countries from where people must quarantine for 14 days on arrival in the U.K. Travel stocks slumped. In Eastern Europe, which had been hit less hard by the pandemic, some countries approached near record number of daily cases.
French Health Agency chief Jerome Salomon said large family reunions, such as weddings, and work places are prevalent places of infection. “One can only be worried as hundreds of new people are hospitalized,” Salomon told France Inter. He urged people to socially distance to avoid the crisis of March and April that “no one wants to go through again.”
It was always going to be a gamble as countries sought to open up their economies in an attempt to mitigate the unfolding financial collapse. Closing businesses and ordering people to stay at home again is something political leaders remain reluctant to do given the dark economic forecast and millions of jobs at risk, particularly in tourism.
Spanish Warning
As infections continued to rise in Spain, the main business lobby on Thursday warned that any second lockdown would have catastrophic consequences and urged the government to promote the use of a new app developed by the Economy Ministry to trace cases of Covid-19. New cases in Spain jumped to the highest since at least May 25, when the government changed its methodology for reporting data.
In the U.K., Prime Minister Boris Johnson has been removing lockdown measures, though he has been concerned not to trigger a second wave of cases from arrivals from abroad. His government already faces an inquiry into its handling of the crisis after Britain recorded Europe’s highest death toll.
Hundreds of thousands of British tourists now face being forced to quarantine on their return home after the government added France, the Netherlands and Malta to its list of virus trouble-spot destinations.
The new rules, which come into force from 4 a.m. on Saturday, are likely to spark a chaotic scramblefor tickets on flights, trains and car ferries for 160,000 Britons currently holidaying in France. The French government said the decision was regrettable and warned it would lead to reciprocal action.
“The biggest priority has to be to protect our hard-won gains in getting the virus under control and not re-importing it as people return home,” U.K. Transport Secretary Grant Shapps told Times Radio on Friday. “It’s a public health issue we simply can’t turn our backs on.”
A family from Frankfurt is sunbathing on the beach on the Spanish island of Mallorca. Wire photography: Clara Margais/picture alliance via Getty Images. Clara Margais—picture alliance/Getty Images
“Calculated Risk”
Back in June, Greek Prime Minister Kyriakos Mitsotakis spoke of how he was taking a “calculated risk” to allow foreign visitors to return to the country’s beaches and resorts.
After a jump in cases, he urged young people to be cautious and said additional protection measures will be announced, the ANA news agency reported. He also requested those returning from vacations to be cautious for a week at least.
There has been concern in Greece and Croatia, two countries in the European Union that rely most on tourism, that the virus is being imported by visitors. Croatia recorded 150 new coronavirus cases on Thursday, the most so far, with the expectation of a record on Friday. Meanwhile, Austria warned against travel to Croatia, a major holiday destination and home country of many Austrian immigrants, effective Aug. 17.
Indeed, the east of the continent is seeing rising number of Covid-19 cases in recent days, especially in Ukraine and Romania. On Friday, Ukraine reported a record-high daily number of new infections for the sixth time this month.
Romania reported its second-highest daily number of cases since the start of the pandemic. The nation with the highest death toll in eastern Europe also reported 44 deaths on Friday, after hitting a record on Thursday.
Poland, whose population of 38 million is almost twice as large as that of Romania, is also seeing the rise in infections, with 832 cases on Friday being the second-highest daily number. The Health Ministry mostly blames weddings for the rebound in cases.


fortune--2020-08-15--What’s driving the new gold rush?

What’s driving the new gold rush?

The new gold rush is on. Suddenly, the precious metal has regained its long-lost glitter, jumping to over $2,000 an ounce during the first full week of August, its highest inflation-adjusted level in a decade. That new peak roughly matched its all-time record in 1980 when the Hunt brothers of Texas notoriously cornered the silver market and gold joined the ride. Then gold collapsed from what everyone in retrospect recognizes as delirious heights. Now, the goldbugs are claiming that it’s the safest port in these stormy seas, while history warns that a rerun of 1980 could be looming. Who’s right?
Over the past few days, the shiny metal has retreated a bit, closing 5% off its summit at $1,946 on Aug. 12. Still, the 24% liftoff this year easily bests stocks and bonds, beating the S&P 500’s modest bump 5 to 1.
On the surface, the story that gold’s fans are advancing to justify its comeback seems to make sense. Banking on this classic store of value, they argue, provides the best insurance against the threat of rampant inflation raised by the U.S. government’s unprecedented fiscal stimulus and the Fed’s money-creation binge. Ruchir Sharma, chief global strategist for Morgan Stanley, recently expressed the widespread view that gold’s resurgence has legs, because stocking bullion furnishes a safe haven in these dangerous times. On Aug. 8, as its price hovered over $2,000, Sharma wrote in a New York Times editorial that “Gold appears relatively cheap,” adding that “unless a vaccine emerges quickly, central banks stop printing money frantically, and real interest rates start rising again, it’s difficult not to be a goldbug right now.”
