fortune--2020-06-03--The most popular police scanner app is donating proceeds to charity

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The No. 1 paid iPhone app right now isn’t a productivity tool, a selfie editor, or a social network. It is “5-0 Radio Police Scanner,” an app that lets people tune into the communications of law enforcement around the world.
As crackdowns on protests over racism have rocked America, people are tuning into police radio scanner apps, like “5-0,” to keep tabs on the tumult. Rival apps—like Citizen, Broadcastify, and Police Scanner Radio & Fire—have similarly shot to the top of the download charts, as I wrote about on Monday.
I recently exchanged emails with Allen Wong, the 5-0 app’s creator, for whom all this turmoil has been especially lucrative. On Monday evening, he told me his app had “netted a few tens of thousands of dollars in profit in the past 24 hours.”
A self-described self-made millionaire, Wong says most of 5-0’s revenue comes from a free, advertising-supported version of the app. Through it, anyone can listen to broadcasts uploaded by hobbyists who own special, emergency responder radio equipment. The free version is the third most popular free iPhone app today, and it makes five times as much money as the paid version, Wong says.
Now Wong wishes to share the wealth. He plans to donate recent proceeds from the 5-0 app “to various groups, such as the Equal Justice Initiative,” a non-profit group that fights mass incarceration and provides legal representation to people who may have been wrongfully convicted of crimes, he says. Wong made similar charitable donations, he says, when the app gained popularity in the aftermath of the Boston Marathon Bombing in 2013.
“It has always been my purpose in life to create technology that helps people change the world for the better,” Wong told me in a note he since posted to his Lamborghini-filled Instagram profile. “I stand together with those who are feeling pain and fear every day of their lives due to racism in America.”
Add Wong’s pledge to the growing number of corporations backing anti-racist equal rights initiatives since protests over the death of George Floyd broke out. Every commitment counts.
Robert Hackett
Twitter: @rhhackett
Email: robert.hackett@fortune.com
THREATS
Permission to speak freely? A tech industry group filed a lawsuit challenging President Trump's recent social media-related executive order. The plaintiff, the Center for Democracy and Technology, contends that Trump's move to limit legal protections for online platforms breaches the First Amendment. The dispute is over Section 230 of the Communications Decency Act, which shields Internet companies from liability over the things people post online.
What I say goes. As tensions boil over, Facebook CEO Mark Zuckerberg is holding firm in his decision to leave up a controversial post by the President referencing shooting looters. Facebook's former security chief praised Twitter for taking a different approach, adding warning labels to the President's posts, while noting that "it's impossible deplatform the President."
Many years later, as he faced the firing squad... Years in the future, if and when Zuckerberg might like to forget this contentious period ever happened, he can use a tool the company just released called "manage activity." The feature, available now on the Facebook mobile app, allows people to bulk-delete old posts.
⬛⬛⬛⬛⬛. Images of black squares flooded Instagram on Tuesday in a show of support for the Black Lives Matter movement. The deluge of posts, many of which used the #BlackLivesMatter hashtag, drowned out links to resources and other relevant content shared by activists. Leaders of the movement recommended using #BlackOutTuesday for the campaign instead.
Crossing borders. Facebook's WhatsApp is making a big investment in Indonesian ride-hailing giant GoJek alongside PayPal. China's Tencent, another GoJek investor, is plunking down $260 million to become the majority stakeholder of Bohemia Interactive, a Prague-based video game studio. And SoftBank, which has been facing a reckoning since the collapse of portfolio company WeWork's IPO, just put together a $100 million fund for minority owned businesses.
Please 👏 change 👏 your 👏 passwords.
ACCESS GRANTED
Cameras are ubiquitous across the American landscape, and they're capturing footage of the recent intensifying conflicts between law enforcement and protestors. From storefront cameras and smartphones to Amazon Ring devices and video-sharing social media apps, there's no shortage of recordings. The technology is amplifying an already tense situation, reports the Washington Post.
On Saturday night, as protests were still taking place in city streets across the country, the Dallas police department put out a call for help on Twitter. It asked anyone who had video from the protests showing "illegal activity" to upload it to its anonymous tip app, iWatch Dallas. What it got was a different kind of protest, in the form of a flood of videos and images of K-pop stars performing. The department later tweeted that the app was down due to technical difficulties.
FORTUNE RECON
Black workers losing jobs at twice the rate of white workers during the pandemic, according to new Fortune data by Lance Lambert
Google is sued for secretly amassing a vast trove of user web data by Robert Burnson
Amazon reportedly plans ‘Summer Sale’ starting June 22 to make up for Prime Day delay by Phil Wahba
Facebook’s Zuckerberg defends his handling of Trump post to staff by Kurt Wagner and Sarah Frier
Trump is sued over executive order targeting social media companies by Bob Van Voris
Two Facebook employees quit over handling of Trump posts by Aaron Pressman
Contact tracing begins in New York City with outreach to 600 people by Marina Villeneuve, Karen Matthews, Michael Hill
ONE MORE THING
As protests over police violence rocked the U.S. on Friday night, the Secret Service whisked President Trump into an underground bunker beneath the White House, according to the Associated Press. What do we know about the secret subterranean lair? Popular Mechanics dug into the details about the safe haven, which is designed for the commander-in-chief to use during emergencies such as terrorist attacks.


fortune--2020-06-03--The S&P 500 is having its best 50-day rally in history

4 ways companies can thrive in the COVID-19 economy , according to philanthropy strategists

