fortune--2020-01-30--Oz Perkins on ‘Gretel & Hansel,’ feminist fairy tales, and suggestive triangles

The films of director Osgood “Oz” Perkins are fractured fairy tales—eerie and richly atmospheric examinations of loss and abandonment that exist in a state of heightened unreality.
In 2015, Perkins—the son of Psycho star Anthony Perkins—arrived on the festival circuit with The Blackcoat’s Daughter, a chilling tale set at an upstate New York boarding school that depicted the horrors two Catholic schoolgirls encounter after getting left behind for a weeklong break. His follow-up (officially released first) was Netflix’s I Am the Pretty Thing That Lives in the House, a ghost story in which a nurse struggles to care for an aging, dementia-afflicted horror novelist in her home.
To craft his third film, this week’s Gretel & Hansel, he partnered with the British playwright Rob Hayes (marking Perkins’s first collaboration with a cowriter) and drew from the well of Grimms’ Fairy Tales.
But even with that classic tale of two children lost in the woods at the dark heart of his film, Gretel & Hansel bears Perkins’s trademarks: foreboding atmosphere, Gothic visuals, and a focus on complex female characters—here, Gretel, played by It’s Sophia Lillis, and the witch, played by Alice Krige—finding their way in a dark world.
Speaking to Fortune by phone from Los Angeles, Perkins discussed the film, fairy tales, and idiosyncratic architecture.
This conversation has been edited and condensed for clarity.
Gretel & Hansel is your first film based on a pre-existing property. What drew you to it?
That’s what seems to be the most compelling for audiences these days—the alchemical mix of something very familiar with a new lens. That relationship is proving to be really good magic for everybody, whether it’s Todd Phillips, Martin Scorsese, or me. Bringing the old stuff back and polishing it up, giving it a new life. When the script first came to me, what was most appealing to me was that it was the original story. It wasn’t some apologist, revisionist bullshit. There was this honorable bravery that the original screenwriter [Rob Hayes] was employing to say, “Let’s just do the fairy tale—it’s good enough, isn’t it?” And of course it was good enough. It’s been powering people’s fantasies and nightmares for hundreds of years.
Your title swaps the traditional placement of the characters, and your film also focuses more on Gretel, played by Sophia Lillis. But that’s not that surprising to me, given the female protagonists of The Blackcoat’s Daughter and I Am the Pretty Thing That Lives in the House. As a male director, what appeals to you about telling stories from a female perspective?
I don’t want to sound craven about it, but it’s especially useful for me as an author and director to pass everything through a female protagonist. It keeps me in a place of mystery, of wondering, of not fully being able to see clearly what’s happening. It adds a layer of darkness, frankly—and I don’t mean in the negative sense, but in the sense that you can’t see. If I had male protagonists, I wonder if my films would start to feel overly familiar, borderline smug at times. Using a female protagonist keeps me walking on eggshells; it keeps me spry and on my toes, and my willingness to explore is always heightened.
Perkins, left, with star Lillis on the set of “Gretel & Hansel.” Patrick Redmond—Orion Pictures
And with Gretel & Hansel, that exploration turns a fairy tale into this feminist coming-of-age story.
Fairy tales are so often instructions on how to live, what you can become. They’re about telling kids, “Look, the world is a lot of things, and some of the things the world is aren’t so great.” There’s the idea that coming of age is really about coming into your relationship with the world. To have a woman put in a situation where she’s tasked to evolve, to find her own power, seems like a really ripe, fertile place to start a story from.
In expanding the original Grimms’ fairy tale as you do, the witch (Alice Krige) has more complex motivations for luring children into her woodland abode. How did you crack that character?
The screenwriter and I insisted from the beginning the witch could not be some cardboard-cutout element standing in for something obliquely defined as evil. For me, I believe the villain is always the star of their own sad story; a villain is just a broken person who’s coping in a destructive way. Looking from the inside out, we wanted to know what her pain was about, what drove her to do all this. Villains who rub their hands and leer… I don’t even know what that is. This witch is luring children, murdering, and eating them. That’s a really painful place to be in. Nobody wants to be doing that, like no heroin addict really wants to be addicted to heroin. We had to find the source of her pain and then build outward. Alice Krige, being such a brilliant actress with careful control of her instrument, is able to bring all that pain into her physicality.
I’m curious how much you as a director think into the psychology of your visuals. Gretel & Hansel, like The Blackcoat’s Daughter and I Am the Pretty Thing, makes such effective use of architecture, with shadowy basements filled with secrets and striking, almost runic structures looming around the characters.
When it comes to this movie specifically, I felt we owed it to contemporary audiences and the original source material to adhere to the basic narrative but then give it our own, personalized feeling, so that it was our world and only our world. One of the charms of fairy tales is that they don’t care what else is going on in the world. There’s no context. It’s just what’s in front of the characters and at hand. We wanted to make a world that was entirely our own. I will say I wouldn’t know how to make a movie in which spaces weren’t vital. It’s like saying it doesn’t matter where you live or walk every day. Our environments are so impactful. When you’re given something as wide-open as the enchanted world of a fairy tale, everything’s essentially possible. We early on decided there was no [established] time [period], country, or context. It gave us the freedom to be expressive and expressionistic, and to harness the fact that not only are fairy tales like that but the horror genre is as well. It’s the genre most without rules and boundaries.
The witch’s house has this geometric, oddly triangular design. Where did that come from?
It’s funny. Triangles come from wherever they come from. (Laughs) That is to say that if you’re lucky and alert, the collective unconscious of the universe will send you messages. David Lynch goes into a lot of details about this in his books, describing how his designs come out of his meditations. It’s all out there, if you look for it and recognize that. The director’s job is to say yes and no to specific things, and to be open to what’s right. The shape of the triangle is this archetypal, elemental, highly suggestive shape, and it means a million things to everybody differently. It’s in step with the mysticism of the occult, of what we understand symbolically but not literally. It’s just this delicious touchstone that everyone has an opinion about. And you introduce that into the unconscious of the movie, thus encouraging everyone’s unconscious to be a part of it.
Your past work was on the independent film circuit but, given how heady some of what you’re talking about here is, what was it like working in a more mainstream studio setting with Orion Pictures and MGM?
I feel like it should have been harder. Or maybe it was harder, for the producers. But it never got to me. The good news was that our taste was good, our imagery was good, and so we were able to get away with a lot of left-of-center stuff. Studios have this mandate to please everybody but often realize that, in the attempt to please everybody, you please nobody. What was gratifying for me with MGM and Orion is that they were willing to go there with all the stuff I wanted to do. They never said, “You can’t do that.” We did some wild stuff. Just the fact that the movie shot in 1.55:1 aspect ratio and is more square than wide, and the fact that a major studio would tolerate that—never mind support or enthusiastically support that—was a real boon. Mine was a vision that was not typical.
You’re held up as part of this new wave of “art horror” directors. What horror movies have influenced you lately?
To be honest, I either avoid the movies made by my contemporaries, because it will almost impact me and throw me off in a weird way. I acknowledge that’s a vulnerability of mine. But I try to watch the oldest-possible movies I can. I’d rather watch the original Cat People or Cronenberg movies. Things that are not current feel much more romantic to me. Then there’s something like Let the Right One In, this beautiful marriage of sadness and horror that strikes me as particularly beautiful. If it was up to me, I’d be making black-and-white horror movies.
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—The Grammys remain more of the same even amid calls for change
—Taika Waititi on Kiwi humor, directing as Hitler, and why kids should see Jojo Rabbit
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fortune--2020-01-30--The next frontier of road rage is the parking garage

