fortune--2020-07-16--Why cruise lines are fighting with passengers—and each other—over safety standards

When will it really be safe to cruise again? Until cruise operators can give a more definitive answer to their eager but vulnerable customers, they might as well be rearranging deck chairs on another famously doomed ocean liner.
Pandemic-battered cruise companies, bleeding cash and desperate to bring passengers back to their ships, this month have touted new efforts to hammer out post-coronavirus health and safety standards. “We will sail when we feel we will honor our commitment to operate in the best interest of public health,” Carnival Corp. CEO Arnold Donald told analysts during a conference call last week.
In Germany, that could be as early as next month. Carnival is planning to bring passengers back aboard three of its German AIDA ships in August, and is hoping that it can resume operations in Italy next. But in the United States—the home to more than half of all cruising customers, the functional headquarters for all the major cruise companies, and a country where COVID-19 cases are spiking again—Carnival and its competitors will remain anchored until at least late September, and quite possibly longer.
The timing for resuming operations in the U.S. will “largely be determined not only by health authorities but also society’s comfort level and acceptance with social gathering,” Carnival spokesman Roger Frizzell tells Fortune.
Now the industry’s efforts to reassure customers about the safety of cruising must overcome internal conflict, as companies diverge on how to establish safe practices, as well as mounting external scrutiny of its track record. Carnival alone, the world’s largest cruise company, is facing government investigations in multiple countries, as well as passenger lawsuits over how it handled the early days of COVID-19.
“Many people who are on these ships were loyal cruisers. They trusted these companies to protect them and to put their safety above corporate profits,” says Mark Chalos, a partner at law firm Lieff Cabraser, who represents about 100 passengers suing Carnival.
The lawsuits his firm has filed, including four class-action complaints, allege personal injuries and wrongful death after customers contracted COVID-19 aboard Carnival-owned ships, including the Grand Princess. Overall, the company is facing at least seven class-action lawsuits, as well as individual claims from more than 100 former passengers, according to a regulatory filing Friday. (Some of the individual lawsuits, claiming emotional damage inflicted by potential exposure to COVID-19, were dismissed by a California federal judge this week.)
Carnival believes the class-action claims “are without merit” and is “taking proper actions” to defend against them and the individual lawsuits, the company said in its filing. Frizzell adds that “the health, safety, and well-being of our guests and crew” is a top priority for Carnival.
Confirmed vs. suspected cases
At least 95 people have died from cases of COVID-19 linked to cruise ships, according to analysis by the Miami Herald. And almost 3,000 people developed confirmed or suspected cases of COVID-19 aboard cruise ships in U.S. waters between March 1 and June 23, according to U.S. Centers for Disease Control data released to the New York Times last month.
Carnival was the most deeply affected by these outbreaks, with people falling ill on 47 of its ships, according to the CDC data cited by the Times. The company has been under scrutiny since the early days of the pandemic, when several of its ships, including the Diamond Princess and the Grand Princess, played host to sweeping outbreaks.
Both Carnival and the Cruise Lines International Association (CLIA), the industry trade group, dispute the methodology of the CDC’s count, which includes “suspected” coronavirus cases. They argue that only confirmed cases from positive tests should be counted. Frizzell says that “only a small percentage” of Carnival’s then-105 ships had customers test positive for COVID-19, while CLIA spokeswoman Bari Golin-Blaugrund says that passengers on 48 ships were confirmed positive by testing for COVID-19, out of almost 280 total cruise ships in operation during that period.
But accurate data about the early spread of COVID-19 doesn’t exist. Widespread testing was largely unavailable to Americans during the early days of the pandemic, and is still not at the level recommended by public health authorities.
The lawsuits also allege that Carnival failed to adequately screen and quarantine customers once it became aware that it had confirmed cases of COVID-19 aboard—even though its chief medical officer had previously coauthored a paper acknowledging that “close quarters and prolonged contact among travelers on ships…increase the risk of communicable disease transmission.”
Frizzell responds that Carnival “had a number of health safety protocols implemented on our ships, well before most other travel companies,” and remained in contact with the CDC to follow its guidance “to the letter” on board.
Yet the company is also facing federal, state, and international regulatory probes. The governments of Australia and New Zealand as well as the U.S. House of Representatives and Senate are all looking into Carnival’s handling of COVID-19 on its ships, and “the investigations could result in the imposition of civil and criminal penalties in the future,” the company said Friday.
Self-imposed vs. court-ordered
For Chalos and his clients, Carnival’s actions in the early days of COVID-19 fell woefully short of safeguarding its customers’ health and safety. These class-action lawsuits include a request for “injunctive relief,” a court order for Carnival to take more proactive, specific measures about handling future outbreaks on its ships.
“At the end of the day, I don’t believe the cruise industry will go away,” Chalos says. “But if it ever expects to gain the confidence of its passengers again, cruise companies will need to change the way they do business.”
The industry already appears to be making some of those changes on its own. Last week, Royal Caribbean and Norwegian Cruise Line Holdings announced that they had enlisted several senior public health experts to advise them on new “healthy sail” standards. Their joint effort, endorsed by CLIA, promised to make its findings and future guidelines “open-source” to all cruise companies—but it did not include Carnival, which is organizing a separate set of public health experts to speak at an event next week.
“I don’t think health and safety should be a matter of competition…I’m not a supporter of that. It doesn’t make sense to me,” says James Ferrara, cofounder and president of travel agent network InteleTravel, which gets about 40% of its business from the cruise industry.
Ferrera is also on CLIA’s advisory board, and argues that health and safety work “should be done at the CLIA level, and not individually by brands or groups of brands.”
Despite these seemingly dueling efforts, none of the cruise companies or their trade group will acknowledge the potential conflict created by designating two separate groups to create safety standards. “Our cruise line members agree that health and safety should not be, and is not, a matter of competition,” CLIA’s Golin-Blaugrund says by email.
“We don’t view it at all as competition on safety and health,” a Royal Caribbean spokesman told Fortune, in a joint call with his Norwegian counterpart. “This was a case where we thought we could go farther and faster by teaming up, while still managing to keep everyone else in the industry included.”
“No one wants to compete on health or safety…and we’re all working collectively,” Carnival CEO Donald said last week, adding that the company is “working diligently to determine what enhancements to our existing protocols will best serve the interests of public health.”


fortune--2020-07-16--Hong Kong’s status as a financial capital is at risk. Can Tokyo snatch its crown?

An error in how the unemployment rate was calculated means we should be more worried than we already are

