fortune--2020-05-28--Women are more worried than men about coronavirus. Cecile Richards doesn’t want that to keep female

Women are more worried than men about coronavirus. Cecile Richards doesn’t want that to keep female voters from the polls

4 more years of Trump may accelerate China ’ s rise , says former UN Security Council president

Even before President Trump’s now-infamous tweet about mail-in ballots, the COVID-19 pandemic has made the question of how Americans can best vote safely this November a national concern. It’s a crucially important question, but it also risks oversimplifying the issue. What a voter needs to access and feel safe at the ballot box depends on a host of factors, including, in some cases, her gender.
Cecile Richards, former president of Planned Parenthood and cofounder of the left-leaning women’s activist organization Supermajority, has spent the past several months focused on mobilizing women for the 2020 election. And to do so, the group is first trying to mobilize women now—urging them to fight for the right to vote safely during the pandemic.
“The reason women have the right to vote is that people did risk their lives,” Richards says, referring to the protest tactics of the suffrage movement. She doesn’t want anyone to have to place him- or herself in harm’s way to get to the polls this year.
Supermajority is lobbying for early voting—intended to cut down on the sometimes crowded lines at polling places—extended absentee voting, and online voter registration. If the organization and others fighting for the same cause are successful in persuading states to increase voting accessibility, women will certainly be able to vote in greater numbers in November. If not—as is likely in states controlled by Republican governors and statehouses, which tend to agree with the President on this issue—the fight to ensure women’s voices are heard this fall will be trickier.
Women, on the whole, already face greater hurdles than men when it comes to getting to the ballot box: a grandparent getting sick, a day-care facility that closes early, or a school that’s not open. That caregiving work that so often falls to women is now some of the “most respected work in the country,” Richards says. And paid domestic caregiving is most often done by women of color, who face additional hurdles exercising their right to vote.
While Supermajority hasn’t yet polled women on their worries about the coronavirus and safety in November, Richards expects women’s general concerns about the virus to extend to their willingness to show up for the presidential election. An April survey by Gallup found that 80% of U.S. women were “very or somewhat worried” that someone in their family would be exposed to the coronavirus, compared with 68% of men. “We know women are much more concerned in general now about the health risks of COVID-19,” she says. “They’re more likely than men to be worried that someone in their family is going to be affected. It’s logical that’s going to apply to going out and standing in line to vote.”
While the cofounders of Supermajority are aligned with the Democratic Party—and while expanded voting access has traditionally been a Democratic issue—Richards emphasizes that now, more than ever, the ability to vote safely applies to everyone, regardless of party affiliation.
“It’s not a partisan issue,” she says. “There’s never been a better reason to solve this problem.”


fortune--2020-05-28--4 more years of Trump may accelerate China’s rise, says former UN Security Council president

Women are more worried than men about coronavirus .
Cecile Richards doesn ’ t want that to keep female voters @ @ @

Relations between the U.S. and China are at their lowest point in decades.
The two countries are trading barbs over China’s new national security law in Hong Kong and fighting over who should bear responsibility for the COVID-19 pandemic. And, after the two-year U.S.-China trade war eased in January with a phase 1 agreement, prospects for further negotiation seem bleak in the aftermath of the outbreak.
U.S. President Donald Trump’s administration has escalated tensions between the two sides. Yet, as the November U.S. election approaches, China may be hoping for four more years of Trump in office, argues Kishore Mahbubani, former president of the United Nations Security Council and current scholar at the National University of Singapore’s Asia Research Institute.
In a discussion with Fortune’s Clay Chandler on Wednesday, Mahbubani argued that Trump’s reelection would continue to diminish the U.S.’s standing globally and provide China the opportunity to take a stronger role on the international stage. Mahbubani also discussed his new book Has China Won?, which argues that the U.S. may be more vulnerable than it thinks in its geopolitical contest with China, as well as East Asia’s response to the coronavirus and Beijing’s proposed national security law in Hong Kong. The Q&A below has been edited for length and clarity.
Fortune: There is an ongoing debate about whether the success of major Asian economies in combating the coronavirus has to do with their political systems, some of which are more centrally controlled than those of Western nations. Could liberal democracies, like the United States, have contained the virus like China did?
Kishore Mahbubani: It’s an easy cop-out [for the U.S.] to say, you know, it’s only a foreign, dictatorial, Communist system that can do well. But East Asia is not uniform. South Korea has done well; it is a robust democracy. Australia and New Zealand have done well; they are liberal democracies. The more fundamental reason why East Asian countries seem to be coping better is that they are unlike the United States, where the institutions of government became delegitimized, defunded, demoralized after the Reagan-Thatcher revolution. After all, Ronald Reagan famously said, government is not the solution; government is the problem.
In East Asia, by contrast, there has always been a deep respect for institutions of government and a realization that if you undermine institutions of the government, society will suffer. The United States needs to understand that societies succeed when they combine the invisible hand of free markets with the visible hand of good governance. And the United States has been fighting a one-handed battle against COVID-19. We [in East Asia] have been fighting a two-handed battle.
Do you see the U.S.-China relationship deteriorating further as we near the election? If Trump is not reelected, do you see that relationship improving?
I can confidently predict that between now and November, the relations between the U.S. and China will get worse. Because the easiest way to win votes in the United States is to bash China.
Things may get superficially better under a potential Joe Biden administration, because he will definitely be more courteous in speaking to China. But, paradoxically, China may be interested in the reelection of Donald Trump. Donald Trump has done so much to reduce America’s standing in the world, and therefore opened political space for China. So, four more years of Donald Trump may actually be good for China. Trump may be painful in the short term, but China may gain long-term dividends.
There’s a growing consensus in Washington and among the business community, whose members were once great allies of China, that the U.S.’s engagement policy with China isn’t working. How do you answer people who claim that was a failed strategy?
China did make some serious mistakes with its relationship with the United States. It’s not that one side is right, and one side is wrong. China’s alienation of the American business community was a serious mistake on their part because they lost the biggest constituency in applying the brakes to any kind of negative policies toward China. At the same time, I don’t agree with the view that the engagement policy has failed. But it has failed to create a liberal democracy in China. There’s absolutely no question about that.
But, from the Chinese point of view, the best 40 years they’ve had in the last 4,000 years have been in the last 40 because there has been a greater improvement in the standard of living and the well-being of people than ever before in Chinese history. And this is why it’s happened, because of engagement with the United States of America. That’s not a failure.
What’s your take on Beijing’s new national security law that bypasses the Hong Kong legislature?
When it comes to legislation the devil is in the details. And we have not yet seen what this legislation is, and what it will do. For example, if this legislation preserves the autonomy of Hong Kong and on all other issues and sticks to foreign interference, then I think it will not do much damage to Hong Kong. So, I think we’ll have to see what the legislation says.
But Hong Kong is going to sadly become a political football in the new geopolitical contest that has broken out between the United States and China. The sad part about being a football is that the players enjoy kicking the ball. But the ball is the one that gets damaged and broken in the end. So that’s the danger that Hong Kong faces.
If there is a response from the U.S. government or Congress about the law, what actions might China take against the U.S.?
The levers that China has against the United States are very, very poor. The United States is still by far the much stronger power. But at the same time, if the United States takes any measures against Hong Kong, the 1.4 billion people in China will not suffer. The 7 million people in Hong Kong will suffer.
This story and video are part of Eastworld Spotlight, a series of conversations on matters of business, tech, and finance with executives, experts, entrepreneurs, and investors in Asia. Subscribe to Fortune’s Eastworld newsletter to get them in your inbox.


fortune--2020-05-28--‘Shameless:’ Beijing accuses U.S. of interference in Hong Kong autonomy dispute

A Chinese foreign ministry spokesperson in Hong Kong called U.S. politicians “arrogant, unreasonable, and shameless” for attempting to interfere with China’s “internal affairs” in a Thursday statement released after the National People’s Congress (NPC) approved a sweeping and controversial national security law tailored for Hong Kong.
The statement comes a day after U.S. Secretary of State Mike Pompeo told Congress that the State Department no longer considers Hong Kong autonomous from mainland China.
“The United States stands with the people of Hong Kong,” Pompeo tweeted on Wednesday, before the NPC approved the law.
The foreign ministry statement said its spokesperson “firmly opposed and refuted” Pompeo’s claim that the law threatens Hong Kong’s autonomy.
President Donald Trump said last week that the U.S. would react “very strongly” if Beijing pushed forward with the law, which allows the central government to bypass Hong Kong’s legislature and directly impose the legislation that lawmakers in China will craft in the coming weeks.
The spokesperson, a representative of the commissioner’s office of China’s foreign ministry in Hong Kong, said the new law will “secure the long-term stability of ‘one country, two systems,’” the framework separating Hong Kong’s legal, political, and financial infrastructure from that of mainland China.
The legislation has received international pushback for the leeway it seems to provide to crack down on Hong Kong’s autonomy and sparked a new round of protests in the city; last year’s months-long political unrest had quieted during the coronavirus outbreak.
“[The legislation] will not affect the high degree of autonomy of Hong Kong [or] the legal rights and freedom of Hong Kong citizens,” the ministry spokesperson said.
Nor will the legislation affect the legal rights of foreign investors in Hong Kong, the spokesperson added.
According to the 1992 U.S.-Hong Kong Policy Act, if the U.S. determines that Hong Kong is not sufficiently autonomous from mainland China, it can revoke Hong Kong’s preferential trade and economic privileges.
One worry among some experts is that the political uncertainty and Beijing’s encroachment on Hong Kong’s legal system will discourage foreign investors and companies from doing business in Hong Kong.
China’s top legislative body resoundingly approved the law, which the Hong Kong government is required to implement once lawmakers in China complete the draft. It will come into effect by September.
More must-read international coverage from Fortune:
—Inside China’s reopening: 7 personal stories of life after lockdown
—Photo essay: What life looks like in Europe as the continent starts to reopen
—Reopening of Shanghai Disneyland is a proving ground for pandemic-era theme parks
—Trump’s demand that China pay coronavirus reparations evokes an ugly history
—PODCAST: How Marc Benioff is helping out during the coronavirus pandemic
—WATCH: The global crisis in recycling


