fortune--2020-07-28--CES is going to be a virtual event in 2021

CES, one of the world’s biggest technology conferences, will be a virtual event in January due to the coronavirus pandemic, a reversal from May when organizers said it would go on as a smaller gathering in Las Vegas.
The announcement Tuesday is another blow for Las Vegas which, like all other U.S. tourist destinations, is suffering as people stay home or vacation locally. More than 170,00 people attended the four-day show this year in January, before COVID-19 began to spread across the U.S.
States in the South and West are being hit particularly hard.
In Nevada over the past two weeks, the rolling average number of daily new cases has increased 27%. The state now ranks sixth in the country for new cases of COVID-19 per capita.
The pandemic has disrupted major tech events everywhere.
Europe’s biggest consumer electronics trade fair, Germany’s IFA, usually runs for six days and drew nearly a quarter million people last year. This year, it’s half that duration and there will be no public access to the event in September. Web Summit, a glitzy event in Portugal that features high profile tech CEOs and celebrities, will be online this time. Organizers aim to still hold the physical conference in Lisbon in December but won’t make any final decisions until early October.
Trade shows are a place where people network, try new gadgets or make a sale. But they’re also big business onto themselves, accounting for $2.5 trillion in global spending, according to the Events Industry Council. Much of that is likely to be lost when events go online.
The Consumer Technology Association, which organizes CES, had said in May that it planned to go ahead and hold some events in Las Vegas next year, but the thinking changed as COVID-19 cases spiked around the world, making it impossible to hold an indoor event in January 2021, said CTA CEO Gary Shapiro.
There was also uncertainty over whether employees of big tech companies would be allowed to travel by then. Google, for example, said this week that its employees should work from home until at least July 2021.
The four-day digital version of the CES gadget show begins Jan. 6.
___
Kelvin Chan in London contributed to this story.


fortune--2020-07-28--To lead in the post-COVID-19 crisis tomorrow, put the right leadership and capabilities in place tod

To lead in the post-COVID-19 crisis tomorrow, put the right leadership and capabilities in place today

HSBC tried to defend itself in China .
Internet censors erased the post

One silver lining of the COVID-19 crisis has been to show businesses how to manage better and achieve greater speed, quality, and cost control. A wartime mindset—decisive crisis management, scenario planning, and a human reflex attuned to the shocks affecting employees—has been the hallmark of leaders so far. Now, as the world feels its way toward recovery and new opportunities, another risk looms. It is that inertia will set in, along with a longing for a return to the operating style of pre-crisis days.
How can leaders avoid the impulse to abandon their progress in shaping a more productive and competitive company profile? The answer is a renewed focus on people and their capabilities. Over the past five months we have seen the edge gained by organizations and leaders with adaptable management and strong capabilities. Only by advancing new cadres of leaders, building a middle bench with skills to cut across silos, and treating technological acumen like a profit center will companies be able to work to further the broader transformation that has begun. The return on this people investment has never been higher.
We see three imperatives as critical for managing people and building capabilities to thrive in the post-pandemic period.
Put in tomorrow’s team today
As in many disruptions, leaders are finding that talent is stepping up in unexpected ways. Even before COVID-19, one European car and truck maker assessed its biggest value creators and found that two-thirds of its 50 most important value contributors were from one to three levels below the C-suite. Today some young middle managers are defying the problems and frustrations of this difficult period to demonstrate calm, champion diverse talent, and achieve far more than peer leaders do. Leaders have to celebrate and reward these rising stars.
Identify and elevate the business skills that matter most
Leaders and boards must identify the core capabilities to build a culture of adaptability to anticipate the next shock or black-swan event. To be clear, this is a prioritization of the handful of an organization’s most tangible and critical business skills and a commitment to driving them deep into the organization. The capabilities showing up now on our radar screen include these:
Managing in a transformational way. Modern management is about safe and incremental change. But by adopting a transformational mindset, companies accomplish so much more than they think they can. Rather than aiming for a 5% improvement, shoot for 20% to unlock energy and performance gains. Today, areas like digitizing customer engagement and launching new products attuned to a changing world are ripe for a transformational push.
Navigating and leading in a network of teams. The modern company is much more complex than it was 20 years ago. The need is greater to do away with rigid hierarchies and operate with agile, empowered teams able to get closer to customers. Executives able to navigate these will do better, but very few have been trained in these skills.
Supply chains. Sure, we know that it’s a perennial niche topic. But COVID-19, the possibility that the pandemic will have a long tail, changing views of China, and the importance of resilience in weathering crisis have moved supply chains from the back office to constant discussion in the front office.
Treat technological acumen as you treat profit targets
As companies have vaulted ahead in adopting and applying digital technologies, the metabolic rate of technological transformation has sped up. Those who master this massive experiment will gain a baseline technological advantage in applying the cloud, analytics, and data-management technologies, to name a few. Leaders should drive technological acumen into all executives and measure their proficiency and improvement in the same way they measure profit targets. This is akin to how some leading companies used lean process improvements in the 1980s and 1990s to encourage new management discipline in their organizations.
As executives feel their way out of the COVID-19 crisis, here’s one question that should be top of mind: What should be retained from this period of pandemic shock, uncertainty, and dramatic change in the ways businesses have reacted to crisis? We are convinced the answer is that those companies that invest in capabilities to empower leadership, teams, and technology will be well positioned to thrive in the post-pandemic era.
(To read the full-length report from which this essay was adapted, click here to visit www.mckinsey.com.)
Daniel Pacthod and Michael Park are senior partners in McKinsey’s New York office.


fortune--2020-07-28--Women are more worried about layoffs than their male coworkers

The 2008 housing bubble was brutal on guys like my dad, who worked in construction. His home-addition business, like so many of those of his peers, was dried up months before the financial crisis was in full swing. That’s why the Great Recession, which caused mass joblessness for men in those fields, was coined a “mancession.”
The opposite, to a degree, is occurring during our current economic upheaval: Women are more likely to lose their job than men. The unemployment rate for women soared from 3.4% in February to 16.2% in April, compared to the 3.6% to 13.5% jump for men. That joblessness rate for women has since declined to 11.7% in June, but it’s still above the same month’s 10.6% rate for men.
Not only are women losing their jobs at a higher rate, women are also more fearful of losing their job. Among female workers, 49% are worried about losing their job, compared to 35% of men, finds a Fortune-SurveyMonkey poll of 2,802 U.S. adults between July 17 and 21.*
Just as 2008 rocked male-dominated fields like construction and manufacturing, the pandemic and shutdowns have hammered women-heavy industries like tourism, retail, education, and health care. Some of them, like tourism, are unlikely to fully rebound for years. For many women, unemployment may likely be long-term.
*Methodology: The Fortune-SurveyMonkey poll was conducted among a national sample of 2,802 adults in the U.S. between July 17–21. This survey’s modeled error estimate is plus or minus 3 percentage points. The findings have been weighted for age, race, sex, education, and geography.


fortune--2020-07-28--‘Don’t plant them’: What we know about the mystery seeds from China that are arriving in U.S. mailbo

‘Don’t plant them’: What we know about the mystery seeds from China that are arriving in U.S. mailboxes

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Thousands of Americans are receiving strange packages in the mail. While many of the package labels suggest they contain jewelry or toys, the contents are packages of seeds with Chinese characters.
The phenomenon is widespread as concerned citizens from across the country—everywhere from Louisiana to Ohio to Washington State—are reporting the deliveries to authorities.
In response, state agricultural agencies are issuing warnings, and posting pictures of suspicious packages on social media. The state of Tennessee has told anyone who received the seeds “do not plant them.”
If you receive seeds in the mail that you did not order, do not plant them. We are working with @USDA_APHIS to determine what should be done with these seeds. Double bag and hang onto them until we know more. And report to https://t.co/mcPSHYvqiA pic.twitter.com/okd8rZ11BB — TN Dept. of Ag (@TNAgriculture) July 27, 2020
The Department of Agriculture in Washington issued a similar warning:
We have received reports of people receiving seeds from China that they did not order. If you receive them – don't plant them. Report to @USDA_APHIS at https://t.co/0U53rbAiHs pic.twitter.com/Y4yAKv5bk7 — WA St Dept of Agr (@WSDAgov) July 24, 2020
The federal government has yet to comment on who is behind the mailing campaign. But a spokesperson for the U.S. Department of Agriculture told Fortune by email the agency is aware of the situation.
“APHIS is working closely with the Department of Homeland Security’s Customs and Border Protection and State departments of agriculture to prevent the unlawful entry of prohibited seeds and protect U.S. agriculture from invasive pests and noxious weeds,” said the spokesperson.
The agency also advised anyone who receives the seeds to hold onto the seeds and the mailing label, and contact agricultural authorities in their state.
As for the origins of the seeds, which are reportedly arriving from both China and Uzbekistan, one theory is that they are part of an underhanded marketing campaign by online sellers.
According to a Facebook post from the police department in Whitehouse, Ohio, “it does appear these seeds are tied with an online scam called ‘brushing’,”—a term that describes scammers sending unsolicited products, and then posting positive reviews on behalf of the people that unwittingly received them.
While the nature of the seeds remains unclear, authorities in Washington state have expressed concerns they could be toxic to livestock or represent an invasive species that could crowd out native plants.
Meanwhile, some pundits are viewing the mailing campaign as an act of aggression by China.
Someone in #China is sending, unsolicited, seeds to Americans in three states. The seeds are usually mislabeled as jewelry. See: https://t.co/L1kKAApYJC. We have to ask: Is this biological warfare? — Gordon G. Chang (@GordonGChang) July 25, 2020
Other unconfirmed reports on Twitter suggest the addresses of seed recipients are not random, but were obtained by hacking databases containing lists of gardening enthusiasts.
More must-read finance coverage from Fortune:


fortune--2020-07-28--‘Watchmen’ leads this year’s Emmy nominations

“Watchmen,” cloaked in superhero mythology and grounded in real-world racism, received a leading 26 nominations Tuesday for the prime-time Emmy Awards.
The HBO series, which captured America’s deep unease as it faces racial and political clashes amid a pandemic, was nominated as best limited series and received bids for cast members including Regina King and Jeremy Irons.
King was part of a vanguard of actors of color indicating that TV academy voters took heed of the social climate.
“Zendaya!” exclaimed Emmy announcement host Leslie Jones, her gleeful reaction to the “Euphoria” star’s nomination as best actress in a drama. “This is a great day,” Jones said.
She was part of a socially distanced, virtual release of nominees that was online, not on television as is usual. But nothing is usual during a coronavirus era that has brought Hollywood production to a virtual standstill and is making the Emmys and other awards grasp for alternatives.
The strong showing by Netflix’s “Ozark” helped the streaming service achieve a record-setting 160 nominations that bested onetime perennial leader HBO, which earned 107 nods.
Streaming newcomer Apple TV+ earned attention in its first season with Jennifer Aniston’s best drama actress bid for “The Morning Show.” Another streaming newbie, Disney+, saw its Star Wars franchise spinoff, “The Mandalorian,” claim a best drama nomination among its hefty 15 total nods.
The Amazon comedy “The Marvelous Mrs. Maisel” is the second most-nominated series with 20, followed by Netflix’s “Ozark” with 18.
“This year, we are also bearing witness to one of the greatest fights for social justice in history. And it is our duty to use this medium for change,” Frank Scherma, chairman and CEO of the Television Academy said at the outset of the presentation.
Kerry Washington’s four nominations covered a wide range, including lead actress for “Little Fires Everywhere” and for her production company’s work on the limited series and other programs.
Diversity was especially notable in the comedy categories after being nearly absent last year.
“Ramy,” which finds nuanced humor in a young Muslim American’s crisis of identity and faith, earned a best actor bid for its star and co-creator, Ramy Youssef. Issa Rae returned to the best comedy actress category for her series “Insecure,” which earned a best comedy bid.
“Schitt’s Creek,” the quirky little show that went without Emmy recognition until last year, received 15 nominations for its final season, including for best comedy series and lead acting nods for Eugene Levy and Catherine O’Hara.
“The Good Place,” also at an end, earned a best comedy bid and, for Ted Danson, a best comedy actor nomination.
The farewell was less fond for other shows that wrapped last season, with no major bids for “Modern Family,” “Homeland” or “Silicon Valley.”
But the late Fred Willard received a nod for his “Modern Family” guest appearance. A posthumous nomination also went to director Lynn Shelton, for the limited series “Little Fires Everywhere.”
“I’m so incredibly grateful that the Television Academy has chosen to honor Lynn with this very deserved nomination,” Washington said. “I know she’s celebrating in the beyond.”
The eight nods for “Unorthodox,” a limited series about a dissatisfied Orthodox Jewish woman, may reflect the virus-quarantine downtime that drew Emmy voters to shows they might otherwise overlooked, said Daniel Feinberg, chief TV critic for The Hollywood Reporter.
A far different pop-culture phenomenon also was a likely beneficiary.
“A show like ‘Tiger King,’ for example, which got a handful of nominations, It’s not really all that great, but it absolutely was the junk food that people were craving at the beginning of this quarantine period,” Feinberg said.
Joining Jones on Tuesday were presenters Laverne Cox (“Orange is the New Black”), Josh Gad (“Frozen”) and Tatiana Maslany (“Orphan Black”). Cox, Gad and Maslany appeared on by video feeds.
Among the honorees whose nomination collided with current events: Brad Pitt earned a nod for a guest appearance playing Dr. Anthony Fauci on “Saturday Night Live.”
The nominees for best comedy series are: “Curb Your Enthusiasm”; Dead to Me”; “The Good Place”; “Insecure”; “The Kominsky Method”; “The Marvelous Mrs. Maisel”; “Schitt’s Creek”; “What We Do in the Shadows.”
The nominees for best drama series are: “Better Call Saul”; “The Crown”; “Killing Eve”; “The Handmaid’s Tale”; “The Mandalorian”; “Ozark”; “Stranger Things”; “Succession.”
In addition to “Watchmen,” the nominees for best limited series are: “Little Fires Everywhere”; “Mrs. America”; “Unbelievable”; ”Unorthodox.”
The nominees for drama series actress are: Jennifer Aniston, “The Morning Show”; Olivia Colman, “The Crown”; Jodie Comer, “Killing Eve”; Laura Linney, “Ozark”; Sandra Oh, “Killing Eve”; Zendaya “Euphoria.”
The nominees for drama series actor are: Jason Bateman, “Ozark”; Sterling K. Brown, “This is Us”; Billy Porter, “Pose”; Jeremy Strong, “Succession”; Brian Cox, “Succession”; Steve Carell, “The Morning Show.”
The nominees for lead actor in a comedy series are: Anthony Anderson, “black-ish”; Don Cheadle, “Black Monday”; Ted Danson, “The Good Place”; Michael Douglas, “The Kominsky Method”; Eugene Levy, “Schitt’s Creek”; Ramy Youssef, “Ramy.
The nominees for lead actress in a comedy series are: Christina Applegate, “Dead to Me”; Rachel Brosnahan, “The Marvelous Mrs. Maisel”; Linda Cardellini, “Dead to Me”; Catherine O’Hara, “Schitt’s Creek”; Issa Rae, “Insecure”; Tracee Ellis Ross, “black-ish.”
The nominees for best TV movie are: “American Son”; “Bad Education”; “Dolly Parton’s Heartstrings: These Old Bones”; “El Camino: A Breaking Bad Movie”; “Unbreakable Kimmy Schmidt: Kimmy vs. The Reverend.”
A high energy Jones kicked off Tuesday’s announcement by appearing on a virtual set and joking that she was told there would be many others on set to announce the nominees, but instead she was locked in a studio with only a cameraman.
The Emmy Awards, hosted by Jimmy Kimmel, will be presented Sept. 20 on ABC.


fortune--2020-07-28--How A.I. is helping doctors triage patients in urgent care

Healthcare experts are hopeful that artificial intelligence could help doctors figure out which patients need urgent care.
At Stanford, physicians at the university’s healthcare facilities will debut, in a month or so, an experimental machine learning-powered triage system. Unlike the machine learning-powered chatbot used by healthcare giant Providence Health & Services that helps patients schedule appointments, Stanford’s software is intended to be used by internal staff to deal with sudden influxes of patients, which can overburden physicians.
The heart of the triaging system is a machine-learning algorithm developed by healthcare firm Epic that analyzes data stored in a patient’s electronic health records. Using data like a patient’s respiratory rate, blood count, and heart rate, the machine learning software can predict whether a patient warrants a visit to the intensive care unit.
Stanford physician Ron Li told Fortune that the machine learning model isn’t “telling us something we wouldn’t know.” Doctors studying the same charts that the software is looking at would likely derive the same conclusion. After all, it doesn’t take a brain surgeon to deduce that patients would probably need immediate help if their heart rate suddenly skyrockets.
When the system debuts, doctors and nurses will receive alerts from their smartphones and computers that the technology has identified a high-risk patient that may need attention, Li said. If a particularly ill patient is staying overnight, for instance, a doctor and nurse handling the nightshift may get an alert from the software to convene at the patient’s bedside to discuss what to do next. Part of the software’s appeal is that it could help nurses and clinicians, who may have differing opinions about interpreting the health of patients, get on the same page about the best way to treat patients in the heat of the moment, a notion that Li refers to as “a shared a mental model.”
Li sees the ultimate value of the software as changing the way Stanford’s clinicians behave in a way that leads to better care for patients. He acknowledged that it’s hard to quantify behavioral change into some form of statistic that indicates a return on investment, or ROI. Indeed, many companies are struggling to report seeing any “value” from their A.I. investments, since it’s difficult to quantify the worth of a successful project beyond merely reducing costs or generating sales.
Clearly, if Stanford’s upcoming test, or pilot, of the new software leads to a reduction in deaths, that would be a success. “I hope it does,” Li said.
Even if that’s not the case, merely getting clinicians and nurses on the same page will be beneficial, Li said. It’s a smaller milestone than reducing deaths, but a more realistic outcome.
PS. Although this project was originally intended to help triage COVID-19 patients, Li said that Stanford pivoted so that pilot test would now help triage general patients, mainly because the clinic did not get enough data from COVID-19 patients to train a coronavirus-specific machine learning model.
Jonathan Vanian
@JonathanVanian
jonathan.vanian@fortune.com
A.I. IN THE NEWS
New Zealand sets some standards. New Zealand is claiming that it’s the “first in the world” to set standards intended for public agencies to adhere to when implementing A.I. technologies, The Guardian reported. Still, there is no “enforcement mechanism” to ensure that the agencies follow the standards, the report said. From the article: In it, departments pledge to be publicly transparent about how decision-making is driven by algorithms, including giving “plain English” explanations; to make available information about the processes used and how data is stored unless forbidden by law (such as for reasons of national security); and to identify and manage biases informing algorithms.
Facebook pays up. Facebook will pay $650 million to settle a class-action lawsuit related to the company’s use of facial-recognition technologies and data collection, Fortune’s Jeff John Roberts reported. As Roberts writes, “The Facebook lawsuit came about as a result of a unique state law in Illinois, which obliges companies to get permission before using facial recognition technology on their customers.”
Einstein loses his voice. Salesforce has decided to “retire” its Einstein Voice Assistant technology and is instead focusing on its Anywhere work-collaboration software as a way for people to interact with the company’s software using their voice, tech publication voicebot.ai reported. It was just a year ago that Salesforce was heavily promoting its Einstein A.I. voice assistant to businesses, but it was never clear if there were enough compelling reasons to use the technology at work besides a handful of scenarios. Salesforce’s decision to shut it down comes amid the company’s chief scientist Richard Socher leaving Salesforce to start his own company. Socher was instrumental in leading Salesforce’s A.I. projects, including much of the company’s research into natural language processing and voice technologies.
LinkedIn gets deep. LinkedIn said it has made its DeText, or Deep Text, natural language processing technology available in open source. One of DeText’s features is how it allows A.I. researchers use multiple NLP models, trained on their own specific language data, to power different tasks via one system.
Please stop faking it until you are making it. The Securities and Exchange Commission said it charged Shaukat Shamim, the founder and CEO of the startup YouPlus, with “defrauding investors by making false and misleading statements about the company’s finances and sources of revenue.” The startup claimed that it developed machine learning software to analyze videos. Shamim was accused of raising “funds from investors while repeatedly misrepresenting the company’s financial condition.”
EYE ON A.I. TALENT
Luminar, a startup specializing in self-driving car technology, hired Aaron Jefferson to be the company’s vice president of product. A Luminar spokesperson told Fortune that this is the startup’s first executive position in charge of products, which was previously a research and development-specific role. The new tech-specific hiring was one of several new hires for the startup. Jefferson was previously the vice president of product strategy for Global Electronics.
Dunkin' Brands Group, Inc., which is the parent company of Dunkin' and Baskin-Robbins, hired Philip Auerbach to be the company’s chief digital and strategy officer, a new position. Auerbach was previously the chief commercial officer of travel company Lindblad Expeditions.
BJ’s Wholesale Club Holdings, Inc. picked Monica Schwartz to be the company’s senior vice president and chief digital officer. Schwartz was previously the vice president of online merchandising at Home Depot.
EYE ON A.I. RESEARCH
A.I. goes bird watching. Researchers from The French National Centre for Scientific Research, Université de Montpellier, and the University of Porto in Portugal published a paper in the Methods in Ecology and Evolution journal about using deep learning to recognize different kinds of birds, specifically “three small bird species, the sociable weaver Philetairus socius, the great tit Parus major and the zebra finch Taeniopygia guttata.”
What's interesting: the technique, or pipeline, for collecting data used for training their deep learning system. The researchers describe in detail how they captured photos of the different birds in both the wild and in captivity using a simple Raspberry Pi processor, the same kind of processor used to teach children the basics of computer science.
The authors programmed the Raspberry PI to take a picture of a bird on a feeder every two seconds. This two-second interval was important because they wanted to “avoid having near‐identical frames of the same bird,” which would lead to “too many near‐identical pictures.” That could lead to a common problem researchers experience when dealing with deep learning: overfitting. In this particular case, overfitting means that this bird-identification system would end up “‘memorizing’ the pictures instead of learning features that are key for recognizing the individuals,” which the authors note would “jeopardize the generalization capability of the models.”
It turns out A.I. practitioners can learn a lot from observing birds.
FORTUNE ON A.I.
What the hell just happened to Intel?—By Aaron Pressman
Facebook’s Messenger will allow users to unlock the app with their fingerprints and faces—By Danielle Abril
It’s getting harder to tell state-sponsored hackers and cybercriminals apart—By Robert Hackett
BRAIN FOOD
Language takes...somewhat of a leap. The A.I. research community has been captivated by the GPT-3 language system created by OpenAI. Researchers have been playing with the language tool and getting it to produce interesting results, such as automatically generating prime numbers “when prompted with the first 12 primes,” as one deep learning researcher noted via Twitter.
But despite the fascinating results, the GPT-3 system is likely not “a new contender for the most spectacularly newsworthy happening of 2020,” as one observer described in a Bloomberg opinion piece.
There’s still many flaws with the system, such as its propensity to generate biased results, as VentureBeat noted. Indeed, even OpenAI CEO Sam Altman tweeted that the “hype is too much,” a comment seemingly intended to counter the notion that OpenAI over-inflates the capabilities of its technologies, as some A.I. researchers have alleged.
While the raw GPT-3 system may be fun for researchers to inspect, it’s a long way away from being useful for general business-related tasks. In June, OpenAI released a commercial-version of its language technology for companies, underscoring how A.I. research tools need some extra safeguards and modifications before they can be safely used in corporate settings.
Still, the fact that A.I. researchers are doing some genuinely interesting things with GPT-3—like generating SQL queries in a databases, a task used to obtain insights within datasets—shows the promise of modern-day NLP systems. Cutting-edge NLP systems won’t likely usher in an age of A.I. sentience (at least not today’s systems), but they could inspire developers to use the tech to automate some useful tasks.
I’ll leave you with this Twitter joke from a data scientist about using GPT-3 to automatically create a music video from the prompt, “80s-style dance-pop led by a scrawny white guy on a $28 choreography budget.”