This is the web version of Eastworld, Fortune’s newsletter focused on business and technology in Asia. Subscribe here to get future editions in your inbox.
In recent weeks, Hong Kong has been hit by a chain of events some fear poses an existential threat to the city’s status as Asia’s leading financial center.
The new national security law, imposed by Beijing, grants China’s central government sweeping authority to surveil, interrogate, fine, and imprison individuals deemed a danger to national security and has cast a chill over culture and society in this freewheeling city.
The Trump administration, decrying the law as a breach of Beijing’s promise to allow Hong Kong a “high degree of autonomy” after the territory’s 1997 return to mainland sovereignty, has revoked Hong Kong’s special trade and tax relationship with the U.S. Trump has threatened sanctions against Chinese officials implementing the law and any firms that support them; Beijing vows to retaliate in kind.
The U.S.-China tussle over the city has spooked global banks and businesses operating here. A survey released this week by the American Chamber of Commerce in Hong Kong found that 76% of respondents are “somewhat concerned” or “extremely concerned” about the legislation, with 30% saying they’re considering moving assets or staff out of Hong Kong in the medium- to long-term future.
American tech companies including Facebook, Google, and Twitter have hinted they’re prepared to pull out of Hong Kong. On Wednesday, The New York Times announced plans to relocate its digital news operations for Asia from Hong Kong to Seoul.
Lawmakers in Britain, Australia, Taiwan and the U.S. all have proposed measures to take in Hong Kongers as refugees, potentially draining the city of talent. Meanwhile, Beijing has announced plans to tax Chinese citizens on their global income, a move that could increase the tax rates of many mainland bankers in Hong Kong from 15% to 45%, further fueling talk of “brain drain” from the city’s financial industry.
So is Hong Kong finished as Asia’s financial hub?
Mark Clifford, executive director of the Hong Kong-based Asia Business Council and former editor of the South China Morning Post, warned in that newspaper this week that Hong Kong “risks an accretion of damage to its international standing from people in a party who don’t understand that institutions of free press, a strong and uncorrupt civil service, and an independent judiciary system are fragile objects…” The city, he argues, stands “in danger of seeing its traditional role as a portal between China and the rest of the world destroyed.”
But I’m not so sure.
As we’ve reported in Fortune, U.S. lawmakers’ effort to chase Chinese companies off U.S. stock exchanges is likely to prove a multi-billion dollar bonanza for Hong Kong’s financial industry. There are myriad ways Beijing can channel capital and investment banking deals to the city.
And, as American Chamber of Commerce president Tara Joseph acknowledged in an Eastworld Spotlight conversation with me this week, it’s hard to imagine another city in the region capable of snatching away Hong Kong’s crown.
Singapore, most frequently touted as Hong Kong’s heir apparent, is comfortable and cosmopolitan. It offers a British-style legal system and English is widely spoken. But it’s a five-hour flight from the nearest Chinese city. And the total market capitalization of Hong Kong’s exchange, about $5 trillion, is six times that of the Singapore exchange. Hong Kong attracted 161 initial public offerings and first-time listings amounting to $40 billion last year, while Singapore drew 11 deals worth $2 billion.
Arcus Research analyst Peter Tasker argues that “the most obvious candidate” to replace Hong Kong as Asia’s financial hub is Tokyo. I agree. Tokyo is capital of the world’s third-largest economy, home to the largest pool of pension assets after the U.S., and a leading source of foreign direct investment. It helps, too, that the yen is the most-traded currency after the dollar and the euro.
I worked for the Wall Street Journal in Tokyo in the go-go years of the early 1990s when no one questioned that city’s financial pre-eminence in the region, and I chronicled the beginnings of its spectacular demise. So I’m intrigued to see that Japanese Prime Minister Shintaro Abe’s Liberal Democratic Party is drafting a plan to revive Tokyo as a financial hub. Recommendations include relaxing banking regulations and developing a stock-market link to China similar to the Shanghai-Hong Kong Stock Connect program. Another positive sign: the Financial Services Agency this week tapped Ryozo Himino, a veteran regulator and former secretary-general of the Basel Committee on Banking Supervision, as its vice minister of international affairs.
But any bid to create direct trading links between Tokyo and exchanges in Shanghai or Shenzhen would require the support of Chinese financial regulators, as would efforts to increase the number of Chinese companies traded on the Tokyo exchange. Why would Beijing help Tokyo dethrone Hong Kong as Asia’s financial center?
Japan’s biggest problem is tax. Abe has cut Japan’s corporate tax rate by about 10 percentage points to about 30% in recent years, but that’s double what businesses pay in Hong Kong. And Japan has increased the top tax rate for personal income to 55%, more than triple the rate in Hong Kong. Capital gains, which aren’t taxed in Hong Kong or Singapore, are treated as income in Japan. As Tasker admits, it’s hard to imagine that Abe will be able to sell Japan’s equality-loving voters on the idea of dishing out huge tax breaks for rich bankers and big foreign firms.
More Eastworld news below.
Clay Chandler
clay.chandler@fortune.com
This edition of Eastworld was curated and produced by Grady McGregor. Reach him at grady.mcgregor@fortune.com.
Eastworld news
Travel ban part two
The U.S. is considering a travel ban on 92 million members of the Chinese Communist Party, a policy that may exclude 270 million Chinese citizens from entering the U.S. if family members are included. In a draft of the order, the Trump administration is also mulling revoking visas for party members currently in the U.S. even though the U.S. does not have a mechanism in place for identifying active CCP members. If enacted, the “broad ban would be the most provocative action against China by the United States since the start of the trade war between the two countries in 2018,” writes the New York Times.
Grabbing for straws
Grab, the Singapore-based ride hailer active in eight countries across Southeast Asia, is facing twin existential problems: a lack of taxi-riders and dried-up funding sources amid the pandemic. As recently as 2018, the company was championed for its success in driving U.S. ride-hailing giant Uber from the region and has obtained $10 billion in investments since launching in 2014. The company’s food-delivery business has grown during the pandemic, but these gains may do little to make up the lost revenues in other areas of its business. Grab has long been unprofitable, but the pandemic may determine whether Singapore’s tech giant can survive for the long haul. Southeast Asia Globe
Holding the fort
In 2008, Huang Guangyu, the trash collector-turned-billionaire founder of GOME Electrical Appliances, was arrested for bribery and insider trading and sentenced to 14 years in prison, an unusually harsh sentence in China for white collar crime. At the time, his wife, Du Juan, told him that “when you return, I will give you a better GOME,” and took the reins of the appliance empire. She faced a steep challenge in trying to right the ship of the recently disgraced firm but managed to hold steady in appliance sales, expand into areas like real estate and telecoms, and attract hundreds of millions from e-commerce giants like JD.com. Huang was just released from jail in June a few years ahead of schedule because of good behavior, which sent GOME shares skyrocketing on Hong Kong’s stock exchange. Sup China
Hong Kong Autonomy Act
Chinese and foreign banks in Hong Kong are on high alert after U.S. President Donald Trump signed the Hong Kong Autonomy Act into law on Tuesday. The law sanctions individuals, entities, and financial institutions that are involved in the “erosion” of Hong Kong’s autonomy. In the weeks preceding the law’s passage, numerous Chinese and foreign banks prepared contingency plans and reviewed their client bases to identify customers who may be targeted by the U.S. sanctions. Yet complying with the potential sanctions may also mean violating Beijing’s new national security in Hong Kong, which has the power to imprison those found to be colluding with foreign powers. Fortune
Coronavirus by country (or special administrative region)
Life had basically returned to normal Hong Kong in recent weeks. Bars were full, beaches were packed, and morning subway commutes had returned to crowded pre-pandemic levels. Yet after months of almost no local virus transmission, the city of 7.5 million residents has recorded a spike in over 200 cases in the last week. There has been a steady rise in cases in Hong Kong via travelers returning to the city from abroad, but authorities have struggled to determine the source of the new outbreak, forcing the government to reinstitute social distancing measures like restaurants restrictions, gyms and cinemas closures, and work-from-home schemes. In total, Hong Kong has recorded 1,589 confirmed cases of the virus since the onset of the pandemic in January, fewer than state-wide totals in 47 of the 50 U.S. states. Yet Hong Kong shows that even when the virus appears to be stamped out, it finds a way to re-emerge. South China Morning Post
Markets and movers
Jio Platforms – On Wednesday, Google announced that it will invest $4.5 billion to take a 7.7% stake in Jio Platforms, the telecoms and digital arm of the Indian conglomerate Reliance Industries Limited. Google also announced that it will work with Jio Platforms to build a new affordable phone for the Indian market. Fortune
Luckin Coffee – There is a mystery as to who is in charge at the Chinese coffee chain after co-founder and former chairman Charles Lu lost control of his shares following a recent court ruling. The company, which was found to have been fabricating its financial results four months ago, has now called in liquidators to oversee a corporate restructuring in an attempt to salvage its business. South China Morning Post
Flipkart – The Indian e-commerce giant, now valued at nearly $25 billion, raised an additional $1.2 billion in a funding round led by Walmart, Filpkart’s majority stakeholder. As Flipkart aims to expand its presence in India’s booming e-commerce market, the company faces stiff competition from Amazon and JioMart, which is backed by Facebook and Google via Jio Platforms. Deal Street Asia
Huawei – The U.K. decided on Tuesday that it will block Chinese telecom giant Huawei entirely from building its 5G network, tearing up earlier plans that would have allowed Huawei to construct non-sensitive portions of the 5G infrastructure. South China Morning Post
Bytedance – The embattled owner of Tiktok has plans to expand in China, and will resist pressures to sell its U.S. operations amid calls to ban the app in the U.S. The U.S. Senate is likely to vote on a bill soon that would ban Tiktok on devices issued by the U.S. government. The Information
Final figure
3.2%
China’s economy is growing again. On Thursday, China released second quarter GDP figures that showed its economy grew by 3.2% in comparison to the same period last year. The rate exceeded forecasts and marks a rapid turnaround from the country’s performance in the first quarter, when GDP fell by 6.8% amid lockdowns imposed during the pandemic. Still, China’s economy remains far from its pre-pandemic growth rate of around 6.1%. Retail sales fell by 3.9% in June in comparison to the previous month signaling that Chinese consumers are struggling to return to pre-pandemic confidence levels. Fortune


fortune--2020-07-16--An EU court just killed a vital U.S. data-sharing agreement. Some say global trade is at risk

