fortune--2020-02-28--This university conference gathers the best chefs in the world in Philadelphia

Inside an unremarkable building in Philadelphia’s University City neighborhood last March, tables were covered with plates of tacos from Carnitas Lonja, an award-winning San Antonio taqueria, Vietnamese bites from Hai Hai in Minneapolis, and a glistening black hill of caviar, served in generous scoops atop sturgeon ice cream, from Restaurant 108 in Copenhagen. The crowd sampling the fare included Noma alum Matt Orlando, Ben Shewry from Attica in Melbourne, and James Beard Award–winning chef Mashama Bailey. Once a year, Drexel University Hospitality Management program director Mike Traud assembles an international roster of world-renowned chefs and food-world luminaries—along with plenty of outstanding bites—for the two-day Philly Chef Conference.
Traud began his career as a lawyer, but with a lifelong passion for food, he took a leap and landed a job working for chef Marc Vetri in 2007, which in turn led to a part-time job teaching hospitality law at Drexel. “One day a week, I would prep pasta at Vetri in the morning, go teach a three-hour law class, and come back and work service,” he says. Two years later, the university offered Traud a full-time job teaching, and he got his doctorate in education soon after.
Now in its seventh year, the Philly Chef Conference was one of Traud’s first initiatives to bridge what he saw as a gap between the food industry and education. In the beginning, the conference focused on Philadelphia—bringing together local chefs and restaurant industry professionals. But in the relatively short span that has followed, it has exploded into an event that draws the most notable names in the food world for two days of panels, live demonstrations, and discussions. (And so much eating.)
Chefs Lior Lev Sercarz (left) and Nick Anderer deliver a presentation on spices at the Philly Chef Conference in 2018. Neal Santos
One impetus for the shift was to bring new voices into the discussion. “If you go to a conference where the same people are talking to the same people, it doesn’t mean anything,” Traud says. Since then, it’s grown to focus on national and international players, which, Traud says, engages the community and spreads its network. “All these industry leaders gather and talk for two days in Philadelphia. People are coming here to discuss and connect,” he says, before adding with a smile, “like in 1776.”
This year’s lineup includes Bo Bech from Restaurant Geist in Copenhagen, Noma general manager Annika de Las Heras, Will Guidara, formerly of Eleven Madison Park, chef Jean-Georges Vongerichten, Nikita Richardson from New York magazine’s Grub Street, Khushbu Shah, restaurant editor for Food & Wine, and dozens more. Intrepid and hyper-organized, Traud grew the conference, seemingly, by sheer force of will, sending out succinct emails to folks he thought would enrich the event. Michael Solomonov, the Philadelphia-based chef and restaurateur behind Zahav, and Jeff Gordinier, author and Esquire food and drinks editor, were both early supporters, which also helped spread the word.
Jeff Gordinier (right) talking with David Zilber, head of fermentation at Noma, in 2019. Neal Santos
Besides impacting the school and its students, the conference has become important to the city of Philadelphia writ large. “I’m trying to bring these leaders to Philadelphia, because it benefits my students, and it benefits our community,” Traud says. “It shines a light on what’s going on in food here. So it’s not like people are just coming to Philadelphia, flying in and flying out. These journalists are going to spend three days walking around everywhere, getting to see the best of Philadelphia. It becomes that little gateway into [our city].”
While intimate and informative kitchen demonstrations cover pairing tea and pastries with Copenhagen-based baker Richard Hart, or pasta making with Rezdôra’s Stefano Secchi, the conference also covers challenging subjects. This year, journalist Priya Krishna will moderate a talk titled “Diversity in the Kitchen: The Road Ahead” with panelists including Claudette Zepeda of San Diego’s El Jardín, and chef Erick Williams from Virtue in Chicago. Other topics have included sustainability and climate change, the #MeToo movement, and mental health.
“In the grand scheme of things, these are the conversations that should be happening right now,” says the director. “It’s not all hugs and kisses. There are tough topics that need to be discussed, and if we’re going to foster these discussions and have these tough questions, you want the right people in the room.”
Chef Ben Shewry traveled from Australia to attend last year, and says he loved the experience: “I think that Mike gives people a forum to speak their minds openly in an environment that is nonjudgmental, inclusive, and safe. The program is incredibly varied; there’s something for everyone, and not just the usual lineup of famous male chefs. Due to Mike’s leadership, the Philly Chef Conference has become an important voice in American food.”
Chef Ben Shewry at the 2019 Philly Chef Conference. Neal Santos
Writer Nikita Richardson, who went for the first time last year and will return this March to moderate a panel on indie food magazines, agrees that the conference is inviting and unpretentious, and compared it to prom. “You’re getting together with your people to celebrate something you all love. In this case, food.” Richardson hadn’t heard of the conference before last year but noted, “Any chance to go to Philly is a chance worth taking, and the lineup of food writers was pretty stunning.”
Lukas Volger, author of cookbook Start Simple, among others, is looking forward to his first conference this year, and will sit on Richardson’s panel to discuss his queer culture and food magazine, Jarry. “For me, it’s an incredible gathering of people,” he says. “I’m so excited and intrigued by the range of expertise, from recipe writing and magazine editing to cutting-edge food science restaurants in the 20th century. [It’s a] very rare chance to get so many perspectives in the same room together!”
The conference will kick off this year on Sunday, March 1, with live Heritage Radio podcast shows, a Gordinier-led panel about food memoirs that includes chef Kwame Onwuachi, and a reception showcasing some of Esquire‘s best new restaurants: Bon Temps from L.A., Rezdôra from New York, and Philadelphia’s own Pizzeria Beddia, along with local favorites like South Philly Barbacoa and Palizzi Social Club.
Most attendees leave feeling enriched, connected, and full of some of the world’s best bites. For Traud, though, the best part of the conference is when his students get something meaningful out of it—and even leave with an internship with one of the world’s best chefs.
More must-read stories from Fortune:
—The drinks America’s best bartenders make for themselves
—Miami’s Balloo is a personal tribute to the chef’s Chinese, Indian, and Trinidadian roots
—Inside the most influential fashion show in menswear
—5 things Madewell’s CEO always packs when traveling
—WATCH: Can San Francisco Be Saved?
Follow Fortune on Flipboard to stay up-to-date on the latest news and analysis.


fortune--2020-02-28--A bugging at the Ritz Hotel is at the center of a court battle between the heirs of British billiona

A bugging at the Ritz Hotel is at the center of a court battle between the heirs of British billionaire twins

The top issues in fintech , according to the industry ’ s biggest players

A spat between the heirs of two of Britain’s most reclusive billionaires became very public this week following a court hearing that revealed that Frederick Barclay was being secretly recorded by his nephew at the Ritz Hotel.
The fight is taking place against the backdrop of changes within the business empire of once inseparable Frederick and his identical twin brother David. Public filings highlight how David’s sons have consolidated control of the five-star Ritz in Mayfair, while Frederick’s daughter Amanda has left the board.
The family tensions came to a light in a London court after Frederick discovered that his nephew Alistair Barclay had “engaged in covert audio surveillance” to record his conversations with Amanda in the conservatory of the hotel. The two had been talking about “potential acquisitions and disposals of business assets” as well as the structure and financing of the group.
“A dispute has arisen between different elements of the family over the governance and direction of the group businesses,” Judge Mark Warby said in his ruling, which was released Wednesday.
The 85-year-old twins are among Britain’s most discreet billionaires, known for a family compound on a tiny island off the U.K.’s southern coast. The two men have been considering offloading some of their most prominent holdings including the Brexit-supporting Telegraph newspaper and the Ritz.
Lawyers for Frederick and Amanda Barclay declined to comment. A spokesperson for the U.K. holding company declined to comment on behalf of the other members of the family, including Alistair.
At the heart of the litigation is Frederick’s concern that his conversations, which were transcribed and shared among family members, would be misused. In a legal filing for the court case, his lawyer said that he had sought a restriction preventing the defendants from using the information at all.
Corporate filings highlight the family’s divisions. Aidan and Howard Barclay replaced Amanda and one of Frederick’s staff as directors across six Ritz businesses, including the hotel’s main U.K. holding company. The latest filings came in the same week that the family tensions emerged.
Amanda, 41, has also stepped back during the same period from a company associated with Arlington Investors, the Jersey-based investment firm that has ploughed money over the past decade into the U.K. student-housing market. Frederick Barclay has previously advised the firm, and his daughter’s recent activity signals a partial withdrawal from the business sector.
The Ritz is the twins’ most valuable business, with the pair expected to recoup many times over the 75 million pounds ($97 million) they paid for the hotel in 1995. Their other holdings include delivery service Yodel and online retailer Shop Direct, which has needed funding from the Barclay family to cover claims tied to Britain’s insurance mis-selling scandal.
The Barclays paid 2.3 million pounds in 1993 for the English Channel island of Brecqhou. They erected a mock-Gothic castle, complete with almost 100 rooms, gilded turrets and a helipad.
The court proceedings add to the brother’s recent legal battles. In July, David lost a libel suit against a little-known French playwright who satirized the lives of him and his brother. David’s lawyer said at the time that he would probably appeal.
Three months later, Frederick was back in a divorce court with his estranged wife. A judge who oversaw the preliminary hearing placed limits on what can be reported, but the case may shed light on the Barclay family’s finances if it reaches a public decision.
David is the older sibling by 10 minutes. Born to Scottish parents, they spent their early days in a west London household so close to a railroad that trains would rattle the windows. After leaving school at 16, David and Frederick started their careers in the accounts department of General Electric Co., according to “The Twin Enigma,” a 2010 book by Vivienne Lewin. They teamed up in the 1960s to turn old boarding houses into hotels and moved into breweries and casinos, marking the beginning of their business empire.
–With assistance from Thomas Seal.
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—One of Bordeaux’s most revered estates is launching a new high-end wine in Napa
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fortune--2020-02-28--As coronavirus goes global,  China touts its ‘strong’ leadership and challenges the West to match it