fortune--2020-07-28--PPP part 3? Everything you need to know about the proposed expansion of the small business loan prog

PPP part 3? Everything you need to know about the proposed expansion of the small business loan program

The emergency funding program for small businesses may be getting a revamp via a new proposal—but this time, loans would only go to the smallest, hardest-hit businesses.
Senate Republicans Marco Rubio (R-FL) and Susan Collins (R-ME) released a new proposal late Monday that would give small, struggling businesses the option to take out an additional Paycheck Protection Program loan, tapping $190 billion in funds Congress would provide under the proposal.
Sen. Rubio urged Congress to “take action to help industries and businesses, especially minority-owned small businesses and those in low-income communities, that have been hit hard by the COVID-19 pandemic,” he said in a statement. He earlier teased the proposal last week, saying in a video on Twitter that the new eligibility requirements would help ensure that “the money goes further and reaches more of these businesses, smaller businesses.”
The proposal comes less than two weeks before the PPP extension period is set to expire on August 8. And according to a new survey released Monday by the National Federation of Independent Businesses, some 46% of PPP loan recipients said they’d need more financial support in the next 12 months, while 71% said they had already spent their loans.
“Even for those owners who have exhausted their PPP loan, the economic conditions have not yet returned to levels that can support business activity for many,” Holly Wade, the NFIB director of research & policy analysis, said in a statement with the release.
Who is eligible?
Under the new proposal, only businesses with 300 or fewer employees would be eligible to take out a second PPP loan. Additionally, the business must demonstrate it took a 50% or more hit to revenue owing to the crisis (in the 1st and 2nd quarters of 2020 versus 2019).
Truly small businesses, those with 10 employees or under, would also get a separate pot of funds (some proposed $25 billion) to “ensure equitable access”—a problem that plagued initial rounds of the program as funds went to some large and public companies. Under the Republican proposal, businesses in accommodation and food services would be able to get loans so long as each location didn’t have more than 300 employees, but loans would be capped at $2 million in total.
Borrowers for the second PPP loans would be able to get 2.5 times their average monthly payroll costs for the previous year up to $2 million, according to the proposal (however, the sum of the two loans couldn’t be more than $10 million). The loans would need to be used 60/40 on payroll and non-payroll expenses, and costs covered by loan would also now include personal protective equipment (PPE) and property damage costs incurred before January 1, 2021.
Notably, the proposal draws a harder line for who is not eligible for the program—including public companies (which controversially ended up getting loans during previous rounds of the program), those affiliated with Chinese entities, and financial services companies that already took a PPP loan in the 1st round.
Changes to PPP loans, new long-term loans
In addition to a second shot at PPP loans, the proposal would also make some changes to existing loans and how they may be used.
In the proposal, funds would now be able to be used on PPE, expenses for cloud computing, software, HR and accounting needs, property damage costs, and more.
Plus, the Rubio-Collins proposal would make changes to the traditional Small Business Administration 7(a) loan, allowing “seasonal businesses and businesses located in low-income communities” with 500 or fewer employees and a 50% hit to revenue to tap up to a $10 million loan with a 20-year maturity at a fixed 1% interest rate.
The proposal comes as Republicans announced a new stimulus package on Monday to the tune of $1 trillion, which has already been met with pushback on the opposite side the aisle.
Democratic Sen. Ben Cardin (D-Md) called the plan “an overdue and inadequate response to the challenges our country is facing,” and Sen. Rubio said on Fox on Tuesday morning that passing the bill through the Democrat-controlled House is “not going to be easy” and that it might take “two weeks or one week or three weeks,” he said. But he added, “I’m confident we ultimately will do something that’s meaningful.”


fortune--2020-07-28--Europe’s auto industry is in the midst of a surprising rebound. Analysts differ on how long it can l

Europe’s auto industry is in the midst of a surprising rebound. Analysts differ on how long it can last

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“Our order book is stellar,” PSA Group CEO Carlos Tavares enthused Tuesday as the Peugeot and Citroën parent reported its results for the first half of the year.
Tavares’s enthusiasm was warranted; the French auto giant posted a profit of €595 million ($697 million) for the period. Analysts expected to see €222 million in operating income, but got €517 million. Sure, PSA knows the coronavirus pandemic will shrink the market this year—by a quarter in Europe and by 10% in China, it predicts—but all is not lost.
A similar story is playing out in Germany, where Daimler CEO Ola Kaellenius last week hailed “the first signs of a sales recovery”—the Mercedes-Benz maker expects this year to be profitable overall—and where the Ifo Institute for Economic Research on Tuesday described the auto industry as “one of the biggest winners” in the country’s cautiously optimistic export sector.
“I don’t see a very quick recovery, but the last two to three weeks have been somehow more positive than I expected,” Jürgen Pieper, a senior adviser at Metzler Bank, told Fortune. “The recovery is there—you can see and feel it—but it will take a couple months before we see 2019 levels.”
“I certainly see the market rebounding, but for full-year 2020 I see the market ending the year with a shortfall of about 20%,” said Berlin-based analyst Matthias Schmidt. “That’s better than most people were expecting a couple months ago.”
Some analysts aren’t so optimistic.
Ferdinand Dudenhöffer, who leads automotive analysis at the University of St. Gallen in Switzerland, told Fortune just over four months ago—as the continent’s car factories were shutting down because of the COVID-19 onslaught—that he expected Western Europe’s auto market to take a full decade to recover to 2019 sales levels.
He hasn’t changed his mind on that—indeed, he expects consumer confidence to be whacked by an imminent wave of bankruptcies in the travel sector, plus tax hikes that will be needed to pay off the titanic debts governments are taking on as they bail out businesses and prop up employment. And then there’s the possibility of a second wave of the coronavirus keeping prospective customers out of showrooms.
“We believe the situation will be very difficult in the next half year, and we don’t think [there will be] a real worldwide recovery,” Dudenhöffer said Tuesday. “All we see is it makes sense for carmakers in Europe to reduce capacity. We see job cuts each week.”
There’s speculation that Daimler, for one, may have to make big job cuts this year.
However, the other analysts interviewed for this piece identified several reasons for a less-bleak outlook.
Don’t take the bus
First, Pieper proposed, the pandemic might be pushing people toward private transport. While consumers were previously concerned about the environmental impact of car use, he said, “people realize driving a car could be safer than the alternative use of public transportation.”
Secondly, some governments—such as those in France and Germany—have moved to prop up the auto sector by subsidizing the purchase of electric cars. France has also introduced a scrappage scheme to incentivize drivers of fossil-fuel cars to get rid of them and go electric.
“France was the only market in Europe to rebound in June,” said Schmidt. “One reason was the subsidies offered by the French government…That’s positive for the French [manufacturers] such as PSA. It had a big impact on PSA registrations.”
Schmidt also suggested that the combination of a generally depressed car market and electric-car incentives would benefit European automakers by making it easier for them to meet emissions targets imposed by the EU.
“With French and German governments enthusiastically choosing to support plug-ins with improved generous stimuluses, be it subsidy or fiscal stimuluses, [manufacturers] can now comfortably sit back and watch their fleet average emissions sail silently over the compliance finish line, avoiding what others had predicted would be some form of compliance carmageddon catastrophe,” he said.
The same incentives aren’t there for traditional-car purchases, but, as Schmidt pointed out, manufacturers such as Volkswagen are still trying to stimulate demand by covering the sales tax on certain models, for a limited time.
“We’re going to see a lot more deals,” Schmidt said.
According to Dudenhöffer, European manufacturers’ exposure to China—where more of a demonstrable recovery is underway—will be key.
“The hope is China,” he said. “The next decade will be the decade of China because they do the best job in combating the coronavirus…Daimler and others that sell cars in China—good luck to them…Companies with strong links to China are the lucky guys.”