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Europe’s highest court just ushered in a nightmare for thousands of American companies, big and small.
Some companies now find themselves immediately unable to legally serve users in the EU. And many Big Tech titans, starting with Facebook, could soon be in the same boat.
It’s all thanks to U.S. surveillance laws, which do not give Europeans a chance to control the collection of their data by American intelligence agencies.
On Thursday morning, the Court of Justice of the European Union (CJEU) struck down a 2016 data-sharing deal between the U.S. and EU, because it could not guarantee the data-protection rights of Europeans when their data goes across the Atlantic, as happens whenever they, for example, use a popular site like Facebook or Google.
The Privacy Shield deal gave American companies a relatively hassle-free way to serve EU users. Under EU law, Europeans’ personal data is only supposed to go to outside countries that have similar data protection rules to those in the EU. The U.S. lacks a strong federal privacy law and therefore doesn’t qualify—so the U.S. and EU agreed on the Privacy Shield register as a way for U.S. companies to say that they adhere to EU-grade privacy rules, even if U.S. law does not.
More than 5,000 companies had signed up for Privacy Shield, and now, with today’s ruling, it’s gone. (Confusingly, though, the U.S. Department of Commerce says it will continue to administer the program, even though it is no longer recognized by the European side.)
The now-stricken deal was itself the replacement for a very similar arrangement, Safe Harbor, that the CJEU also struck down almost five years ago, in what is essentially the same long-running case.
Anti-Facebook crusade
The man behind that case is an Austrian lawyer and activist named Max Schrems, who has been using Facebook since 2008 and is on a crusade to protect the data he gives the company. To do this, he’s had to get the privacy regulator in Ireland—where Facebook has its international headquarters—to deal with his complaint.
Schrems’s first trip to the Luxembourg-based CJEU was the result of the Irish watchdog telling him to get lost, because Facebook had signed on to the Safe Harbor register. In 2016, the court not only said the Irish Data Protection Commission (DPC) did have to investigate Schrems’s complaint—which was sparked by the surveillance revelations of NSA whistleblower Edward Snowden—but it unexpectedly struck down Safe Harbor with immediate effect, because the deal did not actually protect Europeans’ rights as it claimed to do.
This is largely because of programs such as the now-expired PRISM, which allowed agencies such as the FBI to look at foreign users’ messaging data on platforms such as Google and Facebook.
As the U.S. and EU scrambled to come up with a replacement for Safe Harbor, Schrems went back to the Irish DPC. By this point, Facebook was taking no chances, and was relying on a separate legal mechanism to keep its data transfers legal—so-called standard contractual clauses or SCCs, which are a relatively expensive and time-consuming alternative to Safe Harbor.
The terms of SCCs allow a European regulator to suspend data transfers out of the EU if the destination country doesn’t adequately protect that data. But rather than taking this route, the Irish DPC decided to challenge the existence of SCCs as a whole—it essentially sued both Schrems and his nemesis, Facebook.
And that’s how the case ended up back at the CJEU.
‘100% win’
Schrems got exactly what he wanted from the court. Privacy Shield is immediately canceled, but standard contractual clauses are not.
On Thursday morning, the court said SCCs remain valid precisely because they allow a data protection authority to suspend data flows, if the company using the SCCs either breaches its terms or if it is “impossible to honor them” because of the laws in the country to which the data is flowing.
Given that the court slammed U.S. privacy and surveillance laws when striking down Privacy Shield—it said there still weren’t enough limits on U.S. intelligence agencies’ access to Big Tech’s user data, and that Europeans didn’t have a meaningful way to complain about that access—it follows that any company relying on SCCs for their EU-to-U.S. transfers is potentially in trouble.
After a first read of the judgement on #PrivacyShield it seems we scored a 100% win – for our privacy
The US will have to engage in serious surveillance reform to get back to a "privileged" status for US companies.
More details here: https://t.co/t7LFgE7LmT#ThanksToEveryone! — Max Schrems 🇪🇺🇦🇹 (@maxschrems) July 16, 2020
Without SCCs, a company like Facebook may have to set up functionally separate operations in Europe in order to keep operating there.
“Like many businesses, we are carefully considering the findings and implications of the decision of the Court of Justice in relation to the use of Privacy Shield, and we look forward to regulatory guidance in this regard,” Facebook associate counsel Eva Nagle said in a statement. “We will ensure that our advertisers, customers, and partners can continue to enjoy Facebook services while keeping their data safe and secure.”
The Irish Data Protection Commission had yet to respond to the ruling at the time of writing.
In Schrems’s words on Thursday, the court is “telling the Irish DPC to do its job after seven years of inaction” and stop Facebook from sending European users’ data back to the U.S. “The judgment makes it clear that companies cannot just sign the SCCs, but also have to check if they can be complied with in practice,” he said.
“It is clear that the U.S. will have to seriously change their surveillance laws, if U.S. companies want to continue to play a major role on the EU market.”
However, the effects of Thursday’s decision could have ramifications for companies in other countries, too.
Peter Swire, a senior counsel at law firm Alston & Bird and a former U.S. negotiator on data privacy with the EU, reckons the ruling “appears to put global trade at risk” where countries such as China and Russia are concerned.
“China has far fewer surveillance limitations than U.S. law,” Swire—whom Facebook called as an independent witness in this case—said. “If the data protection authorities make individual findings about difficulties in sending data to the United States, then they seem obligated under the court’s decision to similarly block transfers to most other countries in the world.”
After the Brexit transition period runs out at the end of 2020, the U.K. could find itself being one of those countries.
One peculiarity of the situation is that the EU cannot block data transfers between its own member states, whatever surveillance laws those countries have. But it can block data transfers to outside countries. After this year, the U.K. will be an outside country, and many argue that its surveillance activities will create problems.
Need for reform
Microsoft finds itself in a situation similar to Facebook’s, even though it had nothing to do with this case. Microsoft, like Facebook, has been using SCCs and Privacy Shield to shore up the legality of its EU-U.S. data transfers.
“We want to be clear: If you are a commercial customer, you can continue to use Microsoft services in compliance with European law,” wrote Microsoft chief privacy officer Julie Brill in a blog post. “The court’s ruling does not change your ability to transfer data today between the EU and U.S. using the Microsoft cloud.”
The key word in that post is “today”: Microsoft’s SCCs remain valid, but if Facebook’s SCCs fall, then Microsoft’s could soon follow.
That is, unless the U.S. changes its ways.
“U.S. surveillance violates fundamental privacy rights and continues to be a massive financial liability for U.S. companies trying to compete in a global market,” said Ashley Gorski, a senior attorney with the American Civil Liberties Union (ACLU), which testified in the case.
“Unless Congress swiftly acts to enact comprehensive surveillance reforms,” she said. “U.S. businesses will continue to pay the consequences.”
“Our customers can be assured that we are committed to ensuring their data will continue to flow through our services, that we’ll continue our work to provide greater protections based on the issues raised in today’s ruling, and that we’ll work collaboratively with governments and policymakers as they shape new approaches,” Microsoft’s Brill wrote.
U.S. Commerce Secretary Wilbur Ross said in a statement that the U.S. government is studying the ruling to “fully understand its practical impacts.”
Said Ross: “We have been and will remain in close contact with the European Commission and European Data Protection Board on this matter and hope to be able to limit the negative consequences to the $7.1 trillion transatlantic economic relationship that is so vital to our respective citizens, companies, and governments.”
This article was updated to include Facebook’s comment.


fortune--2020-07-16--The Best Workplaces in New York rise to the challenges of COVID-19 and beyond

New York is famous for its creativity, its moxie, its larger-than-life-ness.
Those traits have been in full effect at the Best Workplaces in New York state and the tri-state area during the past few challenging months—a period when the New York region was an epicenter of the COVID-19 pandemic.
Fortune and Great Place to Work just named the Best Workplaces in New York. The 70 organizations on this list earned their spots based on data collected prior to the health crisis. But leaders and employees at the Best Workplaces in New York have stood out for their resilience, generosity and imaginative responses to the pandemic, resulting economic downturn and more recent racial justice protests.
Here are a few of the striking ways these organizations have cared for employees, for customers, and for the community amid turbulent times.
Blanket forts at LaBella Associates
Rochester, N.Y.-based engineering firm LaBella Associates is one of many Best Workplaces in New York that has taken its social responsibility seriously during coronavirus crisis. Employees donated more than $15,000 to its national United Way campaign—a record amount for the company.
But the organization also tapped into its playful side to help employees stay loose amid stressful weeks. To celebrate National Architecture Week in April, LaBella challenged employees to construct blanket forts at home with their families. Employees submitted photos of the completed forts and a fake real estate listing highlighting features of the fort.
“This spacious blanket fortress comes with plenty of scooter parking and a guard dog to keep all your toys safe,” read one employee’s fort description. “A secret tunnel leads to a ball pit bunker in the event you just need to escape chores—your parents will be virtually incapable of finding you!”
Combating discrimination at Cooley
Law firm Cooley has made racial justice and inclusion central in recent months. As part of Asian American and Pacific Islander Heritage Month, Cooley’s diversity & inclusion team invited Dr. Russell Jeung, professor and chair of Asian American studies at San Francisco State University and a leading academic authority on COVID-19-related anti-Asian discrimination, to present his research findings on the political rhetoric and media representation of the disease, as well as actions citizens can take during this critical time. More than 600 employees tuned into the virtual presentation.
In the wake of the killing of George Floyd, Cooley also was among the organizations to publicly commit to continuing the fight for racial justice and a more equitable society for all. Cooley’s Black Attorney Affinity Group compiled and distributed a comprehensive “Allyship & Anti-Racism Resource Kit” filled with literature, documentaries, films, organizations, and charities to deepen and expand the understanding of allyship and what it means to be anti-racist and to encourage education, engagement, and action.
Putting people first at PwC
Employees at the professional services firm were able to breathe easier at the outset of the pandemic. Their U.S. Chair and Senior Partner, Tim Ryan, came out early during the pandemic and announced that PwC would honor entry level offers to graduating students, make full-time job offers to their summer 2020 interns—and that job cuts would only come as a last resort.
“At PwC, we have adopted the principle that we will only consider laying off employees as a last resort,” Ryan wrote in a LinkedIn post. “We are grateful that our people have adapted quickly to the ‘new normal’ of serving our clients remotely. Ultimately, we recognize that if we attempt to protect our profits this year by sacrificing our people, we may lose out both in the short and long run.”
Ryan, with his team, have also personally led weekly town halls throughout the pandemic—addressing the firm’s commitment to safety and well-being, serving clients virtually—and more recently leading discussions on racism.
At the same time, PwC has not scrimped on charitable efforts. The PwC Charitable Foundation, Inc. has committed over $3.5 million to support at-home learning for underserved students, reduce food insecurity and help deliver critical protective equipment to healthcare workers. Most recently, the firm released bold actions to tackle racism across America.
Giving credit where it’s due at ESL Federal Credit Union
Faheem Masood, CEO of ESL Federal Credit Union made a pledge similar to Tim Ryan’s. Early in the pandemic, Masood assured employees of the Rochester-based credit union that they would continue to receive their full pay during the crisis—even if not working all of their normally scheduled hours. ESL Federal Credit Union also continued with its normal merit increase process, despite the crisis. What’s more, it awarded a $1,000 bonus to employees.
The organization also prioritized employee safety. Measures included social distancing in ESL headquarters and branches, as well as steps to protect front-line employees. ESL maximized services in its drive-up lanes, limited services in our branch lobbies by making them available by appointment only, and required front-line employees and customers to wear masks in a branch.
Even as it has focused on employees, ESL has looked out for customers. It waived many fees for customers and offered numerous ways to help with financial hardships they encounter—such as personal and business loan deferment, mortgage forbearance up to 180 days, and no negative impact to credit reports for those using hardship offerings.
Helping employees and their families at Noom
Noom, which helps people build healthier habits to lose weight, helped its employees navigate prolonged periods of remote work. For the roughly 160 employees based at Noom’s headquarters in New York City, the company provided $1,000 for work-from-home materials and furniture, as well as suggestions for how to set up a productive workspace.
Since the headquarters team had become accustomed to daily office lunches provided by Noom’s in-office chef, the company also provided employees with a recurring $300-per-month food budget to ensure they have access to healthier foods.
Noom’s 1,700 full-time, remote coaches throughout the U.S. were already accustomed to working from home. Still, the company recognized that many of these employees faced the challenge of working in a more-crowded-than-usual household. To help, Noom sent 300 laptops and tablets to coaches’ family members who were also looking for ways to stay engaged with friends and family during the day.
Click here for the list of the 40 Best Large Workplaces in New York and the 30 Best Small and Medium Workplaces in New York lists.
Great Place to Work is the global authority on workplace culture and partners with Fortune to produce a variety of Best Workplace lists, including the annual Fortune 100 Best Companies to Work For ranking.