If gold’s advocates are right, the metal should have a long history of first, predicting when inflation is about to take off, and second, providing protection when it happens, in periods when consumer and producer prices are rapidly rising. Over many decades and cycles, gold has failed on both counts. In fact, fear of looming inflation probably isn’t the main motive behind today’s mania. The puny yields on 10- and 30-year Treasuries are forecasting the opposite scenario of prices rising at an unusually slow pace in the years ahead. Even if Treasuries way underestimate the risks of heavy inflation, and that’s highly possible, gold has reached such excessive highs that it’s unlikely to keep rising substantially from here, which is what’s needed to keep you even with a galloping consumer price index (CPI). Catching gold fever is far more likely to saddle you with a big loss.
Rather, what’s driving the spike in gold is what usually brings forth its golden interludes: a speculative frenzy. In the past few years, it has evolved from a favorite of traders at banks and hedge funds, and die-hard “goldbugs,” into a popular, mainstream vehicle. The rise in gold ETFs has made it much easier for the retail crowd to buy. The folks and funds piling into those “massive passives” seem sold that a train chugging with this head of steam, getting buzz this favorable, is bound to keep rolling.
“It’s what Warren Buffett calls ‘the bandwagon effect,’’’ says Campbell Harvey, an economist at Duke University and adviser to Research Affiliates, a firm that oversees investment strategies for $145 billion. “As Buffett says, ‘People create their own truth.’ In this case, they buy more and more gold, and the price goes up, validating their investment thesis. The momentum builds until a shock to the markets or economy gets people to stop believing, and they rush to get out.”
The silver boom
The silver boom of 1980 and its aftermath offer a warning for what may follow from the current craze in its pricier sibling. This writer had an upfront view of the thinking and personalities behind the storied silver debacle. As a young reporter for Fortune, I spent a weekend interviewing the Hunt brothers of Dallas just after the silver bubble exploded in one of the biggest commodity meltdowns in history. Famed oilmen Nelson Bunker and William Herbert Hunt had spent billions accumulating the shiny stuff at below $10 an ounce and watched their holdings multiply to around $13 billion when prices soared to $50. But over a few weeks in March of 1980, silver plummeted 80%, forcing the heavily-leveraged Hunts to mortgage assets from wells for black gold to mansions to Rolex watches as security for the lenders. From the early 1980s to 2016 silver never broke $10. Investors who had suffered heavy losses in the rout charged the Hunts with cornering the market, and the courts agreed, awarding big penalties that forced the brothers into bankruptcy.
When I interviewed the Hunts in June of 1980, their multibillion windfall had collapsed. But for the brothers, it wasn’t a drop in silver’s enduring bedrock value, but the maneuvers of short sellers and regulators that had caused the crash, and they wanted to tell the world in what was their first major interview. I was then a researcher accompanying legendary Fortune writer Roy Rowan, and frankly, despite their travails, the Hunts were delightful company.
The heavyset Bunker dropped some great lines. He even had a witty way of conveying that inflation was a scourge not just for the man on the street, but Texas tycoons. When Roy asked whether he was still a billionaire after his losses on silver, Bunker quipped, “I don’t know. But I do know a billion dollars isn’t what it used to be.” Since he’d just returned from a vacation in Paris, I asked how he’d enjoyed the City of Light. Declared the famously frugal Bunker, “Sure is tough to get a bad meal over in Paris. Sure is tough to get a cheap one, too.”
His luxurious lodgings in a landmark overlooking the Place Vendôme impressed Bunker more for their expense than aesthetics: “When I paid my bill at the Ritz Hotel, I thought I bought the place!” he joked. Bunker was intrigued by what my name suggested about my ancestry: “Shawn, you wouldn’t be an Irishman?” intoned Bunker from an armchair at home, sipping Coca-Cola from a big bottle. Brother Herbert was a relatively quiet foil who confessed to purchasing paintings more for their baroque frames than the artwork itself.
Many years later, Herbert Hunt proved that although his foresight had failed in silver, he retained a knack for charting the future in the oil patch. Herbert staged an amazing comeback as a pioneer in shale fracking. In late 2012, he sold his assets in the Bakken region for $1.45 billion, putting his net worth at an estimated $4.2 billion.
The Hunts told us that it was the Fed’s easy money policies, marshaled to rescue the economy from the deep recession caused by an explosion in oil prices, that drew them to silver. Along with many other gold and silver bulls at the time, the brothers predicted years of heavy inflation that would boost the value of hard assets that, unlike dollars, would stay in short supply. Bunker, a Texas-size Christian, even quoted praise for the safety of silver in times of strife from the Bible. It was clear that Bunker and Herbert were wildcatters at heart and didn’t see silver mainly as a hedge but a ticket to a new gusher of billions.
