fortune--2020-01-29--Airbnb brings in a Disney theme park hand to run ‘Experiences’ ahead of its IPO

Ahead of an expected initial public offering this year, Airbnb has hired a new head of “Experiences,” its promising but still-fledgling division that offers tours and activities for travelers.
Catherine Powell worked at Disney for 15 years, most recently serving as a president of Disney parks overseeing Disneyland, Walt Disney World, and Disneyland Paris. She began at Airbnb on Wednesday, the company said in an announcement the same day.
Growing the Experiences division is a priority for Airbnb as it seeks to diversify its offerings beyond home-sharing. The company aims to an appeal to investors before its public-market debut, and more broadly to build a comprehensive travel platform that includes excursions and transportation.
Airbnb believes it can capitalize on a fragmented tours and activities market, much of which still remains offline. Travel research firm Phocuswright estimates that tours and activities will generate $183 billion in revenue this year.
Experiences launched in 2016, and Airbnb says it now offers more than 40,000 activities in over 1,000 cities and towns. But there have been questions about the segment’s significance as a business, with tech news outlet The Information reporting that Experiences through the first three quarters of 2018 brought in just $15 million in revenue. To contrast, analysts estimate Airbnb generated between $4 billion and $5 billion in total revenue in 2019; the company is currently valued by the private markets at $35 billion.
Some have speculated Experiences’ modest returns led to the departure of former Experiences chief Joe Zadeh, who remains with the company, but now operates under the title “chief stakeholder officer.” Airbnb has described that change as a lateral move, not a demotion.
Announcing Powell’s hiring, Airbnb cofounder and CEO Brian Chesky thanked Zadeh for his leadership in launching Experiences “from an idea on a whiteboard to a global business.” Chesky added that Powell is “the perfect person to lead this business. Some people can come up with creative ideas. Others know how to run big teams and scale big businesses. Catherine can do both.”
With chief operating officer Belinda Johnson’s impending resignation on March 1 (she will remain on the board), Powell begins at Airbnb as one of the highest-ranking women on the company’s executive team.
“I’ve seen firsthand how Experience Hosts take Guests on amazing adventures and I know Airbnb has a unique opportunity to deliver experiences that are distinct, authentic, immersive, and memorable,” Powell said in a statement. “The potential for this business is virtually unlimited.”
The current year is expected to be a big one for the 11-year-old company. In addition to filing its S-1 prospectus, Airbnb will begin a partnership with the Olympics, providing lodgings and Experiences hosted by athletes at the summer games in Tokyo. The company is also racing to implement ambitious safety and trust goals that it outlined in the wake of controversy this past fall.
More must-read stories from Fortune:
—The long ocean voyage that helped find the flaws in GPS
—Atari-themed hotel deal punctuates the gaming pioneer’s turnaround
—Into the ‘crucible’: How the government responds when GPS goes down
—This tech giant says A.I. has already helped it save $1 billion
—What is tech doing to protect the whistleblower’s identity? Not much
Catch up with Data Sheet, Fortune’s daily digest on the business of tech.


fortune--2020-01-29--Why Bud Light gave its new hard seltzer the family name

Why a drug that costs $ 2.1 million per dose is on a sales streak

If you’ve explored the beer aisle at your favorite local store lately you may have noticed that Bud Light has a new product, an alcoholic beverage that actually doesn’t contain any beer: Bud Light Seltzer.
Bud Light Seltzer is the brand’s official foray into the growing spiked seltzer trend. The drink comes in four flavors: black cherry, lemon-lime, strawberry, and mango and clocks in at 5% ABV and 100 calories, right on-par with its biggest competition: millennial favorite White Claw and Boston Beer’s Truly.
“Seltzer is a new, emerging category in the brewing industry,” says Bud Light’s VP of Marketing Andy Goeler. Hard Seltzers were responsible for over $1 billion in annual sales last year, and have become a go-to drink for calorie and alcohol conscious consumers.
A lot of those sales last year were of Bon & Viv spiked seltzer, which is also owned by Anheuser Busch In-Bev. For the Bud Light Seltzer, the brand decided to use the Bud Light name rather than create a new label in the hopes that it will help drive sales and perhaps overtake some of the other seltzer brands that might currently have a leg up in terms of name recognition.
“The Bud Light name and trademark Bud Light has a lot of brand equity and a lot of very positive brand equity,” says Goeler.
He says that launching the product under the Bud Light name rather than creating a new brand for the seltzer product comes with a number of advantages.
“Number one, it gives us the ability for people to identify with the brand immediately because we have such a large level of awareness out in the marketplace,” Goeler says. “Attaching the Bud Light name to the seltzer reaches a lot of consumers, a broad base of consumers, and is able to build awareness of the product fairly rapidly.”
Beyond making inroads with consumers, Goeler says that attaching the Bud Light name to the seller also helps the brand when it comes to securing coveted shelf space at retailers, a feat that’s often a huge hurtle for new brands.
“Having a Bud Light name attached to it, there’s kind of an expectation. And a reputation that retailers kind of relate to and with the Bud Light name on it we’re able to get the brand situated into a large number of accounts across the country,” Goeler says.
It’s also spending a good deal of money to make sure all that translates into sales. From January 1-19, Bud Light made up 37% of the entire beer industry’s spend on TV ads. It also outspent its biggest seltzer competitors.
As for who the brand thinks of as Bud Light Seltzer’s core audience, Goeler says they’re essentially targeting everyone. “With the Bud Light name on it,” he says, “it’s a fairly broad base of consumers. It’s definitely very male-female, it skews very co-ed in the product.”
Worth noting: Goeler says the name does, at times, inspire people to ask if there’s any Bud Light in the seltzer cans. The answer to that question is no, and the company has even enlisted the help of residents in Seltzer, Pa. to help clear up any confusion. Consumers can call the Seltzer hotline with questions toll-free at 1-833-BL-SELTZ.
“This is a new category and emerging category that there’s still a lot of questions that consumers have about seltzer,” says Goeler. A lot of questions, and a lot of anticipation for the future. “We haven’t seen as much excitement in the brewing industry in quite a long time.”
More must-read stories from Fortune:
—Retailers reuse and recycle the way to increased growth
—Why Gap Inc. torpedoed its Old Navy spinoff
—How Ganni used tech-world tricks to grow from cult fashion label to global brand
—Consumers are turning away from real fur, but faux fur isn’t a perfect fix
—The World’s Most Admired Companies in 2020
Follow Fortune on Flipboard to stay up-to-date on the latest news and analysis.


fortune--2020-01-29--If you have insurance, you shouldn’t be paying full price for insulin

It’s a new year, and Americans are starting over on their health insurance deductibles. That means many people with diabetes and other chronic conditions once again face unaffordable out-of-pocket costs for the medicines they need.
But they shouldn’t have to. Employers can now take advantage of new rules for high-deductible health plans, as well as new programs from pharmaceutical and insurance companies, to make sure no one who needs insulin pays full price.
It’s time for employers—who cover more than half of all Americans, according to the Census Bureau—to lead the insurance marketplace to do a better job caring for people with chronic diseases.
It’s true that Eli Lilly, which David leads, has a financial interest in seeing employers reduce costs for the medicines it sells. But since people with chronic diseases drive 90% of all U.S. medical spending, it makes sense for all employers with high-deductible plans to ensure people who need drugs like insulin can afford them.
Take Doug Liebman, a 62-year-old in Arizona. He has Type 1 diabetes and a $3,500 deductible. His typical bill each January for insulin is more than $1,000. That’s a lot, given that two out of every five Americans don’t have $400 available to handle an emergency, per the Federal Reserve.
But no longer do high-deductible plans need to expose people with chronic diseases to unaffordable out-of-pocket costs for medicines. New rules from the Internal Revenue Service now clearly allow high-deductible health plans to cover certain preventive medicines, like insulin, before patients meet their deductible.
The need for action is urgent. Enrollment in high-deductible health plans has surged to nearly half of all Americans with private health insurance, according to the Centers for Disease Control and Prevention.
When low-income individuals with diabetes shift to high-deductible health plans, a Diabetes Care study shows they end up in the hospital more, with more serious conditions.
The cost of this pre-deductible coverage is minimal—about a 2% rise in premiums, according to a recent VBID Health analysis. For insulin alone, it’s even less, per a Milliman study commissioned by Eli Lilly.
It’s even possible for employers to offer this pre-deductible coverage without increasing premiums. One way of accomplishing that is to stop paying for care that has been proven to be of little to no value—and which wastes as much as $100 billion a year, according to a study in the Journal of the American Medical Association. The Task Force on Low-Value Care, which Mark co-leads, has identified the top five low-value items to cut: widespread vitamin D screening, prostate cancer screening for men 75 and over, diagnostic testing for low-risk patients before low-risk surgeries, imaging for acute low-back pain without other warning signs, and using brand-name drugs when identical generics are available. (Mark has a financial interest in the Milliman MedInsight Health Waste Calculator, a software tool designed to help health care organizations leverage value-based principles by identifying wasteful services.)
In addition, a recent Health Affairs study (which Mark co-authored) demonstrated that selectively lowering cost-sharing for high-value chronic disease management medications can meaningfully increase the number of patients taking medication as prescribed, reduce the risk of adverse health outcomes, and, in some cases, reduce expenditures. If more employers—especially large employers—reduce cost-sharing for high-value therapies, they can change the insurance market in ways that improve health and productivity while constraining costs.
Pharmaceutical companies can also help reduce costs. For instance, the three biggest makers of insulin—Eli Lilly, Sanofi, and Novo Nordisk—all took steps recently to lower out-of-pocket costs. Lilly capped out-of-pocket costs for its insulins at the pharmacy at $95 per month—regardless of how much a patient needs. And Sanofi and Novo both introduced programs that make insulin available for $99 a month. Doug Liebman benefited from one of these discounts—and saved over $900 just in January.
Health insurers and pharmacy benefit managers are also acting to lower the cost of insulin. Express Scripts launched a Patient Assurance Program that caps out-of-pocket costs for insulin at $25 a month. Three insurance plans in Minnesota are doing the same. We think more plans should join them.
Also, UnitedHealthcare, Aetna, and Lilly are now sharing the rebates they receive from pharmaceutical companies directly with patients, giving them the same negotiated discounts they already receive for hospital stays, doctor visits, and lab tests. Patients should receive these discounts for drugs too—especially seniors in Medicare Part D, who are ineligible for assistance programs from pharmaceutical companies.
To further help seniors, Congress should make it a priority in 2020 to cap copays in Part D plans, which often have high out-of-pocket costs, especially in the donut hole phase. Legislators should also allow seniors to smooth out their costs into reasonable monthly payments, which would particularly help those managing chronic diseases. Both policy proposals are in a Senate Finance Committee bill.
If employers, insurers, and lawmakers all adopt these commonsense policies, no one with insurance will continue to pay full price for insulin.
Mark Fendrick is director of the Center for Value-Based Insurance Design at the University of Michigan and founding partner of VBID Health.
David A. Ricks is chairman and CEO of Eli Lilly.
More opinion in Fortune:
—Elizabeth Warren: I’ll use the government to make tech work for people with disabilities
—I worked at McKinsey. Here’s how the firm needs to change
—5G’s side streets will be empty without fiber’s interstate
—These new rules might end tech’s reliance on Chinese investors
—To build diversity, companies should focus on tackling student debt
Listen to our audio briefing, Fortune 500 Daily


fortune--2020-01-29--Facebook and Twitter are least trusted in social media for political news