fortune--2020-07-16--The roller coaster ride may not be over

The roller coaster ride may not be over

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Good morning.
I caught up yesterday with Jim Loree, CEO of Stanley Black & Decker, who has been on a roller coaster ride recently that makes Cedar Point seem tame. The $24 billion market cap company saw sales nosedive after the pandemic hit, and its stock followed suit, losing more than half its value. “We were at the edge of the abyss,” he says.
But then in late April, the company started to see U.S. tool sales by way of Home Depot, Lowes and Amazon shoot up, with growth numbers “we’ve never seen in our lifetime.” What happened? “There’s been a reimagination or a reconnection with the home,” he says. “That works extremely well for our tool business. It also works well for the outdoor business.” He expects much of that to continue. “I think this reconnection with the home is going to be a semi-permanent sort of change.”
Loree added a note of caution that I’m hearing increasingly from U.S.-based CEOs. “I have an ominous sense about what is happening in the U.S., in terms of a second wave, or a continuation of the first wave,” he said. The roller coaster ride may not be over.
By the way, Loree mentioned the $600 unemployment benefit “has not helped” his efforts to keep his factories up and running and fully staffed in the U.S. “Some employees can make more money by staying home.” That’s the subject of a hot debate in Congress this week. Fortune’s Lance Lambert breaks it down, here.
More news below.
Alan Murray
@alansmurray
alan.murray@fortune.com
TOP NEWS
Datamageddon
The EU's top court has struck down the U.S.-EU Privacy Shield deal, which gave American companies an easy way to legally handle Europeans' personal data. Big companies can still use an alternative mechanism, but even that may not work for them soon—unless the U.S. reforms its privacy and surveillance laws, its tech industry may soon find it extremely hard to serve EU users. Fortune
Twitter breach
Twitter got hacked, bigtime. The attackers were able to commandeer the accounts of everyone from Joe Biden and Jeff Bezos to Apple and Uber—and they used that access to pump out messages urging people to send cryptocurrency to a certain address, for which those people would receive double the money in return. The scam netted over $100,000 in a few hours. Fortune
China growth
China's economy is growing again—Q2 was 3.2% up on the year before. It's the first major economy to do so since the pandemic struck. Sequentially, it was an 11.5% rebound; Q1 had of course seen a 6.8% contraction due to China's earlier-than-the-rest-of-us shutdown. Manufacturing has been slowly recovering, and exports and imports finally started growing last month too. Fortune
Apple tax
Apple's almost-$15 billion Irish back-tax bill has been cancelled, for now. One of the EU's highest courts yesterday annulled a 2016 European Commission decision that said Ireland had given Apple illegal state aid by allowing its Irish subsidiaries to pay a very low effective tax rate. The court said the Commission hadn't proven Ireland gave Apple any special advantage. The Commission can now appeal, though—and it's also trying to stop EU countries from heavily undercutting their peers on the tax front. Fortune
AROUND THE WATER COOLER
WeChat shopping
Tencent's WeChat has gained an ecommerce feature that lets merchants build virtual shops in the messaging app without the need for outside developers. It's a challenge to rivals Alibaba and JD.com. Merchants won't have to pay service charges, so the move could attract smaller businesses (Alibaba's platforms charge fees.) CNBC
Wirecard loan
The Wirecard scandal continues to deepen. Now it has emerged that former CEO Markus Braun borrowed around $40 million from the payment group's banking arm in January, causing major board ructions and prompting a review from Bafin, Germany's financial regulator (which, in the wake of the Wirecard collapse, is now itself under scrutiny.) Braun's lawyer says he repaid the loan in March. Financial Times
Vaccine development
Sanofi CEO Paul Hudson writes for Fortune that, when the COVID-19 pandemic has truly passed, the pharma industry must invent a "new normal" that capitalizes on the accelerated drug development and approval processes we are witnessing now. Hudson: "The pandemic has proven beyond a doubt that as an industry, we can move together at unprecedented speed." Fortune
Without CARES
What would have happened if the CARES Act and other stimulus measures had not been passed, parceling out assistance as the pandemic gathered speed in the U.S.? Bank of America asked that question and reckons the S&P 500 would have plummeted to 1,720 (it's now above 3,200.) There would obviously have been a huge impact on jobs and public health, too. Fortune
This edition of CEO Daily was edited by David Meyer.


fortune--2020-07-16--Sweden defends its COVID strategy even as the mortality rate surpasses the U.S. and herd immunity re

Sweden defends its COVID strategy even as the mortality rate surpasses the U.S. and herd immunity remains elusive

Swedish Prime Minister Stefan Lofven said he’s in no doubt his country’s highly controversial strategy for fighting Covid-19 remains appropriate.
Lofven, who has seen his popularity flag as Sweden’s decision not to impose a proper lockdown was followed by a spike in deaths, said he still thinks “the strategy is right, I’m completely convinced of that,” according to an interview with Aftonbladet.
The comments follow signs that, despite much higher rates of exposure to the coronavirus in Sweden than in many other places, immunity remains elusive. Meanwhile, Sweden’s mortality rate per 100,000 is higher than that in the U.S.
Immunity Puzzle
Far greater numbers of Swedes have tested positive for Covid-19 than elsewhere in the Nordic region. But Sweden remains a long way off achieving so-called herd immunity, according to the latest data.
“We know that large parts of the population are unprotected, as they haven’t been infected,” Karin Tegmark Wisell, head of the Public Health Agency’s microbiology department, said on Tuesday. That means there remains a “large susceptibility in the population,” she said.
Data published by the agency in June indicated that about 10% of people in Stockholm—Sweden’s worst affected area—had developed antibodies to Covid-19. In the past four weeks, 17.6% of the more than 140,000 who signed up for free antibody tests in the capital region returned a positive result.
But there are plenty of caveats to figuring out how immunity works when it comes to Covid-19. Data from other coronaviruses suggest that an infected person would have some degree of immunity after recovering, though it’s hard to be sure, according to Maria Van Kerkhove, the World Health Organization’s technical lead officer on Covid-19.
“We do expect people infected would mount some level of immune response,” Kerkhove said at a briefing on July 13. “But we don’t know how strong the protection is or how long it may last.”
In a recent study, researchers at King’s College found that levels of immunity dropped drastically only three months after infection.
Unfortunate Outcome
“Of course, it is unfortunate,” Tegmark Wisell said of the study’s results. “It indicates that the protection from antibodies doesn’t last very long, but there are other parts of the immune system that give protection, for example T-cell response and cellular immunity.”
The concept of herd immunity is a controversial one, and Swedish public health experts have consistently denied that achieving it was ever a stated goal.
Last week, 23 academics who have emerged as the most vocal local critics of Sweden’s Covid-19 strategy, wrote an opinion piece lambasting the country’s approach. They questioned the idea that herd immunity was never a goal, calling it a “stealth strategy,” whereby authorities deliberately sought to expose large numbers of the population to the virus.
Sweden had the highest rate of new cases of all European Union states, barring Luxembourg, in the past couple of weeks. That partly reflects that the country finally, after many false starts, has been able to ramp up testing. However, it also indicates that the the virus remains more widespread than in most countries that have implemented more stringent measures.
The group of 23 critics, many of whom have advocated for a stricter lockdown, say Sweden should now consider a range of measures to save lives. These include quarantines for asymptomatic people who have been in contact with an infected person, and recommendations that face masks be used in public.
Face Masks
The question of face masks has proved particularly thorny in Sweden, with the chief epidemiologist, Anders Tegnell, publicly dismissing their effectiveness early on during the pandemic. More recently, he seemed to backtrack somewhat, but stopped short of recommending their use.
Masks are now recommended by the WHO, and authorities in the U.S. and the U.K. advise that people use them when social distancing is difficult to do.
“Asymptomatic spread and face masks are terms that have been stigmatized, and we need to remove that stigma,” said Bjorn Olsen, a professor of infectious diseases, who is part of the group of 23. He says seeing Anthony Fauci, the director of the U.S. National Institute of Allergy and Infectious Diseases, wearing a face mask sends “a very clear signal, and Sweden shouldn’t believe we have better information than he has.”
Tegnell has argued that the evidence on masks is thin, and says that using them might even create a false sense of security, leading people to neglect essential measures such as hand-washing and social distancing. But a review of 172 studies funded by the WHO concluded that mask-wearing protects against Covid-19 transmission.
Tegmark Wisell said distancing remains the most effective way to prevent infection. But she also said her agency plans to review how to tackle situations in which distancing isn’t an option, “and whether face masks can be of any help.”
Olsen, an early critic of Sweden’s Covid-19 strategy, fears that regardless of immunity levels, it will take a long time for the pandemic to run its course in the country. Though a lockdown would have been the right thing to do when the virus broke out, he says it’s too late now to impose one.
“That train left the station in March, and we dropped the ticket on the platform,” Olsen said. “If we had done it then we would have come out of this very differently.”


fortune--2020-07-16--The global stocks rally takes a breather even as China and Goldman Sachs score big beats