As it turned out, silver was a lot more plentiful than the Hunts thought. The jump in prices itself punctured the boom. Stores sprang up advertising super-high prices for household silver, and people rushed to sell their jewelry and teapots. Smelters turned the heirlooms into bullion, swelling the supply and sending prices back to where the sprint began.
The outlook for gold
It’s unlikely that a collapse anything like the selloff that hammered the Hunts is looming for gold. Still, the yellow metal’s resurgence recalls the herd mindset that drove the stampede 40 years ago. In an excellent new paper, Gold, the Golden Constant, COVID-19, “Massive Passives,” and Déjà Vu, Duke’s Harvey and coauthors—retired portfolio manager Claude Erb and Tadas Viskanta, editor of the website Abnormal Returns—chronicle the trends in gold prices over the past decades and explore its trajectory in times of fast-rising prices when, in theory, gold is supposed to provide a reliable hedge. The following analysis comes both from the paper, and my conversations with coauthor Harvey, the Duke University economist.
For Harvey, the big picture is that gold prices do track inflation––but only over periods so long––we’re often talking a century––that in effect, they don’t provide protection in times the cost of living soars. “The Romans kept detailed records, so you can measure the buying power of gold, which they used as a currency, at the time of the centurions 2,000 years ago,” he tells me. Harvey found that the emperors paid those officers in coins whose weight in gold roughly translates into the dollar salary for a U.S. Army captain today. “So the same amount of gold had the same value relative to household expenses in the Roman Empire as it does now,” says Harvey. “That means over all those centuries, the rise in the price of gold has equaled the rise in overall prices.”
As further proof, Harvey takes us back another century to the time of Babylonian king Nebuchadnezzar (d. 562 BC). He notes that in those days the gold coins that bought a loaf of bread equate to $5.50 today, what the economist spends at his boutique bakery. “Over long periods, gold doesn’t give a return over and above inflation,” he says. But he adds that simply keeping up with prices is a pretty good performance. Its record over millennia of matching inflation proves that gold indeed has strong intrinsic value because of its scarcity and use in jewelry. In fact, Harvey believes that small holdings of “hard” rather than paper assets are essential to any diversified portfolio because those holdings overall will perform a lot better than stocks and bonds in times of crisis. Small amounts of gold, he says, should be part of that group.
Gold does sometimes outperform equities and fixed income in turbulent times such as in the mid- to late 1970s when the OPEC oil shock pummeled the world economy. In those years, it also temporarily fulfilled the role that fans praise it for, as an inflation hedge. But gold fails in that role more often than it succeeds. It shows no consistency either in anticipating periods of fast-rising prices or in keeping investors whole when inflation takes charge.
“Gold goes through periods where it’s way overpriced or way underpriced for a lot longer than assets like stocks,” says Harvey. “The lifetime of the average person isn’t long enough to ensure that it will protect you from inflation.” The report focuses on what happened in the two previous periods after gold reached peaks, in 1980 and 2011.
In 1980, the metal hit a “real” price (in 2020 dollars) of $2,200, a touch above the current summit. Gold prices had tripled since 1973, a period where stocks and bonds cratered. For that period, gold had proved a great refuge in a world reeling from inflation.
But gold wasn’t just keeping investors even with racing prices, it was soaring in a speculative bubble. That precedent harbors lessons for today. Indeed, the CPI did run hot for the next five years, advancing at a 6.3% annual clip from 1980 to 1985. But gold failed to keep shielding investors for a simple reason––its price so outstripped its fundamentals that a sharp fall was inevitable. Over those five years, its price dropped a total of 55%. The protector from 1970s inflation flopped as the scourge kept running in the 1980s.
In 2011, gold surged past $1,700 equaling the recent peak of $2,000 in today’s dollars. At the time, many investors fretted that the Fed’s quantitative easing program, marshaled as relief in the Great Recession, would ignite inflation. If that explains the spike, then the gold enthusiasts made a bad bet. From mid-2011 to mid-2016, the CPI rose at just 1.2% a year, while the price of gold dropped 28%.
By comparison, in 2011, the bond market was anticipating minimal inflation following the prolonged downturn. If gold boomed because its backers disagreed and went rogue, they were wrong. The CPI rose at two-thirds of the historical pace for those five years, and gold not only didn’t keep up, it dropped by one-third.
Harvey and his coauthors chose those two periods because, in both cases, prices soared far above their historical norms. They draw two main conclusions on what sent gold to these peaks. First, it’s far more likely that a speculative rush, not fear of inflation, propelled the moonshots. Second, when gold gets this pricey, it’s just too expensive compared with its fundamentals.
What is gold really worth now?
