fortune--2020-06-01--How to be an ally in the struggle against racism and police brutality

This is the web version of the Broadsheet, Fortune’s daily newsletter for and about the world’s most powerful women. To get it delivered daily to your in-box, sign up here.
Good morning, Broadsheet readers! America’s streets are filled with protests against police brutality, Rep. Val Demings addresses her fellow law enforcement officers, and a member of our MPW Next Gen community has something important to say. Wishing you a receptive Monday.
This morning’s guest column comes to us from Jotaka Eaddy. Eaddy, formerly VP Policy, Strategic Engagement, and Impact at LendUp, is the founder and CEO of Full Circle Strategies, and a member of our Fortune Most Powerful Women Next Gen community. Her words began as a post on her Facebook account last week in response to the death of George Floyd. Floyd died in police custody in Minneapolis last Monday after officer Derek Chauvin drove his knee into Floyd’s neck for more than eight minutes as Floyd struggled for breath. On Friday, Chauvin was arrested and charged with third-degree murder; his lawyer has not responded to media requests for comment on the charges. Protests against racism and police brutality have erupted across the country and continued through the weekend.
A message for my white and non-black friends:
Maybe my Facebook algorithm is a factor, but I haven’t seen much outrage from my white and other non-black friends in this moment.
Many of you are allies—strong allies, good people with great hearts. But sadly some of you have family members and friends who have the mindset of Amy Cooper, the McMichaels, or Derek Chauvin and his fellow officers who ignored Floyd’s plea – “I can’t breathe.”
That friend or family member may not have done something as heinous as what we all saw on those videos. But if they are making racist comments in private or have a biased mindset—they are just as dangerous. Bias and misinformation coupled with perceived fear can be explosive. This is the dangerous slippery slope that can lead to situations where innocent black people end up murdered or in prison.
What’s even sadder is that when you go back and review many of these incidents, you often see that just a small bit of human compassion or understanding could have easily deescalated the situation and perhaps a precious life spared.
We have to end this violence, racism, and nonsense. You have a role to play. Here is how you can really help: talk to your friends and family members. Change the hearts and minds at your dinner tables and amongst your own circles of friends.
Start by doing an assessment of your family and friends. Be honest with yourself: you know who the closet racists or bigots are. Where there is a need, have that courageous conversation and do the long and tedious work to challenge and educate them. Arm yourself with facts. Read books, articles, gather information, and do the hard work to shift racist culture among yourselves.
It’s also helpful for you acknowledge the pain that many are feeling and to speak out and take action. Be bold and use your privilege to shed light on bias and racism.
Some of you are doing the important work to dismantle racism. Please keep doing it. Others are trying to figure out what you can do and where to start. Here’s my take:
Acknowledge the pain
Speak up: use your voice and platform to fight racism
Take action: support public actions, donate and/or join organizations fighting against racism, vote for change
Educate yourself. Here’s a sample reading list; please find more.
Do the hard work of challenging your racist family members and friends. Imagine if friends and family had challenged and appealed to Officer Chauvin years ago—just maybe things would have ended differently for George Floyd.
I hope something I’ve written here will motivate you to do more and understand that you have a role to play.
This is simply my humble opinion and suggestion. Take or leave it. I pray that you take it.
Jotaka Eaddy
Jotaka@TheFullCircleStrategy.com
@JotakaEaddy (Twitter and IG)
Today’s Broadsheet was curated by Emma Hinchliffe.
ALSO IN THE HEADLINES
- Black lives matter. For more on this weekend's events, read this piece featuring interviews with Stacey Abrams, Rep. Ayanna Pressley and more. Abrams says that the protests are what happens when "[people are desperate for] their pain to be validated." New York Times
- Talking blue. Rep. Val Demings, the congresswoman who served as one of the House of Representatives' impeachment managers and the former chief of the Orlando Police Department, wrote an op-ed addressed to her fellow law enforcement officers. She begins with a message to her "brothers and sisters in blue: What in the hell are you doing?" Washington Post
- Tough on crime? The death of George Floyd by law enforcement in Minneapolis and this weekend's nationwide protests have put pressure on Minnesota Sen. Amy Klobuchar at a moment when she was considered a frontrunner for Joe Biden's VP pick. During her time as a prosecutor in the state, Klobuchar often declined to bring charges against police officers involved in shootings, instead sending the cases to grand juries. "I think that was wrong now," Klobuchar said on Friday. New York Times
- Glass half empty. After the U.K. government waived its requirement that companies report their gender pay gaps because of the coronavirus pandemic, half of all companies usually obligated to share the information did not disclose wage disparities this year. (They had since last April to calculate the numbers; some had gathered the information before the pandemic hit but opted not to submit.) Advocates worry that companies opting out when not held to account by lawmakers is a troubling sign. Bloomberg
MOVERS AND SHAKERS: Robinhood hired Airbnb director of engineering Surabhi Gupta as VP of engineering. The Association for Computing Machinery named Johannes Kepler University professor Gabriele Kotsis its president.
IN CASE YOU MISSED IT
- Back to books. Emily Powell, CEO of Powell's Books, shut down her enormously popular independent bookstore in March. Now she's figuring out how the Portland business can operate safely. She talks about laying off staff, her relationship with the store's unionized workforce, and the future of bookstore browsing here: New York Times
- Kylie's kash. Forbes put Kylie Jenner on its cover as the youngest self-made billionaire in 2018. Last year, Coty Cosmetics bought Jenner's business, Kylie Cosmetics, for $600 million, valuing the company at $1.2 billion. But Forbes now reports, based on filings from public company Coty, that Jenner's business is much smaller than it appeared with revenues closer to $25 million than $360 million—and that Jenner isn't quite a billionaire. Forbes
- The MTA way. Sarah Feinberg is tasked with saving New York's Metropolitan Transit Authority; from trying to keep its workers safe to buoying the system amid plunging ridership revenue. She started in the job of New York City transit interim president in early March—just in time to face the unprecedented crisis. In more New York news, Chiara de Blasio, daughter of Mayor Bill de Blasio, was arrested at the city's protests yesterday; demonstrators have criticized her father's handling of the protests.
ON MY RADAR
A chess prodigy’s return to health brings cheer to the game New York Times
The VP choice everyone is missing The Atlantic
How to Reopen: One California summer camp's programs are going virtual Fortune
PARTING WORDS
"I wanted to shine a light not just on one person, but on the systemic problem of deep racism in this country that encourages her kind of behavior."
-Melody Cooper, sister of Chris Cooper, on why she posted the video of his encounter with Amy Cooper in Central Park


fortune--2020-06-02--Protests across the U.S. reveal empathy and its enemy

Novartis CEO explains why the wait for a coronavirus vaccine is so long

This is the web version of Business x Design, a newsletter on the power of design. Sign up here to get it in your inbox.
In the design community, it is often asserted that the essence of good design is empathy—an ability to understand and share the feelings of another human. Protests engulfing U.S. cities this week reflect a dearth of that capacity in American society, especially when it comes to white Americans’ ability to comprehend and address the marginalization of black Americans.
Michael Ignatieff discussed the clash of empathy and racism in the New York Times last month in a review of American Poison, a new book by Times economics reporter Eduardo Porter. Ignatieff describes Porter’s book, subtitled How Racial Hostility Destroyed Our Promise, as a “learned, well-written but relentless survey of social science studies on racial polarization.”
He also calls it a “tough read” because it shatters two fundamental illusions of white progressive liberals (of which Ignatieff counts himself one): first, that the arc of American history “bends towards justice” on matters of race, and second, that it is possible for liberals to “empathize” with both the racial pain of Americans of color and racial resentments of America’s white working class.
Ignatieff summarizes Porter’s argument thus: “Empathy…has always waged an unequal struggle against the animus that courses through American history, poisoning both those who hate and are hated. Race has contaminated American solidarity, making it impossible for poor whites, threatened by job loss, globalization and the death of carbon-intensive industries, to make cause with African-Americans, Hispanic-Americans, and immigrants.”
Ignatieff ultimately judges American Poison a bracing but unduly pessimistic “jeremiad.” That was before a white policeman put his knee on the neck of George Floyd in Minneapolis, and before it became apparent that mortality rates for black Americans in the COVID-19 outbreak would exceed those for white Americans by three-to-one. Today, Porter’s pessimism is harder to dismiss.
Can design or design thinking help reverse this “unequal struggle” between empathy and animus? I won’t pretend to have the answer. But if design and empathy have anything in common, that’s a cause all designers, especially Americans, should join.
Clay Chandler
-clay.chandler@fortune.com
NEWS BY DESIGN
Christo
The artist renowned for wrapping buildings in elaborate drapes died Sunday, at the age of 84. The Bulgarian-born conceptualist’s work included obscuring Berlin’s Reichstag and Paris’ Pont Neuf behind giant drapes of fabric and curtaining a mountain pass in Colorado. Christo died of natural causes.
Off brand
Louis Vuitton men’s wear artistic director Virgil Abloh is facing criticism for his response to the protests sweeping the U.S. Abloh first chastised looters for ransacking shops that he says were part of the community and then bragged of a $50 donation to a charity fund for paying the legal fees of protesters. Abloh’s words and deeds prompted fiery debate over what good he has done for the community.
Rocket man
Space X completed its first manned launch last week, blasting NASA astronauts Bob Behnken and Doug Hurley up to the ISS. The mission marked a tremendous milestone for Space X’s engineering team and unveiled figure-fitting space suits, too. Musk says the new suits took nearly four years of design work with NASA to complete.
Rearranging furniture
MASS Design Group has redesigned the restaurant experience, as eateries prepare to welcome back customers following lockdown. Group design director Caitlin Taylor says the return to normal in the industry is “not desirable or possible” and requires a redesign of the "spatial relationship" in our restaurants.
On trend
Here’s a short, visual look from the WSJ at how advertisers have adapted to the pandemic—attempting to find branding that suits the sentiment of a nation under lockdown.
In your shoes
PepsiCo’s chief design officer Mauro Porcini is hosting a new biweekly podcast called In Your Shoes, launched by the beverage giant last week. In the first episode, Porcini talks to MoMa’s senior curator of architecture and design.
EVENTS BY DESIGN
June: The month-long London Festival of Architecture is running a stripped back event online this year, with the core public program moved to (hopefully) later this year. The San Francisco Design Week, which starts June 16, has gone digital too. Also, London Fashion Week: Men’s would have walked June 12-14. Instead, it will sit online.
July: Christie's is planning a semi-virtual auction for July 10. The "first of its kind" event will livestream auctions from four cities—Hong Kong, New York, Paris and London; D&AD’s New Blood Festival—a celebration of upcoming talent in design—will be running online this year, July 6-10. The digital festival marks New Blood’s 40th anniversary.
EXECUTIVE SUMMARY
In April, IDEO launched the COVID-19 Business Pivot Challenge—a virtual platform for business users to submit their experience on switching tack in the coronavirus pandemic. After collecting close to 700 submissions from over 70 countries, IDEO has condensed its learning into a report. You can read the full report here, but below are five key takeaways for how businesses can adapt:
Revisit purpose. Purpose is the reason your business exists and should be ingrained at your center and should not shift or change, even in a crisis.
Repurpose capabilities. Take stock of your organization’s existing skill sets and resources.
Redefine methods. Now is the perfect time to dig deep, ask questions, and pressure test your ways of working to discover what is best for your organization going forward. Businesses who can remain flexible, agile, and lean into ambiguity will be better to navigate the new reality.
Reinvent engagement. Businesses who pivot to offer goods and services in a safe manner will earn not only business, but trust.
Reimagine collaboration. As businesses reassess their value proposition and reimagine their offering during the pandemic, many have turned to unlikely partners for support. Collaboration increases resiliency, opens new doors, and brings to light unforeseen opportunities, both now and in the future.