This is the web version of the Bull Sheet, Fortune’s no-BS daily newsletter on the markets. Sign up to receive it in your inbox here.
Good morning, Bull Sheeters. We’re awash in red this morning. From Shanghai to the U.S. futures, shares are down. That’s despite impressive data out of China today and Goldman’s big earnings beat yesterday.
Let’s check in on the action.
Markets update
Asia
The major Asia indexes are down in afternoon trade with the Shanghai Composite off 4.5% . SHCOMP has slumped nearly 7% in the past five days.
are down in afternoon trade with the off . SHCOMP has slumped in the past five days. Chinese stocks are sinking even as China’s GDP grew 3.2% last quarter, defying a global downturn. Exports of laptops and medical equipment was particularly strong.
grew last quarter, defying a global downturn. of laptops and medical equipment was particularly strong. There’s a big exception to today’s slump: China’s biggest chipmaker, Semiconductor Manufacturing International Corporation, made its market debut on Thursday and shares promptly soared 245%. It was the country’s biggest IPO in a decade.
Europe
The European bourses fell at the start with the benchmark Stoxx Europe 600 down 0.6% .
fell at the start with the benchmark down . The ECB meets today, but don’t expect any fireworks from central bank president Christine Lagarde . No change is expected in the emergency bond-buying program even as the economy remains sluggish.
meets today, but don’t expect any fireworks from central bank president . No change is expected in the program even as the economy remains sluggish. The big brewers are having a bad pandemic. Heineken shares are down 4% after the Dutch brewer reported dismal first-half results. Sales sank 53% as the impact of shuttered bars, restaurants and pubs continues to soak the business.
U.S.
U.S. futures point to a weak open. On Wednesday, the major averages finished higher—including the Dow, up for a fourth-straight day—boosted by Goldman Sachs‘ knockout earnings and the Moderna vaccine trial news.
point to a weak open. On Wednesday, the finished higher—including the Dow, up for a fourth-straight day—boosted by Goldman Sachs‘ knockout earnings and the Moderna vaccine trial news. Twitter shares were down more than 3% in pre-market trading after the social media platform suffered a massive hack attack.
in pre-market trading after the social media platform suffered a massive hack attack. It’s another packed earnings day. Among the big names reporting is stay-at-home darling Netflix. The streaming service is forecasting another big jump in subs. Here’s how big.
Elsewhere
Gold is down.
is down. The dollar is up.
is up. Crude is down ahead of an OPEC committee meeting in which producers are expected to open the taps a bit wider beginning next month.
***
The most crowded trade in history
Gold? Corporate bonds? Nope, it’s tech stocks. Some 74% of fund managers said U.S. tech stocks are the most “crowded trade” out there these days. That’s according to Bank of America’s latest fund manager survey. (I covered part of the findings of that packed report here yesterday.)
In fact, BofA says that as “longs” go, U.S. tech stocks are “the longest long of all-time.” Which is a long way of saying it’s the highest reading in the survey’s history. And it’s not even close (as this BofA graphic shows).
COVID is forcing investors to throw out the crisis-investing rule book. That, during a health crisis, a batch of equities—FANG stocks, mainly, but also stay-at-home wonders like Spotify—are viewed as a safer investment than gold, cash or Treasurys must be making veteran fund managers gasp.
Not surprisingly, the overwhelming majority now think stocks are way too expensive—(nearly) historically so.
The price sensitivity could impact this long-trade in the months to come. Sentiment is extremely cautious, and BofA fund managers report they’ve increasingly moved into cash. Cash holdings are now above the 10-year average.
That is what the pros are saying.
Meanwhile, in Robinhood land, they’re riding out the pandemic by piling into Tesla. The higher the price of TSLA goes, the more they pile in.
I’m sure they’re both right.
***
Have a nice day, everyone. I’ll see you here tomorrow.
Bernhard Warner
@BernhardWarner
Bernhard.Warner@Fortune.com
A note from my Fortune colleagues on a timely new initiative:
Many companies are speaking out against racial injustices right now. But how do they fare in their own workplaces? Black employees in the corporate world, we want to hear from you: Please submit your anonymous thoughts and anecdotes here. https://bit.ly/WorkingWhileBlack
As always, you can write to bullsheet@fortune.com or reply to this email with suggestions and feedback.
Today's reads
Up in smoke.“If you want to be a millionaire, start with a billion dollars and launch a new airline.” The immortal words of Richard Branson never rang so true as today during the COVID crisis. The number of billionaires losing their shirt on airlines investments continues to climb... and climb and climb.
The great hack. Twitter fell prey to the greatest hack in its history yesterday with various celeb accounts hijacked by apparent bitcoin scammers. How much loot did the fraudsters make in the high-tech ruse? Fortune's Jeff John Roberts breaks down the numbers.
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Market candy
S&P 1,720
The S&P 500 closed yesterday at [checks notes] 3,226.56. But the benchmark could just as easily be trading sub-2,000 had Congress and the White House failed to reach an accord on the CARES Act back in late March. Bank of America goes back in time to calculate the carnage to your stock portfolio had that $2.2 trillion law never been passed. If you're a fan of horror flicks, you should check it out.


fortune--2020-07-16--China’s national champion chipmaker becomes its  biggest listing in a decade

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China’s biggest chipmaker debuted in Shanghai on Thursday in the country’s biggest initial public offering in a decade.
Shares in Semiconductor Manufacturing International Corporation (SMIC) jumped 245% at the opening of SMIC’s first day on Shanghai’s tech-focused Star market board, which has no trading limits for a stock’s first five days. Having raised the equivalent of $7.6 billion before the listing, SMIC’s Shanghai debut was China’s biggest stock sale since the Agricultural Bank of China’s IPO in 2010.
The Star board fast-tracked the listing; the float occurred 19 days after SMIC applied to list on the Nasdaq-like Star board, quicker than the standard monthslong approval time.
The Shanghai debut was a secondary listing for SMIC, which dual-listed on the New York Stock Exchange (NYSE) and Hong Kong’s stock exchange in 2004, but delisted from the NYSE last year. SMIC shares in Hong Kong on Thursday fell 17%.
SMIC’s stellar Shanghai debut could provide confidence to other U.S.-listed Chinese companies looking to list closer to home, especially at a time when the U.S. government has threatened to delist Chinese companies trading on U.S. exchanges.
As China’s largest chipmaker, SMIC is crucial to China’s goal of fostering a self-sufficient domestic chipmaking industry. The country currently spends more on importing semiconductor chips than it does on oil, and SMIC is one of the national champions the government hopes will increase self-reliance.
The U.S. and Taiwan, a self-governing island that Beijing claims sovereignty over, lead the world in semiconductor chip production. Taiwan-based chipmaker Taiwan Semiconductor Manufacturing Company is the world’s largest contract chipmaker by market share and market value.
A strong domestic semiconductor manufacturing sector has been a priority for Beijing since 2015, when it pledged to invest in homegrown chipmakers. The looming specter of tech decoupling and trade and political tensions with the U.S. has made China’s technological self-sufficiency objectives all the more urgent.
SMIC debuted in Shanghai amid a bull run across China’s stock markets. Last week, Chinese quantum information security firm QuantumCTek Co. leapt 924% in its trading debut on the Star market in what became the largest first-day leap on any Chinese exchange.
The SMIC offering makes the Star board the exchange with the second-most funds raised in the world in 2020, behind Nasdaq and ahead of Hong Kong. The Star market has earned $14.1 billion in proceeds from IPOs and secondary listings this year; Nasdaq has earned $18.02 billion, and Hong Kong’s pulled in $13.8 billion.


fortune--2020-07-16--The one element of Hong Kong’s new security law that concerns business the most

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Since Beijing enacted the new national security law tailor-made for Hong Kong on June 30, the business community in the city has expressed concern over the legislation that gives authorities broad power to crack down on acts seen as threatening national security.
Businesses’ high level of concern is due to the “ambiguity of the law,” said Tara Joseph, president of the American Chamber of Commerce in Hong Kong (AmCham). The law is written vaguely enough that any criticism of the Chinese government or actions that penalize China could potentially violate its terms.
The broadly defined offenses mandate harsh sentences. Individuals could face life in prison, and businesses supporting sanctions against China could get their business permits revoked.
“Even though the law has been enacted and translated, there’s still a lot of question marks about what this means, what areas are a redline, a no-go zone, and what aren’t,” she said. “It’s not as well drawn up and as well explained as to make people feel comfortable living under that law.”
Even though 76% of respondents to a new AmCham survey say they are anxious about the law, Hong Kong’s business community is not yet taking concrete steps in response, such as moving operations out of the city. In an Eastworld Spotlight conversation with Fortune’s Clay Chandler this week, Joseph discussed the key findings of the survey and the challenges Hong Kong faces as it remains caught in the clash between the world’s top superpowers, the U.S. and Beijing. The conversation below has been edited for length and clarity.
Fortune: Commentators have deemed Hong Kong “dead” many times; it’s been in a constant state of change since the 1997 handover. Is this time—with the national security law—different?
Tara Joseph: It is different, and people are calling this now “the new normal” in terms of the national security law that’s been passed. In my view, it’s anything but normal in terms of what we’ve been used to, in terms of how we lived under “one country, two systems” in Hong Kong. The new national security law brings a lot of issues to the floor in terms of values [such as rule of law, transparency, and free flow of information], and it’s a big change from how Hong Kong has operated before.
There are areas that companies haven’t had to deal with before that they may now have to contend with. [Companies] will be looking at areas like data security, about what their employees say about, [or] what does it mean to have “foreign collusion.” They will be looking at a lot of areas where people didn’t feel uncomfortable before in what was a dynamic, gateway city. So it’s a different tune for sure.
What are the key findings of the AmCham’s survey about the new law?
The level of concern has risen with the enactment of the national security law…And the main reasons were the ambiguity of the law. Even though the law has been enacted and translated, there’s still a lot of question marks about what this means, what areas are a redline, a no-go zone, and what aren’t. It’s not as well drawn up and as well explained as to make people feel comfortable living under that law.
Another aspect is there’s a feeling that parts of this national security law undo the rule of law in Hong Kong, which is actually the key and the main factor why many international companies operate in Hong Kong. It’s an internationally recognized system of law, there is due process of law, etc.
Are businesses considering leaving this city?
More than half said they weren’t planning to leave Hong Kong yet. Departures from Hong Kong, if they were to happen, would be in the medium to long term. There is still a wait-and-see [attitude] as to how this new law is going to affect companies.
There’s so much going on in the world right now, between the U.S.-China geopolitical issues, a trade war, COVID, and recession. We’re not exactly at a point where people are gonna make snap decisions to begin with. And also for many U.S. companies and other multinationals operating in Hong Kong, some of these firms have a thousand people. You don’t just pick up and go. This type of planning, backup planning, will take months if not years to really follow through properly.
Another really important aspect of this [is] that there’s no real replacement…for Hong Kong in the rest of Asia. People might look at Singapore and say, “Well, rule of law, colonial system, a system we understand because it’s in English.” But the size of the capital markets in Hong Kong, the flow of money that takes place here, is one of the largest in the world. Singapore can’t just pick that up in a heartbeat. Shanghai was supposed to become a major financial center for the world, that hasn’t happened. And Hong Kong is really important as a financial center. So this is an issue that may keep companies here for a while to come.
What kind of data security concerns should foreign businesses in Hong Kong have over the new national security law?
International financial institutions here [have] a lot of client data, and Hong Kong is a place where there is free flow of information. People were pretty comfortable setting up their systems here. Now the question is whether that data is at risk. We do not have the cybersecurity law in Hong Kong the way it’s been passed in mainland China. But with this new national security law, could someone walk into a major corporation’s office and say, “I’d like to see that data now, please.” Or is it possible for someone to actually take that data one way or another? These are issues that maybe have been thought of but are suddenly being explored in depth and in detail.
The national security law says explicitly that any individuals or organizations supporting sanctions against China will be found in violation of the law. How should financial institutions respond to U.S. sanctions targeting Chinese officials?
It is very difficult, and [businesses should] really be careful about how they’re handling different people’s money, and maybe causing them to, in a sense, take sides based on whether they’re an American company or a Chinese company.
Hong Kong has suddenly become smack in the middle of a disagreement between the U.S. and China. In some people’s minds, it’s become the new Berlin where we’re really at the edge of a difficult point and a difficult confrontation, and that could have a very difficult impact on business.
Another aspect that worries people is the extraterritorial aspect of the law. If you’re a company operating in Hong Kong and something happens in Hong Kong that’s deemed to affect the national security of Hong Kong, your company could be liable outside of Hong Kong.
So I guess businesses are really going to have to ask the question over the coming few months about how valuable Hong Kong is as a financial center…Are those rewards worth the risk? I think what everyone realizes is the risk is higher than it used to be.
Hong Kong used to essentially feel like it was no risk, a no-risk zone; that’s changed in the so-called new normal, and that happened almost overnight. It’s going to take a while for people to digest it and recognize how difficult it actually will be.
Looking at the Hong Kong issue as it factors into U.S.-Beijing relations, is there any sense in Washington that the U.S. might consider de-escalating the confrontation with China?
I really have not heard de-escalation at all. Hong Kong is fully caught up in the U.S.-China relationship. I think there is a very strong sense [in Washington] that China has stepped over its bounds in terms of Hong Kong and encroached on Hong Kong in a way that’s not acceptable. It would not be surprising to see further actions take place very soon, sanctions on Chinese, potentially Hong Kong officials.
Hong Kong is just a dynamic and amazing business city. Can we crawl back from it at this point? The jury is still out, but the way in which the U.S.-China relationship is going right now, whether it’s a Trump presidency or a Biden presidency, I think it’s becoming more and more difficult every day.
This story is part of Eastworld Spotlight, a series of conversations on matters of business, tech, and finance with executives, experts, entrepreneurs, and investors in Asia. Subscribe to Fortune’s Eastworld newsletter to get them in your inbox.


