fortune--2020-03-02--Funding for female founders increased in 2019—but only to 2.7%

How should female founders reflect on 2019? From a statistical perspective, the year could certainly be seen as step forward: the share of VC dollars that flowed into startups founded by a woman or a group of women crept up over 2019, hitting $3.54 billion, or 2.7% of total investment.
But a more holistic look at the venture capital landscape puts that stat in a slightly different perspective. Consider WeWork, arguably the most notorious startup flameout of the year, if not the decade. In 2019, investment juggernaut SoftBank poured at least $5 billion into the imploding co-working company. That’s about $1.5 billion more than the total VC investment in all female-founded companies combined during the same period, according to data provided to Fortune by PitchBook, a company that tracks data from the venture capital and private equity industries.
“It’s the most visible public argument that could be made for why gender diversity in founding teams, in cap tables, at the board level, and in management at a company is compelling,” Pam Kostka, CEO of the organization All Raise, which advocates for women in startups and venture capital, says of the WeWork comparison. 2019 isn’t the first time the money funneled into female-founded companies has paled in comparison to other investor darlings: in 2018, female founders landed $10 billion less than Juul after a corporate mega-investment in the e-cigarette company.
The $3.54 billion that went to companies founded only by women accounts for a slightly larger share than such startups took in in 2018: 2.7% vs 2.2%. That’s still below 2014’s high, by percentage, of 3.1%. Another $14.76 billion, or 11.5% of the total pot, went to mixed-gender founding teams in 2019.
Women didn’t fare much better in terms of the total number of VC deals done. Investors shelled out for 648 total deals backing female-only founding teams—compared to 7,336 transactions for all-male founding teams. All-female teams got 6.8% of total VC deals by that metric.
The difference between percentages by dollar amount and by number of deals—2.7% compared to 6.8%—shows another gap, this time in the size and stage of the deals venture capitalists are backing for women. The average deal for a female-only founding team was $6.6 million; the average for an all-male founding team was $17.1 million. The median deal size for a female-only founding team was $1.9 million compared to an all-male team’s $3.5 million.
Most of the money going to female-founders—$1.58 billion—went to companies raising money when they’re considered early stage, at Series A or B as defined by PitchBook; 236 such deals were closed by all-female-founded companies in 2019. That funding drops off slightly for later-stage funding in Series C rounds and beyond: $1.44 billion divvied up among 95 deals last year.
Male founders, by comparison, see a dramatic increase in total funding moving from early to late stages, where rounds tend to be larger: $32.19 billion in early stages and $69.34 billion in late stages.
That discrepancy is not something that can be erased quickly, says Kostka; until more female-founded companies are funded adequately in the early stages and grow successful to the point where they can drum up later-stage rounds, the gap will remain.
While PitchBook does track the size of company exits by gender, the sample size is small. Some notable exits for female-founded companies in the past year include the April initial public offering of CEO Jennifer Tejada’s PagerDuty, which saw the stock skyrocket 60% on its first trading day to a $1.8 billion valuation, and the July IPO of founder and CEO Julie Wainwright’s TheRealReal.
Parsing individual rounds also sheds some light on the year in the funding female founders. The largest deal for an all-female-founded company in 2019—$157 million for Rachel Romer Carlson and Brittany Stich’s Guild Education—was still more than $440 million less than the 10th-largest deal for all-male founding teams last year.
It’s not all bad news: 2019 was a remarkable year for female-founded companies becoming unicorns—startups valued at more than $1 billion. The $125 million round in March for Jen Hyman’s Rent the Runway that brought the company to unicorn status was the third biggest deal of the year for a company founded only by women. Glossier’s $100 million Series D round in the same month did the same for the beauty brand founded by CEO Emily Weiss.
Four female-founded companies, including Glossier, raised exactly $100 million in 2019, creating a four-way tie for the fourth-biggest deal of the year for female founders. One of those other $100 million cash infusions went to Away, the luggage startup founded by Jen Rubio and Steph Korey that has faced turmoil in recent months over Korey’s leadership style as chief executive.
The other deals among the top 10 belong mostly to biotech companies like SpringWorks Therapeutics, founded by Lara Sullivan (although she no longer serves on the company’s management team); Talaris Therapeutics, founded by Suzanne Ildstad; and Insitro, founded by Daphne Koller.
The venture firms that invested in the most female-founded companies in 2019 include Alumni Ventures Group, Precursor Ventures, Founders Fund, and Female Founders Fund. Over the past decade, New Enterprise Associates has invested in more female-founded companies, with 53 total deals, than other firms; the firm in second place by that measure, Golden Seeds, backed 46.
From the funder perspective, 2019 saw a modicum of progress. According to All Raise, 54 women last year were named VC partners or general partners at firms with more than $25 million in assets under management (excluding life science and corporate VC firms). That’s an all-time record, beating 38 women named partner in 2018. Most of those women are white and Asian; only two identify as black or Latinx.
However, those numbers still aren’t anywhere close to parity in new appointments: more than 70 men were named partner last year. And the venture world as a whole remains overwhelmingly male, with 65% of VC firms still lacking a single female partner.
Despite the slow rate of progress for women in VC and the funding going to female-founded companies, tracking these incremental gains is important, says Kostka. While raising venture capital certainly does not ensure success, it does enable opportunity.
“Women are not raising as much as men, so they have fewer opportunities to fail. Failure is part of the story in the early lifecycle of an organization,” says Kotska, who worked at several early-stage startups throughout two decades in Silicon Valley before taking over All Raise. “We need to make sure women are getting enough capital to go through that learning process and achieve success on the other side.”
More must-read stories from Fortune:
—Candidates talk about the issues that matter to working women
—Fixing the corporate approach to addressing sexual harassment
—Which candidate has treated women less bad?
—You don’t have to become a manager to grow your career
—WATCH: The double burdens that hold women back
Keep up with the world’s most powerful women with The Broadsheet newsletter.


fortune--2020-03-02--7 new books to read in March

7 new books to read in March

Dow surges 5 % on hopes for central bank help on the economy

In time for Women’s History Month, new reads this month include memoirs from varying voices associated with the #MeToo movement, a biography of one of the most celebrated female artists who ever lived, and a collection celebrating female pioneers in business.
The Innovation Complex by Sharon Zukin
Available March 2
San Francisco, historically and by nature, has always been a city in movement, constantly changing from one decade to the next. But the past decade has seen the City by the Bay altered more rapidly and dramatically (for better or worse, depending who you ask) than ever before. Urbanist Sharon Zukin eyes San Francisco along with New York City and other major economic powerhouses as to how they have been fundamentally changed (possibly forever) by the explosive impact of the tech industry, starting with the job landscape up to the meritocracy that emerges on top of it.
We Are Not Here to Be Bystanders: A Memoir of Love and Resistance by Linda Sarsour
Available March 3
One of the co-organizers of the Women’s March, Linda Sarsour has had a career in activism almost as long as her adulthood, after finding her own voice as a Brooklyn teenager in the immediate aftermath of 9/11. Reflecting on her experience as a daughter of Palestinian immigrants, Sarsour shares what she has come to learn as the tenets of successful community organizing, positing to readers that we should not settle for being bystanders in the fight for racial, economic, gender, and social justice.
The Power Notebooks by Katie Roiphe
Available March 3
After articles in the New York Times, the Washington Post, Esquire, The Paris Review, Vogue, and Slate, among others, author and journalist Katie Roiphe is well-known for her analysis and critiques on feminist issues. She’s also not without controversy, perhaps most recently in 2018 with the publication of a piece in Harper’s Magazine about the #MeToo movement, “Twitter feminists,” and the “Shitty Media Men” list.
In a follow-up to her previous books, The Morning After: Sex, Fear, and Feminism and In Praise of Messy Lives, Roiphe goes more personal, looking back at her own notebook entries and sharing ruminations on her often fraught experiences with divorce, single motherhood, and relationships while also drawing in the experiences of famous writers such as Sylvia Plath and Simone de Beauvoir.
Women’s Work: Stories From Pioneering Women Shaping Our Workforce by Chris Crisman
Available March 3
Award-winning photographer Chris Crisman documents women who pioneered work in fields that have long been considered the provinces of men—with accompanying interviews about how these women paved their own way.
In a marvelous collection of more than 60 beautiful photographs, Crisman profiled women around the world, from C-suite executives to small-business owners, including former PepsiCo CEO Indra Nooyi, presidential biographer Doris Kearns Goodwin, Google vice president Yoky Matsuoka, and Georgetown Cupcake cofounders Katherine Kallinis Berman and Sophie Kallinis LaMontagne.
Frida in America: The Creative Awakening of a Great Artist by Celia Stahr
Available March 3
In November 1930, Mexican artist Frida Kahlo traveled to the United States, living in San Francisco, Detroit, and New York over the next three years. For those familiar with the lauded artist’s history, those three years were not without incident, being mired in tragedy on several occasions.
But Celia Stahr, a professor of modern American and contemporary art at the University of San Francisco, goes further. She illuminates how not only these events but also Kahlo’s culture shock in the U.S.—including witnessing widespread poverty, racial tension, and anti-Semitism amid the Great Depression—influenced her portraiture canon that is still so famous and treasured today.
The Catalyst: How to Change Anyone’s Mind by Jonah Berger
Available March 10
In an era of entrenched political beliefs, rife with misinformation, is it even possible to change a voter’s mind? In the workplace, with so many corporate environments still slow (and resistant) to change, can you change the minds of the powers that be? Even at home, with kids increasingly glued to digital screens, how can parents change their children’s mind? This might all sound pessimistic, but Wharton School professor Jonah Berger has an optimistic outlook, gently suggesting that great change agents aren’t more persuasive, but they’re really catalysts. Put another way, rather than adding pressure, they remove roadblocks.
Available March 24
The legal drinking age in the United States is 21, and at that age, the only difference in wine that younger drinkers know is red and white. Not the case for Victoria James, who at age 21 became the country’s youngest sommelier at a Michelin-starred restaurant.
In her memoir (but not first book; she published Drink Pink: A Celebration of Rosé in 2017), James reveals much more than handling bottles worth hundreds and thousands of dollars during the day, passing sommelier certification exams, and being able to sell hundreds of thousands of dollars’ worth of top-tier wines.
From the outside, the wine industry might seem like the peak of sophistication. But as James reveals (and so many women have spoken out about in the wake of the #MeToo movement), the restaurant world can be highly toxic—and dangerous—plagued by abusive bosses and groping patrons. Despite this and childhood trauma that she also shares in the book, James still believes in the power of good wine and good hospitality.
More must-read stories from Fortune:
—Inside New York City’s Chinese restaurant crisis
—5 things Beats president Luke Wood always packs when traveling
—Colorado State University launches cannabis degree program
—How to scale zen luxury, according to Robert De Niro
—WATCH: Greenwich Village’s coziest new champagne bar
Follow Fortune on Flipboard to stay up-to-date on the latest news and analysis.