As coronavirus goes global,  China touts its ‘strong’ leadership and challenges the West to match its resolve

At first, the coronavirus was a China problem. As the cases of new infections skyrocketed in January and early February, the central government worked to contain the outbreak that started in the commercial center of Wuhan. It closed transport links. It locked down the city of 11 million. It built 1,000-bed hospitals in a matter of days. Beijing was caught on its heels, having to answer for why it didn’t do more sooner.
The rest of the world watched, responding with good wishes but harsh travel restrictions that largely isolated the most populous nation on Earth.
But now, the coronavirus has truly gone global, and other nations are experiencing what China lived through weeks ago. Some like South Korea and Italy are the new coronavirus pariahs, with their citizens banned from crossing certain borders. Still others are facing questions about preparedness and the likelihood of massive lockdowns.
All the while, China’s extreme measures in battling the coronavirus epidemic appear to be working; it seems to be winning its “peoples war” against the disease. On Wednesday, Tedros Adhanom Ghebreyesus, director general of the World Health Organization, said more new cases of coronavirus were reported outside of China than within the country for the first time. Indeed, according to China’s official statistics, which continue to draw some skepticism, the spread of the disease has steeply declined in China, nearly grinding to a halt outside the coronavirus’s epicenter of Hubei Province.
In a matter of days, the coronavirus script has suddenly flipped, and some in China appear vindicated by the moment.
“Perhaps the whole world has underestimated COVID-19, which is a common enemy of mankind,” tweeted Hu Xijin, the editor-in-chief of China’s state-run Global Times. “Countries just cut off transportation with China but did little internally for epidemic control. There’re people who gloat over outbreak being…in China. But things are changing.”
At a press conference in Guangzhou on Thursday, Zhong Nanshan, a Chinese epidemiologist famous for discovering SARS who’s taken an active role in combatting the coronavirus outbreak, predicted that the virus will “basically be under control” in China by the end of April. He decried the “negative” coverage of China’s handling of the outbreak from foreign press and said that taming the virus was only made possible by the strength of China’s political system.
Videos of his press conference zipped around Chinese social media, with some users adding triumphant sound-effects to accompany his comments.
“It wasn’t easy, but China made it,” said a spokesperson for China’s embassy in Singapore on Friday. “Without a strong leadership and an efficient social system, this would be a mission impossible.”
This celebratory tone stands in stark contrast to earlier defensive remarks by Chinese authorities, who’d come under fire—domestically and internationally—for not raising alarm about the coronavirus early enough.
Propaganda sources and nationalistic outlets have struck a distinctly celebratory and defiant tone, says Fang Kecheng, an assistant professor of journalism and communication at the Chinese University of Hong Kong. Some influential social media accounts have proudly claimed that other countries should now “copy China’s homework” in containing the virus, Fang said, while others have said it was lucky that the outbreak initially occurred in China because it’s handling of the outbreak has been so effective.
Beijing’s response to the virus still has plenty of critics, but as the COVID-19 disease spreads, there are real questions about how poorer or more democratic nations will attack the outbreak.
More must-read stories from Fortune:
—Trump budget cuts could become a big problem as coronavirus spreads
—China cracking down on VPNs in coronavirus crisis
—China tries to restart economy as outbreak slows. Is it heading back to work too soon?
—5 reasons coronavirus statistics seem inconsistent
—Coronavirus may be the straw that breaks the back of oil fracking
Subscribe to Fortune’s forthcoming Eastworld newsletter for expert insight on what’s dominating business in Asia.


fortune--2020-02-28--We haven’t reached the bottom yet

We haven’t reached the bottom yet

This is the web version of CEO Daily. To get it delivered to your inbox, sign up here.
Good morning. David Meyer here in Berlin, filling in for Alan.
It would be nice to wake up to good news about the markets, but this apparently isn’t the week for that. After we plowed into correction territory yesterday, with stocks like Tesla’s getting hammered, the slide continued.
In Asia today, the Hang Seng fell 2.4%, the Shanghai Composite and Nikkei 225 both dropped 3.7%, and the Kospi shed 3.3%. Similar story in Europe—the Stoxx Europe 600 was down 2.8% at the time of writing—and U.S. futures are very firmly in the red, too. Zooming out, the MSCI World Index is down more than 9% for the week. We haven’t been here since 2008.
Too much, too soon? Swissquote Bank senior analyst Ipek Ozkardeskaya thinks so, writing this morning: “To us, it appears that the market has gone ahead of itself and a rebound should be around the corner. The coronavirus outbreak has certainly hit businesses, and it might have a longer-than-expected negative impact on company earnings and global growth. Yet the extension of the sell-off we are seeing may be a bit too dramatic, even compared with the significant downshift in valuations.”
Maybe, maybe not. There’s some good news in China, where the number of new infections is falling (Hubei province continues to bear the brunt of the outbreak there). But elsewhere, not so much.
South Korea’s infection count has cleared 2,300, and Italy’s is now over 650—the only western European countries without a confirmed case are Portugal and Ireland. Around 1,000 people in the German town of Heinsberg are under quarantine, and the Geneva Motor Show has been cancelled after Swiss authorities banned large gatherings. Sub-Saharan Africa also now has its first case (an Italian citizen who works in Nigeria), which is particularly worrisome given the relatively poor state of medical care in the region. Middle Eastern countries such as Israel and Saudi Arabia are closing their borders to people coming from countries with confirmed cases.
The powerful are not immune: Iranian Vice-President Masoumeh Ebtekar has been confirmed ill just after meeting with President Rouhani and other cabinet members, and Mongolian President Battulga Khaltmaa has been placed in precautionary quarantine after visiting China on a state visit.
The markets also seem to have absorbed the fact that, while drugmakers are scrambling to create a coronavirus vaccine, it won’t be hitting shelves until (best-case scenario) at least a year from now, due to the need for safety and efficacy trials. An effective treatment—perhaps Gilead’s remdesivir—may become available sooner, but a vaccine will only theoretically be of use if Covid-19 becomes like the flu: something that rolls around each year, that we all have to deal with again and again.
In the meantime . . . hey, at least hand-sanitizer merchants like Bath & Body Works are doing well. As well they should. Wash your hands regularly, folks.
More news below.
David Meyer
@superglaze
david.meyer@fortune.com
TOP NEWS
Location data
AT&T, Sprint, T-Mobile and Verizon are reportedly about to be whacked with fines totalling more than $200 million, due to their failure to protect customers' real-time location data. The carriers were sharing data about the locations of individual people to middlemen who then shared the information with their customers. Some legislators see the scandal as a demonstration of why a federal privacy law is needed. Wall Street Journal
Syria crisis
The EU is warning of a major international conflict in Syria. The battle for the holdout rebel city of Idlib (not far from the Syrian-Turkish border) escalated last night, with at least 33 Turkish soldiers being killed in an airstrike conducted by either Assad's regime or the Russian air force. Almost a million citizens of that city alone have been displaced, and Europe might now be in for a fresh refugee crisis, because Turkey has suddenly decided to end its deal with the EU that saw it stop Syrian refugees from reaching Europe. Greece, which along with Bulgaria provides the EU's border with Turkey, is bracing for arrivals. Reuters
Huawei Europe
Huawei has picked France as the location of its first European factory, the first phase of which will cost around $220 million. The plant will manufacture equipment for 5G networks, and the aim is to supply the whole European market. Huawei denies the move represents a charm offensive. France's government has, like the rest of Europe, so far resisted pressure from the U.S. to shun Huawei's 5G equipment over espionage and sabotage fears. South China Morning Post
A.I. ethics
The Vatican will today release a document, sponsored by Microsoft and IBM, promoting the ethical use of artificial intelligence. According to IBM VP John Kelly III, Pope Francis is concerned about the question of whether A.I.'s benefits will be universally available, or whether it will going to further bifurcate the haves and the have-nots. Reuters
AROUND THE WATER COOLER
German unemployment
The DAX may be suffering today along with other European exchanges (at one point this morning it was more than 5% down), but Germany does have some good news to savor: unemployment unexpectedly dropped this month, with the jobless total down 10,000. Reuters' consensus forecast had predicted a 3,000 rise in the unemployed. Reuters
Mastercard CEO
Fortune's Rey Mashayekhi has a piece out explaining how Michael Miebach, Mastercard's incoming CEO, has strong knowledge both of banking and tech: " As such, he would appear to be a good fit to continue Mastercard’s continued evolution beyond card-based transactions—which, as [current CEO Ajay] Banga noted, have gone from comprising 'close to 80%' of the company’s revenues a decade ago to only around 50% now." Fortune
Drone regulation
The Financial Times has an interesting piece about developments in U.S. drone regulation, in particular the Federal Aviation Administration's work with startups to develop a new traffic management system that can cope with the likely scale of unmanned vehicle deployments. Financial Times
Brexit jobs
Brexit will bring a jobs boom after all . . . in administration. The U.K. government has confirmed industry estimates that 50,000-ish people will need to be hired to fill in all the customs paperwork that would be entailed in the government's preferred kind of trade deal with the EU (a deal similar to that between the EU and Canada). Financial Times
This edition of CEO Daily was edited by David Meyer.