So what’s the fundamental force that does govern gold prices? For the authors, it’s the value of goods and services––clothes, groceries, rent, and everything else we consume in our daily lives––that an ounce of gold buys, on average, over long periods. Let’s call it “the gold standard.” When prices rise far above the standard, they eventually trend back toward it, as if driven by a kind of gravity; when prices fall far below the standard, the fundamentals inevitably take hold, and they catch up.
The authors point out that the gold price over the past 45 years has oscillated around a fixed multiple of the CPI. That’s our “gold standard.” It resembles the price/earnings ratio for stocks. When the P/E reaches unusually high levels, it typically shifts back toward historical norms, because investors refuse to keep paying more and more for each dollar of earnings, and instead dump stocks and take profits.
For gold, hitting an outsize multiple of the CPI means that each ounce of the metal buys far more steaks, cars, and semiconductors than at most times in the past. Eventually, the price of gold to the CPI trends back to the long-term benchmark or our gold standard. The rub is that it can languish way below that benchmark for extended periods, and what’s really dangerous, bubble way over that baseline, and stay there, for years.
“The long-term price is its average, inflation-adjusted price,” says Harvey. “That’s the benchmark. Sometimes gold is way above that benchmark, sometimes way below. When it’s way above, prices will eventually fall. You just don’t know when.”
So what’s the P/E-like ratio that for gold, in the long run, is the lodestar that always guides gold back home? We’ll call it the price-to-CPI multiple or the P/C. The authors show that since 1975, the P/C has averaged around 3.5, meaning that the gold price careens over and above a straight line denoting three and a half times the cost-of-living index for goods and services. That 3.5 multiple is our gold standard, the norm the metal historically trends back to.
Today, with the CPI at 257, the P/C stands at 7.6, well over twice the long-term benchmark. The P/C reached about the same levels at the previous tops in 1980 and 2011. It can also fall far below and stay there for a long time: For much of gold’s 14 years in the desert from 1987 to 2001, its P/C languished at around 2.
The bulls want you to believe that today’s towering P/C is the new normal. For Harvey, gold’s ascension threatens the same fate as the last two big spikes: a downward spiral that five years hence would not just fail to match inflation, but saddle investors with sharp losses. “High gold prices now suggest negative returns in the future,” he says. “Gold isn’t a reliable inflation hedge, it’s a risk asset that’s driven often by speculation.” He points to what happened in the big stock selloff in March. “People saw a crisis building, so they dumped gold just like stocks and Bitcoin, even though the outlook for inflation didn’t change. Then when people began to believe in a V-shaped recovery, gold bounced like the other risk assets.”
But, as Harvey points out, gold is extremely vulnerable to bad news at these prices: If the metal retreats to its long-term multiple, the price would drop to $900, under half its recent high of $2,000.
Hence, Harvey doesn’t buy that a group of investors who disagree with the bond market and predict rampant inflation are the force pushing gold ever higher. “I rule out that it’s a special set of investors,” he says. “There are goldbugs who think that it’s the only safe asset, but they’re a very small part of the market.” He rejects the view that the people fearing catastrophic inflation are only in gold when, he says, they could be buying safety in the bond market by acquiring the likes of Treasury Inflation-Protected Securities or TIPS that provide an extra return when the CPI rises.
So why is gold on a tear? Harvey observes that ETFs now account for most of the investment in gold, and that the holdings in the two largest ETFs have jumped from under 5 million ounces in 2004 to 50 million in July. “The price of gold has been rising right in line with buying in gold ETFs,” he says. “And it’s that buying that’s likely driving the price.”
But Harvey says that gold’s new pop status doesn’t change its underlying dynamics. “Now, it’s too much money chasing too little gold in the ETFs,” he says. “It’s when the people in those ‘massive passives’ sell en masse that prices will fall.” That could happen if we have another shock like the one in March, or another signal that the world is getting riskier. Or folks could decide that prices are so high they can’t resist cashing out. When loyalists see the first wave dumping gold, they’ll join the rush for the exits.


fortune--2020-08-15--China is expanding its digital currency pilot to 2 new cities

China has outlined plans for further tests of its digital currency initiative, now aiming for trials in areas including Beijing and Hong Kong.
A digital renminbi trial will start in some of the country’s most developed regions, the Commerce Ministry said in an announcement on Friday that didn’t provide a timeline. Tests will take place in the area of northern China encompassing Beijing, coastal city Tianjin and Hebei Province; the city cluster in the Yangtze River Delta region including Shanghai; and the Greater Bay Area in the Pearl River Delta Region including Shenzhen, Hong Kong and Macau.
Cities in central and western China may also undertake the trials if they meet certain conditions, the ministry said, without specifying what they were.
The exercise will kick off in Shenzhen, Chengdu, Suzhou, Xiong’an and sites for the 2022 Winter Olympics and will then expand to other regions, the announcement said.
The digital currency trials are part of a broader package of initiatives Beijing rolled out on Friday to stimulate innovation and encourage further opening of its service sector. The same day, the country reported steady industrial growth in July, though retail sales continued to show weakness.