fortune--2020-03-02--Public, a would-be Pinterest of stock-buying apps, raises more cash

Investors looking to buy stocks with no commission have many options: Upstarts like Robinhood and SoFi and, in more recent months, traditional brokerages including Charles Schwab. But despite this crowded market, a startup backed by actor Will Smith and NFL star JJ Watt sees an opportunity to snap up customers.
The new entrant is called Public, which premiered in September, and on Monday, touted an additional $15 million in investment led by the venture capital firms Accel and Greycroft. The startup hopes to distinguish itself by offering retail investors a Pinterest-like social media environment where they let others know which stocks they buy.
A core element of the Public app is a stream that lists who bought or sold shares in various companies along with comments from those users and others on the service. The app also offers streams —along with communities of users—based on user interests such as female-led companies or those committed to fighting disease.
According to Ian Sigalow, a partner at Greycroft, the social element gives Public an edge versus its many competitors, in part because viral sharing helps the company acquire new clients for free. He compared this model to companies like Robinhood, which Sigalow claims rely on paying platforms like Facebook to win customers—often at a cost of more than $100 per user.
Sigalow believes Public can follow in the footsteps of one of Greycroft’s earlier investments, Venmo, the popular peer-to-peer payment service.
“What made Venmo so special was that it was a social network masking itself as a payment service,” he said, adding that Public’s users create content that lead people to open the app more frequently.
For now, Public’s celebrity investors Smith and Watt have yet to publish their stock purchases on the platform, though the startup suggests they may do so in the future. Sigalow also notes that NBA legend Shaquille O’Neil recently opened an account.
The idea of building a social network around stocks is not new. A company called eToro, for instance, has won millions of customers in Europe by allowing users to follow and mimic the investment choices of others on the platform. eToro also promotes leading traders.
Such features have been slow to catch on in the U.S., however, in part due to uncertainty over whether the Securities and Exchange Commission may treat social media posts as investing advice.
Sigalow says he is confident that Public will not encounter regulatory issues, and that the company has invested heavily in compliance. He also points out that users must actually buy or sell a stock in order for it to show up as a new post in the social media feed—something that limits the reach of spammers or would-be market manipulators.
Public, which has 35 employees and offices in New York and Copenhagen, is also one of a growing number of companies, including SoFi, that allow customers to buy fractions of a share. Sigalow says this is important because it allows investors of modest means to buy companies like Google or Amazon, whose stocks trades above $1,000. Public also offers investors a high interest rate, currently 2.5%, on idle cash in their accounts.
The startup has not disclosed its financials, but says it earns revenue by loaning out shares to short sellers, as well as from payments obtained by routing orders to certain exchanges. Public also makes money from interest on cash balances.
The company’s co-CEOs Leif Abraham and Jannick Malling would not publicly disclose how many users Public, which has raised a total of $24 million to date, currently has. Instead, they state that the app’s user base has seen 20% week-over-week growth.
Public believes one tool that will cause its user numbers to swell is a gifting feature, which lets users send stock to their friends, including in amounts as small as $5. Such gifts, says Sigalow, will fuel an “insane virality” that will help Public breakthrough in a market where consumers have a surfeit of platforms to buy stocks.
More must-read stories from Fortune:
—New tech-centric Mastercard CEO has his eyes on the fintech prize
—Investors shouldn’t underestimate election volatility, warns UBS
—You can now buy a fractional share of Amazon stock
—These cities have the most jobs with six-figure salaries
—Credit Karma was acquired rather than pursuing an IPO. Will more companies follow suit in 2020?
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fortune--2020-03-03--Apple’s iPhone maker expects its China plants to be operating normally within weeks

Everything you wanted to know about Super Tuesday but were afraid to ask

Hon Hai Precision Industry Co., Apple Inc.’s most important manufacturing partner, expects its Chinese plants to begin operating normally by the end of March after resolving severe labor shortages brought on by the coronavirus outbreak.
The Taiwanese company, which assembles the majority of the world’s iPhones from China, joins a growing number of corporations envisaging a return to normalcy in the world’s No. 2 economy. Beijing has curbed the spread of an epidemic that erupted in January and forced millions to work from home, tangled up logistics and dented economic growth. Hon Hai said Tuesday its factories are now operating at about 50% of seasonal capacity but that should ramp up over the course of the month as workers stream back into its plants.
Still, Chairman Young Liu warned it remained difficult to quantify the full impact of a weeks-long disruption, or gauge the effect on final demand for the swathe of consumer electronics it makes from laptops to game consoles. Business across all of Hon Hai’s four major divisions should decline in the March quarter compared with the previous year, meaning sales in the first half could end up being flat, Liu told investors and reporters on a conference call.
“There’s not a huge hit on demand yet so far, but I dare not and don’t want to predict the outlook of the outbreak,” Liu said. “We don’t see a huge issue with our suppliers and we are helping them to secure resources.”
As China’s largest private employer and a key partner to many of the world’s most recognizable consumer brands, Hon Hai — known also as Foxconn — has become a symbol of how the outbreak could disrupt the global supply of made-in-China electronics. Apple scrapped its revenue guidance for the March quarter because of the work slowdowns and worsening demand, showing the outbreak was taking a bigger-than-predicted toll on one of the world’s most valuable companies.
Foxconn has already slashed its 2020 revenue projections in the wake of the epidemic. The contagion has disrupted Apple’s carefully calibrated production chain: Hon Hai was forced to postpone the reopening of its “iPhone City” mega-complex in the central city of Zhengzhou while it imposed strict quarantine measures on thousands of laborers. But Foxconn has since sharply raised signing bonuses to attract the new workers it needs to assemble its products.
The first quarter is typically a lull for Apple and Foxconn, because most iPhone sales occur over the holiday season. But Foxconn’s supply chain turmoil coincided with the envisioned launch of Apple’s cheaper iPhone SE2, slated for launch as early as this month. On Tuesday, Liu deflected questions about the gadget, saying only that Foxconn’s product research and development efforts were proceeding.
Liu also said Foxconn was considering reducing its annual revenue outlook, confirming a Bloomberg News report. Hon Hai is projecting a sales increase of 1% to 3% this year, Liu told Bloomberg News in a text message last month. That’s down from a Jan. 22 forecast for 3% to 5% before the epidemic spread around the globe and lagged the average of analysts’ projections at the time. Analysts expect Hon Hai to post 4.9% topline growth in 2020.
Still, Chinese companies have begun to return to work, heeding a call to safeguard economic growth — though often not at full capacity. Hon Hai, which also makes products for companies from HP Inc. to Sony Corp., has said it is restarting facilities throughout China in an orderly manner. Other key tech and Apple suppliers with major Chinese operations, such as Quanta Computer Inc., Inventec Corp. and LG Display Co., are also gradually bringing their factories back online.
“As of today, the production resumption has reached 50% of seasonal required capacity. Based on the current schedule, we shall be able to reach full seasonal capacity by the end of March,” Hon Hai said in a stock exchange filing. “There are still plenty of uncertainties which we cannot quantify around the potential impact on the full year.”
Apple’s China-focused supply chain has faced two major tests — first from trade tensions and more recently from manufacturing suspensions spurred by the spread of the coronavirus. China is also Apple’s biggest international market, and smartphone sales there are expected to take a big hit from the outbreak after government-imposed containment measures snarled logistics and closed stores.
Research firms vary in their estimates of how big the shipments drop-off will be but agree it will hurt. Strategy Analytics forecasts a 32% decline in Chinese shipments in the first quarter, to 60 million from roughly 89 million shipments a year earlier. Canalys, starting from a similar estimate for 2019, scythes its expectations down to 42.5 million shipments.
More must-read stories from Fortune:
—Before coronavirus, there were SARS and MERS. Do epidemics ever really end?
—Coronavirus is giving China cover to expand its surveillance. What happens next?
—The Greek economy is roaring back—which could lead to mass evictions
—10 journalists who deserve justice immediately
—Fortune Explains: Tariffs and trade wars
Catch up with Data Sheet, Fortune’s daily digest on the business of tech.