fortune--2020-02-28--Switzerland cancels events and Germany puts town under quarantine as coronavirus spreads across Euro

Switzerland cancels events and Germany puts town under quarantine as coronavirus spreads across Europe

Switzerland canceled large events as Europe steps up measures to contain the spread of the coronavirus.
Public and private gatherings with more than 1,000 people won’t be allowed until March 15, the Swiss government said on Friday. The next big event in the country is the Geneva Motor Show, which was set to open to the public on March 5.
The move comes alongside a German quarantine of 1,000 people as European authorities struggle to contain the virus and project an image of business as usual. French President Emmanuel Macron and Italian Prime Minister Giuseppe Conte drank coffee together in a bar in Naples on Thursday, calling for European cooperation and rejecting calls for suspending the Schengen Treaty that allows for border-free travel within the European Union.
Authorities in the German municipality of Heinsberg, near the Dutch border, asked people who came into contact with a married couple with the disease to stay at home, spokesman Ulrich Hollwitz said by phone on Friday. The pair had attended a Carnival event in mid-February with about 400 people, and the isolation affects them and their family and friends, according to Bild newspaper.
Cases in Italy soared to 650 on Thursday from 400 a day earlier, bringing the European total to more than 700. German infections rose to 48 on Friday morning, while a first case in the Netherlands was confirmed on Thursday evening. The Dutch patient, who is being kept in isolation, recently visited Italy’s Lombardy region. Globally, there are more than 83,000 cases.
A crisis task force in Germany will meet on Friday afternoon in Berlin to discuss next steps, including the possibility of canceling the ITB tourism trade fair. EasyJet Plc said it’s planning to cancel flights as demand slows for travel, particularly to Italy.
Europe’s largest economy is looking at a range of measures to protect its key export sector and address the damage from a slowdown stemming from the spread of the coronavirus. The benchmark DAX Index lost 4.8% at 10:16 a.m. central European time on Friday.
The government’s plans would seek to improve conditions for doing business, including reducing the tax burden on companies and boosting tax relief for digital investment, Economy Minister Peter Altmaier said Thursday in Berlin, adding that Germany is in “a period of growing uncertainty” and couldn’t rule out cuts to growth forecasts.
The fallout looks to be spreading, compounding a broader industrial slump. BASF SE on Friday warned of a possible second annual profit drop due to the impact of the coronavirus and an ongoing automotive slump.
Germany is monitoring transport links by air, sea and land and will ask international travelers to fill in landing cards stating where else they’ve traveled, Interior Minister Horst Seehofer said on Thursday in Berlin.
“The situation has clearly deteriorated,” he said. “The term ‘beginning of an epidemic’ means that the number of cases will increase.”
With assistance from Ania Nussbaum, Marco Bertacche, Joost Akkermans and Jan Dahinten.
More must-read stories from Fortune:
—Trump budget cuts could become a big problem as coronavirus spreads
—China cracking down on VPNs in coronavirus crisis
—China tries to restart economy as outbreak slows. Is it heading back to work too soon?
—5 reasons coronavirus statistics seem inconsistent
—Coronavirus may be the straw that breaks the back of oil fracking
Subscribe to Fortune’s Brainstorm Health newsletter for daily updates on biopharma and health care.


fortune--2020-02-28--Fastest correction ever—the S&P 500 sell-off is one for the record books

This is the web version of the Bull Sheet, Fortune’s no-BS daily newsletter on the markets. Sign up to receive it in your inbox here.
Happy Friday, everyone.
It’s bleak. That’s the only way to describe the global markets this morning. The sell-off continues across all major indices in Asia and Europe after yesterday’s brutal day. I’m looking at nothing but red screens.
Here’s the latest factors moving the markets.
Markets update
Minutes before the European opening bell, the headline flashed of a new town under quarantine. It’s in Germany, on the Dutch border. Germany’s DAX is down more 5%, as I type, its worst day since 2016. The other major European bourses weren’t faring much better. The U.S. futures are down, but not nearly as sharply.
Elsewhere, the dollar is down, crude is down, and commodities are slumping again. Even gold is selling off.
The bulls clearly are in retreat. Yesterday’s plunge put the European and American markets in correction territory, down more than 10% from their highs, which weren’t all that long ago. In fact, the S&P has experienced its fastest correction ever. Overall, the markets are on track for their worst week since 2008, the height of the financial crisis.
Every sector, it seems, is taking a beating: travel and leisure, financials, automotive, tech. Goldman Sachs analysts yesterday published an investor note saying coronavirus has caused them to update their models. They now project zero earnings growth for U.S. companies. Citi followed up this morning extending the zero handle to global companies.
Once the markets descended into correction—the C-word—land yesterday, the focus then shifted to the R-word—recession. As in when? As soon as mid-2020, says legendary analyst Komal Sri-Kumar. And now we can cue up bets on when the Fed will slash interest rates. Predictions of a cut went from a longshot earlier this month to inevitable—as soon as next month.
As we do every Friday, here’s a look at the big themes.
By the numbers
Six. As in six days. The Dow and S&P 500 have fallen six straight sessions. As we said above, it’s been the fastest top-to-correction drop ever for the S&P. Since its close on Friday, Feb. 21, the benchmark lost 353 points. And it’s declined 12% since Feb. 19. The Dow, meanwhile, is off 11.13% this week, its 14th worst week in its history.
26. As in Aug. 26, 2019. Where were you on that day? Can’t remember? Never mind. On that day, the Dow was starting a little rally. It climbed above 25,766 mid-day and went on a three-weak tear. Yesterday, the Dow closed at 25,766.64. We’re back to August, 2019 levels.
72. As in 72%. Investors are now calculating those are the odds for a Fed interest rate cut at the upcoming March meeting. The odds were a mere 9% a week ago. And the central bank may not be done there. Investors are banking on a significant cut—of at least 50 basis points—in July. Pinned down on that very question, ECB President Christine Lagarde says it’s too early for Europe to act.
***
To end on a positive note—it’s Friday. The markets get a bit of a breather. And so do I. I’m going on break. All next week Bull Sheet will be in the capable hands of my colleague Rey Mashayekhi. He’s based in the States, so you’re probably going to see Bull Sheet hit your in-boxes at a different time.
Take care, everyone.
Bernhard Warner
@BernhardWarner
Bernhard.Warner@Fortune.com
Today's reads
Back to earth. Shares in Virgin Galactic plummeted 24% Thursday after analysts at Credit Suisse and Morgan Stanley—two of only three firms covering the space tourism company—downgraded it. The stock had already slumped 16% on Wednesday after the company reported a 2019 loss of $211 million on revenues of $3.8 million. In Fortune, Erik Sherman tackles the thorny question of how to value the pioneering company.
Karate shop. Actor Steven Seagal, star of “Above the Law” and “Under Siege”, is the latest celebrity punished by the U.S. Securities and Exchange Commission for failing to disclose he was being paid to promote a digital token, Bloomberg reports. Seagal was promised $1 million in cash and tokens for touting an initial coin offering from the oddly spelled startup Bitcoiin2Gen. He agreed to settle the allegations without admitting wrongdoing, and will pay back $157,000 he received in promotional payments, plus a $157,000 fine, the SEC said.
OPEC cut? Plunging demand for oil has prompted Saudi Arabia to push for deeper oil production cuts when OPEC and its allies meet in Vienna next week, the Financial Times reports. The kingdom is asking producers, including Russia, to sign up to a production cut of an additional 1 million barrels a day, at the March 5-6 meetings, a significantly deeper cut than previously discussed.
Market candy
Quiz time. We know that President Trump is a frequent market commentator, particularly on good days. When did he deliver the following tweet: “Highest Stock Market in History, By Far!”?
A. Nov. 6, 2018, the day of mid-term elections
B. Sept. 24, 2019, the day the House announced formal impeachment inquiry.
C. February 19, 2020, a whopping nine days ago.
Answer: C., February 19, 2020. Since then the Dow Jones Industrial Average suffered one of its worst weeks in history, dropping 11% to take it into correction territory.
A reminder: careful what you tweet.


fortune--2020-02-28--Singapore’s coronavirus response has contained the outbreak—but its strategy is hard to replicate