Facebook and Twitter are a long way from instilling confidence after letting misinformation flood their services during recent elections, according to a new survey. Most Americans still don’t trust social media as a source of political news.
Fifty-nine percent of adults distrust Facebook, the worst showing among major social media sites, according to the Pew Research Center. Twitter was second worst with 48% followed by Instagram at 42%.
The report gives “a fuller picture that reinforces what we’ve seen in the past about the general trust level or lack thereof in social media as a news provider,” said Amy Mitchell, director of journalism research at Pew. Social media is ” by far the lowest when it comes to trust levels.”
The findings come as social media companies struggle to control misinformation, spam, and propaganda on their sites. They’ve also been scrutinized for allowing Russians to disseminate political propaganda during the 2016 U.S. presidential election.
Additionally, the social media has taken a scattershot approach to policing political ads that include false information. Facebook, most notably, has taken the controversial position that politicians can lie all they want in ads.
Both Republicans and Democrats have criticized tech companies, claiming that their policies and enforcement are unfair to their candidates and parties. And the Pew report reinforces that the distrust in social media services crosses party lines.
For example, 62% of Republican or Republican-leaning respondents distrusted Facebook for political news versus 59% of those who lean Democratic. When it comes to Twitter, 51% of Republicans said they distrusted those service versus 46% of Democrats.
The Pew report also showed that the people who mostly use social media for political news are less likely to be concerned about misinformation and fake news. Out of that group, 37% of respondents were very concerned about the integrity of the news they accessed through social media. Whereas half of the people who get their news from other sources—like TV, print, or news websites—are very concerned about the influence of misinformation on social media.
The good news is most people don’t rely on Facebook, Instagram, or Twitter as their primary source of political news. Only 18% of adults say social media is their primary source, with the vast majority going to major news outlets for information, Pew found.
Pew’s report was based on a survey of 12,000 U.S. adults between Oct. 29 and Nov. 11, 2019. In addition to Facebook, Facebook-owned Instagram, and Twitter, the survey covered YouTube, LinkedIn, and Reddit.
Of all the services, YouTube scored highest with only 17% of people saying they distrusted the political news posted on it. Meanwhile, adults felt they neither trusted or distrusted news on LinkedIn. Most respondents had either never heard of Reddit and therefore didn’t have an opinion.
More must-read stories from Fortune:
—The long ocean voyage that helped find the flaws in GPS
—Atari-themed hotel deal punctuates the gaming pioneer’s turnaround
—Into the ‘crucible’: How the government responds when GPS goes down
—This tech giant says A.I. has already helped it save $1 billion
—What is tech doing to protect the whistleblower’s identity? Not much
Catch up with Data Sheet, Fortune’s daily digest on the business of tech.


fortune--2020-01-29--MoviePass owner collapses into bankruptcy, leaders quit

The owner of MoviePass, which promised theater-goers unlimited admission for $9.95 a month, collapsed into bankruptcy and said it will liquidate.
The chaos that often surrounded the defunct subscription service followed it into bankruptcy court, with papers filed by parent Helios & Matheson Analytics Inc. in Manhattan giving wildly conflicting figures about what it owns and owes. A separate regulatory filing showed the interim chief executive, interim chief financial officer and its remaining board members have all quit.
On top of that, the company is facing probes by the Federal Trade Commission, the U.S. Securities and Exchange Commission, New York’s attorney general and four California district attorneys, the bankruptcy petition shows.
MoviePass was a subscription service that let theater-goers see a different film every day for a monthly fee. But skepticism abounded about how the cash-burning business model could be sustained, and as money ran short, frustrated customers were turned away by theaters.
The New York-based company got a hastily arranged short-term loan to resume operations in July 2018 from Hudson Bay Capital Management. Meanwhile, AMC Entertainment Holdings Inc. and Alamo Drafthouse Cinema, two theater chains, launched their own services to rival MoviePass.
Helios & Matheson formally shut down the service last September, citing a failed money-raising effort. The bankruptcy papers show that one of the largest unsecured non-priority creditors is Hudson Bay Master Fund Ltd. with more than $30 million in claims.
In a Chapter 7 bankruptcy, a court-appointed official sells off assets to repay creditors. The initial petition shows publicly traded Helios & Matheson listed liabilities of as much as $50 million and assets of no more than $10 million.
But other pages list substantially different numbers — one shows debts topping $267 million—along with a disclaimer that it would be too expensive and burdensome to get current valuations of its assets. One tally, which cites intercompany claims, puts total assets close to half a billion dollars.
Interim Chief Executive Officer Parthasarathy Krishnan and interim Chief Financial Officer Robert Damon resigned, the company said. The shares have been effectively wiped out.
The case is Helios and Matheson Analytics Inc., 20-10242, U.S. Bankruptcy Court for the Southern District of New York (Manhattan)
More must-read stories from Fortune:
—All of your questions on filing taxes in 2020, answered
—The health of the economy in nine charts
—Goldman Sachs Asset Management’s Sheila Patel on her 2020 outlook
—5 pressing questions to hone your investment strategy this quarter
—10 stocks that are poised for a stellar 2020
Subscribe to Fortune’s Bull Sheet for no-nonsense finance news and analysis daily.


fortune--2020-01-29--Hedge funds led by women and people of color outperform those run by white men

This is the web version of raceAhead, Fortune’s daily newsletter on race, culture, and inclusive leadership. To get it delivered daily to your inbox, sign up here.
The business case for diversity is… well, it’s just embarrassing at this point.
According to new analysis from Bloomberg, hedge funds helmed by anybody other than a white man had almost double the returns of their white-led peers. Specifically, out of the 2,935 funds tracked in Bloomberg’s database, 35 were led by a woman or person of color. When compared with 908 funds that would classify as a peer, the “diversity hires” offered a return of about 6.6% over the past three years, compared to about 3.9% for the benchmark.
While there were no fund types where managers from underrepresented groups did not outperform, there were some outliers. Event-driven funds aim to take advantage of temporary stock mispricing that can occur after sudden news or big corporate events like mergers or bankruptcies. If you invested in one of those run by a person who wasn’t a white man, you probably had a great three years. They returned 9.3%, versus 4.2% from their peers.
And for those really keeping score, the funds which identify and invest in broad, global trends, had the biggest performance gap. “Diverse” managers returned 8.5% over three years, as compared to their peer index of 0.2%.
That’s a big gap.
So, while we wait for the follow up pieces explaining the “flaws” in Bloomberg’s straightforward analysis and that it’s totally fine fine fine to leave your money in the care of powerful white men, I’ll leave you with two questions.
One: Who do you think are starting new businesses faster than anyone else in the U.S. and are responsible for employing 9.4 million workers and generating revenue of $1.9 trillion?
And two: Who do I talk to about getting a job as a hedge fund manager? Because I got your trends covered, all day long.
Ellen McGirt
@ellmcgirt
Ellen.McGirt@fortune.com
On Point
Speaking of questions, Fortune has a few for the presidential candidates I’m incredibly proud of my sisters in inclusion at Broadsheet and Most Powerful Women who teamed up with Time’s Up Now to ask the candidates about the issues that matter to working women and working families. These are the questions that are not asked often enough. Thirteen of the remaining candidates—including President Trump— weighed in on paid family leave, sexual harassment, affordable childcare, and offered their intersectional ideas to address the gender pay gap. Bonus, we’ve got some exclusive video interviews, too. No snark from me, just read, watch, and share.
Fortune
Social media is amplifying anti-Chinese racism as coronavirus fears mount “Brace yourselves fellow Asians, the ‘yellow peril’ has officially resurfaced,” begins this important opinion piece by Evelyn Kwong, a digital producer based in Toronto. The harassment and jokes are already starting, and in addition to being painful, they’re dangerous. “We’re often all lumped together, and the idea of 'yellow peril'—a racist stereotype that generalizes Asians as unsanitary, lower-class, and alien is embedded in our nation’s history.” Fear-mongering impacted Asian business districts like Toronto’s three Chinatowns during the SARS outbreak, but current trolls are just getting started. Kwong cited a commenter on a New York Times story about the coronavirus. “I’m trying to keep an open mind like, it’s ok that these cultures like to eat strange things,” it began. "Meanwhile I am thinking... filthy godless people spreading disgusting diseases via their lust for foul foods... No wonder it took them 1,000 years to (almost) join the modern world...”
Toronto Star
A new survey asks: Where is the diversity in publishing? Jason Low of Lee & Low Books, the largest U.S. children’s book publisher focusing on diversity, has posted an excellent analysis of the lack of diversity in book publishing, based on the company’s own Diversity Baseline Survey, first published in 2015. Despite numerous cultural changes since 2015—including #MeToo, the success of films like Black Panther, Crazy Rich Asians, books like The Hate U Give, and numerous industry-specific diversity movements, not much has happened. The book publishing industry is currently, 76% white, 74% cis-women, 81% straight, and 89% non-disabled, numbers which have edged down only slightly from 2015. (Publishers Weekly shows similar numbers in their salary survey, but didn’t query about people with disabilities.) “The book industry has the power to shape culture in big and small ways,” Low writes. “The people behind the books serve as gatekeepers… [i]f the people who work in publishing are not a diverse group, how can diverse voices truly be represented in its books?”
The Open Book Blog
On Background
Speaking of presidential candidates, where are they on A.I.? This is an issue of vital importance to the Black, Latinx, and AAPI working class people who are over-represented in jobs that are poised to be “disrupted” by automation, A.I., and robotics. “The community stands to lose close to five million jobs by 2030 due to technological advances,” says Bärí A. Williams, a tech industry legal and operations executive and startup adviser. “[B]lack Americans tend to over-index in occupations that are service oriented—and not just blue-collar jobs. These service-oriented jobs also include marketing professionals, paralegals, retail workers, data entry clerks, and factory workers.” She’s calling for candidates to get real on tech. “[N]ot just regarding regulation but also dealing with the impact of automation on jobs and how to create effective solutions to that crisis.”
Fast Company
The future of aging and tech Monique Woodard is a fascinating figure in the venture and entrepreneurial scene. She is currently investing in early stage startups (like Blavity and Court Buddy) and excels at thinking global: She originated investments is sub-Saharan Africa in her previous gig as a venture partner at fund and accelerator 500 Startups. Although she doesn’t run a hedge fund (yet) she does have her eye on how older people use technology and how they want to live as they age. “I invested in my first aging company in 2016 and since then, I've seen the market for aging start to mature as more investors become interested in the category,” she tells raceAhead. For her latest report, she surveyed 534 folks ages 55 to 70, then spent a couple of months parsing the data. Here’s one spoiler: Ain’t no Luddites in this cohort.
Gray New World Aging Report
Reminder: “They" is okay, they say at Merriam-Webster The use of “they” as a gender-neutral option in a preferred-pronoun world is problematic for many grammarians for a simple reason: “They” is a plural pronoun. The good folks at Merriam-Webster explains that “they” has been in use as a singular pronoun since the 1300s, but changing societal norms has expanded its acceptable use. Click through for a helpful history of the seach for a nonbinary term, and some encouragement if it all seems a little awkward to your ear. Here’s some progress: In the 17th century, English laws sometimes referred to people who didn’t fit a gender binary as “it,” “which, while dehumanizing, was conceived of as being the most grammatically fit answer to gendered pronouns around then,” they say.
Merriam-Webster
Quote
“Specifically, I’ve been the only person of color in a room full of white, book publishing professionals more times than I’d like to remember. I’ve been the assistant, digging my nails into my palms to keep from speaking out when some art director declares in a meeting that Black girls on book covers don’t sell; I’ve cried in bathroom stalls, tears muffled by my arms, when a white colleague claimed I was just a diversity hire; I’ve smiled instead of screamed when my boss made yet another racist yet 'well-meaning' comment. I’ve also gotten to work with some incredible authors and helped publish books my younger self could only dream existed.”
—Patrice Caldwell, founder of People of Color in Publishing