Nothing can deter the bulls right now.
The market’s foremost index, the S&P 500, is set for its best 50-day rally ever, according to LPL Financial research. The index has recovered over 37.7% in the last 50 trading days, and is trading up over 1% in midday trading on Wednesday.
This is going to go down as the greatest 50-day rally ever for the S&P 500 Index.
Take note, the previous 7 other largest 50-day rallies saw stocks higher 6- and 12-months later every single time. pic.twitter.com/y273jP9BVk — Ryan Detrick, CMT (@RyanDetrick) June 3, 2020
Historically, after the past seven biggest 50-day rallies going back to 1957, stocks were higher six and 12 months after the rallies every time, with stocks rallying an average 17% 12 months after the rally, according to LPL Financial research.
But it’s not just the S&P 500 that is on track for records. As of midday Wednesday, the tech-heavy Nasdaq-100 could close at an all-time high, less than 0.5% off from its record reached in February.
The Nasdaq 100 holds some of the biggest tech names, including Amazon and Microsoft, which have led the rally early on as the coronavirus quarantines have given their businesses a boost—Some, like Amazon and Netflix, so-called “stay at home” stocks, have even posted all-time highs while the overall market still trades down about 4% year to date.
Yet these historic rallies in the S&P and Nasdaq come against a backdrop of intense civil unrest, as protests against the killing of George Floyd in Minneapolis have spread across the nation in recent days.
But the markets are often disconnected from reality, and stocks have a history of ignoring social upheaval. “The markets are taking in stride a lot of concerning political developments and an economy that is just emerging from a nationwide lockdown,” Edward Jones’ Nela Richardson told Fortune Monday. “One of the reasons is that markets are forward-looking, so they’re not just looking at present circumstances.”
Those present circumstances in the economy are grim—GDP fell 4.8% in the 1st quarter, and roughly 40 million Americans are out of a job. And as states begin to reopen, the threat of a second wave of infections is top of mind.
“While everybody is cheering the stock market right now, and we’re watching the mobility data and saying, ‘wow, things are starting to bounce back, states are starting to open up and confidence is coming back a little bit,’ let’s not take a victory lap just yet,” Deutsche Bank’s senior U.S. economist Brett Ryan recently told Fortune.
Additionally, a massive $2 trillion federal stimulus package and unprecedented action from the Fed have helped support market multiples. LPL’s Ryan Detrick wrote on his Twitter on Wednesday that “Historic bearishness at the lows, record fiscal and monetary stimulus, improving high frequency economic data, no new spikes in COVID-19 and optimism over a vaccine are all reasons” for the rally.
The S&P 500 has certainly come a long way from back in March, when it sank into the fastest bear market on record. But the rapid rise has made stocks much more expensive, as investors look beyond poor earnings in 2020 to brighter days next year. That’s lifted stocks to heady levels: the market now trades at a forward PE of over 20 (back in 2009, stocks traded at around 15 times forward earnings).
Since market lows hit on March 23, the S&P 500 has gained roughly 40%, the Dow has jumped 40% as well, and the Nasdaq 100 has recovered roughly 38%. Some of the stocks leading the rally in the S&P on Wednesday include airlines United Airlines and Boeing.


fortune--2020-06-03--‘The recession is over’: Economist Mark Zandi says new data shows start of recovery

On Friday the unemployment rate for May will be released, and it’s expected to be around 20%, up from 3.5% in February. But even as we await that Great Depression-level jobless rate, at least one prominent economist thinks we have already hit the bottom of the COVID-19 recession.
“I think the recession is over. The recession ended in May, and in June we’ll see job growth,” says Mark Zandi, Chief Economist at Moody’s Analytics. “We are in recovery.”
The massive contractions that started in March reversed in late May as states began to loosen up on their shutdowns, Zandi told Fortune. The number of Americans on unemployment benefits fell 3.9 million last week to a total of 21 million receiving benefits. And Zandi forecast the Department of Labor’s data release tomorrow will show another massive decline in the number of Americans on unemployment insurance.
A 3.8 million decline in the number of Americans on state unemployment rolls points to hiring and rehiring in the economy. However, we have a long way to go—given only 1.8 million people were on unemployment insurance the week of March 14, a number that peaked at 24.9 million the week of May 9.
And companies eliminated fewer jobs than expected in May. On Wednesday, ADP reported private payroll fell by almost 2.8 million jobs in May. That was well below the more than 8 million some economists expected, and far under the 19.6 million lost jobs in April.
But being out of the recession phase—when economic growth and activity are declining—and into the recovery phase doesn’t mean the economic storm has passed. The economy could take months or years to recover. Zandi foresees the unemployment rate falling in June, but staying above 10% until at least September.
“We have a long way to dig out of this. It is the most severe downturn since the 1930s. But we are coming off the bottom, and that is the end of the recession,” Zandi says.


fortune--2020-06-03--The Coronavirus Economy: The CEO of e.l.f. Cosmetics on beauty behind face masks