fortune--2020-05-28--China’s Hong Kong move adds to a stew of tensions

This is the web version of CEO Daily. To get it delivered to your inbox, sign up here.
Good morning. David Meyer here in Berlin, covering for Alan.
This is not the geopolitical worst of times, but neither is it the best. Right now there are a number of reasons to be looking in China’s direction with a degree of unease.
The most urgent issue is the approval by Chinese lawmakers of an expansion of the country’s national security law to Hong Kong. U.S. Secretary of State Mike Pompeo has already claimed that Hong Kong no longer merits its special trade status as far as the U.S. is concerned. The new law is likely to trigger more official pushback from the Trump administration, and the question now is whether multinationals will continue to use Hong Kong as a regional base. The Hang Seng fell around 1% on the news.
This all spells further trouble for U.S.-China diplomatic and trade relations—the commitments made in the two countries’ “phase one” trade deal are already looking rickety to say the least, and accusations about the origins of COVID-19 are festering on both sides.
But we can also add into the mix the ongoing Huawei brouhaha. Huawei CFO Meng Wanzhou yesterday failed in a legal challenge to her Vancouver house arrest and pending extradition to the U.S. The Chinese embassy in Canada reacted by saying Canada is an “accomplice to United States efforts to bring down Huawei and Chinese high-tech companies.”
And then there’s the issue of Indian and Chinese troops scuffling at the two countries’ Himalayan border. There have been quite a few skirmishes on the border over the years, but analysts fear this standoff, which relates to disputed territories, could escalate. Thousands of Chinese troops are on what India claims is its soil. The Chinese side says India has been building defense facilities on Chinese land. And each country has a fervently nationalistic government right now.
None of this is to say that disaster is imminent—none of these issues just popped up out of nowhere. But tensions are running high, and with them risk.
More news below.
David Meyer
@superglaze
david.meyer@fortune.com
TOP NEWS
American Airlines cuts
American Airlines will lay off around 30% of its management and admin staff. Although the carrier says it is starting to see demand pick up again, it sees a few lean years ahead before the industry recovers. "We must plan for operating a smaller airline for the foreseeable future," American's People VP Elise Eberwein wrote to employees. Wall Street Journal
Easyjet cuts
Easyjet is also to cut its workforce by around 30%, due to the pandemic. The British budget airline says it will launch a consultation with its workers in the coming days. Cost-cutting measures will also take place in areas such as marketing, and Easyjet will also lease its aircraft to raise cash. CNBC
Trump vs Twitter
President Trump is expected to sign an executive order today that would make it easier for federal regulators to stop social media firms from curbing users' speech. The move comes after Twitter enraged Trump by providing a fact-check for an erroneous tweet of his. The order, if it materializes as anticipated, is likely to spark a court challenge. Washington Post
Fact checks
Twitter isn't just fact-checking Trump's erroneous statements now—it's done the same to at least two posts from China's Foreign Ministry Spokesman, Zhao Lijian. The tweets in question referred to the, ahem, counterintuitive idea that the U.S. army brought COVID-19 to China. Twitter now directs viewers of those tweets to a note saying the virus appears to have originated in animals, not some lab. Fortune
AROUND THE WATER COOLER
Google suit
The state of Arizona has filed a consumer fraud lawsuit against Google over its collection of users' location data. Arizona AG Mark Brnovich said Google often collected this data—which it uses to target advertising—without users' consent or knowledge. Google claims Arizona has "mischaracterized" its services. Reuters
MedMen saga
What happened to MedMen, which was a couple years ago going to become the Apple of the legal pot industry? This Politico piece looks back at the slew of lawsuits—from employees, from investors, from the former CFO—that brought down CEO Adam Biermann and turned MedMen into… and this is cruel… the "WeWork of weed." (Also check out Fortune's take on the saga from a few months back.) Politico
Death rate
The U.K. has the world's highest COVID-19 death rate, according to a Financial Times analysis. The U.S. may have more deaths—now over 100,000—but the FT (which looks at excess deaths rather than official death tolls) puts the U.K. death rate at 891 people per million. The U.S., by comparison, appears to have a death rate of around 200 people per million. Close behind the U.K. are Italy, Belgium, Spain and the Netherlands. FT
SpaceX launch
Due to lightning near the launchpad, SpaceX and Nasa yesterday called off (for a few days) the U.S.'s first crewed spaceflight since the retirement of the space shuttle fleet some nine years ago. As Aaron Pressman writes, the mission will "kick off a major phase of the privatization of space. Planned missions to follow include the launch of private astronauts, a private space station, and possibly private missions beyond Earth." Fortune
This edition of CEO Daily was edited by David Meyer.


fortune--2020-05-28--Still fuming over a fact-checked Tweet, President Trump expected to sign executive order aimed at so

Still fuming over a fact-checked Tweet, President Trump expected to sign executive order aimed at social media platforms

Donald Trump has been raging against Twitter Inc. since the social media platform that helped vault him to the presidency slapped fact-check links on a pair of his tweets.
Now, he’s poised to take action Thursday that could bring a flurry of lawsuits down on Twitter, Facebook and other technology giants by having the government narrow liability protections that they enjoy for third parties’ posts, according to a draft of an executive order obtained by Bloomberg.
The companies’ protections against lawsuits apply when they act “in good faith” in taking down or limiting the visibility of inappropriate tweets, videos and other social media posts, but the law doesn’t define bad faith. The draft order would push the Federal Communications Commission to issue rules clarifying the issue, potentially allowing users to sue over takedowns if they were inconsistent with companies’ terms of service, did not provide enough notice or meet other suggested criteria.
The White House declined to comment early Thursday morning.
The draft order would also convene, through the Justice Department, a working group of state attorneys general to look into deceptive practices and review executive ad spending on the platforms.
The move could set off a legal battle between Washington and Silicon Valley.
“Big Tech is doing everything in their very considerable power to CENSOR in advance of the 2020 Election,” the president said Wednesday night — on Twitter. “If that happens, we no longer have our freedom. I will never let it happen! They tried hard in 2016, and lost. Now they are going absolutely CRAZY. Stay Tuned!!!”
Big Tech is doing everything in their very considerable power to CENSOR in advance of the 2020 Election. If that happens, we no longer have our freedom. I will never let it happen! They tried hard in 2016, and lost. Now they are going absolutely CRAZY. Stay Tuned!!! — Donald J. Trump (@realDonaldTrump) May 28, 2020
Word of the executive order came a day after Twitter added links to a fact-checking page on Trump tweets asserting that mail-in-voting leads to rampant fraud.
As Trump himself has observed, Twitter gives him the power to dodge the media and speak directly to the American public. It also allows the president and his vast community of followers to instantly spread a steady stream of pro-Trump messages and attacks on his rivals, including exaggerations and outright falsehoods that not even Twitter’s fact-checking links can dent.
He has no legal authority to shut down the service, as he threatened to do Wednesday morning, but doing so would mean silencing his loudest megaphone — as well as what his campaign calls “keyboard warriors” who both amplify his voice and provide him memes and other free content to broadcast to his 80 million followers.
Twitter also serves as a valuable punching bag, which he uses to generate outrage and sympathy among his supporters.
The social media platform has become even more important for Trump as the coronavirus pandemic prevents him from holding his trademark rallies, and he seeks a free outlet to attack his likely Democratic challenger, Joe Biden.
“He’s going to need to continue to use this platform,” said Amy Becker, a professor at Loyola University Maryland, who focuses on political communication. “It’s going to be his random tweets, it’s going to be him attacking whoever criticizes him, there’s going to be a lot of attacks on Biden, the Democrats.”
Liability Protections
The order Trump plans to sign Thursday is his latest attempt to exert control over the formidable technology industry. In 2018, he considered issuing an order instructing federal antitrust agencies to open probes into the practices of tech giants like Alphabet Inc.’s Google and Facebook. The possible measure was criticized as politicizing antitrust enforcement and it was never signed.
Trump’s attacks on Twitter and other social media companies are often hyperbolic and rarely lead to immediate concrete action. The government could never silence a company like Twitter without violating First Amendment rights to free speech. However, his threats are a reminder of other significant levers that the president and the rest of the federal government have at their disposal.
Senator Josh Hawley, a Missouri Republican, wrote Twitter Chief Executive Officer Jack Dorsey on Wednesday to demand an explanation for the fact-checking links added to Trump’s tweets. He accused the company of choosing to “editorialize.”
Hawley repeated a threat that’s been raised by other lawmakers over the years: Revoking the protections that shield Twitter and other platforms from legal liability for content its users post.
“Politicians can use the powers of government to make life very difficult for private companies and there’s a long track record of politicians from both parties doing this in the last couple years to social media companies,” said Jesse Blumenthal, a conservative who leads tech policy at Stand Together, part of the political network affiliated with libertarian billionaire Charles Koch.
In recent days, Trump had tweeted attacks on cable news host and former Republican Representative Joe Scarborough by pushing a baseless conspiracy theory that he was involved in the death 19 years ago of a woman who worked at his district office in Florida. Her widower sent a letter to Twitter asking the publicly traded company to delete Trump’s tweets, but it chose to leave them online.
Scarborough is a frequent critic of the president.
80 Million Followers, 52,000 Tweets
The feud with Twitter comes as Trump has been under siege for his handling of the coronavirus pandemic that’s infected more than 1.6 million Americans and killed some 100,000. He trails Biden in general election polls by an average of 5.3 percentage points, according to RealClearPolitics.
There has never been a politician as prolific on social media, which he often uses to call opponents names, spread conspiracy theories, dismiss employees and announce policy changes. He has sent more than 52,000 tweets and has more than 80 million followers.
Trump has both acknowledged the power he wields when he tweets and the platform’s impact on his 2016 election. At a July 2019 social media event at the White House he boasted about using Twitter to announce that the U.S. would recognize Israel’s sovereignty over the Golan Heights, one of the world’s most contentious foreign policy issues.
“Boom,” Trump said of the March 19 tweet. “I press it and, within two seconds, we have breaking news.”
At that same event he acknowledged that without the platform he might not have been elected.
‘Keyboard Warriors’
Trump has a symbiotic relationship with his supporters on Twitter. They often create memes that go viral with his retweets. Earlier this month, he retweeted a meme of himself as the president giving a speech in the 1996 movie “Independence Day,” about an alien invasion. That meme has been viewed 18 million times on Twitter.
He’s repeatedly promoted a twitter handle that goes by the name of @sexcounseling that reinforces his messages. Earlier this month he egged on his supporters online with the hashtag obamagate, alleging that President Barack Obama’s administration improperly tried to undermine his election campaign in 2016. His supporters tweeted a series of memes with Obama and Biden.
“Thank you to all of my great Keyboard Warriors. You are better, and far more brilliant, than anyone on Madison Avenue (Ad Agencies). There is nobody like you!,” Trump said in a May 14 tweet.
Tim Murtaugh, a Trump campaign spokesman, defended the president’s use of Twitter.
“Most Americans have a pretty clear understanding of the way that President Trump uses Twitter,” Murtaugh said Wednesday on Fox News. “Twitter is a way for the president to connect with his voters. We hear all the time from the president’s supporters that they like the way that the president expresses himself on Twitter because they say to this day they say listen here’s a guy who finally says the things out loud that I’m thinking to myself.”
Going back to the 2016 campaign, Trump and his campaign have cultivated a relationship with his supporters online. That part of his base remains engaged, echoing and spreading his messages, said Eric Wilson, a Republican digital strategist.
“The most effective endorsement for a candidate is from someone that you already trust, that you already have a relationship with,” Wilson said.