fortune--2020-06-02--As Amazon shares top $2,442, Charles Schwab is the latest to offer ‘fractional’ shares

Protests across the U.S. reveal empathy and its enemy

Fintechs and brokerages are vying for a smaller piece of your investing wallet.
As the value of hot stocks soars beyond what some investors can pay—Amazon is $2,442 per share, Berkshire Hathaway is $278,640 per share—brokerages are attracting new customers by giving investors the ability to buy a fraction of a share.
Fidelity Investments began offering partial stock trades to clients in late January after rival Robinhood announced its fractional trading plans in December. And today Charles Schwab will launch Stock Slices, giving investors the ability to invest in a portion of an S&P 500 stock starting at $5. According to the company, Slices was built in response to burgeoning demand for the so-called FAANG stocks—Facebook, Amazon, Apple, Netflix, Google—the lowest of which, Facebook, currently trades at $225 per share.
“We started hearing about investors who are interested in getting into the market and maybe wanted to participate in the FAANG stocks and tech companies, but saw these prices and felt sticker shock,” said Neesha Hathi, chief digital officer at Charles Schwab.
For brokerages, fractional shares could be a significant way to attract new, younger investors that see the high returns tech companies can bring but are wary of dipping a $200 toe into the water. Anthony Noto, CEO of fintech SoFi, told CNBC recently that 40% of trades via its brokerage platform came from fractional shares.
“We believe that the millennial earlier investor would be where the demand would be,” said Hathi.
But in an age of zero commissions, the key for brokerages isn’t simply getting investors to try fractional trading, but persuading them to stick around and sample the rest of a company’s offerings.
The trend toward fractional trading also comes at a time when stock splits—when companies with high share prices fractionalize shares to more affordable levels—have fallen out of favor (Apple is one outlier, having split its stock several times). A higher stock price after all could mean less volatility and a tighter hold on who the owns the shares, as Berkshire Hathaway CEO Warren Buffett famously opined in 1984 letter to shareholders.
Unlike, say, Fidelity, Charles Schwab has constrained its fractional trading to the S&P 500—where it sees the most demand. That also means investors with a taste for risk who hope to invest in yet unprofitable companies for a fraction of the cost won’t be able to invest in Tesla or Spotify, as the index excludes companies that have not reported positive earnings in the most recent four quarters. But Charles Schwab isn’t ruling out a wider net either.
“We would very much be interested in broadening the universe” if clients are interested, said Hathi.


fortune--2020-06-02--Widespread CEO commentary on the George Floyd killing is a new phenomenon

This is the web version of CEO Daily. To get it delivered to your inbox, sign up here.
Good morning.
I’m going to run long today, in order to highlight the outpouring of CEO commentary on the George Floyd killing. As I’ve said here before, this sort of CEO public reaction to controversial social issues just didn’t happen a decade or more ago. Someone check my memory, but I don’t recall a flood of CEO sentiment after the Rodney King beating.
This time, the heartfelt statements were hard to keep up with. A sampling of the many:
“The tragic and unnecessary death of George Floyd in Minneapolis earlier this week and the ensuing unrest are glaring reminders of the progress we need to make to have a truly equal and just society.”
–Mike Corbat, Citigroup
“We cannot lose sight of the fact that racism is tearing our communities apart. One lesson we should all learn is that silent carriers help spread racism.”
–Arvind Krishna, IBM
“Regardless of race, gender, nationality, sexual orientation, abilities, wealth and educational background or any other point of human difference, each person deserves to be recognized for who we are and respected for both our common humanity and the distinct qualities that make us unique…George Floyd won’t get that opportunity. But we can honor his memory by leading our own lives in a way that pierces through prejudice to embrace and know people as individuals.”
–Arne Sorenson, Marriott
Today, there are four black CEOs leading Fortune 500 companies. That’s less than 1% of the total. The comments of this group were particularly poignant:
“My wife & I feel tremendous sadness as our hearts & prayers are with the families of George Floyd, Ahmaud Arbery, Breonna Taylor & all communities ripped apart by violence. As the father of a young black male, I can only imagine their pain & emptiness.”
–Marvin Ellison, Lowe’s
“As brands whose core values are powerfully informed by the creative tension that cannot exist without diversity and inclusion, we cannot succeed if the ideal that is America does not succeed, including in different and diverse ways globally. We cannot attract and engage talented colleagues. We cannot design beautiful and functional products. We cannot authentically engage with consumers around the world.”
–Jide Zeitlin, CEO Tapestry (formerly Coach)
And then this bracing call to action:
“Business needs to go to the seat of government not only for its own economic self-interest in the short term but also to think about how to create a society that is going to actually be good for business. We can’t have this toxic environment for much longer.”
–Ken Frazier, Merck
Fortune, of course, only compiles the Fortune 500; we are far from being on it. But I also shared my sentiments with staff yesterday. An excerpt:
“As someone who moved to the segregated South just as the controversy over school busing was taking hold, I have watched this movie run for far too long. My proudest memories of my mother, who made a habit of walking out of rooms whenever any racial slight was suggested, are a constant reminder to me that looking the other way is just as incriminating as participating in the act.”
Separately, a new episode of Leadership Next is out this morning, featuring the charismatic CEO of Novartis, Vas Narasimhan. You can listen to it here. Vas is part of an amazing outpouring of energy in the pharmaceutical sector aimed at defeating the virus, and he gave Fortune Editor-in-Chief Clifton Leaf his unique perspective on how that war is going. (Spoiler: he doesn’t see a vaccine being rolled out broadly for 18 months to 2 years.)
And finally, a plug for a remarkable event that Fortune is hosting virtually next month: Fortune Brainstorm Health. At a time when the world is struggling with the health and economic implications of the coronavirus, we are bringing together CEOs of Johnson & Johnson, Amgen, Baxter, Bristol-Myers Squibb, Centene and the Mayo Clinic, as well as thought leaders like Dan Ariely, Jennifer Doudna and Niall Ferguson, to provide an early look at the post-Covid future. There are still a few spots available for this highly interactive event. If you are interested, go here to apply. CEO Daily readers get a 50% discount if they use this code: BSH20HALF
Phew. Apologies for the length. More news below.
Alan Murray
@alansmurray
alan.murray@fortune.com
TOP NEWS
Military threat
President Trump has threatened to send the military to quell protests across the country, unless cities and states step up their actions against the protests. Trump characterized the protests as "acts of domestic terror" and told governors to "dominate" their streets with National Guard units. The 1807 Insurrection Act, which Trump would need to invoke in order to deploy the military on American streets, has not been invoked since the Rodney King riots in 1992. Financial Times
Facebook walkout
Many Facebook employees staged a virtual walkout (most are working remotely) yesterday, in protest at the company's decision to leave up President Trump's inflammatory posts about the Minneapolis protests. Mark Zuckerberg says the posts are fine unless they cause "imminent risk of specific harms or dangers." Trump's posts said that "when the looting starts, the shooting starts." Fortune
Long recovery
The Congressional Budget Office has predicted that the U.S. economy will take most of a decade to recover from the coronavirus pandemic. The agency said it was marking down its 2020-30 forecast for U.S. economic output by around 3% of GDP, relative to projections it released in January. BofA Merrill Lynch chief U.S. economist Michelle Meyer: "After you get the initial bounce of economic activity simply from removing the lockdowns, I think what we’ll see is an economy that is running at a level of activity notably below where we were prior to Covid." Wall Street Journal
Lufthansa bailout
Lufthansa's share price jumped more than 8% this morning after a bailout drew closer. The German flag carrier's supervisory board yesterday approved a compromise that would see Lufthansa hand over lucrative operating slots at its key Frankfurt and Munich hubs, in order to win EU approval for the bailout. If the deal goes through, the German state would likely become Lufthansa's biggest shareholder. Bloomberg
AROUND THE WATER COOLER
Chinese chips
China's largest contract chipmaker has filed for a Shanghai listing that it hopes will bring in around $2.8 billion. Semiconductor Manufacturing International Corporation (SMIC) may have to take on more production soon, due to escalating U.S.-China trade tensions—U.S. sanctions may stop other chipmakers, such as Taiwan's TSMC, from supplying chips to blacklisted Huawei if they make those chips using U.S. machinery. CNBC
QR codes
Following further COVID-19 outbreaks, South Korea is testing a new system that would see people having to scan a QR code when they visit high-risk restaurants, churches and entertainment facilities. Scanning the code will put the phone user's information in a centrally-held database for several weeks, so they can be more easily traced if an outbreak is linked to the facility they visited. Reuters
House prices
House prices in the U.K. have fallen at the sharpest rate since the financial crisis. The average home price fell by 1.7% from April to May. Potential house-buyers say they are likely to wait half a year or so, in the hope that the worst of the pandemic will have blown over by then. Guardian
Multiple crises
Carolyn Fairbairn, the director general of the Confederation of British Industry, writes for Politico that there is still a risk of no U.K.-EU trade deal appearing by the end of this year, when the Brexit transition period ends. This would be a "shocking outcome" for businesses, especially in the context of the pandemic: "For many firms fighting to keep their heads above water through the crisis, the idea of preparing for a chaotic change in EU trading relations in seven months is beyond them. They are not remotely prepared. Faced with the desperate challenges of the pandemic, their resilience and ability to cope is almost zero." Politico
This edition of CEO Daily was edited by David Meyer.