fortune--2020-03-03--Jack Welch’s complex legacy

Jack Welch’s complex legacy

This is the web version of CEO Daily. To get it delivered to your inbox, sign up here.
Good morning.
Jack Welch, one of the great CEOs of the 20th century, died Sunday at the age of 84. His legacy has been debated since the day he stepped down from the top job at GE in September 2001, and it will continue to be debated for years to come. But the very fact that it is still debated is proof he was a once-in-a-generation, if not once-in-a-century, business leader.
I only got to know Welch after he retired from GE. But he remained as energetic, as candid, and as full of his unique form of Gatling-gun wisdom as ever. In an interview in Radio City Music Hall in 2010, he sprayed news-making soundbites: the Obama administration “is just plain anti-business”; the Hewlett Packard board “has not done one of the primary jobs of a board, which is to prepare the next generation of leadership”; his successor Jeff Immelt was “the best choice I could make at the time.” A couple of years later, I invited him and his wife Suzy to a Wall Street Journal conference on Women in the Economy, where he drove the crowd into a frenzy by bluntly repeating his claims that there is “no such thing as work-life balance,” and that women “don’t want to be in the victims unit.”
But while Fortune rightly dubbed Welch “Manager of the Century” in 1999, it also was directionally right in 2006, when Betsy Morris wrote that Welch’s rules were being displaced by new ones. Subsequent years have only made those changes clearer. A few of them:
– Welch famously and relentlessly focused on delivering steady earnings for shareholders. Today’s CEOs are denouncing quarterly earnings guidance, and advocating a much broader view of “stakeholder” capitalism.
– Welch “went nuts” over Six Sigma, as a tool to reduce cost in his businesses. But Six Sigma is about fixing existing processes. In today’s world of rapid technology change, the best leaders are focusing on how to completely rethink their processes and disrupt their businesses. It’s a very different skill set.
– Welch built a famed management training school, using the company’s facility in Crotonville to hone a generation of corporate leaders. But the top 21st century leaders believe their managers need to look outward to find direction for the future, not focus inward.
I welcome your thoughts on the Welch legacy. More news below.
Alan Murray
@alansmurray
alan.murray@fortune.com
TOP NEWS
Markets up
Today has so far played out well in global markets, with the notable exception of Japan, where the Nikkei 225 was down 1.2%—investors seem not to have been impressed with the Bank of Japan's attempt to inject more liquidity into the market. The Shanghai Composite closed up 0.7%, the Stoxx Europe 600 was up 3% at the time of writing, and futures in the U.S. (where the rally began in earnest yesterday) also look positive. Wall Street Journal
Temporary respite?
This could however only be a temporary pause in the markets' downward trajectory. Barclays analysts: "Our central and worse case scenarios see the stock market falling 20% and 30% respectively from its previous peak." Sanford C. Bernstein & Co. also says many investors have yet to factor in the coronavirus's impact. Bloomberg
Amazon warehouses
Amazon is expanding its same-day delivery program to shoppers in more American cities, via a series of small warehouses it has quietly opened close to the cities (Phoenix, Philadelphia, Dallas and Orlando). The new facilities are around a tenth of the size of Amazon's fulfillment centers. Reuters
Chris Matthews
Hardball host Chris Matthews has abruptly retired following heavy criticism over his comments about women's appearances, his likening of Bernie Sanders' Nevada win to the Nazi takeover of France, and a very uncomfortable interview with Sanders rival Elizabeth Warren. Fortune
AROUND THE WATER COOLER
Apple supply chain
Should Apple finally be altering its supply chain to avoid its current reliance on China? As the Journal notes, CEO Tim Cook is playing down the idea, probably because Apple would struggle to find a comparable workforce elsewhere. But criticism of that reliance is not new, and won't go away. Wall Street Journal
Fed rates
Would rates-cutting by the Federal Reserve help fend off the coronavirus's economic destruction? As Larry Light writes for Fortune, Fed rescue operations in the financial crisis "served as a palliative for a damaged economy, not an elixir that magically restored the old mojo." However, "a Fed rate reduction would give the public the temporary solace, or perhaps the necessary illusion, that someone at the upper levels is getting a handle on this dreadful dilemma of lost money—and lost lives." Fortune
Netanyahu victory
Benjamin Netanyahu has claimed victory in Israel's third general election in the space of a year. According to exit polls, the Likud leader's right-wing bloc will however fall slightly short of a parliamentary majority. BBC
African data
Money is plowing into African data center infrastructure, as the continent starts to catch up with the rest of the world in terms of the scale of data it generates. Interestingly, as the Financial Times notes, the international investment does not seem to include much from China. FT
This edition of CEO Daily was edited by David Meyer.


fortune--2020-03-03--Everything you wanted to know about Super Tuesday but were afraid to ask

The coronavirus outbreak could drag down debt-bloated companies .
These are some of the most vulnerable

The 2020 presidential elections felt so far away for so long, until they didn’t.
Tuesday, March 3, is not just a regular Tuesday, it’s Super Tuesday, the 14-state (and one territory) voting extravaganza that adds up to about one-third of all delegates available to Democratic candidates hoping to nab their party’s nomination. It’s the biggest delegate day of the primary season (1,357) and could potentially give one candidate a lead significant enough to end the contest right then and there.
Senator Bernie Sanders (I-Vt.) currently leads the field in national polls, and it looks like he’s the most likely to receive a plurality of those delegates, especially in the two largest delegate states in the nation, California and Texas.
But as former candidates like Senator Amy Klobuchar (D-Minn.) and former South Bend, Ind., Mayor Pete Buttigieg endorse former Vice President Joe Biden, there may be a surprise consolidation of moderate power that leads to no clear majority winner and a contested convention this summer. And let’s not forget about billionaire Michael Bloomberg, who has spent $217 million of his own money on ads leading up to Super Tuesday, dominating the competition.
Even if the sun rises on Wednesday with no clear winner, the major voting day will likely cause some candidates to have a come-to-God moment and face the stark realization that they have no path to the nomination. You can expect the field to narrow shortly thereafter.
Here’s everything you need to know going into the day of reckoning.
What’s at stake
A Democratic candidate needs 1,991 delegates pledged in order to secure the presidential nomination. With 1,357 on the line (Bernie Sanders currently has 60 delegates and Joe Biden has 54), this day makes a huge difference. Below are the states and territory that will vote or caucus tomorrow and the number of delegates on the line.
California, 415 delegates
Texas, 228 delegates
North Carolina, 110 delegates
Virginia, 99 delegates
Massachusetts, 91 delegates
Minnesota, 75 delegates
Colorado, 67 delegates
Tennessee, 64 delegates
Alabama, 52 delegates
Oklahoma, 37 delegates
Arkansas, 31 delegates
Utah, 29 delegates
Maine, 24 delegates
Vermont, 16 delegates
Democrats living abroad, 13 delegates
American Samoa, 6 delegates
The 15% Rule
One important part of Super Tuesday is the 15% rule, which was first adopted in 1988. The rule works to shut out candidates who are on the precipice from taking delegates away from frontrunners.
Under the rule, a Democrat needs to win at least 15% of state or district votes in order to win even one delegate. This could hurt candidates like Senator Elizabeth Warren (D-Mass.) and stop her from gaining momentum. The change in math can also bump delegate counts for top candidates. The more candidates who cross that threshold, the more evenly distributed the delegates are. But if just two candidates make it, then more are awarded to candidates (another reason Klobuchar and Buttigieg’s pre-Super Tuesday dropouts are so important).
Origins of Super Tuesday
States typically get to pick their own primary dates, so long as they take place between March and June (The Democratic and Republican National Committees like to reserve February for Iowa, New Hampshire, Nevada, and South Carolina). But a lot of these states want to exert as much power in the election as possible and so they like to go as early as possible: the first Tuesday of March.
Some say the concept of Super Tuesday truly began in 1980 when President Jimmy Carter was challenged in the primary by then Senator Ted Kennedy (D-Mass.). Carter’s strategists convinced some large southern states to vote early in order to give Carter a momentous win early on. Other southern states joined in subsequent elections, and by 2000, large states across the country began participating in early voting.
Super Tuesday peaked in 2008 with the number of states and delegates on the line, but has since declined slightly.
What to expect this time around
The term ‘contested convention’ has recently gone from a controversial phrase whispered in DNC hallways to one shouted by Joe Biden on CNN’s State of the Union. This Sunday, Biden said that he would not cede the nomination to Sanders this July during the convention in Milwaukee if he was winning in delegate count but had not secured the 1,991 delegates needed to secure it. “The rules have been set,” Biden said. “You don’t change the rules in the middle of the game.”
That means that if this Tuesday isn’t a wash for Sanders, we will likely be anticipating a brokered convention this summer, putting whoever is the eventual candidate in a weaker position when it comes time to face off against President Donald Trump. This would be the first brokered convention since 1952.
“If you reject the candidate who has the most votes from the people and you win it through superdelegates,” Sanders said on ABC’s This Week. “Do you think you’re going to have the energy and the grassroots movement to defeat [Trump]? I honestly don’t think you will.”
These votes will also be the defining moment of the Bloomberg campaign, which has purposefully eschewed the first four elections in order to focus on these larger-delegate states. If he cannot pick up a significant portion of votes here, he’ll have trouble continuing on with his campaign. Warren, with just eight delegates in her pocket, faces a similar fate, and without the billions of self-funding that Bloomberg enjoys.
What could go wrong?
After the debacle in Iowa, election security experts are on high alert. Los Angeles County will be rolling out all new voting machines, in North Carolina more than half of voters will be using new machines to vote. In Tennessee, 70% of voters will use on unverifiable direct-recording electronic (DRE) voting machines. In Texas about 40% of voters will use DRE machines.
“Voting systems need proper planning, testing and training, especially when a new type of equipment is being introduced,” said Marian K. Schneider, president of Verified Voting. “There also needs to be a way to monitor, detect, respond and recover from technological failures—no matter the cause—and to ensure that election officials have the proper resources and tools to run elections.”
Outbreaks of coronavirus across the United States may also keep voters away from crowded polling stations with touchscreens, limiting turnout. Some districts have added curbside ballot drop offs, so that voters don’t have to exit their cars to cast their ballots. Across the country, voting stations will have extra hand sanitizer, plastic gloves and disinfectant wipes.
Maria Benson, the communications director for the National Association of Secretaries of State, said she would “defer to states,” to create their own contingency plans if necessary.
More must-read stories from Fortune:
—Are we undergoing an industrial revolution or a phase change?
—Twitter’s testing new ways to fight misinformation. Is open-source the answer?
—Meet Trump’s Giuliani-approved power broker—and Melania’s new senior adviser
—Angela Merkel is on her way out. Meet her potential replacements
—How the 2020 election could influence your personal finances
Get up to speed on your morning commute with Fortune’s CEO Daily newsletter.