fortune--2020-05-28--Bug bounty startup Synack valued at $500 million to boost ‘white hat’ hacking from home

In 2018, Wes Wineberg decided to take the plunge and make his side hustle—hacking companies for pay—a full-time gig.
Wineberg was a senior security software engineer at Microsoft. He was a member of one of its “red teams,” units tasked with hacking into the company’s systems to find vulnerabilities and shore up its defenses. But he had an itch. He wanted to move from Seattle back to Vancouver, his hometown—a transition to remote work his bosses wouldn’t allow. So he struck out on his own.
Well before the COVID pandemic struck and many companies were forced to allow their sheltered-in-place employees to work from home, a subset of cybersecurity professionals and hobbyists were ahead of the virtual trend. Bug bounty hunters, the guns-for-hire of the information security industry, tended to make their own hours. The vast majority of people participate in their spare time—but some, like Wineberg, were good enough to go pro.
Now with more people working from home and relying on digital services, the security of those websites and apps has become even more important to companies. At the same time, side-gig hackers have more free time to lend their skills to bug bounty platforms—like Synack, the one Wineberg prefers most.
“On the researcher side, we’re seeing more activity than we ever have before,” says Jay Kaplan, a former senior cyber analyst at the National Security Agency and current CEO of Synack. To wit: The company’s “red team” hackers discovered 250% more vulnerabilities in March versus the same period last year, and their hacking work increased 70%.
The increase is “due to new vulnerabilities surfacing from work-from-home changes and also a growth in our business,” says Mike Farrell, a Synack spokesperson.
Synack is enjoying the attention. A new set of venture capitalists is pouring a fresh batch of venture capital funding—$52 million—into the seven-year-old startup. The deal, news of which Fortune broke Thursday morning, puts the company’s valuation near $500 million, according to a source familiar with the financing.
The new backers include B Capital, a VC firm launched by Facebook cofounder Eduardo Saverin, and C5 Capital, a tech investing firm based in London. Rashmi Gopinath, an investor at B Capital who co-led the deal, says the new reality of the pandemic “further demonstrates the importance of a remote, crowdsourced model for cybersecurity.”
Synack is working with a number of businesses battling the COVID pandemic on the front lines. One customer, according to public records, is the U.S. Department of Health and Human Services. Biopharmaceutical companies and drugmakers involved in antibody testing and vaccine development are among the firm’s customers too.
“As soon as organizations started realizing everything was about to change due to the pandemic, we started getting calls and inquiries from customers about testing COVID-19-related recovery apps,” Kaplan says. The work “is highly sensitive, so we just can’t talk about those efforts right now,” he adds.
Customers, such as the Department of Defense and General Dynamics, who are among the ones the company can name, pay Synack to scan for vulnerabilities and to host bug bounty programs. Synack then doles out a portion of the funds to hackers, the size of the payday depending on the severity and number of software flaws they report.
Synack last raised venture capital in 2017 at a private valuation of $150 million, including the money raised, according to data from the industry tracker PitchBook. Adding the new funding, the company has raised $112 million total to date.
Synack competes with other bug bounty startups. Notable rivals include HackerOne, which is bigger by number of hackers, and Bugcrowd, which recently raised new funding of its own.
The trio of companies is angling for a greater share of the cybersecurity market once reserved for penetration testing, a segment expected to grow to $4.5 billion by 2025. Many industry professionals say that mercenary forces, like bug bounty hackers, are best considered a supplement to, rather than replacement for, in-house security staff.
Wineberg says he likes Synack the most because it offers a diverse set of targets, and the team is highly responsive to his inquiries. If he submits a bug, he’s confident he will learn quickly whether it entitles him to a prize, or whether someone else beat him to the punch.
Although Wineberg declines to reveal the amount he gets paid, he says he’s making at least as much as he did at Microsoft—and sometimes plenty more. “I think it pays just as well or potentially better than having a normal full-time job in computer security,” Wineberg says.


fortune--2020-05-28--Stocks continue to rally despite China-Hong Kong tensions and mounting jobless claims

This is the web version of the Bull Sheet, Fortune’s no-BS daily newsletter on the markets. Sign up to receive it in your inbox here.
Good morning, Bull Sheeters. How’s this for a matchup? The pessimism around China-Hong Kong tensions and U.S. jobless claims is facing off against investor euphoria over stimulus packages. So far the bulls have the upper hand.
There’s plenty of green on the screens.
Let’s see where investors are putting their cash.
Markets update
Asia
The Asian indices are mostly higher in afternoon trade .
trade The Nikkei is up more than 2% after the Japanese government approved what some are calling the “world’s biggest” coronavirus stimulus package (in GDP terms).
is up more than after the Japanese government approved what some are calling the “world’s biggest” coronavirus stimulus package (in GDP terms). Hong Kong’s Hang Seng is that lone patch of red in Asia. It was down at the start of the trading session after U.S. Secretary of State Mike Pompeo said in a Tweet Hong Kong is no longer considered fully autonomous , throwing its special trading status into question.
is that lone patch of red in Asia. It was at the start of the trading session after U.S. Secretary of State said in a Tweet Hong Kong is no longer considered , throwing its special trading status into question. The Hang Seng then fell further, down as much as 1.2%, after the legislature in Beijing approved, as expected, the new national security law that’s tailor-made for Hong Kong.
Europe
European bourses climbed out of the gates again this morning. Germany’s Dax was up 0.55% two hours into the trading day.
bourses climbed out of the gates again this morning. was up two hours into the trading day. The continued momentum behind European equities comes down to yesterday’s European Commission announcement of a more-generous-than-expected €750 billion coronavirus stimulus package . Promoting green tech is at the heart of the recovery plan.
comes down to yesterday’s European Commission announcement of a more-generous-than-expected coronavirus . Promoting is at the heart of the recovery plan. Bloomberg crunched the numbers on the EU’s full recovery bill, putting it at €2.4 trillion ($2.6 trillion).
U.S.
The Dow and S&P 500 futures are in the green, as I type, though they’re off their highs following the latest China-Hong Kong news. The Nasdaq appears set to open flat.
and futures are in the green, as I type, though they’re off their highs following the latest China-Hong Kong news. The appears set to open flat. On the same day the U.S. officially surpassed the 100,000 COVID-19 death toll , the S&P 500 climbed to an 11-week high , closing above 3,000 .
, the climbed to an , closing above . Want more evidence Wall Street and Main Street are worlds apart?… The gulf between consumer sentiment data and the gains in the S&P 500 are at an all-time high. A hint : consumer sentiment is really low; investor exuberance sky-high.
and the gains in the are at an all-time high. : consumer sentiment is really low; investor exuberance sky-high. We get another update on the brutal U.S. labor market before the bell today. One set of economists predicts that between 2.1 million and 2.4 million unemployment claims were filed in the past week.
Elsewhere
Gold is up.
is up. The dollar is flat.
is flat. Crude is one of the few assets in the red today. Brent is off 2%, trading below $35 per barrel.
Russellmania
The Russell 2000 yesterday closed 3.1% higher, extending its incredible two-month run. If you’d completely overlooked the daily swings of this small- and mid-cap index, don’t feel too bad. The Russell doesn’t get a lot of attention day in, day out.
But ignore it at your peril.
As Fortune reported last month, the Russell often acts as an important bellwether for the broader U.S. markets. That’s often true on the way down, amid market slumps, and on the way up, as we’re now seeing. Today’s chart shows the Russell vs. its peers over the past month. The Russell 2000 is even outperforming the Nasdaq.
“When things really turn around… stocks on the Russell frequently lead the large-caps,” Erik Sherman wrote in Fortune last month.
That’s because the small- and mid-caps are, by definition, riskier assets. When investors look to buy there, they’re clearly in a risk-off mood. And these days, risk-off = buy everything. As Dan Wantrobski, associate director of research at Janney Montgomery Scott, told Sherman, “you’ll know we’re getting close to a bottom when we see small-caps starting to outperform large.” And that’s certainly what’s happening right now.
Russell 2000 companies are also highly tied to the American consumer. They grow when the U.S. economy grows. And that’s where a big warning flag should come in right about now. The economic indicators show the U.S. economy, at best, may be off its lows. It’s certainly not growing at a rate that could easily explain the Russell’s near 10% rally this past month.
Some market commentators have taken to describing the Russell 2000 rally as something of a curiosity, as Russellmania.
A mania? By that measure, it would have good company.
***
Have a nice day everyone. I’ll see you here tomorrow.
Bernhard Warner
@BernhardWarner
Bernhard.Warner@Fortune.com
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Today's reads
Fancy duds. Shares in Walmart have been on a tear since the market's mid-March swoon. Now the retailing giant is looking to become a player in fashion through a new tie-up with clothing resale specialist, ThredUp. It's all part of a strategy that's been years in the making, Fortune's Phil Wahba explains.
The F-word. Analysts are growing increasingly pessimistic about equities, and yet investors keep pushing markets to new heights. What gives? I'll give you a hint. It starts with "F," and rhymes with "bed." The Times' Matt Phillips digs into the numbers of the Fed effect.
(Some of these stories require a subscription to access. There is a discount offer for our loyal readers if you use this link to sign up. Thank you for supporting our journalism.)
Market candy
This day in history
83 years ago on this date, a consumer brand for the ages was born: Gesellschaft zur Vorbereitung des Deutschen Volkswagens mbH—later shortened to Volkswagen. The German automaker managed to shake off its Nazi roots to become a big-seller the world over. (In the 1980s, my oldest brother cycled through used VW Bugs as often as he bought a new pair of shoes.) At the end of 2019, VW was the world's No.2 carmaker behind Japan's Toyota, selling 10.8 million vehicles. It also came up with the best car ad of all time, imo.