fortune--2020-07-28--Fauci says NFL may need a ‘bubble’

Fauci says NFL may need a ‘bubble’

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The nation’s top infectious disease expert says the Major League Baseball season may be in danger after 12 Miami Marlins players and two coaches tested positive for Covid-19 — and that the outbreak doesn’t bode well for the start of professional football.
“I don’t believe they need to stop but we just need to follow this and see what happens with other teams on a day-by-day basis,” Anthony Fauci, director of the National Institute of Allergies and Infectious Diseases, said in an interview Tuesday with ABC.
Fauci, who last week threw out the first pitch on opening day for the Washington Nationals, commented after the newly started Major League Baseball season saw it’s first game cancellations due to the virus. The Marlins canceled the team’s home opener, according to ESPN, and the Philadelphia Phillies — who played the Marlins this past weekend — postponed their Monday game against New York Yankees.
“You just have to watch this, it could put it in danger,” Fauci said of the MLB season.
Asked if the National Football League will have to operate in a “bubble,” similar to the precautions undertaken by the National Basketball Association, Fauci said that’s possible.
The basketball league has planned to play the rest of its season by moving most of its teams to a facility at Disney World in Florida and playing without fans. That season restarts Thursday.
“It might be that they have to go in a bubble,” Fauci said. “I think they’re conscientious enough and want to protect their players and protect their personnel that they will do the right thing.”


fortune--2020-07-28--Twitter just suspended Donald Trump Jr.’s posting privileges

Twitter temporarily limited the account of Donald Trump Jr. after the President’s son retweeted a video alleging a conspiracy to suppress the use of hydroxychloroquine to treat COVID-19.
Trump Jr.’s previous tweets were still visible on the Twitter website. But Republican strategist Andrew Surabian tweeted a picture of Trump Jr.’s account as suspended. “We’ve temporarily limited some of your account features,” the suspension notice said, noting that Trump Jr. had violated “the policy on spreading misleading and potentially harmful information related to COVID-19.”
Twitter spokesman Nick Pacilio explained that Trump Jr.’s account would have “limited functionality” for 12 hours. “This account has not been permanently suspended,” he wrote in a tweet. “Per the screenshot, the Tweet requires deletion because it violates our rules (sharing misinformation on COVID-19).”
Fortune reached out to Twitter directly for comment and will update this story if a response is received.
The limitation of Trump Jr.’s account comes as the President and his allies have increasingly used social media to spread misinformation about the coronavirus outbreak. Earlier this week, Facebook took down a misleading video about COVID-19 only to have President Trump tweet clips from the same video. Twitter deleted several of Trump’s tweets.
The latest move by Twitter also comes just before the CEOs of Amazon, Apple, Google, and Facebook are scheduled to testify before Congress on Wednesday, with Republican representatives expected to bring up the issue of alleged anti-conservative bias in social media.
Update: This story was updated on July 28 with Twitter’s confirmation of the limiting of the account.


fortune--2020-07-28--Why a startup that counts people has raised $51 million amid the pandemic

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Signs that limit the number of people in a store have become endemic in the pandemic.
Now a startup that automatically monitors indoor headcounts has raised $51 million as restrictions on gatherings usher in a fresh wave of demand for the business.
San Francisco-based Density, which uses sensors to monitor the number of people entering and exiting a room or building, announced Tuesday that it raised the Series C funding with Kleiner Perkins leading the round and substantial capital from 01 Advisors. Other investors included Upfront Ventures, Founders Fund, Ludlow Ventures, Launch, DTA, Alex Rodriguez, LBC Ventures, and Julia and Kevin Hartz, as well as Cyan and Scott Banister.
Prior to the pandemic, Density’s main pitch was space optimization: Using its sensors and software, businesses and real estate investors could analyze which commercial properties were being under-used and cull wasted rentals and buildings. For those who know the pain of lining up at the Department of Motor Vehicles, the startup may also be remembered as one that sought to kill lines at the DMV.
“Prior to COVID, this was an important and material thing for those that led large real estate portfolios,” says CEO and co-founder Andrew Farah regarding headcount control. “In the pandemic, this is a mainstream issue.”
Businesses such as manufacturing, food production, and shipping logistics are still bringing workers to work—all sectors where Density says it has experienced a flood in inquiries. In one case, says Farah, a meat plant became a customer after two coronavirus outbreaks led the factory to seek ways to limit its worker concentration. Stores are also using Density to display the number of people inside with iPads at the door.
While Farah declined to give specifics on revenue and valuation, he says new bookings grew 493% in the quarter beginning February compared to the quarter prior.
There are ways to trick the technology, says Farah. Pop up an umbrella. Or, if you feel so inclined, walk under a sensor under all fours and you might just fulfill your childhood fantasy of becoming a dog—at least in a machine’s eyes. But these, says Farah, are “edge cases.” Read more.
Don’t miss this story from last week: The name may not ring bells for many, but it’s one that rings loud in fintech. Ribbit Capital, a venture capital firm that invests in financial technology startups (such as Robinhood, Hippo Insurance, Revolut, and Chainalysis), is planning to raise a $600 million blank-check company, according to the Financial Times. The deal, per the report, could be announced as soon as early August.
What makes this particular SPAC deal interesting, if it goes through: Sure, Dragoneer, another investor in the venture space, recently filed to raise a multimillion blank-check company too. But unlike Dragoneer, a growth-stage investor known for investing both in public and private markets, Ribbit is generally known as an early-stage player. Which would make a $600 million SPAC—which historically represents a fraction of the actual size of the company it will acquire—a first. The press-shy firm also filed to raise $420 million for its sixth flagship fund in January.
Lucinda Shen
Twitter: @shenlucinda
Email: lucinda.shen@fortune.com
VENTURE DEALS
- Ro, a New York-based online health start-up, raised $200 million in Series C funding. General Catalyst led the round that values it at $1.5 billion. Read more.
- Geltor, a San Leandro, Calif.-based maker of designer proteins, raised $91.3 million in Series B funding. CPT Capital led the round and was joined by investors including WTT Investment.
- Withings, a Paris-based connected health devices company, raised $60 million in Series B funding. Gilde Healthcare, Idinvest Partners, and Bpifrance led the round, and were joined by BNP Paribas Développement, ODDO BHF Private Equity, and Adelie Capital.
- Nanox, an Israel-based medical imaging company, raised an additional $59 million in funding as part of a $110 million round. Its investors include SK Telecom, Foxconn, Yozma Korea, and Industrial Alliance.
- ComplyAdvantage, a London-based financial crime detection company, raised $50 million in Series C funding. Ontario Teachers’ Pension Plan Board led the round and was joined by investors including Index Ventures and Balderton Capital.
- Conexiom, a Vancouver-based provider of sales order and invoice automation, raised $40 million in funding from ICONIQ Capital.
- True Link Financial, a San Francisco-based maker of customizable prepaid debit cards, raised $35 million in two Series B tranches, the first led by Khosla Ventures and the second led by Centana Growth Partners.
- MBX Biosciences, a biotech focused on rare endocrine diseases, raised $34.6 million in a Series A funding. Frazier Healthcare Partners led the round and was joined by investors including OrbiMed, and NEA. Read more.
- Advertima, a St.Gallen, Switzerland-based computer vision platform provider, raised €15 million ($17.6 million) in Series A funding. Fortimo Group led the round.
- Abzena, a Cambridge, U.K.-based organization researching biologics and antibody drug conjugates, raised $10 million from Biospring Partners.
- Tandem, a Berlin-based app for practicing a second language, raised £4.5 million (~$5.7 million) in Series A funding. Brighteye Ventures led the round and was joined by investors including Trind Ventures, Rubylight Limited and GPS Ventures. Read more.
- Tire Agent, a New York-based platform for buying tires, raised $5 million in funding. American Family Ventures led the round and was joined by investors including ERA, Sidekick Fund, NY Angels and HBS Angels. Read more.
- InSilicoTrials, an Italy-based maker of a collaborative platform for healthcare simulation models, raised €3 million in Series A funding. United Ventures led the round and was joined by Pi Campus.
- Pyn, a Sydney-based HR company, raised $2.2 million seed round led by Accel, and was joined by investors including Skip Capital, Scott Farquhar (co-founder and co-CEO of Atlassian), and Jay Simons (former president of Atlassian). Read more.
- Wingocard, a Montreal-based personal finance platform for teens, raised $2 million in funding from Diagram Ventures.
- Spotta, a Cambridge-based startup that uses AI to spot pests, raised a $1.2 million in seed funding. Investors include Cambridge Angels, the Angel CoFund and US VC REMUS.
PRIVATE EQUITY
- Oak Hill Capital will acquire Otelco Inc. (Nasdaq: OTEL), a wireline telecommunication services provider in Alabama, Maine, Massachusetts, Missouri, New Hampshire, Vermont and West Virginia, for $11.75 a share. The deal values it at about $40.5 million.
- KKR, The Carlyle Group and Blackstone are interested in buying ITP Aero, a Spanish engine and turbine manufacturer, from Rolls-Royce in a deal that could be worth £1 billion (about $1.3 billion), per a report from the Times. Read more.
- TA Associates and Francisco Partners agreed to make a significant investment in Edifecs, a Bellevue, Wash.-based health information tech company. Financial terms weren't disclosed.
- Modern Hire, backed by the Riverside Company, acquired Sonru, an Ireland-based provider of automated video interviewing technology. Financial terms weren't disclosed.
- 3i Group’s single use bioprocessing platform acquired Sani-Tech West, a U.S.-based manufacturer, distributor and integrator of single-use bioprocessing systems and components. Financial terms weren't disclosed.
OTHERS
- Tencent proposed buying out and taking private Sogou, a Chinese search engine listed in the U.S. Tecent is bidding $9 a share.
- Paysafe acquired Openbucks, a U.S.-based payments company. Financial terms weren't disclosed.
- Hughes Network Systems agreed to invest $50 million in the British government and Bharti-backed consortium buying Oneweb, the bankrupt satellite operator. Read more.
IPOS
- Churchill Capital Corp IV, a New York-based blank check company founded by former Citi executive Michael Klein, now plans to raise $1.5 billion. It plans to list on the NYSE as “CCIV.U.” Read more.
- Northern Genesis Acquisition, a Kansas City, Mo.-based blank check company led by Stone Capital founder Michael Hoffman, filed for a $300 million IPO. It plans to acquire a sustainable business. It plans to list on the NYSE as “NGAU.” Read more.
- Lionheart Acquisition II, a Miami, Fla.-based blank check company formed by Lionheart Capital, plans to raise $200 million in an IPO. It is targeting a company in the real estate space. Lionheart founder Ophir Sternberg leads the company. It plans to list on the Nasdaq as “LCAPU.” Read more.
- Harmony Biosciences Holdings, a Plymouth Meeting, Penn.-based biotech developing therapies for narcolepsy and other CNS disorders, filed for an $100 million IPO. Valor Management, Fidelity, and HBM Healthcare back the firm. It plans to list on the Nasdaq as “HRMY.” Read more.
EXITS
- Thomas H. Lee Partners and Cannae Holdings plans to co-invest in a company formed after Black Knight, Inc (NYSE:BKI), agreed to acquire Optimal Blue, a provider of secondary market solutions (for an enterprise value of $1.8 billion) from GTCR, and combine it with Compass Analytics. Cannae and THL will each own roughly 20% of the new company while Black Knight will own about 60%.
F+FS
- Gallant Capital Partners closed its debut fund with $378 million.
PEOPLE
- Silver Creek Capital Management appointed Art Zaske, managing director and portfolio manager, as deputy chief investment officer.
- TPG added Michael Woolhouse as a partner for secondaries.
- Cove Hill Partners added Alex Jannotta as a vice president.