How the Wuhan coronavirus spreads and what ’ s being done about it

They’re called “ICEholes.” In online conversations between electric vehicle owners, ICE stands for internal combustion engines, making “ICEholes” those gasoline-powered drivers who antagonize their electric counterparts out of negligence or spite.
“The biggest ICEhole regularly blocks the only working charger in the garage,” reads a car-shaming post (with photo!) in a Tesla-focused forum on Reddit. One submission shames a semi truck blocking access to six chargers by parking horizontally. Another shows a Nissan Leaf parked awkwardly on a curb in order to reach a charger blocked by a gas-guzzling Chrysler.
Parking is politics. Just witness any George Costanza-level meltdown over a contested space or encounter the unwritten rules of Bostonians, Chicagoans, or Philadelphians who claim a snowy spot they cleared. With electric vehicle sales on the rise—U.S. sales topped 300,000 last year, according to the Department of Energy, and some predict that total global sales could reach 100 million by the end of the decade—parking angst is sure to deepen as new electric drivers find the chargers they desperately need already in use or blocked by gasoline cars that don’t need them. Fortunately, some drivers, cities, and lawmakers are working on smart ideas to de-escalate the parking wars to come.
Access denied
The simplest way around range anxiety is to charge at home. EV owners who install a dedicated charger in their garage wake up each day to the contented feeling of a full battery. But not all drivers have this option. Consider the many home-renters or apartment-dwellers who’ll drive electric vehicles once they go mainstream but who won’t have the prerogative to install a big piece of electric infrastructure.
Those EV converts will find themselves at the mercy of the public EV charging hustle, a hodgepodge of confusing and time-consuming options, from “destination chargers” at Whole Foods and hotels to company-specific high-power stations such as Tesla superchargers. Drivers might plug in at a public garage to grab a few electrons while they shop, race to beat others to work so they’re guaranteed a charging stall for the day, or trek to the Tesla supercharger and wait for a space to come free if it’s a busy time of day.
As an electric-vehicle owner, I primarily charge at the office. But I’m lucky. My employer—located in California, it’s worth noting—has deployed dozens of chargers in one of its parking structures, allowing electric drivers to charge during the workday and leave with a full battery. Even so, I fret. Only some of these spaces are officially marked “EV only,” and as the morning progresses, many of the “all parking okay” spaces fill up with gasoline-powered cars. This isn’t malevolence on the part of the other drivers, necessarily—typically anyone who needs a charger has snagged one by then. Still, I feel preemptive anger at the sight of a random fossil fueler parked in front of a charger, dreading the inevitable day when I’ll need immediate access to a plug and won’t get it.
That day is coming soon.
The coming charger crunch
The 2020s promise to be the decade of the electric car. Toyota has 10 all-electric vehicles in the hopper. Jaguar, which beat many legacy competitors to market with its battery-powered i-Pace crossover, has weighed the possibility of the brand going entirely electric. Even Porsche finally took the plunge, revealing its long-awaited electric sedan, the Taycan, in 2019. Within a few years, most new vehicles will likely be hybrids as the floodgates swing open for pure EVs.
An obvious infrastructural crisis looms. The world needs many, many more public charging stations, plus smarter ways to manage the load and ensure more of that power comes from renewable sources. On top of that, a society with hordes of electric drivers demands a new way to think about the precious shared resource of EV parking stalls.
In some places, the reset is happening by force. The number of Teslas on the road has multiplied with the release of the Model 3 and the automaker has promised a slew of new supercharger stations to meet the added demand. In the meantime, though, lines form at the busiest outposts. To ease the logjam, Tesla automatically asks drivers at full-capacity superchargers to take off when their vehicle’s battery hits 80% (though they can opt to get more energy). The company also introduced “idle fees” to fight space-hogging: Following a five-minute grace period after charging concludes, Tesla begins charging drivers by the minute until they move the car.
Beyond the Tesla ecosystem, new parking laws target bad behavior. Last year, Colorado added fines for blocking EV charging stations. Other states and cities have put laws on the books to fine drivers who park without hooking up to the charging equipment. The primary villain here may not even be ICEholes, but rather indifferent electric owners. According to Green Car Reports, in 2018 the most fines for illegally parking in a charging stall went to EVs that blocked a space while not charging.
Parking police
Thanks to the smartphone revolution, Americans have already internalized the lesson that not all charging is created equal. Say you’re standing at an airport charging station to boost your phone’s battery from 55% to 90% because it happens to be available. Then someone comes along with 2% and asks to cut in. Most people probably would let them.
A few civic-minded electric cars drivers are already trying to reorient our parking culture around this concept. One group attempted to make electric vehicle charging hangers that tell other drivers whether your car is “opportunity charging” (meaning you’re not desperate for the miles) or “necessity charging (you very much are). Displaying the “opportunity” placard gives another driver permission to unplug your sufficiently juiced Nissan Leaf or Chevy Bolt if they’re in danger of their own battery hitting zero. Benevolent chargers can even leave their phone number for the desperation drivers who needs to text them to ask if they can move out of the stall.
These small steps are commendable. But the U.S. is a nation that paves a staggering number of parking spaces and never has enough, with a driving public trained to think of refueling as a five-minute forgettable chore. As cities build more charging stalls and enforce who gets to the park in them, it’s easy to foresee a new tide of road rage over parking—both in battery drivers desperate to get a charger, and in gasoline drivers circling past that one empty space in the lot that’s reserved for electric vehicles only.
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fortune--2020-01-30--‘American Dirt’ falls in the mud

‘American Dirt’ falls in the mud

This is the web version of raceAhead, Fortune’s daily newsletter on race, culture, and inclusive leadership. To get it delivered daily to your inbox, sign up here.
American Dirt debuted this month to much acclaim. The novel promised to be the long-awaited expression of the Mexican migrant experience, the “A Grapes of Wrath for our time,” as one reviewer gasped on the book jacket.
Jeanine Cummins, 45, who identifies as white and Latina, appeared to have a hit on her hands right out of the gate. The novel, which is about a middle-class bookstore owner who treks from her home in Acapulco, Mexico to the U.S. border with her son after her entire family is gunned down by cartel members, was this year’s Big Book—introduced by an elaborate marketing campaign, befitting an author who had reportedly nailed a seven-figure advance from publisher Flatiron Books.
It also hit the shelves with significant praise from esteemed writers, like John Grisham, Stephen King, and Sandra Cisneros, and celebrities like Salma Hayek. But the biggest get of all was a high-profile welcome as an Oprah’s Book Club selection.
But American Dirt quickly turned to mud, largely of its own making.
It started with the book itself. Rather than illuminating the stories of asylum-seeking migrants, Latinx readers and writers felt the novel was an exercise in cultural appropriation, relying on embarrassing linguistic missteps and ugly stereotypes .
Even the author was concerned she wasn’t up to the task. “I was worried that, as a nonmigrant and non-Mexican, I had no business writing a book set almost entirely in Mexico, set entirely among migrants,” Cummins wrote in her author’s note.
California-based Chicana writer Myriam Gurba affirmed Cummins’s fear in an early review that jump-started a movement.
[“Cummins’s] obra de caca belongs to the great American tradition of doing the following: 1. Appropriating genius works by people of color; 2. Slapping a coat of mayonesa on them to make palatable to taste buds estados-unidenses and; 3. Repackaging them for mass racially ‘colorblind consumption,’” she wrote in the blog Tropics of Meta. (The review was self-published after Ms. Magazine turned it down for being too negative.)
Gurba was eventually joined by a chorus of Latinx voices critiquing the book—the outfit behind Bitch Magazine helpfully compiled a representative list—while asking broader questions about how the overwhelmingly white book industry operates, which stories it chooses to tell and to whom.
The song from the c horus: The industry norm of catering to a white gaze informed by racist ideas is the problem.
“If [publishers] come across a compelling pitch about a person of color, the question becomes, ‘How do you sell this idea to a broader, mainstream audience?’ Translation: white people,” explains Los Angeles Times staff writer, Esmerelda Bermudez. “By focusing on one audience, the industry makes it harder for writers of color to break through and also for publishers to build a more diverse customer base.” Which gets us nothing but Dirt. “So it goes, in a long process that many writers of color know all too well, where the best of our stories are frequently sanitized, devalued, tropicalized, manipulated, shrunk down, hijacked.”
In the case of the American Dirt saga, the problematic marketing machine got to work early and often.
It started with a border wall-themed dinner hosted by Flatiron Books celebrating Cummins’s debut. “At an #AmericaDirt party, guests dined while BARBED WIRE CENTER PIECES adorned the tables. You know, to evoke border chic,” tweeted Gurba.
Then formidable forces convened around the book, including a CBS Morning Show roll-out with Winfrey and a related social media campaign of positive posts from Latina actors. (Hayek was forced to delete her post after admitting she didn’t read the book.) Part of the marketing push emphasized that Cummins’s husband was an “undocumented immigrant,” who turned out to be from Ireland. By the time the novel was in circulation, its framing as emblematic of the migrant experience was too much to bear.
The rage against the marketing machine has been remarkably effective.
#DignitadLiteraria is now a robust Twitter hashtag, highlighting the work of Latinx writers who have been ignored by the publishing world, and 124 writers published an open letter to Winfrey asking for her to remove American Dirt as a book club selection. She has since acknowledged the backlash and promised more dialog.
Then, on Wednesday, Flatiron Books conceded the fight and canceled the remaining 13 events left on Cummins’s national book tour.
Bob Miller, Flatiron’s president and publisher, issued a statement citing “specific threats to booksellers and the author” as the reason, then apologized for the marketing of the book. “We can now see how insensitive [the dinner, the unspecified Irish husband] and other decisions were, and we regret them,” he wrote. Flatiron also plans to host or participate in town hall meetings to further explore the backlash against the book and their own diversity deficits. “The discussion around this book has exposed deep inadequacies in how we at Flatiron Books address issues of representation, both in the books we publish and in the teams that work on them.”
But these discussions have already started—and I hope they stay centered in Latinx spaces, where they belong.
Futuro Media’s Maria Hiojosa, host of Latino USA, the weekly NPR news and cultural radio program, spoke to four key figures in the American Dirt controversy: Myriam Gurba, Silvia Cisneros, Mexican-American writer, novelist and poet Luis Alberto Urrea, and Jeanine Cummins herself.
The show offers an excellent breakdown of the complex issues the book has raised, and a master class in having very difficult conversations. But this moment with Urrea made my heart skip a bit, wondering what a marketing campaign for him would have looked like: “My first book, which seemed to inspire things in this novel, was rejected for 10 straight years.”
Ellen McGirt
@ellmcgirt
Ellen.McGirt@fortune.com
On Point
Fifth Third Bank takes a stand on LGBTQ equality The bank is pulling millions of dollars in funding to Florida's Tax Credit Scholarship program, which lets companies make tax deductible contributions to a private school voucher system designed to help low-income students. Following a report that dozens of the schools discriminated against LGBTQ students, the bank withdrew. "We have communicated with program officials that we will not be contributing again until more inclusive policies have been adopted by all participating schools to protect the sexual orientation of all our students," the bank tweeted.
CNN
The first 19th* story focuses on Kamala Harris’s exit from the race The 19th, the new nonprofit newsroom covering gender, politics, and policy, has published its first piece today. It explores the presidential campaign of Harris, who launched her bid to tremendous promise a year ago this week. De-briefing with staffers, reporter Errin Haines finds they struggled to make sure that Harris’s attributes, a Black and Indian woman from immigrant parents, didn’t take away from her relatability. “We had to be very, very careful about how we handled all types of situations, on the account that we did not want anything to interfere with progress, and we did not want anything to interfere with someone’s ability to connect with Kamala,” says the candidate’s Iowa state director.
Washington Post
Gwen Ifill honored with a Black Heritage series stamp from the USPS The legendary journalist would probably wave off the honor, but the groundbreaking reporter is still a beacon to many. "She touched my life because she was a damn good reporter," Allison Davis, one of the founders of the National Association of Black Journalists told NPR. "She is what everybody should aspire to be." Ifill will become the 43rd stamp in the Black Heritage series when the stamp is issued next Tuesday.
NPR
On Background
What a great time to read Latinx authors! The open letter to Oprah doubles as a great place to start, but I’ll also shout-out Rose Cahalan writing in the Texas Observer who did the work in her critique of American Dirt. “Racism and gatekeeping in the publishing industry are big, systemic problems; at least American Dirt has started a much-needed conversation on the subject. What can readers do? One small step is to commit to read more books by Latinx authors,” she says.
Texas Observer
Did you love Island of The Blue Dolphins? It has long been a childhood staple, the tender tale of a girl surviving alone on San Nicolas Island, a small island off the coast of Santa Barbara, Calif. It is based on a story of a real woman who actually lived there from 1835 to 1853. She died six weeks after her rescue; because nobody knew her language, we don’t even know her true name. This analysis from American Indians in Children's Literature (AICL) offers rich details of the life of the real woman, the context and how Scott O’Dell’s well-meaning attempt to create a sentimental story erased a culture. “Island of the Blue Dolphins is a lot like most books and media about American Indians that give the audience the kind of Indians that America loves to love.”
American Indians In Children’s Literature Blog
Architects of color weigh in on the unbearable whiteness of design The American Institute of Architects is over 160 years old, and still a work in progress. Curbed asked 16 architects at various stages of their careers to talk candidly about the race-related challenges they’ve faced over their careers. They did not disappoint. “I never saw anything about work by black architects or architecture about black people unless it was traditional African architecture or the pyramids in Egypt. That's as far as it went,” said Mabel O. Wilson on the eurocentrism of the profession. Suchi Reddy, an immigrant from India, remembers the shock. “I never really knew what racism was until I came to this country,” she said. “The first thing you overcome is the gender bias, and then the racial questions come.”
Curbed
Quote
"As a formerly undocumented Mexican immigrant, I have long wished for books with Mexican immigrant protagonists, squarely centered on our immigrant experience, to receive critical acclaim—to be celebrated with awards, to appear on required reading lists, and to have their authors receive advances that raise an eyebrow. I should have been more specific in my wishes and prayers."
—Julissa Arce, in a book review for BuzzFeed.