fortune--2020-07-16--How the West’s work from home trend is fueling China’s GDP growth

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While much of the West has been working from home amid the coronavirus pandemic, China’s labor force has returned to factories—ramping up exports of electronics to feed the needs of a rising class of remote workers.
“Export growth is so much stronger than anyone could have expected,” said TS Lombard’s chief China economist, Bo Zhuang. Exports of “work from home” gadgets such as laptops, webcams, and even gaming consoles increased during the second quarter. “These are high–value-added products,” Zhuang said.
According to data released Thursday by the National Bureau of Statistics (NBS), China’s economy returned to growth in the second quarter of this year, jumping 3.2% over the same period last year and exceeding the 2.5% predicted by a Reuters poll of economists.
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China’s return to growth, from a 6.8% contraction in the first quarter of 2020, was driven by the surprising strength of exports, which, on paper, may not seem so impressive. Year over year, exports increased only 0.3%. But considering that some analysts predicted the figure would be closer to –25%, Zhuang says, the turnaround is incredible.
According to China’s customs office, exports of notebook computers increased 9.1% in the first half of the year, with the gains made almost entirely in the second quarter. The export of medical equipment has also skyrocketed. In the first six months, exports of “medical devices” increased 46%. Exports of textiles, which includes surgical masks, increased 32% as factories restructured to meet surging demand.
“People underestimate the ability of China to pivot,” Zhuang said, pointing to the slight contraction in China’s unemployment rate in June—down 0.2 percentage points from 5.9% in May. “Because labor deployment has been quite flexible, China has managed to avoid the mass layoffs we feared,” he said.
Apart from medical supplies and electronics, however, the rest of China’s exports have remained quite weak. In fact, the 3.5% year-over-year growth in GDP belies an enduring weakness across China’s industrial sectors.
Data from NBS shows the total value added of the manufacturing and services sectors decreased 1.9% and 1.6% year over year, respectively. The primary sector—including agriculture and mining—grew only 0.9%. To an extent, Zhuang says, the second-quarter growth figure is reflective of gains China made in the third and fourth quarters last year. The economy had already grown far enough in the second half of 2019 to remain ahead now, despite the massive downturn in the first quarter of this year.
“Besides exports, China’s GDP growth was also buoyed by government investment in infrastructure,” Zhuang said, adding that the investment should make for more sustainable long-term growth—but to a limited degree. By the second half of next year, Zhuang says, China’s growth will have stabilized to 5%, a relatively slow pace for the economic powerhouse accustomed to growth in the 6% to 7% range.


fortune--2020-07-16--How did Twitter’s hackers do it? Here’s one likely explanation

Update: Twitter confirmed it believes hackers targeted employees with “a coordinated social engineering attack” that gave the hackers access to “internal systems and tools.”
Cybersecurity experts are speculating about the cause of a spate of high-profile Twitter hijackings that rocked the social media giant on Wednesday.
The accounts of many of Twitter’s most prominent users including former Vice President Joe Biden, Tesla CEO Elon Musk, and Microsoft co-founder Bill Gates posted fraudulent tweets intended to lure people into Bitcoin-related scams.
The growing consensus is that Twitter—the company, rather than individual users impacted—succumbed to a major hack. While the technical details of the latest breach remain unclear, the leading theory is that hackers gained access to an administrative “panel” used by Twitter employees to manage people’s accounts.
Screenshots of the purported panel circulated online in the aftermath of the hacking, as Vice Motherboard reported. Twitter has deleted the images, saying they violate the company’s rules about sharing “private, personal information” in tweets.
A source with intimate knowledge of the company’s internal workings told Fortune this theory was the likeliest explanation for the widespread account hijackings. The individual requested anonymity because of a lack of authorization to speak to press.
“Think of this like a web form,” the source said, describing Twitter’s technical infrastructure. Such tools enable the company’s engineers to handle key operations—everything from account suspensions to advertising campaigns.
But these tools can also allow an attacker—such as a rogue, hacked or otherwise comprised insider—to “come in sideways” and send a tweet from any account, the source said.
Twitter did not respond to Fortune’s questions about the hack, and instead pointed to its public comments. In those comments, the company said it had temporarily disabled tweets and password resets by “verified” accounts while attempting to regain control, an unprecedented measure.
It’s unclear who’s behind the hacking. The perpetrators may have at least been partly motivated by money, given their public posts requesting that Twitter users send them cryptocurrency.
“We’re looking into what other malicious activity they may have conducted or information they may have accessed and will share more here as we have it,” Twitter said.
Update: This article was updated with information from Twitter about the cause of the hacking. Some information in the article was changed to reflect the latest comment.


fortune--2020-07-16--Gokada startup CEO Fahim Saleh found decapitated, dismembered in Manhattan condo

Fahim Saleh, the 33-year-old founder and chief executive officer of startup Gokada, was found dead Tuesday afternoon at his Manhattan condominium.
Saleh’s body was found dismembered and decapitated near an electric saw that was still plugged into the wall, the New York Times reported. Officials told the newspaper that his sister discovered the body when she decided to go to Saleh’s building after a day without hearing from him.
Gokada, a motorcycle ride-hailing business that operates in Nigeria, confirmed the death on Twitter.
We are deeply saddened to inform you about the sudden and tragic loss of our founder and CEO, Fahim Saleh. Fahim was a great leader, inspiration and positive light for all of us. — Gokada – We do delivery now (@GokadaNG) July 15, 2020
Saleh’s death was ruled a homicide, police said. One official told the New York Times that there were large plastic bags in the condo and there appeared to be an effort to clean up what happened.


fortune--2020-07-16--Hackers didn’t access user passwords, Twitter says

What Starbucks learned about COVID-19 from its China stores

Twitter said users’ passwords weren’t stolen in a widespread digital attack Wednesday, despite the fact that hackers were able to send tweets from several high-profile accounts.
“We have no evidence that attackers accessed passwords,” Twitter said in an update Thursday. “Currently, we don’t believe resetting your password is necessary.”
Some people who changed their passwords in the past 30 days may still be blocked from accessing their accounts, the company said, but that doesn’t mean those accounts were compromised.
The hack on Wednesday affected some of the world’s most recognizable people, including Democratic presidential candidate Joe Biden, former President Barack Obama, and Tesla Inc. Chief Executive Officer Elon Musk. Those who gained access to the accounts used them to attempt a bitcoin scam, sending tweets asking for people to give them money in exchange for a bigger payment in return.
Twitter said Wednesday evening that the hack was part of a “coordinated social engineering attack” that targeted Twitter employees. It granted hackers access to some of the company’s internal systems, and then high-profile user accounts, the company said. That forced Twitter to temporarily halt verified accounts from sending any tweets.
Twitter said it would take “significant steps to limit access to internal systems and tools while our investigation is ongoing.” Twitter is still probing how the attack was carried out and has not disclosed if any other information related to the accounts, such as data like private messages, was compromised.
U.S. politicians quickly called on Twitter to share more information. “The ability of bad actors to take over prominent accounts, even fleetingly, signals a worrisome vulnerability in this media environment,” said Democratic Senator Mark Warner, vice chairman of the Intelligence Committee, and one of the tech industry’s most vocal critics. The Federal Bureau of Investigation is also investigating the hack.