As the novel coronavirus starts to gather speed in Europe, the Middle East and the U.S., there’s one place it is seemingly being contained: Singapore.
With no reported virus-related deaths despite 96 cases, and a slowing rate of infection that’s been outpaced by recoveries, the Asian city-state is emerging as a litmus test of whether the deadly pathogen can be, if not contained, then neutralized.
The answer is maybe, and perhaps only with the unique combination of factors that Singapore brings: a top-notch health system, draconian tracing and containment measures, and a small population that’s largely accepting of government’s expansive orders. Few other countries battling an outbreak that’s now infected more than 83,000 globally and killed over 2,800, can replicate these circumstances.
Singapore’s tally of cases is still inching up but it’s no longer the worst-hit nation outside of China after South Korea saw an over 30-fold increase in a week. Italy, with at least 650 confirmed cases, has now become the epicenter in Europe while Iran has reported an alarming jump in numbers of those infected and dead.
“There seems to be more of a willingness to place the community and society needs over individual liberty and that helps in a public health crisis,” said Kent Sepkowitz, an infectious disease control specialist at Memorial Sloan Kettering Cancer Center in New York.
‘Not Hesitate’
Singapore was aggressive out of the gate and has continued to be. It was one of the first countries to impose restrictions on anyone with recent travel history to China and parts of South Korea. It has a strict hospital and home quarantine regimen for potentially infected patients and is extensively tracing anyone they may have been in contact with.
It’s charging a couple who gave false information on their travel history and taking away residency status from a person who breached his quarantine, among other punitive actions.
Singapore “will not hesitate to take strong action” against rule breakers, Law Minister K. Shanmugam said in a statement Thursday. “The deliberate breaking of the rules, in the current situation, calls for swift and decisive response.”
The country started a text and mobile web-based software solution on Feb. 10 through which people placed under home quarantine could report their location to the government, according to a statement Thursday from the Prime Minister’s Office.
“This served as the first level of verification of compliance for close to 12,000 foreign employees,” the office said in statement.
The consistently forceful posture is in contrast to other Asian nations, who despite being closer geographically to China, have been slower to act. Japan and South Korea are both facing criticism for lax and delayed containment measures that have led to mounting virus cases.
As the epidemic that emerged from China threatens to become a global pandemic that could wipe off $1 trillion from the world’s gross domestic product, Singapore used its early infections to establish an advanced contact tracing system.
It’s now using a new serological test developed by Duke-NUS Medical School that can establish links between infected cases, which will allow authorities to map out the chain of transmission and therefore try to break it. Local researchers had earlier successfully cultured the novel virus within a week of Singapore confirming its first case.
A historically “very strong epidemiological surveillance and contact-tracing capacity” in Singapore led to a high detection rate initially, according to a yet to be peer-reviewed study published by researchers at the Harvard University.
The country’s experience with the 2003 SARS outbreak in which 33 people died in Singapore, and the 2010 swine flu known as H1N1 where an estimated more than 400,000 people were infected, meant that precautions were already in place. These included ready-made government quarantine facilities and a 330-bed, state-of-the-art national center for managing infectious diseases that opened last year.
No Hinterland
To be sure, few other countries can recreate Singapore’s circumstances. It’s a small, rich nation without a hinterland or health-care shortages. It’s been ruled by one political party for its nearly 55 years of independence, and local media outlets carry the government’s messaging without questioning, from washing hands to staying at home if someone is not feeling well.
In a recorded address earlier this month, Prime Minister Lee Hsien Loong reassured Singaporeans that the city had enough supplies and that the virus didn’t appear as deadly as SARS, meaning that most people would likely experience a minor illness even if they contracted it. The population has been noticeably calmer since.
Fresh infections in Singapore may still break out given the virus’s long incubation period and lack of symptoms in some carriers. The country’s chief health scientist, who led the public health response during SARS, has cautioned that more cases can emerge anytime given the rapid increase in global numbers.
Business Hub
Authorities have tested more than 1,300 people, while the Ministry of Health has imposed two-week quarantines on 2,887 close contacts of infected patients. Singapore is also a regional business hub with a large flow of overseas visitors.
After a local business meeting was tied to a cluster that spread to countries in Asia and Europe, officials said earlier this month they were investigating residents who attended the meeting to prepare for the possibility of fresh confirmed cases. Three infected people have recovered and no fresh cases related to this meeting have emerged.
But what Singapore is showing the world is that when all the stars are aligned, the virus may not be as uncontrollable as feared.
The situation “tells you a lot about Singapore’s health care system and their confidence,” said Sepkowitz.
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fortune--2020-02-28--Hong Kong police arrest media tycoon Jimmy Lai, known for championing pro-democracy movement

Hong Kong media tycoon Jimmy Lai has been arrested on suspicion of participating in an unlawful assembly last year and intimidating a reporter in 2017.
The arrest was confirmed by Mark Simon, the group director for Lai’s company, Next Digital Ltd., which publishes the Apple Daily newspaper. Two former pro-democracy lawmakers and activists, Lee Cheuk-yan and Yeung Sum, were also arrested on suspicion of unlawful assembly Friday, he said.
“This is ridiculous,” Simon said by phone. Lai was being held in a police station in Kowloon and was waiting to see his lawyer, he said.
The Police Public Relations Branch didn’t immediately respond to a request for comment Friday. The moves were earlier reported by local media including Now TV and Cable TV.
The arrests come amid a lull in protest activity following more than six months of nearly non-stop demonstrations in the former British colony and as the city battles the outbreak of the deadly coronavirus. The Hong Kong police have been going through footage and trying to track down around 300 protesters and suspects, the South China Morning Post newspaper reported Jan 29.
The arrests also follow Beijing’s appointment of new hard-line officials responsible for overseeing Hong Kong. Earlier this month, China tapped Xia Baolong, the vice chairman of the Chinese People’s Political Consultative Conference, as director of the Hong Kong & Macau Affairs Office.
Beijing also appointed Luo Huining — a cadre known for executing President Xi Jinping’s anti-corruption campaign — as head of China’s Liaison Office in Hong Kong. Simon, the Next Digital group director, said Lai’s arrest probably stemmed from the Liaison Office’s desire to show it was taking action.
Lai has long championed the city’s pro-democracy movement and has been labeled a traitor by the Chinese government.
Around 10 police officers arrived at Lai’s home in Ho Man Tin in Kowloon at around 7:30 a.m. Friday, according to local newspaper Oriental Daily News. He was arrested in relation to the criminal intimidation of the newspaper’s reporter in 2017 and for unlawful assembly on Aug. 31 last year, the Oriental Daily said, citing unidentified people.
The Oriental Daily had long sought to have Lai prosecuted over the 2017 incident, Simon said.
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fortune--2020-02-28--A dog in Hong Kong has tested ‘weak positive’ for coronavirus

The pet dog of a coronavirus patient in Hong Kong has been found to have a “low level” of the virus, the Hong Kong government said early Friday.
The dog tested “weak positive” for the coronavirus, the city’s agricultural and fisheries department said in a statement, without giving further details. Officials will carry out further tests to confirm whether the dog has really been infected with the disease, or if it was a result of environmental contamination of its mouth and nose.
Much is still not known about the virus that is spreading around the world after emerging in central China late last year. It is thought to have transferred to humans from bats and has been shown to spread in a number of ways, but the Hong Kong agricultural department said it doesn’t have evidence that pet animals can be infected, or be a source of infection to people.
If confirmed, the dog would be the first case of a pet catching the coronavirus amid a global outbreak that’s now infected more than 82,000 people and claimed more than 2,800 lives.
The dog is being quarantined at an animal facility, the Hong Kong government said. The department strongly advised that pets of confirmed virus patients also be put under quarantine.
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fortune--2020-02-28--Four takeaways from the annual RSA security conference

Thousands of cyber security professionals flocked to San Francisco this week for the annual RSA Conference, where executives, government workers, and researchers gather to talk the latest trends in protecting firms from hackers.
This year’s event had the unfortunate timing of coinciding with the coronavirus outbreak, which led to companies like IBM, AT&T, and Verizon dropping out of attending the event out of fears that employees could catch the virus.
But, the show carried on, and attendees—a few wearing face masks—soldiered on to hear topics including artificial intelligence’s impact on cybersecurity, the rise of easy-to-access-genetic testing services and how it impacts data privacy, and the Department of Defense’s decision to ban U.S. governments from buying telecommunication equipment from Chinese tech giant Huawei.
Here’s a few of the biggest takeaways from the conference sessions:
A leading cyber security expert shares his thoughts on A.I.
Esteemed cryptographer Adi Shamir shared his thoughts on the two biggest problems with deep learning and neural networks, software created decades ago to loosely imitate how the human brains learns.
“We don’t understand why they’re working so well,” Shamir said. “And second, we don’t understand why they’re working so terribly.”
Shamir’s says technologists are having a difficult time explaining how neural networks learn to discover patterns in lots of data. These neural networks are so big, it can be like having a million interconnected calculators. So trying to find the few that made the most difference in reaching the conclusion can be a challenge.
Shamir noted how some A.I.-powered image recognition systems can confuse photos that look normal, but have been subtly altered by other A.I. systems, as in the case when Google’s technology mistook an image of a turtle with a rifle.
“Until we solve this problem, I think it can be very dangerous to use deep neural networks in autonomous vehicles and in making life and death choices in medicine,” Shamir said. “Machine learning has made tremendous advances in the last ten years, but there’s still many problems.”
In praise of paper
The most secure way of protecting the elections from hackers involves using trusty paper ballots, Ronald Rivest, a cryptographer and MIT professor, told conference attendees.
“Putting trust on electronic components that are hackable is just not the way to go,” Rivest said. Voting records stored on paper, as opposed to digital bits, can be more easily verified and are less likely to be tampered with, he believes.
As for newer technologies like blockchain, which some technologists have praised for possibly being a safe-proof way to record transactions between multiple parties, Rivest had some doubts.
He joked that blockchain presents the dilemma of “garbage in, garbage stays forever,” a play on the saying “garbage in, garbage out,” which refers to the notion that analysis based on bad data will be inherently flawed. “Maybe it’s not the best for voting,” Rivest said.
Genetic testing, security, and privacy
The rise of off-the-shelf genetics-testing services from companies like 23andMe has led to some privacy advocates being concerned about potential consequences. After all, stolen computer passwords can always be changed, but DNA information is forever.
On a panel about security and genetic testing, Kaiser Permanente chief medical officer Dr. Patrick Courneya, said one of his biggest concerns involves privacy and transparency. When consumers have their genetics tested, they can sign consent forms that let companies use the data for further research. Courneya is worried that those current consent forms may not take into account future ways businesses can use that data as the technology continues to progress faster than data privacy regulations.
“I would argue the consent I give today about the use of my genetics may be fundamentally different in a year,” Courneya said. “I think we should not draw false comfort from the ways the structure is set up right now.”
Meanwhile, 23andMe chief legal and regulatory officer Kathy Hibbs said that while the focus on genetics and data privacy and security is important, most consumers should also be thinking about the security and privacy of their more standard health care records.
The battle between the DoD and Huawei
A panel that included representatives from both the U.S. Department of Defense and Huawei about the federal government’s blacklisting of the Chinese tech giant did not end in harmony.
Katie Arrington, the federal cyber information security officer of acquisitions, reiterated the government’s line that Huawei and its alleged ties to the Chinese government is a national security issue. She said that her agency has classified data, which she cannot share, that proves her point.
Because the data shows that there is a “known vulnerability” with Huawei equipment, the “recommendation was made to take Huawei out.”
“The law is the law,” Arrington said. “I work at the DoD—I’m going to enforce the law.”
Huawei chief security officer Andy Purdy, however, criticized the federal government’s decision, explaining that there are other ways to ensure that the government purchases equipment without so-called backdoors, without completely blacklisting a company. The “rip and replace will take more time and money than anticipated,” Purdy said.
Additionally, he said Huawei has created features intended to provide more transparency to its customers and alleviate potential concerns. But Kathryn Waldron, a research fellow at the R Street Institute think tank, explained that because federal policy makers believe tech companies in China are synonymous with the Chinese government, they aren’t likely to be won over by Huawei’s transparency features.
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fortune--2020-02-28--Producer Dick Wolf signs new 9-figure deal with Universal