fortune--2020-03-03--The coronavirus outbreak could drag down debt-bloated companies. These are some of the most vulnerab

The coronavirus outbreak could drag down debt-bloated companies. These are some of the most vulnerable

From Richard Branson’s Australian airline to U.S.-based cinema chains and casino operators, the companies most vulnerable to the coronavirus outbreak are facing mounting pressure in global credit markets.
An escalating outbreak that drives off customers and revenue could lead to ratings downgrades, hinder refinancing efforts, and in some cases trigger defaults. And it’s more than just travel companies: Debt-laden commodities producers, shipping firms and luxury automakers have endured waves of selling by bondholders as they ratchet down expectations for global growth.
Investors who’ve spent years pouring money into nearly everything the credit markets had to offer are balking now that the outbreak has spread to more than 65 countries. That’s stoking fears of a prolonged slump in riskier assets. While central banks from the U.S. to the U.K. and Japan have all said they stand ready to roll out stimulus to support credit markets, it’s not clear the tactic will work if the problem is an historic slump in consumer demand.
“We should all be worried,” said Azhar Hussain, head of global credit at Royal London Asset Management, who manages 6.1 billion pounds ($7 billion) of assets. “First-order effects are likely to be travel and cyclicals with long supply chains, but the concern is that it spreads to the developed-market consumer.”
Diamond Hill Capital Management’s Bill Zox and John McClain told investors Monday morning that they see little upside from more rate cuts if business activity is increasingly disrupted by the virus and everyone is forced to work from home. “Corporate CFOs won’t be Skyping in plans for new capital projects,” they wrote.
Below are some of the companies on the watch lists of credit investors and ratings firms as the human and economic toll of the virus increases.
Airlines
Virgin Australia Holdings: The carrier, part of billionaire entrepreneur Richard Branson’s Virgin Group, saw its $425 million of bonds due in 2024 plunge nearly 12 cents since the start of last week to a record low of 85.2 cents on the dollar on Monday. The airline warned last week that the coronavirus is expected to reduce earnings by A$50 million ($33 million) to A$75 million in the second half of 2020. S&P Global Ratings last week lowered its outlook on the company to negative, citing restrictions on inbound tourism from Chinese nationals.
Billionaire entrepreneur Richard Branson’s Virgin Australia Holdings saw its $425 million of bonds due in 2024 plunge nearly 12 cents since the start of last week to a record low of 85.2 cents on the dollar on Monday. James D. Morgan—Getty Images
Garuda Indonesia: The flag carrier’s $500 million global sukuk due in 2020 has slumped nearly 37 cents since the start of last week to a near record low of 60.6 cents on the dollar on Tuesday. Tourism to the country is faltering, and the government forecasts $4 billion of losses on travel restrictions.
Airline vendors are also feeling the pressure. WiFi companies Gogo Inc. and Global Eagle Entertainment Inc., which provide passenger internet for airlines including United, Delta and Southwest, are declining in debt and equity markets on concern that if more companies suspend business travel, the demand for in-flight WiFi could drop significantly. Both companies carry some of the weakest junk ratings and high debt relative to their earnings.
Gaming
Codere: If the spread of the virus in Europe isn’t contained, the Spanish gaming company may find it more difficult to refinance bonds due next year, according to Lucror Analytics. The debt, 500 million euros of notes due in November 2021, has plunged 9 cents on the euro since Feb. 21 to about 87 cents, Bloomberg data show.
Macau casinos: China’s gambling hub shut down 41 casinos for 15 days to contain virus exposure, triggering a record drop in gaming revenue in February. March may bring more of the same, writes Bloomberg Intelligence’s Margaret Huang.
That could pressure U.S. casino companies with significant business in Macau. MGM China, a unit of MGM Resorts International, sought to ease covenants tied to a HK$9.75 billion ($1.25 billion) loan to address what MGM China CEO Grant Bowie said “may be an extended recovery period.” The company’s junk-rated $750 million of notes due in 2026 have dropped 5.25 cents on the dollar to a nine-month low of 101.25. Meanwhile, the $1 billion of notes that Wynn Resorts Ltd.’s Macau unit issued in December have plunged to 97 cents from almost 102 on Feb. 12.
For cruise operator Royal Caribbean Cruises, the cost of credit-default swaps contracts has more than tripled in less than a week. Christopher Occhicone—Bloomberg/Getty Images
Travel
Cruise lines: Passenger ships have been among the worst-hit in markets after a quarantined ship off Japan’s coast with more than 600 confirmed cases led to cancellations and profit warnings. While most of the sector brags of investment-grade ratings and relatively strong balance sheets, the escalating crisis is raising concern that those ratings may be at risk if the virus isn’t contained. Take the credit-default swaps market, where credit investors buy insurance against losses. For cruise operator Royal Caribbean Cruises Ltd., the cost of the contracts has more than tripled in less than a week.
Tui AG: The German travel service provider was downgraded to BB- from BB with a negative outlook on Friday by S&P, which said the coronavirus could jeopardize bookings, adding to risks it was already facing from the grounding of Boeing’s 737 Max and unusual weather patterns. Tui’s 300 million euros of notes due in October 2021 have dropped almost 7 cents on the euro to 95.
Entertainment
Companies and municipalities have been shutting doors to venues like museums, casinos and movie theaters to prevent widespread exposure. AMC Entertainment Holdings Inc.’s bonds plunged to stressed levels last week after the chain closed 22 of its 47 theaters in Italy. While the closures in aren’t expected to have a major impact on the company, an outbreak in the U.S. could be a problem, Chief Executive Officer Adam Aron said on an earnings call Thursday. The company has already been suffering from a decline in movie theater attendance, reporting that ticket sales in the U.S. slipped 4.4% in 2019. AMC’s $600 million of notes due in 2025 dropped to 81.5 cents on the dollar to yield more than 10%.
Energy
The world is facing the biggest commodity demand shock since the global financial crisis as the virus outbreak spreads, according to Goldman Sachs Group Inc. Oil and gas companies across the globe have come under pressure amid fears of a global slowdown. Some, such as Chesapeake Energy Corp. and Whiting Petroleum Corp., have plunged to distressed levels in credit markets, with Chesapeake’s notes due 2025 dropping to 60 cents on the dollar and Whiting’s plunging to about 38 cents.
In Asia, India’s Vedanta Resources Ltd.’s 2024 bonds fell 7.5 cents last week as the virus weighed on commodity prices, and Indonesia’s Medco Energi Internasional Tbk has also fallen some in the bond market.
Shipping
China has grown into the maritime industry’s main source of cargoes, and sailings to ship goods to consumers around the world has been disrupted. As the virus wreaks havoc on physical supply chains and global trade, the shipping industry is rife with canceled voyages, idle containers and falling rates. CMA CGM, the world’s third-largest shipping company is seeking to refinance $1 billion of debt coming due next year, but coronavirus might disrupt the plans of the highly leveraged shipping operator, which opened shop in Shanghai in 1992. The company’s notes due January 2025 are currently up 1 point to 65 cents, but were trading at 70 cents last Monday.
Autos
Aston Martin’s bonds lost around 6 cents on the dollar last week, with its April 2022 notes bid at around 92 cents on Monday after it declined to divulge its latest sales figures for a new SUV. The company is relying on growth in China to double its sales output. Notes issued by Jaguar Land Rover also lost around 6 cents on the euro in the same period. Its November 2024 notes were bid at around 95 cents on Monday as coronavirus fears nixed its plans to issue a U.S. dollar bond.
More must-read stories from Fortune:
—Before coronavirus, there were SARS and MERS. Do epidemics ever really end?
—Coronavirus is giving China cover to expand its surveillance. What happens next?
—The Greek economy is roaring back—which could lead to mass evictions
—10 journalists who deserve justice immediately
—Fortune Explains: Tariffs and trade wars
Catch up with Data Sheet, Fortune’s daily digest on the business of tech.


fortune--2020-03-03--The stock market’s gyrations feel historic. But are they?