fortune--2020-01-29--New trade deal with Canada, Mexico to boost U.S. growth, Trump says

President Donald Trump on Wednesday signed into law a major rewrite of the rules of trade with Canada and Mexico that he said replaces the “nightmare” of a Clinton-era agreement and will keep jobs, wealth and growth in America.
Trump made renegotiating the North American Free Trade Agreement a priority during his 2016 campaign, although trade experts say the impact of the new U.S.-Mexico-Canada Agreement will be modest.
“This is a cutting-edge, state-of-the-art agreement that protects, defends, and serves the great people of our country,” Trump said in an outdoor signing ceremony at the White House, where the invitation list included more than 70 Republican members of Congress but no Democratic legislators. “Together we are building a glorious future that is raised, grown, built and made right here in the glorious U.S.A.”
Canada and Mexico already represent the top two export markets for U.S. goods. But the new pact, along with the signing of a “phase one” agreement with China, dials down trade tensions that contributed to slowing economic growth globally.
The leaders of the U.S., Canada and Mexico signed the deal in late 2018. Legislation implementing it received overwhelming, bipartisan support in Congress after several months of behind-the-scenes negotiations between Democratic lawmakers and the Trump administration.
Trump made a point of praising Republican legislators for their work in passing the deal but did not mention the role of Democrats, who said that even if they weren’t invited to the signing ceremony, their influence was being felt.
“What the president will be signing is quite different from what the president sent us,” said House Speaker Nancy Pelosi, D-Calif. “We were able to make vast improvements. If we weren’t, we would not have been able to pass the bill.”
Rep. Richard Neal, chairman of the House Ways and Means Committee, said it only passed Congress because of how the Democrats forced changes in Trump’s original proposal. “They voted for it for one reason, is because of how we shaped and altered the president’s proposal,” said Neal, D-Mass.
NAFTA, which took effect in 1994 under President Bill Clinton, tore down trade barriers between the three North American countries and commerce between them surged. But Trump and other critics said NAFTA encouraged factories to leave the United States and relocate south of the border to take advantage of low-wage Mexican labor.
Trump threatened to leave NAFTA if he couldn’t get a better deal, creating uncertainty over regional trade.
His trade negotiator, Robert Lighthizer, pressed for a revamped pact designed to bring factory jobs back to the United States. The new agreement, for example, requires automakers to get 75% of their production content (up from 62.5% in NAFTA) from within North America to qualify for the pact’s duty-free benefits. That means more auto content would have to come from North America, not imported more cheaply from China and elsewhere.
At least 40% of vehicles would also have to originate in places where workers earn at least $16 an hour. That would benefit the United States and Canada — not Mexico, where auto assembly workers are paid a fraction of that amount.
The independent U.S. International Trade Commission last year calculated that the U.S.-Mexico-Canada deal would add 0.35%, or $68 billion, to economic growth and generate 176,000 jobs over six years — not much of a change for a $22 trillion economy with 152 million nonfarm jobs.
“It’s a blip,” said Syracuse University economist Mary Lovely, who studies trade. “The main thing is what it isn’t: It isn’t a continuation of uncertainty, and it isn’t a major disruption” to business.
Critics include environmental groups concerned that the agreement does not address global warming. Some conservatives say the agreement will make cars and other products more expensive for consumers.
The president wasn’t wasting any time highlighting the deal in battleground states that will determine who wins this year’s presidential election. He will travel Thursday to Michigan, where some of the state’s auto workers should benefit from a deal that encourages more manufacturing in the United States.
Trump wants to talk up a deal that about 4 in 5 Americans have heard little or nothing about. Indeed, while a third of the public approves of the deal and only 5% disapprove, a solid majority, 61%, have not formed an opinion, according to a recent poll conducted by Monmouth University.
More must-read stories from Fortune:
—What is tech doing to protect the whistleblower’s identity? Not much
—5 surprising consequences from a decade of Citizens United
—Understanding the 2020 election as brand marketing
—As the USPS faces privatization, here’s what it can learn from Canada
—Millions have been purged from voter rolls—and may not even realize it
Get up to speed on your morning commute with Fortune’s CEO Daily newsletter.


fortune--2020-01-29--SAG-AFTRA issues standards for intimacy coordinators who help navigate sexually sensitive scenes on

SAG-AFTRA issues standards for intimacy coordinators who help navigate sexually sensitive scenes on set

The union that represents actors and television performers issued a series of standards and guidelines Wednesday for crew members who supervise scenes involving sex and nudity. The goal is to combat on-set sexual harassment.
The framework announced by the Screen Actors Guild-American Federation of Television and Radio Artists provides a common set of policies and practices for so-called “intimacy coordinators” to help productions and actors navigate sexually sensitive scenes.
Under the guidelines, intimacy coordinators should have pre-production meetings with producers, directors and writers to establish the exact degrees of nudity expected and the specifics of simulated sex as established in scripts. They should have one-on-one meetings with actors to be clear about what they consent to.
“These protocols and guidelines will help to normalize and encourage the use of intimacy coordinators in productions, therefore ensuring the safety and security of SAG-AFTRA members while they work,” union President Gabrielle Carteris said in a statement.
The guidelines say that on set, intimacy coordinators should review the so-called “modesty garments” and physical barriers used during simulations of onscreen sex, and be familiar with ways to help directors choreograph the scenes in ways that can keep them believable and artistic without sacrificing the dignity or safety of performers.
The guidelines, drawn up by a team of leaders from the union, actors and intimacy coordinators, directly address the problem of sexual harassment on sets, the union’s National Executive Director David White said in a statement.
Deviations from the standards do not carry enforcement penalties.
Amanda Blumenthal, founder of the Intimacy Professionals Association, helped create the guidelines and said in a statement that they “strike the right balance between describing the roles and responsibilities of intimacy coordinators while still allowing for flexibility from show-to-show.”
The move is the latest of several made by SAG-AFTRA during the #MeToo era in an attempt to fight sexual harassment and other sexual misconduct aimed at actors. They include the adoption in 2018 of a code of conduct, which says among other things that auditions and similar professional meetings should not be held in hotel rooms or homes.
More must-read stories from Fortune:
—American Factory directors on capturing what “globalization looks like on a human scale”
—In the Dark podcast host Madeleine Baran on Curtis Flowers’ release, season three, and more
—The Grammys remain more of the same even amid calls for change
—Taika Waititi on Kiwi humor, directing as Hitler, and why kids should see Jojo Rabbit
—Zombi Child auteur Bertrand Bonello on colonialism, French trap music, and a “cinema of fear”
Follow Fortune on Flipboard to stay up-to-date on the latest news and analysis.


fortune--2020-01-29--Super Bowl LIV tickets could be the most expensive in the game’s history

The Super Bowl is always a hot ticket, but this year’s match up between the Kansas City Chiefs and San Francisco 49ers is proving to be one of the most in-demand games in years.
The average price of a ticket is now more than $8,200, according to TicketIQ. The cheapest ticket (known as the “get in” price) currently stands at $4,600, down from $5,000 on Tuesday. And they’re only likely to get more expensive, as supply dwindles.
Two key factors are driving prices higher. First, the Chiefs haven’t been to a Super Bowl since 1970, so fans aren’t sparing any expense to see it in person. A study by StubHub finds that fans are traveling an average of 1,540 miles to see the game this year. The average ticket price on that site is $6,400, an 8% increase over the past 24 hours.)
Meanwhile, fans from San Francisco tend to have more disposable income, so they’re able to pay higher prices.
Want a seat close to the field? That will run you an average of $27,643, says TicketIQ.
The most expensive Super Bowl (as far as secondary market ticket prices go) was Super Bowl XLIX in 2015, when the Patriots topped the Seahawks. Average prices for that game hit $9,723. It’s uncertain if this year’s game will top that, but the current “get in” price is $900 more than where tickets stood in that game. And, for that game, at least, the big surge in asking prices didn’t really kick in until three days before kickoff.
More must-read stories from Fortune:
—10 stocks that are poised for a stellar 2020
—Will retiring baby boomers crash the stock market?
—Millions have been purged from voter rolls—and may not even realize it
—Inside New York City’s Chinese restaurant crisis
—All of your questions on filing taxes in 2020, answered
Subscribe to Fortune’s Bull Sheet for no-nonsense finance news and analysis daily.


