fortune--2020-10-09--Sheryl Sandberg: Companies can’t risk losing their best women leaders

Good morning, Broadsheet readers! Two women are the finalists to head the World Trade Organization, we get ready to welcome special guests to Fortune’s MPW Next Gen Summit, and Sheryl Sandberg sounds the alarm on the importance of retaining corporate America’s best leaders. Have a restful weekend.
– Senior-level crisis. Earlier this week, the Broadsheet covered the astounding number of women leaving the workforce: 865,000 in September alone.
That crisis is just the tip of the iceberg for corporate America, write Lean In cofounders Sheryl Sandberg and Rachel Thomas in a new op-ed for Fortune. Businesses risk losing their top female leaders—the senior most women at their companies—as a result of the coronavirus pandemic.
“Senior-level women—tough, tested, ambitious leaders—are being pushed to their limits and beyond,” write Sandberg and Thomas. “This is a real problem for companies because these leaders are too important to lose.”
Like many working women, female executives are struggling with childcare. Case in point: Among senior leaders with partners, 63% of women have partners who work full-time, compared to just 35% of men. Even executive women who don’t have kids face burdens that men in similar roles simply don’t.
“Senior-level women report feeling more stressed, more exhausted, and more burned out than the men who are their peers. At Lean In, we’re hearing stories from executive women who say that the emotional labor needed to get employees through this crisis is disproportionately falling to them,” the pair write. “Some have been asked by the men they work with to step in to check in on employees and lead difficult internal conversations. … This emotional labor can be draining and often goes unnoticed and unrewarded.”
Sandberg and Thomas—who as Facebook COO and Lean In CEO, respectively, are both senior female executives themselves—are calling on businesses to prevent these valuable leaders from leaving behind their careers. “Unless companies take swift action, we risk losing hard-won gains in the number of women in leadership,” they write. “The ripple effects will spread across organizations: companies will lose women’s experience and expertise, and other women will lose their greatest champions.”
Read Sandberg and Thomas’s full op-ed here.
And an exciting announcement: Meghan, The Duchess of Sussex will join us at our Fortune MPW Next Gen Summit next week. This will be a new conversation on Tuesday following her appearance at the Fortune Most Powerful Women Summit last month. This time, The Duchess will talk about leading on the global stage (in conversation with me!). See our full agenda, featuring speakers from Peloton’s Ally Love to former Pinterest COO Françoise Brougher, and apply for an invitation here. This news is once again a Broadsheet exclusive, so keep an eye out for The Duchess’s full event description on the agenda shortly.
Emma Hinchliffe
emma.hinchliffe@fortune.com
@emmahinchliffe
ALSO IN THE HEADLINES
- Indra's call to action. We have another Fortune op-ed for you today. Former PepsiCo CEO Indra Nooyi writes about what the private sector must do to confront climate change: Fortune
- Terrifying plot. The federal government filed charges against six members of a militia group who plotted to kidnap Michigan Gov. Gretchen Whitmer. "I knew this job would be hard," Whitmer said after learning of the alleged plot. "But I never could have imagined anything like this." She also criticized President Trump for "stoking distrust"—and he responded with a tweetstorm Thursday night. Detroit Free Press
- Unicorn status. Everlywell, the health startup led by CEO Julia Cheek, is reportedly seeking a new round of funding that would value it at $1 billion, a threshold that would make it a unicorn. The startup, which sells an at-home COVID-19 test and is best known for its food-sensitivity tests, was last valued at $175 million when it raised $50 million in April 2019. Bloomberg
- Wilson to Hobson. During this year's reckoning over racial injustice, Princeton University stripped the name of President Woodrow Wilson from its school and buildings. Now, a new residential college will be named after Mellody Hobson, an alumna and the co-CEO of Ariel Investments (and No. 48 on Fortune's Most Powerful Women list). It will be the first residential college at the university to be named for a Black woman. Washington Post
MOVERS AND SHAKERS: Salesforce EVP of strategic business operations Lisa Edwards joins Diligent Corporation as president and COO.
IN CASE YOU MISSED IT
- Prizewinning poet. The 2020 Nobel Prize in Literature went to poet Louise Glück. The Nobel committee praised Glück's "unmistakable" voice that "signals this poet wants to be understood." New York Times
- Maya for Mayor. Maya Wiley, a former attorney for New York Mayor Bill de Blasio and MSNBC analyst, yesterday entered the race to succeed her former boss. In her mayoral campaign announcement, Wiley said she aimed to fill a "crisis of confidence in our city’s leadership." New York Times
- Who will head the WTO? The contest for the new leader of the World Trade Organization is down to two finalists: Nigeria's former finance minister Ngozi Okonjo-Iweala and South Korean trade minister Yoo Myung-hee. Either would be the first woman to lead the WTO. BBC
- Workers' rights. Sweeping legislation in Indonesia allows companies to cut workers' pay and days off—and maternity and menstrual leave. The law sparked widespread protests, including among opponents who said it would hurt female workers the most. New York Times
ON MY RADAR
Library of Congress acquires archives of the National Woman’s Party New York Times
Friends recall hearing Trump accuser’s claims in 1997 New York Times
Soledad O'Brien isn't here for the soundbites Marie Claire
PARTING WORDS
"They say silence is violence, and I refuse to be complicit in my silence."
-Gabrielle Union on speaking out about injustice


fortune--2020-10-09--Sheryl Sandberg: Senior-level women are leaving the workforce. If businesses don’t act, we’ll lose o

Sheryl Sandberg: Senior-level women are leaving the workforce. If businesses don’t act, we’ll lose our best leaders

Stimulus update : White House unveils $ 1.8 trillion offer—but it ’ s unclear if Congress has the appetite to @ @ @ @ @

This op-ed is the third in a series by LeanIn.Org on the state of women in the workplace.
Last month, the U.S. workforce lost 865,000 women—and that might be just the tip of the iceberg.
According to the 2020 Women in the Workplace report by LeanIn.Org and McKinsey & Company, one in four women in corporate America are now considering downshifting their jobs or leaving the workforce. That number holds steady even for the country’s senior-most women leaders.
Senior-level women—executives at the level of vice president and up—have dedicated a great deal to their careers over their lifetimes, working to earn promotions and run teams, often in workplaces that are structurally biased against women. They’re leaders. They’re trailblazers. So why are so many thinking about leaving?
Lack of access to childcare is a key factor driving millions of women from the broader U.S. workforce. Executive women likely have better access to childcare than other workers, but their responsibilities have still skyrocketed at home. Many men at their level have spouses who handle childcare and housekeeping, but most senior-level women don’t have that kind of support. Among senior leaders with partners, 63% of women have partners who work full-time, compared to just 35% of men. And mothers are three times more likely than fathers to be handling all of their family’s housework and childcare.
But senior-level women without children are struggling, too. They report feeling more stressed, more exhausted, and more burned out than the men who are their peers. At Lean In, we’re hearing stories from executive women who say that the emotional labor needed to get employees through this crisis is disproportionately falling to them. Some have been asked by the men they work with to step in to check in on employees and lead difficult internal conversations. As one senior vice president at a private equity firm told us, “I’m dealing with multiple people in crisis at the same time. Some people’s parents or grandparents died of COVID or got sick. That’s a very different conversation to the one you have with a mother homeschooling with children.” This emotional labor can be draining and often goes unnoticed and unrewarded.
Even in the best of times, being a woman leader comes with extra challenges. Research shows that women are often held to higher performance standards and blamed more for failures. Senior-level women are often the only woman in the room at work, and “Only” women are more likely to have their judgment questioned and need to provide more evidence of their competence. Imagine what it’s like for women in leadership when the stakes are as high as they are now, with leaders writing the playbook as they go. It’s no wonder senior-level women feel pressured to work more than senior-level men; they’re facing harsher judgment overall.
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Senior-level women—tough, tested, ambitious leaders—are being pushed to their limits and beyond. This is a real problem for companies because these leaders are too important to lose. Companies with more women in senior leadership perform better and have better cultures. Executive women are more likely than men to raise workplace issues that matter to employees, including work/life flexibility and equal pay. They’re also more likely to be mentors and sponsors to other women—and to be allies to women of color.
It’s critical that companies double down on supporting senior-level women right now. This means rethinking goals and expectations set before the pandemic while it’s harder than ever for employees to live up to “business as usual” expectations. It also means making it OK for women in leadership—and all leaders—to set boundaries to protect their families or personal time. And executive men should ask themselves: Am I doing enough to support the women at my level, especially those with more demands at home? Is there more I can do to take on emotional labor at work?
Unless companies take swift action, we risk losing hard-won gains in the number of women in leadership. The ripple effects will spread across organizations: companies will lose women’s experience and expertise, and other women will lose their greatest champions. Retaining senior-level women leads to better business results, better work cultures, and more support for women. In an unprecedented time full of hard choices for companies, this one is simple.
Sheryl Sandberg is Facebook Inc.’s chief operating officer and the founder of LeanIn.Org. Rachel Thomas is the CEO of LeanIn.Org.


fortune--2020-10-09--Discrimination has become a fact of life for Black farmers—that must end