fortune--2020-07-28--McDonald’s posts worst global sales decline in at least 15 years

McDonald’s Corp. reported its worst global sales decline in recent memory, with drive-thrus and delivery unable to make up for the blows from pandemic shutdowns and consumer caution.
The fast-food company’s total same-store sales in the second quarter dropped 23.9%, slightly worse than what analysts had been expecting despite getting mid-quarter updates throughout the spring—and the worst performance in Bloomberg data going back to at least 2005. That was dragged down by a 41.4% plunge in its international operated markets unit, which includes stores in countries such as Spain, the U.K. and France.
McDonald’s shares fell as much as 3.6% in pre-market trading in New York.
All quarter long, McDonald’s had said international was weaker than its home market of the U.S., where comparable sales were down just 2.3% last month—nearly back to pre-pandemic levels. But even that may have disappointed investors, who’d been hoping June levels would be flat, RBC Capital Markets analyst Christopher Carril wrote in a note.
Drive-Thru Boost
Still, U.S. sales were better than for rival restaurants reliant on in-person dining, with drive-thru and takeout options easing the burden. The burger chain has been revamping digital options over the past few years, including touchscreen kiosks, which was a step that “served us well through these uncertain times,” McDonald’s Chief Executive Officer Chris Kempczinski said in a statement.
Meanwhile, the chain says 96% of its global restaurants are open again, with 99% operating at home. Of course, “open” doesn’t necessarily mean for sit-down dining. Earlier this summer, the fast-food chain temporarily halted its reopening plans for U.S. dine-in services, and investors listening to the call later this morning will be anxious to learn more on that pause.
The other big question now is whether a resurgence of Covid-19 in parts of the U.S. will derail the recovery. Economic stimulus is another big issue that’s up in the air that will likely define the path forward for the world’s biggest restaurant company.
To help with declining sales, McDonald’s said it spent $100 million to support its U.S. franchisees, with a similar amount going to international operated markets. The company also paid $31 million to distribution centers for “obsolete inventory” to support liquidity at the franchise level. The company also made tweaks to its menu this spring, such as the end of all-day breakfast, to ease the return to operations and address changes in diner behavior.


fortune--2020-07-28--Density, a startup that monitors headcount indoors, raises $51 million

Large indoor meetings are a surefire way to get yourself thrown out-the-door in a moment’s notice—at least in some states.
Now a startup that automatically monitors headcount indoors has raised $51 million as limits on gatherings during the pandemic ushers in a fresh wave of demand for the business.
San Francisco-based Density, which uses sensors to monitor the number of people entering and exiting a room or building, announced Tuesday that it raised the Series C funding with Kleiner Perkins leading the round and substantial capital from 01 Advisors. Other investors included Upfront Ventures, Founders Fund, Ludlow Ventures, Launch, DTA, Alex Rodriguez, LBC Ventures, Julia and Kevin Hartz, as well as Cyan and Scott Banister.
Prior to the pandemic, Density’s main pitch was space optimization: Using Density, businesses and real estate investors could analyze which commercial properties were being under-used with its sensors and software, and cull wasted rentals and buildings. And for those who know the pain of lining up at the Department of Motor Vehicles, the startup may also be remembered as one that sought to kill the lines at the DMV.
With an easily spread virus that’s required social distancing, companies, says CEO and Co-founder Andrew Farah, have sought to control the number of employees and customers indoors.
“Prior to COVID, this was an important and material thing for those that led large real estate portfolios,” says Farah. “In the pandemic this is a mainstream issue.”
Stores are using Density to display the number of people inside with iPads at the door, for instance. And while work-from-home has become the norm for many large companies, businesses such as manufacturing, food production, and shipping logistics are still bringing workers to work—all sectors where Density says it has experienced a flood in inquiries.
Meat processing plants, where workers often stand shoulder-to-shoulder, have experienced outbreaks that fanned fears of shortages around the country. In one case, says Farah, a meat plant became a customer after two coronavirus outbreaks led the company to seek ways to limit its worker concentration.
While Farah declined to give specifics on revenue and valuation, he says new bookings grew 493% in the quarter beginning February compared to the quarter prior.
Data privacy
Density uses a laser-based depth sensor, a small square rigged to doorways, that bounces infrared lasers off of objects to determine height values.
So there are ways to trick the technology, says Farah. Pop up an umbrella. Or, if you feel so inclined, walk under one under all fours and you might just fulfill your childhood fantasy of becoming a dog—at least in a machine’s eyes. But these, says Farah, are “edge cases.”
Which also means the sensor cannot tell who exactly is walking under the doorway. At a time when consumers are becoming increasingly wary of data privacy, Density also prides itself on anonymized data. The company can tell which location is being entered and exited, but it can’t determine for example the IP address of the person walking under the doorway or their face. When asked if the company would be open to sharing information to governments, Farah says Density doesn’t plan to sell customer data to the the group.
“Governments are customers,” says Farah. “But at present, we don’t sell or intend to sell, or give customer data to the government.”


fortune--2020-07-28--4 ways the Senate GOP’s new coronavirus stimulus bill ‘falls short,’ according to critics