fortune--2020-01-30--Philip Morris CEO aims for a ‘smoke-free future’

The Marlboro Man and those iconic Marlboro cigarettes could be a thing of the past if the CEO of Philip Morris succeeds in creating what he calls a “smoke free future”.
“I will be extremely happy if we don’t sell cigarettes one day,” says Andre Calantzpoulos. “That’s what we’re trying to do. So I think success for us is, the faster the better to get there.”
You may be surprised to hear that from the CEO who runs the one of largest tobacco companies in the world. But Calantzpoulos, a former smoker, wants to convince adult smokers to switch to alternative smoke-free products because he believes there are fewer health risks versus conventional cigarettes. Reaching that goal will take time. As of September of 2019, smoke-free products accounted for only 18 percent of Philip Morris’s revenues. Cigarette sales still make up for the bulk of the company’s revenues of $29 billion.
Calantzpoulos is betting that PMI’s electronic cigarette device that is now on sale in the United States will pave the way to a future without cigarettes. It’s called IQOS (pronounced Eye-kose). The battery-operated, pen-like device isn’t a vaping e-cigarette. It heats tobacco rather than burns it and releases a vapor with the taste of tobacco. Calantzopoulos claims that IQOS has significantly lower levels of harmful chemicals compared to vaping products. He says the device is aimed for adults and he insists it is not for teen use. “There is a very big increase in youth use of nicotine products,” he acknowledges, “and that has to be stopped.”
PMI made IQOS available in the U.S. last October under a licensing agreement with Altria, its former parent company. Currently, the e-cigarette is available for purchase only in Atlanta, Georgia and Richmond, Virginia. Since its launch in 2014, IQOS has been sold in more than 50 markets outside of the U.S. Calantzpoulos says there are more than 12 million IQOS users worldwide.
The marketing pitch from PMI is that IQOS helps smokers quit. But until the Food and Drug Administration makes an official ruling on the health dangers of e-cigarettes, including IQOS, Calantzpoulos is cautious.
“The product is neither risk free and it is addictive,” he says. “It’s much better than cigarettes. But it’s not risk free.”
Watch the video above for more.


fortune--2020-01-30--In the wake of Boeing’s historic loss, analysts say the company may be underestimating MAX costs

Boeing’s new chief executive, David Calhoun, assured investors Wednesday that the company will recover from the 737 MAX crisis, even as it posted its first annual loss in more than 20 years. He seemed to absolve himself of any responsibility he had as a board member during a time that Boeing put its commitment to shareholder payouts into overdrive. As a board member, “I simply had a front-row seat to everything you saw,” Calhoun said on Wednesday’s earnings call with financial analysts.
The MAX, Boeing’s popular single-aisle airplane, has been grounded around the world after two crashes—in October 2018 and March 2019—that killed 346 people. Boeing suspended MAX production in early January.
On the call Calhoun announced Boeing would take a smaller than expected $2.6 billion pre-tax charge for potential customer concessions, and that the company expects an additional $4 billion in costs from restarting 737 MAX production and deliveries later this year. Boeing also added $2.6 billion in deferred production costs to the program. Those figures plus $9 billion in previously disclosed MAX-related costs brings the total cost to $18 billon.
But some analysts were concerned that the charges were too low.
“Investors had expected a larger MAX charge, considering new CEO Calhoun was expected to take a ‘kitchen sink’ approach with this quarter, understanding he would get a pass and thus would want to get as much bad news out as possible,” Canaccord Genuity aerospace analyst Ken Herbert said in a note to clients.
Barclay’s analyst David Strauss calculates that customer concessions will hit $18 billion, more than twice what Boeing expects, he wrote in a note to clients following the earnings announcement.
Credit Suisse’s Robert Springarn says costs likely will be at least $21 billion, not including additional costs for stopping and restarting 737 MAX production.
During Wednesday’s conference call, Boeing executives were light on details into MAX-related cost projections, Springarn said in a note to clients. Given that, “we cannot really vouch for the accuracy of the costs, except to suggest that (Boeing) should better understand the magnitude of total costs today than it did in Q3.”
Calhoun stressed that he wants to change company culture and take other steps to ensure the aerospace giant never endures another crisis like the current one. He said developing new airplanes to compete with Airbus is not the top priority, but it remains a priority.
Despite his comments, Calhoun described the cultural problems as limited, more like a few bad apples, rather than a company-wide problem.
Internal emails and instant messages released by Boeing show its employees mocking airline customers, Federal Aviation Administration regulators, and even company managers. They also show Boeing workers raised safety concerns with the 737 MAX before the two fatal crashes. These messages are the latest in a growing mass of evidence that the company’s culture and finances-first orientation may have contributed to the MAX crashes.
Calhoun referred to the “horrible IMs” as being “relegated to a relatively small group of folks.”
The company needs to listen more, and “I have to do everything in my power to make sure going forward that it does,” he said.
Calhoun, though, ended Wednesday’s call without taking questions from the news media, as is standard practice.
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fortune--2020-01-30--Why you shouldn’t feel guilty about paper packaging when you shop online