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With so many events canceled and millions of employees working from home (or donning a mask when venturing out), makeup becomes a bit pointless, at least in the short term. So it’s not surprising that makeup sales dipped 22% in the first quarter, and as face masks become the new normal, it’s hard to see a major reversal anytime soon.
The opposite can be said for skin care sales, which were up 11% in the first quarter and have been on an upward trajectory since well before the pandemic struck. That could be the saving grace for many beauty-product makers that have either already made a shift in product inventory or were in motion to do so.
Fortune spoke with e.l.f. Cosmetics CEO Tarang Amin for a new series, The Coronavirus Economy, to ask about how the outbreak has affected sales and what it’s like managing a global workforce, as well as how publicly traded companies can work with small businesses to get through the economic crisis.
Tarang Amin, CEO of e.l.f. Cosmetics Courtesy of e.l.f. Cosmetics, Inc.
The following interview has been lightly edited and condensed for clarity.
Fortune: When did you realize COVID-19 would affect your business? And how has it thus far?
Amin: We’ve been dealing with COVID since January when our team in China was impacted. I still remember the concern in our general manager’s voice when she spoke of the uncertainty. We took immediate steps to make sure our employees in Shanghai were safe, and thanks to the strict health protocols and dedication of our employees and suppliers, our team has remained healthy. We were also one of the first beauty companies to be fully operational in China when COVID-19 restrictions were lifted.
In the U.S., our first priority was also the safety and wellbeing of our employees and consumer community, and we’ve taken many of the same protocols we used in China and implemented them here. We sent safety kits with gloves, hand sanitizers, and disinfectant wipes to all employees and provided assistance with other needs.
We also manufactured hand sanitizer that we’ve shared with our team and partners and are shipping for a limited time with every order on elfcosmetics.com. Our focus will always be on our community, and I’m proud of our efforts to get through this together.
In terms of impact, for the four weeks ending April 18th, the cosmetics category was down 38%, and e.l.f. was down 30% in Nielsen-tracked channels. However, we were able to grow market share, reaching 5.2% of the market, up 60 basis points versus year ago.
What kinds of trends have you observed among your customers? Has there been a significant shift toward skin care over beauty products? Could these shopping habits take root for the long term?
Yes, we are seeing a lift in skin care and a blurring of the lines between health and wellness. For example, our Holy Hydration, Cannabis Sativa, and Supers lines fueled growth in skin care with sales up 27% in fiscal year 2020. We also launched the first full-spectrum CBD line in Massachusetts this month and have seen terrific results so far.
For us, we see skin care as a strategically important category that exemplifies our ability to deliver prestige quality at great value, which is resonating with our consumers in so many different ways.
“During the COVID-19 outbreak, we received notes from nurses on the front lines who let us know that e.l.f.’s Poreless Putty Primer…not only helped save and soothe their skin, but also…wouldn’t soil their face masks,” says Amin. Courtesy of e.l.f. Cosmetics, Inc.
During the COVID-19 outbreak, we received notes from nurses on the front lines who let us know that e.l.f.’s Poreless Putty Primer—which is our No. 1 SKU in the face category and the bestselling primer in the U.S.—not only helped save and soothe their skin, but also worked well as it wouldn’t soil their face masks like their other color foundations. We love these types of stories and hearing from our consumers.
So, while we’ll continue to innovate across eyes, lips, and face, we’re also leaning into skin care. We recently extended our popular Putty Primer into franchises with the introduction of our Matte and Luminous Putty Primers, and plan to further our presence in the category, with a strong pipeline for this fall.
We believe that our fundamental value equation and digital engagement as well as our world-class team’s ability to adapt at e.l.f. speed positions us well to weather the COVID-19 storm better than others in the category, as we continue to gain market share.
E.l.f. Cosmetics is a publicly traded company, and it has been working with a number of smaller businesses during the downturn. Could you explain more about this collaboration, what kinds of opportunities are available to both parties, and, in general, the value proposition for large, public companies supporting small business during this economic downturn?
Last year, we rolled out a refreshed brand expression, where we redefined our marketing strategy, investing more to bring more consumers into the brand. We looked to build relationships with new partners who could help us add more strength, to go where no one has gone before. We brought in Brooklyn-based creative agency, Movers+Shakers, who had a unique superpower in bringing brands to life with original music and dance.
Together we launched the #eyeslipsface hashtag challenge on TikTok, and worked alongside Grammy Award–winning producer iLL Wayno [in partnership with Republic Records] and singer Holla FyeSixWun, to create the campaign’s original song, “Eyes. Lips. Face. (e.l.f.),” which has garnered 5.3 billion views, 3.5 million videos created, and has been deemed the most viral campaign in TikTok U.S. history.
Building off the challenge’s success, we put our heads together to raise awareness of basic preventative measures we can take to help stop the spread of COVID-19 and decided to release a remix of the original song, called “Eyes. Lips. Face. Safe”—a fun, yet important musical reminder to share basic hygiene steps, while fostering creativity to help stop the spread of the virus.
Nearly 10,000 videos were created using “Eyes. Lips. Face. Safe”—including posts by Loren Gray and Meghan Trainor—and garnering close to 4 million likes and over 23,000 shares on TikTok alone.
How have your employees been coping through this? Are they all working from home? Have you been forced to make any cuts to your workforce?
First, I’ll say that I’m extremely proud of the resilience of our team during this stressful and uncertain time.
I think as a diverse company with international teams and offices, who were already accustomed to working productively from different spaces and time zones, we were well prepared to embrace the new work-from-home challenge. I think the key to our success has been communication, both from a leadership and internal perspective. We have weekly town hall meetings, and each week we have a different theme, whether it’s a dance party, sharing our moments of gratitude, to having our kids or pets join us. I’ve also been doing regular check-ins by calling employees across the organization to see how they are doing.
We have an extremely talented team, and we are determined to protect as many jobs as possible during this time. We have instead looked at other areas where we could reduce costs, tightly managing inventory receivables in capital expenditures, reducing expenses, and scaling back digital marketing investments in proportion to net sales.
Now that many regions are in the process of reopening, how does that affect your company, from transitioning employees, ensuring their work environments are as safe as possible, to working with supply chain and retail partners?
Our first priority is always the safety and wellbeing of our employees. We have taken many of the same actions we used in China for our U.S. employees, and again, thanks to the strict health protocols and dedication of our employees and suppliers, our team has remained healthy.
We are starting with an employee survey to see who is comfortable coming into an office or would prefer to continue working from home. We will always respect what makes anyone feel safe. We will begin opening offices when local health authorities allow it. We will use the same approach that we did in China where each office will have a fraction of the normal staff to ensure social distancing. We are also instituting an elevated hygiene protocol, and I’m sure we will evolve the plan as we get experience with what works and doesn’t.
We are continuing to work closely with our supply and retail partners, whom we have long-standing relationships with, to appropriately navigate this next phase as the country begins to reopen.
On a personal note, how have you been faring amid all this?
While it’s been an extremely challenging time, I am so proud of our team, and I feel fortunate to have the opportunity to spend more time with my family. My hope is that when we look back on this time, we will be able to see the silver linings. Some of the positives that I’ve taken from this experience so far include the opportunity to practice gratitude for all that we have and to continue giving back to our communities and others; the need to take care of ourselves both mentally and physically—taking breaks to get some fresh air, breathe, exercise, and rejuvenate; and the opportunity to be so present for our loved ones—kids, pets, significant others.
I’m a people person, so I’m looking forward to being together with my team in-person again, but for now, we’ll embrace our Zoom-themed parties and push on with the e.l.f. strength that I’ve had the pleasure to lead during this historic time.


fortune--2020-06-03--Lea Michele apologizes after former ‘Glee’ costar Samantha Ware accuses her of ‘traumatic microaggre

Lea Michele apologizes after former ‘Glee’ costar Samantha Ware accuses her of ‘traumatic microaggressions’

Former “Glee” star Lea Michele has apologized for being “unnecessarily difficult” on the set of the musical TV show after a co-star accused Michele of making her time there “a living hell.”
Michele issued a statement saying that while she didn’t recall any incident or judged anyone by their background, she was sorry and blamed her privilege and “immaturity.”
“I clearly acted in ways which hurt other people. Whether it was my privileged position and perspective that caused me to be perceived as insensitive or inappropriate at times or whether it was just my immaturity and me just being unnecessarily difficult, I apologize for my behavior and for any pain which I have caused,” she said.
The apology came two days after former co-star Samantha Marie Ware accused Michele of “traumatic microaggressions that made me question a career in Hollywood.” Michele is white and Ware is black.
After the Ware’s allegation, the meal kit company HelloFresh announced that it would sever its partnership with Michele, saying “We are disheartened and disappointed to learn of the recent claims concerning Lea Michele.”
The controversy started when Michele tweeted a comment on the death of George Floyd, a black man who died after a white officer pressed his knee into in his neck while he pleaded for air in Minnesota.
Michele tweeted her support of Black Lives Matter movement and said police violence on black people must end. Ware responded by tweeting in all caps that Michele had made her first TV job a “living hell.”
In her statement, Michele noted that she is soon to be a mother and tried to strike a hopeful note.
“I listened to these criticisms and I am learning and while I am very sorry, I will be better in the future from this experience,” she wrote. “We all can grow and change and I have definitely used these past several months to reflect my own shortcomings.”


fortune--2020-06-03--Allergan is trying to track down women with breast implants it recalled nearly a year ago