fortune--2020-05-28--The pandemic won’t derail the green energy transition

Environmental campaigners have frequently warned that a race to return to “business as usual”—with companies and countries scrambling to escape the recession wrought by coronavirus stagnation—could come at the detriment of climate change goals.
So here may be some good news: a report from Deloitte this week says that companies are largely staying the course toward decarbonization despite suffering pandemic disruption.
The report, based on interviews with 600 executives and managers worldwide, says that “despite current economic challenges, energy and industrial leaders are expected to remain committed to their long-term plans to reduce fossil fuel reliance.”
Admittedly, the statistics Deloitte cites lend little weight to its assertion. The accounting group’s headline figure shows 89% of respondents have developed or are developing a strategy to reduce reliance on fossil fuels—a fact that offers little insight into how these plans will be affected by the pandemic. When it comes to oil and gas companies, too, Deloitte says most do not have a renewables plan “per se.”
The fossil fuel industry’s moves to “reduce fossil fuel reliance” is geared primarily at cutting fossil fuels from their own operations but, even then, only 49% of oil and gas companies intend to do so.
Other groups are less bullish on the future of the green energy transition. This week, the International Energy Agency warned that energy investment—including spending on R&D—is set to slump 20% this year, down almost $400 billion compared to last year.
“The slowdown in spending on key clean energy technologies also risks undermining the much-needed transition to more resilient and sustainable energy systems,” IEA director Fatih Birol said.
But Deloitte’s report does account for a short term “pause” in spending on new technologies. The consultancy wagers investment in the sector will return in the long run because, ultimately, better tech means lowers costs.
Lower costs are ultimately what will continue to drive the energy transition towards greener pastures, too, as the price of renewable energy continues to decline. Industrial consumption of polluting energy, Deloitte says, will naturally decline as cheap renewables ease utility networks off of fossil fuels.
In the U.K., in fact, the pandemic slowdown has provided a testing ground for the national grid’s transition to clean energy, as Fortune’s Katherine Dunn reports. The grid has gone over 46 days without burning coal during the pandemic, as coal proves too expensive relative to decreased power demand.
But, of course, it’s the return to higher levels of demand that will test the resolve of companies pledging to transition from fossils. Here, even Deloitte seems uncertain, concluding: “The coming months will likely show how enduring these innovations may prove.”
Eamon Barrett
eamon.barrett@fortune.com
CHANGE THE WORLD
Fortune's annual Change the World list will be published later this year and we are currently welcoming submissions for companies you feel should be included. Each year the list features businesses that are doing well by doing good. While charity is an important endeavour for companies to engage in, the Change the World list is given over to enterprises that are using business to tackle the world's unmet needs. That means they're making profit while making change. For a taste of what we're after, see last year's list here.
To submit a nomination, click here.
CARBON COPY
Greenlight
150 CEOs representing companies with a combined value of $2.4 trillion signed a UN initiative urging governments to instigate “green recovery” schemes, as world leaders funnel stimulus into pandemic-struck economies. Roughly two-thirds of the companies are headquartered in Europe. Bloomberg
COP 26, 2021
The U.K. proposed rescheduling the pivotal COP26 climate change conference to November 2021. The conference, originally planned for November this year, was supposed to mark the deadline for signatories of the Paris Agreement to present enhanced plans to reduce carbon emissions. Some proponents argue delaying the deadline until next year will allow countries time to work climate goals into their post-pandemic recovery plans. Reuters
Bright, like a Dimon
J.P. Morgan CEO Jamie Dimon called the pandemic a “wake up call” for governments and business to build a fairer economy for millions who “left behind for too long.” His remarks came before 49.6% of the bank’s shareholders backed a resolution requiring the bank to disclose its carbon footprint. The bank’s board recommend shareholders vote down the proposal, which ultimately failed. Financial Times
Pipe dream
A report out yesterday serves as a reminder that if the world is to be rid of single use plastics, something needs to be used in their stead. Many developing countries rely on plastic bottles and pouches to deliver drinking water to citizens living in areas with poor or insufficient plumbing facilities. The report authors argue that improving this vital infrastructure is key to diminishing plastic waste. The Guardian
SEC doesn't rate ESG ratings
Chairman of the Securities Exchange Commission Jay Clayton warned about risks attached to ESG ratings. Clayton said he had yet to see a case where combining separate Environment, Social and Governance analysis together into a single company rating would “facilitate meaningful investment analysis that was not significantly over-inclusive an imprecise.” Financial Times
IN CASE YOU MISSED IT
COVID-19 is crippling the energy market, with one big exception: renewables by Katherine Dunn
Intel pledges ambitious water-use goal by 2030: To go ‘net-positive’ by David Meyer
The U.K.’s lockdown is making the country’s electricity grid greener—for good by Katherine Dunn
Will the airlines survive the coronavirus? Yes—and here’s how by Shawn Tully
The plastics problem is getting harder to solve by Alan Murray
CLOSING NUMBER
€750 billion
Yesterday the European Commission unveiled a €1.85 trillion ($2 trillion) recovery plan to pull the economic bloc out of the coronavirus crash. More details of the plan are due today but the proposal includes €750 billion stimulus package tied to the EU’s target of achieving net zero carbon emissions by 2050. Touted as the world’s biggest “green” stimulus program, the funding will accelerate spending on green rooftops, hydrogen fuel development and New Energy Vehicle purchases.


fortune--2020-05-28--Beijing approves national security law seen as threatening Hong Kong’s autonomy

China’s top legislature on Thursday approved a controversial national security bill tailor-made for Hong Kong.
The National People’s Congress (NPC), China’s top political organ, voted to move forward with the law on the last day of its annual meeting in Beijing. Lawmakers in China will draft the legislation in the coming months, and it’s expected to take effect by September.
The law bans sedition, secession, and subversion of China’s central government. Critics say it threatens civil liberties in Hong Kong and undermines the “one country, two systems” arrangement that separates the region’s political, legal, and financial infrastructure from mainland China’s.
The U.S. government has already signaled it will oppose the passage of the law, which U.S. Secretary of State Mike Pompeo on May 22 called a “death knell” for Hong Kong’s autonomy.
A U.S. response to the NPC vote could jeopardize Hong Kong’s special trade status and standing as an international financial and business hub.
The U.S. response
On Wednesday, Pompeo said the State Department no longer considers Hong Kong autonomous from the Chinese government. Pompeo certified the designation to Congress, as is required by the 1992 Hong Kong Policy Act.
Last year’s Hong Kong Human Rights and Democracy Act (HKHRDA), signed into law as anti-government protests gripped Hong Kong in November, requires the U.S. government to review Hong Kong’s autonomy every year.
Pompeo’s remarks do not trigger any part of HKHRDA, but they pave the way for harsher U.S. action against Beijing. The HKHRDA allows the U.S. to sanction Chinese officials and gives it the option to rescind Hong Kong’s status as a separate trade and customs territory from mainland China.
If the U.S. chooses to revoke Hong Kong’s special status, the city would be subject to all the same tariffs and export restrictions that the U.S. places on China. Some experts worry that the political uncertainty could discourage foreign investment in Hong Kong and prompt multinationals to scale back their presence there, or relocate to places like Singapore or Tokyo.
President Trump said on Tuesday that the U.S. would announce its response to the national security law by the end of the week. Trump said the response would be “very interesting” but did not specify what it would entail.
The U.S. Chamber of Commerce said in a Tuesday statement that it was “deeply concerned” that the national security law would undermine the “one country, two systems” framework that separates Hong Kong’s legal, financial, and political systems from mainland China’s. The chamber also expressed concern that altering Hong Kong’s special trade status would have “serious implications for Hong Kong and for U.S. business.”
“It would be a serious mistake on many levels to jeopardize Hong Kong’s special status, which is fundamental to its role as an attractive investment destination and international financial hub,” the statement read.
A Hong Kong government spokesperson on Wednesday called the U.S. chamber’s statement “unhelpful” and said, “All the rights and freedoms enjoyed by Hong Kong people and international investors will remain unchanged.”
What’s next for Hong Kong?
Article 23 of the Basic Law, Hong Kong’s mini-constitution, states that the Hong Kong government should introduce its own version of a national security law forbidding secession, sedition, and subversion against the central government.
In 2003, Hong Kong’s government was forced to withdraw a bill that would have enacted the article after hundreds of thousands of demonstrators in Hong Kong took to the streets to oppose the legislation.
Beijing is bypassing Hong Kong’s legislature with the new law. Thursday’s vote authorizes the NPC Standing Committee to draft the new law on its own. Once it’s written, the Hong Kong government is required to enact the law immediately.
Anti-government protests in Hong Kong, which entered a lull during the coronavirus outbreak after engulfing the city for much of 2019, restarted last week after Beijing announced the national security legislation.
On Sunday, police fired tear gas and used a water cannon in Hong Kong’s downtown shopping district against protesters at a march opposing the national security law.
On Wednesday, police fired pepper balls and arrested over 360 people during another protest against a proposed national anthem bill.
More must-read international coverage from Fortune:
—Inside China’s reopening: 7 personal stories of life after lockdown
—Photo essay: What life looks like in Europe as the continent starts to reopen
—Reopening of Shanghai Disneyland is a proving ground for pandemic-era theme parks
—Trump’s demand that China pay coronavirus reparations evokes an ugly history
—PODCAST: How Marc Benioff is helping out during the coronavirus pandemic
—WATCH: The global crisis in recycling
Subscribe to How To Reopen, Fortune’s weekly newsletter on what it takes to reboot business in the midst of a pandemic


fortune--2020-05-28--Twitter applies another fact check—this time to China spokesman’s tweets about virus origins