China has been ramping up plans and testing for the People’s Bank of China digital currency in recent months, an initiative that some see as a threat to cryptocurrencies like Bitcoin and even potentially someday to the U.S. dollar’s dominance.
In April, Bloomberg News reported that state-owned Chinese banks were conducting internal, hypothetical-use tests of the currency. Last month, Softbank Group Corp.-backed ride-hailing company Didi Chuxing said it was working with the PBOC on tests of the currency and Bloomberg reported that Tencent Holdings Ltd.-backed food delivery giant Meituan Dianping was planning tests on its platforms as well.


fortune--2020-08-15--The Postal Service has always had a tech problem

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One of the biggest stories in the news right now has to do with our mail (regular mail, not email).
President Trump is blocking federal funding to the Postal Service to discourage the use of mail-in ballots in this fall’s election. The USPS has already been bleeding cash, with potential bankruptcy predicted within a year. Meanwhile, its broken business model is resulting long mail delivery delays for you and me.
Staff and policy changes are a large part of the issue, but at the crux of it, the Postal Service also has bad tech.
And it’s always had it. Look no further than a classic Fortune story from 1973, “What the Postal Service can’t deliver,” on the USPS’s woes, then merely two years old and already struggling.
“These days, it seems, just about everybody has some personal horror story to tell about the U.S. Postal Service,” the unnamed author writes. “On Valentine’s Day a resident of Elizabeth, New Jersey, received a Christmas card postmarked December 10.”
It’s a cautionary tale on the consequences of cutting funds. The Postmaster General at the time, E.T. Klassen, admitted that “we were so hell-bent on [cutting] costs that we did not pay enough attention perhaps to service.”
“To understand what went wrong,” reads the piece, “one must enter the arcane world of mail processing. There are essentially six steps in the movement of letters and packages: collection, culling, canceling, sorting, transportation, and delivery.”
Sorting is crucial. To minimize handling costs, the goal is to sort mail as few times as possible. At the time, about 40% of mail was sorted mechanically—everything else was by hand.
Management thought that, even with a leaner business model, they could rely on sophisticated machinery to get the job done. “But much of the new equipment was late in arriving, and the new systems proved to be horribly accident prone,” according to the piece. Staff cuts made things worse, and the deluge of Christmas mail became especially a disaster.
How did Klassen get the USPS out of its mess? He made service the priority over budget. “More workers were hired, more mechanization came on line, and snarls were gradually unraveled in the complex logistical systems used to channel mail around the country.”
And one simple innovation came to the rescue: the use of colored tags on mail pouches. The tag, affixed in the dispatching office, told the receiving office what day the mail was meant to be delivered.
The story reveals the “inescapable dilemma” of the Postal Service that we’re seeing now: For delivery, including tech, to keep up to standard, costs must rise. But that’s usually antipode to how a business—which is how Congress characterizes the USPS—is run.
Amazon didn’t exist at the time, of course. Today’s competition adds even more of an existential urgency to the USPS. But the story’s thoughts were presciently pessimistic: “There is no panacea that will keep the bill from rising.”
Karen Yuan
@karenyuan_
karen.yuan@fortune.com
This edition of Data Sheet was curated by Jonathan Vanian. Check out Eye on A.I., the A.I. newsletter he writes weekly.
NEWSWORTHY
Mutiny in the app stores. Epic Games has sued both Apple and Google after the two tech giants removed the company’s popular Fortnite video game from their respective app stores due to alleged violations, CNET reported. Prior to being kicked off of the app stores, Epic told its users that it would offer them a way to buy digital goods related to Fortnite that would bypass “the up to 30% charge Apple and Google levy on each transaction” via their stores, the report said. From the report: Apple's and Google's decisions to ban Fortnite from their respective app stores marks a dramatic escalation in the debate between the tech giants, the developers that make programs for their devices, and regulators interested in examining it all.
People like bundles, right? Apple plans to debut subscription bundles for its various services like Apple Music and Apple News+ that are intended to entice people by offering “groups of services at lower prices than would be charged if consumers subscribed to each offering individually,” Bloomberg News reported, citing unnamed sources. The story describes the planned service bundles as akin to Amazon’s Prime service, which combines multiple services like video streaming and delivery features into one subscription package.
Bad for business. Major U.S. companies like Apple, Ford, Walmart, and Walt Disney participated in a call with White House officials questioning the Trump administration’s proposed plans to “restrict business transactions” involving Tencent’s popular WeChat app, The Wall Street Journal reported. The companies are concerned that a possible WeChat ban “could undermine their competitiveness in the world’s second-biggest economy,” the report said.