fortune--2020-01-29--Billionaire Les Wexner could be stepping down as CEO of L Brands, breaking up company

Les Wexner, the longest serving chief executive officer on the S&P 500 Index, is in talks to break up Victoria’s Secret owner L Brands Inc. and potentially step down from his role leading the company, according to a person familiar with the matter.
Shares of L Brands surged as much as 15%, the most in eight months, in New York trading. The shares pared some of the gain after the Wall Street Journal reported Wednesday afternoon that L Brands is in talks with private equity firm Sycamore Partners for a stake in the lingerie business.
The stock has fallen in value for four straight years, including a 29% drop in 2019. L Brands and Sycamore Partners declined to comment.
Victoria’s Secret has reported annual sales of between $7 billion and $8 billion in recent years, but the total fell in 2018 and likely will decline again in 2019. L Brands is scheduled to report quarterly results on Feb. 26.
Between poor performance, activist pressure and questions about past association with Jeffrey Epstein, the 82-year-old Wexner had a rough 2019. The founder of the Limited is trying to turn the chain around as upstarts like Aerie and ThirdLove take market share from Victoria’s Secret. The appeal of his company’s push-up bra aesthetic has faded against competing products that are marketed as more comfortable and body-positive.
“It’s about time. As you get older, running something like this becomes a sort of hobby and it’s hard to separate yourself from it,” said Kent Kleeberger, a former executive who worked in the Columbus, Ohio, headquarters of the Limited, which was the precursor of L Brands. “But it’s time to let somebody else run it.”
Activist attention
The discussions follow pushback from activist investor Barington Capital Group, which has pushed for a spinoff of L Brands’ faster-growing Bath & Body Works chain and a board overhaul in the past.
The company’s pact with Barington is up for renewal in late February, about the same time new board members can be nominated.
Barington’s stake in the company is less than 1%. The billionaire Wexner remains its largest shareholder with a 16% stake. Nevertheless, the standstill agreement shows that L Brands saw Barington’s demands as worth considering.
The Columbus, Ohio-based company, which also owns the young-adult focused Pink brand, told investors last September it was charting a turnaround for Victoria’s Secret. The plan calls for a marketing strategy that’s more inclusive and upgrading the in-store experience, while making sure core customers don’t feel alienated.
Analysts have also floated the idea of separating Victoria’s Secret from the better-performing Bath & Body Works chain.
The troubles at Victoria’s Secret likely erode its value to potential buyers, according to Bernstein analyst Jamie Merriman.
“While a $0 price for Victoria’s Secret is likely too low, with Victoria’s Secret close to break even, we also do not expect a buyer to pay a premium for the business,” Merriman said in a research note.
Wexner’s fortune
Any sale won’t have a major impact on Wexner’s overall net worth. His stake in L Brands is just 14% of his $6.8 billion fortune on the Bloomberg Billionaires Index. That reflects a consistent selldown down of his stake over decades. He’s sold $1.8 billion of stock since 1993, according to calculations by Bloomberg.
Some of those sales were overseen by his then-money manager Epstein. “He votes the shares, I just decide when to sell it,” Epstein said in a 2003 interview. “If you take a look back, you’ll see I’ve made very good decisions.”
Epstein gave up his role managing the billionaire’s fortune in 2007 around the time of the financier’s arrest in Florida on charges he had sex with a minor. Wexner said last year that Epstein, who was found dead in his jail cell last summer, had deceived him and “misappropriated vast sums of money from me and my family.”
L Brands hired an external law firm last July to probe any ties between the company and Epstein.
Kleeberger said the ties to Epstein shouldn’t matter now.
“I think it’s been very stressful for him and even if they did find more about it, the guy is dead and it’s all history now,” he said. “People need to move on.”
The Wall Street Journal reported earlier that founder Wexner may step down as CEO and sell Victoria’s Secret. Wexner may stay on as chairman, the Journal reported.
More must-read stories from Fortune:
—Retailers reuse and recycle the way to increased growth
—Why Gap Inc. torpedoed its Old Navy spinoff
—Ganni used tech tricks to grow from cult fashion label to global brand
—Consumers turning away from real fur, but faux fur isn’t a perfect fix
—The World’s Most Admired Companies in 2020
Follow Fortune on Flipboard to stay up-to-date on the latest news and analysis.


fortune--2020-01-29--‘American Factory’ directors on capturing what ‘globalization looks like on a human scale’