More than 10 months after recalling some of its breast implants, Allergan is making a new effort to find tens of thousands of women who still have the dangerous devices.
The pharmaceutical company, now owned by AbbVie, said this week that it will launch a digital and social media ad campaign to alert patients about the July 2019 recall of its textured Biocell implants. Those implants have been linked in academic studies to a sometimes-fatal cancer known as BIA-ALCL, for “breast implant–associated anaplastic large cell lymphoma.” More than 33 women have now died from BIA-ALCL.
Allergan’s announcement comes two weeks after Fortune published an investigation into the persistent problems with breast implants and the health risks, including BIA-ALCL, they have created for millions of women worldwide. These risks have been amplified by decades of inadequate study and problems that were hidden by breast implant manufacturers, as well as the generally poor tracking of medical devices, our investigation found.
Many women affected by Allergan’s Biocell recall told Fortune that they found out about it through social media or news reports, rather than directly from the company or the U.S. Food and Drug Administration, which requested the recall.
On Monday, Allergan acknowledged that it does not have device-tracking information for some 52,000 Biocell breast implants. Despite “robust efforts” to reach patients since last July, “the company is still seeking to directly contact all U.S. Biocell patients that have not yet been notified,” Allergan said in a press release.
“We are continuing to make every effort to make sure that each and every patient is made aware of the Biocell recall, and knows their implant type and implant history,” John Maltman, Allergan’s vice president of medical affairs, said in the release.
A company spokesperson did not respond to a request for more specifics about when the ad campaign would launch, or what exactly it would entail. And longtime critics of breast implant safety greeted Allergan’s announced plans with skepticism.
“I don’t know how visible it’s going to be,” says Diana Zuckerman, president of the National Center for Health Research. “Will the kind of money and effort be put into this in a way that’s comparable to ad campaigns when they’re selling something?”
The new ad campaign appears to be at the behest of the FDA, which “asked Allergan to develop a strategy to contact patients who may not have heard about the recall,” an agency spokesperson told Fortune by email on Tuesday, adding that the FDA “is working with Allergan to amplify the message and outreach related to its July 2019 voluntary recall of certain breast implants.”
This is the latest of several actions the FDA has taken on breast implant safety in the wake of Fortune’s investigation. Last month, after speaking with Fortune, the FDA sent a warning letter to Allergan over its longtime failure to comply with regulatory requirements for selling its implants. At the same time, the agency also sent a letter to a smaller manufacturer warning about manufacturing and quality-control issues.
The FDA is promoting Allergan’s promised campaign on its website and social media channels, as well as directly in conversations with patients and public health experts. On Monday evening, FDA officials held a conference call with some of the advocates who have spent years asking the agency to regulate breast implants more strictly. Some of the people on the call praised the FDA’s latest efforts, and willingness to ask patients to help spread the word about Allergan’s new ad campaign.
“This is a really unusual step, and it does show that the FDA understands that the breast implant safety advocates have established communication mechanisms that they haven’t,” says Madris Tomes, a former FDA manager who tracks reported medical device failures at her Device Events firm.
Still, she and others point out several limits to what Allergan is offering to do for patients, if and when it tracks down all 52,000 missing recalled implants. For example, the company has offered up to $7,500 to cover out-of-pocket surgery costs for any woman who has developed BIA-ALCL, and $1,000 toward diagnostic testing for anyone with the implants. But several affected women call those amounts inadequate for the costs of procedures that health insurance won’t always cover. “Why would patients sign up to be tracked if the company isn’t going to do anything for them?” Tomes asks.
(Allergan is also now facing about 48 lawsuits, including some class-action claims, relating to BIA-ALCL and its recalled implants. The company has declined to comment on pending litigation.)
Raylene Hollrah, an implant patient advocate who was diagnosed with BIA-ALCL and who has filed suit against Allergan, also questioned why 10 months have elapsed between when Allergan agreed to recall its textured breast implants, and when it said it would do more to track down and alert women about the recall.
“This should have been announced almost immediately after the recall,” Hollrah says. “I’m glad they’re doing this, but I think there are still some holes in it.”


fortune--2020-06-03--U.S. threatens to halt airline access as relations with the Chinese government fray

The U.S. government on Wednesday warned the Chinese government that it will suspend passenger airline flights from that nation if Beijing doesn’t allow American carriers to reenter that market, an escalation in tensions between the two nations.
The action responds to Beijing’s failure to permit U.S. carriers from expanding service there in the wake of the COVID-19 outbreak that prompted flight cuts early this year, said two people familiar with the decision who couldn’t be identified because it wasn’t finalized yet.
The notice was released from the Department of Transportation.


fortune--2020-06-03--SoftBank plans to invest $100 million in startups with minority founders