Twitter has applied a fact check tag to at least two posts by China Foreign Ministry Spokesman Zhao Lijian, both of which advanced questions about whether the COVID-19 virus began in the U.S. rather than China.
The tags, at the base of the tweets originally posted in March, are marked with an exclamation point inside a circle and follow with text that reads “Get the facts about COVID-19”. Clicking the link takes a user to tweets about the virus origin, which emphasize that the virus appears to have originated in animals in China, rather than a virus laboratory in Wuhan, China.
2/2 CDC was caught on the spot. When did patient zero begin in US? How many people are infected? What are the names of the hospitals? It might be US army who brought the epidemic to Wuhan. Be transparent! Make public your data! US owe us an explanation! pic.twitter.com/vYNZRFPWo3 — Lijian Zhao 赵立坚 (@zlj517) March 12, 2020
The notification is similar to a fact check Twitter placed on tweets from U.S. President Donald Trump, in which he said California’s mail-in voting would be “substantially fraudulent” and result in a “rigged election.”
Zhao’s tweets “contain potentially misleading content” about the virus and have been labeled “to provide additional context to the public. These actions are in line with the approach we shared earlier this month,” a spokesperson from Twitter told Bloomberg.
The New York Post, which earlier reported the labels on Zhao’s tweets, said Twitter’s move Wednesday came after the newspaper pressed them about a possible double standard between Trump and the Chinese tweets.


fortune--2020-05-28--Silicon Valley is divided over Trump’s executive order to rein in social media

Americans are doing something surprising with their money right now

The tech industry reacted like much of America to President Trump’s executive order cracking down on social media companies—with deep division.
“Our platforms have empowered a wide range of people and organizations from across the political spectrum, giving them a voice and new ways to reach their audiences,” Google said in a statement. It added that the order “would hurt America’s economy and its global leadership on Internet freedom.”
However, Michael Moe, CEO of investment firm GSV and a rare Trump supporter in Silicon Valley, sided with the President. He said Twitter, in which he was an early investor, shouldn’t fact-check politicians. “I don’t think Twitter should get in the business of being an umpire,” he argued.
But Moe added that if social media companies choose to become more like publishers, which face higher scrutiny from regulators, then they should be regulated as such. “If it looks like a duck and quacks like a duck, it’s a duck,” he said.
Trump’s executive order came a day after Twitter flagged one of his tweets in which he claimed “there is NO WAY” mail-in ballots would be “anything less than substantially fraudulent.” The company, for the first time, appended a fact-check link at the bottom of the tweet, debunking the President’s comment.
Enraged, Trump on Thursday signed an executive order that takes aim at a legal provision called Section 230 that protects Internet companies from liability for what their users post. Under the order, regulators may decide whether social media companies should keep those protections.
The move is part of a long battle between the tech industry and conservatives, who complain that social media services unfairly delete their posts for violating policies against hate speech and misinformation. In recent months, some services have started to police what political figures post on their services and in political ads.
Although Trump said that his order is intended to encourage free speech, Facebook said it will have the opposite effect. “It will restrict more speech online, not less,” a Facebook spokesperson said. “By exposing companies to potential liability for everything that billions of people around the world say, this would penalize companies that choose to allow controversial speech and encourage platforms to censor anything that might offend anyone.”
Twitter declined to comment about Trump’s order.
Some of the tech lobbying groups that Internet companies support criticized Trump’s order as well. The Internet Association said that it undermines the government’s efforts to protect the free flow of information and “threatens the vibrancy of a core segment of our economy.” The association also noted: “This proposed Executive Order seems designed to punish a handful of companies for perceived slights and is inconsistent with the purpose and text of Section 230.”
Incompas, another lobbying organization, argued that weakening Section 230 prevents people from promoting their ideas and from creating new online businesses. “Social media is an American-made engine for economic growth and opportunity,” the group said in a statement. “The Executive Order threatens to hurt innovators and small business on Main Street who depend on social media the most.”
However, Cameron Winklevoss, head of Winklevoss Capital Management, who, with his brother, once sued Mark Zuckerberg for allegedly stealing their idea for Facebook, took Trump’s side. He said, on Twitter, that Twitter should stay away from fact-checking posts. “‘Fact checking’ is a euphemism for editorializing which is a form of censorship. And that’s a fact,” he tweeted on Thursday.
"Fact checking" is a euphemism for editorializing which is a form of censorship. And that's a fact. — Cameron Winklevoss (@winklevoss) May 28, 2020
Despite its scuffle with Trump, Twitter doubled down Thursday on its new policy of fact-checking politicians. Since flagging Trump’s tweet yesterday, it reportedly added hundreds of fact-check labels to tweets from others, including one by Zhao Lijian, a spokesman for the Chinese foreign ministry who said that U.S. troops may have spread the coronavirus in China.
Meanwhile, Trump and his base bashed Twitter’s head of site integrity, Yoel Roth, tying his liberal tweets from his personal handle to the decision Twitter made to fact-check the President’s tweet. Twitter CEO Jack Dorsey defended the decision and his employee.
“Fact check: there is someone ultimately accountable for our actions as a company, and that’s me,” he tweeted. “Please leave our employees out of this.”


fortune--2020-05-28--COVID-19 can’t be used as an excuse to limit skilled immigration

Memorial Day is an excellent opportunity to celebrate the contributions immigrants have made to America. However, worrying news has emerged that the Trump administration plans to limit highly skilled immigration in an attempt to goose employment.
Such a policy shift would not only be deleterious to our nation, but an ill-founded solution to spiraling unemployment.
From the earliest days of the republic, immigrants have been vital to our national identity. Hot dogs and hamburgers are products of immigrants, and immigrants have played a part in founding iconic American companies like Google, Tesla, and Uber. But now, the administration and some lawmakers are using the coronavirus crisis as an excuse to tear down programs that have helped bring talented workers and students to the U.S., where they are crucial contributors to our economy.
The two most prominent programs being targeted are H-1B visas and Optional Practical Training, or OPT. H-1B visas allow U.S. employers to temporarily hire foreign workers in occupations that require specialized knowledge and skills, with stays ranging from three to six years. OPT allows foreigners with student visas to work in the U.S. following graduation for periods between one and three years, depending on their field of study.
Restricting these programs could have an enormous impact on the tech and engineering fields. Many leading U.S. companies were founded by immigrants and depend upon these programs to employ talented international students and workers. About 18% of the entire labor force is foreign-born, with one in four STEM workers being an immigrant, according to an American Immigration Council analysis of American Community Survey data.
Furthermore, more than half of startups with revenues of $1 billion or higher have immigrant founders or cofounders, according to a National Foundation for American Policy study. And immigrants or children of immigrants are responsible for founding or cofounding 45% of 2019’s Fortune 500 companies, per New American Economy.
International students, who make up over 5% of American university students with more than 1 million studying here, contributed about $45 billion to the U.S. economy in 2018, according to the Institute of International Education.
Our health care system will also be at risk from a policy change. The pandemic has highlighted the role of health care workers in our society, so limits on highly skilled immigration could have fatal consequences for Americans.
Colleges are already fearing the impact of COVID-19 on enrollments and endowments; we are simply not in a financial position to reject qualified students who dream of studying and working in our nation.
To be sure, some schools operate as irresponsible “visa mills” that trade a substandard education for work opportunities in the U.S. But that problem can be solved by not extending H-1B and OPT authorization to students from those colleges and universities.
COVID-19 has had a devastating impact on all of us, but this crisis should not be used as an excuse to allow xenophobia to stifle our future growth. The U.S. has been and always should be a nation of immigrants. Now more than ever, we must remember the importance of immigration, which has fueled technological ingenuity and economic productivity for our entire history, shaping America’s character as a symbol of freedom and innovation.
Welcoming highly skilled and talented foreign students and workers is our best path to promoting employment of native-born Americans. We need great minds from all corners of the world to preserve America’s technological prowess, social diversity, and economic vitality. Preserving the H-1B and OPT programs will benefit us all.
Jeffrey Sonnenfeld is senior associate dean and Lester Crown professor in the practice of management at the Yale School of Management. He wrote this on behalf of the board of the Ellis Island Honors Society.