Veteran producer Dick Wolf signed a new five-year agreement to keep making TV shows for Comcast’s Universal Television, extending a string of deals that total in the hundreds of millions of dollars.
As part of the pact, Comcast’s NBC will continue airing Wolf Entertainment’s “Chicago” shows—Chicago Fire, Chicago P.D., and Chicago Med—for at least three more seasons. Law & Order: Special Victims Unit, already in its record-breaking 21st season, also will be picked up for three more years.
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Med&
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P.D.& pic.twitter.com/W7wxRxBcL4 — NBC Entertainment (@nbc) February 27, 2020
Wolf, 73, will get at least $150 million upfront in the deal, according to a person familiar with the matter, who asked not to be identified because the terms weren’t released publicly. He stands to make more from his share of his shows’ potential profits when Universal licenses them to streaming services and other TV networks.
“The significance of having Dick Wolf remain at Universal Television can’t be overstated,” Pearlena Igbokwe, the division’s president, said in a statement. “Dick has proven himself masterful at building successful, iconic brands and telling gripping, intelligent and thought-provoking stories.”
Comcast already agreed to pay Wolf between $300 million and $400 million for the rights to offer his past shows, including the original Law & Order, on its streaming service Peacock.
Competition between new streaming services has set off a bidding war for TV’s top writers and producers. Ryan Murphy and Shonda Rhimes signed deals with Netflix worth hundreds of millions of dollars to produce multiple shows at the same time, while Warner Bros. kept Greg Berlanti at that studio with a deal worth more than $400 million.
The creator of more than six versions of Law & Order shows, as well as the “Chicago” franchise and other programs, Wolf is one of the most prolific producers in TV. He produces 11 shows currently on the air across CBS, NBC, Fox, and Oxygen. Unlike many of his peers, Wolf has opted not to cash in by selling the right to future earnings from his work—what’s known as the back end.
Wolf, who grew up in New York, moved to Los Angeles to work as a screenwriter in the 1980s and got his start as a staff writer on Hill Street Blues and Miami Vice. He then created Law & Order, which debuted in 1990s and went on to be one of the longest-running dramas in TV history.
Wolf has watched as broadcast TV surrendered its place as the home for the best TV to premium cable and then streaming. Yet he has continued to churn out programs for broadcast networks, where the ultimate economics are still favorable for producers. Wolf gets paid to produce the show, and then again every time its rights are sold to cable or streaming companies.
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fortune--2020-02-28--Kansas struggles with details of legalizing sports betting

Kansas lawmakers who want to legalize betting on sports events and allow online sales of lottery tickets are struggling to agree on the details and facing criticism that they’re being too generous toward companies already managing casinos for the state.
The state Senate voted 23-15 on Wednesday to approve a sports betting bill less than month after the Kansas City Chiefs’ victory in professional football’s Super Bowl highlighted how many Kansas fans likely placed wagers on the team out of state or illegally. Approval came after a four-hour debate and sent the bill to the House, but a committee there is working on its own legislation that is likely to differ significantly.
The Senate’s bill would allow people to place bets on sports events through four state-owned casinos managed by private companies through contracts with the Kansas Lottery, and the casino companies could take wagers through computer or cellphone apps. The measure also would allow limited state lottery ticket sales online.
The bill’s supporters don’t expect sports betting to raise more than a few million dollars a year for the state, even if the annual amount wagered reaches $1 billion, because 95% would go back to players in the form of winnings. But 20 states have legalized sports betting, including Colorado, Illinois and Iowa.
“It certainly put us in a position where we can establish sports gaming in Kansas and pull, hopefully pull, wagers from a black market, off-shore, unregulated, untaxed market and bring it into Kansas under a regulated, safe market,” said Senate Vice President Jeff Longbine, a Republican from eastern Kansas who led supporters during a four-hour debate.
The House committee plans to have hearings next month on its rival proposal. Chairman John Barker, a Republican from a central Kansas, where racing greyhounds have long been raised, said the House measure would give the state a larger share of the sports betting revenue and would allow hundreds of retail stores that sell lottery tickets to accept simple bets on sports.
“We thought we would spread it out,” Barker said. “You could be able to go down and buy a lottery ticket and bet on the K-State-KU game, hopefully buy a loaf of bread and 10 gallons of gas or whatever and go home.”
There’s also the question of whether Kansas should try to revive long-closed dog and horse racing tracks. State law allows slot machines at the tracks, but critics say the state’s take is too high for them to be profitable. The Senate voted 18-17 against lowering the tax rate for a dog and horse racing park in Kansas City, Kansas.
The park is owned by billionaire casino mogul Phil Ruffin, a friend of President Donald Trump. The Wichita Eagle reported that in 2018, Senate President Susan Wagle, a Wichita Republican, listed Ruffin as a reference as she sought an ambassadorship, sending an email to a political operative 10 days after for a similar proposal. She voted for Wednesday’s proposal as well.
Democrats in the Senate complained that their chamber’s bill gave too much control over the sports betting to the companies managing the state’s casinos by not requiring separate sports-betting contracts with the lottery and letting the casino managers decide who provides computer or cellphone apps.
Some critics also found the casinos’ favored position galling because of restrictions the bill would place on online lottery ticket sales. About a dozen other states have some form of online lottery sales.
The Kansas Lottery couldn’t use any sound or visual effects simulating a slot machine, allow someone to play more than one game at a time or determine a winner in less than four minutes. The lottery estimates it could boost sales $3 million a year under the bill but by as much as $26 million if the provisions were less restrictive.
Sen. Tom Holland, a Democrat from northeast Kansas, said the bill is a “sucker bet” for the state when it’s likely to see more gambling addicts and other problems from expanded gambling.
“If Kansas is going to extend its gaming products, then that extension needs to be profitable for the state,” Holland said in explaining his no vote.
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fortune--2020-02-28--Amidst coronavirus panic, the stock of this hazmat suit-maker is up 88%