fortune--2020-06-02--Novartis CEO explains why the wait for a coronavirus vaccine is so long

Vas Narasimhan, CEO of Swiss drug giant Novartis, talks with Fortune editor-in-chief Clifton Leaf about health care’s present and future in the latest episode of “Leadership Next,” a podcast about business leadership’s evolution.
Narasimhan is not only a Harvard-educated physician, but he has a significant background in both public health and public policy too. That makes him particularly well-suited to lead a major pharmaceutical company during the coronavirus pandemic.
Leaf and Narasimhan first discuss the timeline for a COVID-19 vaccine hitting markets in a safe way at scale.
Part of the reason a vaccine can take much longer to develop than treatments is the difference in safety expectations. Medications are given to sick patients, with some assumption of side effect and risk, while vaccines are given to healthy people in order to protect them from an external threat. So the “safety profile” of a vaccine needs to be extraordinary, according to Narasimhan, because it will be distributed to billions of otherwise healthy people.
“The risk-benefit equation is flipped when you try to develop a vaccine,” he said.
Another challenge is how little the medical community knows about the novel coronavirus so far. The need for more research on the type and amount of antibodies needed to provide immunity against the virus is delaying the production of a vaccine.
With this information in mind, Narasimhan guesses that a vaccine could be widely available in about 18 months to two years.
While the world waits for a vaccine, many in the pharmaceutical industry are working on developing drugs and treatments to help those that get COVID-19. Around the 10-minute mark, Narasimhan explains the different ways these drugs could be developed.
As the interview continues, Leaf and Narasimhan zoom out to look at the health care industry and public health as a whole, as well as business leadership during a pandemic. Do we have the right infrastructure in America to recover from this pandemic? How can the world make sure that it is ready for the next outbreak before it comes? What can leaders do to ensure access to technological and medical advancements in the developing world?
To hear the pair’s thoughts, listen to the rest of the podcast below.


fortune--2020-06-02--Investors brush aside protests, COVID and Brexit talks to send global markets higher

This is the web version of the Bull Sheet, Fortune’s no-BS daily newsletter on the markets. Sign up to receive it in your inbox here.
Good morning. The markets continue on cruise control. That’s despite another night of protests and looting in the U.S., and big doubts as the U.K. and Europe go back to the negotiating table to hammer out a trade deal.
Let’s see where investors are putting their money.
Markets update
Asia
The Asian indices are all in the green in afternoon trade again on Tuesday, looking to extend yesterday’s gains. Japan’s Nikkei , a high-flyer last month, leads the way.
in afternoon trade again on Tuesday, looking to extend yesterday’s gains. , a high-flyer last month, leads the way. Not more than two months ago they were engaged in a bruising oil price war . Now Saudi Arabia and Russia are playing nice, planning to limit crude production through Sept. 1, sending oil prices higher.
. Now and are playing nice, planning to through Sept. 1, sending oil prices higher. Australia’s central bank says the downturn will be less severe than expected. The country has had a relatively small, manageable batch of COVID-19 cases.
Europe
European bourses climbed out of the gates again this morning, led by Germany’s DAX , which was 3.5% higher two hours into the session.
bourses climbed out of the gates again this morning, led by , which was two hours into the session. Brexit negotiations resume today. No-deal remains a distinct possibility. Citi thinks such a development would force the BOE to join its European peers in pushing interest rates into negative territory .
resume today. remains a distinct possibility. Citi thinks such a development would force the to join its European peers in pushing . Russia is one of the worst-hit COVID-19 countries on the planet. But that’s not stopping Russian President Vladimir Putin from scheduling a referendum for next month to essentially keep himself in power until 2036.
U.S.
U.S futures are off their lows as I type. All three indices closed higher on Monday, all but ignoring the turmoil in the streets of America’s cities.
are off their lows as I type. All three indices closed higher on Monday, all but of America’s cities. If you’re confused by the paradoxical markets calm… there’s a long history of America’s stock markets ignoring America’s social upheaval .
. JP Morgan, for one, thinks this rally has legs as there’s still more than a trillion in cash sitting on the sidelines. “There is still plenty of room for investors to raise their equity allocations,” JPMorgan strategists wrote in a note yesterday.
Elsewhere
Gold is down.
is down. As is the dollar .
. Crude is gaining. West Texas Intermediate is up above $35/barrel.
The American precariat, revealed
America is suffering. We saw it in the images from April of mass graves and coffins. We saw it in the images from May of protests at state capitols. We’ve seen it in the images from America’s burning cities this past week. And, yes, we will see it again on Thursday when millions more jobless claims are announced.
Who are these suffering Americans? They drive our commuter bus. They clean our office. They operate that small business you frequent every now and then, or maybe they just work there.
In good times, they make up a crucial part of the American economy. In bad times, they are the first to lose their jobs. The difference this time around is that they seem to all be losing their jobs at once, forming the great American precariat. Historians say we haven’t seen such economic upheaval since the Great Depression. Others point out the inevitable: social upheaval is sure to follow. It probably already has.
The American precariat is more diverse than you think. Gallup has been doing some great work digging into the numbers to find out who’s out of work, and who’s clinging to a job on reduced hours and reduced pay.
Some jobs (in IT, for example) are more pandemic-proof than others (service workers). We knew that. But even essential staff (transportation and healthcare) cannot avoid the COVID-19 hit. Many have to go to work these days earning reduced pay.
As Gallup researchers point out, the most vulnerable have been hit the hardest in this pandemic. Gallup writes:
A staggering 95% of workers in low-income households—defined as those making less than $36,000 per year—have either been laid off as a result of the coronavirus (37%) or have seen a loss of income (58%). When asked about their current financial situation, 42% in this income group described themselves as spending beyond their income. They are either drawing from savings or taking on debt. Another 37% say they are “just making ends meet,” when asked to describe their current financial situation.
Middle- and upper-income brackets have been hit, too, but not like the lowest-income groups.
It took the better part of a decade for the labor market to recover from the global financial crisis. And that made the larger economic recovery all the more uneven for Americans. This current shock to the labor market has been even more extreme. There’s little reason to think the recovery this time will be any different.
***
I’ll see you back here tomorrow, everyone.
Bernhard Warner
@BernhardWarner
Bernhard.Warner@Fortune.com
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Today's reads
Earnings, schm-earnings. So far in 2020, S&P 500 companies have posted dreadful bottom-line results. And yet if you're long the benchmark index, you're pretty happy this morning. What gives? How long can this earnings-don't-matter paradigm last? Fortune's Anne Sraders digs into the numbers.
Bully, bully. Remember when Goldman called a 2400 bottom for the S&P? It was just a few weeks ago. Well, after the May rally, it's had to abandon that position, repricing the floor. And it even sees a further rally in the cards. Here's how high they think the benchmark index has room to climb.
(Some of these stories require a subscription to access. There is a discount offer for our loyal readers if you use this link to sign up. Thank you for supporting our journalism.)
Market candy
Quiz time
In yesterday's chart, I pointed out that one of the winners for May was German equities. The Dax is up 12% since its mid-May low. It has company.
Which of its European peers is the second-best performer over that period?
a) London's FTSE
b) Spain's IBEX
c) Milan's FTSE MIB
d) Paris' CAC
The answer: The IBEX, up an impressive 11.5% since May 14 as the country comes out of lockdown with a much-reduced coronavirus caseload. The FTSE is the relative laggard (+7.4%)


fortune--2020-06-02--Why Citi’s CFO decided to speak out about George Floyd’s death