Out of left field, SoftBank is perhaps the first among VCs to dedicate a large dollar amount to their words of support.
On Wednesday, the Japanese telecom giant announced a $100 million Opportunity Growth Fund that will invest solely in companies founded by people of color. A portion of the gains from the fund’s investments will be donated to organizations “focused on creating opportunities for people of color,” while half of gains will be reinvested into subsequent Opportunity Growth Funds.
“We know that the venture capital community and tech industry have long lagged on diversity and inclusion,” wrote SoftBank COO Marcelo Claure. “When it comes to diversity, SoftBank absolutely has to do better as an employer, investor, and partner.”
SoftBank does not plan to include a management fee or a carry, and the language of the letter suggests that the company may be looking to loop in additional investor: Claure stated that the $100 million will be the “initial” size of the fund and SoftBank will serve as the “primary” Limited Partner.
Claure will lead the fund as CEO alongside Shu Nyatta, a Managing Partner who works on SoftBank’s Latin America-focused Innovation Fund. SoftBank also brought on board two prominent black figures in tech, TaskRabbit CEO Stacy Brown-Philpot and founder of TechSquare Labs Paul Judge, to sit on the investing committee.
The news comes as venture capital firms have condemned racism following George Floyd’s death (Including the likes of Accel, Benchmark, First Round and Kleiner Perkins) and some investors say they are seeking black entrepreneurs.
SoftBank itself is facing turmoil—and carries a battered reputation in the venture community. The company has strained its relationships over the past year as it sought to shore up its Vision Fund holdings, scrapping agreements to buy WeWork stock from the likes of Benchmark Capital and even walking away from deals.
The most busiest time of the year: Warner Music Group priced its IPO early Wednesday, kicking off 2020’s busiest week for new listings with a total of eight companies set to go public, according to Renaissance Capital. The entertainment company raised $1.9 billion by offering 77 million shares priced at $25 apiece, the higher end of its $23 to $26 price range.
Early-morning timing of the pricing may seem odd, given IPOs generally price the night before, and that was a conscious decision. Had Warner priced on Tuesday, the news would have clashed with a pledge from the music industry to pause normal activities to express solidarity with those protesting the death of George Floyd.
Meanwhile, ZoomInfo is expected to trade Thursday.
VENTURE DEALS
- MGI Tech, an affiliate of Chinese genome sequencing company BGI Group, raised over $1 billion in Series B funding. IDG Capital led the round. Read more.
- Bohemia Interactive, a Czech Republic–based game developer, raised $260 million from Tencent for about 70% to 80% of the company, per the Information. Read more.
- Varo Money, the San Francisco-based digital bank, raised $241 million in Series D funding. Gallatin Point Capital and The Rise Fund led the round and were joined by investors including U2 lead singer Bono, and Jeff Skoll, HarbourVest Partners and Progressive Insurance.
- Nice Tuan, a Chinese e-commerce platform, raised $81.4 million in Series C1 funding. GGV led the round. Read more.
- Climeworks, a Switzerland-based company converting carbon dioxide from the air into a solid state, raised $76 million from undisclosed investors. Read more.
- Bigfoot Biomedical, Inc., a Milpitas, Calif.-based developer of therapy and telemedicine Solutions for those with Diabetes, raised $55 million in Series C funding. Abbott led the round and was joined by investors including existing investors Quadrant Capital Advisors, Senvest Capital, Janus Henderson and Cormorant Asset Management, along with new investors Smile Group.
- NodThera, a clinical stage biotech targeting diseases driven by chronic inflammation, raised $55 million (£44 million) in a Series B funding. Novo Ventures led the round and was joined by investors including Cowen Healthcare Investments, Sanofi Ventures, 5AM Ventures, F-Prime Capital, Sofinnova Partners and Epidarex Capital.
- LanzaTech, a Chicago-based biotech company and carbon recycler, raised $50 million in funding from Suncor Energy, All Nippon Airways, Mitsui & Co., and the US Department of Energy (grant).
- Tae Life Sciences, a Foothill Ranch, Calif.-based radiation therapy company, raised $30 million in Series B funding. Artis Ventures was among the investors.
- PlushCare, a San Francisco-based virtual primary care platform, raised $23 million in Series B funding led by Transformation Capital. GGV Capital, WTI, and others participated.
- Cutover, a London-based cloud-enabled work orchestration platform, raised $17 million in Series A funding from Barclays and Index Ventures.
- MessageGears, a provider of customer marketing solutions, raised $12 million in funding. Argentum and Bridge Bank led the round.
- Meditrina, Inc., a San Jose, Calif.-based women’s healthcare company, raised $10 million in funding. Deerfield Management Company led the round.
- Shorla Pharma, an Irish specialty pharmaceutical company, raised $8.3 million in Series A funding. Seroba Life Sciences led the round.
- Overjet, an Allston, Mass.-based startup using AI to help dentists and insurance companies understand dental scans, raised $7.9 million in seed funding from investors including the Harvard Innovation Lab. Read more.
- Tictrac, a London-based startup targeting employee wellness, raised £6m ($7.5 million) in funding led by Puma Private Equity. Read more.
- Vara, a Berlin-based AI company focused on breast cancer screening accessibility, raised $7 million in Series A funding. OMERS Ventures led the round and was joined by investors including Merantix, Think.Health, Soleria Capital, and Plug and Play.
- Poka, a Quebec-based connected worker platform for manufacturers, raised $6.4 million in funding led by SE Ventures.
- MySky, a New York-based AI-powered spend management platform designed for the private aviation industry, raised $5 million in funding. GMF Capital led the round and was joined by investors including Global Trading Group.
- Energysquare, a Paris-based wireless charging technology maker, raised €3 million ($3.4 million) in funding. Partech led the round.
- Re-Vana Therapeutics, a Belfast, Northern Ireland-based drug delivery company developing sustained-release therapeutics for ocular diseases, raised $3.3 million in pre-Series A funding. Investors included ExSight Ventures, Visionary Ventures, InFocus Capital Partners, TechStart Ventures, Clarendon Fund Managers and Qubis.
PRIVATE EQUITY
- Zip Co (ASX:Z1P) acquired QuadPay, a New York-based payment installment platform. Height Capital Management invested $130 million in convertible notes and warrants.
- GTCR took a 25% minority stake in CAPTRUST Financial Advisors, valuing the North Carolina-based company at $1.25 billion.
- WatchGuard Technologies, backed by Vector Capital and Francisco Partners, acquired advanced endpoint protection provider, Panda Security, an endpoint protection provider. Investing Profit Wisely will join as an investor in WatchGuard.
OTHERS
- Facebook’s WhatsApp and PayPal Holdings invested in Gojek, an Indonesian ride-hailing app operator as part of the company’s ongoing fundraising round. Financial terms weren't disclosed.
- Maven acquired Bright Parenting, a New York-based parenting app. Maven is backed by Icon Ventures, Sequoia Capital, and Oak HC/FT.
- Puig is nearing an acquisition of Charlotte Tilbury, the U.K.-based makeup brand. The deal could value the company at more than $1 billion, per Bloomberg. Read more.
- Carrefour agreed to buy food retailer Wellcome Taiwan from Dairy Farm, making it the number two player in Taiwan’s convenience stores market. The deal comes with an enterprise value of 97 million euros ($108.00 million). Read more.
- LVMH’s $16.2 billion takeover of Tiffany & Co could be on the rocks, per WWD. Read more.
IPOs
- DoubleDown Interactive, a South Korean developer of mobile and web-based games, filed for an $100 million IPO. It posted revenue of $273.6 million and income of $36.3 million in 2019. It plans to list on the Nasdaq as “DDI.” Read more.
- Playtika, an Israel-based mobile gaming company, is preparing for a U.S. IPO that could raise around $1 billion, per Reuters A group of Chinese investors including Giant Network Group and Yunfeng Capital (a private equity firm founded by Alibaba Group founder Jack Ma) acquired the company for $4.4 billion in 2016 from Caesars Interactive Entertainment. Read more.
- Pliant Therapeutics, a San Francisco-based Phase 2 biotech developing therapies for the treatment of fibrosis, raised $144 million in an offering of 9 million shares priced at $16. It posted revenue of $57.1 million in 2019 and loss of $631 million in 2019. Third Rock Ventures (32.3% pre-offering), Eventide Asset Management (9.3%), and Redmile Biopharma (7.8%) back the firm.. It plans to list on the Nasdaq as “PLRX.” Read more.
EXITS
- Cortec Group sold its stake in YETI Holdings, a maker of camping equipment. Financial terms weren't disclosed.
- Cerberus Capital Management sold its controlling stake in Dallas-based Steward Health Care back to the company. Financial terms weren't disclosed.
F+FS
- Ardian raised $19 billion of commitments.
- Francisco Partners closed on about $10 billion in capital commitments across three funds: Francisco Partners VI, a $7.45 billion equity fund; Francisco Partners Agility II, a $1.5 billion equity fund; and FP Credit Partners, a $750 million opportunistic credit fund.
- Team8 raised $104 million for Team8 Capital. Read more.
- C4 Ventures raised €80 million ($88 million) for “Fund II”. Read more.
- Brownstone Equity Partners secured $75 million of commitments for its debut fund.
PEOPLE
- Unusual Ventures added Sarah Leary, a Nextdoor cofounder, as an investment partner. Read more.
- Kareem Aly joined Felicis Ventures as a principal.


fortune--2020-06-03--Why Lands’ End is betting on its new Kohl’s partnership to refuel growth