You could call it the ultimate safety stock.
As U.S. markets swooned, shares of Lakeland Industries, a protective clothing maker whose products include hazmat suits, jumped 22% by the market’s close Thursday, representing a rise of 88% year-to-date.
Dizzy from coronavirus’ rapid global spread in countries including South Korea and Italy, some investors appeared to be hunting for defensive stocks that tend to do better in downturns. As of Thursday, 82,550 people have been infected with 2,810 deaths worldwide. Forty-seven countries have reported cases, with 60 in the U.S.
The surge in Lakeland’s stock doesn’t appear to be predicated on any particular news, but on speculation that the spreading virus will boost demand for masks and hazmat suits among healthcare professionals, and that some demand will flow to Lakeland Industries. Some of the rise may also be based on speculation that other traders will come to that conclusion.
The trade is not a new idea. After the U.S. confirmed its first case of Ebola in Oct. 2014, Lakeland shares rose dramatically, with the company later confirming that it had ramped up production due to Ebola, materially improving the business.
Women working on the CT1SL428, a protective suit for use in handling people infected with the Ebola virus, in a sewing room of Lakeland Industries on Oct. 23, 2014. JOHANNES EISELE—AFP/Getty Images
Since the start of the coronavirus outbreak traders have flocked to other companies that make protective gear, such as Japanese mask maker Kawamoto Corp., whose stock is up 391% since the start of the year.
There is currently no clear indication whether coronavirus will have a material impact this time around on Lakeland, which is a micro cap company valued at about $145 million and trades with much volatility.
Lakeland is not considered the leader in the hazmat industries‚ that would be Dupont. However that company has multiple business lines and operations in China at a time when corporations are warning of lower earnings and supply chain disruptions due to the virus—making the shares less attractive for traders looking to bet purely on protective health gear. Dupont says it has ramped up production of its own hazmat suits, while 3M says it is doing the same for its respirators in reaction to the outbreak.
Lakeland declined to comment for this story.
The interest in protection also goes beyond healthcare professionals. While panicked selling is driving stock markets lower, panicked buying is driving up some anecdotal interest in hazmat suits.
“These are absolutely desperate people, and it’s tripled my site traffic,” say PK Safety CEO Rick Pedley. His products, which include face masks and hazmat suits, are “effectively out of stock” as consumers afraid of coronavirus have phoned in.
Historically, PK Safety’s customers come from businesses such as those in the oil and gas industry or in construction—where workers often come in contact with hazardous chemicals. In the throes of Coronavirus panic however, uncommonly large demand is coming from consumers who are also drilling down on his site to search for the arcane differences between, say, a N95 or P100 mask.
Pedley, who ran his business through the SARS outbreak and Ebola scare, says the masks typically go first, with full-body suits following.
Even Amazon, where consumers are accustomed to finding everything, has seen shortages. Research from Jungle Scout says that Amazon sold out of its best-selling hazmat suits on February 5, leaving only third party sellers as sources.
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fortune--2020-02-27--Walmart expands delivery subscription program to take on Amazon Prime

Walmart’s battle with Amazon is going Prime time.
The world’s largest retailer is developing a paid membership program to challenge the internet giant’s Prime offering—which has become the default online shopping option for millions around the globe. The service, called Walmart+, will expand on the retailer’s existing grocery-delivery subscription service, which it introduced last year. Chief customer officer Janey Whiteside will spearhead the service’s development and rollout.
A Walmart spokeswoman confirmed the plans but declined to provide any details. Additional perks could include discounts on prescription drugs and fuel, according to Recode, which first reported the existence of the program.
Developing a broad-based membership program illustrates Walmart’s deep-seated concern that shoppers who defect to Amazon don’t often come back. The idea also runs counter to the ethos of founder Sam Walton, who famously refused to introduce the shopper-loyalty programs that are now commonplace at U.S. retailers. He argued that Walmart needed to treat each and every customer the same.
That said, Walmart has tried to mimic Prime before, testing a program called ShippingPass that it shuttered in 2017 upon the arrival of Marc Lore, who now runs Walmart’s U.S. e-commerce business.
The latest move is more ambitious than previous efforts, though, and aims to counter Amazon’s vise-like hold on the loyal shoppers who pay for the perks associated with Prime, which include free shipping and video streaming. Prime members spend about twice as much as other customers, and their willingness to splurge is a big reason why Amazon captured an estimated 40% of all sales growth at U.S. retail in the holiday quarter.
Since its debut in 2005, Prime has helped Amazon compete on price with physical retailers, allowing it to grow from an online bookseller to the largest online merchant of a wide range of goods. The company has tried to keep Prime members, who pay $119 a year for the service in the U.S., hooked with goodies like streaming video and music, and, more recently, free grocery delivery.
Amazon has also taken steps to lure lower-income shoppers into Prime memberships by offering monthly membership rates rather than forcing members to pay annually. Like Walmart, it is also delivering groceries to food-stamp recipients. Such efforts show Amazon is looking to broaden its customer base from affluent shoppers craving convenience to making Prime membership an everyday necessity.
Courting Shoppers
Whiteside, the Briton who’s heading Walmart+, has become a powerful player at Walmart since her arrival from American Express in 2018. Chief Executive Officer Doug McMillon has tasked her with courting more upscale shoppers and merging online and brick-and-mortar operations so that customers have a similar experience no matter where or how they shop. She’s also created a so-called product team, led by chief product officer Meng Chee, which is using technology to improve the customer experience.
Using Walmart’s existing grocery delivery service as the backbone of Walmart+ makes sense, as it’s the one business where Walmart has a clear advantage over Amazon, with more than 20% market share in the $800 billion category. Walmart already delivers groceries from more than 1,600 U.S. stores and is testing a service that sends employees right into customers’ homes to put the food away in their fridges.
Walmart’s Delivery Unlimited service currently costs $98 a year or $12.95 monthly, and uses a free 15-day trial to entice new members. Customers can also pay a per-delivery fee, with no membership.
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fortune--2020-02-27--‘I can’t remember when it’s been down this much so fast’: late day selling pushes Dow down 10% in fo

‘I can’t remember when it’s been down this much so fast’: late day selling pushes Dow down 10% in four days

The spread of the coronavirus across national boundaries—and the lack of predictability in reported numbers—is spreading panic, at least among investors.
On Thursday all major indices took a brutal beating: the smallest loss was in the Russell 2000, down 54.88 (3.5%). But other U.S. indexes took much bigger hits: S&P 500 down 4.4%, Dow Jones Industrials down 4.4%, and the Nasdaq was down 4.6%.
And a big part of the floor falling away happened in the last few minutes. “I can’t remember when it’s been down this much so fast,” said Susan Schmidt, head of U.S. equities at Aviva. “We’re scratching our heads.”
“In true disclosure, I was one of the adults saying at midday everything is going to be alright,” said Lisa Shalett, chief investment officer of Morgan Stanley Wealth Management. “But when I saw 1100 down on the Dow, I recognized that was not the right assessment.”
The markets also saw more than just a one-day thrashing. All the indexes are now deeply red year-to-date: 9.7% for the Dow and Russell 2000, 7.8% for the S&P 500, and Nasdaq at 4.5%.
Losses for the S&P 500 and Dow since last Friday are the worst the market has seen since 2008. For the Nasdaq it’s necessary to go back to 1998.
S&P sector losses for the year have varied wildly: while utilities are off by 1.1%, energy is down 25.7%.
The energy sector loss is due to reduced use of oil in China as well as people putting off travel. Materials feel the pinch because manufacturers face supply chain outages. And financials because they will be hit by widespread economic weakness.
Given that an epidemic was the trigger, it could have been much worse, according to Nancy Perez, a managing director at Boston Private Bank & Trust. “When you look at the avian flu in 2006, the market probably declined about 35%,” she said, especially when the June 2006 outbreak was followed by one of dengue fever in September of that year, according to data from First Trust. Within six months, however, the S&P was already back up 11.7% and had gained 18.4% within a year.
Trouble also had probably been brewing already. “Market sentiment is coming off a 20-year extreme from just a couple weeks ago,” Doug Ramsey, a chief investment officer at the Leuthold Group said in a message to Fortune. “Based on that alone, we would’ve expected a correction of at least 6-8%.” That leaves Ramsey worried that markets may then not have fully priced in the potential COVID-19 economic impact, or the fall could have been steeper.
“The difference in this [epidemic] is the economy was already slowing,” Perez said. Markets expected assistance from trade deals kicking in, a potential further drop in interest rates, and an improvement in the EU’s economic situation.
“We have over the last six months been quite cautious about where we are,” Shalett said. “We have taken a position, up until today … that this is a market that was bound to crack and crack pretty hard. The coronavirus was just the catalyst to let the genie out of the bottle.
At this point, the only certainty is uncertainty, and that’s bad for equities.
“Stock prices are based on expectations, not realizations, and what we have is that some investors are pricing in a true global pandemic, in essence, assuming a worst-case scenario,” said Robert Johnson, professor of finance at Creighton University. “There is a flight to quality and bond yields are dropping precipitously. Ironically, those investors piling into treasuries are going into the most overvalued asset.”
And for better or worse, there’s still another trading day left this week.
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fortune--2020-02-27--Worried about the stock market? Resist the urge to panic

The S&P 500 closed at an all-time high of 3,386.15 on February 19, 2020. Just six short trading sessions later, the stock market is in the midst of an 12% drawdown as of the close on Thursday. Monday and Tuesday were the first back-to-back 3% sell-offs for the S&P 500 since August 2015. Thursday was the first down 4% day since February 2018.
Every time stocks fall a little it feels like they’re going to fall a lot. I’m stating the obvious here but you have to go through a minor correction to get to a major 30%-50% bear market. But the minor correction is far more commonplace because most to the time when stocks are down they only fall a little, not crash a lot.
Even when the stock market rises in a given year, it’s not out of the ordinary for stocks to fall along the way to earning those gains. Going back to 1950, the S&P 500 has experienced an average intra-year peak-to-trough drawdown of 13.4%.
So the current pullback is actually right around the average for a given year. Of course, this average result doesn’t tell us what happens every year but downturns are the norm in the stock market.
So roughly 53% of all calendar years for the S&P 500 since 1950 have experienced a double-digit correction. And more than 91% of the time there was at least a 5% correction or worse.
Thirty-seven of the past 70 years have seen an intra-year double-digit correction in the stock market. Surprisingly, 22 out of those 37 years saw stocks finish the year with a positive return overall. And 13 of those years with double-digit corrections saw the S&P finish out the year with double-digit gains.
This means even when stocks have a decent year to the upside, you should plan on experiencing some downside to get there. Years like 2017 and 2019, where the worst drawdowns were -2.8% and -6.8%, respectively, are the outliers not the norm. The market is far more likely to see some serious losses on the way to earning gains than a smooth ride up the entire way.
As an investor, you have to get used to existing in a state of drawdown because that’s where the market is the majority of the time. Since 1928, the S&P 500 has hit new all-time highs in roughly 5% of trading sessions. If we invert this number, that means 95% of the time investors are in a state of drawdown.
This time may feel different because the coronavirus has the potential to wreak havoc on the global economy. No one knows how bad things will get. Volatility begets volatility in the stock market so investors should prepare themselves for more wild swings in price to both the upside and the downside as people work through updates on this outbreak.
But this is nothing new. There has always been volatility in the stock market and there always will be. That’s guaranteed as long as humans are the ones making buy and sell decisions.
In the short-term, the reasons for market sell-offs feel like they matter a lot. In the long-term, investors tend to forget the specific reasons stocks fell in the past.
In the short-term, market downturns feel like they will never end. In the long-term, all corrections look like buying opportunities.
Regardless of how long this correction lasts, to win in the stock market over the long haul you must be willing to lose over the short-term.
Ben Carlson, CFA is the Director of Institutional Asset Management at Ritholtz Wealth Management. He may own securities or assets discussed in this piece.
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fortune--2020-02-27--How should investors value Virgin Galactic? Space plus speculation makes for a tough equation to sol