fortune--2020-05-28--The week that reduced Hong Kong to a superpower plaything

This is the web version of Eastworld, Fortune’s newsletter focused on business and technology in Asia. Subscribe here to get future editions in your inbox.
Fortune‘s 1995 cover proclaiming “The Death of Hong Kong” ignited a firestorm of controversy in Asia. The accompanying story, in its opening paragraph, declared the “naked truth about Hong Kong’s future could be summed up in two words: it’s over.”
The prediction of Hong Kong’s demise proved premature. After Britain returned the city to Chinese sovereignty in 1997, Hong Kong weathered a regional financial crisis, the SARS epidemic of 2003, the Global Financial Crisis of 2008, and the Umbrella Revolution in 2014. After each crisis, Hong Kong not only survived, but reinvented itself, and (mostly) thrived. The noisy crowds flocked back to bars in Lan Kwai Fong. More luxury boutiques sprang up in Central. Container ports hummed, rents and property prices soared, stock prices resumed their upward climb.
Over the course of my two tours for Fortune in Hong Kong, as Asia Editor in the early 2000s, and in my current role since 2016, I have learned not to underestimate this city’s resilience. Hong Kong’s future isn’t “over” now any more than it was in 1995.
Fortune Magazine’s June 1995 cover story proclaimed the ‘Death of Hong Kong.’ Fortune
And yet it does seem clear that the shape of that future has been irrevocably altered by decisions announced in Beijing and Washington over the past seven days.
First came the surprise announcement Thursday that China’s rubber-stamp National People’s Congress would vote on a resolution to draft tighter security laws for Hong Kong, bypassing the former British colony’s local legislature and seemingly rolling back the “one country, two systems” principle by which China’s leaders promised to govern the territory when they reclaimed it from Britain.
On Wednesday, U.S. Secretary of State Mike Pompeo formally advised Congress that the State Department no longer considers Hong Kong to have a significant degree of autonomy under Chinese rule. His statement seemed to indicate that the Trump administration intends to withdraw some or all of the special commercial privileges the U.S. has accorded Hong Kong since 1992.
On Thursday afternoon, as expected, the Chinese legislature approved the Hong Kong security proposal. The final version, to be drafted by members of the NPC’s powerful standing committee, may not be ready until August. But a summary of the NPC’s decision released after the vote suggests the law will grant local and national authorities vast new powers for quashing dissent in the city. The new measure prohibits any act of treason, secession, sedition or subversion. It also bans all “activities of foreign forces” interfering in Hong Kong affairs. It would allow China’s Public Security and National Security agencies to operate openly in Hong Kong, and criminalize acts or expressions of disrespect for the Chinese national anthem or other state symbols.
The next move is Trump’s. In the most extreme case, President Donald Trump could rescind Hong Kong’s special trade status altogether and seek to punish Beijing by treating this global financial hub as no different than any other Chinese city. That move might play well with Trump’s political base as he heads into the November election. But it is unlikely to inflict meaningful economic pain on the rest of China—and is certain invite further retaliation from Chinese President Xi Jinping.
Financial Times correspondent Henny Sender, in a contrarian analysis, argues that U.S.-China tension might actually provide a windfall benefit to Hong Kong’s stock exchange as a slew of mainland companies eying U.S. public offerings in coming months follow the lead of e-commerce giant Alibaba in redirecting listings to Hong Kong.
Singaporean scholar and diplomat Kishore Mahbubani, in this week’s provocative Eastworld interview, laments that Hong Kong as a whole has become a “political football” in the larger global conflict between the world’s two largest economies.
More Eastworld news below.
Clay Chandler
clay.chandler@fortune.com
This edition of Eastworld was curated and produced by Grady McGregor. Reach him at grady.mcgregor@fortune.com.
Eastworld news
An extended quarantine
On Wednesday, Canadian courts denied Huawei Chief Financial Officer Meng Wanzhou’s request to throw out her case. Meng, the eldest daughter of Huawei CEO Ren Zhengfei, has been under house arrest in Canada since being arrested by government authorities in December 2018 under an extradition order from the United States. The U.S. Department of Justice has charged Meng with defrauding banks into doing business with Iran, in violation of sanctions imposed on Iran by the U.S. Meng has denied the charges and has expressed confidence that Canadian courts would clear her of wrongdoing. She plans to continue fighting her case in Canadian courts, but the decision brings her one step closer to being extradited to the U.S. Bloomberg
High stakes
A high-altitude border stand-off between Chinese and Indian troops is escalating tensions between the region’s two major powers. Confrontations began in early May near the Pangong Tso lake in the Himalayan region of Ladakh when Chinese and Indian soldiers engaged in fistfights and pelted one another with stones. The contours of the border region are hotly contested, and since then Indian and Chinese troops have been seen camping in areas claimed by the other party. India alleges that China has recently moved thousands of troops and equipment into Indian territory, and analysts fear that further escalation of the dispute could result in “all-out combat.” Al Jazeera
Waging on Cambodia
Cambodia may be the next Macau. This week, The Wire China told the story of Nagaworld, a mega casino complex in Phnom Penh, Cambodia that has risen to the ranks of the world’s most profitable gaming facilities, netting over $500 million in profits in 2018. The casino has ambitions for more growth, planning to double its capacity via a project called Naga3 by 2025. Gambling in Cambodia remains illegal for its citizens, but the casino was able to grow in large part on the back of booming tourism from China. Yet the guests may only be the tip of the iceberg of China’s influence. The Wire shows how state-run Chinese companies have been intricately involved in planning and constructing Cambodia’s gambling boom. The Wire China
A Thailand bubble
Your Thailand beach vacation may have to wait. Thailand says that it may be October before it opens its doors to tourism, which makes up roughly 14% of the country’s gross domestic product. Tourism authorities in the country say that even then, the country will likely place heavy restrictions on which countries it opens its doors to and what areas the tourists are allowed to visit. The announcement is an early hint at a potential inter-Asia travel bubble, in which countries could make bilateral agreements for cross-border tourism. Analysts say Chinese travelers are likely to be the first allowed into Thailand, given that China is Thailand's largest tourism source and has managed to get a handle on its domestic outbreak. CNN
Testing for all
In mid-May, local authorities in Wuhan, China, the epicenter of the COVID-19 pandemic, detected six new cases of coronavirus. In response, the city launched an ambitious plan to test every one of its 11 million residents. This week, Fortune’s Naomi Xu Elegant says the city has largely managed to pull it off. She writes that in a single day, Wuhan tested 1.47 million people, more than 10% of its population. For comparison, New York state, the hardest hit region of the United States, has conducted 1.8 million tests in total since the beginning of the outbreak. Fortune
Succession
A Macau gambling empire is being passed to the next generation. Pansy Ho is expected to take control of SJM Holdings and consolidate its assets after her father, Stanley Ho, who was known as the King of Gambling for his role in transforming Macau into the world’s most profitable gambling center, died at 98 this week. But Pansy Ho's control over the company's 20-casino empire may be delicate given competing family interests and the economic toll COVID-19 wrought on the gaming industry. Stanley Ho fathered 16 children with four different wives, and each living member of the family has a stake in the firm. Analysts believe that Pansy Ho, the eldest daughter of Stanley Ho's second wife, will have free rein to try and rejuvenate the family business for now. If business falters, however, her control may vulnerable to the family infighting that has plagued the gambling empire in the past. Bloomberg
Coronavirus by country
India -- The world’s largest lockdown experiment may have not been enough. India surpassed 150,000 COVID-19 cases, with over 4,500 deaths, this week, and the virus does not seem to be slowing down. With limited testing capabilities to serve its 1.4 billion citizens, the country averaged over 6,000 cases per day in the last week, up from roughly 1,000 per day in April. Experts predict that infections may not peak until July. India first imposed a country-wide lockdown in late March before beginning to lift restrictions earlier this month. Yet now, even as parts of its economy have reopened, millions of urban workers are returning to their home villages amid the country’s slowdown. As the workers migrate from urban centers, the big question is whether states with fewer resources will be able to handle the expected influx of new cases. BBC
Markets and movers
Uber – The ride-sharing company has proposed moving its Asia-Pacific headquarters from Singapore to Hong Kong. The catch is that Uber says it will only move if Hong Kong officially legalizes its services. Uber is currently banned in Hong Kong, but thousands of drivers and riders still use the ride-hailing app in the face of potential fines. Fortune
Tencent – The Chinese tech giant is investing $70 billion in cloud computing, artificial intelligence, and cybersecurity over the next five years in China, amid government calls for the country to upgrade its technological infrastructure. In a separate deal, Tencent said on Thursday that it raised $6 billion dollars by selling U.S. bonds. Reuters
Volkswagen – The German carmaker is in the final rounds of talks to purchase a 50% stake in Anhui Jianghuai Automobile group, a major electric vehicle maker in China. On Friday, Volkswagen also purchased a 26% stake in Guoxuan, a Chinese electric vehicle battery maker, becoming the company's largest shareholder. For Volkswagen, already the largest foreign automaker in China, the deals represent a major challenge to competitors like Tesla and would help the German company grab a foothold in China’s booming electric vehicle market. Reuters
Final figure
$18 billion
Pinduoduo, or PDD, may be the largest e-commerce company you’ve never heard of, with a user base of over 628 million people. The company keeps costs low by connecting customers directly with factories, and keeps users engaged with its social and gamified shopping experience. The combination proved successful amid China’s coronavirus lockdown, with daily orders increasing from 50 million in March to 65 million in May. The company’s stock has soared; its market cap has nearly doubled to $80 billion since the beginning of 2020. The success has vaulted the company’s founder, Colin Huang, to the No. 3 spot on China's ranking of wealthiest people with a net worth of over $35 billion. His fortune has grown by nearly $18 billion in just the last two months. Fortune


fortune--2020-05-28--The real risk isn’t the federal government’s exploding debt. It’s how it is structured that’s so dan

The real risk isn’t the federal government’s exploding debt. It’s how it is structured that’s so dangerous