For years, the bulk of Lands’ End’s physical retail presence consisted of its shops within Sears stores. Soon, the apparel brand’s outside brick-and-mortar partner will instead be longtime Sears rival Kohl’s.
Starting in the fall, Kohl’s will sell a limited Lands’ End assortment of 300 items at shop-in-shops at 150 of its stores—it will sell all Lands’ End products online—a move aimed at rebuilding what had once been a large brick-and-mortar business for Lands’ End.
Lands’ End, best known for its casual clothes, kids’ uniforms, and outdoor apparel, was bought in 2002 by Sears, which had hoped at the time to improve the drab clothing offerings at a retailer better known for tools and appliances. But Sears’ inexorable decline and poorly kept stores damaged the brand, and in 2014, Lands’ End was spun off as a separate company.
By 2019, Lands’ End was no longer sold at any Sears stores, marking the end of what had been a $300 million business only a few years before. Enter Kohl’s, a fellow Wisconsin company and a struggling but still very viable department store, looking to bolster its own assortment.
“What makes Kohl’s a great idea is the same thing that made Sears not a great idea: The consumer at Sears didn’t share the same demographics as ours,” Lands’ End CEO Jerome Griffith tells Fortune.
Sears apparel rarely went beyond inexpensive basics (with rare exceptions, such as its ill-fated Kardashian Kollection a few years ago), and its shoppers rarely overlapped with those of Lands’ End.
To be sure, Kohl’s is struggling too, but not nearly to the same extent, or at least not before the COVID-19 outbreak decimated its business in March. But Kohl’s, whose net sales fell 1.5% last year, has succeeded in building up a sizable business in activewear—lining up Under Armour a few years ago—a move that helped it attract many shoppers Lands’ End also covets.
Kohl’s joins Amazon as an outside retailer selling Lands’ End merchandise. In 2016, Lands’ End took the plunge many brands still hesitate to take, but one Griffith says is still paying off. “The relationship is based on new-customer acquisition: 75% of people who buy Lands’ End on Amazon have never shopped us before or haven’t in a long time,” he says.
In 2019, Lands’ End retail sales fell by more than half to $59 million and made up only 4% of its total $1.45 billion in sales, largely because of the Sears closings. (About 75% of sales come from its own stores and website, and another 16% from the sale of uniforms for corporations such as American Airlines as well as school uniforms, businesses Griffith wants to further build up.)
Two years ago, a few months after he took the reins, Griffith laid out a plan to have 60 stores by 2023. It currently has only 26, and the company is suspending new store openings after launching the five locations it had already planned for this year until it’s clearer what the long-lasting impact of COVID-19 will be on physical retail.
“People are going to be gun-shy about going out to stores for a while,” says Griffith.
So Lands’ End is even more reliant on e-commerce and is looking to boost sales another way starting soon: using its website for the first time to sell outside brands’ merchandise in categories complementary to its own, notably in home goods. That is no slam dunk given the panoply of choices customers already have, especially for clothing.
Despite the big challenges retail apparel is facing, Griffith thinks Lands’ End can thrive in this tough environment. In its first quarter, the company’s net revenue decreased 17.3% to $217 million, a sharp drop, but not so terrible when one considers nationwide apparel store sales were down 89% between February and April.
“As more people work from home and are encouraged to work from home, people will be buying different product, cozy stuff which is right up our alley, and buying it online, which is also up our alley,” he says.


fortune--2020-06-03--Black women are bearing the economic brunt of the pandemic

Good morning, Broadsheet readers! Stitch Fix feels the sting of the downturn, China defines sexual harassment, and black women are bearing the economic brunt of the pandemic. Have a productive Wednesday.
– An unequal burden. As protests continue to gather steam across the country, many media outlets—including Fortune—have turned to economic data in an attempt to illustrate some of the realities that underlie the outrage and despair felt by black Americans.
With headlines like ‘Black workers, already lagging, face big economic risks,’ and ‘An undercurrent of the protests: African Americans are struggling more economically from this pandemic,’ these stories focus on the macro, laying out the multitude of ways in which black people are facing a structural economic disadvantage in the U.S.
Digging a little deeper into the data, there’s also a gender component worth noting. As William M. Rodgers III, a professor of public policy and chief economist at the Heldrich Center for Workforce Development at Rutgers University told the Washington Post: “When I saw the numbers I was not surprised to see blacks, particularly black women, bearing a major brunt of this recession.”
The Post notes that black women have been hardest hit in terms of the employment population ratio, which focuses on the share of people who are working out of an entire group. By that measure, black women went from 58.4% employment in February to 47.4% in April.
Add that blow to the fact that black women have long faced a larger gender pay gap than white women—not to mention their higher likelihood of being overlooked for opportunities and promotions—and it’s clearer than ever that we were wrong about the coronavirus being the ‘great equalizer.’ The economic pain of the pandemic is in no way equal, and black women are feeling far more than their share.
Kristen Bellstrom
kristen.bellstrom@fortune.com
@kayelbee
Today’s Broadsheet was curated by Emma Hinchliffe.
ALSO IN THE HEADLINES
- Historic election. Amid the backdrop of nationwide Black Lives Matter protests building on the demonstrations over Michael Brown's death six years ago, Ella Jones was elected the first black mayor of Ferguson, Missouri; the Ferguson City Council member is also the first woman to lead the city. In other results from states that held primaries yesterday, Congressional races throughout the country nearly all involved women; more women than even in 2018 have filed to run for office, an increase largely helped by more Republican women declaring their candidacies. From the effort to challenge Sen. Joni Ernst in Iowa, to House races in New Mexico and Pennsylvania, to the election for mayor of Baltimore, see the details and projected winners here.
- Two diseases. Dr. Lauren Powell heads Time's Up's work in the healthcare industry, and from the earliest days of the coronavirus, her biggest fear, as a black woman in public health, was the death of a black person by law enforcement setting off widespread protests amid the pandemic. Well, that fear has come to pass. Powell reflects on her "nightmare" scenario and the "two infectious diseases" of racism and COVID-19. STAT News
- California dreaming. Stitch Fix told about 1,400 California stylists for the personalized shopping service that they will lose their jobs unless they relocate to a cheaper city. The company led by founder and CEO Katrina Lake plans to hire 2,000 stylists in cities like Dallas and Cleveland. Wall Street Journal
- Dynamic duo. Sen. Kamala Harris is working to pass a bill that would provide monthly payments up to $2,000 to Americans during the coronavirus pandemic. In a town hall with Andrew Yang earlier this week, Harris pushed for the proposal. Fortune
MOVERS AND SHAKERS: Finastra named Dell Technologies' Margaret Franco CMO.
IN CASE YOU MISSED IT
- Activists off the field. Six U.S. Women's National Team players spoke to The Athletic about their experiences with racism and about the protests playing out across the country. Hear from athletes Crystal Dunn, Julie Ertz, Adrianna Franch, Jessica McDonald, Midge Purce, Becky Sauerbrunn, and Lynn Williams, who helped to craft the USWNT players' official statement on the death of George Floyd: The Athletic
- Defining the problem. China's legal code had no specific definition of sexual harassment. On Thursday, the National People's Congress enacted largely symbolic legislation defining sexual harassment in the country's civil code; there are not yet any guidelines for enforcement. Reuters
- Risk management. Hanzade Dogan Boyner is the founder and chair of the e-commerce company Hepsiburada, also known as Turkey's Amazon. In this piece for Fortune, she argues that the business world can't allow the coronavirus to slow progress on gender equality. Fortune
ON MY RADAR
A midwife, a train driver and a store worker are British Vogue's latest cover stars CNN
She gave birth alone in the hospital. Six days later, she was back to work as a newsroom CEO facing the pandemic Poynter
The anti-racist reading list Elle
Tiger King's Carole Baskin handed control of Joe Exotic's zoo Guardian
PARTING WORDS
"I am both impatient and disgusted by the fact that as a nation, we seem to be placated by the passive discussion of ‘why.’ Why does this happen?"
- General Motors CEO Mary Barra in her message to employees about the death of George Floyd