How should investors value Virgin Galactic? Space plus speculation makes for a tough equation to solve

Virgin Galactic, the first publicly-traded space tourism company, released its earnings report for 2019 on Tuesday: $3.8 million in revenue and a loss of $210.9 million. And then the asteroids hit the fan.
Investors weren’t pleased, with shares dropping 15.5% to $28.75 by Wednesday’s close.
By Thursday, analysts at Credit Suisse and Morgan Stanley—two of the only three firms covering Virgin Galactic—downgraded it. The stock went into another tailspin, down about another 15% by midday. Although that still left the price at nearly double its value at the close of 2019.
Indeed, Richard Branson’s space company has come to be a favorite topic among traders and investors, with some even referring to Virgin Galactic as the ‘new Tesla’ given the chatter, awe and scorn it inspires.
Also like Tesla, short sellers have shown interest in Virgin Galactic since it went public in October 2019. Short interest, or the number of shares of the stock sold short but not covered, had grown from almost 12 million shares at the beginning of the year, to more than 19 million by Feb. 14. The percentage of float shorted was 24.1%, according to Morningstar. Short sellers may have magnified the gains—as they bid up the price as they bought shares to cover their positions.
But the week’s whiplashing again raised a fundamental question for all investors, no matter long or short: how do you value a space stock, when the company hasn’t started sending customers to space? Last year’s revenue of $3.8 million came from carrying payloads for others and engineering consulting.
Virgin Galactic now has a roughly $4.7 billion market cap (down from $5.6 billion the day before, for anyone keeping track). Valuations that seem unconnected to revenues or earnings may not be unusual these days, but they raise the question of what a company’s true worth is. The answer: It depends on who’s figures are at hand.
“An investor might look at a business value differently than if you were doing it for, say, a divorce or calculating fair value for accounting purposes,” said said Katie Swanson, a CPA with Wilson Toellner CPA.
Investors look at public companies in different ways, but always with an eye to what the future will bring. A mature corporation could be judged on earnings, for example, while investors might look at revenue growth as well as how many users or customers are being added. In either case, comparisons to other companies might also play a part.
Virgin Galactic’s revenues are minimal, there are no clear competitors with public financial data. Valuation then rests on estimating the future. Formally known as net present value, someone calculates how much an investment today could be worth if it grew to given revenue and operating profits at a point in the future. That means some math and a lot of estimation.
As Virgin Galactic CEO George Whitesides told Fortune last July, “It’s a new product. You can’t just divide by years and say that’s the market. It’s like saying, ‘What’s the market for cell phones?’ and taking the first three years of sales [as the baseline].”
“Everything is a financial model or number you’re plugging in” explained Noland Langford, founder of Left Brain Investment Research. “It’s all speculative. There’s not anything concrete there.”
For example, with an established ticket price of $250,000 and an estimated number of customer flights per year—from “several hundred” in the near term to between 1,000 and 2,000 further out, according to Whitesides— annual revenue might run between $75 million to $500 million.
“There are a lot of people that can afford Gucci loafers, but they’re not walking around in them,” said Langford. “I think there’s going to be an unbelievable amount of inertia. It’s so ‘The Jetsons’ that people may think, ‘I wonder how safe it is?'”
Tyler Hardt, founder and managing member of Pelican Bay Capital Management, put together for Fortune a different example of a financial model based on ticket price, number of passengers seats per vehicle, and estimated flights per day.
He assumed five ships, with six passengers a ship, the same $250,000 per ticket, and between 0.5 and 2.5 daily trips. That could make for annual revenue of nearly $1.4 billion at the top end, if each ship were ready to operate every other day.
Because judgment and assumptions are part of the valuation process, there is no single objective number that everyone might agree on.
After calculating a range of potential revenue, Hardt projected costs using a 2011 figure of $400 million per ship and then salaries for pilots and support staff, 30% of revenue going to fuel, 5% in miscellaneous, ongoing costs of the launch and landing area, vehicles depreciation, and taxes. “If you put this all together then Virgin Galactic is worth $400 Million to $2.9 billion,” he estimated.
And yet, markets are not purely rational. Whims play a big role in the value of shares.
“There is the minute-to-minute valuation in the stock market, driven by the actual company performance, formula traders, large mutual funds, a fear of what’s happening with disease coming out of China—all of those factors impact the investors’ sentiments to one degree or another,” said David Larsen, managing director at valuation and governance consultancy Duff & Phelps.
Don’t forget computers either. Automated trading has the ability to turn things upside down. “There are a lot of computers chasing momentum,” meaning trading software looking to take advantage of shifts in how a stock performs, Hardt said. “Say you get a bunch of retail investors buying it? The computers can take over [and drive up the price].”
All investors need do then is wait for the countdown and watch share prices to launch into outer space. With an unknown date for a return to the ground.
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fortune--2020-02-27--States ramp up virus preparations, try to reassure public

With worries growing about the new coronavirus in the U.S., state officials are ramping up efforts to prepare for a possible outbreak while simultaneously trying to assure the public that they are well-positioned to handle it.
Governors and legislators in several states have proposed pumping millions of dollars into programs to combat the virus that causes the Covid-19 illness. State health officials are checking on stockpiles of supplies such as face masks and respirators and arranging potential isolation sites for sick patients.
Many states also are pursuing federal approval to conduct tests for the virus at their own labs, which could confirm or rule out potential cases more rapidly than waiting on results from federal labs.
Governors in several states — including the three most populated, California, Texas, and Florida — planned to hold news conferences Thursday to address concerns about the coronavirus. State officials are walking a fine line between not stirring unnecessary anxieties while still keeping the public informed.
Republican Florida Gov. Ron DeSantis, for example, pledged to notify the public if anyone tested positive for the new virus in his state. But the state’s surgeon general declined to confirm if any suspected cases had been investigated. He and the governor cited state laws for withholding any statistical information.
That didn’t sit well with some other elected officials. Democratic U.S. Rep. Stephanie Murphy, who represents the Orlando area, called for more transparency.
“As a top tourist destination and home to many vulnerable seniors, Florida is uniquely at risk from the threat of this illness,” she said after the governor’s news conference.
Top health officials from many states met this week in Washington with officials from President Donald Trump’s administration. While the Centers for Disease Control and Prevention has warned public institutions, businesses and individuals to get ready for the disease, Trump has said there is no need to panic and that the U.S. is “very, very ready” to handle any outbreak.
The virus causes fever and coughing and, in serious cases, shortness of breath or pneumonia. Some symptoms are similar to influenza, which the CDC says has sickened tens of millions of U.S. residents and led to thousands of deaths since last fall.
Though the number of Covid-19 cases remains low in the U.S., the spread of the virus from China through Asia and elsewhere has alarmed some state and local officials.
“I think we’ve entered a new phase in terms of the preparations. It’s not a matter of ‘if,’ it’s ‘when,'” Minnesota Gov. Tim Walz told reporters Wednesday. “We are starting to step up our coordination amongst agencies.”
A new coronavirus case announced Wednesday in California could be the first in the U.S. that has no known connection to foreign travel or another known case, a possible sign the virus is spreading in a U.S. community, health officials said. Even before then, some cities and counties in California have preemptively declared local health emergencies.
Federal health officials have already burned through $105 million in emergency funding while preparing for the coronarivus. Trump has requested an additional $2.5 billion to combat the virus, while congressional Democrats have proposed nearly four times that amount. But some state officials are not waiting for Congress to act.
New York Gov. Andrew Cuomo has said he will ask lawmakers to approve $40 million to respond to the threat, including hiring additional state health workers and buying supplies such as protective masks and gloves. In New York City alone, more than 1.5 million protective masks already have been given to health care workers and first responders, and the city is seeking more.
Several other states also are looking to set aside additional money because of the coronavirus.
Hawaii Gov. David Ige has asked lawmakers to allocate $7.2 million for the next four months. In Minnesota, Republican state Sen. Jerry Relph plans to seek to add $5 million to the state’s emergency account for public health. Different budget plans in the Washington state House and Senate each include $5 million of state funding that could go to establish a dedicated call center, monitor known coronavirus cases and provide support for local health officials.
Delaware Public Health Director Karyl Rattay said it’s “incredibly important” that states receive additional federal funding to respond to the coronavirus.
“Already, we are seeing our capacity maxed out,” Rattay said. “Staff are spending many, many hours on this, and there’s still core public health work that needs to be completed. We can’t just stop everything else that we do on a regular basis.”
New Hampshire Gov. Chris Sununu sent a letter Wednesday to the state’s congressional delegation urging that additional coronavirus funding be approved quickly. “Now is not a time for partisan games and grandstanding,” he wrote.
Health officials in many states told The Associated Press that their preparations rely on current staff and budgets and existing public health frameworks. One key exception is that most states have so far been unable to run their own laboratory tests on potential coronavirus cases, because they have not received federal clearance to do so. States instead have had to send samples to the CDC, which has delayed the response time.
But that could change soon. Missouri received word Thursday that it has been approved to start running tests at its own medical laboratory, and similar notices should be arriving at other states, said Bill Whitmar, director of the Missouri health lab and president-elect of the Association of Public Health Laboratories.
“If every state would be able to perform those tests, they’d be able to perform them much more rapidly,” Whitmar said.
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fortune--2020-02-27--Yankees and Cubs fans are facing a broadcast TV blackout