As protests over the killing of an unarmed black man by Minneapolis police spread across the U.S., Mark Mason, one of Wall Street’s most senior black executives, debated whether to weigh in.
People around him kept asking what he thought.
On a conference call last week to honor a group of junior executives inside Citigroup, an employee asked Mason, the bank’s chief financial officer, whether it planned to enter the political fray as it had on issues including gun control and protests by white supremacists. Mason’s wife and children encouraged him to speak up as well.
“It became obvious through the week that people needed to hear from the company,” Mason said in an interview Monday evening. “I wanted to speak out in a way that highlighted the atrocities of this incident, that explained what black Americans are feeling and that gave some way for people to help.”
The blog post he ended up publishing on Citigroup’s website late Friday began by repeating some of Floyd’s last words, “I can’t breathe,” 10 times. It has since drawn hundreds of public comments from bank employees.
“The response has been overwhelming,” Mason said.
The death of George Floyd in Minneapolis and other fatal police encounters now fueling protests nationwide have prompted executives from almost every major bank and investment firm to speak out. And behind the scenes, it’s driving conversations in an industry that wants to be viewed as more socially responsible, even as it struggles to deliver on promises to improve diversity within its ranks.
Executives of color are using the moment and their platform to speak out.
“It’s 2020, and enough is enough. We can no longer be silent,” Thasunda Brown Duckett, chief executive officer of consumer banking at JPMorgan Chase, said in a post on LinkedIn. Like Mason, she’s a rare black American in the top tiers of the U.S. finance industry. “Yes it’s painful, and my tears are real.”
‘Pain Still Lingers’
For billionaire Robert Smith, founder of Vista Equity Partners, Floyd’s killing and other recent events—such as the shooting death of Ahmaud Arbery in south Georgia while he was out for a run—forced him to recall learning his uncle was shot dead by a white gas-station attendant after having just received his master’s degree and taking on a new job with the state of Colorado.
“This was almost 50 years ago, and the pain still lingers,” Smith said in a memo to employees. “When I see the face of George Floyd, Ahmaud Arbery, or Christian Cooper, I see myself as a young man; I see the faces of my children; and I am reminded of the many times in my life when I have been judged not by my character, but by my skin color.”
Cynthia Adams, a top lawyer at Jefferies Financial Group, expressed her dismay in a letter to colleagues. Coworkers told her it helped open the door for conversations in the workplace about race and politics. “I continue to feel the pain,” she said in a phone interview Monday. “My main reaction is ongoing grief.”
At many of the biggest U.S. banks, the percentage of black workers and executives has been slipping or stagnant. African-Americans accounted for 13% of JPMorgan’s U.S. employees last year, down from almost 19% before the 2008 financial crisis. At Goldman Sachs, African-Americans accounted for 2.7% of the top ranks last year, little changed from 2013, while black representation among the bank’s total U.S. workforce grew to 6.6% from 4.8%.
The Floyd incident came the same day as another racial flash point that shook Wall Street. Amy Cooper, a white employee at Franklin Templeton, was captured on video calling the police and saying, “There is an African-American man, I am in Central Park, he is recording me, and threatening myself and my dog.” Christian Cooper, a black man, had asked her to put a leash on her cocker spaniel in an area where dogs aren’t allowed to run free.
Within 24 hours, Franklin Templeton fired Amy Cooper.
“Recent events have been absolutely disheartening and gut-wrenching,” Ashok Varadhan, the only nonwhite leader of a major business line at Goldman Sachs, said in an interview. “Whatever we are all doing is not enough,” he said. “We are failing miserably.”
In some cities, protests have included looting, arson, and other property damage. Images on social media show people breaking into and vandalizing JPMorgan, Wells Fargo, and Capital One Financial Corp. branches. Still, members of the financial industry said they don’t want such incidents to distract from the need to hold police accountable.
“They were all black Americans victimized because of their race,” Ken Chenault, chairman of General Catalyst, and other executives from the venture capital firm said in a blog post. “Accountability for their deaths only began after outraged Americans spoke out and took action.”
Other top finance executives began weighing in late last week. Bank of America CEO Brian Moynihan asked employees to pray with him over the recent killings. Wells Fargo’s Charlie Scharf acknowledged that as a white man, he can’t really understand what people of color are feeling right now but pledged to listen. U.S. Bancorp’s Andy Cecere said he’s felt shock and anger in recent days.
Some of the comments from bank executives were met with contempt online, where activists questioned whether the lenders would alter practices to help minorities.
And while some workers and customers flooded social media with thanks for the comments made by top bank executives, they also underscored how much more needs to be done.
“I, too, was deeply affected by that video. It made me fear for my black son, my black brothers, and the black fathers,” Racquel Porteous, a Citigroup employee, commented in response to Mason’s blog. “Often you ask the question, will we ever be free?”


fortune--2020-06-02--Google is sued for secretly amassing a vast trove of user web data

GOP to look at potential alternative sites for August convention

Google surreptitiously amasses billions of bits of information –every day — about internet users even if they opt out of sharing their information, three consumers alleged in a proposed class action lawsuit.
“Google tracks and collects consumer browsing history and other web activity data no matter what safeguards consumers undertake to protect their data privacy,” according to the complaint filed Tuesday in federal court in San Jose, Calif.
Even as it scoops up information, the search-engine giant assures users — falsely — that they’re in control of what they share with the company, according to the suit, which includes claims for invasion of privacy and violations of federal wiretapping law.
The case was filed by Boies Schiller Flexner, a high-profile litigation firm that previously defended Uber Technologies when the ride-hailing firm was accused three years ago by Alphabet’s self-driving unit of stealing trade secrets.
Google didn’t immediately respond to a request for comment.
According to the suit, the company collects information, including IP addresses and browsing histories, whenever users visit web pages or use an app tied to common Google services, such as Google Analytics and Google Ad Manager. This makes “Google ‘one stop shopping’ for any government, private, or criminal actor who wants to undermine individuals’ privacy, security, or freedom,” the consumers allege.
A consumer suit accusing Google of illegally tracking and storing geolocation data with its mobile apps and operating system was thrown out by a California federal judge in December. Arizona’s attorney general filed a similar complaint last month. Google disputed the claim and said it’s looking forward to setting the record straight.