fortune--2020-06-03--Ferguson elects first black mayor as new protests continue across the country

Ferguson voters have elected Ella Jones as the city’s first black mayor as protests over the death of George Floyd and police treatment of black communities roil the nation.
Jones, a city council member who also will be the first woman to lead the St. Louis suburb, beat fellow council member Heather Robinett in the nonpartisan election for a three-year term that starts later this month, the St. Louis Post-Dispatch reported. Incumbent James Knowles III could not run again because of term limits.
Protests following the 2014 fatal police shooting of 18-year-old Michael Brown thrust Ferguson into the national spotlight. They also helped solidify the Black Lives Matter movement formed in the wake of the death of black teenager Trayvon Martin in Florida two years earlier and the acquittal of the neighborhood-watch volunteer who shot him.
The city voted Tuesday amid another day of protests over the death of Floyd, a black man who died last week after a white Minneapolis police officer pressed his knee into Floyd’s neck for several minutes even after he stopped moving and pleading for air.
The shooting of Brown, a black teen, by a white Ferguson police officer prompted a Justice Department investigation that resulted in a consent agreement reached in 2016 that requires significant changes in the city, including municipal court reforms, community policing efforts, hiring more minority officers, and improved policies in areas such as use of body cameras and search-and-seizure practices.
Both Jones, 65, and Robinett, 49, said if elected they would help Ferguson continue implementing the changes outlined in the agreement.


fortune--2020-06-03--White House softens on sending troops to states

After threatening states that he would dispatch the military to quell protests, President Donald Trump appeared to be privately backing off, with White House officials saying the response to demonstrations across the country indicated that local governments should be able to restore order themselves.
The shift came as protests in Washington and other cities over police brutality against minorities proceeded Tuesday with relative calm, a striking contrast to the harsh crackdowns outside the White House on Monday night. The president wanted to make the aggressive action in the nation’s capital an example for the rest of the country, a senior White House official said Tuesday.
The Defense Department has drafted contingency plans for deploying active-duty military if needed. Pentagon documents reviewed by The Associated Press showed plans for soldiers from an Army division to protect the White House and other federal buildings if the security situation in the nation’s capital were to deteriorate and the National Guard could not secure the facilities.
But interest in exerting that extraordinary federal authority appeared to be waning in the White House. Though the crackdown on the Washington demonstrations was praised by some Trump supporters Tuesday, a handful of Republicans expressed concern that law enforcement officers risked violating the protesters’ First Amendment rights. Trump’s defense secretary also distanced himself from Trump’s decision to walk across Lafayette Park for a photo opportunity at a church after the demonstrators had been cleared.
Pentagon Chief Mark Esper, who walked with Trump to St. John’s Church on Monday evening, insisted he did not know the president’s destination.
“I didn’t know where I was going,” Esper told NBC News. He said he had expected to view damage to a bathroom facility that had been vandalized in Lafayette Park, across from the White House, and talk with National Guard troops positioned there.
Protests have sprung up following the death of George Floyd, a black man who died after a white Minneapolis police officer pinned him down and pressed Floyd’s neck with his knee. Violent demonstrations have raged in scores of American cities, a level of unrest unseen for decades.
The situation in Washington escalated Monday, becoming a potent symbol of Trump’s policing tactics and a physical manifestation of the rhetorical culture war he has stoked since before he was elected. Nearly 30 minutes before a 7 p.m. curfew in Washington, U.S. Park Police repelled protesters with what they said were smoke canisters and pepper balls.
“D.C. had no problems last night. Many arrests. Great job done by all. Overwhelming force. Domination,” Trump tweeted Tuesday, after a night in which heavily armed military forces and federal officers swarmed the city. Trump added, “(thank you President Trump!).”
The clampdown followed a weekend of demonstrations outside the White House. Trump had been furious about images juxtaposing fires set in the park outside the executive mansion with a darkened White House in the background, according to current and former campaign and administration officials. He was also angry about the news coverage revealing he had been rushed to the White House bunker during Friday’s protests.
In a Monday address in the Rose Garden, he called on governors to ramp up the National Guard presence to tamp down the protests. If they didn’t, Trump said, he would dispatch the military to their states — a step rarely taken in modern American history.
The federal government has provided affected states with a list of National Guard resources available to them, the White House official said. The official added that Trump’s message to governors was that if they don’t use all the tools in their arsenal, they shouldn’t expect a sympathetic response to any request for federal dollars to help with cleanup and recovery down.
On Monday, 715 soldiers from the 82nd Airborne Division arrived in the capital area in case the situation in Washington escalated. They are stationed at Joint Base Andrews in Maryland and Fort Belvoir in Virginia. Two more 82nd Airborne battalions, totaling 1,300 soldiers, are on standby at Fort Bragg in North Carolina, according to documents reviewed by the AP. The plan is named Operation Themis.
The soldiers on standby in the Washington area are armed and have riot gear and bayonets. After the AP first reported the issuing of bayonets Tuesday, orders came down that soldiers would not need the knife-like weapons that can be affixed to rifles, according to two soldiers from the 82nd who spoke on condition of anonymity for fear they would be punished for commenting publicly. The idea that bayonets could be used in confronting civilians provoked an outcry on social media and among some members of Congress.
Administration officials were privately acknowledging that Monday’s events didn’t serve the administration well. Some Republican lawmakers, typically in lockstep with the president or at least refrain from publicly criticizing him, said Trump had gone too far in appearing to use force to clear the way for his visit to the church.
“There is no right to riot, no right to destroy others’ property, and no right to throw rocks at police,” said Nebraska Republican Sen. Ben Sasse. “But there is a fundamental — a constitutional — right to protest, and I’m against clearing out a peaceful protest for a photo op that treats the Word of God as a political prop.”
Former Vice President Joe Biden, the presumptive Democratic presidential nominee, said of Trump posing for photos holding up a Bible, “I just wish he opened it once in a while.”
It was Attorney General William Barr who gave the order for law enforcement to clear out the protest before Trump’s walk to the church ahead of Washington’s 7 p.m. curfew. A person familiar with the matter said the decision was made earlier Monday, but had not been executed by the time Barr arrived in Lafayette Park to survey the scene. He verbally gave the order at that time.
After the demonstrators had been pushed out of the park, Trump emerged from the White House with several officials, including Esper and Gen. Mark Milley, the chairman of the Joint Chiefs of Staff. Senior defense officials told reporters Milley was also not aware that the Park Police and law enforcement had made a decision to clear the square or that Trump intended to visit the church. They had been in Washington to coordinate with federal law enforcement officials but were diverted to the White House to brief Trump on military preparations, the officials said.
The White House, Defense, campaign officials and others with knowledge of Monday’s events all insisted on anonymity because they were not authorized to speak publicly.


fortune--2020-06-04--Providing bereavement leave is one way companies can support black employees right now

Could this be the best bull run ever ?