The all-knowing oracle. A federal litigator involved with employment discrimination cases against database giant Oracle is alleging that she "faces removal from her job" after she objected to Labor Secretary Eugene Scalia’s decision to intervene in the case, The New York Times reported. A spokesperson for the Labor Department said that Scalia did “nothing irregular or improper in the Oracle case.” From the article: Oracle has a lot at stake in the case, which originated in the Obama administration: potentially hundreds of millions of dollars in back pay for female, African-American and Asian-American employees who the department said were paid less than white and male counterparts.
FOOD FOR THOUGHT
There’s a weird echo of recent history here. In the 2008 election cycle and during his two terms as president, Barack Obama faced repeated false claims—most prominently advanced by Donald Trump—that he was not a real American, that his origin story was a fraud, that he was somehow a foreigner infiltrating the American body politic. In her first few hours as Biden’s running mate, Harris faced something analogous, both in conservative media and on online platforms: claims that she’s not really an African American. The Atlantic probes the “editing battle” taking place on Wikipedia in light of Democratic presidential candidate Joe Biden’s pick of Kamala Harris as his running mate.
IN CASE YOU MISSED IT
Federal agents tricked Hamas into sending Bitcoin to Uncle Sam—Jeff John Roberts
Inside Netflix’s ‘Project Power,’ a ‘refreshing’ take on the popular superhero movie genre—Radhika Marya
How Livongo reached its historic $18.5 billion Teladoc merger—Sy Mukherjee
‘Irreplaceable’: U.S. WeChat users struggle to imagine life without the app Trump wants to ban—Naomi Xu Elegant
AMC movie theaters will reopen on Aug. 20 with 15-cent tickets—Jonathan Vanian
Stimulus checks and extra unemployment benefits unlikely until September as Senate goes on recess—Lance Lambert
(Some of these stories require a subscription to access. Thank you for supporting our journalism.)
BEFORE YOU GO
It’s 1984 all over again. Epic released a short video, dubbed “Nineteen Eighty-Fortnite,” parodying Apple’s classic 1984 Macintosh commercial shortly after Apple booted the company’s Fortnite video game from its app store.


fortune--2020-08-15--A famous West African chef and a Dean & Deluca alum have a new ‘it’ grain that could unseat quinoa

While on a walk in 2010 around Brooklyn’s Clinton Hill neighborhood, Teverow saw a man cooking a whole animal on the sidewalk and had one overriding thought: I have to go talk to him.
It was Pierre Thiam, one of the world’s leading West African chefs.
“It was a lamb, and I was humiliated because I assumed it was a baby pig,” Teverow told Fortune. (A pig would not have passed muster in Senegal, Thiam’s birthplace, which is a predominantly Muslim country.)
The pair would occasionally cross paths after that initial meeting, and Teverow had ordered Thiam’s first cookbook: “Yolélé! Recipes From the Heart of Senegal.” (Yolélé is a Fulani expression used throughout West Africa that’s meant to be shouted in joy. It roughly translates to, “Let the good times roll!”)
But a partnership wasn’t born until Teverow read an article about Thiam’s dream: creating economic opportunity for West African farming communities by sharing their food with the world, including the ancient grain fonio, pronounced “phone-yo.”
Five years after their sidewalk meeting in 2010, the pair launched their company, aptly named Yolélé. “I had been making my living in the specialty food industry for 16 to 17 years at that point, and I’d been looking for a way to make that work more meaningful than making fancy food for fancy people,” Teverow says.
Their signature product—a West African grain called fonio—is now sold nationally in Whole Foods and found in restaurants across the country. Teverow says they have seen online sales increase around 20% month over month since April. Their August Amazon sales so far are more than six times their sales for all of August 2019.
From May to April, Yolélé’s sales grew by over 600%. They began to receive more interest, and out of the 1,500 stores Yolélé will be sold in by 2021, 60% are new partnerships formed after May, underscoring a widespread wave of interest in Black-owned food business.
Yolélé’s signature grain, fonio. Courtesy of Yolele
Creating a market
When he read about Thiam’s ambitions, Teverow knew that he could help—because he’d done it before. In the ’80s, Teverow worked as the director of product development for Dean & DeLuca, an upscale grocery known for its unique imports. The main part of Teverow’s job, he says, was identifying ingredients that are delicious but not well known in the U.S. to buy in bulk.
“When quinoa came across my desk, I thought, Well, here’s a grain. We sell plenty of grains. Absolutely. Let’s do it,” Teverow recalled. “I was surprised when it started selling really well from the beginning.”
But even he could not have predicted the fact that quinoa has become a virtual staple, now found everywhere from L.A. grain bowls to Midwestern grocery stores.
The same appeal quinoa had is present in fonio: It’s healthy and novel, and it gives foodies a chance to get more creative. Teverow said the process of getting it to the market is also not so different. To reach consumers, fonio needed to be placed not only into cutting-edge stores but also onto cutting-edge menus to raise awareness. And in that sense, the food entrepreneur learned a major lesson from quinoa.