In conversations with other CEOs across a wide range of industries, I hear firsthand that consumers in markets around the world are not only motivated to be more environmentally conscious, but are exercising their influence through the products they purchase. With the majority of products shipped in corrugated boxes and the significant increase of e-commerce, there’s a good reason for consumers to ask if they are making the best decisions for the environment when purchasing products delivered in corrugated boxes.
The answer is clearer than they might think: Consumers should not feel guilty about paper packaging when they shop online.
My company, International Paper, is one of the oldest and largest producers of renewable fiber-based products in the world. We are also one of the world’s largest users of recycled fiber. We’ve been in business for more than 120 years using a circular model that transforms renewable resources into recyclable products that people depend on every day.
According to the Fibre Box Association (FBA), the average corrugated box produced in the U.S. is made with 50% recycled content. New boxes are made from recycled boxes and trees, a renewable natural resource. FBA data shows that in 2018, 96% of the corrugated packaging produced in the U.S. was recovered and recycled. That is a significantly higher recovery rate than plastic; 91% of plastic ever created has not been recycled, according to a 2017 study by the National Center for Ecological Analysis and Synthesis.
Still, you might be asking yourself: What about the trees?
Our entire business depends on the sustainability of forests, and trees are a renewable resource. The U.S. forest products industry plays an essential role in ensuring sustainable forest management. According to the U.S. Forest Service, there are more acres of forests today than there were over a century ago. Today, almost one-third of working forests—defined by the National Alliance of Forest Owners as “forestland carefully managed to supply a steady, renewable supply of wood for lumber, energy, paper, and packaging”—in the U.S. are on private land. And 89% of fiber sourced in the U.S. comes from private landowners, according to the U.S. Department of Agriculture. These landowners have an economic incentive to harvest and replant so that their forestland continues to generate revenue.
The papermaking process relies on renewable, carbon-neutral biomass residuals—from lumber and pulp production—to generate the energy used to produce fiber-based packaging. International Paper generates nearly 75% of our paper mill energy from these biomass residuals rather than from fossil fuels. Since 2010, we have reduced our greenhouse gas emissions by more than 20%, and we have committed to reducing our Scope 1, 2, and 3 emissions (standards set by the Greenhouse Gas Protocol) by a further 35% by 2030.
The forest products industry continues to improve its environmental footprint, but more work is needed. According to Environmental Protection Agency data, U.S. pulp and paper industry greenhouse gas emissions declined from 44 million metric tons of carbon dioxide equivalent in 2011 to 36 million in 2018, a 19% reduction. This improvement was due to improved energy efficiency and increased use of less carbon-intensive fossil fuels and carbon-neutral residual biomass-based energy. This is good progress, but we understand we need to further reduce greenhouse gas emissions.
The forest products industry is an important contributor to the U.S. economy and is positioned to meet the challenges ahead—and do so sustainably. According to the American Forest & Paper Association (AF&PA), the industry employs 950,000 workers in green jobs, making the industry a top 10 manufacturing employer in 45 states and responsible for 4.5% of U.S. manufacturing GDP. AF&PA also notes that our industry is the leading generator and user of renewable energy in the U.S.
According to the CIA World Factbook, the service sector in 2017 accounted for 80% of U.S. GDP. As the world’s population continues to increase, and the service sector expands, we will need to meet the rising demand for raw materials used to make packaging. Our industry’s circular model—using recovered fiber and renewable fiber from trees—holds the answer.
Be sure to flatten those brown boxes and place them in a recycling bin. This simple step ensures old boxes are recycled into new packaging, which allows your e-commerce orders to arrive clean and undamaged. And in doing so, you’re joining the corrugated packaging industry in proactively protecting our environment.
Mark S. Sutton is chairman and CEO of International Paper.
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fortune--2020-01-30--Bloomberg and Trump spend $10 million each on dueling Super Bowl ads

Democratic presidential candidate Michael Bloomberg will use his Super Bowl ad to highlight his efforts to combat gun violence, while President Donald Trump will focus on his economic record as the two candidates face off during the year’s most-watched television event.
Trump and Bloomberg will broadcast dueling ads during Sunday’s NFL championship game, with each campaign spending an estimated $10 million on 60 seconds of airtime.
Bloomberg’s spot, instead of an attack ad as some had reported, will feature a grieving mother who lost her son to gun violence.
The focus underscores the former New York City mayor’s efforts to contrast himself with Trump as he tries to build a national profile with a highly unconventional ad-driven campaign that is looking to get under the president’s skin.
For Trump’s campaign, the aim is to make the case that even if voters are turned off by the president’s style, they are better off now under him they were four years ago.
Sunday’s b roadcast comes just one day before Iowa’s first-in-the-nation caucuses, though neither candidate is really competing. Trump has an ironclad hold on the Republican nomination, while Bloomberg is skipping the four early voting states to focus instead on Super Tuesday contests on March 3.
Trump’s campaign will air two ads during the game, both 30 seconds long. One, released Thursday, highlights Trump’s record, especially on the economy, citing continued wage growth and the record low unemployment rate.
“America demanded change. And change is what we got,” says the narrator, who states that, “Under President Trump, America is stronger, safer and more prosperous than ever before.”
“Just as the Super Bowl crowns the greatest football team, nothing says ‘winning’ like President Donald Trump and his stellar record of accomplishment for all Americans,” Trump campaign manager Brad Parscale said in a statement. The campaign said its second ad won’t be released before it airs.
Bloomberg’s ad will air following the h alftime show. The ad features the story of Calandrian Simpson Kemp, a Texas mother whose 20-year-old son was fatally shot in 2013. George Kemp Jr. was a college football player who dreamed of one day playing in the NFL.
“Lives are being lost every day. It is a national crisis,” the grieving mother says in the ad, which also highlights Bloomberg’s record on the issue.
“When I heard Mike was stepping into the ring, I thought, ‘Now we have a dog in the fight,’” she says. “Mike’s fighting for every child. Because you have a right to live. No one has a right to take your hopes and dreams.”
Bloomberg is a longtime backer of what he calls “common-sense” gun legislation and has spent hundreds of millions of dollars since his time as New York City mayor to combat gun violence, including founding Mayors Against Illegal Guns, which eventually merged with Moms Demand Action for Gun Sense in America.
In 2013, he founded Everytown for Gun Safety, which has worked to pass gun control legislation, and in 2018, he spent $110 million to elect candidates who support gun safety in the midterm elections.
Simpson Kemp told The Associated Press that she first met Bloomberg in 2015 and was drawn to him because he was proposing solutions.
“When you have lost a child — when you have actually opened the earth and put your child in a hole and closed it up — you don’t have time to wait and play,” she said Wednesday. “This is urgent. And I knew Mike Bloomberg had a plan and had a plan that we can get behind.”
She will be attending the game Sunday on a ticket Bloomberg gave her. “When I walk into that stadium and sit in that seat,” she said, she’ll be able to “tell my son that he made it. Indirectly, he has made it.”
While an ad featuring a tearful mother might seem out of place alongside spots advertising beer and sedans, Bloomberg campaign spokeswoman Julie Wood said th e goal was to “make people take notice” and try to start a conversation about the issue during a rare day when so many Americans come together to watch something “and actually watch the ads and talk about the ads.”
“It’s not about selling corn chips and beer. It is a serious ad about an issue that I think the country does care about and should care about,” Bloomberg said in an appearance on “The Tonight Show Starring Jimmy Fallon” this week.
Bloomberg’s decision to buy the Super Bowl time is just the latest in his tit for tat with Trump, whose campaign said it had been in talks with Fox, the network broadcasting the game, for months about an ad. It’s apparently the first time a presidential campaign has purchased national Super Bowl time.
The candidates, who have been trading barbs since Bloomberg’s late decision to enter the race, both have near-limitless money to spend. Trump’s campaign has set fundraising records, with $46 million raised in the last quarter of 2019 alone. Bloomberg, a billionaire who is self-funding his race, had already spent over $225 million on television and digital advertisements as of mid-January, according to the tracking firm Advertising Analytics.
During his late-night interview, Fallon remarked that Bloomberg seemed to be getting under Trump’s skin with his nonstop television presence.
“Well, I sure hope so,” Bloomberg responded. “I’m trying.”
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fortune--2020-01-30--As the yield curve slips towards inversion, the recession warning light blinks red—again