A new cable channel that carries the Chicago Cubs made its debut on Saturday, but Ken Matuszak, a lifelong fan of the team, wasn’t able to tune in.
His cable company, Comcast Corp., doesn’t carry the new Marquee Sports Network, which is jointly owned by Sinclair Broadcast Group Inc. and the Cubs. That means Comcast’s 1.56 million subscribers in the area, the most of any pay-TV provider, are shut out as preseason baseball gets underway.
Another Sinclair dispute surfaced on Thursday, with YouTube saying it would drop the company’s sports networks after being unable to reach a deal. That includes the YES Channel, which airs New York Yankees games.
We purchase rights from Sinclair to distribute content to you. Despite our best efforts, we’ve been unable to reach an agreement with Sinclair. As a result, we will no longer offer FOX Regional Sports Networks, including YES Network, beginning February 29th. — YouTube TV (@YouTubeTV) February 27, 2020
“They’re doing a disservice to the fans,” said Matuszak, 58, who lives in Third Lake, Illinois, and says he’ll switch pay-TV services if he can’t get the games by opening day on March 26. “They need to work it out or there will be a lot of unhappy people.”
From Los Angeles to Denver and now Chicago, the ranks of angry fans are growing. In recent years, giants like Sinclair, Comcast, AT&T Inc. and Charter Communications Inc. have paid huge sums to carry pro baseball, basketball and hockey in local markets. There’s just one problem: The companies are demanding high fees from rival pay-TV providers and their subscribers in those markets, and some are saying no.
Sinclair investors have been especially hard hit. Their shares have lost about half their value since the company agreed to buy 21 regional sports networks last May.
Making matters worse, millions of cable- and satellite-TV customers are dropping service every year, opting to stream movies and shows on Netflix or Hulu instead. The standoff in Chicago is the latest sign that local sports are especially vulnerable as the cable-TV model unravels.
Before last year, Sinclair was best known as a big owner of local TV stations affiliated with ABC, Fox, CBS and NBC. In 2019, the broadcaster paid $9.6 billion for local sports channels owned by Walt Disney Co. That same year, Sinclair created Marquee Sports with the Cubs. The team’s games previously aired on Comcast’s NBC Sports Chicago and on free broadcast television.
But since last summer, satellite-TV provider Dish Network Corp. has refused to carry Sinclair’s 21 regional sports networks, affecting fans in San Diego, Cincinnati, Detroit and elsewhere. And now Comcast has dropped the Cubs, though the parties are still talking.
“Given the value of these properties, and demand from local viewers, we are confident that we will come to an agreement and they will allow their subscribers to watch and enjoy their favorite home teams,” Sinclair, based in Hunt Valley, Maryland, said in a statement.
Fee fights
Such fights are hardly new in pay TV. But regional sports channels, or RSNs, are getting squeezed hard because they’ve paid so much for broadcast rights and were counting on high subscriber fees from all of the pay-TV providers in their markets. There’s also the broader issue of cord cutting: From its peak in 2013, the industry has shrunk by 18% to 85.8 million subscribers.
“If you look at the cable bundle, the RSNs are in the worst position,” said Geetha Ranganathan, an analyst at Bloomberg Intelligence.
Chris Ripley, Sinclair’s chief executive officer, has said that local sports channels are among the few types of programming that people still watch live, which boosts advertising sales. And legalized sports betting will open up new revenue opportunities, he argues.
Investors may not be as certain. They’ve sent Sinclair shares tumbling from their all-time closing high of $61.81 in May 2019, days after the Disney deal was announced, signaling growing doubt that the company’s big bet on sports will pay off.
The business of local sports channels made more sense back when the pay-TV industry was still growing, according to Leo Hindery, the former CEO of YES Network, which is 20% owned by Sinclair and carries the New York Yankees.
Channels for sale
“As the industry evolves to an ‘a la carte’ environment and the legacy bundle begins to evaporate, the economics underpinning these channels will change dramatically,” he said.
That kind of pessimism may also be hurting AT&T’s efforts to sell four regional sports channels it acquired with the $85 billion takeover of Time Warner in 2018. Bids for those networks have come in lower than expected due to a decline in profit, the New York Post reported.
Marquee Sports recently agreed to pay $132 million a year on average for the rights to Cubs games, or more than double the previous deal. The network stands to lose about $100 million a year in subscriber revenue from the blackout on Comcast, based on a $5-a-month price. Even a settlement at less-than-ideal terms could force the network to “dramatically trim its revenue outlook,” Ranganathan said.
Dodgers saga
Sinclair isn’t the only local sports broadcaster under pressure. MSG Networks Inc., led by Jim Dolan, lost subscribers at an annual rate of about 8% last quarter, which is faster than the overall industry. The company, which carries the New York Knicks and New York Rangers, has seen its stock price fall 46% in the past year.
According to spokeswoman Kimberly Kerns, the company has renewed carriage deals with four of its top five pay-TV distributors, “which speaks to the power of live sports and the deep relationships we’ve formed with our partners over our 50 years in the market.”
As Matuszak, the Cubs fan, weighs his options, sports lovers in other markets with longer-running disputes are growing accustomed to not seeing their favorite teams. Ultimately that will mean less money for the networks and franchise owners.
In Denver, Comcast and Dish customers still can’t get the NBA’s Nuggets because of a fight with Altitude Sports & Entertainment, which is owned by billionaire Stan Kroenke.
And for several seasons, many Los Angeles Dodgers fans have been unable to watch games because Charter, the distributor of SportsNet LA, hasn’t come to terms with AT&T Inc.’s DirecTV or other pay-TV providers in that market.
“Dodgers fans have been in the dark for six years,” Ranganathan said.
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fortune--2020-02-27--China pops Tesla’s bubble

China pops Tesla’s bubble

Tesla’s stock skidded as much as 15% on Thursday amid signs of weak sales in China due to a softening economy and the still-spreading coronavirus.
The electric carmaker’s shares fell to as low as $669.02 during morning trading, before slightly recovering. Its shares closed at $679, down nearly 13%.
Tesla had promised aggressive growth in China this year, but all signals point otherwise. China’s state-run Automotive Information Net has reported that registrations of new Tesla cars were down 46% between December and January, to 3,563 vehicles.
Meanwhile, Chinese EV sales dropped a steep 34.6% in the fourth quarter of 2019, investment bank Cowen said in an early February report.
Those declines may not be strongly linked to coronavirus: Chinese authorities didn’t report the first cases to the World Health Organization until December 31. China has been in a mild overall slowdown, with economic growth declining in 2019 to 6.1%, from 6.5% in 2018.
But coronavirus does appear to have sharply accelerated the broader trend. Overall car sales in China declined a staggering 92% in the first two weeks of February, according to Bloomberg. Tesla blamed coronavirus for a two-week closure of its new Shanghai factory.
Tesla’s disappointing China numbers come at a particularly sensitive time for its stock, which soared nearly 260% between late October and its peak on February 19. Tesla is now valued at more than $127 billion, far more than competitors like Ford and GM, which sell far more vehicles and, unlike Tesla, are consistently profitable.
That means investors expect Tesla to grow quickly to justify its high-flying stock price. And China, which makes up more than half of the global EV market, has been central to that imperative.
“The [Tesla Shanghai Gigafactory] was expected to be the growth engine prior to the coronavirus outbreak,” Cowen analyst Jeffrey Osborne told Fortune. “Now with factory shutdowns and consumers cautious on spending as recent car registration data suggests, there is heightened investor concern around broader auto demand trends in China.”
Related coronavirus fears have helped send the broader stock market into a correction, with the Dow Jones Industrial Average down 7.7% since February 19. Tesla stock is now off 23% for the same period.
For Tesla’s critics, though, today’s slump is a welcome dose of sanity for a stock driven by hype.
“Tesla’s stock has been completely decoupled from any iota of reality since the $300s in December,” said Mark Spiegel, a longtime Tesla critic and short-seller. “It’s difficult to assign a specific rational cause to the deflation of a bubble, as it wasn’t rationality that inflated it in the first place – it was mania.”
Still, Tesla’s stock remains up more than 180% since its rally began in late October.
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