Washington, D.C.’s largest farmers market routinely denies spots to Black vendors, according to a Forbes report. The news, while upsetting, will come as little surprise to America’s Black farmers—a group that has suffered discrimination from our nation’s capital for decades.
Even today, plainly racist policies at the U.S. Department of Agriculture (USDA) frequently deny Black farmers the resources they need to keep their businesses afloat.
Creating a more equitable agriculture system will be impossible unless Black farmers have control over their own financial destinies. That goal will require a new credit and financing institution, owned and controlled by Black farmers and aimed squarely at supporting Black farmers, landowners, and their cooperatively owned businesses.
For more than a century, the USDA’s discriminatory policies have been a fact of life for Black farmers. But they first came to national attention in 1997, after Timothy Pigford and 400 Black farmers filed a class-action lawsuit against the agency.
That suit, known as Pigford v. Glickman, charged the USDA with discriminating against Black farmers when distributing loans—and also with failing to investigate complaints regarding this widespread bias. The government ultimately settled, compensating more than 16,200 Black farmers victimized by these racist practices. Only 371 Black farmers received debt relief.
In 2010, the agency announced a second Pigford settlement of $1.25 billion, which compensated thousands of additional farmers who had missed the original filing deadline. Altogether, the Pigford case represents the largest discrimination settlement ever paid by the federal government.
The racism exposed by Pigford had its roots in the mostly white local committees charged with distributing USDA loans to farmers. In the South especially, it was common for these government officials to deny Black farmers access to credit, to intentionally delay the release of funds to Blacks, or to ignore their loan applications altogether.
Unfortunately, racist USDA loan policies didn’t end with Pigford. For one, Black farmers still lack representation on the committees in charge of federal loans.
Inflexible loan terms, meanwhile, have made it nearly impossible for many Black farmers to stay in business. For instance, most loans from the Farm Service Administration are limited to seven years, after which farmers are forced out of the program.
This may not be a problem for white farmers, many of whom have access to other sources of credit. But for Black Americans, federal loans are often the only funding option. And when their seven years are up, many Black farmers must resort to predatory lenders or else borrow from suppliers charging outrageous interest rates.
As one might expect, years of racist policies at the USDA have taken an enormous toll on Black-operated farms. Consider that, in 1910, 14% of the nation’s farmers were Black. By 2017, that number had fallen to 1.4%.
A lack of access to credit has also prevented Black farmers from expanding their operations, which is why their operations tend to be much smaller than those of white farmers. Today, Black farmers operate a mere 0.5% of the nation’s farmland.
America needs to finally address the legacy of discrimination that pervades our farm sector. But as long as loan decisions are made by white-dominated institutions, Black farmers will never break free of the racism that has held them back for generations. That’s why a credit and financing institution owned and controlled by Black farmers is long overdue.
Congress can help create such an organization and devote $50 to $100 million for a credit and financing institution modeled on the Farm Credit System.
Lawmakers can also help rectify decades of racist agricultural policy by providing a full debt write-off—and continued eligibility for USDA loans—to Black farmers who participated in the Pigford case.
Reforms like these would help start America’s agriculture sector down a road to social justice. At the very least, it would give Black farmers a chance at success unimpeded by government officials’ bias.
Lloyd Wright, a farmer and conservationist, is the former director of civil rights at the USDA and former director of conservation operations for the Natural Resources Conservation Service.


fortune--2020-10-10--Should you renew your travel credit card for 2021?

Many people sign up for credit cards based on reward programs, notably those tied to airlines or hotels to rack up points for flights and stays even faster. But with so many people not traveling this year due to the pandemic, these cards might not seem as valuable as they once did, especially as many of these credit cards come with pricey annual fees.
Consumers now have to decide if it’s worth it to maintain those accounts (with their fees) for another year or research if it would be more prudent to find a new credit card with programs that offer loyalty points that might reward business closer to home, like for gas stations and grocery stores.
“If you actually have a travel credit card, chances are you’re an avid traveler, and you’ll want to be ready as soon as borders open again,” says Sheree Mitchell, founder of Immersa Global, an upscale tour operator for bespoke trips in Spanish and Portuguese-speaking countries. “What you should do now is go over how much you’ve taken advantage of your travel credit card’s benefits in the past—pre-pandemic, of course—to make sure that the current program is right for you. Now is the perfect time to see what other card issuers and airlines are offering to attract new clients.”
Canceling a card is a personal decision, but there are a few things to consider.
“First, I’d recommend waiting until the annual fee comes due. If you paid your annual fee last fall, in the winter or in the spring, there’s probably no benefit to canceling now,” advises Brian Kelly, founder and CEO of The Points Guy. “However, if the annual fee has just hit, look at what—if any—additional perks have been added to your card. Delta, for example, just added new bonuses to many of its American Express cards, while Chase has launched targeted bonuses for United and Southwest cardholders. Citi also announced annual fee credits for select holders of its high-end American Airlines card.”
After that, consider additional existing perks on your card, whether it’s an annual companion certificate or help qualifying for elite status. Are these compelling enough to keep the card?
“Switching cards is always an option, but there are new incentives and bonuses to keep travel cards now more than ever,” says Stephen Oddo, CEO of Walks, a walking tours operator in the U.S. and Europe. “Especially if you managed to rack up a ton of points, with airfares being lower, you can take the trip of a lifetime that would otherwise be out of reach if you stopped accumulating travel points.”
Finally, if you think you want to cancel, call the customer service number on the back of your card and see if they have any incentives for you to keep the card. These are typically called retention offers and may include a waived (or discounted) annual fee or bonus points or miles.
“Even if you’re not planning a big trip in the immediate future, most credit cards are currently offering appreciation credits, hotel certificates, and travel credits that can be used towards restaurants, groceries, and gas, and higher multipliers giving you the opportunity to accumulate points faster than ever to use in the future,” says Anthony Melchiorri, CEO of consulting firm Argeo Hospitality and host of Travel Channel’s Hotel Impossible. “Contact your credit card company to see how your perks may have changed, chances are they will still be relevant.”
If you have a credit card that’s no longer conducive to your lifestyle (especially one that involves less traveling) or would like to explore other rewards programs, there are options for 2021 you can look into now.
Kelly’s top recommendation is to focus on flexible, transferable currencies, as seen with credit cards such as Chase Ultimate Rewards, American Express Membership Rewards, and Capital One Venture Miles.
“Since you aren’t locked into a single loyalty program, these points or miles offer an array of flexibility, much more so than rewards with a given airline or hotel program. You’re in the driver seat with these currencies and have a much lower risk of them suddenly becoming less valuable,” Kelly explains.
For instance, an airline may suddenly decide that a flight from New York to Florida should cost 60,000 miles instead of 30,000 miles, even if the price doesn’t materially change; Kelly says his team has seen examples of this practice—even during the pandemic. “By focusing your earning on credit card rewards with more flexibility, you’ll likely have more valuable options when travel does start to return in earnest,” he says.
And one last bit of cautionary advice for those who might want to change cards: “Bear in mind, too, that some issuers have tightened their standards for approval given the pandemic, so applying for a new card offers no guarantee that you’ll be approved,” Kelly notes.


fortune--2020-10-10--Why investors shouldn’t necessarily care who wins the White House in November

With the presidential election just weeks away, you can expect to be inundated with predictions about how the winner will impact the markets and the economy.
It may be entertaining to guess how the outcome of the election will impact your wealth, but this becomes a futile exercise once you realize how much there is that we don’t know about what comes next. Not only do we not know who is going to win but also:
We don’t know which policies they’re going to implement while in office.
We don’t know how amenable the other party will be to those policies.
We don’t know how the person in office will impact consumer spending and sentiment in the economy.
We don’t know which sectors or industries will be the biggest winners and losers.
We don’t know how investors will react or what they have already priced in regarding the outcome of the election.
When Trump got elected, there were pundits and investors galore predicting an enormous market crash. Instead, stocks rose steadily for most of his first term until the pandemic hit. There have been more than 130 new all-time highs on the S&P 500 during Trump’s tenure.
When Obama got elected, there were people predicting, “[His] Radicalism Is Killing the Dow.” Instead, stocks set off in 2009 on a bull market that lasted for the entirety of the next decade. There were nearly 130 new all-time highs on the S&P 500 during Obama’s tenure.
The long-term trend of the stock market has been up and to the right no matter who the President is:
Source: Dimensional Fund Advisors
And no President in modern history has been able to prevent the stock market from falling either:
Every President going back to Herbert Hoover has experienced down markets.
We also don’t know who will hold a majority in Congress coming out of the upcoming election. The promises candidates are making on the campaign trail right now won’t necessarily come to fruition if they don’t control Congress. The performance of stocks also varies depending on who controls what historically:
The truth is politicians have far less control over the stock market than most people would like to believe. Policy outcomes often show up on a lag and come with unintended consequences. As we’ve seen this year, the economy and the stock market are not always on the same page. It might give you an illusion of control to know your party holds the nation’s highest office, but no one person is bigger than the stock market.
In addition, much of the performance in the stock market under any administration depends on where we are in the cycle when they take office. Bill Clinton and Ronald Reagan both took office at opportune times during one of the biggest bull markets in history. On the other hand, Franklin D. Roosevelt’s time in office was bookended by the Great Depression and WWII, while George W. Bush took over just before 9/11 and ended his term during the Great Financial Crisis.
Regardless of who wins next month it’s important to keep politics out of your portfolio. Money decisions are already rife with emotions, biases, and blind spots. Bringing politics into this equation only amplifies those emotions and makes it nearly impossible to make rational clearheaded decisions.
If you’re thinking about selling all of your stocks based on the winner of the presidential election, be sure to ask yourself the following questions first:
If I sell out of the market because of the President, does that mean I have to stay out of the market until a new President takes over? If I sell out of the market because of the President and the stock market moves higher will I buy back in or continue to sit on the sidelines? If I sell out of the market because of the President and the stock market crashes will I buy in at lower prices or continue to sit it out based on my political beliefs? If I sell out of the market because of the President and things don’t turn out as bad as I originally thought, how will I know I was wrong?
There are never any easy answers when it comes to handicapping the markets, because no one knows what the future holds.
There are only two things I’m certain of when it comes to mixing politics with investing decisions: (1) The stock market will go up and down no matter who the President is, and (2) Investing your money based on how you vote in November will not result in levelheaded financial decisions.
Ben Carlson is the director of institutional asset management at Ritholtz Wealth Management. He may own securities or assets discussed in this piece.