2019 went down as the year of the yield curve inversion.
This classic sign of pending recession—when short-term government securities offer higher yields than longer-term ones—lingered for a “solid five months” from mid-May to October, according to Luke Tilley, chief economist of Wilmington Trust. It was the first time in years the yield curve had inverted.
The recession never came, of course—no small thanks to the Federal Reserve’s decision to return to more accommodative monetary policy, effectively cutting rates three times.
But now the warning signs are back. And it may be that other corrective actions by the Fed—pumping cash into the overnight lending market by buying short-term U.S. securities from banks—are effectively keeping the yield curve from going haywire once again.
Yielding to economic pressure
The Treasury sells securities of varying duration, whether measured in months or years. Under normal economic conditions, the shorter a bond’s term, the lower its yield (the interest rate it offers). The opposite is true for bonds that mature years out; investors expect a premium to have their money tied up for longer periods. After all, a lot more can go wrong over 10 years than it can over two.
An inversion then is a measure of upside-down markets logic. When demand is higher for short-term securities, the nominal rate it carries climbs. That makes sense. But when rates for short-term securities surpass those of longer-term ones, investors are telling the markets they have more confidence that things will work out better in the near-term—ergo, they expect future economic conditions to worsen.
If enough people and businesses feel that way, it might force them to curtail purchase, investment and hiring decisions, which in turn, can be enough to bring on a recession.
Because of the variety of bond durations on the market, there isn’t a single inversion scenario. Market watchers may focus on a pairing of say, a three-month bond verses a two-year bond, or the 10-year versus 30-year. The graph below shows the movement of yields for these treasuries from the beginning of 2018 to the most recent date in January.
From mid- to late-2019, some curves inverted. Most recently, the three-month and 10-year curves have come closer.
Investors differ in the comparisons they find significant. “We put more importance and value on the 10-year yield versus two-year yield,” Tilley said.
“We prefer to focus on 3M-30Y inversions because they have more consistently provided investors with a lead time of about 1.5 years to recession,” wrote Allen Sukholitsky, founder and chief macro strategist Xallarap Advisory, in a note to Fortune.
A full inversion of the three-month and 10-year aren’t necessarily the biggest worries for them. And even though the two curves did invert briefly on Tuesday, there is again some distance between the two now. However, there is the question of whether an inversion would be more pronounced without the Fed’s interventions.
The agency has been buying short-term Treasurys from banks since September. The Fed has looked to control spiking interest rates on overnight lending in the so-called repo market by injecting more cash into the system, increasing liquidity.
Although the Fed has insisted that the action is not quantitative easing (QE)—the massive purchases of long-term Treasurys it undertook as part of the reaction to the great financial collapse—financial professionals don’t see much difference. Many have come to call the current round “non-QE QE.”
In addition to controlling overnight lending, the current rounds helped depress yields on short-term Treasurys and ultimately closed the inversions gaps that emerged earlier in the year. As basic economics dictate, driving up demand for a bond increases its market price, which effectively reduces the yield. The Fed bought up about $400 billion the amount of Treasurys since last September—a big jump.
Not that the action is completely unusual. “This experience of them buying short-term securities is much more in line with what they did for decades in normal circumstances,” Tilley said. And it has kept short-term rates within the Fed’s target range. At the same time, “we believe it was part of their intention” to stop yield curve inversion, he theorized.
Digging in
That may have implications for current conditions, as this next graph, focusing on the period from Dec. 2, 2019 through January 28, 2020, shows.
The graph shows that the three-month, ending with a 1.57% yield, was only a .08 percentage points from the 10-year on Jan. 28.
There are two trends evident here. One is that the three-month yield has stayed fairly flat, likely due in large part to the Fed’s intervention in the repo markets since last fall. Without that, the three-month might have been higher, accentuating any inversion.
The other trend is that inversion has come closer because yields on longer-range Treasurys have dropped.
“The behavior of the Treasury curve since September is a little bit disturbing in that we’ve had monetary stimulus come in,” said Ed Al-Hussainy, senior interest rate and currency analyst for Columbia Threadneedle Investments. “Despite all of this, 10-year yields basically never got above 2% since September. That to me signals monetary policy is still too tight.”
The drop in longer-rate yields suggests there has been increasing demand for the bonds. “A lot of people have thrown in the towel and said, ‘I don’t know, maybe interest rates are never going to rise that much, so maybe yields that looked disappointing maybe aren’t,” said Warren Pierson, managing director and deputy chief investment officer for Baird Advisors.
Now, the big question: Does the move towards inversion mean an increased chance of a recession? Most of the experts that spoke with Fortune didn’t think so.
“Our view is that this flight to quality [which means investment in longer-term U.S. government bonds] will be temporary, as long as we don’t see a further epidemic of what’s happening,” said Charlie Ripley, senior investment strategist for Allianz Investment Management. There is still steady growth, full employment, and plenty of consumers spending money, the last of which represents roughly 78% of GDP. “Until we see some deterioration in consumer behavior, the economy is going to chug along.”
But not everyone is so sure. “Consumer sentiment is terrific and the market is terrific, but all the surveys of CEOs say they expect a decline in the economy and I think, ‘Who’s got a better feel for that?'” said Peter Ricchiuti, a business professor at Tulane University who regularly speaks with small- to medium-cap company CEOs. “Everybody’s at least cautious. In the long run the strength of the economy is in the population of working age people.”
Birth rates are down in the U.S., as is immigration, both critical drivers of growth.
If 2019 was the “year of the inversion,” 2020 may turn out to be the year of “what does the inversion mean?”
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fortune--2020-01-30--For the first time in four years, U.S. life expectancy rises—a little

Life expectancy in the United States is up for the first time in four years.
The increase is small—just a month—but marks at least a temporary halt to a downward trend. The rise is due to lower death rates for cancer and drug overdoses.
“Let’s just hope it continues,” said Robert Anderson, who oversees the report released Thursday by the Centers for Disease Control and Prevention.
The latest calculation is for 2018 and factors in current death trends and other issues. On average, an infant born that year is expected to live about 78 years and 8 months, the CDC said.
For males, it’s about 76 years and 2 months; for females 81 years and 1 month.
For decades, U.S. life expectancy was on the upswing, rising a few months nearly every year. But from 2014 to 2017, it fell slightly or held steady. That was blamed largely on surges in overdose deaths and suicides.
Suicides continued to increase in 2018, as did deaths from the flu and pneumonia during what turned out to be an unusually bad flu year. But declines in some other causes of death—most notably cancer and drug overdoses—were enough to overcome all that, according to the report.
Cancer is the nation’s No. 2 killer, blamed for about 600,000 deaths a year, so even slight changes in the cancer death rate can have a big impact. The rate fell more than 2%, matching the drop in 2017.
“I’m a little surprised that rapid pace is continuing,” said Rebecca Siegel, a researcher for the American Cancer Society.
Most of the improvement is in lung cancer because of fewer smokers and better treatments, she said.
Also striking was the drop in drug overdose deaths that had skyrocketed through 2017. The death rate fell 4% in 2018 and the number of deaths dropped to about 67,400.
Deaths from heroin and prescription painkillers went down, however, deaths from other drugs—fentanyl, cocaine and meth—continued to go up. And preliminary data for the first half of 2019 suggest the overall decline in overdose deaths is already slowing down.
It’s still a crisis, said Katherine Keyes, a Columbia University researcher. “But the fact that we have seen the first year where there’s not an additional increase is encouraging.”
The national decline was driven by dips in 14 states, the CDC’s Anderson said. Those include states where overdose deaths have been most common, like Ohio, Pennsylvania, Kentucky, and West Virginia.
In Ohio’s Hamilton County, which includes Cincinnati, overdose deaths fell in 2018 and preliminary data indicates another drop last year. County health commissioner Tim Ingram credited efforts to try to expand access to treatment, and to widely distribute the overdose reversal drug Narcan.
“We almost saturated our community with Narcan,” he said.
Nationally, for all causes of death, more than 2.8 million Americans died in 2018. That’s about 26,000 more than the year before, the CDC report found. The number went up even as the death rate went down, because the population is growing and a large group are retirement age baby boomers.
Other findings:
The 10 leading causes of death remained the same, with heart disease at No. 1. The death rate for heart disease declined slightly, by less than 1%.
Death rates also dropped for stroke, Alzheimer’s disease, chronic lower respiratory diseases and unintentional injuries, which includes drug overdoses.
Americans who were 65 in 2018 are expected to live another 19 years and six months, on average.
The infant mortality rate fell more than 2%, to 1 in 177 births.
The suicide death rate hit its highest level since 1941 — about 14 per 100,000. The rate peaked during the Depression in 1932 then mostly declined until 2000. It’s been rising most years since then.
The U.S. has the highest suicide rate of 11 wealthy nations studied, according to a separate report released Thursday by the private Commonwealth Fund. That report also found U.S. life expectancy is two years lower that the average for the 10 other wealthy nations.
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—All of your questions on filing taxes in 2020, answered
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fortune--2020-01-30--Global companies enter lockdown mode as coronavirus outbreak rocks China