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Senate Republicans finally unveiled their proposal for a new coronavirus stimulus package on Monday—a roughly $1 trillion plan known as the HEALS (Health, Economic Assistance, Liability Protection, and Schools) Act, which follows up on the $2.2 trillion CARES Act passed by Congress in March.
Like its predecessor, the bill seeks to aid American households and businesses suffering the economic effects of the coronavirus pandemic. That includes another round of direct “economic impact payments”—more commonly known as stimulus checks—to American taxpayers, as well as extended (albeit more limited) federal unemployment benefits and a renewal of the Paycheck Protection Program for small businesses.
Already, the HEALS Act is receiving criticism from observers over everything from its rollback of the CARES Act’s more lucrative unemployment benefits to its inclusion of questionable “pork barrel” provisions. The bill certainly appears far less generous—and less expensive—than House Democrats’ $3 trillion HEROES Act proposal earlier this summer.
One left-leaning political initiative, the progressive Economic Security Project, struck back against the bill on Monday. “Instead of cutting unemployment benefits, Congress should be working to get money to people as quickly as possible,” according to Adam Ruben, director of Economic Security Project Action. “People are hurting now. The economy is on the brink of the abyss. We cannot afford to wait any longer.”
Of course, it remains to be seen what the HEALS Act will look like in its final form. Should they wish to pass another stimulus bill to aid the American people, Republicans and Democrats on Capitol Hill will have to come together and strike a compromise. But with the GOP’s initial proposal now out in the world, here’s why some of the HEALS Act’s opponents believe the bill doesn’t do enough to address the U.S. economy’s current, coronavirus-related struggles.
Another $1,200 stimulus check ‘isn’t enough’
Like the CARES Act, the GOP proposal includes a one-time stimulus payment of up to $1,200 for qualified American taxpayers under certain income thresholds. For some critics, a one-time payment isn’t enough, especially for the Americans that are struggling the most.
“Rent is due every month. Medical bills come every month. People need to put food on the table every month, but the economy will not recover in a month,” according to the Economic Security Project’s Ruben.
To that end, the group backs the idea of not just one, but a series of “recurring cash payments” to Americans as a “no-brainer solution” to helping Americans get through the pandemic. Such an idea has already been proposed on Capitol Hill by the likes of Sen. Kamala Harris (D-Calif.), though it’s yet to receive much traction.
The Economic Security Project notes that an overwhelming majority of Americans spent their initial stimulus check on essentials like food, rent or mortgage payments, and utilities. With the pandemic continuing to hamper the U.S. economy, the group believes that the CARES Act’s followup “must include multiple rounds of payments” to get American households through this time.
Federal unemployment benefits will be cut by two-thirds
Tens of millions of Americans—particularly those formerly working in the service and retail sectors—have relied on the CARES Act’s historic expansion of unemployment insurance to make ends meet while the pandemic ravages huge swaths of the U.S. economy.
The GOP’s proposal would reduce the CARES Act’s federal unemployment benefit, which supplements existing state unemployment benefits, from $600 per week to only $200 per week through September, and would subsequently cap the benefit at 70% of an unemployed person’s previous income through the end of this year.
The Economic Security Project, among other progressive groups, has called on the HEALS Act to continue federal unemployment insurance “at 100% of the levels enacted in the CARES Act.” House Democrats’ HEROES Act proposal would have extended the $600 weekly benefit, which expires this month, through January 2021; it also would have expanded state unemployment insurance to part-time workers, gig workers, independent contractors, and the self-employed (who are eligible to receive such benefits through the end of this year under the CARES Act) through March 2021.
Already, it appears that some state lawmakers, like those in California, are prepared to step in and fill the breach should federal unemployment benefits prove inadequate.
Renewed Paycheck Protection Program ‘far and away’ from small businesses’ needs
The HEALS Act would bring the Small Business Administration’s Paycheck Protection Program back to life—providing $190 billion in forgivable loans to businesses with fewer than 300 employees that have seen their revenues badly damaged by the pandemic.
But already, some small business groups are worried that the GOP’s proposal has shortcomings as far as PPP is concerned. John Arensmeyer, founder and CEO of the Small Business Majority, described the HEALS Act’s PPP framework as “simply a starting point” that is “far and away from where it needs to be to ensure Main Street can recover” from the pandemic.
“Namely, the requirements [for businesses] to qualify for a second PPP loan are too burdensome; more reforms will need to be made to ensure this next round of PPP does not favor the well-connected over true small businesses again; and special emphasis needs to be placed on ensuring women- and minority-owned businesses are not shut out of additional funding,” according Arensmeyer.
Households with children and dependents need more help
Whereas the CARES Act supplemented taxpayers’ stimulus payments with an additional $500 per each child under 17 years of age in their household, the HEALS Act expands that $500 credit to include all dependents—not just children—living under a taxpayer’s roof.
Still, some critics believe that’s not enough. The Democrats’ HEROES Act proposal would have provided an additional $1,200 per dependent to each household’s stimulus check, up to a cap of three dependents. That would have meant that a married household living with three or more children would have been eligible for a $6,000 payment.
Such financial assistance would go a long way for those struggling to make ends meet while taking care of children and other dependents during challenging economic times.
“This pandemic has caused schools and child care [centers] to close, millions of parents to lose jobs, and created a slew of additional costs to make ends meet,” accordion to the Economic Security Project. The group cites recent data indicating that one in five American households with children can’t afford enough food to feed their kids in calling for children and dependents to be “eligible for the same [stimulus] payment amount as adults.”


fortune--2020-07-28--The tech industry needs more skepticism

The tech industry needs more skepticism

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Can technology be a force for good?
That’s the question a group assembled Monday by Fortune’s CEO Initiative discussed. (Yes, it was via Zoom; I nearly didn’t feel the need to say so. Eventually.) The goal was to suggest solutions to society’s problems that uniquely leverage the powers of tech and the industry that sells its wares. By agreement, I cannot say who said what, but here are some of the ideas we discussed, and my assessment of their prospects for success:
As “re-skilling” will be imperative in the post-pandemic world order, what if an open tech platform could be used to share best practices? No one company would benefit, but all companies would be served by better trained workers. Ambitious.
Increase access to digital products and use information technology to increase access to physical products and services. This suggestion is a hearty perennial and includes such tough-to-execute solutions as providing broadband everywhere and computers (or tablets or phones) to everyone. Doable but expensive.
Use technology to deliver better, more accurate, more consistent public safety information in times of crisis, like a pandemic. The technology could be as simple as text messages. Agreeing on the right language would be the hard part. Doable but contentious.
Call out “bad” as well as good uses of tech by way of assigning “resiliency” scores to tech players. Poor scores would prod embarrassed companies and people to improve. Good scores would provide positive examples. I’m a big fan of skepticism as a force for good.
These were just a few of the ideas our group discussed. Fortune will present the final proposals—and the metrics by which they’ll be measured—at the Oct. 26 (virtual) annual meeting of the CEO Initiative. The “Tech for Good” working group would love to know your ideas too. Please email me.
***
Brainstorm Tech, the July conference Fortune holds annually in Aspen, Colo., (except this year, when it will take place online Dec. 1-2) has expanded its leadership group. Fortune journalists Aaron Pressman (he of Data Sheet fame) and Lucinda Shen (who runs the VC and PE newsletter Term Sheet), are now editorial co-chairs. They are joined by Lo Toney, founding managing partner of the investment firm Plexo Capital, who will be an outside co-chair. Existing co-chairs Michal Lev-Ram, Andrew Nusca, Christa Quarles (who is not a journalist but absolutely could be if she wanted) and I are pleased to have them aboard.
Adam Lashinsky
@adamlashinsky
adam.lashinsky@fortune.com
This edition of Data Sheet was curated by Aaron Pressman.
NEWSWORTHY
The Zoom where it happens. Wednesday's Congressional showdown with the leaders of Big Tech will be fueled by a year-long antitrust investigation that reviewed more than 1 million documents and conducted hundreds of hours of interviews, so expect more than the usual vapid questioning, the Washington Post reports. The New York Times calls it tech's "Big Tobacco moment." On the other hand, some members plan to rehash their evidence-free charges of social media bias, so maybe do expect some vapid questions, too. Facebook decided to delay its earnings release until Thursday, joining Apple, Google, and Amazon on that date (and making for a very busy news day).
The boom where it happens. In case your Thursday is not busy enough, that's also the day NASA aims to launch its $2.7 billion Perseverance rover on its journey to Mars. The launch window opens at 7:50 a.m. ET. Perseverance and its super cool helicopter drone thingamajig are slated to arrive at the red planet on Feb. 18, 2021.
Best foot forward. Prepping for the CEO's testimony is not slowing down the Amazon empire. The company debuted a revamped app for its Alexa digital assistant that puts more emphasis on Alexa actions, like making a shopping list or playing music, while shunting third-party skills to a lesser role. Facebook's Instagram unit has also been busy shoring up its position in video by offering to pay top TikTok creators to join its Reels app. Seems like only yesterday when Microsoft was paying top Twitch creators to join Mixer. (How did that work out? Not well.)
Time to triple down on secrecy. At Apple, the whole 2020 launch calendar apparently just leaked. August is said to bring new iMacs and HomePods, while the usual September iPhone debut will also bring Apple Watch 6 and the AirTags Tile imitator. In October, the first Apple chips arrive in new MacBook and MacBook Pro laptops along with a revamped iPad Pro and Apple TV. Or so they say.
The other shoe. Perhaps not surprisingly, some top Intel executives are out the door after last week's 7-nanometer debacle. Murthy Renduchintala, chief engineering officer and group president of the Technology, Systems Architecture and Client Group, is leaving, and Mike Mayberry, who oversaw technology development, is retiring. Renduchintala, the longtime Qualcomm exec who joined Intel five years ago with wide responsibilities across the company, is not being replaced. Ann Kelleher, a 24-year Intel veteran, takes over Mayberry's role.
FOOD FOR THOUGHT
Most drones on the market have a number of rotors, usually four, that provide lift for flight. Professor at the University of South Australia Javaan Chahl and his team are developing drones with wings that flap like birds, dubbed ornithopters. Chahl explains why the group went with "nature's original solution" in an article at The Conversation.
Ornithopters fly differently to conventional drones. They can glide, hover, and perform aerobatics. In different situations, they can either save energy by flying like a regular aeroplane or choose to hover. They can take off and land slowly in tight spaces, yet might quickly soar upwards to perch like a bird.
Current multirotor drones hover very nicely, but use even more energy in forward flight than in hover, so they can’t really travel far. Fixed wing drones can travel efficiently at high speeds, but hovering is not normally possible without compromising the entire design. There are hybrid concepts, usually with wings and rotors. Hybrid aircraft perform poorly when hovering and cruising when compared to other designs due to additional weight and drag from having more parts.
ON THE MOVE
Jim Lanzone, former CEO of CBS Interactive and former chief digital officer of its parent company, CBS, is taking over as CEO of Match Group's Tinder dating app. Current Tinder CEO Elie Seidman is departing for venture capital land...Virgin Galactic hired longtime Disney veteran Michael Colglazier as its new CEO, replacing George Whitesides, who shifts to chief space officer...autonomous vehicle startup Rimac Automobili named former Aston Martin chief engineer Chris Porritt, who also worked at Tesla and Apple, as its chief technology officer...Twilio is bringing Michelle Grover in as its first chief information officer. Grover joins from SAP Concur, where she led a team of engineers focused on TripIt and the Concur mobile app...Luminar Technologies grabbed investment banker Tom Fennimore as its CFO, replacing Bill Zerella, who has left for points unknown. Fennimore was previously global head of automotive at Jeffries Group and Goldman Sachs.
IN CASE YOU MISSED IT
A $2.1 billion buyout offer could see another Chinese company delist from the U.S. By Naomi Xu Elegant
Intel’s decline makes rival chipmaker TSMC the world’s tenth most valuable company By Eamon Barrett
What’s behind Bitcoin’s surge? Experts have several theories By Jeff John Roberts
One of the year’s most buzzed-about graphic designers had a secret: He was a machine By Clay Chandler and Eamon Barrett
How the government could boost women- and minority-owned businesses—while turning a profit By Dale Mathias and Agnes Dasewicz
(Some of these stories require a subscription to access. Thank you for supporting our journalism.)
BEFORE YOU GO
An ongoing memorabilia auction happens to include the cover page of the October 9, 1989 edition of Fortune picturing Steve Jobs. And it's autographed by Steve Jobs. The minimum bid is only $11,000. I'm collecting all that loose change I've been saving during quarantine to see if it's enough.
Aaron Pressman
@ampressman
aaron.pressman@fortune.com


fortune--2020-07-28--Rep. Ilhan Omar and daughter Isra Hirsi learn about activism from each other