It feels a bit surreal at first, but there it is, happening on-screen: The Chinese president of a Chinese-owned factory is coaching a roomful of Chinese workers on how to increase the productivity of their American coworkers, whom they work together with in Dayton.
“You need some skills to handle Americans,” says Fuyao Glass America president Jeff Daochuan Liu. “There’s a culture in the U.S. where children are showered with encouragement. So everyone who grows up in the U.S. is overconfident. Americans love being flattered to death.”
This scene is at the heart of the conflict in American Factory—the first Netflix offering from Barack and Michelle Obama’s production company, Higher Ground—which has earned an Academy Award nomination for Best Documentary Feature.
Fuyao chairman Cao Dewang (right), from Netflix’s “American Factory.” Courtesy of Netflix
In 2015, Chinese billionaire Cao Dewang reopened a shuttered General Motors plant that previously served as the lifeblood of the Dayton community. While locals who lost their GM jobs were initially enthusiastic about the opportunity to return to work, the film goes on to detail the challenges of two very different cultures and approaches to labor coming together. American Factory spans nearly three years and utilizes a fly-on-the-wall approach to documentary filmmaking. Beyond the cultural themes explored, the film poses even larger questions about the future of work as we speed toward an increasingly globalized world.
Ahead of the Oscars on Feb. 9, directors Julia Reichert and Steven Bognar spoke on the phone with Fortune to discuss the varying viewpoints of the American and Chinese subjects, the challenges in making the film, as well as the unexpected response it has received in China—even though Netflix is not available there.
This conversation has been condensed and edited for clarity.
It’s clear what the Academy thinks of the movie, but what sort of reception did you receive from the subjects of the film?
Julia Reichert: Well, starting with the high-ups at Fuyao, they were really generous and positive. I would say that their butts wiggled a few times, and they were like, “Well, I wish I hadn’t said it that way.” But honestly, overall, they said, “We want all of our Chinese staff to see this film.” The chairman [Cao Dewang] desperately wants to get it seen all over China—he’s been bugging us about it again and again. It is being seen all over China, pirated, which is good, because it’s the full version. It’s quite surprising to us. Their response has been, “We learned a lot.”
There were things that made them uncomfortable, but on the other hand, it was what they said or did. Now, the American workers, the general response has been, “Wow, you really captured it. This is really fair, and yes, this is my experience as a worker there.” Of course, in general, blue-collar folks are gonna be pranksters, and funny, and rueful. So, for example—you remember the supervisor [in the movie] who says in China to another supervisor in China, “I wish they’d put duct tape on [the employees’] mouths, because then they’d work harder”? Well, we heard that a number of workers put duct tape on their mouths that next day, after our initial screening in Dayton, to make fun of that supervisor.
Fuyao Glass America workers (from left) Wong He, Kenny Taylor, and Jarred Gibson, as seen in Netflix’s “American Factory.” Aubrey Keith—Netflix
Steven Bognar: No one’s gotten bent out of shape about something they said or did. We tried to make it nuanced and complex. The chairman in one moment could be a real driving hard-ass. A tough capitalist. And then another minute he’s reflecting on his life, questioning his choices, missing his youth when things were simpler. Everybody in the film we tried to give that level of complexity, and maybe the nonnegative response has been helped by that.
Both of you are residents of Dayton, where the factory is located. In the six months or so since the film’s release, have you observed any notable changes involving the Fuyao factory? The film ends in a state of tension, with the unionization effort quelled and the Chinese supervisors planning to fire workers in favor of automated machines.
Bognar: The factory is still going strong—they’re expanding. They just announced they’re going to hire 100 people. There was an event about a week and a half ago where the chairman came to town, and the governor of Ohio was there. Now, we’re still in touch with a lot of folks who worked on the factory floor. Depending on who you ask, people say things are better, or people say it’s more of the same. There’s a range of opinions.
Reichert: Yeah, I would say mostly the people I talk to say it’s same old, same old—things have not gotten better. Have there been any changes because of the film? It’s an interesting question, but I would say no—that we know about.
“If we lived in New York or L.A., we couldn’t have made this film—or it certainly would be a very different film,” says codirector Bognar. Courtesy of Netflix
Bognar: It may not be for us to answer actually, because we’re not in the factory anymore. I’d like to think the film really showed how hard it is to do this. How the cultural differences are far deeper than people might have assumed they would be. And that created real challenges for everybody.
Reichert: We hope the film will, in general, urge people to see what globalization looks like on a human scale. And also [inspire] a certain kind of empathy for people who do that hard labor. They’re smart people, they work really hard, and they deserve a living wage. And they’re not getting it.
Bognar: In the early days we felt like there was a lot of empathy going in both directions. The Americans could see folks like Wong, in the movie, who misses his kids—he won’t see them for two years. The Americans had real empathy for him and what he was going through. And the Chinese folks could see that the Americans had really been struggling to get decent jobs again. But then as pressure mounted and the plant was not making a profit, and everybody was getting the screws tightened on them, I feel like that empathy went away.
Workers at Fuyao Glass America, from Netflix’s “American Factory”: “[There] was an extraordinary amount of trust,” says Bognar of the level of access the filmmakers received. Courtesy of Netflix
The subjects’ trust in you is a big part of the movie, and I read about how often you visited the factory to establish a rapport, and how you brought in Chinese filmmakers to assist with telling that side of the story. You had some really candid interviews with the chairman and other higher-ups as well. Why do you think Fuyao agreed to open up so much to you?
Reichert: One factor for sure was that the chairman himself made the decision to give us access. Some Dayton business leaders came to us and said, “Hey, you made this film 10 years ago about the closing of this plant. It’s a terribly sad film. Everybody’s in tears. How about you make a film about the positive reopening?” We said, “Well, that would be really interesting, but we can take zero money from the company”—which I think surprised them. We would have to have full access, and they would have to have no editorial control.
Those were our three conditions, and it went right up to the chairman, who I believe saw the last film about that plant, and he said yes. He’s a maverick, he believes in transparency. Now, in a Chinese business, as you can imagine, it’s a privately owned business. Once the chairman says yes, the answer is yes all the way down the line. Even if people didn’t like it. Some of the vice presidents and HR people might not have liked that we were there all the time.
Bognar: There were definitely meetings where we were told, “Ah, not this one folks. Come back tomorrow.” But a key factor in our documentary practice is we just keep showing up. We were there for three years. We shot 1,200 hours of footage. We live a short 25-minute drive to that plant. If we lived in New York or L.A., we couldn’t have made this film—or it certainly would be a very different film. But the fact that we could go there constantly for three years and shoot that much footage … we had badges, we didn’t have to have a handler with us beyond the first week or so.
We could come and go whenever we wanted. It was an extraordinary amount of trust, and we tried to honor that trust by being fair. We weren’t out to make a muckraking film or a hatchet job. But I think the depth that we hopefully achieved is because we just kept showing up.
Zach Ray working at Fuyao Glass America in Netflix’s “American Factory.” Courtesy of Netflix
Reichert: It’s like we became part of the wallpaper. And the turnover there, I will say, continues to be—and was—very, very high. So after a while we were there longer than a lot of people who worked there. I don’t know how many HR people they went through, but we were there, and they’d gone through a few more. A lot of the vice presidents, supervisors rolled over, and we were just always there.
Bognar: And we also had to persuade people. We would say to people, “Look, we need you to be your authentic self, we need you to be real. And we’re trying to tell a true story here, and if you take a chance on us, we will treat you fairly—but this is historic, and it’s not going to be easy, and there might be moments where you wanna tell us to get the hell out of the room. But please let us try to tell this story, and we’ll do the best we can.”
The entire third act of the movie centered mostly on the unionizing efforts, and it sort of builds up to this climactic vote at the end. I’m sure you could only guess things would play out that way when you started filming, but at what point did you realize you wanted to structure the movie in that way, and why?
Reichert: We had zero idea there’d be a union drive. We know about unions, and it’s a big plant, but we didn’t know anything about it when we started. Within the first year or so we were presented with two things we didn’t expect: One was, this union avoidance company—consultants—which is called Labor Relations Institute, one of hundreds of such firms all across the country. Any time there’s a union drive at a big plant or even a big workplace like a white-collar workplace, they’re going to hire union avoidance people in general.
So in the editing we realized that on the blue-collar side, their complaints were being addressed by the union. The pay, the lack of advancement, and that they could fire you at will—all that stuff. The union was capturing those grievances and putting those forward. On the other side, the company hired this multimillion-dollar firm, so we could see that was coming to a head. Honestly, we were very exhausted after three years of filming, five of us in the plant, mostly daily, so this provided a really dramatic end to the plot. Then everybody gives their broad life perspective before we come to the ending, which we chose to be American workers leaving the plant going into their own lives, chatting, and Chinese workers leaving their plant and going into their own lives. The whole point of that is to say, visually, these folks have more in common than they have with their bosses.
Fuyao Glass America workers at a union organizing meeting. “We had zero idea there’d be a union drive,” says Reichert. Courtesy of Netflix
Bognar: Yeah, and their cultural differences are, at the heart of it, less than they might think. Everybody wants a decent job so they can have a decent life. This is pretty universal, and going to China was really eye-opening for us. We try not to have stereotypes, but as Americans, as Midwesterners, before we made this film, I think we were living in certain stereotypes about how folks in China are just nose to the grindstone, and they want to work hard because there’s a love of the labor. And actually I just think that’s a total bad stereotype. Chinese people work hard because that’s the societal norm, but they want to go fishing. They want to roll on the carpet with their kids. It’s a deeply human thing, it’s just that what’s normalized is different in China—12-hour days, six days a week—than it is here.
The film has made its way to China at a time of tense geopolitical relations between China and the U.S. What has been the response to American Factory in China?
Bognar: About 10 days or so after the film’s launch on Netflix, we started hearing that all over China, people were watching the movie. Now, Netflix is not in China. They’re in Taiwan and Hong Kong. So if you’re there, you can watch the movie with Chinese subtitles with all the English language dialogue. And some enterprising, I imagine, young person or people somehow bootlegged the film from Netflix, ripped it, and then uploaded it on Chinese social media sites. And then thousands of people started watching it, and then comments started coming on social media, on Weibo and other platforms. And all the hopes we had for conversations in the U.S. about the future of work, sustainability for working people … those kinds of comments were being said in China.
It was so exciting that the kinds of conversations we hoped would happen were happening there as well as here. The funny thing is filmmakers are very opposed to piracy, but in this case we’re happy because Netflix is not in China, and it’s the full uncensored movie. We never submitted it to the censorship board of the Chinese government—we didn’t want to see it censored—so we’re happy people are seeing it the way it is.
More must-read stories from Fortune:
—In the Dark podcast host Madeleine Baran on Curtis Flowers’ release, season three, and more
—The Grammys remain more of the same even amid calls for change
—Taika Waititi on Kiwi humor, directing as Hitler, and why kids should see Jojo Rabbit
—Zombi Child auteur Bertrand Bonello on colonialism, French trap music, and a “cinema of fear”
—Sundance 2020: Hunting for the next indie hit and what it may be worth
Follow Fortune on Flipboard to stay up-to-date on the latest news and analysis.


fortune--2020-01-29--The way your credit score is calculated will be changing dramatically—and soon. What to expect

Few things produce as much anxiety for the American consumer as credit scores: Being judged, by a somewhat mysterious process, with a grade that has enormous implications for your financial life.
Well, crank your anxiety up to 11, because that scoring methodology is being changed.
Credit analytics firm FICO announced it is rolling out a new version of its score, which helps lenders figure out who is a credit risk, who isn’t, and what interest rates it makes sense to charge.
Its new “10 T” score—the T stands for “Trended”—is slated to be rolled out later this year. Growing adoption of the new model is projected by early 2021.
“Traditional credit scoring looks at a snapshot of your current balances,” says David Shellenberger, FICO’s VP of product management. “Trended data, meanwhile, looks at your balances and credit limits over time.”
Specifically, a period of about 24 months. FICO spins this broader perspective as beneficial for the consumer, but really, it could be either good or bad for you.
If you have been paying all your bills on time, and your debt has been consistently heading downwards in the past couple of years—good. If you have been adding to your debt over time, or missed a payment here and there—bad.
Think of the new scoring system as an amplification of your current trendline. If you’re on a positive financial path, then you might see an upwards bump in your score of 20 points or more, as is predicted for about 40 million Americans, Shellenberger says.
Conversely, if you are on a worrisome path, you will see a downwards knock of 20 points or more—also predicted for about 40 million Americans. Meanwhile about 110 million consumers are expected to either stay the same, or see modest changes of less than 20 points up or down.
Calculating your risk of default
The main purpose of this update is to give lenders a more accurate picture of who might be at risk of default. Shellenberger says that means lenders could approve more applicants, while keeping defaults at the same level. That could also mean, of course, that access to credit could get tighter in years to come.
One way it could benefit consumers: You will not get knocked as much for temporary debt spikes, that might naturally occur over the course of a year. “If you typically rack up some debt for a summer vacation, or for holiday spending, that won’t count against you as it has in the past,” says Kendall Little, a credit card analyst for personal finance website Bankrate.com.
In terms of timing, there’s no need to press the panic button. Lenders are pretty sluggish at implementing new systems, so it’s not like 2021 is going to bring about an immediate and dramatic change in the nation’s credit landscape. Many aren’t even using the last scoring update, from five years ago.
“Most lenders are still using FICO 8, which came out in 2009,” says Little. “Based on history, they are very slow to adopt new models, so for most people this is not going to affect them in the short-term.”
That being said, it is never a bad idea to get your financial house in order, in advance of changes that are coming. The score-boosting advice is the same as it has always been: Pay your bills on time, every month. Work at eliminating revolving debt, the amount that is carried over from month-to-month.
Try not to keep opening and tapping new lines of credit, which indicates you might be in some financial trouble. Clean up mistakes on your report, which do happen, by contacting the main credit agencies (Experian, TransUnion and Equifax). And lower what’s called your overall “utilization rate,” or how much of your total access to credit you are currently tapping.
Little suggests keeping that utilization rate below 30%, with 10% or less being ideal. Ultimately you are aiming for a score of 740 or higher—don’t stress about achieving a near-perfect tally of 800 or above —which should get you access to the most attractive interest rates.
From FICO’s perspective, this is highly complicated stuff, using advanced AI to predict the creditworthiness of almost 200 million Americans. But from the consumer’s perspective, when it comes to debt, the principle remains pretty simple. Says Shellenberger: “Lower is always better.”
More must-read stories from Fortune:
—All of your questions on filing taxes in 2020, answered
—The health of the economy in nine charts
—Goldman Sachs Asset Management’s Sheila Patel on her 2020 outlook
—5 pressing questions to hone your investment strategy this quarter
—10 stocks that are poised for a stellar 2020
Subscribe to Fortune’s Bull Sheet for no-nonsense finance news and analysis daily.


fortune--2020-01-29--50 U.S. service members suffered brain injuries in Iran strike