fortune--2020-07-16--Flights with empty middle seats decrease COVID risk 79%, study says

If you plan to fly during the pandemic, you’re better off choosing an airline with a policy of keeping the middle seat empty. Such a policy lowers the risk of contracting COVID from 1 in 4,400 to 1 in 7,300, according to a new academic study.
That estimate comes from Arnold Barnett, a statistics professor at the MIT Sloan School of Management. His findings—which suggest a “no middle seats” flight reduces risk by 79%—also note that the risk of dying from catching COVID on a flight are less than 1 in half a million.
Barnett’s conclusion on the risk of middle seats comes as U.S. airlines pursue different approaches. For instance, Delta, JetBlue and Southwest have chosen to keep middle seats empty, while United and Spirit are filling them. American is also doing so as it runs many flights that are over-capacity.
The new research should be taken with a grain of salt, however, as Barnett himself acknowledges. In his paper, he emphasizes that his findings are “rough conjecture” in light of the difficulties in calculating such a risk.
Barnett’s calculations are based on numerous assumptions, including that all passengers are wearing masks—a step he says reduces risks of catching COVID by 82%. He also assumes that someone is more likely to catch COVID from those in the same aisle rather than from those in rows behind or in front of them
The findings also disregard the risk of catching COVID from trips to the restroom, or from boarding or getting off the plane. But the latter situation may pose a significant risk according to the Wall Street Journal, which notes the close proximity of passengers waiting to board or scrambling to store luggage.
The Journal, which cited the Barnett study, suggested that flying is not especially dangerous overall, in part because planes frequently replace the air in the cabin.
For his part, Barnett concludes by noting that middle seat policy will also be informed by economic considerations facing the airlines.
“The calculations here, however rudimentary, do suggest a measurable reduction in Covid-19 risk when middle seats on aircraft are deliberately kept open,” he writes. “The question is whether relinquishing 1/3 of seating capacity is too high a price to pay for the added precaution.”
More must-read finance coverage from Fortune:


fortune--2020-07-16--Netflix Q2 earnings: Stock plummets as Ted Sarandos is named co-CEO

Shares of Netflix plummeted following the news that chief content officer Ted Sarandos has been named co–chief executive of the streaming giant alongside Reed Hastings.
Netflix’s stock price plummeted 10% to $474 in after-hours after closing at $527.39 in regular trading. Still, including the drop, the company’s shares are up 46% for the year.
The news about the executive promotion was announced in a letter to shareholders that accompanied Netflix’s second-quarter earnings report on Thursday.
Sarandos will remain in the role of chief content officer, where he oversees the development of original programming as well as license acquisition, in addition to his new co-CEO role, Netflix said.
“Ted has been my partner for decades,” said Hastings in the letter. “This change makes formal what was already informal—that Ted and I share the leadership of Netflix.”
Boosted by the shelter-in-place orders prompted by the coronavirus pandemic, Netflix once again smashed its projections for subscriber growth, adding a second-quarter record 10 million global paid memberships for a total of 193 million. The company had given guidance for 7.5 million additions, though it cautioned that given “the uncertainty on home confinement timing, this is mostly guesswork.”
Last year, the company added just 2.7 million in the same quarter.
Some analysts had actually pegged Netflix to add nearly 15 million subscribers, close to its previous quarter haul of 15.8 million. Still, Netflix more than doubled its subscriber growth in the first half of this year compared with 2019, with 26 million this time around versus 12 million last year.
“As a result, we expect less growth for the second half of 2020, compared to the prior year,” Netflix warned.
That warning, including that the company expects to only add 2.5 million new subscribers in the third quarter, helped spark the huge stock selloff. Wall Street had predicted far more new subscribers.
Revenues for the quarter came in at $6.15 billion, a year-over-year increase of 25%. That beat Wall Street consensus estimates of roughly $6.05 billion. Profits more than doubled from the same period a year earlier to $720 million or $1.59 per share. That was below analyst forecasts for a $1.81 per share profit.
Netflix said it was unconcerned about coronavirus production delays owing to a long lead time for content. The 2020 slate is not expected to change, whereas Netflix anticipates the second half of 2021 to see its bigger releases—though the company said the total number of originals for next year will still be higher than this one. In some places, like Asia and Europe, production has gradually resumed.
The company also commented on the competition, noting the likes of HBO Max, Disney+, and NBCUniversal’s newly launched Peacock. Netflix also acknowledged the war chests of Apple and Amazon, as well as the “astounding” growth of TikTok.
“Instead of worrying about all these competitors, we continue to stick to our strategy of trying to improve our service and content every quarter faster than our peers,” Netflix said.
Said eMarketer forecasting analyst Eric Haggstrom: “Netflix added 25.9 million new worldwide subscribers in the first half of 2020, just 2 million short of their total additions in all of 2019. Even though growth should slow in H2, Netflix is already well ahead of pre-pandemic predictions.
“The pandemic and associated lockdowns have massively accelerated the shift from linear TV to streaming video,” he added. “Looking forward, even as lockdowns are relaxed and new competitors begin to scale their services, Netflix will extend its lead as the first stop for entertainment.”


fortune--2020-07-16--The long turnaround for coronavirus tests leaves travelers, economies in a bind

This is the web version of The Capsule, a daily newsletter monitoring advances in health care and biopharma. Sign up to get it delivered free to your inbox.
Good afternoon, readers.
Yesterday we wrote about the troubling delays in coronavirus test turnaround that many face. Quest Diagnostics says that for non-priority patients, it can take seven or more days on average to get a COVID test result back due to surging demand and supply constraints.
That has obvious public health ripple effects, such as the potential of infecting other people while waiting for a test result since you’re not sure whether or not you’ve contracted COVID. But a Capsule reader points out another important conundrum.
“You did not mention an economic dimension to the delay in COVID-19 testing: Alaska is requiring arriving visitors to show negative coronavirus test results taken within 72 hours before boarding the airplane. Visitors who cannot show the results are required to quarantine under strict supervision for 14 days, and this is enough to discourage casual visitors,” he writes.
“Hawaii has now decided to start allowing visitor arrivals September 1 on the same basis, 72 hour test. Hawaii depends so heavily on tourism that their reopening is a serious economic issue. Very few tourists are willing to come if they are subject to quarantine.”
He’s right. The Alaskan government states that travelers “who can show proof of a negative test result taken within 72 hours before departure will not have to quarantine” for 14 days. And those who can show a negative test within five days of departure won’t have to quarantine but will have to be re-tested upon arrival. Hawaii has made similar moves.
This presents an obvious dilemma. These states have heavy stakes in the tourism industry. But as our reader points out, “it is not possible for a normal healthy person to get a test within 72 hours. The prices being charged for private tests are prohibitive… Just saying ‘I want to take a trip to Alaska or Hawaii’ does not qualify you for a test.” In fact, in certain states, you’ll be deprioritized from taking a test unless you show active COVID-19 symptoms or meet other prioritization criteria.
So the options are to quarantine for 14 days (which can be a problem depending on a traveler’s itinerary and economic circumstance) or face an uncertain turnaround time for testing before a flight to a state trying to both protect public health while reviving their economies.
Read on for the day’s news.
Sy Mukherjee
sayak.mukherjee@fortune.com
@the_sy_guy
DIGITAL HEALTH
Telehealth services expand into the psychiatric arena. Insurer Centene and Quartet Health are ramping up their alliance to extend virtual behavioral health services to members who are uncomfortable with coming into a brick-and-mortar building. “Centene is pleased to partner with Quartet to leverage its national network of locally-based behavioral health providers, allowing our members to quickly be matched to the care they need in a setting that is comfortable for them," said Centene CEO Michael F. Neidorff in a statement. They're far from the first companies leveraging a growing demand for telemedicine options.
INDICATIONS
Biotech's largest trade group speaks up for Fauci amid White House row. The CEO of the Biotechnology Innovation Organization (BIO), the industry's largest trade organization, issued a statement supporting infectious disease expert and federal public health official Dr. Anthony Fauci after several White House officials began publicly questioning his judgment and leadership during the ongoing pandemic. "As this global pandemic continues to wreak havoc, we must stand behind the scientists and researchers working tirelessly to eradicate this devastating disease. Nothing is more disheartening or disturbing than to see Dr. Anthony Fauci, a critical leader at a pivotal moment, maligned publicly and attacked personally," said Dr. Michelle McMurry-Heath in a recorded public statement.
THE BIG PICTURE
COVID-19 data to be transmitted by administration, not CDC. There's some serious confusion brewing about the CDC's role in collecting and transmitting coronavirus data, including the number of hospitalizations across states, after the Trump administration moved to have hospitals send information to a centralized database to the Department of Health and Human Services directly rather than to the CDC. That has some ringing the alarm bells about data transparency as cases surge, although CDC officials have said they still have access to the information generally (the CDC is housed within HHS). As of Thursday afternoon, the CDC's website still appeared to have an updated case count.
REQUIRED READING
Abigail Disney slams Disney World's reopening, by Aric Jenkins
An error in how the unemployment rate was calculated should have us concerned, by John D. Finnerty
How can companies keep sick people out of the office, by Jeff John Roberts
Sign up for other Fortune newsletters.