This is the web version of The Broadsheet, a daily newsletter for and about the world’s most powerful women. Sign up to get it delivered free to your inbox.
Good morning, Broadsheet readers! Melania Trump is renovating the Rose Garden, more Black women than ever are running for Congress, and Rep. Ilhan Omar and her daughter Isra Hirsi reflect on their intersecting work and relationship. Have a lovely Tuesday.
– Mother-daughter time. When Rep. Ilhan Omar and her daughter Isra Hirsi signed on for an interview with Fortune‘s Most Powerful Women community yesterday, it was the first time the mother and daughter were seeing each other that morning.
“Good morning, Isra,” Omar said from D.C. to her Minneapolis-based daughter as we waited for the Zoom meeting to kick off. The pair joined Fortune senior writer Jen Wieczner and me for a conversation about their relationship, Hirsi’s work as a climate activist, and paying it forward to the next generation.
Before Omar had to head to the House floor for a vote, I asked her how Hirsi’s activism—the 17-year-old is a cofounder of the U.S. Youth Climate Strike and has also organized against gun and police violence—has affected her policymaking on Capitol Hill. Omar described a moment three years ago when Hirsi led a rally for gun control at the Minnesota State Capitol, where Omar then served as a state representative. “If my generation had acted with the urgency that her generation had acted,” the congresswoman remembers wondering, “would my daughter be at the state capitol asking for us to introduce sensible gun laws and to protect the lives of young people?”
It was a pleasure to hear from Omar, but Hirsi was the real star of the gathering (if you haven’t seen her TikTok account, I highly recommend it). The Most Powerful Women community members who joined us brought to the call their own mentees, from daughters to early-career colleagues, and Hirsi had advice for them about how to take action for a better world as she has: “Understand that you are valuable. Your voice is big and strong and powerful.”
And for the parents raising young activists, Omar has her own guidance: “Every time you are able to change a mind—or awaken a mind—you are winning in creating a better tomorrow.”
Read my colleague Beth Kowitt’s story about the rest of the gathering here.
Emma Hinchliffe
emma.hinchliffe@fortune.com
@_emmahinchliffe
ALSO IN THE HEADLINES
- 2020 milestones. The 2020 election has set another record: more Black women than ever before are running for Congress, Reuters reports. Another election cycle note: the rate of GOP women winning their races has fallen dramatically, reports Fortune's Nicole Goodkind.
- Quarantine gardening. Melania Trump has a new project: renovating the White House Rose Garden. The first lady aims to restore some of the Rose Garden's original design, as envisioned by 1960s horticulturist and philanthropist Rachel "Bunny" Mellon. CNN
- Retail redo. The retail industry is powered by women as employees and customers. But the biggest retail brands are led by male executives—especially in Europe, which has been slower than the U.S. to appoint women to these roles. Melanie Smith, CEO of U.K. grocer Ocado Retail and one of few women to head a European retail brand, says she worries the pandemic has lost another "20 years" of progress. Bloomberg
MOVERS AND SHAKERS: Felicia Mayo, Tesla's former diversity chief, is Nike's new chief talent, diversity and culture officer. The Charles Schwab Corporation added former Fidelity National Information Services COO Marianne C. Brown and Starbucks chief technology officer Gerri K. Martin-Flickinger to its board of directors.
IN CASE YOU MISSED IT
- Herd mentality. Herd immunity to COVID-19 only works if "you don't care how many people die," science writer Laurie Garrett argues in a new op-ed. The real problem with counting on the strategy? "Humans have free will." Fortune
- Madame prime minister. Last week, Gabon got its first female prime minister. The country's president appointed defense minister Rose Christiane Ossouka Raponda to the role with a mandate to guide Gabon through its economic recovery from the coronavirus pandemic. Al Jazeera
- Zoom bomb. How do you advertise a product everyone is using—but probably rather wouldn't be? Zoom CMO Janine Pelosi over the past several months focused on supporting users like K-12 schools rather than marketing to companies. AdAge
ON MY RADAR
Bethenny Frankel on her latest business ventures and how she became a self-made mogul Fortune
Oprah Winfrey's magazine to cease regular print publication as brand becomes 'digitally centric' The Hollywood Reporter
Inmates witnessed a suicide attempt. They received coloring pages instead of counseling Washington Post
PARTING WORDS
"This moment is so much bigger than sports."
-WNBA stars Sue Bird and Nneka Ogwumike


fortune--2020-07-28--Former Malaysian prime minister sentenced to 12 years in 1MDB trial

A Malaysia court sentenced former prime minister Najib Razak to 12 years imprisonment after ruling him guilty in the first of a series of trials linked to 1MDB.
Najib was guilty Tuesday of all seven charges in the case involving 42 million ringgit ($10 million) of funds deposited in his personal accounts from a former unit of 1MDB. His lawyer has said an appeal against the ruling is a certainty, while seeking to keep him out of jail during the appeal process.
High Court Judge Mohd Nazlan Mohd Ghazali sentenced him to 12 years in jail for one count of abuse of power, as well as 10 years each for three charges of money laundering and three criminal breach of trust charges, to be served concurrently. He must also pay a fine of 210 million ringgit.
The judge told the court he found “the defense has not succeeded in rebutting the presumption on the balance of probabilities or raising reasonable doubt on the charge against the accused” as he delivered his judgment on the abuse of power charge.
The verdict comes days after Malaysia resolved settlement talks with Goldman Sachs Group Inc. over the bank’s role in raising funds for 1MDB during Najib’s time as prime minister. The bank agreed on a $3.9 billion settlement, including $2.5 billion in cash, in return for all its charges being dropped.
Prosecutors questioned dozens of witnesses over months to build a case that showed Najib’s “pervasive and imperious” role in SRC International Sdn., the former unit of 1MDB, the judge said in November. The former leader had testified that he acted in the best interests of the country and consulted the cabinet and 1MDB executives at every step of the way, while his lawyers argued that he had been misled by others, including fugitive financier Low Taek Jho.
Jho Low played a crucial role in transferring the funds to Najib’s account, according to the judge on Tuesday. BlackBerry Messenger conversations revealed the two were communicating, and there was no basis to claim the account balance was being hidden from Najib. Low has consistently denied wrongdoing.
The judge also dismissed the defense’s premise that they believed the funds were a donation from the Saudi royal family. Najib could have verified it himself with the Saudi government, yet chose to take Low’s word for it, the judge said. On charges of money laundering, the judge said Najib practiced “willful blindness” to the receipt of the proceeds.
The verdict comes two years since the charges were announced against Najib, who at the time had just been ousted from power on a wave of public anger over the 1MDB scandal and rising living costs. Since then, the administration that first brought him to book has been replaced by Prime Minister Muhyiddin Yassin’s government, which counts on the backing of a party once led by Najib.
The trial is only the first of at least three involving Najib, who faces dozens more corruption and money-laundering charges, including those linked to billion-dollar acquisitions and bond sales by the scandal-ridden fund.


fortune--2020-07-28--How the coronavirus is testing the stakeholder business model