On Tuesday the Pentagon raised the number of U.S. service members who suffered traumatic brain injuries in Iran’s missile strike to 50. This is the third time the number of injuries has been increased since missile strike hit earlier this month.
The new casualty total belies President Donald Trump’s initial claim that no Americans were harmed. Days after the attack, the military said 11 service members were injured. Last week, the Pentagon said that 34 U.S. service members were hurt.
Lt. Col. Thomas Campbell, a Pentagon spokesman, said Tuesday that 16 additional service members were diagnosed with traumatic brain injury. Of the 50, Campbell said, 31 service members had returned to duty.
The service members were treated in Iraq, or at military health centers, including Landstuhl Regional Medical Center, the largest U.S. military hospital outside the continental United States, and a U.S. military medical facility in Kuwait.
Trump had initially said he was told that no troops had been injured in the Jan. 8 missile strike on Iraq’s Ain al-Asad air base, which Iran carried out as retaliation for a U.S. drone strike in Baghdad that killed Iran’s most powerful general, Qassem Soleimani, on Jan. 3. The military said symptoms of concussion or traumatic brain injury were not immediately reported after the strike and in some cases became known days later. Many were in bunkers before nearly a dozen Iranian ballistic missiles exploded.
After the Pentagon reported on Jan. 17 that 11 service members had been evacuated from Iraq with concussion-like symptoms, Trump said, “I heard they had headaches and a couple of other things … and I can report it is not very serious.” He said he did not consider the injuries to be as severe as those suffered by troops who were hit by roadside bombs in Iraq.
Traumatic brain injury, or TBI, became a bigger concern for the military in recent years as medical science improved its understanding of its causes and effects on brain function. It can involve varying degrees of impairment of thinking, memory, vision, hearing and other functions. The severity and duration of the injury can vary widely.
The Defense Department has said more than 375,000 incidents of TBI occurred in the military between the years 2000 and 2018. The Centers for Disease Control and Prevention says a severe TBI may lead to death or result in an extended period of coma or amnesia.
More must-read stories from Fortune:
—Europe may be next in Trump’s trade war offensive
—Berlin’s “ghost” airport might open, billions over budget and 8 years late
—The long ocean voyage that helped find the flaws in GPS
—Mysterious GPS outages are wracking the shipping industry
—Into the ‘crucible’: How the government responds when GPS goes down
Catch up with Data Sheet, Fortune’s daily digest on the business of tech.


fortune--2020-01-29--Boeing reports historic earnings loss as 737 MAX costs surpass $18 billion

Boeing Co. closed the financial books on a tragic and tumultuous 2019 by revealing that total costs for its grounded 737 Max will surpass $18 billion when the tab for restarting production later this year is included.
The plane-maker is taking a $2.6 billion pretax write-down to compensate airlines for ballooning losses from a global flying ban that’s expected to stretch to midyear. Deferred production costs also grew by $2.6 billion, clipping the jet’s long-term profit potential, Boeing said in a presentation Wednesday. That’s on top of more than $9 billion in Max-related costs already disclosed.
Adding to the barrage of bad news, Boeing notched its first annual loss last year since 1997, when it shut down assembly lines amid a supplier meltdown. Looking ahead, the company expects “future abnormal costs” of about $4 billion as it slowly restarts Max production. That’s adding to the pressure on new Chief Executive Officer Dave Calhoun as he seeks to reset expectations and forge a recovery that in a best-case scenario will take years.
“We recognize we have a lot of work to do,” Calhoun said in a statement. He said the plane-maker had the financial liquidity to follow a “disciplined recovery process” and is committed to “restoring the long-standing trust that the Boeing brand represents with the flying public.”
Boeing’s troubles went well beyond the Max in a quarterly earnings report that showed sales and profit plunging because of the crisis.
“I think he’s trying to grab all the bad news that he can, put it in the current period and then get on with life,” Bloomberg Intelligence analyst George Ferguson said before earnings were announced.
In one small bright spot, however, the company burned $2.67 billion in free cash, which was less than expected by analysts.
Boeing climbed 2.5% to $324.61 at 9:35 a.m. in New York. Through Tuesday, the shares had fallen 25% since an Ethiopian Airlines jet slammed into a field March 10, killing all on board and plunging Boeing into one of the worst crises of the modern jet era. That crash came less than five months after a Lion Air jet went down off the coast of Indonesia.
Dreamliner cut
The Chicago-based manufacturer confirmed a Bloomberg News report last week that it plans a further cut in production of the 787 Dreamliner, to 10 a month early next year. And Boeing set aside $410 million for an additional orbital flight in case NASA requires the mission after the company’s Starliner spacecraft missed a rendezvous with the International Space Station last month.
Calhoun, a General Electric Co. veteran and longtime Boeing board member, stepped into the top job on Jan. 13 after Dennis Muilenburg was ousted in December. The new CEO is working to shore up confidence in Boeing, which repeatedly missed estimates for the Max’s return last year.
The company suffered further embarrassment from internal messages, which sullied Boeing’s reputation for safety and engineering prowess. Calhoun, speaking Wednesday on CNBC, said his “stomach turned” when he saw the communications.
Debt and inventory costs are swelling as mechanics tend to 400 or so newly built jets that can’t be delivered until regulators clear the Max to fly.
During the earnings call, analysts will be listening for details about Calhoun’s priorities. Other question marks include the outlook for the Max’s regulatory certification, Boeing’s strategy for restarting production and the financial impact of the crisis, said Cowen & Co. analyst Cai von Rumohr.
Cautious approach
“We think Calhoun is likely to choose cautious financial assumptions to avoid rolling resets that plagued prior CEO Muilenburg,” von Rumohr wrote said in a report earlier this month.
Boeing’s results marked a dramatic reversal from a year earlier, when the company surpassed $100 billion in sales for the first time in its history. In 2019, revenue slid 24% to $76.6 billion.
The new reduction in planned Dreamliner production further darkened the outlook for Boeing, which suspended its financial forecast last year because of the Max crisis. The company is managing its order backlog for the Dreamliner, another critical source of cash, more conservatively under Calhoun’s lead.
As announced last year, Boeing still plans to trim monthly output of the twin-aisle jet 14% to 12 by the end of this year. The planemaker said Wednesday that it will make another cut next year to 10 a month as it deals with slowing sales and lingering effects from U.S.-China trade tensions.
The production rate of the carbon-composite plane will return to 12 a month in 2023, Boeing said.
More must-read stories from Fortune:
—10 stocks that are poised for a stellar 2020
—Will retiring baby boomers crash the stock market?
—Millions have been purged from voter rolls—and may not even realize it
—Inside New York City’s Chinese restaurant crisis
—All of your questions on filing taxes in 2020, answered
Subscribe to Fortune’s Bull Sheet for no-nonsense finance news and analysis daily.


fortune--2020-01-29--Barstool Sports is selling part of its business to a casino operator in a deal that values the compa

Barstool Sports is selling part of its business to a casino operator in a deal that values the company at $450 million

Barstool Sports, the sports media site, has agreed to sell a 36% interest stake in its business to casino operator Penn National Gaming. That’s approximately $163 million in cash and convertible preferred stock. The deal would value Barstool at $450 million.
The deal would give Penn National exclusive rights to use the Barstool brand for all of its online and retail sports betting and iCasino products. In the fall, Barstool launched Barstool Bets, a platform that offers free-to-play betting contests.
“With its leading digital content, well-known brand and deep roots in sports betting, Barstool Sports is the ideal partner for Penn National and will enable us to attract a new, younger demographic, which will nicely complement our existing customer database,” said Penn National CEO Jay Snowden in a news release.
What’s interesting here is that Penn National isn’t exactly focused on Barstool’s content. It’s looking more at monetizing a cult-like, sports-obsessed audience. The partnership would allow Penn National to market its products to Barstool’s audience of nearly 66 million monthly unique visitors. According to Vox, Barstool generated between $90 million and $100 million in revenue last year, with the majority coming from podcasts, merchandise sales, and gambling deals.
I spoke with the CEOs of fantasy sports companies DraftKings and FanDuel after the U.S. Supreme Court cleared the way in 2018 for states to legalize sports betting, striking down a 1992 federal law that had banned the practice in most states. FanDuel CEO Matt King told me at the time that a market expansion like that one was bound to attract many new competitors.
Many sports publishers, including Bleacher Report, ESPN and Sports Illustrated, have established content verticals dedicated to sports betting. It’ll be interesting how many of them begin rolling out sports betting apps a la Barstool. It’s only just the beginning for this brave new world.
JOIN FORTUNE AT BRAINSTORM HEALTH: Two questions: First, where do you think a small investment in health/health care (less than $1 million) would have the greatest near-term impact? Second, where you think a large investment in health/health care ($1 billion or more) would have the greatest long-term impact?
Both questions were posed to me by Fortune’s Editor-in-Chief, Clifton Leaf, yesterday. The questions drive to a big, lasting issue: As Term Sheet readers know well, the healthcare industry is in the midst of a bottom-to-top disruption—one largely led by venture capital and private equity investment. Entrepreneurs are, in a sense, driving care to become more personalized, more mobile, more pinpoint, and more preventive in nature, and the changes are transforming virtually every aspect of the health care industry.
That’s why, five years ago, Fortune launched its famed Brainstorm Health conference—to highlight the corporate leaders, entrepreneurs, and investors who are building this brave new world. And in our 2020 event, on April 21-22, at the Ritz-Carlton in Marina Del Rey, California, we’ll get to explore how to invest in this transformation with an unbelievable list of experts, including:
— The CEOs of Amgen, Ancestry, AT&T Business, Baxter International, Beyond Meat, Box, Cardinal Health, Centene, Cisco, GE Healthcare, Levi-Strauss, Whoop, and many others;
— The leaders of Google Health, the American Heart Association, the National Institute of Mental Health, Stanford University School of Medicine, and Verily
— Investor-philanthropist-entrepreneur Sean Parker, CNN Chief Medical Correspondent Dr. Sanjay Gupta, NBA Commissioner Adam Silver;
—Co-chairs Arianna Huffington and Dr. David Agus, and dozens of other leading thinkers and builders.
If you want to join the Fortune team in Marina Del Rey this April, please shoot me a note at polina.marinova@fortune.com. It’s invitation-only, but there are a few spots left.
TIME’S UP: In partnership with Time’s Up, Fortune reached out to all the 2020 presidential candidates with a list of questions about about their policy positions related to gender equity and working families. Thirteen of the remaining 15 candidates—including President Trump—participated, with many doing exclusive video interviews. Read more.
Polina Marinova
Twitter: @polina_marinova
Email: polina.marinova@fortune.com
VENTURE DEALS
- Justworks, a New York-based HR technology company, raised $50 million in Series E funding. Union Square Ventures and FirstMark Capital led the round, and was joined by investors including Bain Capital Ventures, Index Ventures, Redpoint Ventures, Spark Capital, and Thrive Capital.
- Advano, a New Orleans-based company focused on lithium-ion battery technology, raised $18.5 million in Series A funding. Mitsui Kinzoku SBI Material Innovation Fund, Tony Fadell’s Future Shape, and People Fund co-led the round.
- Roambee, a Santa Clara, Calif.-based on-demand shipment and asset monitoring platform company, raised $15.2 million in Series B funding. Anchor Group led the round, and was joined by investors including Intuitive Ventures, Jebsen & Jessen, Telkomsel and Anant Singhania.
- Bond, a New York-based startup that offers ecommerce companies delivery and distribution center services, raised $15 million in funding. Investors include Lightspeed Venture Partners, MizMaa Ventures, and TLV Partners.
- Pecan.ai, an Israel-based deep learning platform, raised $11 million in Series A funding. Dell Technologies Capital and S Capital co-led the round.
- Nuweba, a provider of application aware serverless security services, raised $10.2 million in seed funding. Blumberg Capital led the round, and was joined by investors including Magma Partners and Target Global.
- Concentric, a San Jose, Calif.-based AI-powered enterprise data management platform to secure unstructured business-critical data, raised $7.5 million. Investors include Clear Ventures, Engineering Capital, Homebrew and Core Ventures.
- Lynq Technologies, Inc., a New York-based deep-tech startup that connects people and devices across miles without infrastructure, raised $6 million in seed funding. Investors include ff Venture Capital, Sony Innovation Fund, Chetrit Ventures, and Plus Eight Equity Partners.
- AmazeVR, a Sunnyvale, Calif.-based cloud-based platform for VR content production and distribution, raised $2.5 million in Series A funding. Investors include Partners Investment and YG Investment.
- 1Huddle, a Newark-based workforce tech company that trains and motivates employees through mobile games, raised $5 million in Series A funding. Tribeca Venture Partners led the round, and was joined by investors including Humbition, NRD Capital and Newark Venture Partners.
- Encantos, a Corte Madera, Calif.-based creator of direct-to-consumer family entertainment education brands, raised $2 million in seed funding. Kapor Capital led the round, and was joined by investors including Boston Meridian Partners, Chingona Ventures, Human Ventures, and MathCapital.
- Crown Affair, a New York-based beauty brand, raised $1.7 million in funding from Brand Foundry, Amplifyher Ventures, Thirdlove’s Heidi Zak, Create & Cultivate’s Jaclyn Johnson, Brian Spaly of Bonobos and TrunkClub, and Shiza Shahid of Malala Fund and OurPlace.
PRIVATE EQUITY DEALS
- Marlin Equity Partners acquired RevenueWell, a Chicago-based provider of cloud-based dental software. Financial terms weren't disclosed. .
- Gryphon Investors made a majority investment in PestRoutes, a McKinney, Texas-based provider of software for pest control companies. Mainsail Partners will retain a minority stake.
- Northgate Capital and Alta Growth Capital acquired a majority equity interest in USK Urresko Holding S.A.P.I. de C.V., a manufacturer serving the North American heavy truck industry. Financial terms weren't disclosed.
IPOs
- Calisen Group, a London-based smart meters supplier, plans to raise 408 million pounds ($536.28 million) in an IPO in the U.K., valuing the firm at as much as $1.87 billion. KKR backs the firm. Reuters.
PEOPLE
- Baum Capital Partners promoted Jon Biggs and Brian Coleman to principal, Sam Barton to vice president, and Samantha Carter to associate.
- Evan Cohen is joining Human Ventures as a venture partner.