fortune--2020-10-10--How to utilize your frequent flyer miles this year even if you’re not buying plane tickets

Many travelers had racked up thousands of frequent flyer and travel rewards points going to 2020 and might have had plans to use them this year. Then COVID-19 got in the way, and now many of those would-be passengers didn’t end up doing much, if any, travel this year, and are now left wondering what to do with them.
Most airlines aren’t canceling frequent flyer miles earned in 2019 and 2020, instead allowing them to roll over for service in 2021. But what about customers with hundreds and thousands of points who want to use those credits now? No, you do not have to waste them on “flights to nowhere,” which might induce a little bit of normalcy and feel like a 30,000-foot joy ride, but are drawing a vocal backlash from environmental groups around the world.
“While it’s possible to use your airline and hotel points for non-travel redemptions, you don’t get a lot of value from doing so and, with brands not expiring your points anytime soon, I wouldn’t recommend using them for something other than travel,” says Matt Kepnes, founder of travel resources site Nomadic Matt. “Save them for when travel is possible again.”
Fortunately, there other kinds of local, grounded travel amenities—such as car rentals and hotel stays—for which these points can be applied.
“While so many of us have scaled back travel considerably this year, there’s plenty to get excited about for the future,” says Brian Kelly, founder and CEO of The Points Guy. “In many cases, there are more ways to earn points than ever before, with credit card issuers adding big bonuses for grocery store purchases, dining, gas, and other things we’re spending more on now. Banks have recently launched lucrative offers for new customers, too, making it easy to quickly boost your account.”
Nearly every rewards program allows you to redeem points for rental car bookings. The Chase Sapphire Reserve credit card, for example, gives owners approximately 1.5 cents worth of value per point for car rentals through the Chase travel site, so a $24 rental would cost 1,600 points.
“There are also several credit cards that we highly recommend for gas purchases, such as the Chase Freedom Unlimited, where you earn 1.5% cash back on all non-bonus expenses, including gas stations; the Blue Cash Preferred from American Express, where you earn 3% cash back at U.S. gas stations; and the Bank of America Cash Rewards credit card, where you earn 3% cash back in one of six categories of your choice, including gas purchases, for the $2,500 spent each quarter,” Kelly explains.
For frequent flyers who might miss one of the mainstays of the in-flight experience—the SkyMall catalog—many airlines offer an opportunity to use miles towards consumer products as well as subscriptions for newspapers and magazines, notes Anthony Melchiorri, CEO of consulting firm Argeo Hospitality and host of Travel Channel’s Hotel Impossible. Southwest Airlines offers its entire catalog for shopping from your home; Emirates has a variety of retail and lifestyle options, including tours and tickets for skiing, waterparks, and more; and United even has an option to purchase an Apple Watch.
“Many airlines offer an option to use miles on purchasing a special experience, but due to COVID-19 most of those are currently on hold,” Melchiorri says. “If you’re not planning to travel right now, consider using your points towards a local staycation or give yourself something to look forward to by planning a trip for next year.”
As always, you’ll want to check your loyalty account to make sure your points and miles aren’t set to expire, Kelly reminds. “I’d use this time to accumulate points and miles so that when it is safe to travel the world again, you are ready to do so,” he says.
If your miles are set to expire soon, Sheree Mitchell, founder of bespoke tour agency Immersa Global, suggests requesting an extension due to the pandemic. Also, inquire about what you can do to extend your miles’ expiration date. Otherwise, she says, wait it out. “This would be the best option if your miles either don’t expire within the next year or they don’t expire at all,” Mitchell says. “If this describes your situation, my best suggestion would be to wait until it’s safe to travel again then redeem your miles for a comfortable lay-flat seat to your favorite overseas destination.”
There are several other ways to maximize frequent flyer points while not actually flying. For budget-conscious consumers working on their holiday shopping, another option is applying those points to gift cards, which can usually be done through the credit card’s customer portal (where you pay your bills online) or via Amazon and Apple.
“If you can sit on your points until the industry rebounds without having them expire, you’ll likely get the best value,” Kelly says. “Ultimately, they’re your points and you should redeem them for whatever you want and need and if that means cashing in your coveted points for a Target gift card to stock up on groceries, go for it.”
Most frequent flyer programs allow customers to redeem miles for hotel stays. “This could be a good option for someone who’d like to schedule a staycation or a romantic getaway to a local hotel or resort,” Mitchell says. “However, please note that the mile redemption rate for hotel stays is not great. I’d only suggest this option if your miles are expiring soon and you really need to use them before you lose them.”
Most frequent flyer programs will also allow you to donate your miles to specific charities, which is a leading option among travel experts for miles that are going to expire soon.
“Some might not know this, but you can donate your points and miles to various organizations that are in need. This can be a great way to give back without shelling out any cash,” Kelly says. A few examples he cites include Miles4Migrants, a nonprofit accepting frequent flyer mile donations, using them to book airfare for migrants with financial hardships; and JustGiving, a fundraising platform with more than 1.5 million nonprofits registered, and you can donate your rewards points to a charity of your choice. Airline and hotel programs also have partner charities that you can donate your points and miles. For example, you can donate Delta SkyMiles points to charities, such as the American Red Cross, the Make-A-Wish Foundation, and St. Jude’s Children’s Hospital, among others.
Javier Valdez, CEO of Travel with Myght, a travel agency with a focus on sustainability and nonprofits, recommends travelers to donate a portion—or all—of their frequent flyer miles to nonprofit organizations, if possible. “The impact of the miles will help nonprofits that accept them the opportunity to move their mission forward during these tough fundraising times, and the great thing is that some airlines will match the donation to the nonprofit,” he says. “As we’re approaching the holiday season, it’s a good way to give back if you are in the position to do so.”


fortune--2020-10-10--The next President must tackle the intertwined crises of racial injustice and climate change

Hurricane Delta, the 25th named Atlantic storm of the 2020 hurricane season, made landfall in southwest Louisiana in almost the exact same place Hurricane Laura swept through just weeks ago. Laura struck Gulf Coast communities the week of the 15th anniversary of Hurricane Katrina. In Laura’s wake, a chemical plant ignited into flames in Lake Charles, La., spewing toxic smoke into the surrounding area for three days.
This is the heart of the petrochemical industry in the U.S., where clusters of industrial facilities dot the landscape. As protests around the country have drawn attention to Black people being killed by police violence again and again, violence of pollution and climate disaster plagues these same communities.
Over 48% of Lake Charles’s residents are Black people. Since Katrina made landfall 15 years ago, devastating Black communities in particular, the country has seen waves of disasters amplifying existing inequality. In 2017, when Hurricane Harvey struck southeast Texas, the residents of Houston, a city with no zoning and hazardous facilities on top of each other in Black and brown neighborhoods, literally swam in a toxic soup of air and water pollution released from dozens of facilities and waste sites in the region.
In West Louisville, near the same neighborhood where Breonna Taylor was killed by police officers in her home, residents are fighting not just police brutality, but also the long-term violence of pollution. Louisville ranks number one for poor air quality among hundreds of mid-sized cities in the U.S.
West Louisville, where more than 80% of the population is Black and median household income is $21,700, houses 56 toxic facilities and bears the brunt of 80% of Louisville’s pollution. In the Rubbertown industrial zone just a few minutes away from Taylor’s home, residents live about 12.5 years less than do residents of Louisville’s most affluent white neighborhoods.
This life expectancy gap mirrors the gap in the impact of the coronavirus between white people and people of color across the country. This is because the health conditions that result from living near air pollution make people more vulnerable to deadly respiratory diseases.
A recent study showed that people who live with air pollution have increased mortality risk from COVID-19. Black and Latinx people are exposed to disproportionately higher rates of toxic air pollution across the country. And nationally Black, Indigenous, and other communities of color have suffered higher rates of COVID-19 infection and death.
A just and equitable recovery from this prolonged crisis means not only mobilizing medical resources in the short term, but also ending pollution hotspots in communities of color.
As the experience of the people of Lake Charles reminds us, we do not have time to wait. The racial inequities laid bare today demand a Presidential administration to take aggressive action to confront pollution and environmental injustice. It is imperative that the next President takes steps to get to the root of this crisis and address health inequities by putting environmental justice at the center of a long-term recovery.
This election season climate change and environmental justice have become a flashpoint of debate, as storms and wildfires have raged across the country leaving orange skies and destroyed communities in their wake. While Donald Trump continues to waffle on whether he believes the science of the climate crisis, Joe Biden’s climate policy proposals include a commitment to pollution monitoring and investments in frontline communities. He has come out in support of ending fossil fuel subsidies, yet he also has stated his opposition to a ban on fracking.
Activists have called on Biden to take a clear position on climate justice. In July, over 110 organizations released the Frontlines Climate Justice Executive Action Platform, outlining a set of actions a Presidential administration can take that centers racial justice in climate policies.
This platform includes a proposal for a federal policy that leverages existing Clean Air Act authority to regulate and remediate concentrated pollution. The platform also includes the creation of a screen to evaluate all climate policies on how they impact equity, particularly concerning low-income populations and communities of color. Policies like these need to be part of a government mobilization against environmental inequality.
The linkages between pollution, public health, and racial inequality are clear. A President who is committed to getting this pandemic under control must also commit to addressing historic environmental injustice, discriminatory pollution, and the impacts of the climate crisis on the poor and people of color.
A full recovery from the crises at hand cannot put a bandage over the persistent discrimination that has resulted in chronic pollution, destroying lives in Black and brown communities. It is time to stop sacrificing people living in places like Lake Charles, West Louisville, and Houston.
We need leadership that will end the plague of pollution in our neighborhoods, prioritize the health of those who bear the most risk, and tackle environmental justice head-on.
Adrien Salazar is a senior campaign strategist at Demos Action. Follow him on Twitter.
Lennox Yearwood Jr. is a reverend, the president of Hip Hop Caucus Action Fund, a minister, a climate and community activist, and a U.S. Air Force veteran. Follow him on Twitter.