fortune--2020-06-02--China significantly delayed releasing coronavirus info

Throughout January, the World Health Organization publicly praised China for what it called a speedy response to the new coronavirus. It repeatedly thanked the Chinese government for sharing the genetic map of the virus “immediately,” and said its work and commitment to transparency were “very impressive, and beyond words.”
But behind the scenes, it was a much different story, one of significant delays by China and considerable frustration among WHO officials over not getting the information they needed to fight the spread of the deadly virus, The Associated Press has found.
Despite the plaudits, China in fact sat on releasing the genetic map, or genome, of the virus for more than a week after three different government labs had fully decoded the information. Tight controls on information and competition within the Chinese public health system were to blame, according to dozens of interviews and internal documents.
Chinese government labs only released the genome after another lab published it ahead of authorities on a virologist website on Jan. 11. Even then, China stalled for at least two weeks more on providing WHO with detailed data on patients and cases, according to recordings of internal meetings held by the U.N. health agency through January — all at a time when the outbreak arguably might have been dramatically slowed.
WHO officials were lauding China in public because they wanted to coax more information out of the government, the recordings obtained by the AP suggest. Privately, they complained in meetings the week of Jan. 6 that China was not sharing enough data to assess how effectively the virus spread between people or what risk it posed to the rest of the world, costing valuable time.
“We’re going on very minimal information,” said American epidemiologist Maria Van Kerkhove, now WHO’s technical lead for COVID-19, in one internal meeting. “It’s clearly not enough for you to do proper planning.”
“We’re currently at the stage where yes, they’re giving it to us 15 minutes before it appears on CCTV,” said WHO’s top official in China, Dr. Gauden Galea, referring to the state-owned China Central Television, in another meeting.
The story behind the early response to the virus comes at a time when the U.N. health agency is under siege, and has agreed to an independent probe of how the pandemic was handled globally. After repeatedly praising the Chinese response early on, U.S. President Donald Trump has blasted WHO in recent weeks for allegedly colluding with China to hide the extent of the coronavirus crisis. He cut ties with the organization on Friday, jeopardizing the approximately $450 million the U.S. gives every year as WHO’s biggest single donor.
In the meantime, Chinese President Xi Jinping has vowed to pitch in $2 billion over the next two years to fight the coronavirus, saying China has always provided information to WHO and the world “in a most timely fashion.”
The new information does not support the narrative of either the U.S. or China, but instead portrays an agency now stuck in the middle that was urgently trying to solicit more data despite limited authority. Although international law obliges countries to report information to WHO that could have an impact on public health, the U.N. agency has no enforcement powers and cannot independently investigate epidemics within countries. Instead, it must rely on the cooperation of member states.
The recordings suggest that rather than colluding with China, as Trump declared, WHO was itself kept in the dark as China gave it the minimal information required by law. However, the agency did try to portray China in the best light, likely as a means to secure more information. And WHO experts genuinely thought Chinese scientists had done “a very good job” in detecting and decoding the virus, despite the lack of transparency from Chinese officials.
WHO staffers debated how to press China for gene sequences and detailed patient data without angering authorities, worried about losing access and getting Chinese scientists into trouble. Under international law, WHO is required to quickly share information and alerts with member countries about an evolving crisis. Galea noted WHO could not indulge China’s wish to sign off on information before telling other countries because “that is not respectful of our responsibilities.”
In the second week of January, WHO’s chief of emergencies, Dr. Michael Ryan, told colleagues it was time to “shift gears” and apply more pressure on China, fearing a repeat of the outbreak of Severe Acute Respiratory Syndrome that started in China in 2002 and killed nearly 800 people worldwide.
“This is exactly the same scenario, endlessly trying to get updates from China about what was going on,” he said. “WHO barely got out of that one with its neck intact given the issues that arose around transparency in southern China.”
Ryan said the best way to “protect China” from possible action by other countries was for WHO to do its own independent analysis with data from the Chinese government on whether the virus could easily spread between people. Ryan also noted that China was not cooperating in the same way some other countries had in the past.
“This would not happen in Congo and did not happen in Congo and other places,” he said, probably referring to the Ebola outbreak that began there in 2018. “We need to see the data…..It’s absolutely important at this point.”
The delay in the release of the genome stalled the recognition of its spread to other countries, along with the global development of tests, drugs and vaccines. The lack of detailed patient data also made it harder to determine how quickly the virus was spreading — a critical question in stopping it.
Between the day the full genome was first decoded by a government lab on Jan. 2 and the day WHO declared a global emergency on Jan. 30, the outbreak spread by a factor of 100 to 200 times, according to retrospective infection data from the Chinese Center for Disease Control and Prevention. The virus has now infected over 6 million people worldwide and killed more than 375,000.
“It’s obvious that we could have saved more lives and avoided many, many deaths if China and the WHO had acted faster,” said Ali Mokdad, a professor at the Institute for Health Metrics and Evaluation at the University of Washington.
However, Mokdad and other experts also noted that if WHO had been more confrontational with China, it could have triggered a far worse situation of not getting any information at all.
If WHO had pushed too hard, it could even have been kicked out of China, said Adam Kamradt-Scott, a global health professor at the University of Sydney. But he added that a delay of just a few days in releasing genetic sequences can be critical in an outbreak. And he noted that as Beijing’s lack of transparency becomes even clearer, WHO director-general Tedros Adhanom Ghebreyesus’s continued defense of China is problematic.
“It’s definitely damaged WHO’s credibility,” said Kamradt-Scott. “Did he go too far? I think the evidence on that is clear….it has led to so many questions about the relationship between China and WHO. It is perhaps a cautionary tale.”
WHO and its officials named in this story declined to answer questions asked by The Associated Press without audio or written transcripts of the recorded meetings, which the AP was unable to supply to protect its sources.
“Our leadership and staff have worked night and day in compliance with the organization’s rules and regulations to support and share information with all Member States equally, and engage in frank and forthright conversations with governments at all levels,” a WHO statement said.
China’s National Health Commission and the Ministry of Foreign Affairs had no comment. But in the past few months, China has repeatedly defended its actions, and many other countries — including the U.S. — have responded to the virus with even longer delays of weeks and even months.
“Since the beginning of the outbreak, we have been continuously sharing information on the epidemic with the WHO and the international community in an open, transparent and responsible manner,” said Liu Mingzhu, an official with the National Health Commission’s International Department, at a press conference on May 15.
___________
The race to find the genetic map of the virus started in late December, according to the story that unfolds in interviews, documents and the WHO recordings. That’s when doctors in Wuhan noticed mysterious clusters of patients with fevers and breathing problems who weren’t improving with standard flu treatment. Seeking answers, they sent test samples from patients to commercial labs.
By Dec. 27, one lab, Vision Medicals, had pieced together most of the genome of a new coronavirus with striking similarities to SARS. Vision Medicals shared its data with Wuhan officials and the Chinese Academy of Medical Sciences, as reported first by Chinese finance publication Caixin and independently confirmed by the AP.
On Dec. 30, Wuhan health officials issued internal notices warning of the unusual pneumonia, which leaked on social media. That evening, Shi Zhengli, a coronavirus expert at the Wuhan Institute of Virology who is famous for having traced the SARS virus to a bat cave, was alerted to the new disease, according to an interview with Scientific American. Shi took the first train from a conference in Shanghai back to Wuhan.
The next day, Chinese CDC director Gao Fu dispatched a team of experts to Wuhan. Also on Dec. 31, WHO first learned about the cases from an open-source platform that scouts for intelligence on outbreaks, emergencies chief Ryan has said.
WHO officially requested more information on Jan. 1. Under international law, members have 24 to 48 hours to respond, and China reported two days later that there were 44 cases and no deaths.
By Jan. 2, Shi had decoded the entire genome of the virus, according to a notice later posted on her institute’s website.
Scientists agree that Chinese scientists detected and sequenced the then-unknown pathogen with astonishing speed, in a testimony to China’s vastly improved technical capabilities since SARS, during which a WHO-led group of scientists took months to identify the virus. This time, Chinese virologists proved within days that it was a never-before-seen coronavirus. Tedros would later say Beijing set “a new standard for outbreak response.”
But when it came to sharing the information with the world, things began to go awry.
On Jan. 3, the National Health Commission issued a confidential notice ordering labs with the virus to either destroy their samples or send them to designated institutes for safekeeping. The notice, first reported by Caixin and seen by the AP, forbade labs from publishing about the virus without government authorization. The order barred Shi’s lab from publishing the genetic sequence or warning of the potential danger.
Chinese law states that research institutes cannot conduct experiments on potentially dangerous new viruses without approval from top health authorities. Although the law is intended to keep experiments safe, it gives top health officials wide-ranging powers over what lower-level labs can or cannot do.
“If the virologist community had operated with more autonomy….the public would have been informed of the lethal risk of the new virus much earlier,” said Edward Gu, a professor at Zhejiang University, and Li Lantian, a PhD student at Northwestern University, in a paper published in March analyzing the outbreak.
Commission officials later repeated that they were trying to ensure lab safety, and had tasked four separate government labs with identifying the genome at the same time to get accurate, consistent results.
By Jan. 3, the Chinese CDC had independently sequenced the virus, according to internal data seen by the Associated Press. And by just after midnight on Jan. 5, a third designated government lab, the Chinese Academy of Medical Sciences, had decoded the sequence and submitted a report — pulling all-nighters to get results in record time, according to a state media interview.
Yet even with full sequences decoded by three state labs independently, Chinese health officials remained silent. The WHO reported on Twitter that investigations were under way into an unusual cluster of pneumonia cases with no deaths in Wuhan, and said it would share “more details as we have them.”
Meanwhile, at the Chinese CDC, gaps in coronavirus expertise proved a problem.
For nearly two weeks, Wuhan reported no new infections, as officials censored doctors who warned of suspicious cases. Meanwhile, researchers found the new coronavirus used a distinct spike protein to bind itself to human cells. The unusual protein and the lack of new cases lulled some Chinese CDC researchers into thinking the virus didn’t easily spread between humans — like the coronavirus that casues Middle East respiratory syndrome, or MERS, according to an employee who declined to be identified out of fear of retribution.
Li, the coronavirus expert, said he immediately suspected the pathogen was infectious when he spotted a leaked copy of a sequencing report in a group chat on a SARS-like coronavirus. But the Chinese CDC team working on the genetic sequence lacked molecular specialists and failed to consult with outside scientists, Li said. Chinese health authorities rebuffed offers of assistance from foreign experts, including Hong Kong scientists barred from a fact-finding mission to Wuhan and an American professor at a university in China.
On Jan. 5, the Shanghai Public Clinical Health Center, led by famed virologist Zhang Yongzhen, was the latest to sequence the virus. He submitted it to the GenBank database, where it sat awaiting review, and notified the National Health Commission. He warned them that the new virus was similar to SARS and likely infectious.
“It should be contagious through respiratory passages,” the center said in an internal notice seen by the AP. “We recommend taking preventative measures in public areas.”
On the same day, WHO said that based on preliminary information from China, there was no evidence of significant transmission between humans, and did not recommend any specific measures for travelers.
The next day, the Chinese CDC raised its emergency level to the second highest. Staffers proceeded to isolate the virus, draft lab testing guidelines, and design test kits. But the agency did not have the authority to issue public warnings, and the heightened emergency level was kept secret even from many of its own staff.
By Jan. 7, another team at Wuhan University had sequenced the pathogen and found it matched Shi’s, making Shi certain they had identified a novel coronavirus. But Chinese CDC experts said they didn’t trust Shi’s findings and needed to verify her data before she could publish, according to three people familiar with the matter. Both the National Health Commission and the Ministry of Science and Technology, which oversees Shi’s lab, declined to make Shi available for an interview.
A major factor behind the gag order, some say, was that Chinese CDC researchers wanted to publish their papers first. “They wanted to take all the credit,” said Li Yize, a coronavirus researcher at the University of Pennsylvania.
Internally, the leadership of the Chinese CDC is plagued with fierce competition, six people familiar with the system explained. They said the agency has long promoted staff based on how many papers they can publish in prestigious journals, making scientists reluctant to share data.
As the days went by, even some of the Chinese CDC’s own staff began to wonder why it was taking so long for authorities to identify the pathogen.
“We were getting suspicious, since within one or two days you would get a sequencing result,” a lab technician said, declining to be identified for fear of retribution.
___________
On Jan. 8, the Wall Street Journal reported that scientists had identified a new coronavirus in samples from pneumonia patients in Wuhan, pre-empting and embarrassing Chinese officials. The lab technician told the AP they first learned about the discovery of the virus from the Journal.
The article also embarrassed WHO officials. Dr. Tom Grein, chief of WHO’s acute events management team, said the agency looked “doubly, incredibly stupid.” Van Kerkhove, the American expert, acknowledged WHO was “already late” in announcing the new virus and told colleagues that it was critical to push China.
Ryan, WHO’s chief of emergencies, was also upset at the dearth of information.
“The fact is, we’re two to three weeks into an event, we don’t have a laboratory diagnosis, we don’t have an age, sex or geographic distribution, we don’t have an epi curve,” he complained, referring to the standard graphic of outbreaks scientists use to show how an epidemic is progressing.
After the article, state media officially announced the discovery of the new coronavirus. But even then, Chinese health authorities did not release the genome, diagnostic tests, or detailed patient data that could hint at how infectious the disease was.
By that time, suspicious cases were already appearing across the region.
On Jan. 8, Thai airport officers pulled aside a woman from Wuhan with a runny nose, sore throat, and high temperature. Chulalongkorn University professor Supaporn Wacharapluesadee’s team found the woman was infected with a new coronavirus, much like what Chinese officials had described. Supaporn partially figured out the genetic sequence by Jan. 9, reported it to the Thai government and spent the next day searching for matching sequences.
But because Chinese authorities hadn’t published any sequences, she found nothing. She could not prove the Thai virus was the same one sickening people in Wuhan.
“It was kind of wait and see, when China will release the data, then we can compare,” said Supaporn.
On Jan. 9, a 61-year-old man with the virus passed away in Wuhan — the first known death. The death wasn’t made public until Jan. 11.
WHO officials complained in internal meetings that they were making repeated requests for more data, especially to find out if the virus could spread efficiently between humans, but to no avail.
“We have informally and formally been requesting more epidemiological information,” WHO’s China representative Galea said. “But when asked for specifics, we could get nothing.”
Emergencies chief Ryan grumbled that since China was providing the minimal information required by international law, there was little WHO could do. But he also noted that last September, WHO had issued an unusual public rebuke of Tanzania for not providing enough details about a worrisome Ebola outbreak.
“We have to be consistent,” Ryan said. “The danger now is that despite our good intent…especially if something does happen, there will be a lot of finger-pointing at WHO.”
Ryan noted that China could make a “huge contribution” to the world by sharing the genetic material immediately, because otherwise “other countries will have to reinvent the wheel over the coming days.”
On Jan. 11, a team led by Zhang, from the Shanghai Public Health Clinical Center, finally published a sequence on virological.org, used by researchers to swap tips on pathogens. The move angered Chinese CDC officials, three people familiar with the matter said, and the next day, his laboratory was temporarily shuttered by health authorities.
Zhang referred a request for comment to the Chinese CDC. The National Health Commission, which oversees the Chinese CDC, declined multiple times to make its officials available for interviews and did not answer questions about Zhang.
Supaporn compared her sequence with Zhang’s and found it was a 100% match, confirming that the Thai patient was ill with the same virus detected in Wuhan. Another Thai lab got the same results. That day, Thailand informed the WHO, said Tanarak Plipat, deputy director-general of the Department of Disease Control at Thailand’s Ministry of Public Health.
After Zhang released the genome, the Chinese CDC, the Wuhan Institute of Virology and the Chinese Academy of Medical Sciences raced to publish their sequences, working overnight to review them, gather patient data, and send them to the National Health Commission for approval, according to documentation obtained by the AP. On Jan. 12, the three labs together finally published the sequences on GISAID, a platform for scientists to share genomic data.
By then, more than two weeks had passed since Vision Medicals decoded a partial sequence, and more than a week since the three government labs had all obtained full sequences. Around 600 people were infected in that week, a roughly three-fold increase.
Some scientists say the wait was not unreasonable considering the difficulties in sequencing unknown pathogens, given accuracy is as important as speed. They point to the SARS outbreak in 2003 when some Chinese scientists initially — and wrongly — believed the source of the epidemic was chlamydia.
“The pressure is intense in an outbreak to make sure you’re right,” said Peter Daszak, president of the EcoHealthAlliance in New York. “It’s actually worse to go out to go to the public with a story that’s wrong because the public completely lose confidence in the public health response.”
Still, others quietly question what happened behind the scenes.
Infectious diseases expert John Mackenzie, who served on a WHO emergency committee during the outbreak, praised the speed of Chinese researchers in sequencing the virus. But he said once central authorities got involved, detailed data trickled to a crawl.
“There certainly was a kind of blank period,” Mackenzie said. “There had to be human to human transmission. You know, it’s staring at you in the face… I would have thought they would have been much more open at that stage.”
_________________
On Jan. 13, WHO announced that Thailand had a confirmed case of the virus, jolting Chinese officials.
The next day, in a confidential teleconference, China’s top health official ordered the country to prepare for a pandemic, calling the outbreak the “most severe challenge since SARS in 2003”, as the AP previously reported. Chinese CDC staff across the country began screening, isolating, and testing for cases, turning up hundreds across the country.
Yet even as the Chinese CDC internally declared a level one emergency, the highest level possible, Chinese officials still said the chance of sustained transmission between humans was low.
WHO went back and forth. Van Kerkhove said in a press briefing that “it is certainly possible there is limited human-to-human transmission.” But hours later, WHO seemed to backtrack, and tweeted that “preliminary investigations conducted by the Chinese authorities have found no clear evidence of human-to-human transmission” – a statement that later became fodder for critics.
A high-ranking official in WHO’s Asia office, Dr. Liu Yunguo, who attended medical school in Wuhan, flew to Beijing to make direct, informal contacts with Chinese officials, recordings show. Liu’s former classmate, a Wuhan doctor, had alerted him that pneumonia patients were flooding the city’s hospitals, and Liu pushed for more experts to visit Wuhan, according to a public health expert familiar with the matter.
On Jan. 20, the leader of an expert team returning from Wuhan, renowned government infectious diseases doctor Zhong Nanshan, declared publicly for the first time that the new virus was spreading between people. Chinese President Xi Jinping called for the “timely publication of epidemic information and deepening of international cooperation.”
Despite that directive, WHO staff still struggled to obtain enough detailed patient data from China about the rapidly evolving outbreak. That same day, the U.N. health agency dispatched a small team to Wuhan for two days, including Galea, the WHO representative in China.
They were told about a worrying cluster of cases among more than a dozen doctors and nurses. But they did not have “transmission trees” detailing how the cases were connected, nor a full understanding of how widely the virus was spreading and who was at risk.
In an internal meeting, Galea said their Chinese counterparts were “talking openly and consistently” about human-to-human transmission, and that there was a debate about whether or not this was sustained. Galea reported to colleagues in Geneva and Manila that China’s key request to WHO was for help “in communicating this to the public, without causing panic.”
On Jan. 22, WHO convened an independent committee to determine whether to declare a global health emergency. After two inconclusive meetings where experts were split, they decided against it — even as Chinese officials ordered Wuhan sealed in the biggest quarantine in history. The next day, WHO chief Tedros publicly described the spread of the new coronavirus in China as “limited.”
For days, China didn’t release much detailed data, even as its case count exploded. Beijing city officials were alarmed enough to consider locking down the capital, according to a medical expert with direct knowledge of the matter.
On Jan. 28, Tedros and top experts, including Ryan, made an extraordinary trip to Beijing to meet President Xi and other senior Chinese officials. It is highly unusual for WHO’s director-general to directly intervene in the practicalities of outbreak investigations. Tedros’ staffers had prepared a list of requests for information.
“It could all happen and the floodgates open, or there’s no communication,” Grein said in an internal meeting while his boss was in Beijing. “We’ll see.”
At the end of Tedros’ trip, WHO announced China had agreed to accept an international team of experts. In a press briefing on Jan. 29, Tedros heaped praise on China, calling its level of commitment “incredible.”
The next day, WHO finally declared an international health emergency. Once again, Tedros thanked China, saying nothing about the earlier lack of cooperation.
“We should have actually expressed our respect and gratitude to China for what it’s doing,” Tedros said. “It has already done incredible things to limit the transmission of the virus to other countries.”