fortune--2020-01-29--You might not ever notice hackers stealing your retirement savings

This is the web version of Data Sheet, Fortune’s daily newsletter on the top tech news. To get it delivered daily to your in-box, sign up here.
More and more, retirement savings accounts are becoming an attractive target for thieves.
Hackers gain access to these accounts by stealing people’s identities and login credentials. Either they buy databases of stolen passwords, which are traded on shady forums, or they “phish” people. The latter category involves tricking people into revealing sensitive information, often using bogus emails and fake websites.
Last night, I discussed this threat on Fox 5 NY, the local Fox News broadcast station. I told Ernie Anastos, the show’s host, that people should be wary of inbound emails telling them to take urgent action, even when they appear to come from trusted sources. Many phishing emails look exactly like they came from the real deal: your bank, brokerage, or email provider. “You have an important message, log in here to read it.” How do you know the prompt is not a fake—a facsimile—sent by a hacker? It’s almost impossible to tell imposters apart.
For that reason, it’s always best not to follow the links in such emails. Instead, go directly to the sign-in page of the website in question; type the web address into your browser. Otherwise, you might be led into a trap.
Why target retirement savings? People spend their lives accumulating wealth in 401k and mutual fund accounts. Often they don’t monitor these accounts as closely as they do other bank accounts. Lots of people simply “set it and forget it,” making automatic contributions out of their paychecks and assuming that the pot is growing over the long term.
Hackers exploit the cover of darkness. So as not to trip any alarms, they withdraw funds little by little. A few thousand here, a couple thousand there—and soon they’ve drained a substantial amount. Scammers thrive in the places where no one is watching.
How often do you monitor your accounts? Maybe it’s time to get into the habit of regularly checking in. Even better: Make sure each account is locked with a strong, unique password.
Recycling is for plastic, not passwords.
***
Before I sign off, here’s a note from Adam Lashinsky:
The Fortune extended family lost one of its best Monday. Xana Antunes, a Fortune editor from 2003 to 2008, was a lively, wise, funny, caring, smart-as-hell soul. She was a tough but compassionate editor, a friend, a mentor, and a helluva newswoman. I’ll never forget a Xana-ism I think of all the time. She told me once that very often the critical nugget of a story, the kernel that demands further exploration that can lead to even greater stories, is buried in the 17th paragraph or so. It was simply a damn practical piece of advice that prods me to keep reading. She was 55 and leaves behind a husband and daughter, born right around the time mine was. Those of us who knew Xana are passing around stories about how much we enjoyed working with her and how much we loved her.
Robert Hackett
Twitter: @rhhackett
Email: robert.hackett@fortune.com
THREATS
Facebook stalker. Everyone's favorite social media app released a long-awaited tool called "Off-Facebook activity," which tracks the many ways Facebook and its third parties track your online footprint. Try it out and bask in the sheer creepiness of surveillance capitalism. "Think of it more as a reminder that we’re all living in a reality TV program where the cameras are always on," writes tech columnist Geoffrey Fowler for the Washington Post.
Huawomp-womp. The U.S. failed to stop the UK from giving a green light to Huawei. The Brits will allow the Chinese company's equipment to be used in what they deem non-sensitive parts of the country's 5G networks. Senator Tom Cotton, a Republican member of the U.S. Senate Intelligence Committee, wrote on Twitter, "I fear London has freed itself from Brussels only to cede sovereignty to Beijing." Senator Mark Warner, a Democrat who chairs that same committee, described the outcome as "disappointing because the security risks are so well understood."
Jive turkeys. British and U.S. security agencies have uncovered a cyber-espionage campaign that has been advancing the interests of the Turkish government, Reuters reports. Since early 2018, the hackers have targeted at least 30 organizations, including Cypriot and Greek government email services and the Iraqi government’s national security advisor, the newswire reports. The hackers used a technique called "DNS hijacking," which involves subverting key pieces of Internet infrastructure that match websites to web addresses.
Avast ye, matey. Avast isn't the only "security" company that has been caught sharing people's data for commercial purposes. Noonlight, a company that provides a "panic button" for users of swipe-and-smooch app Tinder, has been sending people's information to Facebook, YouTube, and others, Gizmodo reports. (In the meantime, Tinder is adding its own in-app emergency button.)
SextPanther, nice.
ACCESS GRANTED
Last week we discussed the alleged hacking of Amazon founder Jeff Bezos's phone by a WhatsApp account used by Saudi Crown Prince Mohammad bin Salman. Now a New York Times reporter covering the Saudi royal family says he, too, was targeted by Saudi spyware. You can read his personal account here, or a report about the attempted hack in Citizen Lab, a spyware research group based out of the University of Toronto, here. Below is his personal account.
On June 21, 2018, I received an Arabic text message on my cellphone that read: “Ben Hubbard and the story of the Saudi royal family,” with a link for a website, arabnews365.com.I had been writing extensively about Saudi Arabia, including its royal family, and at first glance the link appeared to be a Saudi news story about my coverage — a subject that would normally grab my attention.But it also struck me as fishy, so I refrained from clicking and decided to investigate. That led me to the booming market among governments for hacking technologies and a lesson in how easily the most intimate information on our phones — chats, contacts, passwords and photos — could become a target.
FORTUNE RECON
Hackers had a banner year in 2019 by Chris Morris
The A.I. in your workplace by Ellen McGirt
Apple’s iPad turns 10: Experts look at the decades behind and ahead by Don Reisinger
Facebook’s appeals court for questionable content takes shape. Here’s what you need to know by Danielle Abril
Wawa Breach: A hacker is selling 30 million stolen credit cards on the dark web, cyber experts say by Jeff John Roberts
What Walmart and Target need to do to stay on top in a reshaped retail world by Phil Wahba
A.I. is unstoppable. And A.I. is struggling. by Jeremy Kahn
ONE MORE THING
Sara Morrison, a data and privacy reporter at Recode, fell victim to hacking too. She explains how it all went down in this post. You can learn from her lessons: Use a password manager, set up two-factor authentication on your online accounts, and, this one is good, don't save your credit information everywhere online. Of course, if you're a regular reader of this newsletter, you may have heard these tips before!


fortune--2020-01-29--Trump’s Phase One trade deal with China suffers from coronavirus spread