fortune--2020-10-10--How major conventions likes SXSW and CES are working around the extended pandemic timeline

A little over nine months ago, some 182,000 people flew into Las Vegas for CES, the annual tech gathering where companies showcase their products for the year to come and beyond. Next January, the floors of the Las Vegas Convention Center—and hundreds of suites in hotels in and around the Strip—will be empty.
Many trade shows have thrown in the towel on 2020, but the event business is hoping for a resurgence in 2021. The question, which many organizations are still figuring out, is how.
“Too many events are just trying to replicate the trade show,” says Jean Foster, senior vice president of marketing and communications for the Consumer Trade Association, which hosts CES. “So many platforms have an avatar walking through a digital show floor, and we said that is not what we want to be. That is not what CES is.”
In April, the CTA began working on a digital plan for next year’s show, anticipating a hybrid event. In July, it became apparent there was no safe way to convene the industry, and it announced CES would be fully digital.
CES 2021 will largely consist of two core aspects: a robust conference aspect, with multiple sessions running simultaneously (as well as keynotes from industry leaders) and a showcase for exhibitors. That second component will be key to most showgoers, as CES is known for its cavernous show floor with everything from giant TV sets to smart vehicles to drones (and everything in between). Next year, though, the emphasis will be on more than just showing off new products.
“It’s much more about connections,” says Foster. “It’s about being able to pop into meetings or briefing sessions or one on ones or being able to run videos. Exhibitors will be able to use the platform to create the experience they want to deliver and engage with key audiences.”
Conventions are huge revenue generators for both the hosts and the cities that house them, making the drive to keep them relevant especially strong. In Orlando, a top town for conventions and trade shows, the average convention delegate generates an average economic impact of $2,229, according to the Orange County (Fla.) Convention Center Annual Report. Southern Nevada (including Vegas) saw an estimated 6.6 million people come to conventions last year, according to the Las Vegas Convention and Visitor’s Authority, generating a total economic output of $11.4 billion.
So, it shouldn’t be surprising that some states are slowly warming to the idea of small-scale trade shows. Nevada governor Steve Sisolak has ok’d conventions with up to 1,000 people, with the caveat that attendees must be separated into groups of no more than 250 in an area at one time.
Some casinos, such as MGM, are setting up rapid testing stations and touchless kiosks for guests, while Wynn Resorts plans to launch a lab in its convention center by Thanksgiving to conduct thousands of rapid COVID-19 tests per day.
“We are not planning on creating a full ‘Wynn bubble’ by testing everyone in every environment, but instead requiring a test for employees to work or guests to attend a show, convention, nightclub or other crowded space that exceeds the ‘mass gathering’ state-mandated limits,” said Matt Maddox, CEO of Wynn Resorts, in an op-ed detailing the plans earlier this month.
Online conventions and tradeshows will likely continue to be the most prevalent in 2021, though—certainly for the first half of the year. South by Southwest (SXSW) has already announced it will offer a digital experience in March, combining keynotes, conferences, film screenings, and music showcases. The organizing committee says it is “working with the City of Austin and public health authorities on plans for a 2021 physical event,” but has no details on that at present.
For the Great American Beer Festival, which regularly draws 60,000 people to Denver, organizers pivoted to a virtual event this year after their usual home was designated an auxiliary field hospital. Attendees can purchase a “passport” that they can use for discounts on merchandise, discounts, and free beers at some local breweries for the first half of October.
Ann Obenchain, marketing director at the Brewers Association, says it’s too early to know what next year will hold, but says she expects the passport to remain as part of a hybrid model of the show in years to come—but sales of that are just a pittance of the usual money the event typically generates.
“Revenue this year represents 3% of what we would get in a normal year,” she says. “It’s significantly down. We’re planning around those much lower numbers for 2021.”
The bigger question, of course, is whether the trade show business will ever fully recover. Wakefield Research says it believes COVID-19 “will hasten a multi-industry shift away from trade shows as a primary method of product marketing.”
A national economic crisis would certainly support that theory, as companies find equal returns on virtual marketing presentations, and business travelers and consumers are hampered by budget restraints. Organizers of big shows, though, say they believe people will come, if for no other reason than humans are social creatures. But, like so many other industries, some changes have to take place first.
“The event industry is evolving like every other industry, like we’re seeing with the health industry and telemedicine and schools and distance learning,” says Foster. “I don’t think we’ll get back to the 170,000 people in the first year, but I think we’ll get there.”


fortune--2020-10-10--Why do attempts at reforming capitalism fail?

One of the economic side effects of the coronavirus pandemic is the crumbling traditional boundaries between markets and governments. In the U.S., the federal government’s Coronavirus Aid, Relief, and Economic Security (CARES) Act of March 2020 earmarked an unprecedented 10% of GDP to support private commerce; and in the U.K., by June 2020, more than one-quarter of all workers were on state-supported furloughs.
This radical commingling of public and private comes on the heels of growing political momentum to “reform capitalism” away from profit-seeking and toward social objectives. Groups as diverse as the U.S. Business Roundtable and the U.K. Labour Party are pushing us today to reimagine the role of business in society.
If we are on the cusp of structural transformation of society toward a new era of state capitalism—where the distinctions between private enterprise and public mission are blurred—now seems like a good moment to recall two simple observations about how markets and government work.
The first is that while deregulation is a myth, regulation often becomes captured by private interests. The second is that both privatization and nationalization disappoint, because both processes are frequently marred by expropriation.
These observations matter because they temper the rhetoric on reforming capitalism. That project has been attempted before, from both the left and the right, in the U.S., the U.K., and many other countries. Over the decades, the pendulum has swung back and forth between more decentralized and more coordinated models of the economy, each time expecting a different result.
True, there are serious problems with capitalism today, but the inherent limitations to how both the public and private sectors work should ground our expectations of any reform efforts.
Neither deregulation nor regulation really work as promised
The cornerstone of modern capitalism is limited liability, the legal notion that investors are responsible for losses of a corporation only to the extent of their own initial investments. For instance, if you own a share of Amazon, and the company goes bust, then you are not liable beyond the loss of your own share’s value.
Without limited liability, we would not have anything close to our current capital market system that allows entrepreneurs to raise funds from ordinary investors, driving innovation and commerce; we could not even have anything more than basic, direct trading relationships. The promise of limited liability is that it will structure markets to generate economic scale, which in turn can enable greater human flourishing.
Limited liability is the most basic type of regulation: It is the collectivization of risk for the good of the whole. Of course, regulation can serve other objectives as well, such as fraud prevention, environmental goals, minimum wage goals, and so on. The inseparability of limited liability regulation from capitalism impairs the case for unrestrained deregulation, as an economy without limited liability would be considerably smaller and simpler.
There’s a flip side to this essential idea of risk collectivization through regulation, though: Once you introduce it, the basic instinct of every entrepreneur is to seek ever more downside protection. If, as an entrepreneur, I am entitled to some degree of risk collectivization through limited liability, why stop there? Why not seek other ways in which I can build a regulatory strategy of “heads I win, tails you lose”?
Before long, you’re in a state of “regulatory capture,” in which capitalists shape regulations to meet their private needs. In this case, the risk-reward balance that is inherent to well-functioning capitalism is thrown off-kilter as the taxpaying public increasingly picks up the costs of private economic failure. The more the regulation, the greater the opportunities for capture.
Forty years ago, the highly regulated nature of the Anglo-American economies was seen as stifling free enterprise. Corporate insiders, plush on regulated profits, were thought to be ill-adapted to change and losing out to overseas competitors from Japan. Politicians like Ronald Reagan and Margaret Thatcher swept to power to fix this with the promise of deregulation.
But perhaps we overdid deregulation, as even Alan Greenspan acknowledged to the U.S. Congress during the 2008 financial crisis when he conceded that he had “found a flaw” in the deregulatory economic ideology. Today, those clamoring as a result to reinvent capitalism with more regulation are well-warned to avoid condemning us to relive this history.
Both privatization and nationalization disappoint
There are really only two good reasons to privatize: to let market forces—which can bring greater operational efficiency to an organization—drive decisions within a previously public organization, or to bring in external capital that the government cannot otherwise raise through taxation.
The tricky bit is that these two reasons for privatization are at odds with each other. For market forces to work, private players must experience competition, or else they will become fat and happy just like nationalized players. But if the government is seeking external capital through privatization, it will yield more such capital when competition is lower, as private players will pay more for monopoly rights.
In other words, with privatization there is always a trade-off between capital raised and efficiency gained. The trouble is politicians do not always figure this out, and, when they do, they often exploit it for private benefit. The 1990s deregulation of Russia’s energy industry, in the wake of the Soviet Union’s collapse, is a case in point, as it transformed a handful of apparatchiks into oligarchs.
Naturally then, the public sours on privatization. The alternative, in such cases, is (re)nationalization. As with privatization, there are two good reasons to produce in the public sector: because private sector competition is infeasible, as with natural monopolies like many utilities, and because the outcomes yielded by market forces are morally undesirable, as would be the case if human organs were bought and sold.
To make nationalization work, we need to be as clear as possible about organizational objectives—for instance, we need to specify whether this organization should be prioritizing access, quality, timeliness, or other objectives. Politicians loathe to prioritize as such, not just because it is difficult to do so but also because it deprives them of power.
When an organization faces multiple, competing objectives with unclear priorities, it is an invitation for political interference—the sort that allows politicians to build grace-and-favor courts. In India, for instance, nationalized banks have been used by politicians across the aisles to finance their pet projects. In effect, the public’s disappointment with outcomes under privatization will persist in another form.
In the 1980s, along with the deregulatory wave came a privatization wave. As with deregulation, this went too far. In the U.K., for instance, even water services were privatized; some of these companies are now effectively private monopolies mooching off of citizens. The COVID-19 crisis response has reversed the dynamic and brought thousands of private companies under public control through emergency capital infusions.
Already, various special interest groups are looking at ways to use this newfound control over private commerce to “fix” market outcomes they dislike, such as by insisting on stricter environmental protection practices or improved worker pay. But in doing so, they risk swinging the pendulum right back to the state of morass and inefficiency from where we were prompted into radical privatizations.
Achieving public-private balance
The ecosystem of both public- and private-sector bodies is such that neither can really deliver on traditional left versus right ideological performance myths. Both markets and governments have their flaws, and it is through a nuanced management of these flaws that we strike a sustainable balance between them.
The sobering reality is that there isn’t a single model of economic organization that will allow us to do so, and we must beware of rhetoric for another grand redesign of capitalism. These tend to be profoundly costly and replace one problem for another.
Worrisomely, in our current age of anxiety and populist upheaval, such a message of restraint is easily drowned in the din of polarized outrage.
Karthik Ramanna is professor of business and public policy at the University of Oxford’s Blavatnik School of Government.