Last August, 181 CEOs committed to the Business Roundtable’s redefined purpose of a corporation, stating that businesses are to promote “an economy that serves all Americans.” A year later, that commitment to serve all stakeholders—customers, employees, suppliers, communities, and shareholders—is being put to the test.
As a society, we are facing previously unimagined challenges—a global pandemic unlike anything we’ve ever experienced and a reckoning with deep-seated racial injustice and inequities. According to the Edelman Trust Barometer, 65% of respondents—out of a total of 13,200 individuals in 11 global markets—felt that CEOs should take the lead on addressing the pandemic rather than waiting for government to impose restrictions and demands. Similarly, 67% of Americans say that how businesses react and express themselves on racial inequality will have a permanent effect on buying decisions, according to a recent survey by Morning Consult.
It’s no longer enough for businesses to focus on providing health benefits, advancing diversity and inclusion, and creating economic opportunity. The new and expanded responsibilities of a business have evolved to facilitating services that focus on employee health and safety, rooting out racial injustice, and addressing the environmental factors that impact a community’s ability to thrive. More so now than any other time in our history, business leaders have an opportunity to be part of the solution to drive positive societal change.
Every employer is a now health care company
With Americans more likely to get their health coverage from an employer than any other source, the relationship between a business and the health of its workforce has already been strong. Yet COVID-19 dramatically shifted how employers think about the health of their employees and its impact on business continuity. Providing a safe environment and resources to support employees’ well-being went from something a business should do to something it needs to do to survive.
In boardrooms and C-suites across the country, leaders are grappling with public health indicators and workplace policies that will determine when and how they bring their employees back to work sites. From redesigned office space and cleaning protocols to health symptom checks and COVID-19 testing, companies are more focused than ever on the actions they can take to promote health in the workplace.
Beyond the physical environment, increased attention is centering on the growing mental-health crisis, a deadly undertow that has the potential to impact more individuals than the virus itself. A recent study by PricewaterhouseCoopers found that 30% of individuals with employer-sponsored coverage either sought help for mental health as a result of COVID-19 or had plans to do so. The report also found that mental-health issues left untreated increase costs by a multiple of 12.
As a result, more employers are acknowledging the importance of mental health, investing in expanded support for employees and normalizing conversations that bring these issues out from the shadows. Eliminating the stigma associated with mental health may become a silver lining of the pandemic.
Making progress toward racial equality
Diversity and inclusion have been elements of business strategy for some time but have largely focused on the factors within a company. A commitment to systemic change both internally and externally is required to make real progress toward addressing the root causes of inequality in our country.
In the wake of the killing of George Floyd and growing momentum of the Black Lives Matter movement, businesses are taking stands, committing to action toward racial justice, and being held accountable for meeting those commitments—both within their organizations and outside them. Corporations have significant influence on social issues, and in this moment, that means determining our role in fostering equality and taking tangible steps that will turn this long overdue conversation into a moment of true change. At CVS Health, we are focusing our efforts on improving the overall experience for our colleagues, supporting communities through reducing health care disparities and increasing economic opportunity, and influencing public policy to drive positive change for Black Americans.
Addressing the needs of our communities
There’s a well-established connection between a person’s health and well-being and the factors in their environment, such as access to transportation, quality education, affordable housing, and healthy food. As much as 60% of a person’s life expectancy is driven by these social and environmental determinants. COVID-19 has reinforced this reality as Black and Hispanic people have been more significantly impacted by the pandemic, largely due to factors like families of multiple generations living in the same household, greater likelihood of being essential workers, and lack of access to health care.
Addressing social determinants of health is a concern not just for the health care industry, but for all companies. Businesses rely on their communities for healthy workforces and customer bases to support their growth.
With the trajectory of the pandemic uncertain, business leaders must consider the ongoing problems our communities face as our own. COVID-19 has made us more interconnected than ever, and conversations about access to schools and childcare will be just as important in the boardroom as they are at the kitchen table. We also must prioritize areas of greatest need, like housing and food security, for those most vulnerable in our communities. These issues are economic just as much as they are about social justice, and inaction is not an option.
Seizing the moment
We are facing an inflection point as business leaders. The role that businesses play in society was already expanding, but COVID-19 and the movement to address racial injustice have radically accelerated that transformation. The public expects and trusts us to do something about these historic challenges, and by seizing that opportunity, I am confident our collective action can drive real change.
Karen S. Lynch is executive vice president of CVS Health and president of the Aetna business unit.


fortune--2020-07-28--LVMH takes profit hit as pandemic forces buyers to cut back on luxury

LVMH’s customers are curbing purchases of high-end fashion faster than the company can cut costs, and that’s hitting the Louis Vuitton owner’s profit.
The French luxury conglomerate’s profit from recurring operations totaled 1.67 billion euros ($1.96 billion) in the first half, less than the 2.32 billion euros analysts expected. The shares fell as much as 4% early Tuesday in Paris.
With boutiques shut down worldwide and international tourism largely halted, revenue fell 38% on an organic basis in the three months through June, the company said in a statement on Monday. Chief Financial Officer Jean-Jacques Guiony said LVMH slashed operating costs by 29%.
“LVMH showed relative resilience at the revenue level in the first half of the year,” said Luca Solca, an analyst at Bernstein. “On the profit side, it’s obvious that it’s not been able to slash costs with the same pace as the revenue decline due to the fixed-cost base.”
LVMH follows Richemont and Burberry in reporting what analysts expect will be the industry’s worst quarter ever because of the pandemic. The company cited signs of recovery across several businesses in June and a particularly strong rebound in China, and said it expects further improvement in July.
The company reacted “swiftly to the adverse situation,” Guiony said on a call with analysts. “We expect to keep the cost base under control.”
Tiffany Contract
Guiony said in an interview with Le Figaro that LVMH still expects to respect the contract signed for its planned purchase of jeweler Tiffany & Co.
“Tiffany’s results are clearly affected by the crisis,” the CFO told Le Figaro. “That said, we have signed a contract and we will respect it.”
Guiony told analysts on the call that LVMH is still waiting for about half a dozen antitrust approvals for the Tiffany deal, adding that “things are moving forward.”
Sales at LVMH’s fashion and leather goods unit, which includes top brand Louis Vuitton, fell 37% in the quarter. Analysts expected a 38% decline. Louis Vuitton management increased prices globally by 5% in late June and early this month, Guiony said.
While shoppers are increasingly turning to online purchases, the luxury industry has notoriously been slow to generate more revenue that way. LVMH noted a “significant acceleration” in online sales in the first half, which only partially offset the store closures.


fortune--2020-07-29--How ugly will it get? The U.S. is set to release a historically bad GDP report

‘ We see no point in wearing a face mask , ’ Sweden ’ s top virus expert says as @ @ @ @ @ s improving COVID numbers

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The U.S. economy ground to a halt for almost the entirety of April. Now the world is about to find out the depth of that contraction.
Data due Thursday are forecast to show U.S. gross domestic product plummeted an annualized 34.8% in the second quarter, the most in records dating back to the 1940s, after the spread of Covid-19 prompted Americans to stay home and states to order widespread lockdowns.
Even though economic activity picked up in May and June as stay-at-home orders lifted, the scale of the decline in April likely far outweighed any gains later in the quarter.
Here are some questions and answers about the report:
Did the U.S. economy actually shrink by one-third?
No. The Bureau of Economic Analysis, the government agency that compiles the GDP figures, has historically reported the headline numbers as an annualized rate. That shows what the quarterly change would be if it lasted a full year.
Before the crisis, the economy was usually growing by a few tenths of a percentage point each quarter, resulting in an annualized pace typically ranging from 2% to 3%.
This means the main number Thursday will look much worse than reality. A 35% contraction on an annual basis actually means the economy was about 10% smaller in the second quarter than it was in the first quarter.
Even so, that would still be far beyond the record quarterly decline on an annual basis — 10% in the first quarter of 1958, which coincided with a global flu pandemic.
The latest figure, which is the first of three estimates, may be revised in the next two months and also in coming years like all GDP reports, and revisions could be bigger than usual.
What drove the second-quarter contraction?
Mostly a collapse in consumer spending, which typically accounts for about two-thirds of GDP, as Americans stayed home — erasing spending on dining out, physical retail and travel. Personal consumption is projected to have plummeted an annualized 34.5% in the quarter, which would also be a record.
Michael Gapen, chief U.S. economist at Barclays Plc, projects a 36% drop in second-quarter consumer spending. That translates to about 25 percentage points of the projected 35-point annualized decline in GDP.
It’s not just personal consumption, though. A 40% decline in residential investment and a 50% drop in equipment spending, as well as drags from net exports and inventories, all likely contributed. The only major category Gapen expects will be positive is government consumption and investment, though it will add less than a percentage point to growth.
Wells Fargo & Co., though, expects government outlays to be negative despite enormous federal stimulus. Why? Lower spending by state and local governments that have seen plunging tax revenues.
Won’t the economy come back strongly in the second half?
Yes, but activity may remain below pre-pandemic levels for several years, and the recovery is already showing signs of stalling.
The economy is expected to grow an annualized 18% in the third quarter, according to a Bloomberg survey of economists in early July. That would be just ahead of the record 16.7% pace in the first quarter of 1950.
“The question is, how sustainable is that bounce?” said Michelle Meyer, head of U.S. economics at Bank of America Corp.
Amid a surge in new virus cases in the South and West, many states have paused or even reversed reopening plans, and measures of mobility and restaurant bookings have plateaued. Lawmakers are in the midst of debating another round of fiscal stimulus, with the supplemental $600 in weekly unemployment benefits about to expire.
If the economy starts to deteriorate, the fourth quarter could show a contraction, said Gapen.
What does it all mean for the election?
American voters will decide in three months whether to re-elect President Donald Trump to a second term against a backdrop of a virus-induced recession and his response to the health crisis.
Before the pandemic, Trump’s goal was for a sustained pace of 3% economic growth. Now, the coronavirus has left its own mark on Trump’s economic legacy — with the declaration of a recession and likely the worst quarterly GDP decline on record.
The GDP figures for the third quarter — the anticipated rebound — are due Oct. 29, just five days before Election Day. Trump is well aware of the timing.
“We’re going to have a great third quarter,” he said in an interview with Fox News’s Sean Hannity last week. “And the nice thing about the third quarter is the results are going to come out before the election.”
While the results may in theory sway some last-minute deciders, many of those who mail in ballots will have already made their choice — – especially if mail-in ballots happen in greater numbers this year as a result of Covid-19 concerns.


fortune--2020-07-29--‘We see no point in wearing a face mask,’ Sweden’s top virus expert says as he touts the country’s i

‘We see no point in wearing a face mask,’ Sweden’s top virus expert says as he touts the country’s improving COVID numbers

How ugly will it get ?
The U.S. is set to release a historically bad GDP report

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As other countries face renewed outbreaks, Sweden’s latest Covid-19 figures suggest it’s rapidly bringing the virus under control.
“That Sweden has come down to these levels is very promising,” state epidemiologist Anders Tegnell told reporters in Stockholm on Tuesday.
The Health Agency of Sweden says that since hitting a peak in late June, the infection rate has fallen sharply. That’s amid an increase in testing over the period. “The curves are going down and the curves for the seriously ill are beginning to approach zero,” Tegnell said.
The development follows months of controversy over Sweden’s decision to avoid a full lockdown. The unusual strategy coincided with a much higher Covid-19 mortality rate than elsewhere in the Nordic region. Per 100,000, Swedish deaths even exceeded those in the U.S. and Brazil.
On Tuesday, Sweden reported two new deaths, bringing the total to 5,702.
Masks
Tegnell also broached the subject of face masks, which the World Health Organization recommends people use when social distancing isn’t possible.
“With numbers diminishing very quickly in Sweden, we see no point in wearing a face mask in Sweden, not even on public transport,” he said.
Tegnell has consistently argued that Sweden’s approach is more sustainable than the sudden lockdowns imposed elsewhere. With the risk that Covid-19 might be around for years, he says completely shutting down society isn’t a long-term option.
Meanwhile, many countries that thought they’d brought the virus under control are now seeing second waves. Tegnell called those developments “worrying.”
“The positive trend is reversing, with an increase in the number of cases in Spain, Romania and Belgium, among others,” he said.