Two weeks ago, the U.S. and China completed a phase-one trade deal amid almost immediate doubts that Beijing’s commodity purchase pledges were achievable.
That was before a health crisis gripped the world’s second-largest economy, making it even tougher to see how the export sales that President Donald Trump said would make American farmers “so happy” will materialize.
Since then Chinese buyers have booked only modest amounts of U.S. soybeans, pork and cotton, according to government data. Sure, it’s early days and coronavirus is an ongoing emergency. Barges aren’t ordered, loaded and delivered that quickly anyway.
But markets are noticing the dearth of buying activity, wondering how big of a dent to demand the health scare will cause.
While the agreement granted grace periods of 10 days or more to sort out paperwork, traders are growing impatient to see the follow-through after China’s pledge the boost purchases of American agricultural supplies by $32 billion over two years from pre-trade war levels. The shopping list includes soybeans, grain, meat, cotton and dairy.
For those keeping score:
Futures prices for soybeans — historically the most valuable U.S. export to China — have slumped 4.4% in Chicago since the day before the deal was signed.
Hog prices — pork is the preferred red meat among Chinese consumers — are 4.9% lower over the same time period.
Cotton is down 1.4% since mid-January, after reaching an eight-month high two days before the China accord was signed.
U.S. wheat is little changed since the signing ceremony. China has indeed bought the grain, but from Australia, Canada and France as part of WTO quotas.
As the coronavirus spreads, slower economic growth and travel restrictions could limit the need for imports in China’s food pipeline. Beijing pushed for wording in the accord that ensured its purchases complied with both WTO rules and the laws of supply and demand — insulating it somewhat against unforeseen events like a demand shock.
“It is, above all, uncertainty about the effects of the increasingly widespread coronavirus and about the implementation of the Phase 1 deal agreed between the U.S. and China that is weighing on sentiment,” Commerzbank said about slumping agricultural markets in a report yesterday. “As yet, there have been no reports of any significant Chinese purchases in the U.S.”
More must-read stories from Fortune:
—Europe may be next in Trump’s trade war offensive
—Berlin’s ‘ghost’ airport might finally open, billions over budget and 8 years late
—The long ocean voyage that helped find the flaws in GPS
—Mysterious GPS outages are wracking the shipping industry
—Into the ‘crucible’: How the government responds when GPS goes down
Catch up with Data Sheet, Fortune’s daily digest on the business of tech.


fortune--2020-01-29--Debates weren’t enough, so Fortune and Time’s Up asked the 2020 candidates about gender equality

This is the web version of the Broadsheet, Fortune’s daily newsletter for and about the world’s most powerful women. To get it delivered daily to your in-box, sign up here.
Good morning, Broadsheet readers! J. Crew and the Match Group choose new CEOs, caucusing can be hard for Iowa parents, and Fortune and Time’s Up ask the 2020 candidates the questions you want answered. Have a wonderful Wednesday.
– Time’s Up and the 2020 questions we care about. As you watched the Democratic primary debates last year, did you wonder: When will these politicians answer questions about women’s working lives?
So did we. Only eight out of the 4,000 presidential debate questions asked from 1996 to 2016 addressed the core economic and workplace issues of sexual harassment, childcare, equal pay, or paid family leave, according to a Time’s Up analysis. This cycle, it took until the fifth debate for most of those issues to come up at all.
That’s why Fortune partnered with the Time’s Up Now, the nonprofit dedicated to promoting safe working conditions for women, to ask all 2020 candidates—not just the Democrats—the questions we wanted answered. Four of the 15 remaining candidates for President joined us for video interviews. Another eight answered our questions via email or recorded their own videos. Two—Republican primary challengers Bill Weld, former governor of Massachusetts, and Joe Walsh, former Illinois congressman—did not participate in any form, while President Trump answered select questions through a White House spokesperson. We’ve also published four video interviews with candidates who have since dropped out of the presidential race, but remain part of the political conversation.
This project has been months in the making, and—with the first primary less than a week away—we hope that it helps inform voters’ views on candidates. Read and watch our interviews here, and keep an eye out for those videos on Time’s Up’s social media as well.
From Pete Buttigieg’s Women’s Agenda to Elizabeth Warren’s plan for universal childcare, these are issues that are central to candidates’ visions for the country. Let’s give them the airtime they deserve.
Emma Hinchliffe
emma.hinchliffe@fortune.com
@_emmahinchliffe
ALSO IN THE HEADLINES
- J. Crew picks Jan. J. Crew has a new CEO: Jan Singer, the former Victoria's Secret lingerie chief. Singer is tasked with turning around the struggling fashion brand. Read Fortune's Phil Wahba here: Fortune
- Match Group's new match. Match Group CEO Mandy Ginsberg is stepping down after what she describes as a "personally trying" four months—a period that included a surgery. Her deputy and current president Shar Dubey will take over and lead the company through its planned spinoff from IAC. Bloomberg
- Caucus childcare. With the Iowa primary around the corner, let's talk about caucusing. The famed voting system can be incredibly inconvenient and inaccessible for parents with young children. Writer Lyz Lenz talks to moms in Iowa who can't leave their kids at home for the scheduled 7 p.m. vote: The Gazette
- Trading expertise. As part of Fortune's quarterly investment guide, chairman of Goldman Sachs Asset Management Sheila Patel shared her expectations for 2020 and her advice for aspiring traders. Early in her career, a more senior woman advised her to move from investment banking to trading to take advantage of her people skills. "I remember, as a young person, being insulted," Patel recalls. "I thought my quant skills were the most important thing. But no one should underestimate how important relationships are." Fortune
MOVERS AND SHAKERS: Former Tableau CMO Elissa Fink joined the board of directors at Pantheon.
IN CASE YOU MISSED IT
- Challenge accepted? Rep. Doug Collins made it official: he will challenge Georgia Sen. Kelly Loeffler for her newly appointed seat in 2020. Collins, a strong supporter of President Trump, had been the administration's choice for the open seat, but Georgia Gov. Brian Kemp picked Loeffler, a GOP businesswoman, for the spot instead. The challenge will likely set off a fight within the Republican Party. Washington Post
- Pocket change. Emily W. Murphy, the administrator of the U.S. General Services Administration, writes for Fortune about the $6 billion that is spent every year on the government's equivalent of odds and ends. The federal government isn't required to document via contracts spending under $10,000 that qualifies as "small purchases." Murphy argues that the government should use her administration's new technology to provide more transparency into those billions of dollars. Fortune
- What Kiwis want. New Zealand Prime Minister Jacinda Ardern will next face voters' verdict on her leadership in September. She announced the date of the country's next general election yesterday. "I will be asking New Zealanders to continue to support my leadership and the current direction of the government, which is grounded in stability, a strong economy and progress on the long-term challenges facing New Zealand," Ardern said. She has been lauded for her leadership through crises like the Christchurch terrorist attack, but faces some domestic political challenges. Guardian
- Moms wanted. Do you need a Momcation? Hotels are starting to market vacation packages designed for moms looking for a break from their spouses and kids. From the "remote you won’t have to share" and "Mom juice" (aka wine) in the rooms, these packages are quite something: New York Times
ON MY RADAR
The Wall Streeter turned sleep whisperer Ozy
State Department denies NPR reporter a spot on Pompeo's plane after heated interview NBC News
The Washington Post’s misguided suspension of Felicia Sonmez over Kobe Bryant tweets Washington Post
PARTING WORDS
"Once they got over the fact that I was a woman, and they learned they could make money with the items I was selling, I had no problems."
-Frieda Caplan, a food distributor who introduced American consumers to jicama, kiwi, and other fruits and vegetables, on the male-dominated grocery industry. She died at 96 this month.


fortune--2020-01-29--Europe opts against an outright Huawei ban, echoing the U.K.’s defiance of Trump

The European Union stopped short of an outright ban of Chinese suppliers such as Huawei Technologies Co. from lucrative 5G contracts, as warnings and threats by Donald Trump’s administration failed to convince the U.S’s closest allies to risk provoking Beijing.
In a set of commonly agreed guidelines on how to mitigate risks stemming from the roll-out of next generation telecoms networks, the EU said companies based in non-democratic countries could be excluded from the procurement of certain core components, following assessments by security agencies.
But despite intense U.S. lobbying, the so-called toolbox of measures released Wednesday doesn’t recommend a preemptive blanket ban of Chinese equipment, a decision that follows the U.K. on Tuesday allowing Huawei components into non-core networks. EU member states have until April 30 to implement the mitigating measures included in the toolbox.
The EU’s position reflects a balancing act between concerns about the risk of Chinese espionage and the bloc’s reluctance to pick a fight with its second-biggest trading partner, which has been increasingly infiltrating the continent with large-scale investment projects over the past decade. The fudge is an effort to navigate between Beijing’s warnings of repercussions if companies like Huawei were banned, and U.S. threats of sanctions, such as cuts in intelligence sharing, if Chinese equipment is used.
The policy document urges EU member states to apply ad hoc restrictions on merit for certain suppliers of key 5G components, including core, network management, access network, and orchestration functions. The assessment criteria, already published in December, include “a strong link between the supplier and a government,” and the lack of “legislative or democratic checks and balances” in the home-country of the company.
Mitigating Measures
While these guidelines may encourage some governments to restrict the participation of Huawei and other Chinese companies in parts of their next-generation broadband, they also leave room for interpretation and don’t call for a de facto ban. Decisions are left to individual member states, as the EU doesn’t have the competence to regulate centrally in this area.
The proposals also include bolstering the role of national authorities, audits of telecom operators and measures to ensure diversity of suppliers for any single telecommunications company. In addition, the EU proposes stricter screening of foreign direct investment in the area of 5G and possible anti-dumping duties and other penalties for companies benefiting from state subsidies.
“Today we are equipping EU Member States, telecoms operators and users with the tools to build and protect a European infrastructure with the highest security standards so we all fully benefit from the potential that 5G has to offer,” EU Commissioner in charge of the bloc’s internal market rules, Thierry Breton, said in a statement.
An EU diplomat said the bloc’s countries can also use other legislation, such as rules for procurement in the areas of defense and security, to further limit the use of Huawei’s equipment. The bloc is also preparing beefed up rules that would raise the price of bids placed in Europe by companies based in countries with protectionist procurement legislation, such as China.
Still, the overall stance, first reported by Bloomberg News on Jan. 22, may come as another blow to the U.S. a day after the U.K. risked a rift with President Trump by giving Huawei the green light to help develop Britain’s 5G networks. U.S. officials expressed regret at the decision even though the U.K. announced it would keep high-risk vendors out of the most sensitive core parts of its networks.
U.S. officials have long urged European governments to exclude Huawei from all sections –- core and non-core — of their networks, arguing it threatens their national security. The EU partly shares these concerns, as 5G will connect everything to networks, making societies more susceptible to sabotage and espionage.
In a review published in October, the bloc warned against a nightmare scenario whereby hackers or hostile states assume control of everything from electricity grids to police communications and even home appliances.
Huawei and Chinese officials have repeatedly denied the company poses a spying risk.