Well that was fast.
In the span of 7 trading days, the S&P 500 lost nearly 13%. Poof…gone. Last week marked the worst week of performance since the financial crisis since 2008. Then today saw another seemingly historic move, this time to the upside with the Dow notching its biggest point gain of all time.
When markets reprice so quickly it can leave your head spinning as an investor. The coronavirus is a reminder that risk in the stock market often comes from where you least expect it. It also adds a new level of uncertainty for investors who are already forced to deal with numerous uncertainties when trying to handicap the future.
While a pandemic is a rare event, losses in the stock market are not. Here’s a chart showing the frequency of drawdowns by various levels of losses going back to 1928
By my calculations, there have been 53 double-digit corrections in the stock market over the past 90+ years, good enough for one every other year or so. The current double-digit correction feels different because there is the prospect of a looming pandemic and potential economic slowdown.
While the severity of these downturns is always impossible to predict in advance, we can look at the historical track record of stock market losses to get a better sense of the historical range of outcomes.
When stocks fell 10% in the past:
49% of the time they didn’t fall any further than 15%
13% of the time they didn’t fall any further than 20%
15% of the time they fell between 20% and 30%
9% of the time they fell between 30% and 40%
8% of the time they fell between 40% and 50%
6% of the time they fell more than 50%
When stocks fell 15%:
26% of the time they didn’t fall any further than 20%
30% of the time they fell between 20% and 30%
19% of the time they fell between 30% and 40%
15% of the time they fell between 40% and 50%
11% of the time they fell more than 50%
When stocks fell 20%:
40% of the time they didn’t fall any further than 30%
25% of the time they fell between 30% and 40%
20% of the time they fell between 40% and 50%
15% of the time they fell more than 50%
When stocks fell 30%:
42% of the time they didn’t fall any further than 40%
33% of the time they fell between 40% and 50%
25% of the time they fell more than 50%
When stocks fell 40%:
57% of the time they didn’t fall any further than 50%
43% of the time they fell more than 50%
When stocks fell 50%:
67% of the time they didn’t fall any further than 60%
33% of the time they fell more than 60%
Here’s another way of looking at these numbers:
When stocks fell 10%, 51% of the time they fell at least 15%.
When stocks fell 15%, 74% of the time they fell at least 20%.
When stocks fell 20%, 60% of the time they fell at least 30%.
When stocks fell 30%, 58% of the time they fell at least 40%.
When stocks fell 40%, 43% of the time they fell at least 50%.
When stocks fell 50%, 33% of the time they fell at least 60%.
The huge crashes are always the biggest worry but that’s because they are so rare. Nearly 80% of all double-digit corrections didn’t see losses exceed 30%.
The length of the market plunge can also vary widely. For those corrections that were in the 10% to 30% range, the average loss was -16.1%, lasting 140 days from peak-to-trough. The corrections that were -30% or worse averaged losses of -45%, lasting 442 days from top to bottom.
The path of the current downturn will likely be determined by the severity of the economic slowdown caused by the coronavirus, the potential fiscal and monetary stimulus that occurs because of it and the psyche of investors who are dealing with a new known unknown.
Just remember that the fact that stocks have fallen so hard so fast doesn’t necessarily make it any easier to predict what comes next.
When the stock market took a nosedive in the 1960s, one of Warren Buffett’s clients called to warn him that stocks would surely fall further. Buffett responded with two questions:
If you knew in February that the Dow was going to 865 in May, why didn’t you let me know it then? And if you didn’t know what was going to happen during the ensuing three months back in February, how do you know in May?
Markets are driven by trends and psychology in the short-term so it’s possible stocks continue their downward trajectory. But the truth is no one knows how far these things will go or what expectations investors have already baked into current prices.
Markets feel more uncertain today than they have in some time. Just know that no investor has ever had complete clarity about the path markets will take over the short-to-intermediate-term. There are far too many variables at play to know what will happen with anything approaching certainty when it comes to market psychology.
Ben Carlson, CFA is the Director of Institutional Asset Management at Ritholtz Wealth Management. He may own securities or assets discussed in this piece.
More must-read stories from Fortune:
—Coronavirus spreads to a previously healthy sector: corporate earnings
—A Fed rate cut won’t cure what’s ailing the stock market
—How companies like Ernst & Young are going to extremes to avoid infections
—These cities have the most jobs with six-figure salaries
—Credit Karma was acquired rather than pursuing an IPO. Will more companies follow suit in 2020?
Subscribe to Fortune’s Bull Sheet for no-nonsense finance news and analysis daily.


fortune--2020-03-03--Other countries are testing patients for coronavirus by the tens of thousands. Why the U.S. is so fa

Other countries are testing patients for coronavirus by the tens of thousands. Why the U.S. is so far behind