“We sold small amounts of it for years until finally someone took quinoa and turned it into a grain-based food,” he explained. “Rather than selling grain, they turned it into pasta. That was the game changer.”
So Teverow and Thiam decided from the outset that variety—offering everything from curry to savory umami flavors—was the route they had to take if Yolélé was to have a national impact.
Creating a global supply chain
The duo got their first big break in the fall of 2017. Whole Foods was opening its first location in Harlem, and the company wanted to feature products produced by Black-owned businesses. The company gave Yolélé a chance, and Thiam says Whole Foods turned out to be the champion in its category.
“They realized that this had potential, and they offered a few other stores in New York City. And in each new store, we were doing great,” he says. “Whole Foods noticed what we’re doing, our story, and they insisted very early that we should launch nationally.”
Thiam always demoed their products in stores himself. Fonio has a delicate, slightly nutty flavor that people find unique, he says. In the summer, he would prepare a fonio salad with mango and parsley, herbs and lime, combining fresh summer flavors to entice grocery shoppers to try it.
Pierre Thiam (left) and Phil Teverow. Courtesy of Yolele
While shoppers were often sold instantly, building a sustainable production system for fonio farmers in West Africa was a daunting challenge. Senegalese Thiam didn’t just want to share the ancient grain with the world, he wanted to make sure that the products also had an impact on the places they came from. The partners are currently in the process of building a new mill, in Thiam’s hometown of Dakar, which will be the anchor of their global supply chain.
Fonio grows in poor soil easily, Thiam says, but the challenge is the processing: Fonio has an inedible skin that must be removed. “To give you an example, for about 100 kilos of fonio, it would take close to two weeks to remove the skin. Fonio is almost the size of a grain of sand, so the process is tedious,” he says. “But with the state-of-the-art mill we are about to build, it will be three tons of fonio per hour.”
Their goal is to create a distribution network and economic opportunity for farming communities, which will hire thousands as the fonio moves through the processing cycle, Thiam says. The traditional cleaning process requires a lot of water, a constraint in some regions where resources are scarce, but the mill, scheduled to finish in early 2022, will require none.
“Many of those families will hire local youths at busy parts of the agricultural cycle, so that could be additional tens of thousands of seasonal jobs. Many more jobs will be created in transportation and aggregation,” Teverow says. “There will be industrial and clerical jobs in the processing facility and then competitors will replicate our setup, which should further multiply the economic impact.”
Cautionary tales
The quinoa case study also showed that there can be downsides to popularity, too. As awareness about quinoa skyrocketed, so did the price—and concern that global interest was hurting farmers in Peru, says Andrew Stevens, who holds a doctorate in agricultural and resource economics. In the Puno region of Peru, where the majority of the country’s quinoa is grown, consumption did drop slightly, but Stevens says this is a result of higher income leading to more purchasing options. The real concern, Stevens says, is the unintended consequences of creating a global supply chain.
“We can think about high-quality coffee, cacao, things that are small-landowner produced but marketed by large, multinational corporations,” he says. “There’s a question about sort of who owns what and who’s getting the money?”
Marc Bellemare and his colleagues Johanna Fajardo-Gonzalez and Seth Gitter published a paper on the welfare impacts of rising quinoa prices and also found little impact. While quinoa and fonio are not parallel situations, Bellemare said there is one principle to consider: Cochrane’s agricultural treadmill. The treadmill is the idea that after being introduced to new technology, farmers become dependent on each new innovation to stay competitive in the market. With quinoa now being grown in Colorado and the prices of quinoa back down to their pre-2010 levels as more quinoa floods the market, Bellemare says farmers in Peru have seen this for themselves.
“We were talking to some farmers in the highlands of Peru,” he says. “They were telling us things like, ‘I know prices are back down, but I’m just going to hold on to my grain because the prices are going to spike back up again.’ But those old levels of profits are gone.”
Creating a taste
Bellemare says it’s hard to determine if fonio will be the next quinoa—but it really will depend on whether chefs and foodies embrace it.
“We went into restaurants with a bag of fonio and asked to talk with the chef. After Whole Foods, restaurants were really our first customers,” Teverow says.
The partners looked to tastemakers like Filipino chef Woldy Reyes, who runs catering company Woldy Kusina in Brooklyn, and Sabrina De Sousa and Alissa Wagner, the minds behind the NYC restaurant and market Dimes.
“Most people find it forbidding to encounter an ingredient that they’ve never cooked before, but if a great chef cooks it for them and it gets buzz, it becomes cool,” he says.
Fonio (left) with mafe sauce, grilled lamb chops, and asparagus and (right) fonio cereal with berries. Both recipes are from “The Fonio Cookbook: An Ancient Grain Rediscovered.”