In 2008, eager homebuyers and developers found themselves lured by adjustable-rate mortgages and flooded into the market, creating the housing craze of the mid-2000s. Then came a credit crunch as lenders lost confidence in borrowers’ ability to make good. The destruction that started with overstretched homeowners and developers walloped the widespread economy.
Now there’s a similar danger brewing. But the catalyst isn’t reckless consumers. Now it’s the U.S. Treasury choosing daredevil financing. And because of the particulars of how the government has structured its debt, this plan could backfire down the road—and lead to a new financial crisis.
The parallels between the two borrowing booms should concern all Americans because in both cases, they left the economy highly vulnerable to unforeseen shocks. The problem isn’t just the gigantic scale of the new debt we’re shouldering to blunt the lockdown. If we were relying on long-term Treasuries that locked in low, fixed interest costs for decades, the threat wouldn’t be nearly so dire.
But in fact, the U.S. has doubled down by raising $3.6 trillion, equivalent to over one-fifth of all federal pre-pandemic debt, using ultra-short-term loans at never-before-seen, unsustainably low rates that are bound to jump. If they jump far enough, the U.S. would endure gigantic budget shortfalls that would panic our creditors and cripple the private sector with soaring interest costs. Only giant tax increases would halt the damage.
To weigh what the U.S. risks by wagering on short-term borrowing, it’s instructive to examine what happened in the financial crisis. In 2008 and 2009, the upheaval arose from a real estate bubble that shattered. But the type of mortgages held by U.S. homeowners undermined their ability to weather the hurricane. Between 2003 and 2006, around 20 million households gorged on $4 trillion in adjustable-rate mortgages, or ARMs, priced at low fixed rates for, say, two years. After that initial period, the ARMs reset at the much-higher market levels for floating-rate debt.
From 2001 to 2006, ARMs as a share of all home-loan originations soared more than threefold, to over 50%. By late 2009, between $50 billion and $100 billion a month in ARMs were resetting at rates as high as 9%, far above the initial “teasers” that first attracted the homeowners. Millions of families couldn’t afford the new payments, and the credit crunch caused by the mortgage meltdown made it impossible for most of them to roll the ARMs into safe, 30-year home loans. Put simply, the ARM holders took a flier, and it flopped in an onslaught of foreclosures and bankruptcies, amid a deep recession that sank national income 4.3% from late 2007 to mid-2009.
The proliferation of ARMs helped cause the financial crisis by inflating housing prices. But it also made the outcome far worse by heightening the risk faced by America’s households. Families who could have muddled through the downturn with a 30-year mortgage at 5% lost their homes because they had wagered on an ARM that reset at rates almost twice that high, nearly doubling their monthly payments. We don’t know what will cause the next upheaval—widespread trade wars that bring on a new era of protectionism, a deep recession coupled with a collapse in stock prices, or another black swan like COVID-19. But whatever the shock, today’s explosion in super-short-term borrowing could turn what would have been a passing tremor into a devastating earthquake.
John Cochrane, an economist at Stanford’s Hoover Institution, warns that the U.S. is ignoring the lessons from the financial crisis at great peril. “America is using the equivalent of ARMs to finance the relief programs to fight the coronavirus,” warns Cochrane. “Rates on the short-term federal debt are super-low right now, but if rates go up, the U.S. is—what’s the polite word for ‘screwed’? What if the Treasury suddenly can’t find the new people to pay off the old borrowers, except at much higher rates, like the ones that sank the ARM borrowers?” That’s the formula for a fiscal catastrophe, Cochrane adds. He notes that in his home state of California, earthquakes are unlikely, but do happen, and unpredictable financial earthquakes happen too. He adds that it was precisely the inability to refinance short-term debt that caused the Greek debt crisis a decade ago.
The risks of short-term debt
To fund the four relief and stimulus packages designed to ease damage from the lockdown, the Treasury has embarked on by far the biggest one-year borrowing program in U.S. history. Keep in mind that the U.S. is adding that COVID-19 debt on top of the borrowings needed to fund the $1 trillion deficit for fiscal 2020 (ending September 30) projected before the outbreak. On May 4, the Treasury announced that it will borrow $2.999 trillion in the three months from April to June, versus the previous plan to retire $56 billion.
The structure of that new borrowing is a sharp departure from the program in recent years. Since 2012, the U.S. has been capitalizing on historically low longer-term interest rates to extend the average maturities of its fast-growing debt. The reason is obvious: Shifting the balance toward 10-year notes and 30-year bonds is a lot safer than relying on “T-bills,” securities that come due in a time period from a couple of weeks to a year. From 2012 to 2019, that swing toward conservatism enabled the U.S. to extend the average maturity from 60 months, which has been the norm for several decades, to around 70 months, meaning that 17% versus 20% of all U.S. debt comes due each year.
In the first quarter from October to December, the Treasury kept that strategy in place. Of the $330 billion in new debt, 42% came in maturities of seven years or more. The “go-short” reversal went from pronounced in the January to March quarter (Q2), to overwhelming in Q3. In Q2, the U.S. borrowed a total of $477 billion. Of that number, 26% came in maturities of seven years or more, and just over half came due in a year less.
In Q3, borrowing exploded, and so did the shift to selling bonds carrying the cheapest rates, meaning the ones with the shortest maturities. Of the staggering, nearly $3 trillion jump, Treasury forecasts that it will fund $2.750 trillion, or 92%, in bills running a year or less, and another $92 billion at terms of three years or shorter, for a total of $2.840 trillion, 95% of the total. The Treasury has also disclosed that it intends to sell another $677 billion in securities in the final quarter ending Sept. 30. We don’t yet know the breakdown of maturities, but it’s reasonable to predict the Treasury will follow the crisis-driven pattern of Q3, so that around 90% of the offerings will have terms of a year or less, and almost all of them will carry durations of no more than three years.
If Q4 resembles Q3, as expected, the U.S. debt picture will undergo a historic transformation in just 12 months, both in the well-publicized surge in total debt, but also in the mostly overlooked move to shorter maturities. The binge on bills, as opposed to going long, makes the outlook far more dangerous. By Fortune’s estimates, by the close of September, the U.S. will have added $4.15 trillion in new debt, of which $3.6 trillion, or 86%, will be due in a year or less—generally a few weeks or months. And $3.78 trillion, or 91%, will need to be refinanced by mid-2023.
Why aren’t we going long?
The reason for the gigantic shift both to the size and share of Treasury bills is clear: In this time of exploding deficits, Treasury sees its role as minimizing the extra costs of borrowing.
It’s easy to see Treasury’s rationale: Going short has never been cheaper. Since the outbreak signaled a sharp economic slowdown, rates on short-term debt have collapsed. In late February, the six-month Treasury was paying 1.52%; by May 22, it was yielding 0.14%, and 13-week bills now trade at 0.12%. On a current run rate, a good guess at the extra interest the U.S. will pay this year on that entire $4-trillion-plus in new debt might be a tiny 0.5%, or $20 billion, an addition of just 5% to last year’s interest bill.
That break won’t last. The average market rate on six-year Treasuries was 5% from 1960 to early 2007, and it reached 2.6% in December 2018. So Treasury is taking a big risk, since anything like a return to historic averages would push interest expense to ruinous levels. On the other hand, long-term debt is also extremely inexpensive right now. The 10-year note is yielding just 0.64%, and the 30-year is a screaming deal at 1.27%; it stood at 4% as recently as 2013.
So why isn’t the U.S. picking long-term protection at bargain rates? “The U.S. should be going with long-term financing,” says Cochrane. “That way, if there is any problem and rates go up, the U.S. isn’t stuck with massive interest costs and deficits. Borrowing long-term insulates the economy from a financial crisis.” In fact, Treasury Secretary Steven Mnuchin has shown a strong interest in choosing a safer path. In early March, he told the House Ways and Means Committee that he had explored interest in new, 50-year Treasury bonds and got a less-than-enthusiastic reception. “We went out to a large group of investors and solicited feedback, and I was somewhat surprised that there’s some interest but not enough that it would make sense to issue those bonds,” Mnuchin told the legislators.
It’s also likely that Treasury isn’t pushing hard on 30-year bonds because investors balk at buying tons of those too. In early March, the demand for new offerings of 30-year Treasuries collapsed, driving rates skyward. Enter the Fed, which calmed the waters by purchasing $17 billion in long-dated Treasuries. “Treasury was having a hard time selling 30-year bonds in March,” says Cochrane. “It was a warning sign that the Fed had to step in to buy lots of the longer-term bonds Treasury wasn’t able to sell in the private markets.”
For Cochrane, the blowup may explain why Mnuchin isn’t championing long-term debt that would lock in rates at historically low levels for decades to come. In the absence of strong demand for 10- or 30-year borrowings, Treasury is pursuing a strategy of funding where debt is cheapest. That means replacing maturing Treasury bills with the new bills of the same term, simply exchanging three- or six-month Treasuries that come due with new three- or six-month Treasuries. Clearly, Treasury isn’t worrying about defending the U.S. against rising rates.
Danger ahead
Though slender rates are restraining interest costs right now, the scale of the extra debt puts the U.S. in danger. And the ARM-style borrowing magnifies the menace. By the end of the September fiscal year, the U.S. will hold approximately $21.7 trillion in debt, a 29% increase of almost $4.9 trillion on last year’s $16.8 trillion. In a single year, the national burden will jump from 79% to over 100% of GDP, and that’s using last year’s national income figure, not this year’s stricken number, as the benchmark. “When you have debt that huge, it doesn’t take much of a rise in rates to bury you,” warns Brian Riedl, an economic policy expert at the conservative Manhattan Institute.
Riedl points out that a 2% increase in average rates on that $21-trillion-plus load, leaving rates still well below their historic average, would add $420 billion interest expense, $45 billion more than America’s total interest expense in 2019, and almost 10% of all outlays.
What scenario could trigger a fiscal crisis? Cochrane isn’t worried about a rise in rates caused by stronger economic growth. “In that case, rates are rising because there’s more demand for capital, and companies are getting more productive,” he explains. “Tax receipts go up, and the need for spending goes down. If the rate increase is driven by a strong economy, we can afford it.”
The real danger, he says, comes from a confluence of a bad economy and a crisis of confidence, with one force-feeding the other. In a recession, tax receipts would dwindle, causing deficits to explode, and investors would fret that the U.S. can’t make good on its bonds without stoking inflation that would crush their value. Result: a flight from Treasuries that would hike rates and throw the U.S. economy into a tailspin. Once again, cautions Cochrane, the chances that endgame will arrive are far greater because we’re choosing the fix of short-term financing.
The danger of ARM-style financing isn’t the only lesson from the financial crisis. In effect, the U.S. is paying for fixed and growing long-term obligations, everything from Social Security to Medicare to the military, with more and more short-term funding. In the real estate frenzy in the early years of the century, Lehman Brothers spent billions of dollars on apartments and office buildings, often carrying long-term mortgages, using short-dated securities such as commercial paper. General Electric followed the same playbook, issuing $150 billion in commercial paper to back a gigantic real estate portfolio.
Lehman and GE were doing just what the U.S. is doing now, using securities due in weeks or months to cover fixed payments stretching years into the future. When it was clear that Lehman couldn’t cover those payments on assets collapsing in value, it failed to raise the funds to survive. On Sept. 15, 2008, Lehman folded in the biggest bankruptcy in U.S. history, exposing the folly of that mismatching funding and obligations.
That’s a warning America should take to heart while there’s still time.


fortune--2020-05-28--Americans are doing something surprising with their money right now