fortune--2020-10-10--Women executives say the pandemic is exacerbating gender bias

This year is hard on working women. They’re losing their jobs and leaving the workforce at higher rates than men. Not to mention school closures are disproportionately creating more work for mothers.
So how are women at the top doing? How do they see the pandemic changing their work?
To find out, Fortune surveyed a group of more than 600 women leaders in our Most Powerful Women (MPW) community. In all, we received 112 responses in September. Among those, 88% work on at least one corporate or nonprofit board and 30% are CEOs.
Among the women executives surveyed by Fortune, 66% say the pandemic is exacerbating gender bias.
The pandemic is resulting in more childcare work for employed parents—and much of that is falling to mothers. But 57% of women leaders told Fortune that their company is not offering additional child-care resources or paid leave. On the flip side, 43% of them say their employers are expanding benefits for parents. Those companies, according to our survey results, are more likely to be led by a woman CEO.
The pandemic is taking a mental toll on women leaders too. While half of respondents say their mental health hasn’t been negatively impacted, almost 4 in 10 say their mental health has.


fortune--2020-10-11--The next President will hold a lot of sway over Tesla’s biggest profit center

What Wall Street ’ s favorite election indicators say about who will win the White House in 2020

This article is part of Fortune‘s quarterly investment guide for Q4 2020.
For years it has been a little-talked about secret hiding in plain sight: Tesla doesn’t make much of its money selling cars. Instead, the company has shrewdly capitalized on mastering a complex market for selling global emissions credits. As Fortune previously examined in detail, Tesla’s credit sales started off small, averaging $3.4 million per year through 2011, and rising to $1.049 billion through the last four quarters ended June 30, 2020.
To sum it up, Tesla amasses tradable credits from four main sources. The first category is zero-emission vehicle (ZEV) programs run by the states, notably California. It also benefits from two U.S. federal standards, the greenhouse gas (GHG) emissions regulations imposed by the Environmental Protection Agency, and corporate average fuel economy (CAFE) rules established by the National Highway Traffic Safety Administration. The fourth is the European Union’s CO2 emissions targets.
CAFE was born during the oil crisis of 1978 and sets annual average miles per gallon standards that a manufacturer must meet for its entire fleet. GHG arose from a 2007 Supreme Court decision that designated CO2 as a pollutant, and hence gave the EPA authority to regulate vehicles. GHG establishes a limit for the amount of CO2 per vehicle a manufacturer’s fleet can emit before triggering penalties. Both programs, which closely coordinate their regulations, required that automakers start complying in 2012. That same year, they also began awarding ZEV-like credits to manufacturers that exceeded the benchmarks.
Under both programs, Tesla earns maximum credits for every car it produces, since its vehicles neither consume gasoline nor spew CO2. In fact, the credits it receives rise smoothly with production. Its customers’ need for credits rises in parallel as they make more noncompliant trucks and SUVs. Since Tesla’s credits and its customers’ deficits run in tandem, Tesla trades its CAFE and GHG credits on long-term contracts that produce more consistent, though in the past smaller, revenue than the inflow from lumpy ZEV sales.
Under President Obama, the CAFE and GHG rules got a lot stricter, mandating 5% annual increases in fuel economy and a like decline in grams of CO2. But the Trump administration rolled back the requirements to yearly improvements of just 1.5%. If it remains in effect, that downshift means that most carmakers posting shortfalls won’t need to increase their purchases of credits in the future, and may buy fewer of them.
“This is totally different from California, which is like a different country,” says Ben Leard, an environmental economist and an assistant professor at the University of Tennessee. “The Obama rules were putting a lot of pressure on carmakers to buy more credits.” That pressure is expected to ease in the years ahead, given the rollback in standards. As a result, he predicts that the price of credits, and possibly the volumes sold, will decrease in 2021 and the years ahead.
If the current rules hold, Tesla is likely to see its CAFE and GHG revenues fall going forward. The decline should should be gradual, in contrast to ZEV, which should see a spike followed by a steep slide starting in a couple of years.
But a new administration could flip that script. If President Biden were to restore the aggressive targets, it would be a huge boost CAFE and GHG sales. In his “Plan for Climate Change and Environmental Justice,” Biden cites his pride in raising the CAFE mileage requirements during the Obama administration, implying that he’d push to revive or even tighten those standards as President. To do so, he’d need a buy-in from the auto companies that initially agreed to the Obama rules before convincing Trump to roll them back. If he doesn’t get carmakers to agree, he’d likely need to resort to legislation. And toughening the GHG rules requires amending the Clean Air Act. So if Biden wins the presidency in a blue sweep, keeps the House majority and wins the Senate, automakers will probably be forced to buy a lot more of Tesla’s credits to skirt big fines. That’s only a short-term benefit, however. The stricter regime will also force the manufacturers to accelerate their move to electric cars.
Meanwhile in Europe, the glory days of selling carbon credits may already be numbered. There, Tesla’s biggest buyer of credits has been FCA, maker of Jeep, Fiat, Maserati, and Alfa Romeo. But FCA plans to launch a number of hybrids, plug-ins, and EVs from 2020 to 2022, including new versions of the Jeep Renegade SUV, as well as the new all-electric version of the Fiat 500. FCA’s leaders have stated publicly that they expect the automaker to be compliant with the new rules on its own by 2022, implying that it will no longer need Tesla. At the end of 2019, FCA agreed to merge with the much greener Peugeot, a deal expected to close next year. That union could bring FCA in line still earlier.
But even an environmentalist in the White House will only buy Tesla some time, rather than preserve its current flood of profits. CAFE and GHG revenues will eventually succumb to the blow of increased competition: Starting around 2023 an influx of new EVs from manufacturers like Ford will bring their fleets closer to full compliance, reducing their purchases of Tesla credits relative to the past.
After that, it appears Tesla will have to reach profitability the old-fashioned way: by selling cars.
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fortune--2020-10-11--The biggest economic threat facing the next administration: A weak dollar