We’ll continue to update this story with the latest developments.
The new coronavirus has now infected more than 7,700 people globally. All but 68 cases were reported in China, which is also where all 170 deaths have occurred.
While the markets dipped over the weekend, the indexes saw significant recoveries by Tuesday. At the company level, however, there is still plenty of concern. Multinationals—companies with offices around the world—across the board are responding by placing restrictions and outright bans on employee travel to China, indefinitely closing offices in China, and telling employees to work from home.
Google is shutting down its offices in mainland China, Hong Kong, and Taiwan and restricting employee travel to China and Hong Kong. The company has instructed employees flying back to the U.S. from China to work from home for 14 days before returning to the office.
Apple, Facebook, JPMorgan Chase & Co., Ford Motor Co., and Kraft-Heinz Co. have also instituted employee travel bans to and from China to reduce risk of exposure to the virus. The Dubai state-controlled port operator DP World has also banned workers from traveling to China, where it runs three ports on the mainland, and one in Hong Kong.
Apple employees wear face masks as they listen to a presentation in an Apple Store in the Sanlitun shopping district in Beijing as China is hit by an outbreak of the new coronavirus. Thomas Peter—Reuters
The Hong Kong branch of PricewaterhouseCoopers suspended all employee travel to Wuhan, the center of the outbreak, and is requiring all employees who have traveled to Wuhan and anywhere else in Hubei province to work from home before returning to the office.
“Staff returning from Hubei are required to remain isolated for 14 days with remote working before returning to the office, while reporting their health and wellness to us regularly. Meanwhile, we are also avoiding non-essential travel to minimize the risk of spreading any infection,” a spokesperson for PwC Hong Kong said.
Similarly, HSBC has instituted a ban on travel to Hong Kong until February 11, and an indefinite ban on travel to mainland China. “We are encouraging employees in Hong Kong to consider working from home, where possible,” Europe’s largest bank said in a statement, adding: “We are asking those who have travelled to mainland China or been in contact with anyone who has travelled to or through Hubei Province in the last 14 days to stay home for a period of 14 calendar days.”
The Hong Kong branch of Ernst & Young has also asked employees to work from home this week, and enacted similar self-quarantine and health monitoring measures for employees who recently traveled to Hubei province. EY mainland China offices extended the Lunar New Year Holiday period in accordance with Chinese state council and local government measures.
South Korean electronics giant LG was one of the first companies to restrict employee travel to China due to the virus, and it has now instituted a blanket ban, entirely barring LG employees from going to China. Apple and Facebook have not issued full bans yet and are still allowing for “essential” travel to China.
Meanwhile, France’s PSA Group is flying its workers home from Wuhan, a major location for the automotive industry, in line with the advice of the French authorities. Renault also has a plant there, but it was already shuttered until February 10 for the New Year holiday, and the company said it is working with the Chinese authorities to monitor the situation. American automotive company Tesla has temporarily shut its factory in Shanghai as part of an order by the Chinese government, which will cause delays in Tesla’s Model 3 production.
Japanese carmakers Nissan and Honda are pulling their employees from the Wuhan area and Toyota, which does not have facilities there, has banned staff from traveling to China. Webasto, the German auto-parts supplier that has found itself the base for Europe’s first confirmed person-to-person transmissions of the virus, has banned all travel to and from China.
Siemens, the German industrial giant, has a transformer plant in Wuhan. The company told Fortune Thursday that while it does not have any travel-ban policy at the moment, it is advising staff to travel to China only if the trip is business-necessary. “In other cases, our recommendation is to postpone the trips or switch them to virtual meetings, phone conferences and so on,” said spokesperson Julia Wiemer.
Bosch, another major German automotive supplier with two plants in Wuhan, said it has told staff to cancel or postpone all business trips to and from China until the end of February.
Even businesses that don’t introduce travel bans may soon find themselves unable to fly employees to China, as major airlines reduce and cancel flights to China in response to the outbreak—both to mitigate infection risk and because demand has dropped so much.
United Airlines reduced flights to Beijing, Shanghai, and Hong Kong; American Airlines reduced China flights over lack of demand; British Airways halted its daily Beijing and Shanghai routes; and the Dutch airline KLM also suspended China flights. Indonesia’s Lion Air will cancel all flights to China from Saturday.
Cathay Pacific Airways cabin crew wearing face masks walk out of the international terminal at the San Francisco International Airport in Millbrae, California on January 28, 2020. Yichuan Cao—Sipa USA/AP Images
Cathay Pacific, Hong Kong’s flagship airline, will cut flights to mainland China by more than 50%, in line with Hong Kong’s ferry, train, and bus restrictions on mainland routes.
The Trump administration is reportedly considering a government ban on all flights between the U.S. and China.
The Centers for Disease Control and Prevention, which previously advised U.S. citizens against nonessential travel to Wuhan, expanded its warning on Tuesday and recommended that Americans avoid travel to all of mainland China.
Store closures and supply chain risks
During the 2002-2003 SARS crisis, Swedish furniture giant IKEA had just two stores in China. Now it has 30, and the company announced on Thursday that it is temporarily closing all of them in light of the virus.
China’s role in the global economy has transformed since the SARS outbreak, which ended in 2003. At the time of SARS, China was a new World Trade Organization member—having officially joined in December 2001—and multinationals had a much more modest presence than they do today.
A Starbucks employees uses a thermometer to check the temperature of a customer in Beijing, China on January 30, 2020. Carlos Garcia Rawlins—Reuters
Starbucks, which opened its first China store in 1999, now has 4,292 stores in mainland China. It is closing half of those stores in response to the coronavirus. China is the coffee chain’s fastest-growing market and, after the U.S., its largest.
Starbucks said it was expecting the virus outbreak to “materially effect” its financial results for the rest of the year—a potential wrench in the company’s plan to open 6,000 stores in China by the end of 2022.
IKEA, which opened its first China store in 1998 but only had two in operation during SARS, may also see its expansion plans go awry: the company invested $1.4 billion in China in fiscal 2020 as part of a three-year growth strategy for its China market.
Apple—which had zero stores in China during the SARS outbreak—reduced operating hours for its China stores and closed one branch, which IKEA also did before it announced total store closure. Apple opened its first store in China in 2008.
China accounted for 16.7% of Apple’s total revenue in 2019, and the virus fallout is already impacting retail sales. Apple’s supply chain might also be disrupted: most iPhones are manufactured in China, and Apple’s production facilities there have stayed shut because of the outbreak.
Disney closed the gates at its Shanghai theme park, which opened in 2016, and its Hong Kong theme park, which opened in 2005.
Disney staff wears masks at the entrance of the Shanghai Disney Resort, which closed due to the outbreak of coronavirus in Shanghai, China on January 25, 2020. Aly Song—Reuters
In Hong Kong, which confirmed 10 coronavirus cases, the government has closed public sports facilities, cultural centers, and museums. Civil servants have been instructed to work from home and the government has encouraged private firms to let their employees stay home as well.
The U.S. evacuated 201 Americans from Wuhan on Tuesday. More than a dozen countries including Canada, Japan, New Zealand, and the U.K. are also evacuating their citizens from Wuhan.
However, there are reports of difficulties in these evacuation efforts. On Thursday a U.K.-government-chartered flight was not cleared for takeoff in Wuhan, leaving around 200 Britons stranded rather than heading home as planned. Australia is also still awaiting permission from the Chinese authorities to execute its own evacuation from Wuhan.
It’s no question that the fears around coronavirus have sent businesses into a frenzy. Just how long will this economic uncertainty last? It all depends on the speed and duration of the outbreak, but it’s certainly not over yet. The World Health Organization is meeting again on Thursday to discuss declaring the outbreak an international public health emergency.


fortune--2020-01-30--If you like Skittles and Trix, you will love this new beer

The beer world is full of odd pairings, but it’s been a while since we’ve seen one this strange.
Pontoon Brewing Co., in Sandy Springs, Ga. will roll out a new offering called Rainbow Smiggles in early February that was made with Trix and Skittles.
“We’re trying to keep the market well provided with interesting new flavors month after month,” said Chris Baratz, Pontoon Brewing’s head brewer in a statement. “Because of that, we like to push the limits and go to extremes to keep the brewers and customers excited about each new sour.”
Beyond the breakfast cereal and the candy, the Berliner Weisse will incorporate strawberries, pineapple, vanilla and lactose to add a fruit flavor and give the beer some acidity. Pontoon is no stranger to unusual sour beers, rolling out “Snozzberries Taste Like Snozzberries” last year and capturing the attention of national beer drinkers.
Courtesy of Pontoon Brewing
Unusual beers aren’t uncommon, but from time to time the brewers really indulge their mad scientist instincts. Five years ago, San Francisco’s 21st Amendment introduced Toaster Pastry, a beer meant as an homage to Pop Tarts (the brewery is located in a former Kellogg Co. factory that used to make the popular treats). Colorado’s Black Bottle Brewery puts out a Count Chocula-flavored beer every fall. And Barrels and Bottles Brewery in Golden, CO has offered an extra special bitter brewed with Peeps, the colored marshmallow candy that marks the Easter season. (90 of them, to be specific.)
The king of strange beers, though, remains Iceland’s Brugghús Steðja, which makes Hvalur 2—a 5.2% ABV seasonal ale that incorporates the testicles of fin whales into the brewing process. And if that wasn’t weird enough, the testicles are smoked in dry sheep dung.
More must-read stories from Fortune:
—10 stocks that are poised for a stellar 2020
—Will retiring baby boomers crash the stock market?
—Millions have been purged from voter rolls—and may not even realize it
—Inside New York City’s Chinese restaurant crisis
—All of your questions on filing taxes in 2020, answered
Subscribe to Fortune’s Bull Sheet for no-nonsense finance news and analysis daily.


fortune--2020-01-30--In the age of Twitter and group chats, seconds-long streaming delays can make or break live entertai

In the age of Twitter and group chats, seconds-long streaming delays can make or break live entertainment