South Korean officials are setting up “drive-thru” coronavirus screening facilities. Manufacturers in China have the capacity to distribute more than 1.5 million tests a week. The countries, alongside Italy and the U.K., are testing tens of thousands of people for the coronavirus, in many cases processing thousands of samples a day.
In the U.S., meanwhile, inadequate coronavirus testing has become a full-blown scandal. As U.S. cases spike, the Department of Health and Human Services has launched an investigation into defective testing kits that delayed lab results by several days, and experts are worried that a slow federal response may have given the virus more time to spread.
The U.S.’s testing missteps are especially alarming since the coronavirus’s initial spread in Asia gave U.S. officials fair warning that the outbreak was heading their way.
“If we had the ability to test earlier, I’m sure we would have identified patients earlier,” Jeff Duchin, the health officer for public health in Seattle and King County, Wash., where the first coronavirus death in the U.S. was reported, told the New York Times.
Subscribe to Fortune’s Outbreak newsletter for a daily roundup of stories on the coronavirus outbreak and its impact on global business.
The coronavirus outbreak neared 91,000 confirmed cases worldwide on Tuesday, and over 3,000 people have died. The rising number of confirmed cases in the U.S., which reflects both the continued spread of the virus and the fact that more testing is occurring after delays, has raised questions about U.S. government handling of the outbreak.
The U.S. Centers for Disease Control and Prevention (CDC) had been keeping track of the number of people tested for the coronavirus; the count stood at 472 people as of late Monday. But the tally was scrubbed from the website on Tuesday. The webpage now only lists the number who have tested positive—102 as of Tuesday, up from 86 the day prior. The U.S. reported its first two coronavirus-related deaths over the weekend, and the death toll in the U.S. reached six as of Tuesday.
A faulty first test
The coronavirus’s emergence in Asia in December and January gave the U.S. weeks to prepare, but even in the early stages, diagnostic testing hit snags.
The CDC, a U.S. federal agency, opted to develop its own test kit rather than use the existing one recommended by the World Health Organization; it is not yet clear why. Early on, CDC sent 200 of its test kits to state labs across the country (each kit can test 700 to 800 samples), but in mid-February, the agency announced that some of the kits were flawed, and asked labs to send samples to the CDC’s central lab in Atlanta to be tested, a move that delayed results by several days.
Medical professionals take samples from drivers with suspected symptoms of the COVID-19 coronavirus at a “drive-thru” virus test facility north of Seoul, on February 29, 2020. South Korea is testing possible coronavirus patients by the thousands. JUNG YEON-JE—AFP/Getty Images
But until last week, only 12 labs had the capacity to test for the virus. As of Saturday night, 31 public health labs were able to carry out the test, Scott Becker, the chief executive officer of the Association of Public Health Laboratories (APHL), said on Twitter. Becker said more than 100 labs—out of APHL’s more than 200 members—would be ready to test for the virus next week, after the CDC sent out more test kits.
The CDC until recently also restricted who could be tested—ruling out people who did not show symptoms and who had not been in contact with a confirmed case or traveled to affected countries. The limits seemed to ignore a key trait of the new coronavirus; that asymptomatic sufferers may still be able to spread the virus.
Regulatory hurdles
Regulatory procedures have also slowed down the process. Commercial and state labs typically need Food and Drug Administration (FDA) approval before they can develop diagnostic tests.
On Feb. 29, the FDA announced a new policy to help expedite the process for labs applying for FDA approval, and signed off on the Wadsworth Center in New York as the first non-CDC lab approved to test for the virus. A Wadsworth lab test confirmed the first coronavirus case in New York state.
The U.S. now has new test kits for 75,000 people, and more are on the way, Health and Human Services Secretary Alex Azar said on CBS’s “Face the Nation” on Sunday. He promised a “radical expansion” of testing in the next week or two.
At least one medical professional is skeptical. “We hear that [the tests are] coming very soon, but I’m here to tell you right now, at one of the busiest hospitals in the country, I don’t have it at my fingertips, I still have to call the Department of Health, I still have to make my case, plead to test people, this is not good,” Matt McCarthy, a staff physician at New York-Presbyterian Hospital, told CNBC.
McCarthy added that there would be “thousands [of cases] by next week, and this is a testing issue.” McCarthy called the lack of coronavirus testing in the U.S. a “national scandal.”
“Although [the testing delay in the U.S.] will soon improve, production of these kits—should infection rate increase and COVID become pandemic—will need to be ramped up and deployed to all hospitals and clinics without delay,” said Alan Hsu, a post-doctoral research fellow at the University of Newcastle in Australia who studies influenza viruses.
But some experts worry that even when test kits become widely available in the U.S., many people will be deterred from getting tested for the virus for fear of expensive medical bills.
Federal funds cover the cost of the test in federal, state and local public health labs, but do not extend to academic or commercial labs, nor do they cover emergency room, doctor’s office, or urgent care visits.
New York Governor Andrew Cuomo on Monday evening issued a directive requiring New York health insurers to waive cost sharing associated with testing for the coronavirus and said New York residents with Medicaid coverage would not be charged co-pays for coronavirus testing.
How are other countries doing?
As the U.S. struggles, other nations have rolled out coronavirus testing on massive scales. South Korea, which has 4,812 confirmed cases and a population around six and a half times smaller than the U.S., had tested more than 121,000 people as of Tuesday, using a test developed in-country.
As coronavirus cases spiked in the country, President Moon Jae-in raised South Korea’s alert level to its highest, empowering the government to carry out sweeping measures to control the virus.
The government designated coronavirus-only hospitals, expedited the approval of newly-built wards, and required anyone visiting a hospital with respiratory symptoms to be tested—even allowing doctors to order a coronavirus test if the patient refuses one. The alert also made it easier for officials to access the personal data of suspected cases and allocate more funds to fight the virus.
South Koreans are queuing for Starbucks-inspired drive-thru coronavirus testing facilities, which local health officials are setting up in parking lots. Medical workers lean into the car window, check individuals inside for fever and other symptoms, and take a secretion sample for examination—all in less than 10 minutes.
Health care workers prep evaluation swabs for coronavirus in the research laboratory of a hospital in Turin, Italy. Other countries have tested for coronavirus at scale as the U.S. has struggled to test only dozens of patients. Stefano Guidi—Getty Images
The drive-thru helps offset the wait times and crowds of hospitals and clinics, which lowers infection risks because fewer people will be in a room together for a shorter period of time. Drivers also do not need to get out of their cars for the drive-thru checks, which also lowers infection risk.
In the U.K., which has a population five times smaller than the U.S., 13,525 people had been tested for coronavirus by Monday—13,485 tested negative and 40 were confirmed positive. Italy, which has over 2,000 confirmed cases and a population size similar to the U.K., had carried out more than 23,000 tests as of Tuesday.
South Korea and Italy have the highest number of confirmed cases outside of China. Both Korea and Italy, as well as the U.K., have a national health service that provides residents with universal coverage.
Importance of coronavirus testing
Because the vast majority of COVID-19 cases can present as mild, with symptoms like fever and cough that are common in the flu and other respiratory viruses, health professionals are “highly dependent on the use of diagnostics” to identify COVID-19, said Meru Sheel, an epidemiologist at Australian National University.
The World Health Organization has manufactured coronavirus test kits and is making 250,000 kits available to 159 laboratories around the world to ensure that countries that cannot manufacture their own kits will be able to test for the virus; countries that don’t have the facilities to use the test kits can send samples back to WHO labs for diagnosis.
So far, 18 countries in Africa have confirmed they have the ability to test for the virus, and 31 countries in Europe have also established testing capabilities.
Countries that have to ship samples to other parts of the world will have to bear “significant delays in getting access to the results,” Sheel said. To minimize the risk of infection, health officials in these countries should treat individuals that show symptoms and have links to a confirmed case as if they are a confirmed case, until their results come back negative.
More must-read stories from Fortune:
—How to think about COVID-19
—Coronavirus spreads to a previously healthy sector: corporate earnings
—Coronavirus is giving China cover to expand its surveillance. What happens next?
—Coronavirus shows why we need vaccines before, not after, an outbreak
—Before coronavirus, there were SARS and MERS. Do epidemics ever really end?
Subscribe to Fortune’s Outbreak newsletter for a daily roundup of stories on the coronavirus outbreak and its impact on global business.


fortune--2020-03-03--Chris Matthews retires from MSNBC, citing inappropriate comments

Longtime MSNBC host Chris Matthews abruptly retired from his “Hardball” show on Monday, apologizing for making inappropriate comments about women and following a brutal week where he also took heat from supporters of Bernie Sanders and Elizabeth Warren.
His exit came after a weekend of discussions with his bosses, three days after GQ ran a column by a freelance journalist about her “own sexist run-in” with Matthews in the makeup room before appearing on his show.
Matthews opened his program Monday with the announcement, talking in his familiar staccato style, that he was ending his run on the political talk show he started in 1997. After a commercial break, he was replaced in the anchor chair by a shaken Steve Kornacki.
“This is the last ‘Hardball’ on MSNBC, and obviously this isn’t for lack of interest in politics,” Matthews said.
He said that “compliments on a woman’s appearance that some men, including me, might have incorrectly thought were OK were never OK. Not then, and certainly not today, and for making such comments in the past, I’m sorry.”
The 74-year-old Matthews, who underwent prostate surgery last year, worked as a speechwriter for President Jimmy Carter and was top aide to House Speaker Thomas “Tip” O’Neill before turning to journalism as Washington bureau chief for the San Francisco Examiner. He had been talking to MSNBC management about retiring after the election, but he didn’t survive until Super Tuesday.
He apologized last Monday for likening Sanders’ win in the Nevada caucus two nights earlier to the Nazi takeover of France. On Friday’s show, he confused the identities of South Carolina Senate candidate Jaime Harrison and Sen. Tim Scott, both black men.
And he was criticized for an uncomfortable interview with Warren following the presidential debate, asking if she believed Mike Bloomberg was lying when he denied telling a pregnant female employee of his news company to terminate the pregnancy.
“Why would she lie?” Warren said.
In her first-person story GQ story released Friday, journalist Laura Bassett said Matthews behaved inappropriately toward her when she was a guest on his show in 2016.
In the makeup room prior to the show, Matthews looked at her and said “why haven’t I fallen in love with you yet?” she wrote.
“When I laughed nervously and said nothing, he followed up to the makeup artist. ‘Keep putting makeup on her, I’ll fall in love with her,’” Bassett wrote. “Another time, he stood between me and the mirror and complimented the red dress I was wearing for the segment. ‘You going out tonight?’ he asked.”
Bassett said she wrote about the encounter in a 2017 essay but didn’t name Matthews because she was afraid of network retaliation, adding, “I’m not anymore.”
It was noticed by outsiders when Matthews didn’t appear on MSNBC’s coverage of the South Carolina primary on Saturday night.
Crew members backstage at “Hardball” on Monday learned of their boss’ exit about an hour and a half before Matthews’ statement. There were audible gasps in the green room from guests waiting to go on for the first segment when they listened to the announcement the same time as viewers. Shortly after he made his statement, Matthews left the studio with his wife and family.
MSNBC said there will be rotating subs in the time slot before a permanent replacement is named for the host who has been a mainstay of the network’s lineup since two years after MSNBC launched.
Even before his last week, there was some discontent among Sanders supporters about Matthews’ lack of enthusiasm for their candidate, putting the news network that appeals to a liberal audience at odds with a potential liberal presidential nominee.
Kornacki, at the end of Monday’s show, said he watched the show as a teenager.
“Chris has plenty of intellect but he also was willing to wear his heart on his sleeve,” he said. “That’s what made him compelling viewing.”
Washington Post columnist Kathleen Parker tweeted that she’s writing an angry column about his exit.
“Chris Matthews is a friend of mine,” she wrote. “He and I have flirted unabashedly for 20 years. This is an atrocious end to a noble, happy-warrior career. I will continue to be his friend.”


fortune--2020-03-03--The markets charge back to life—with a little help from the Fed