The real risk isn ’ t the federal government ’ s exploding debt .
It ’ s how it is @ @ @ @ @ dangerous

The U.S. is not known as a nation of savers compared with the likes of Germany and Japan, and the pandemic would seem an unlikely time for that to change. But there is evidence to suggest Americans are indeed changing their ways.
At a virtual Fortune Brainstorm Finance event on Thursday, executives from three digital finance companies—Square, stock buying app Robinhood, and digital bank Chime—all reported a marked uptick in saving and investing.
“As stimulus checks come in, consumers are increasing their security blanket,” said Jackie Reses, head of Square Capital, noting that the company’s research suggested an “important change in consumer behavior.”
Chime CEO Chris Britt, meanwhile, reported that savings balances in recent months had reached an all-time high. And Gretchen Howard, COO of Robinhood, described a spike in deposits of $1,200 to $2,400—reflecting the amount in stimulus many individuals and couples received—during the week of April 13.
Howard also noted a 17-fold increase in deposits at Robinhood in March compared with the fourth quarter of 2019, and said much of the trading activity on the platform consisted of buying. Among the most popular stocks were those of airlines and cruise operators, which have been battered during the pandemic—a phenomenon Howard attributed to people who sought to “buy the dip.”
None of this reflects widespread prosperity, of course. New figures released this week revealed that over 40 million Americans have filed for unemployment during the pandemic, and that the real U.S. jobless rate is close to 24%. While some are putting part of their unemployment checks into savings—as Britt of Chime attested—Americans are also lining up at food banks in record numbers.
Other positive metrics, including the rebound of the stock market, may also reflect a temporary reprieve. Zach Perret, CEO of Plaid, which provides digital payment connections to banks and is set to be acquired by Visa, said many companies are “waiting for the other shoe to drop” in the form of elevated defaults, missed rent payments, and other signals of economic distress.
On a broader level, the participants at the Fortune event predicted the pandemic will spur a broader transformation of U.S. financial infrastructure. This will include Americans’ coming to adopt the contactless payment systems used in other countries—and, perhaps, an openness to embracing other types of financial innovation found overseas.
Julia Sunderland, payments business operations officer at Google, described the company’s initiatives in India, which have involved collaborations with the government and nonprofits like the Gates Foundation to build open source financial infrastructure. The result, she said, has been a wealth of new services that have enabled Indians to do everything from pay phone bills to buy gold to learn which nearby stores have essential supplies in stock.
“It was a pivotal time for payments already, but now the digitization of economies is happening at 10 times the pace,” said Sunderland.
The executives spoke at “Fintech on the Front Lines,” the inaugural event in what will be an ongoing series exploring the role of financial companies during the pandemic.
This story was updated on May 29 to reflect that Visa’s acquisition of Plaid is yet to be final.
More must-read finance coverage from Fortune:
—Saving lives vs. saving the economy is a false tradeoff, economists say
—Real unemployment rate soars past 24.9%—and the U.S. has now lost 33.5 million jobs
—17% of unemployed workers aren’t looking for work—and that’s warping the official unemployment rate
—Does Apple’s stock buyback strategy make sense in this market?
—Goldman Sachs doubts there will be a Round 3 of PPP loans for small businesses
—Listen to Leadership Next, a Fortune podcast examining the evolving role of CEOs
—WATCH: Why banks were ready for the financial impact of the coronavirus
Subscribe to How to Reopen, Fortune’s weekly newsletter on what it takes to reboot business in the midst of a pandemic


fortune--2020-05-28--Experts say Trump’s threats to Twitter have little legal standing—but they detract from COVID-19 eff

Experts say Trump’s threats to Twitter have little legal standing—but they detract from COVID-19 efforts

President Donald Trump is mad at Twitter, and he’s planning on using his authority to do something about it.
The White House has issued an executive order which could give the federal government broad and unprecedented authority over social media companies. The plan attempts to trim down current laws that protect companies like Twitter and Facebook from liability over what users post on their platforms.
The order asks the Federal Communications Commission (FCC) and Federal Trade Commission (FTC) to roll back parts of Section 230 of the Communications Decency Act, which is seen as the largest protector of free speech on the web. It comes immediately after Trump became angered by a fact-checking tag placed on the bottom of two tweets where he made false claims about vote-by-mail fraud.
“Republicans feel that Social Media Platforms totally silence conservatives voices. We will strongly regulate, or close them down, before we can ever allow this to happen. We saw what they attempted to do, and failed, in 2016,” the President wrote on Twitter following the incident. “Twitter has now shown that everything we have been saying about them (and their other compatriots) is correct. Big action to follow!”
But the President’s actions will likely be ineffective, said Gigi Sohn, a former FCC lawyer and co-founder of Public Knowledge. “This is another example of Donald Trump working the refs. The President can’t overturn 25 years of judicial interpretation of the law, which is what he’s trying to do here, and he also can’t rewrite the law,” she said, adding that she didn’t believe that limiting the rules of online platforms was even within the legal power of the FCC.
The order is complicated. A draft, which was reviewed by Fortune, instructed the Department of Commerce to direct the FCC create a rule change that limits liability protections if a platform is able to remove or alter a user’s content. Additionally, the FTC should look into whether these kind of activities are done in “good faith.”
“This language is very lawyered,” said Sohn, but she still thinks the president is overstepping his authority. The FTC and FCC are both independent agencies authorized by Congress. The President cannot order them to take action.
“Much as he might wish otherwise, Donald Trump is not the president of Twitter. This order, if issued, would be a blatant and unconstitutional threat to punish social media companies that displease the president,” said ACLU senior legislative counsel Kate Ruane in a statement. “The president also has no authority to rewrite a congressional statute with an executive order imposing a flawed interpretation of Section 230.”
There are worries this could take away from other pressing matters related to the current pandemic. “Instead of making sure everyone has broadband to do homework and talk to their doctor and telework, the FCC is going to be focusing whether Twitter has the ability to place a ‘get more info’ sign at the bottom of a tweet, and the Federal Trade Commission, which has to deal with COVID-19 hoaxes right now, will also have to devote resources to this because of the president’s vendetta,” Sohn said.
While Duke University legal scholar Phil Napoloi believes that social media sites do need regulation, “this initiative coming from the White House threatens to do far more harm than good to the cause of responsible, constitutional, and effective government regulation of social media,” he said. “This is because the most potent argument that opponents of social media regulation have at their disposal is the concern that any regulatory intervention can be used primarily as a political tool by the administration in power—which is exactly what these actions from the White House appear to be.”
Sohn, meanwhile, thinks that this threat of an executive order is a scare tactic. Last year, the White House said that they would issue a similar order but reportedly dropped the idea after receiving pushback from both the FCC and FTC.
Twitter CEO Jack Dorsey stood behind his decision and criticized the President for singling out a particular employee at Twitter for the tag on his tweets. “Fact check: there is someone ultimately accountable for our actions as a company, and that’s me. Please leave our employees out of this,” wrote Dorsey in a series of Tweets. “We’ll continue to point out incorrect or disputed information about elections globally. And we will admit to and own any mistakes we make.”


fortune--2020-05-28--Dollar store chains are the pandemic’s big winners so far

Dollar General has been on a tear for a decade now, and the current pandemic, weak economy, and very high unemployment is only accelerating that momentum.
The company, which like its dollar store peers was deemed essential by most local authorities because it sells household products and food, said on Thursday that sales in the first quarter, which ended in early May, had increased 27.6% to $8.4 billion. Comparable sales, which includes stores open for at least a year, rose 21.7%. And shoppers also flocked to its smaller, underperforming rival, Family Dollar, whose comparable sales were up 15%.
That was far better than the growth of the pandemic’s other big winners, namely Target, Walmart, and Costco, which, unlike the dollar stores that do almost no business online, have big e-commerce operations.
The dollar store chains have grown in popularity over the decades by operating small stores of about 7,000 square feet, or half the size of a drugstore, and opening them closer to shoppers, with Family Dollar gravitating more to suburbs and Dollar General in rural areas.
What’s more, by offering a limited assortment of items, compared with that of other retailers, as well as thinly staffed stores, they have kept costs and prices down. For instance, a Dollar General store will stock about 10,000 kinds of items, one-tenth of what a big Walmart carries.
The result is that these stores dot the country and dominate markets too small to support a Walmart, Target, or Kroger. Dollar General now has 16,500 stores, double the number a decade ago, and is the biggest U.S. retailer by store count: Some 75% of Americans live within five miles of a Dollar General store, the company says.
“This ‘localness’ was a major advantage during the crisis when many households were reluctant to travel too far, and some were nervous about visiting big-box stores where it is very difficult to reduce dwell time,” says Neil Saunders, a managing director at GlobalData Retail. That has helped Dollar General, which got its start in the rural South, win more middle-class shoppers and expand closer to large cities in recent years.
But the convenience and lower prices are only part of why dollar stores have thrived. Long known for selling food items like frozen pizza and beef jerky, such stores don’t offer enough assortment to allow for a weekly grocery run, though they are practical for intra-week fill-in trips.
Still, as detailed in a Fortune feature last year, that is beginning to change. Dollar General has been moving for years to improve its food offerings, making a bigger push into fresh produce, meats, and healthier fare, all while adding more refrigerators at its stores, meaning it will keep winning a bigger share of food spending. It is even testing a format that looks a lot like a grocery store—with fresh fruit. Dollar General has also added products from better brands like Starbucks in recent years.
As for Family Dollar, the troubled dollar store chain Dollar Tree bought in a battle with Dollar General in 2014, it was able to ride the wave of stock-up shopping for many of the same reasons as Dollar General. But Family Dollar’s turnaround is far from complete, with many stores still shabby and a product assortment not as inviting to shoppers as Dollar General’s. (Dollar Tree, where all items are $1 without exception, is more focused on discretionary items like party supplies and less on essentials.)
GlobalData Retail said its data suggests that Family Dollar won far fewer new customers than Dollar General did during the pandemic and that many of those that it did win are drifting back to the other retailers they frequented before the crisis shut down some stores. Meanwhile, Dollar General said that sales growth three weeks into this quarter is on par with the first quarter and that it still plans to open another 1,000 stores this year.