Jacob Feldman and his girlfriend awaited midnight this New Year’s Eve, 30 seconds from the ball drop. Or so they thought.
Suddenly, voices erupted down the hall in their Manhattan apartment building. Fireworks launched from nearby Central Park. But on Feldman’s television stream playing CNN’s broadcast of the festivities, the countdown hadn’t even reached its famous last 10 seconds.
“We realized the stream was off, which created this really anticlimactic moment where we got to zero and everybody else already knew,” Feldman says.
The lag Feldman experienced that evening is called latency, the delay between what a camera captures and what is transmitted to viewers. And as millions of Americans gear up to watch live, high-profile events such as Super Bowl LIV and the 92nd Academy Awards, latency will be on the minds of many hoping to avoid spoilers.
As TV audiences increasingly make the switch from traditional broadcast TV to Internet streaming services, latency is subtly shifting the ways viewers watch television. Now, push notifications from apps like ESPN must be turned off in advance of games. Group chats must be warned not to react too quickly to what unfolds on the screen. Social media must be avoided at all costs, at least until commercial breaks.
Latency is experienced on all cord-cutting services to a varying degree of roughly 15 to 60 seconds, and so companies have no problem acknowledging the issue. An Amazon Web Services web page dedicated to explaining video latency cites an example: “Perhaps you are watching a live talent competition, your anticipation building for the winner’s reveal, when your social media feed—typically generated by TV viewers—ruins the surprise 15 seconds before you see it.”
Geir Magnusson Jr., the chief technology officer of sports-focused Internet TV service FuboTV, says, “Latency is ironically important and somewhat unimportant to us.
“In general, there’s going to be latency no matter how it’s being delivered—classical, cable, satellite. They differ by provider,” he explains.
Traditional broadcasts for years have operated on short, five- to seven-second delays when showing live events in order to censor unacceptable behavior or language. Before streaming, though, everyone experienced the delay at the same time and length. But streaming companies today operate on different content delivery networks, or CDNs, meaning latency can differ significantly for a YouTube TV viewer or a Hulu watcher or those following standard TV broadcasts, and so on.
Similar to broadcast TV, the delay is intentional—though cord-cutting services also take into account the possibility of slowdowns between the network and the viewer’s device. Extra latency is added so that playback can continue while the stream catches up in the background, rather than pausing the stream as it buffers. Streaming apps prioritize high bandwidth, which maximizes video quality, over low latency. Due to current tech limitations, it’s difficult to achieve both.
“Technically, it’s possible to reduce the delay below a certain number,” says SlingTV chief technology officer Kannan Alagappan. “But we generally think it’s not worth risking high image quality with no buffering.”
Magnusson echoes practically identical sentiments, saying, “[Latency] is very important to us, but it will never be worth the cost of risking the playback experience. Consumers want to see it at the highest bandwidth possible.”
That may be true, but consumers still experience inconveniences as a result of delayed streams.
“I’ve had to jokingly scold my friends if they kept texting regarding things ahead of me,” says YouTube TV user Charlie Oliver. “I used to be on Twitter more during a baseball game, but I do less of that now in case of a potential spoiler.”
“I know when we’re watching the Super Bowl this week, you can’t be on Twitter,” Feldman says. “You go on Twitter during the commercials.”
“There’s a real question in sporting events whether users will be more frustrated by delay or buffering,” says Theo Schlossnagle, founder and chief technology officer of Circonus, a machine data intelligence platform.
“I think the right psychology is, if you watch [sports on] TV and it’s buffering, you’re gonna turn the TV off and go to the bar,” he adds. “But if it’s going to be a 10 to 15 seconds delay… I’d rather have a consistent and smooth visual and audio experience than have things play right away.”
Alagappan says that the widespread introduction of 5G technology will result in a lower latency in time. But experts say latency will likely always be present to some extent, and it’s just a facet of modern life to get used to.
“We certainly hear from our customers. When I’m sitting at a bar watching live TV, I’m always comparing how Sling is doing,” Alagappan says. “We’re a few seconds behind, and you see the discrepancy. I don’t know if it causes confusion. You just get it ahead of time.”
Being a few seconds behind for Internet-powered TV is a convenience many are willing to trade for. But in a hyperconnected world that lives for instantaneous information, those few seconds can make all the difference.
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fortune--2020-01-30--Brexit Day is finally here. What will actually change?

Late Friday evening in the U.K., a momentous event will take place: the country’s long-awaited departure from the European Union.
Well, sort of.
Brexit will definitely take place at 11 p.m. local time—or midnight on the European mainland—but because there will be a transition period over the rest of 2020, in many respects the event will be more symbolic than practical. During those 11 months, almost all EU rules will still apply in the U.K., rulings from the bloc’s Court of Justice must still be enforced there, and there will be no immediate change to how business is conducted across U.K.–EU borders.
So what exactly will change Friday night?
Trade deals
One of the main battle cries of Brexit proponents is that the U.K. will once again be free to negotiate its own trade deals—something that, as a member of the EU, it has for decades been forced to do collectively.
This is perhaps the most visible change that will take place at the end of this week, when the U.K.’s team of negotiators will be able to spring into action. It remains an open question as to how advantageous their deals will be, given that the U.K. is a lot smaller than the EU, but they will certainly be able to operate independently.
According to a recent report in The Sun, the first objective will be to strike a trade deal with Japan by the end of 2020, and to start negotiating with the U.S., Australia and New Zealand. The U.K. will also seek trade talks with its former bloc; it will be a major strand of the discussions during the transition period, in order to establish the future U.K.-EU relationship.
Loss of control
The trade-deal aspect of Brexit is about “taking back control,” as the Brexiteer slogan went, but the opposite will also occur on Friday evening. During the 11-month transition period, the U.K. will find itself having to obey EU rules, without the ability to influence the rule-making process.
Philipp von Ditfurth/picture alliance via Getty Images
Prime Minister Boris Johnson ensured that U.K. members of the European Parliament (MEPs) had minimal presence there in the last few months, but now they won’t be there at all. There is already no Brit sitting in the European Commission, and the country will be no more than an occasional observer in the Council of the European Union, which represents the EU’s member states.
Being outside the club, the U.K. had better hope the rest of the year involves no big EU decisions that will affect it in new and interesting ways—because if there are, it will just have to toe the line.
Certainty
As far as business is concerned, Brexit’s most damaging effect so far has been the uncertainty that it has imposed on operations—a problem that manifested in the repeated stockpiling that many firms used to hedge against the possibility of the “no-deal Brexit” that would have occurred if the U.K. and EU had split without first negotiating a future relationship.
In some respects, Brexit uncertainty is now a thing of the past. After Friday, there will no longer be any possibility of the U.K. cancelling Brexit; if it wants to rejoin the EU, it will have to apply to do so. This is why Simon Usherwood, a politics professor at the University of Surrey in England, says Friday evening will be “a huge deal.”
“It’s the point at which this process becomes fixed in a very real sense,” he says. “There’s no longer [a question of], ‘Can the U.K. change its mind and say sorry, we didn’t mean to do that?'”
But…
The problem is that the transition period will be uncomfortably brief. Trade deals typically take years to negotiate. The U.K. and EU have the advantage of starting from a common point—the U.K. already adheres to EU rules and standards, having been a member for decades—but again, the scope of their future relationship will be extremely wide, and the U.K. will want to diverge from EU rules in the future. Ironing out the details will take a lot of work.
And they only have 11 months in which to achieve this—actually, a few months less, given the need for the deal to be ratified by the British and European Parliaments, plus the legislature of each remaining EU member state.
JOHN THYS/AFP via Getty Images
“[Friday is] the end of the first part of this process, and it’s likely to be the easier part—stopping doing something, rather than starting doing something else,” says Usherwood. “That’s a problem for a lot of people who think it’s done and dusted and haven’t really appreciated that there’s still an awful lot of ground to be covered.”
Unanswered questions
Although there is now no longer any way to delay Brexit itself, the British government does have the option of extending the transition period by up to two years. This can only be done once—unlike the repeated postponements of Brexit Day that took place in the last couple years—and doing so would also be a major embarrassment for the government, which swears blind that the transition period will end on December 31. But the option is there.
So, businesses will ask with good reason, what’s going to happen at the end of the year? Will there be a comprehensive deal that describes the new landscape in detail? Will there be a bare-bones deal that leaves many questions unanswered until further negotiations take place? Will there be no deal and therefore a return to stockpiling towards the end of the year? Will the transition period be stretched out into something more manageable?
On Friday night, there will be no answers to those questions—though Usherwood has an inkling. “There’s good reason to think an extension is necessary,” he says. “I don’t think anybody is going to be totally surprised if it is actually used.”
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—Europe may be next in Trump’s trade war offensive
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Catch up with Data Sheet, Fortune’s daily digest on the business of tech.


fortune--2020-01-30--Altria drastically distances itself from Juul after writedown

Altria Group Inc. made dramatic efforts to distance itself from the legal troubles of Juul, as it wrote down the value of its stake in the vaping company to about a third of what it initially paid.
Altria also said in a statement it has changed the terms of its minority investment in the company, including stopping all services other than regulatory affairs and said that it has an option to be released from its non-compete obligation in some circumstances. Altria valued its Juul stake at $4.2 billion at the end of 2019, after paying $12.8 billion in Dec. 2018.
Altria shares fell 1% to $49.60 in early trading Thursday. The stock was so far flat for the year.
For the tobacco company, it’s another blow as it attempts to broaden its portfolio beyond cigarettes. Atria’s 35% stake in Juul has become a headache as the e-cigarette market grapples with slew of vaping-related lung illnesses and deaths. Altria has also been named in lawsuits claiming youth addiction to Juul. These are new kinds of challenges for an old-guard company like Altria that’s used to taking things slow, getting FDA approval and testing the market before making big decisions.
Altria Chief Executive Howard Willard cited the “unexpected challenges” of Juul that had led to impairment charges and reported losses. The new charge comes amid a rise in lawsuits over Juul’s vaping devices, which allege it has addicted a new generation of youth and become a burden on school districts. Legal cases have increased by more than 80% since Oct.31, and many name Altria as a co-defendant.
Pivot prelude
The Juul writedown is “a prelude to a pivot to prioritizing other noncombustible products,” such as the IQOS vaporizer, Bloomberg Intelligence analysts Kenneth Shea and Gopal Srinivasan said in a note. Such a massive impairment charge “may raise concerns about CEO Howard Willard’s stewardship,” they said.
Altria’s move is a serious blow to Juul, once a high-flying Silicon Valley startup that threatened to disrupt the tobacco industry with a sleek product and hip, youthful marketing. It also heaps more pressure on the company as it heads into a critical moment. Juul and all other e-cigarette makers are required to apply with U.S. regulators by May 12 to keep selling their products.
“As we continue to reset the vapor category, we are committed to advancing the long-term potential for harm reduction for adult smokers while combatting underage use,” Juul CEO K.C. Crosthwaite said. Juul is focused on building the company for the long-term by preparing premarket tobacco product applications to earn authorization in the U.S., he said.
Revised terms
Under the revised terms of its minority investment, Altria said its non-compete option would be void if Juul can’t sell its products in the U.S. for at least a year, or if the value falls to less than 10% of its initial $12.8 billion investment.
Juul will also restructure its board to include two directors designated by Altria, three independent directors, the Juul CEO and three directors designated by Juul stockholders other than Altria, once it gets antitrust clearance from the U.S. Federal Trade Commission, according to the statement. The board will also add a nominating committee and a litigation oversight committee upon that clearance, it said.
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fortune--2020-01-30--The thorny trade-offs in the Trump administration’s Medicaid deal