This article is part of Fortune‘s quarterly investment guide for Q4 2020.
Buckle up. The next President will inherit an economy defined by conditions we haven’t ever seen in our lifetimes.
Let’s take stock. To start with, the Federal Reserve has embarked on a daring, never-before-tried strategy to recharge the COVID-stricken economy and support prices of everything from stocks to houses. The Fed’s plan centers on holding short-term interest rates, and possibly a long stretch of the yield curve, below the level of inflation. Supercheap borrowing, the Fed reckons, will entice companies to invest in new plants and fabs, spurring productivity and growth, and supporting assets that may not yield much, but they’d beat Treasurys by such a wide margin that they sustain their lofty valuations.
Interest rates
The Fed’s stance is winning widespread praise from Wall Street and corporate America. But it also raises a nagging issue: Interest rates, left to the market, typically give investors a return that exceeds the trend in overall prices, often by a lot. That makes sense. Big lenders such as banks and hedge funds, and folks who buy corporate bonds, want interest payments that are well above today’s pace of inflation even on the safest credits, as payment—an extra cushion—for tying up their money for years and shouldering the risk that unforeseen future spikes in consumer and producer prices could wipe out their gains.
For decades, companies have willingly paid several points over inflation because they can make much more using that money to build or retool factories or launch winning new products.
Now the Fed is buying such a gigantic portion of all newly issued government and private bonds that it’s relentlessly pushing up their prices. Those super-high prices have shrunk the cents in interest that investors collect for every dollar they’re paying for the bonds to lows never before witnessed in modern U.S. history. Hence, the consumer price index is now rising faster than what Treasurys are yielding, and top-rated corporate bonds are offering 2.3%, beating inflation by less than a point.
So it’s logical to worry that by creating a huge distortion in the credit markets, the Fed could trigger a backlash from another bulwark of the economy that’s damaged by artificially low rates. By pulling hard on the stimulus lever, will the Fed push another set of macro forces in motion that go in the wrong direction, undermining growth and hammering asset prices?
The dollar
The factor most likely to blunt the Fed’s offensive is a steep fall in the dollar. That’s the view of Ashwin Alankar, head of Global Asset Allocation at Janus Henderson Investors, a firm with over $300 billion under management, and a Ph.D. in finance from Berkeley. “Policymakers and investors are mostly overlooking the risk of a downward spiral in the dollar at their own peril,” says Alankar. (Alankar makes his case in this excellent piece on Janus Henderson’s website.)
Alankar notes that the dollar is already declining, albeit from high levels, and cautions the Fed’s policies lift the probability that drop will accelerate. The problem posed by a weak greenback, he argues, is that the foreign investors who’ve been essential to funding our big deficits and debt, and whom we need more than ever now that shortfalls are exploding, will soon have far fewer dollars to buy our Treasurys. Alankar thinks the endgame could be the return of stagflation.
A second risk that Alankar also fears, and this writer deems more probable: The pullback in overseas buyers of Treasuries is so violent that the Fed loses its grip, ditching its easy money stance and allowing a jump in rates to lure back foreign investors. In the process, the U.S. endures a new, post-pandemic recession as rising borrowing costs curb business investment, and the need to tame inflation forces the Fed to keep rates high.
As Alankar points out, it’s the Fed’s reliance on “negative real rates” that poses the threat. In recent years, the dollar’s been extremely strong. According to the Bloomberg Index that measures its value versus a basket of major currencies, the dollar in the past two years has hovered roughly 25% above its level from 2012 to 2015. Its recent buoyancy arises from relatively robust GDP growth through early this year and its status as the world’s reserve currency. That confluence has made the greenback especially attractive as a safe haven in the turbulence caused by shocks such as Brexit, the collapse in oil prices, and turmoil in emerging markets.
Until late 2018, the Fed was “normalizing,” meaning that it was gradually raising its benchmark rate to exceed the pace of inflation, hence orchestrating a return to positive “real rates” that have been the norm for decades. In late October 2018, the 10-year Treasury yield rose to over 3%, meaning that the inflation-adjusted number reached a positive 1%. Then, the worsening trade war and a selloff in stocks—unleashed by investor panic over those rising rates—prompted the Fed to reverse course. The pandemic propelled Chairman Jerome Powell to double down, pledging to hold the Fed funds rate at zero through at least 2022.
That cheap-credit policy has dropped the yield on 10-year Treasurys to 0.66%, the lowest reading in 60 years. Inflation was running at 2.4% in January and February and, after collapsing in the darkest days of the pandemic, is on the rise, hitting 1.3% in August. So the real rate, the 10-year yield minus inflation, is in negative territory by at least 0.6% and likely even more.
It’s a falling dollar that’s delivering the counterpunch. Since May, its value has dropped against that of major currencies, declining over 6% from its pre-pandemic high and settling 5.4% below its average for 2019. It’s impossible to identify all the factors responsible for the pullback: The deep recession and foreign investors’ wariness over the gigantic increases in U.S. federal debt doubtless are contributing. But for Alankar, the downward pull comes principally from those subzero real rates.
“What’s happening is that the dollar’s weakness is making foreign imports more expensive in dollars, so that American consumers and companies can afford fewer German cars and French wines and perfume,” says Alankar. Hence, overseas companies that sell those products stateside are collecting fewer dollars. Alankar adds that most of the cash gets recycled into super-safe Treasurys. Now foreigners are amassing fewer dollars at the same time our deficit, in a single year, has exploded from just under $1 trillion to a projected $3.4 trillion in 2020, with $4.4 trillion in shortfalls to come from 2021 to 2023.
Imports and exports
The exploding gap between the dollars foreigners are reaping and the dollars the U.S. government needs to borrow is illustrated by the shift in the shares of national income going to imports versus deficits. In 2018 and 2019, the imports averaged roughly 2.5 points of GDP, trailing our 4.5% deficits by two points. In 2020, the share of imports is stable, while the budget shortfall has swelled to 17% of GDP, dwarfing the imports share by over 14 points.
Negative real rates also make dollars less attractive to funds and folks with savings abroad, so they will increasingly invest in their home countries, or invest elsewhere in euro or yen securities, because our returns don’t even match inflation. The upshot is lower demand for U.S. Treasurys. Also curbing demand for our debt: Foreign investors can get much higher yields on dollar-denominated debt issued by Mexico, Brazil, or Indonesia. Their bonds are all yielding from 2.2% to 3.8%.
If the dollar keeps falling, products from abroad will get more and more expensive, and foreigners will have fewer and fewer dollars to buy the fresh trillions in Treasurys flooding the market. As of June, foreigners held $6.2 trillion in U.S. federal debt, almost one-third of the total and 90% of the amount owned by U.S. citizens. (As part of its stimulus plan, the Fed itself has accumulated 17% of all outstanding Treasuries.)
Inflation
A falling dollar, dragged down by ultralow rates, will stoke what Alankar calls “imported inflation.”
“The big danger that stance creates is that higher import prices will lead to higher inflation, yet rates don’t rise to stabilize the dollar. Instead, real rates stay negative,” says Alankar. Indeed, the Fed has declared that it will allow inflation, if it picks up, to run hot without raising rates. So U.S. consumer and producer prices are destined to rise faster than the yield on Treasurys, making our bonds increasingly less enticing to foreign investors. That could create a vicious cycle: As the dollar keeps falling, Americans buy fewer and fewer foreign goods. Alankar foresees the possibility of a downward spiral in the dollar that would severely curtail the foreign purchases of Treasurys sorely needed to sustain our gigantic borrowing without causing a crisis.
What would that crisis look like? It’s important not to overstate the potential perils. “I would not extrapolate from short-term movements in the dollar,” says Matteo Maggiori of Stanford University, a top international economist. “For example, a lot of dollar alarmism for a few percentage movement in the short run seems to me overstated. However, there are some important long-term questions about the dollar’s role in the international monetary system. The rapid increase in U.S. federal debt is one risk factor. The large foreign holdings of this debt is another.” Maggiori views these factors not as an immediate threat but as long-term risks.
The market or the Fed?
Alankar believes a haymaker is bunching its fist and could strike at any time. As foreigners pull back, he says, Americans will be forced to fill the breach by plowing trillions more of their savings into Treasuries. The pool of those savings available to businesses would shrink. It’s unclear what effect that shortage would have on future rates, because the Fed might take more extraordinary measures to hold its benchmark artificially low, a posture that could depress yields on all bonds. In any case, government borrowing would “crowd out” much of the private capital needed to fund new growth, at the same time the falling dollar feeds inflation. Result: stagflation reminiscent of the U.S. in the 1970s, and Japan for more than two decades.
But another outcome is also possible. The dollar’s fall could become so severe that the Fed throws up its hands and hikes rates to wrestle down inflation and boost the dollar. Of course, the stock market freaks out at the very hint of higher rates, and the tightening would throw the U.S. into another recession. But the market, not the Fed, would be back in charge. And the foreign investors we need so desperately would return en masse to the U.S. haven that’s not only the safest in the world but also one that is free to offer a decent return once again.
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fortune--2020-10-11--ESG investing is bigger than ever. Here’s how you can save the world, and your portfolio