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 evening, Bull Sheeters! This is Fortune finance reporter Rey Mashayekhi, filling in this week for Bernhard Warner. We’re trying something new: To orient you on Asia and U.S. markets, I’ll be sending you a special evening (or morning, for those of you in Asia) edition of the newsletter. We’ll be back to regular scheduling next week.
In what are tumultuous times for the global financial markets, I’ll do my best to keep this ship of ours sailing smoothly as businesses and investors navigate the fallout from the ongoing coronavirus outbreak. And that’s exactly where we will begin today’s discussion: Last week saw markets around the globe lose trillions in value thanks to fears of the outbreak’s hugely disruptive potential.
But it appears investors were prepared to buy the dip—because the bull market returned on Monday in triumphant fashion.
Markets update
In Asia, the epicenter of the coronavirus scare, the major indices all rebounded to start the week. Tokyo’s Nikkei index was up nearly 1% while Hong Kong’s Hang Seng showed more modest gains, but the real success story was on mainland China, where the major Shanghai and Shenzhen stock market indices climbed more than 3% each.
The outbreak has decimated factory output in mainland China. Official PMIs released by Beijing over the weekend showed severe contraction in February—but that didn’t stop the markets from starting the week strong amid signs that the worst of the outbreak has headed elsewhere. According to the World Health Organization, the virus is now spreading faster outside of China.
Moving westward, Europe’s major indices also showed signs of life, with the FTSE up more than 1%. But that paled in comparison to the rally seen in New York on Monday, where the Dow climbed nearly 1,300 points, or more than 5%, and the Nasdaq and S&P 500 also each gained more than 4%. It was a sorely-needed shot in the arm for the major U.S. markets, all of which fell into correction territory last week with losses exceeding 10%.
So what’s driving this healthy rebound? One cannot discount the calming effect of an accommodative central banking policy—and that’s exactly what investors got after Federal Reserve chairman Jerome Powell indicated that the Fed is prepared to cut interest rates this month to help shelter the U.S. economy from the impact of the coronavirus outbreak. That sentiment has since been echoed by policymakers elsewhere, most notably in Japan and Europe—though some have doubts over whether monetary policy alone can lift the markets out of this rut.
Indeed, there are signs that investors are still wary; 10-year U.S. Treasury yields hit record lows during trading on Monday. Elsewhere, crude oil prices rebounded after taking a pounding last week, while gold was up and the dollar was down.
That’s all for now. Have a pleasant evening and see you tomorrow.
Rey Mashayekhi
@reym12
rey.mashayekhi@fortune.com
Today's reads
Earnings hurt. My Fortune colleague Anne Sraders documents how the coronavirus outbreak has hit corporate America's bottom line (and, in turn, the pockets of shareholders). Companies as varied as Apple, Mastercard, Marriott, and Coca-Cola all anticipate feeling the pain, with the outbreak stunting what's been several years of mostly robust earnings growth for American companies. The good news is that the impact should be "transitory, not permanent," according to one analyst.
Technical difficulties. Who didn't get to ride the stock market rally on Monday? Robinhood users. The popular stock trading app crashed in the morning and was out of service the entire day, as my colleague Jeff John Roberts reports. It's a major blow for the fintech startup, which has targeted millennials on the way to a valuation exceeding $7 billion but has had to answer its fair share of controversies in recent times.
Going public. Meanwhile, startups like Public are coming for some of Robinhood's market share, not to mention that of established players like Charles Schwab and E-Trade. The company announced a $15 million investment led by venture capital firms Accel and Greycroft, and also counts the likes of actor Will Smith and NFL star J.J. Watt among its backers. Public's differentiator? A "Pinterest-like social media environment" that lets retail investors interact with each other.
Market candy
“From the day I joined GE to the day I was named CEO, 20 years later, my bosses cautioned me about my candor. I was labeled abrasive and consistently warned my candor would soon get in the way of my career... and I'm telling you that it was candor that helped make it work.”
— former General Electric chairman and CEO Jack Welch, who died Sunday at the age of 84.


fortune--2020-03-03--Twitter and Square are ‘strongly encouraging’ employees to work from home amid coronavirus fears

Twitter and Square are asking their employees across the globe to work from home over concerns about the spread of the coronavirus.
Monday, the two companies, both of which are led by CEO Jack Dorsey, said they were “strongly encouraging” employees to stay home. About 5,000 employees from Twitter and 4,000 employees from Square will be affected. The two companies have also suspended all non-critical business travel and events.
“Our goal is to lower the probability of the spread of the COVID-19 coronavirus for us – and the world around us,” Jennifer Christie, head of Twitter’s human resources, said in a blog post. “We are operating out of an abundance of caution and the utmost dedication to keeping our Tweeps healthy.”
Twitter and Square’s policies are some of the most cautious as tech companies continue to clamp down on travel, pull out of trade shows, and cancel major events out of fear of the rapidly spreading virus. On Monday, Google announced that it was morphing its Google Cloud Next conference, which had been scheduled for April in San Francisco, into a streamed event, while Microsoft said it wouldn’t host its MVP Summit later this month near Seattle. That followed an announcement from Facebook last week, which canceled its most publicized annual event, its F8 developer conference.
Meanwhile, a petition with about 20,000 signatures is circling in the hopes that organizers will cancel the Austin’s annual South by Southwest, a conference Facebook and Twitter already pulled out of.
Twitter’s work-from-home policy is mandatory for employees in Hong Kong, Japan, and South Korea, due to government restrictions. The company said it will work to make its meetings and internal tasks doable remotely. Outside of the mandatory restrictions, offices will remain open for those who need to come in or prefer to work there. Meanwhile, the company is increasing the deep cleaning and sanitizing of all its work spaces, and will be offering pre-packaged food options for employees.
Twitter said that its criteria for the new policy will “evolve over time” as it gets more information.
Twitter is a global company & the safety of our people and those around us is our top priority. We've been closely monitoring #coronavirus COVID-19 developments, & wanted to share our current plans & travel policies. There will be more updates to this policy in the coming days. — Jennifer (@jenchristiehr) March 1, 2020
Square similarly is keeping its offices open, minus a shut down in Shenzhen, China, according to an internal email sent to employees on Monday. The company is also deep cleaning its offices and providing sanitizing materials and “basic culinary” offerings for employees who are not able to work from home. Square also said it’s suspending outside visitors to its offices, including job candidates, which will be interviewed via video conferencing.
The news comes as four more deaths from the coronavirus were announced in Washington on Monday. The epidemic has already exceeded 90,000 cases and caused 3,000 deaths worldwide. In the U.S., about 100 cases have been reported to authorities and six people have died.
More must-read stories from Fortune:
—How to think about COVID-19
—Coronavirus spreads to a previously healthy sector: corporate earnings
—Coronavirus is giving China cover to expand its surveillance. What happens next?
—Coronavirus shows why we need vaccines before, not after, an outbreak
—Before coronavirus, there were SARS and MERS. Do epidemics ever really end?
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fortune--2020-03-03--For a time, Jack Welch was the most valuable CEO on earth