fortune--2020-06-02--GOP to look at potential alternative sites for August convention

Google is sued for secretly amassing a vast trove of user web data

Organizers of the Republican National Convention said Tuesday they will begin visiting potential alternative sites after North Carolina’s governor told them the COVID-19 pandemic requires them to prepare for a scaled-back event if they want to hold it in Charlotte.
Gov. Roy Cooper, a Democrat, said in a letter to the top convention organizer and the national GOP chairwoman that “planning for a scaled-down convention with fewer people, social distancing, and face coverings is a necessity.” The letter came on the eve of a deadline from the GOP for assurances that Cooper would allow a full-scale event in August.
Later, Cooper told reporters it’s unlikely that virus trends will allow a full-capacity nominating convention for President Donald Trump to proceed at Charlotte’s NBA arena.
“We think it is unlikely that we would be to the point at the end of August to be able to have a jam-packed 19,000-person convention in the Spectrum arena,” Cooper said. “So the likelihood of it being in Charlotte depends upon the RNC’s willingness to discuss with us a scaled-down convention, which we would like to do.”
Republican National Committee chairwoman Ronna McDaniel, one of the recipients of Cooper’s letter, accused him of “dragging his feet” on giving them guidance for proceeding with convention plans. She released a statement saying that while the party would like to hold its event in Charlotte, “we have an obligation to our delegates and nominee to begin visiting the multiple cities and states” that have reached out to express interest in hosting.
Republican governors of Tennessee, Florida, and Georgia have said they would be interested in hosting if North Carolina falls through. Tennessee Gov. Bill Lee said that GOP officials are coming to scout Nashville on Thursday, calling the city “the best place in America to have a convention.”
Wednesday was the GOP’s deadline for assurances from Cooper. Last week, Trump demanded that Cooper guarantee him a full-scale event or he would be forced to move the event elsewhere.
North Carolina faces an upward trend in its virus cases, reporting about 29,900 cumulative cases and 900 deaths as of Tuesday. Around 700 COVID-19 patients are currently hospitalized. Mecklenburg County accounted for 4,500 cases—more than double the next-highest county—and nearly 100 deaths.
Earlier in the day, North Carolina GOP chairman Michael Whatley acknowledged some changes would likely be needed, but he maintained Republicans want a “full-scale” convention.
“Look, we’re not going to move forward with any activities that do not follow federal, state, or local requirements and regulations. So, we need to know what those requirements are going to be,” he said.
Michael Bitzer, a political scientist at Catawba College, said that Cooper’s popularity in North Carolina may give him a stronger position than Trump to convince the public of his approach.
But Bitzer said it’s hard to imagine Cooper and Trump will strike a deal that fully satisfies both sides by Wednesday.
“The deadline is gonna push one side to do one thing, and the other side is just going to say ‘no’ or ‘we can’t,’” he said.
A Charlotte convention could help Trump boost enthusiasm among North Carolina supporters, but he could also frustrate some voters if he pushes too hard during a delicate time for health and public safety, Bitzer said.
Whatley said the convention could generate $200 million for the regional economy, especially in the hospitality industry and in restaurants and bars.
Still, two Charlotte restaurant owners said they didn’t expect a huge hit if the RNC moves or is scaled back.
“I feel like it would be a small impact on our business,” said Greg Zanitsch, who owns the Fig Tree near the city’s central business district.
When the Democratic National Convention was held in Charlotte in 2012, he said an increase in business from visitors was balanced by the fact that his regulars stayed away.
“So, it was pretty much just a normal weekend. We didn’t see a big increase in business because of the convention,” he said.
Patrick Whalen, owner of 5Choice in Charlotte, said the convention would be good for the city, but he added: “Whether the RNC was going to be here or not, we would have done fine.”
Whalen, whose restaurant’s windows were smashed during recent protests over George Floyd’s death in Minneapolis police custody, said he thinks the RNC could also bring protesters, but that the city is equipped to deal with them.
“So my guess is that will probably happen again during the RNC, but hopefully with less violence,” he said.