Adam Bartos – Lake Isle Press Courtesy of Lake Isle Press
When Thiam approached Mawa McQueen, a restaurant owner in Aspen, about incorporating fonio into her menu, the memories came back. “I show it to my brother. I was like, ‘Oh, my God. We used to hate this.’ It was like the poor man food,” McQueen says, laughing. “But it has so many good things for your health, I said, you know what? I’m going to introduce this in Aspen.”
It also helped that McQueen was sick and tired of quinoa. Aspen is the worst place to introduce anything ethnic, she says, but because people knew her she was able to take the risk. Anything on her menu with quinoa was replaced with fonio, much more gentle on the stomach and easier to digest, she says.
The first week, the guests complained.
“People would ask, ‘Can I have quinoa?’ I would go out and say, ‘You eat this,’” McQueen says, laughing.
Now, no one asks for quinoa at all. Some guests even stop by Mawa’s Kitchen to buy fonio to cook themselves. She offers a gluten-free pancake, porridge, and a fonio and arugula salad, and the only time guests complain now is if the fonio runs out.
Indeed, Thiam is confident that fonio will one day be just as popular—if not bigger—than quinoa. During Thiam’s TED Talk with over 1 million views, he asked the audience to imagine the African grain just as popular as the European grains we consume today.
“Fonio touted on the levels of cereals, breads, nutrition bars, cookies, pastas, snacks—why not? It’s easier to say than quinoa.”


fortune--2020-08-15--What college football cancelations mean for TV networks

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College football fans across the country—especially those in the Midwest and on the West Coast—are still reeling from this week’s announcement that the Big Ten and the Pac-12 are postponing their fall football seasons due to the coronavirus pandemic.
As two of the major “Power 5” collegiate athletic conferences, the moves mean that fans of universities including Ohio State, Michigan, USC, and Oregon will have to wait until spring at earliest before seeing their favorite teams back on the field.
While the three other Power 5 conferences—the SEC, ACC, and Big 12—currently plan to proceed with their fall seasons, the absence of some of the sport’s biggest institutions will have major economic consequences for the multibillion-dollar industry that surrounds college football.
But one group of stakeholders that should manage just fine, despite having considerably fewer games to show, are the broadcast networks. While the likes of Disney, Fox, and ViacomCBS have invested billions of dollars for the rights to air the nation’s premier college football contests, analysts at Bank of America said this week that a slimmer slate of games should be “relatively digestible” for those media giants and their shareholders.
One reason is the exposure that all three have to the NFL, which plans to begin its season as intended next month. BoA analysts cite the “potential for the NFL to fill in some of the programming gaps” on college football Saturdays—though there may be some regulatory hurdles to overcome before that’s possible.
There are also potential benefits to saving some college football for the spring, assuming the Big Ten and Pac-12 are able to resume their seasons then. “If some games are played in the fall while others are played in the spring, ratings could improve on a per-game basis due to scarcity, while also creating a more attractive spring slate for advertisers,” BoA analysts wrote.
And while fewer games in the fall will lead to a “meaningful” decline in revenues for broadcasters, due to “lower advertising dollars and certain affiliate rebates,” the networks will also likely be spared significant expenses associated with their college football slates. They would be “unlikely to pay [broadcast] rights fees” to the conferences—which often amount to hundreds of millions of dollars annually—or would receive rebates or compensation, perhaps in the form of “contract extensions for lost value” if games do not take place, according to BoA.
Of the major media conglomerates, Disney has the most exposure to college football. Through ESPN, it holds the rights to the end-of-season College Football Playoff, majority ownership of both the SEC Network and the ACC Network, and the rights to games across all of the major conferences.
ViacomCBS, meanwhile, currently pays around $60 million annually to be the SEC’s flagship broadcaster. Should the SEC reverse course and decide to cancel its season, the company will face a negative EBITDA impact of around $50 million this year, according to BoA analysts—though that could be “partially offset by replacement programming.”
Fox currently pays roughly $550 million per year for the right to air games across the Big 12, Pac-12, and Big Ten (including majority ownership of the latter’s Big Ten Network). Interestingly, BoA notes that the broadcaster “would likely see profitability improve” if all of its college football games were canceled, as TV affiliate revenues “would still accrue despite lower expenses.”
From a stock market perspective, the size and scope of all three broadcasting companies means it’s unlikely that any college football cancellations would hurt their bottom lines considerably, according to TG Watkins, director of stocks at Simpler Trading.
“I think these publicly traded companies are probably big enough that they’ll still do fairly well,” Watkins tells Fortune, citing Disney—which derived the largest chunk of its revenues in its last fiscal year from its Parks division (37.7%)—as an example. “Obviously it’s a big deal, but they’re well-diversified enough that they can pivot and look to provide content wherever they can.”
But while may be alright regardless of what happens, college football fans are left to wait and see whether they’ll be able to watch their favorite teams in action—be that this fall, next spring, or at all.