It’s a sign of Jack Welch’s revolutionary influence on business that when you tell people about the pre-Welch world, they don’t believe you.
When Welch became General Electric’s CEO in 1981, the CEOs of the Fortune 500 had just named General Electric the company they admired most. Yet this paragon was managed according to an antediluvian five-volume set of rules. In one division, computers printed out seven unreadable reports daily for managers to study; one of the reports routinely stood 12 feet high. Bureaucracy had become almost comical: The head of the computer lab in the medical equipment business couldn’t sign for deliveries without a superior’s approval. Not too surprisingly, in the preceding decade GE stock had lost half its value after inflation—and still Fortune 500 chiefs said this was the best business they knew.
That was the world Welch inherited, hated, and transformed. GE was worth $14 billion when he took over; it was worth some $400 billion when he stepped down 20 years later, and for a time it was the most valuable company on earth. Welch changed GE so radically and successfully that business leaders everywhere studied his methods and tried to emulate them. He was by far the most influential manager of his generation. Fortune named him the manager of the century in 1999, and in retrospect he still merits the title.
Welch understood a few fundamental truths that had been forgotten in the gigantic, self-absorbed bureaucracy that GE and many other companies had become. Success did not consist of making the company bigger; success was making the company more valuable. You didn’t get there by hiring strategists at headquarters to tell operating chiefs what to do, or by adopting new procedures for everyone to follow, or by holding more meetings or adding more layers of management, all of which had happened in the decade before Welch took over. You got there by freeing managers to create value. He viscerally despised bureaucracy—”Hate it, kill it!” he said—and never stopped trying to eliminate it. Those five volumes of management rules? He ceremonially burned them in a parking lot.
Turning a bloated institution into a lean and hungry one required firing employees, which was not universally popular. That’s where the infamous “Neutron Jack” label came from, referring to a bomb that leaves buildings standing but eliminates the people. Welch hated that name. He felt certain he was doing what had to be done, but in the 1980s it was shocking. In 1989 when a Fortune writer turned in an article stating that Welch had eliminated 100,000 GE employees, the editor ordered him to re-check the figure because it couldn’t possibly be right. But it was.
Jack Welch (L) and Jeffrey Immelt (R) at the November 2000 press conference announcing Immelt’s appointment as the new GE CEO following Welch’s retirement in 2001. Doug Kanter—AFP/Getty Images
Even more disorienting was Welch’s introduction of the “vitality curve,” which others called the “rank and yank” system. It required managers to (among other things) rank employees by performance annually and identify the bottom 10%, who had to improve or leave—and as he acknowledged, they “generally had to go.” Plenty of critics loathed the system as inhumane, but Welch felt the opposite. He said the system’s goal was “to force a conversation” that most managers don’t want to have—telling underperformers where they stand. Failing to tell them, Welch said, was truly inhumane.
In fact Welch obsessed over GE’s people. He said that as CEO of a diversified conglomerate, “I have only two jobs, allocating capital and evaluating people.” (He later added a third job, transferring ideas between parts of the company.) His heart was in studying people; he claimed he spent more time on it than on everything else put together. He said he didn’t always know the CFOs of GE’s many far-flung operations, but he always knew the HR chiefs.
Yet it was as a judge of people that Welch committed what he considered his worst mistake, choosing Jeff Immelt as his successor. Welch and the board spent six-and-a-half years on succession and agreed unanimously that Immelt was the right choice, but GE collapsed spectacularly on his watch; he stepped down in 2017, and when he announced his departure, the stock notched its biggest gain in months. Welch criticized Immelt publicly just once, during the financial crisis, but in more recent years he was privately furious and distraught over GE’s meltdown. He was haunted by something he had said near the end of his own CEO tenure: “My success will be determined by how well my successor grows the company in the next 20 years.”
It has become fashionable to bash Welch on two counts: that his management practices didn’t always work when applied elsewhere and that he was somehow responsible for GE’s near-demise over the past few years. The evidence is not persuasive on either charge. On the first, remember that Welch did what needed doing at a particular company and a particular time, and it worked astoundingly well. He was happy to tell the world what he was doing and why because it built up GE (and him). But when other managers in other companies, industries, and decades failed to get the same results, blaming Welch’s techniques is a weak excuse.
On the second charge, one could fairly blast Welch for choosing Immelt as CEO, but today’s conventional criticism doesn’t do so. It holds instead that Welch bulked up GE Capital unsustainably, forcing Immelt to slim it down. SEC filings show the opposite. (For details, read “What the hell happened at GE?” from the June 1, 2018 issue of Fortune magazine.) In any case, blaming an ex-CEO for trouble 16 years after his departure surely violates some reputational statute of limitations.
Welch was by far GE’s most successful post-World War II CEO, but he will be remembered as something much more. He wrenched an entire generation of business leaders out of an old era of management and into a new one. He certainly wasn’t the only CEO who saw a need for urgent change, but as GE’s chief he stood on a huge stage and faced a brutal challenge. It took 20 years, but he transformed the conventional view of what it meant to succeed at the top of a great corporation.
More must-read stories from Fortune:
—What Beth Comstock learned from Jack Welch (2016)
—Where have you gone, Jack Welch? (2012)
—How Jack Welch and the GE board chose his successor (2001)
—Jack Welch: The ultimate manager (1999)
—Inside the mind of Jack Welch (1989)
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fortune--2020-03-03--Testing for coronavirus should be free, but it’s not always that simple

Andrew Yang is still the most visible Asian American in politics right now

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If you’re worried you might have COVID-19, how does the coronavirus testing procedure actually work? And how much does it cost? The answer is: It’s complicated, confusing, and a lot of people simply don’t know the intricacies of the situation—including the financial burden a U.S. patient with suspected coronavirus might have to bear.
Fortune reached out to all 51 state public health departments in the country (each state and the District of Columbia), urgent care centers, pharmacy giants, the Centers for Disease Control (CDC), and multiple other agencies to figure out how the process plays out. Most didn’t respond or declined to comment.
Here’s what we know so far.
Why was the U.S. slow to test for coronavirus?
It’s unclear why the CDC and the Trump administration decided to develop their own test instead of using those already in place in countries with major outbreaks. Manufacturing issues for the CDC’s coronavirus test significantly slowed down the process in the U.S.
According to the CDC’s latest numbers, there have been a total of 60 cases of COVID-19 (the official name for disease caused by the new coronavirus strain) in the U.S. and six reported deaths, all of them in Washington state. Those cases now span a dozen states: California, Oregon, Washington, Arizona, Illinois, Wisconsin, Florida, Georgia, New York, New Hampshire, Massachusetts, and Rhode Island, with Georgia and New Hampshire reporting the newest known cases.
That number is expected to swell significantly in the coming weeks and months as the CDC fixes its test and distributes it to state and local labs across the nation.
On Monday, Tom Frieden, former CDC director and former commissioner of New York City’s health department, held a public briefing to discuss the U.S. response to coronavirus to date. Frieden, as many public health officials have done, praised China’s rapid response and containment efforts and pointed to the lessons learned and mistakes made in America’s own quest to quell the pathogen.
“In 2009, with the H1N1 flu epidemic, and with the Ebola outbreak in 2014, the CDC’s labs and contractors created high quality tests very quickly,” he said in response to a question from Fortune during the briefing. “This time there’s clearly been a glitch in that process. I think it’ll be important when things quiet down to have a review and figure out what went wrong.” He went on to emphasize his confidence in the medical professionals at the CDC.
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President Trump appointed Vice President Mike Pence as the leader of the administration’s coronavirus response. On Sunday, Pence said that the CDC’s manufacturing capacity for testing would ramp up significantly by the end of the week, and that state and local laboratories would be able to conduct their own initial testing without having to send samples to a federal CDC lab—a critical tool in containing the outbreak, according to Frieden.
In addition to the CDC test, the Wadsworth Center, a research lab within the New York State Department of Health, developed its own FDA-approved test, the first of its kind. The center partnered with hospitals to expand testing.
Who gets tested for coronavirus?
Fortune reached out to every state health agency in the country to ask about the status of coronavirus testing. Most declined to comment, did not reply, or pointed to a press release. A handful—Wyoming, Wisconsin, Utah, Hawaii, Louisiana, New York, Arkansas, Indiana, and Idaho—directly answered questions either via email or by phone.
The departments Fortune spoke to presented a common narrative: CDC-cleared coronavirus tests are finally making it to state and local labs. The CDC has stated that as many as 40 public health labs across the country can conduct coronavirus testing at the moment.
“In Arkansas, today, our state public health lab is testing,” said Dr. Jennifer Dillaha, medical director for immunization and outbreak response in Arkansas, on Monday. “Today is the first day that we’ve been able to do our own test.”
According to Dillaha, the CDC has provided guidelines to help state agencies make judgments on who to test, but discretion will fall to the individual agencies—although she doesn’t think there will be much variance between public health departments’ procedures.
In Arkansas, assessing that risk relies on a combination of factors including whether or not someone has been to a region where the outbreak is prevalent or had contact with an infected individual. If the U.S. continues to see a “community spread” of coronavirus—the term used when the source of infection is unknown—it’s expected that more people will be tested.
How is coronavirus testing done?
The coronavirus test is a combination of a nasal swab and an oral swab. Dillaha said medical professionals might only take one or the other, but labs prefer to have both.
As of now, urgent care centers and organizations like CVS’s health clinics cannot conduct coronavirus tests on site, according to a CVS spokesperson. That may be a possibility in the future should private commercial entities develop their own coronavirus tests; as of now, samples collected at hospitals, urgent care centers, and doctors’ offices are sent to public health labs cleared to conduct the reviews.
Dillaha says that Arkansas public health labs can conduct the test within four hours. Initial results are shared with medical professionals and patients, and then samples would be sent to a CDC lab for final confirmation.
How much does the coronavirus test cost?
Any coronavirus test conducted in a public health lab using an FDA-approved test should, theoretically, be free to the patient.
“Those people are all tested by the CDC. It’s not based on whether or not someone would be able to pay,” said Dillaha. “Of course no test is free. Someone is bearing the cost.”
She notes there are ongoing conversations between federal and state authorities on how to finance the tests and that she doesn’t know all the intricacies of the payment situation.
Representative from Utah, Wisconsin, and New York’s health departments concurred, saying FDA-approved tests (the CDC test and the Wadsworth Center test) that are tested in public health facilities are free to patients.
But the fragmented nature of the American health system complicates the issue significantly. For instance, even though the coronavirus test itself is free, the associated hospital stay, doctors’ visit, or quarantine may not be—and depending on the quality of one’s insurance, a patient with a suspected case may face thousands of dollars in medical costs. An urgent care visit or hospital stay related to coronavirus may not be fully covered.
New York Governor Andrew Cuomo announced in a tweet on Monday that he had issued a directive “requiring NY health insurers to waive cost sharing associated with testing for #coronavirus, including emergency room, urgent care and office visits.” He added that anybody in the state covered by Medicaid would not have to pay for coronavirus-related care. It’s unclear how this would play out for those with private insurance.
More must-read stories from Fortune:
—How to think about COVID-19
—Coronavirus spreads to a previously healthy sector: corporate earnings
—Coronavirus is giving China cover to expand its surveillance. What happens next?
—Coronavirus shows why we need vaccines before, not after, an outbreak
—Before coronavirus, there were SARS and MERS. Do epidemics ever really end?
Subscribe to Fortune’s Outbreak newsletter for a daily roundup of stories on the coronavirus outbreak and its impact on global business.