This article is part of Fortune‘s quarterly investment guide for Q4 2020.
If 2020 was the year that upended personal lives, workplaces, and how we view health and safety, it may also be the year we reached another tipping point: in how we invest.
Between April and June, as the COVID-19 pandemic gained speed worldwide, funds that prioritize ESG investing—buying stock in companies with an environmental, social, and governance mission—saw global assets under management hit a record $1 trillion, according to Morningstar. That was on the back of net inflows of $7.1 billion in those three months alone.
Well-known funds in the U.S. include the Vanguard FTSE Social Index Fund (+11% YTD, as of Oct. 8), which excludes stocks in companies in adult entertainment and tobacco, among other sectors; the Parnassus Endeavor Fund (+5.26% YTD), which excludes some sectors and puts an emphasis on companies with good workplaces; and the BGF Sustainable Energy Fund (+26.38% YTD), which focuses on companies in renewable and sustainable energy.
Two of the three—Vanguard FTSE Social Index and the BGF Sustainable Energy funds—are far outperforming the S&P 500 this year while Parnassus Endeavor Fund is bang in line with the benchmark S&P 500, both up a little over 5% in 2020 (as of Oct. 8).
ESG experts say that generation-defining events of the past year—from the pandemic to racial justice protests to the West Coast wildfires—have only helped fuel momentum that was already there.
“I think now we are in a moment where, in the mainstream portfolio, ESG will be mandatory,” says Michael Herskovich, head of corporate governance at BNP Paribas Asset Management in Paris.
Doing it right, however, still requires a clear-eyed vision, a strategy—and a hefty dose of skepticism.
Here’s how to get started.
Think about what you want to achieve
“ESG is super personal,” says Robert Jenkins, global head of research at Refinitiv Lipper. After all, ESG investing requires you to place a bet, so to speak, on your values. And with so much money on the line, you ought to take an honest look at precisely what it is you care about.
But fear not: ESG experts, including Jenkins, point out that sacrificing returns for investing in good works is no longer a given.
While some experts point out that high ESG scores can be a proxy for a forward-looking management team (and, at least before COVID, that translated to relatively low volatility), others note that it’s difficult to find many companies that check every E, S, and G box.
Once you’re clear about your investment budget, and what risk you can tolerate, narrow it down to questions like: Do you value a low-carbon footprint? What about board diversity? Does that matter to you?
If you choose “low carbon,” for example, then think about whether you want to focus on cutting out companies with high-carbon footprints. Another consideration: Do you want to use your investment as a cudgel to push companies to invest in cleaner operations or reexamine their supply chains?
These are the kinds of questions on the minds of large fund managers. It’s important to know where you stand on these matters, too.
Decide on your strategy
Depending on how much you have to invest, the first place to start is with your existing investments—including your pension. Many institutional investors will now provide you with information on how they integrate ESG and may even be members of investor networks like Climate Action 100+, which engages with companies on lowering their emissions.
If you want to go for passive investing, there are nearly endless options for ETFs that focus on issues ranging from diversity in the management ranks to emissions to social equality. Think about whether you want a product that “screens” out certain sectors or companies—like coal—or is focused on certain industries—like renewable energy.
But if you’ve got the money, ESG is one area where an actively managed fund is frequently worth the fees, says Jenkins. Because ESG is so difficult to track and standardize, doing it properly is time- and research intensive.
Actively managed, established funds can also have a role in engaging directly with companies—a path many experts see as the most effective way to push for change. CCLA, a London-based manager for charities and the public sector, has a policy of “divest the worst and engage the rest,” says Peter Hugh Smith, the chief executive. “Then you have a seat at the table.”
Remain skeptical
Whatever route you pick, prepare to do some research. (Sorry, passive investors.)
Complicating things, ESG investing has long struggled with a lack of transparent, regular, and standardized information that allows you to truly compare apples to apples.
That’s getting easier though as a growing number of NGOs and mission-based investment funds are increasingly doing the work for ESG investors. For example, some put out comparable rankings to help you check emissions reductions targets.
That said, ESG investing may require you to dig well beyond a company’s annual reports and profit projections.
One place to start is with the company’s regulatory disclosures, says the Rev. Kirsten Snow Spalding, senior program director for the Investor Network at Ceres. “If you can’t see it in the disclosures, then it was probably just the marketing department,” she says.
Also look for whether goals are clear, measurable—and near term. The current CEO won’t be around when it comes time to see if a company followed through on its “net zero by 2050” target, says Cynthia Cummins, director of private sector climate mitigation at World Resources Institute.
You need information on how they’re going to achieve that goal—and what their targets are in the years leading up to 2050.
And if the targets are confusing? That can be a red flag, too, warn the experts.
The opposite is true as well—an overwhelming data dump can be designed to obfuscate the facts on the ground.
If a company initiative or target seems vague, confusing, or wishy-washy, think twice about whether it really represents a commitment to ESG.
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fortune--2020-10-11--These 6 economic charts tell the story of Trump’s presidency

This article is part of Fortune‘s quarterly investment guide for Q4 2020.
While on the campaign trail in 2016, Donald Trump promised to create an economic boom.
But did he?
Before the onset of the pandemic—which created the hardest economic shock in U.S. history—he was at the helm of a historically strong economy. We’re in recovery now, but we still have a long way to go as more than 10 million Americans remain unemployed.
Fortune set out to measure how the economic performance under Trump stacks up to that of recent Presidents. We created annualized returns, or compound annual growth rates, for most of these metrics. That way we could fairly compare eight-year presidencies and four-year presidencies to Trump’s 44-month presidency.
We looked at the following U.S. economic metrics: The unemployment rate, the trade deficit, job growth, manufacturing job growth, income growth, and S&P 500 index returns.
Here’s what we learned.
When Trump took office the unemployment rate sat at just 4.7%. By February 2020 it had chipped down to 3.5%—a 50-year low.
Then the pandemic hit. The jobless rate soared to 14.7% in April, its highest level since 1940.
While the economy has since moved from contraction to recovery, with the jobless rate falling to 7.9% as of September, it’s still well above its level when Trump took office. If he loses reelection, he’ll likely join George H.W. Bush and George W. Bush as recent Presidents who left the White House with a higher level of joblessness than when they took office. Meanwhile, Barack Obama, who took office a year into the Great Recession, saw the jobless rate fall from 7.8% at his inauguration to 4.7% at his departure.
The silver lining for Trump? It may take decades for the U.S. to again reach the 3.5% unemployment rate low achieved during the Trump administration. Historically, the U.S. unemployment rate rarely drops under 5% outside of long economic expansions. The 10-year expansion that ended this year was the longest in U.S. history.
On the 2016 campaign trail, Trump promised to shrink or close the U.S. trade deficit. As President he’d wage a trade war with China, and pressure numerous allies on trade. Prior to the pandemic, the U.S. trade deficit was improving a bit under Trump, coming in at an annual rate of $37 billion in February—down from $42.9 billion when he took office.
But during the pandemic imports have surged (see the plunge in the chart, representing a widening gap). In August, the U.S. trade deficit hit $67.2 billion—the highest in 14 years.
During Obama’s eight years at the helm of the nation, U.S. employment maintained a 1% annualized return. That growth level had been climbing under Trump; as of February 2020 employment was increasing on a 1.5% annualized basis during his presidency.
But that was before the U.S. economy shed a staggering 22.2 million jobs in the spring. By April, U.S. employment had fallen from 152.5 million to 130.3 million—putting the country back at 1999 employment levels. We’ve since recovered 11.4 million jobs, however, the annualized job growth for Trump sits at –0.7%.
If Trump loses reelection and the nation doesn’t add or recover 3.9 million jobs by January, he’ll become the first post–World War II President to see employment fall during his presidency.
Before taking office, Trump promised he’d end the era of offshoring factory jobs and oversee a manufacturing renaissance.
While it was hardly a renaissance, manufacturing job growth did rise during Trump’s first three years: It rose 1.2% on an annualized basis through February. But at the onset of the pandemic, the nation lost nearly 1.4 million manufacturing jobs, wiping out all the gains made during the Trump years. We’ve since recovered 716,000, but annualized manufacturing job growth during the Trump administration is at –0.4%.
The good news? After recovering 66,000 manufacturing jobs in September, the nation is down by 164,000 manufacturing jobs since Trump took office. If that rate of recovery continues, Trump would pull that figure back into positive territory by the end of January. If he did so, he’d be the first President since Bill Clinton to oversee positive manufacturing job growth.
Manufacturing jobs fell during the presidencies of Reagan, George H.W. Bush, George W. Bush, and Obama.
Economics 101: Once an economy nears full employment, businesses must begin to bid up wages to secure and retain workers. That’s exactly what happened during the Trump administration—which oversaw the final three years of the longest economic expansion in U.S. history. During Trump’s first two years, real household income rose by 3.8% on an annualized basis. It climbed from $63,761 to $68,703.
Income growth is the one metric where Trump clearly stands ahead of his predecessors. During the eight-year Obama presidency, real household income rose by 0.9% on an annualized basis, climbing from $59,458 to $63,761.
We should note median household income hasn’t yet been released for 2020—a.k.a. the COVID-19 recession. But income data released by the U.S. Bureau of Economic Analysis suggest incomes haven’t fallen dramatically. In fact, in August real personal incomes were up 3.3% year over year. Income gains during the Trump years rose for all income groups, with low-income earners seeing the most growth—a trend spurred in part by a movement among cities and states to increase the minimum wage.
Trump has tweeted about the stock market or 401(k)s nearly 200 times since his inauguration, according to Fortune’s count. It’s safe to assume that stock market performance is important to the President. However, the market gains during his time at the helm lag that of his predecessor.
During Trump’s first term the S&P 500 index has grown 11.6% on an annualized basis. That’s higher than the annualized return of the past three Republican presidents: Reagan (10.2%), George H.W. Bush (10.9%), and George W. Bush (–12%). But it’s below the levels seen under Clinton (15.2%) and Obama (13.8%).
Final verdict?
Before the economic crisis hit, the Trump years were ahead of the Obama years for gains in four of six core metrics Fortune looked at. But now the Obama years top Trump years in five of the six core economic metrics (unemployment rate, trade deficit, employment growth, manufacturing job growth, and stock market gains), while Trump is besting him in one (income growth). However, by the end of his first term, Trump is poised to retake Obama in manufacturing job growth.
Everyone knows how much Trump loves a performance. We’ll find out soon whether his so-so economic performance is enough to win another term.
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fortune--2020-10-11--This year’s ‘October surprise’ could impact your portfolio for years to come