fortune--2020-06-02--Amazon reportedly plans ‘Summer Sale’ starting June 22 to make up for Prime Day delay

Amazon.com is planning to hold a summer sale event on June 22 to help sellers grappling with the reported postponement of the e-commerce site’s Prime Day and the hit to sales from the COVID-19 pandemic, CNBC reported on Tuesday.
A spokesperson for Amazon did not immediately respond to a request for comment from Fortune.
According to a document CNBC said it saw, Amazon told brands on Tuesday that it would hold a “Fashion Summer Sale Event” later this month to “drive excitement and jump-start sales,” with participation by invitation only. CNBC also reported discounts of at least 30% will be required, and items that will be included in deals need to be shared with Amazon by tomorrow. The sales event would last seven to 10 days, according to CNBC.
Several media outlets recently reported that Amazon’s annual Prime Day event would be delayed until September to allow Amazon to help relieve its warehouses still dealing with a surge in business because of coronavirus-driven stockpiling this spring.
The Amazon sale would come at a time many brands, particularly clothing lines, are desperate to clear merchandise left over from the spring season when spending fell off a cliff and stores were closed. Analysts expect heavy discounting from department stores and clothing chains in June, particularly later in the month, by which time most national retailers will have reopened almost all their stores. Apparel stores saw sales drop 89% between February and April.
Amazon recently lifted restrictions on nonessential goods and restored coupons and deals, but it is still dealing with some lingering out-of-stock issues. In April, the company warned investors it would spend $4 billion in the current quarter on coronavirus-related expenses, including “getting products to customers and keeping employees safe.”


fortune--2020-06-02--Facebook’s Zuckerberg defends his handling of Trump post to staff

Facebook CEO Mark Zuckerberg told staff at a companywide meeting that he won’t change his mind about a decision to leave up posts shared by President Donald Trump last week that many workers felt violated the company’s policies against violent rhetoric.
At an all-hands meeting via video chat on Tuesday, Zuckerberg took questions from employees, many of whom have publicly voiced dismay that the Trump post, which seemed to threaten that looters would be shot, was still visible on Facebook’s service. Zuckerberg told workers that he and other members of the company’s policy team couldn’t justify saying that the message clearly incited violence, which means it didn’t break Facebook’s rules, according to two people who attended the meeting.
Zuckerberg added that Facebook is exploring whether the company should change the policy or come up with other ways to flag violating posts besides taking them down entirely, one person said. The meeting lasted 90 minutes, and employees asked Zuckerberg questions via a video split screen. Many of those who spoke were upset and frustrated with the company’s position.
Facebook is responding to the most intense internal protest in its history, involving public resignations and increasing outrage over Zuckerberg’s decisions. While the CEO stood his ground on the posts from last week, the company tried to assuage concerns by announcing two initiatives. Facebook will create a hub for election resources—similar to its offering for COVID-19—where users can seek out vetted information, the meeting attendees said. And Fidji Simo, the head of Facebook’s flagship app, was tasked with sponsoring more proactive initiatives to advance racial justice, according to the employees, who asked not to be identified discussing an internal meeting.
On May 28, Trump posted a message on Facebook with the words “when the looting starts, the shooting starts” in response to protests over the death in police custody of George Floyd, an unarmed black man, in Minneapolis. It remains on the social network.
The same post was also shared to rival social network Twitter, which then added a warning and filter to the message. A number of Facebook employees, including some senior figures, have criticized the company’s approach, challenging Zuckerberg’s decision to leave the post up, and on Monday some workers participated in a virtual walkout in protest.
“Mark had an open discussion with employees today, as he has regularly over the years,” a Facebook spokesperson said. “He’s grateful for their feedback.”
One employee, software engineer Timothy Aveni, announced his resignation on Monday, citing Facebook’s failure to step in on content such as Trump’s.
“Mark always told us that he would draw the line at speech that calls for violence. He showed us on Friday that this was a lie,” Aveni posted on Facebook. “Facebook, complicit in the propagation of weaponized hatred, is on the wrong side of history.”
As criticism mounted on Monday, Zuckerberg and chief operating officer Sheryl Sandberg held a videoconference with U.S. civil rights leaders to discuss issues around Facebook’s policies related to race, elections, and other topics. Color of Change president Rashad Robinson said participants were left disappointed with Zuckerberg’s understanding of the issues.
Last week, Twitter also angered Trump when the company added a fact-checking label to a post about mail-in ballots. Trump responded by unveiling an executive order targeting the law that protects social media companies from liability for the content posted by its users.


fortune--2020-06-02--Trump is sued over executive order targeting social media companies

President Donald Trump’s order targeting social media companies was challenged in court by a nonprofit group that claims the edict violates free-speech protections guaranteed by the First Amendment.
Trump’s order, issued on Thursday, might undermine the legal protections enjoyed by social media companies including Twitter and Facebook. He asked federal regulators to look at provisions, contained in Section 230 of the 1996 Communications Decency Act, that insulate the companies from liability for content posted by users.
The order followed on the heels of Twitter’s decision to add fact-check labels to two of Trump’s tweets. Twitter also restricted a post by the President suggesting that protesters who engaged in looting would be met with violence. Legal observers have said Trump lacks the power to modify Section 230 by executive order.
The Center for Democracy and Technology sued in Washington federal court Tuesday, claiming the order is an unconstitutional retaliation against Twitter and that it seeks to discourage other companies and individuals from disagreeing with the government.


fortune--2020-06-02--Black workers losing jobs at twice the rate of white workers during the pandemic, according to new F

Black workers losing jobs at twice the rate of white workers during the pandemic, according to new Fortune data

Protesters across the country have taken to the streets of American cities to demand justice for George Floyd, a black man who died after being handcuffed and pinned to the ground by a white police officer. As protesters call attention to the nation’s uneven treatment of black Americans at the hands of law enforcement, the country is also in the midst of an unprecedented economic shock that is hitting communities of color harder than white Americans.
Black adults are twice as likely to have been laid off or furloughed as white adults, finds a Fortune-SurveyMonkey poll of 4,109 U.S. adults between May 20 and 26. Since the onset of the coronavirus outbreaks, 24% of black workers say they have lost their job compared with 20% of Hispanic workers, 19% of Asian workers, and 11% of white workers.
The coronavirus shutdowns were uneven. Businesses in the service and tourism industries—cruise lines, restaurants, retail stores, and nail salons—tended to be hit the hardest, and many of those rely heavily on nonwhite workers.
For instance, of the more than 50,000 people employed at Hilton before the crisis, 69% are people of color. So when the hotel chain furloughed tens of thousands of its workers, those groups were disproportionately impacted.
And it’s not just unequal job losses—pay cuts have also been unequally doled out. The Fortune-SurveyMonkey poll finds that while 28% of white workers got their hours or pay cut, that rose to 29% of Hispanic workers, 31% of black workers, and 37% of Asian workers.
And among black workers who have retained their jobs thus far, 56% are still worried about losing them. Meanwhile, that figure is 35% among white workers. The majority of Hispanic and Asian workers are also worried about losing their job, at 57% and 66%, respectively.
This uneven economic downturn has already manifested itself in the jobs reports. The official April unemployment rate stood at 14.7%. But among white workers the jobless rate was 14.2%, compared with 14.5% for Asians, 18.9% for Hispanics, and 16.7% among black workers. But that official jobless rate is through just mid-April. Since then, another 14.3 million Americans have claimed unemployment benefits. That will push the jobless rate even higher in May, and could further increase the racial unemployment gap.
*Methodology: The Fortune-SurveyMonkey poll was conducted among a national sample of 4,109 adults in the U.S. between May 20 and 26. This survey’s modeled error estimate is plus or minus 2.5 percentage points. The findings have been weighted for age, race, sex, education, and geography.


fortune--2020-06-02--Everything to know about Blackout Tuesday

Thousands of people are going on social media on Tuesday to participate in what has been dubbed “Blackout Tuesday,” to advance social and racial justice.
Tuesday’s event came after protests erupted nationwide following the death of George Floyd, a black Minneapolis resident who died after a white police officer kneeled on his neck. His death prompted business executives, political leaders, and the broader public to speak out.
Here’s what you need to know about Blackout Tuesday.
Where did it come from?
Blackout Tuesday, also known as Black Out Tuesday and #TheShowMustBePaused, aims to create a one-day pause on business as usual.
Black music industry executives Brianna Agyemang and Jamila Thomas, who work for music talent firm Platoon and Atlantic Records respectively, initially created the campaign to focus on the music industry, in which black artists play a large role. Major recording companies including Atlantic Records, Sony, and Universal backed the campaign over the weekend. Some expressed their support for the day while others including Atlantic Records and Warner Music Group said they would use the day to “collectively reflect” on what it could do as a company to contribute to change.
The movement quickly spread to individuals and other groups, who opted to black out their profiles for the day and to post on social media while referencing the movement.
How are people participating?
Many people are using online services like Instagram, Twitter, and Facebook and are changing their profile picture and backgrounds to black boxes with the hashtags #BlackLivesMatter, #BlackOutTuesday, and #TheShowMustBePaused. They’re also publishing posts that feature black squares to “black out” their feeds.
As of Tuesday, Instagram users had published more than 22 million posts with the #BlackOutTuesday hashtag or a variation of it. #BlackOutTuesday was also the top trending hashtag in the U.S. on Tuesday, followed by #BlackLivesMatter.
Why is it becoming a problem on social media?
Though the campaign is intended to protest black racial injustice, some activists are arguing that the hashtags on social media are drowning out important information related to the Black Lives Matter movement.
On Instagram, for example, people are including the #BlackOutTuesday hashtag alongside #BlackLivesMatter. Others are solely using the #BlackLivesMatter hashtag. That creates problems for users who search for #BlackLivesMatter because they get results showing row after row of black boxes rather than useful resources.
Instagram head Adam Mosseri acknowledged the problem Tuesday on Twitter, reminding people that they can remove the #BlackLivesMatter hashtag to clear up the hashtag page.