fortune--2020-07-16--What Starbucks learned about COVID-19 from its China stores

The long turnaround for coronavirus tests leaves travelers , economies in a bind

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To Starbucks CEO Kevin Johnson, there’s no question that COVID-19 will change humanity. “I do believe that this global pandemic will reshape the way we think about and live the rest of our lives,” he said.
The virus has already changed the way the company runs its stores. The global retail giant is in what Johnson called a “monitor and adapt phase,” following a playbook that will likely guide the company for the next 18 to 24 months while the world waits for a widely available vaccine, or multiple vaccines, he said.
“Until there’s a vaccine,” Johnson said, “everyone around the world is going to be aware that we have to live in a world with COVID-19.” Johnson made his comments Thursday as part of the National Retail Federation’s virtual leadership series.
Through its operation in China, Starbucks had an early look at how the virus might impact the world. Johnson said he started to get involved with the leadership team in China’s COVID-19 response in mid-January, and it was quickly “evident [that the virus] would be something that would impact all markets around the world.” As the virus moved to other parts of the globe, the company adapted the safety protocols it had created for China in various regions.
Johnson said that even though the pandemic is ongoing, the company is no longer in crisis mode, because it has figured out how to operate in this new environment. “We’re in a position now where we accept that is the new reality until there’s a vaccine,” he said. “This is the new environment that all retailers have to operate under.” Johnson said this moment is a chance to build a sense of trust with customers; if they believe retailers are creating safe environments for them, that trust will continue beyond the pandemic, he added.
Starbucks has provided all of its store employees with facial coverings, installed plexiglass at the point of sale, and instituted employee hand-washing on a 30-minute basis. The protocols, he said, were grounded in its work of understanding the science behind the spread of COVID-19. “If we don’t provide a safe environment, we and the economy can’t expect to reopen.”
Starbucks was one of the first retailers to say that it would require customers wear face coverings in its stores, a mandate that went into effect yesterday.
Johnson noted that while the average amount spent per transaction had increased during the pandemic, the product mix was essentially unchanged. Trends that had already emerged were continuing: cold beverages outselling hot drinks and the move toward plant-based beverages and food. Earlier this summer, Starbucks started offering breakfast sandwiches made with Impossible Foods’ plant-based sausage patty.
However, the pandemic does have the potential to remake the company’s store footprint. With a significant amount of commercial real estate likely available in urban areas—at what Starbucks believes will be a lower rate—the company is going to “take this opportunity to transform its store portfolio,” Johnson said. Starbucks is planning on opening more rapid pickup stores in urban areas—what are essentially the pedestrian equivalent of a drive-thru.
“The concept of experiences that are safe, familiar, and convenient,” Johnson said. “That’s going to be the theme until a vaccine or multiple vaccines are available.”


fortune--2020-07-16--Nick Cannon wants full ownership of ‘Wild ’N Out’ after ViacomCBS ouster. Does he have a case?

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The actor and TV host Nick Cannon has lashed out at ViacomCBS after the media giant terminated him over anti-Semitic remarks. In a lengthy Facebook post, Cannon accused the company of “robbing” the Black community and claimed that he is the rightful owner of Wild ’N Out, a popular improv show he conceived and hosted.
“I created a billion-dollar brand that expanded across a multitiered empire that is still Viacom’s biggest digital brand,” Cannon wrote. “Based on trust and empty promises, my ownership was swindled away from me…I demand full ownership of my billion-dollar Wild ’N Out brand that I created.”
Cannon’s claim is a significant one. If he does indeed own Wild ’N Out, he could be entitled to receive a large amount of money from ViacomCBS and determine the future of the brand.
The Facebook post does not explain his legal justification for the claim, and one intellectual property expert is skeptical that the post amounts to much more than a rant.
According to Alexandra Roberts, a professor at the University of New Hampshire law school, ViacomCBS owns two trademarks for Wild ’N Out—one for entertainment services and another related to restaurants. Owning such marks creates a legal presumption that ViacomCBS is indeed the owner.
“[E]ven if the show was Cannon’s ‘idea’ or he’s the driving creative force behind it, that doesn’t make him the mark owner,” Roberts explains.
Roberts adds that there could be clauses in Cannon’s contract with ViacomCBS that assign Cannon intellectual property rights to Wild ’N Out, but this would be unusual for the industry.
“But it strikes me as unlikely that a big company like Viacom would ever agree to assign trademark rights in the name of a show to an entertainer,” she says.
Neither Cannon nor ViacomCBS immediately responded to a request for comment about the dispute.
ViacomCBS cut ties with Cannon over a podcast in which he engaged in a lengthy discussion of anti-Semitic conspiracy theories. This included asking why “we give so much power to the ‘theys,’ and ‘theys’ turn into illuminati, the Zionists, the Rothschilds”—language that alludes to baseless assertions about Jewish plots.
In his Facebook post, Cannon claims to have spoken with “many Rabbis, clergy, Professors and coworkers” about the incident and expressed remorse.
“I must apologize to my Jewish Brothers and Sisters for putting them in such a painful position, which was never my intention,” he wrote.
The post did not, however, expressly renounce the conspiracy theories he described in the podcast. In further remarks on Wednesday, Cannon reiterated his apology and described the controversy as “only the beginning of my education” and committed himself to “strengthening the bond between our two cultures today and every day going forward.”
Cannon’s most recent remarks came as Fox announced it would let the entertainer continue to host the popular Masked Singer show.


fortune--2020-07-17--The iconic Boeing 747 is almost finished as a passenger plane as BA retires its fleet

How ‘ The Alienist : Angel of Darkness ’ returns viewers to the Gilded Age while setting up new stories

Somebody told her that there was a place like heaven
Across the water on a 747
Yeah, we’re living in a modern world
—Electric Light Orchestra, “Calling America” (1986)
The original jumbo jet, Boeing’s 747, is nearing the end of its runway after half a century of service.
On Friday, British Airways management signaled the early retirement of all 31 of the carrier’s 747-400s. That’s about a tenth of BA’s total fleet.
“It is with great sadness that we can confirm we are proposing to retire our entire 747 fleet with immediate effect,” BA said in a statement.
Until now, BA was the world’s biggest remaining operator of 747-400 passenger flights. Lufthansa also owns 13 of the craft, along with 19 of the newer 747-8 model, while Air China and Air India also still operate a handful of 747-400s. U.S. carriers such as Delta and United retired theirs a few years ago. Air France did the same in 2016.
KLM’s last 747-400 passenger flight took place in March this year, and Qantas’s is scheduled for next week. Pretty soon, the only 747s actively in service will be cargo planes—a few hundred are still being used for this purpose.
Generally speaking, the big reason for the retirements is fuel efficiency; the twin-deck, four-engine 747—whose 64-foot-high tail is as tall as a six-story building—is of little use to airlines that are desperate to cut emissions.
The Space Shuttle Columbia on a Boeing 747 Shuttle Carrier in the 1980s. The Columbia Orbiter operated between 1981 and 2003. (Photo courtesy of Heritage Space via Getty Images) Heritage Space/Heritage Images/Getty Images
Airbus’s once-competing A340 is in a similar situation, as is its far newer A380. Contrary to expectations, it turned out that very few routes really require a giant plane.
“While the aircraft will always have a special place in our heart, as we head into the future, we will be operating more flights on modern, fuel-efficient aircraft such as our new [Airbus] A350s and [Boeing] 787s, to help us achieve net-zero carbon emissions by 2050,” BA said Friday.
But the pre-existing trend has been accelerated by this year’s coronavirus pandemic, which abruptly killed off most international travel and has forced airlines—many of which were already contemplating slimming down—to scramble for survival. BA itself is bracing for as many as 12,000 job cuts.
The industry expects it will take at least a few years for passenger numbers to recover. In the meantime, it makes little sense to keep maintaining giant planes that were soon going to be retired anyway; the smarter option is to use smaller craft that allow carriers to retain their valuable slots at major hubs without spending so much in operational costs.
“It is unlikely our magnificent ‘queen of the skies’ will ever operate commercial services for British Airways again due to the downturn in travel caused by the COVID-19 global pandemic,” BA, which was originally planning to phase out the 747-400 by 2024, said.
BA has been operating 747s of one variety or another since 1971, a year after Pan Am became the world’s first airline to put them into service. It took deliveries of the 747-400 model in the decade between 1989 and 1999, at one point operating 57 of them. (Only Japan Air Lines had more, with a fleet of 100—the last of which was retired in 2011.)


fortune--2020-07-17--Fauci is optimistic we’ll see COVID vaccine breakthroughs by early Fall

Anthony Fauci told Facebook, Inc. ‘s Mark Zuckerberg that he expects results for a clinical trial on monoclonal antibodies by late summer or early fall, underscoring the speed at which the government has been working to quickly approve and roll out treatment for the novel coronavirus.
A monoclonal antibody is a laboratory-produced protein that can potentially be used to treat sick patients as well as for prophylaxis. Fauci, the top U.S. infectious disease expert, described them as “precise bullets” that can be developed from antibodies from other people who’ve been infected and used as a treatment to fight the virus at multiple stages.
“What we really need are drugs that, when given early, can prevent a symptomatic person from requiring hospitalization or very dramatically diminish the time that they’re symptomatic,” Fauci said during the Facebook Live interview on Thursday. Monoclonal antibodies can be administrated intravenously or through a shot.
Fauci, director of the National Institute for Allergy and Infectious Disease, also said that the nation needs to “regroup” and “call a time out” as cases continue to surge across the U.S. Too many states skipped over certain guidelines as they jumped to reopen their economies.
“That is a recipe for getting into trouble,” Fauci said.
Zuckerberg, chief executive and co-founder of the social-media company, was critical of the government’s handling of the pandemic, saying “it’s really disappointing that we don’t have adequate testing, that the credibility of top scientists and the CDC are being questioned.”
Facebook has sought to remove misinformation on its platforms, but the struggle was illustrated during the event as several users’ comments scrolled next to the interview questioning the utility of vaccines. One pressed for “therapeutics or God created supplements.”
Fauci and Zuckerberg also discussed the importance of wearing masks, developing an effective vaccine, getting children back in school and young people’s role in stopping the spread of the virus
“Young people are intimately and heavily involved with what is going on with this pandemic,” Fauci said, pointing to the surge in younger people testing positive in the newest hotspots. “Consider your responsibility to yourself, but also the societal responsibility.”