This article is part of Fortune‘s quarterly investment guide for Q4 2020.
A disputed election that could devolve into a full-blown constitutional crisis. A COVID third wave. A stimulus rescue package that bogs down in Washington.
As the calendar flipped to October, the start of the final quarter of 2020, these clouds hung thick and dark over the markets. Veteran investors could be excused for wanting to take the fourth quarter off, a common strategy in a presidential election year.
But something unusual happened. In keeping with this completely unpredictable year, the markets rallied, with the Nasdaq and S&P 500 both climbing 2.2% in the first week of October, enough to just about recoup all of September’s losses.
What gives?
You can call it an October surprise that came early, and one that may have a enduring impact for the next four years, and beyond.
President Trump’s positive COVID-19 diagnosis may have thrown his re-election bid into turmoil, but it has had the opposite effect on the markets. From that point on, Joe Biden’s lead in the polls and election odds solidified, and Wall Street and investors started to come to grips with how their portfolios would perform with, gasp, a Democrat in the White House, and a blue sweep overtaking Congress.
“The odds of a Biden victory continue to rise, as do the chances of a blue sweep,” Ian Lyngen, a BMO Capital Markets bond analyst, wrote last week in an investors note. “And if the recent bid for risk assets is any guide, such an eventuality could prove a decidedly positive event for domestic equities.”
Ordinarily, Wall Street hates one-party control. And, if anything, it usually prefers a low-tax, regulation-busting Republican in the Oval Office. That anxiety runs deep, even if the historical data doesn’t quite back up the paranoia.
But this year, the script has flipped. Wall Street is not only unperturbed by the prospect of Washington awash in blue come January, it sees a possible upside.
Spending and taxes
Yes, a Biden presidency would likely mean a tax hike at some point after 2021, but, all in all, the pros outweigh the cons, a growing chorus of Wall Street analysts say.
“A blue wave would likely prompt us to upgrade our forecasts,” Goldman’s chief economist, Jan Hatzius, told investors last week. “The reason is that it would sharply raise the probability of a fiscal stimulus package of at least $2 trillion shortly after the presidential inauguration on January 20, followed by longer-term spending increases on infrastructure, climate, health care and education that would at least match the likely longer-term tax increases on corporations and upper-income earners.”
Jeff Buchbinder echoes that fear-not message. Buchbinder, vice president and market strategist at LPL Financial Research, sees the addition of a big fat stimulus spending package from a Biden-led White House plus the removal of the Trump era trade wars as two tailwinds for Corporate America that could just about offset the negative hit brought on from a Democrat-led tax rate hike. The best scenario for corporate earnings would be a return to free trade and no new taxes, as LPL’s calculation here shows.
Still, Buchbinder figures the 10% hit (Goldman calculates it at an 9% hit) to corporate earnings that you’d see from a Biden tax hike matches the EPS boost you’d get from removing tariffs from America’s top trading partners in China and Europe.
And, it should be noted, the consensus is that a Biden tax hike would be watered down before it gets signed into law. “Not a single President in American history has had a tax plan in their campaign that then got photocopied and became a tax law. Ever,” David Bahnsen, founder and managing partner of the Bahnsen Group, tells Fortune.
Even still, it’s time to look at which sectors would be most exposed to Biden’s tax proposal. As is is the case with any new tax plan, there will be winners and losers.
According to Goldman Sachs, the following sectors—information technology, health care, communications services and consumer discretionary—could see the biggest EPS hits from a tax rate hike in the years to come. Energy and financials would be less exposed, as the following Goldman chart shows:
The almighty dollar
There’s a third factor that could add rocket fuel to a stocks rally: the dollar. The FX markets are highly sensitive to shifts in foreign policy, and to changes at the top.
“A ‘blue wave’ scenario—where former Vice President Biden wins the presidency and Democrats also take the Senate—should accelerate US Dollar weakness, in our view,” Goldman Sachs FX analysts wrote in its latest “Election Playbook” report to investors. They see increased government spending, higher corporate taxes and a return to freer global trade as three factors that could weigh on the greenback.
And a weak dollar is a big stimulus for corporate earnings as it makes exports cheaper and gives American multinationals a competitive edge in global trade.
“We are holding off on recommending new Dollar shorts for now as we await more information on how the President’s health situation will affect the race,” the Goldman analysts wrote. “But we view current levels as relatively attractive to express our positive cyclical views—especially if polling continues to indicate a sizable lead for Biden.”
Surprise!
On Sept. 2, the S&P 500 slumped to 3,281.06, putting it within a few fractions of a percent of break-even for 2020. After the markets closed that day, my in-box filled up with all kinds of historical analyses how, every four years, Wall Street typically performs poorly in the two months prior to a presidential election. The message was clear: history says to move into cash, and wait it out until America elects a president.
As it stands now, that would have been an extraordinarily bad move. The S&P 500 is up 6.5% since then (as of the Oct. 8 close), and market volatility, as measured by the VIX index, is flashing a green light.
But, dear reader, this is still October. There’s no rule saying only one October surprise per election cycle. Anything can still happen between now and Election Day.
“We must now run ‘what-if’ scenarios toward the U.S. presidential race,” James McDonald is CEO of Hercules Investments, told Fortune. “My biggest ‘what-if’ is if Joe Biden contracts COVID-19, too.”
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fortune--2020-10-11--Q&A: Former Commerce Secretary Penny Pritzker talks America’s R&D problem, taxes, and the country’s

Q&A: Former Commerce Secretary Penny Pritzker talks America’s R&D problem, taxes, and the country’s economic outlook

This article is part of Fortune‘s quarterly investment guide for Q4 2020.
What would a Joe Biden presidency mean for the economy?
It’s a question that hangs on everyone’s mind as poll day approaches. Some people fear—or hope, depending on political inclinations—the former vice president will make radical leftward changes. Others wish—or worry—he’ll not rock the boat.
Penny Pritzker, former secretary of commerce under Obama, has a closer view than most into Biden’s agenda. As one of his top economic advisers, Pritzker is uniquely situated to weigh in. Also, as a scion of the Hyatt Hotels family fortune, Microsoft board member, and founder of the Chicago-based PSP Partners investment firm, Pritzker has a nonpareil grasp on the implications for business and investors.
Fortune asked Pritzker to share her thoughts about the economic outlook, post-November. She believes recovery can’t happen until the COVID-19 crisis is effectively handled. Here is what she expects in the months ahead. The conversation has been edited and condensed for clarity.
Fortune: What’s going to happen in November?
Penny Pritzker: It’s no secret I’m on the Biden-Harris team. Biden represents greater certainty and stability. He has a plan to address the COVID crisis. He’s got a terrific economic plan. I fundamentally believe Joe Biden is a good jobs President. He has a plan to create millions of good-paying jobs. Reports from Goldman Sachs and Moody’s say Biden’s economic plan will create more than 7 million more jobs than Donald Trump.
President Trump recently tweeted that a vote for the Democrats is a vote for massive tax increases, economics shutdowns, and job losses. Who’s right?
Donald Trump is not running on his track record. He wants us to judge him as if the football game only has three quarters, not four quarters. We’ve had the worst federal mismanagement in our history over the last six months. That’s cost us tens of millions of jobs. By not having an effective COVID strategy and by being dismissive of the experts, we’re stuck in a situation where millions of Americans are out of work.
Are the lost jobs ever coming back?
Some may not. Others will, for sure. Remember, 25% of the jobs created after the Great Recession were in leisure and hospitality. People are itching to travel. But people are going to need to be more digitally astute and better trained. If we’re going to continue to create jobs, we have to make sure that our people are prepared for them.
What will Biden do differently?
Biden will invest in important things, like R&D. Our R&D investment is near 0.6% of GDP, which is the lowest level since 1955. How are we expected to compete globally, and be in the lead, if we’re spending that little on R&D? We need to be a leader in A.I., in quantum, electric vehicles, clean energy, 5G, and broadband. These are the technologies of the future, but they’re also the technologies of now.
Can the U.S. keep ahead of China?
We can outcompete China over the long term if we both invest in our technologies and invest in our people.
What about the trade war?
The trade war with China has not worked. Trump promised to reduce our trade deficit, but instead our global trade deficit in goods with China and with Mexico hit all-time highs this summer. China promised to buy massive amounts of U.S. goods. The Peterson Institute tells us they’re at least a third to a half off of what they committed to buy. In the meantime, China is going back to its old state-led ways by pumping up credit in order to boost economic output. These are the things Joe Biden will stand up against.
Your successor at the Commerce Department, Secretary Ross, is issuing bans on popular Chinese apps TikTok and WeChat. The White House says they are national security threats. How would you recommend handling this predicament?
We have to protect our national security—the question is, how? A ban may feel good in the moment, but let’s play this out five or six plays ahead. What American products will China ban? How will this work for the 100 million people using TikTok today? Having a plan to achieve your desired outcome is critical.
And you think there are better ways than an outright ban?
There are more nuanced approaches. It’s not something that can be done overnight. It requires a combination of forceful behavior and diplomacy. It requires negotiation. It’s complicated, but I think we can achieve both. But you need a government that’s capable of doing that.
As a board member of Microsoft, were you disappointed that Oracle and Walmart swooped in as the likely winners of the TikTok acquisition contest?
I really can’t comment on that. But I appreciate you asking.
With the uncertainty of an election looming alongside fears of new waves of coronavirus infections, what parting words of advice might you share with our readers?
The advice I try to give myself is first make sure you take care of what you’ve got. Make sure the businesses you own are well capitalized and can survive the volatility. Right now, we’re in a period of extreme uncertainty. I predict that will continue for a while until we get through this pandemic. Also, be open to new ideas. The world is adopting technology at a pace it has never done before. Make sure you’re taking advantage of those opportunities.
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