fortune--2020-06-02--Two Facebook employees quit over handling of Trump posts

Two Facebook software engineers publicly quit the company on Tuesday, as internal dissent escalated over how the social network has handled posts from President Trump.
Timothy Aveni posted on LinkedIn that he was resigning because Facebook had not held Trump to its community standards. “Over and over he posts abhorrent, targeted messages that would get any other Facebook user suspended from the platform,” Aveni wrote.
Another engineer, Owen Anderson, wrote on Twitter that he was “proud to announce” he was resigning on Tuesday as he would “no longer support policies and values I vehemently disagree with.” Anderson said his departure was “in the works for a while.”
The public resignations follow a “virtual walkout” that many Facebook employees staged on Monday and also fall in the wake of critical messages a number of employees had posted on Twitter over the weekend about Facebook CEO Mark Zuckerberg’s handling of Trump’s posts.
On Thursday Trump said on Facebook, “when the looting starts, the shooting starts,” referring to protests over the death of George Floyd, a black Minneapolis resident who died after a white police officer kneeled on his neck. Trump also said that he would send in the National Guard to “get the job done right.”
Many people complained that the President’s posts encouraged violence and that Facebook should remove them. Twitter covered Trump’s identical posts on its service with a label warning that they were “glorifying violence.”
Zuckerberg on Friday said that he had decided against removing Trump’s post because he’d considered it a “warning about state action.” Unless a post causes “imminent risk of specific harms or dangers,” he said, Facebook sides with free expression.
The two resignations account for just a tiny fraction of Facebook’s 48,000 employees. But if the exodus grows, it could become a problem for the company, which has been beacon for new recruits.
Facebook did not immediately respond to a request for comment from Fortune about the departure of the two employees.
The resignations are hardly the first examples of employees leaving big tech firms over policy issues. Prominent technologist Tim Bray quit Amazon last month over the firing of employee labor activists. In another instance, two years ago, about a dozen Google employees quit over the company’s assistance in a Pentagon artificial intelligence program.


fortune--2020-06-02--Contact tracing begins in New York City with outreach to 600 people

New York City contact tracers hired to contain the spread of the coronavirus reached out to all of the roughly 600 people who tested positive for the virus citywide on Monday, the first day of the program, and succeeded in reaching more than half of them, officials said Tuesday.
“On day one of the program, seeking to reach several hundred people and have what could be an hour’s conversation with each of them was a tall order,” Dr. Ted Long, head of the city’s contact tracing program, noted at a briefing. Long said the fact that the contact tracers actually got through to more than half of the new cases “shows that the system we’re setting up is working.”
The city has hired 1,700 people for its contact tracing effort and needs to reach 2,500 in order to meet Gov. Andrew Cuomo’s target for entering the first phase of the state’s four-step reopening process. The contact tracers are placing people infected with the virus in hotel rooms if they need to isolate themselves from their families as well as reaching out to the close contacts of those who test positive for COVID-19.
Asked if the past week’s protests over the death of George Floyd might spark a new wave of infections, Long encouraged anyone who was at a protest to get tested for the coronavirus at one of the more than 150 free testing sites around the city. Floyd, who was black, died after a white police officer pressed a knee into his neck for several minutes.
“It starts with the testing piece, which is why we’re extending the invitation to anybody that’s been out there at the protests. Come in for a free test. It’s close to where you live,” Long said. “We’d love to have you.”
COVID-19 hospitalizations are down in New York, with an average of 154 admissions a day, compared with more than 3,000 daily at the peak of the outbreak. More than 24,000 deaths statewide have been reported in the outbreak, but the daily death toll has been under 60 for several days, with 58 new deaths recorded Monday.
Buffalo and western New York on Tuesday became the latest region of the state allowed to reopen hair salons, retail shops, and offices under strict guidelines. The Albany area was on track to also move to “phase two” reopenings on Wednesday.
More coronavirus coverage from Fortune :


fortune--2020-06-02--The Coronavirus Economy: Bankruptcy attorneys are learning to hit ‘mute’

As a bankruptcy attorney, Stuart Gold is on the ugly front lines of the coronavirus downturn. But he’s well prepared: he has been in the field for more than three decades. Since 1987, he has been a U.S. bankruptcy trustee, and he is a cofounder and managing partner with Gold Lange & Majoros, based in Southfield, Mich.
Thanks to government relief programs, bankruptcies haven’t started surging yet, but Gold says he’s expecting a “tsunami” of cases. He has some important messages for small-business owners who might find themselves in an unexpected financial bind, from new programs to take advantage of to the best way to think about bankruptcy. (“Failure” isn’t it.)
Gold recently spoke with Fortune for a new series, The Coronavirus Economy, about his work, how it has changed under lockdown, and what he sees coming.
This interview has been lightly edited and condensed for clarity.
Bankruptcy attorney Stuart Gold has been in the field for more than three decades, and he has some important insights for business owners facing hard times. Stuart Gold
Fortune: What does your workday look like, during normal times?
Gold: I’ve been a U.S. bankruptcy trustee since 1987. When an individual or a corporation applies for bankruptcy under Chapter 7, we examine the debtor and determine whether there are any assets that the debtor has that we can sell and distribute to creditors.
About 50% of my practice is devoted to trustee work. I handled about 70 hearings this morning, and I do that twice a month, for my trustee side. And there’s preparation for that, you have to review debtor’s documentation, to see if there are any assets that should go to creditors. I’m an advocate for the creditors, basically.
The other half of my practice is devoted to representing individual debtors filing for bankruptcy, as well as working with businesses to file under Chapter 11, or to handle their dissolution outside of bankruptcy.
How has the coronavirus changed your work on a day-to-day basis?
Well, normally my trustee hearings are in person. It’s me, a debtor, and debtor’s counsel, and any creditors, in a room to review their financial affairs. And in the same room are [people waiting for] other cases to be heard.
But now we’re doing them strictly by phone. We have conference lines for debtors and debtors’ counsel to call in, and notice to the creditors that they can be on the line at the same time. We’ve been doing it since March, and we just got notice that it will continue at least through August.
It’s painful to be on a conference call with 50 people and one person doesn’t mute their phone. But attorneys are getting used to it, and advising their clients, “Hey, make sure your phone is muted.”
I’ve been talking to clients and doing the initial consultation over the phone, and we are securing documents remotely. We have to review documents, and I’ve been doing that through Zoom—to the extent that clients have the ability and the equipment. Some do, and some don’t.
What attitudes do people bring with them about bankruptcy?
I would say the majority of clients come in thinking it’s failure. There are a lot of tears when they come in. And we do our best to assure them bankruptcy has been around for centuries. It’s embedded in our Constitution. In a capitalistic society, bankruptcy is necessary to allow people a fresh start, and to let entrepreneurs try new things and give them a safety net. We want people to take chances.
They come in thinking that they’re a failure, and we try and build them back up and let them know that they’re only one of many seeking this type of relief. And it’s there for a reason.
A lot of people are in trouble out there, including a lot of people who probably never thought bankruptcy would be something they needed. Who should consider bankruptcy?
It’s important to talk to a professional and get advised of all your options—both bankruptcy and non-bankruptcy. People are aware of the stigma, and they should know how that plays out, for instance in their credit ratings. And they’re afraid of losing everything; they’re not aware of exemptions that can protect their assets. So a review of the situation is important.
For the business side of things, it’s important to realize that there are options other than simply closing your business and walking away, such as the restructuring available under the new Subchapter 5. That’s the important message: There’s just not one size that fits all. There are solutions to financial problems. I’ve done workouts without a bankruptcy where we just work with creditors. Every case is different, and it’s important that you get all the information.
The economic damage from the coronavirus is expected to be substantial. Does that mean more work for you?
It’s been the exact opposite of what you’d expect: The filings are way down, almost 50%. The relief packages passed by Congress have allowed people to survive and to not need bankruptcy relief at this time.
However, those benefits are going to run out. It’s anticipated that in the third and fourth quarter of this year, bankruptcy filings will rise dramatically. Someone referred to what’s coming as a tsunami, where the water is retreating from the coast, and then it comes in all at once and floods the lowlands. It’s coming—not just for individual consumers, but for businesses.
Are you preparing for that by adding staff?
Absolutely. During the height of the Great Recession, our firm had 30 employees, and we’re less than half of that right now. We anticipate we’re going to be ratcheting up and hiring in the third and fourth quarters, because of the deluge of filings.
Subchapter 5, sometimes referred to as “Fast Pass,” is a new kind of bankruptcy specifically for small businesses. What’s the advantage?
Congress passed it last fall, which has turned out to be very timely. The overall cost is going to be substantially reduced. And it’s very quick; you can be in and out in basically four months. And the approval process for the plan is more debtor-friendly than traditional Chapter 11.
When it rolled out, it was for businesses with debts under $2.7 million. Now they’ve [expanded] it to debts under $7.5 million. Those businesses can take advantage of this streamlined approach.
Your career has you interacting with people on what may be some of the worst days of their lives. How do you approach that, in terms of your bedside manner?
People do come in with a lot of financial and emotional burdens, losing businesses they have maintained for a number of years. We try and see if there are options. If it’s a viable business, we can consider a reorganization.
I’m dealing with individual debtors in my trustee calls who are very fearful. Bankruptcy may relieve you of debt, but it doesn’t put food on the table if you don’t have a check coming in.
These people are going through a lot of suffering—financial suffering, emotional suffering. So empathy covers my entire practice.