The Trump administration has a Medicaid deal for states: more control over health care spending on certain low-income residents if they agree to a limit on how much the feds kick in.
It’s unclear how many states would be interested in such a trade-off under a complex Medicaid block grant proposal unveiled Thursday by Seema Verma, head of the Centers for Medicare and Medicaid Services. The federal share of Medicaid is now open-ended, meaning that a state is at least partly protected from unpleasant surprises like a new, $300,000 prescription drug or an economic downturn that swells enrollment.
The deal is optional for states, and they’d have to apply for a federal waiver to get it. But takers would face the prospect of court battles.
Although the Medicaid law allows for state waivers to promote experimentation, advocates for low-income people say the administration is exceeding its legal authority because caps on federal spending would require congressional approval. Verma maintains that the plan does not cross any red lines by violating Medicaid’s spending formula.
The Trump administration is calling the proposal the Healthy Adult Opportunity. Outlined in a letter Thursday from Verma to state Medicaid directors, the deal would be restricted to able-bodied adults under 65. A state could not put nursing home residents, disabled people, pregnant women, or children into the new plan. The federal government would not limit its Medicaid contribution for these groups, considered the most sensitive.
“Our focus … is to change the whole paradigm and to reset the framework of how we’re working with states,” said Verma. “We are providing them this up front flexibility and the federal government is in the role of monitoring the program.”
In exchange for operating under a fixed federal allocation, states, among other things, would be able to:
— Limit what prescription drugs will be covered.
— Waive a current Medicaid benefit that allows a low-income person to get retroactive coverage for medical care going back three months.
— Use copays to steer Medicaid recipients to services that are deemed to have the highest value.
— Share in savings with the federal government.
One potential twist is whether GOP-led states that have refused the Affordable Care Act’s Medicaid expansion would be more receptive under the terms proposed by Verma. Oklahoma voters will get to decide on a Medicaid expansion ballot initiative this year, and Republican Gov. Kevin Stitt has expressed interest in a block grant.
Verma said the federal government would monitor a state’s performance, acting not only as a fiscal bean counter but also to protect Medicaid recipients.
“There would be very strong monitoring from the federal government,” she said. “If a state set up something that was onerous … that would be an impetus for the federal government to take action.”
Medicaid is a $600 billion federal-state program that covers about 70 million low-income people, from elderly nursing home residents to many newborns. President Barack Obama’s health care law gave states the option of expanding it. Most states have done so, covering millions more able-bodied adults. Polls show the program has widespread public support.
With President Donald Trump already getting poor marks from the public for his handling of health care, the Medicaid plan is likely to provide another set of election-year arguments for Democrats. It dovetails with Trump administration efforts to restrain spending on other programs that help the poor, including food stamps and housing assistance.
Early on as a presidential candidate Trump promised to protect Medicaid. “Every Republican wants to do a big number on Social Security, they want to do it on Medicare, they want to do it on Medicaid,” he said at a 2015 event in New Hampshire. “And we can’t do that.”
Medicaid promises faded away as Trump’s campaign advanced. Once elected, he sought deep cuts to the program as part of the failed GOP effort to repeal “Obamacare.” Trump’s budgets have continued to call for limits on the federal share of Medicaid.
“Capping federal funding weakens beneficiary protections, and it put beneficiaries, providers, and states at risk,” said Jessica Schubel, a health care policy analyst with the nonprofit Center on Budget and Policy Priorities, which advocated on behalf of low-income people.
The professional group representing cancer doctors has also raised concerns. “Block grants could transform Medicaid from a safety net program, designed to meet basic health needs for low-income Americans, to a program with funding limits that drive care rationing for the most vulnerable,” Dr. Howard Burris, president of the American Society of Clinical Oncology, said in a statement.
Potential lawsuits are another hurdle for the administration’s plan.
“It is virtually certain that any state that takes up the option will be walking into litigation,” said Cindy Mann, who ran Medicaid in the Obama administration. She’s now with the Manatt Health consultancy.
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fortune--2020-01-30--European dealmaking is showing no signs of slowing down

There were hints that the European venture capital ecosystem was booming, but we now have cold, hard data to support them.
The value of venture capital deals in Europe topped €30 billion ($33 billion) last year for the first time, according to PitchBook’s 2019 European venture report. This represents a 33% increase in deal value on a year-over-year basis, the largest annual leap since 2015.
In 2019, the total value of deals that corporate venture capital participated in grew for the eighth consecutive year, landing at €14.7 billion, a year-over-year increase of 52.6%. (Corporate venture capital refers to the type of funding in which corporations buy into startups through an investment arm.)
Corporate investors appear to be investing more heavily in startups. The United States underwent a flurry of CVC activity the year prior, with 2018 reaching historic highs for corporate venture investments. Investing in internal R&D and creating new divisions, on the other hand, could potentially affect existing core strategies and balance sheet performance, according to the PitchBook report.
Although dealmaking may be heating up, a very important element is still missing: exit events. No European exits sized €1 billion or above closed in the first nine months of the year. The fourth quarter had only two exits over the €1 billion threshold — BioNTech’s initial public offering which had been valued at €2.9 billion in the private markets, and Intel’s €1.8 billion acquisition of Habana Labs.
But there are numerous unicorns in the European tech ecosystem that could boost exit value in 2020. Swedish payment provider Klarna might be eyeing an initial public offering this year. Klarna is currently the highest-valued private fintech in Europe, following a $460 million investment that pegged the company’s valuation at $5.5 billion in August.
Private wealth, accumulated over the past decade from tech entrepreneurs with ultra-high net worth, is funneling back into the VC ecosystem — and it looks like this is only the beginning.
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Email: polina.marinova@fortune.com
VENTURE DEALS
- Policygenius, a New York-based online marketplace for comparing and purchasing insurance, raised $100 million in Series D funding. KKR led the round, and was joined by investors including Norwest Venture Partners, Revolution Ventures, Susa Ventures, AXA Venture Partners, MassMutual Ventures and Transamerica Ventures.
- Verkada, a San Mateo, Calif.-based cloud-based enterprise video security company, raised $80 million in Series C funding at a $1.6 billion valuation. Investors include Next47, Sequoia Capital, Meritech Capital and Felicis Ventures.
- Attentive, a personalized mobile messaging SaaS platform for brands, raised $70 million in Series C funding. Sequoia and IVP co-led the round, and was joined by investors including Eniac Ventures and NextView Ventures.
- Whip Media Group, a Santa Monica, Calif.-based parent company to the TV and movie tracking app TV Time, raised $50 million in Series D funding. Eminence Capital and Raine Ventures led the round.
- Gabi, a San Francisco-based startup that monitors insurance rates from various carriers and provides users with pricing information on home and auto insurance, raised $27 million in Series B funding. Mubadala Capital led the round, and was joined by investors including Canvas.
- Codility, a London-based platform that enables companies to build better engineering teams, raised $22 million in Series A funding. Oxx and Kennet Partners co-led the round.
- Yumpingo, a London-based restaurant intelligence platform, raised $10 million in Series A funding. Investors include Smedvig Capital.
- Forma, a San Francisco-based computer vision company enabling the creation of photorealistic digital avatars from regular photos, raised $7 million in seed funding. Founders Fund led the round, and was joined by GSR Ventures.
- Kloud.io, a San Jose, Calif.-based data integration tool, raised $4 million in seed funding. Unusual Ventures led the round, and was joined by investors including Jason Calacanis and Firebolt Ventures.
- HeyMama, a New York-based social network for working moms, raised $2 million in seed funding. Investors include Rebecca Minkoff, Kori Estrada, Kathryn Moos, Janna Meyrowitz Turner, Divya Gugnani, Alison Wyatt, Sari Azout, Kymberly Marciano and Karen Cahn.
PRIVATE EQUITY DEALS
- Five Elms Capital made an investment in LaborChart, an Overland Park, Kansas-based workforce management platform for the construction industry. Financial terms weren't disclosed.
OTHER DEALS
- RoadSafe Traffic Systems acquired A Cone Zone Inc, a Corona, Calif.-based provider of consulting services for traffic control. Financial terms weren't disclosed.
FIRMS + FUNDS
- Intermediate Capital Group, a London-based private equity firm, raised $2.4 billion for its fund ICG Strategic Equity Fund III.
PEOPLE
- Long Ridge Equity Partners promoted Angad Singh and Donna Little to partner.