Amid nationwide protests over the killing of black men and women by law enforcement, the freelancing platform Upwork is offering bereavement leave to its black employees. “This is not the normal PTO. This is not mental health. These are losses,” says Erin Thomas, the company’s head of diversity, inclusion, and belonging.
Providing this specific kind of paid leave is one way Upwork has tried to show support for its black workers after George Floyd died at the hands of law enforcement in Minneapolis. Thomas shared the approach during a virtual gathering, where members of Fortune’s Most Powerful Women community convened on Wednesday to discuss racism and allyship in the United States. Thomas was joined by other business leaders and activists for the discussion, which was led by Fortune’s Ellen McGirt.
Below are four ways companies should respond and support their black employees right now, according to the MPW panelists:
Focus on black belonging
The first priority for any company right now, Thomas said, should be supporting its black employees—a goal that many companies have fallen short of achieving in recent days.
“A lot of these messages don’t center on what black employees are going through right now,” Thomas said of the corporate communications that some employers have sent out this week. “It’s incredibly important to focus on black belonging—the sense that your black team members feel a sense of solidarity from corporate leaders and everyone around them.” For a company trying to adequately respond to this societal movement, she said, everything else should come second right now.
Recognize your power
EY U.S. chair and Americas managing partner Kelly Grier offered a frank reflection on the consulting firm’s level of influence—and how the $36.4 billion company has chosen to use that power in the past.
“The services we bring, our purchasing power, our voice in D.C.—we have not used any of that power to address the systemic injustice of racism in this country,” she said. “That has to change.”
Grier is working to help her company acknowledge the power of its privilege on an institutional level in the same way white people and nonblack people of color are recognizing theirs as individuals.
Companies, overall, should reflect on their role in the country’s history of racism and oppression, Thomas added. “Hopefully we are waking up to realize companies are both by-products of and mechanisms for perpetuating the systemic inequity we’re seeing,” she said.
Make room for mistakes
There isn’t much room for companies to make mistakes while responding to this moment. But individuals can—and will. Leadership should make room for their nonblack employees to make those errors while having these discussions, the group agreed. At Cisco, managers are trying to support employees in having “imperfect conversations” about racism and discrimination, said chief people officer Fran Katsoudas.
At EY, the company’s “white majority feels quite helpless,” added Grier. Company leaders should encourage white employees to push past those feelings of helplessness—to support black employees who, more important, feel “traumatized, numb, anxious, and fearful,” she said.
Be authentic
While communicating to employees and the wider world, corporate leaders should remain authentic, said Crystal Ashby, CEO of the Executive Leadership Council. What that doesn’t look like, Ashby said, is rote discussion of programs like diversity initiatives. While the diversity of an organization is certainly a reflection of the treatment of black Americans in the United States, such programs do not necessarily provide companies with the right toolkit to respond to police brutality against black people.
“This response can’t seem like a diversity program. This response can’t seem like something on a checklist. It can’t seem like they’re doing it for that reason or it’s no longer real,” said Ashby.
Corporate America must ultimately remember: It’s not about them. “This is not an issue about companies,” Ashby said. “This is an issue about people.”


fortune--2020-06-04--Germany’s coronavirus package shows the growth of green stimulus

Providing bereavement leave is one way companies can support black employees right now

This is the web version of CEO Daily. To get it delivered to your inbox, sign up here.
Good morning. David Meyer here in Berlin, filling in for Alan.
The push for green coronavirus stimulus measures looks like it’s getting somewhere. Following furious wrangling within Germany’s coalition government, Chancellor Angela Merkel’s administration has announced a €130 billion ($146 billion) stimulus package—that’s nearly 4% of GDP—that should aid the energy transition as well as pulling Germany out of its pandemic slump.
A key element is the increase of government subsidies for people buying electric vehicles—up from €3,000 to €6,000 per vehicle. Along with cash for hydrogen energy, this forms part of a €50 billion tranche of the overall package, which is set aside for addressing climate change and researching A.I. and quantum computing. (Other notable measures include a temporary lowering of the sales tax rate, and a one-off allowance of €300 per child.)
“It is an ambitious program,” said Merkel, while her finance minister—Olaf Scholz, from the center-left SPD party—talked about emerging from the crisis with “oomph” (my translation).
In a note today, BoA’s analysts said the EV subsidies were “too high” and would not have a great effect on car demand in Germany. It should also be noted that the full subsidy is only for cars costing under €40,000, which leaves out electric vehicles from the likes of BMW, Mercedes, Audi and Tesla.
Volkswagen should benefit somewhat—its ID.3 EV is coming out this summer at a price of just under €30,000. The car giant had previously called for stimulus measures to also support combustion-engine cars, but no dice as it turns out.
Germany’s move comes after neighboring France also increased incentives for the purchase of electric vehicles, in order to keep its auto industry afloat. As French Finance Minister Bruno Le Maire said last month: “We are ready to support the demand for vehicles but it will be support for clean vehicles that emit less CO2, especially electric vehicles.”
However, France also took a step beyond where Berlin is prepared to go: its bailout for Air France came with “ecological commitments” such as a halving of carbon emissions on domestic flights within the next five years.
Germany’s Lufthansa bailout, agreed in the last few days, comes with no green strings attached.
More news below.
David Meyer
@superglaze
david.meyer@fortune.com
TOP NEWS
China flights
China will allow foreign airlines to step up flights to and from the country as of next week. The move follows a threat by the Trump administration to block Chinese carriers from the U.S., if China does not allow in the likes of United and Delta. Foreign carriers will now be able to fly one service into China per week, or two if they have already been maintaining a China route (which the U.S. airlines were not). Fortune
Trump slapdown
Former Defense Secretary James Mattis has released an extraordinary statement backing protestors in the U.S. and accusing President Trump of trying to divide the American people. "We must reject and hold accountable those in office who would make a mockery of our Constitution," he said, breaking more than a year's silence about Trump's performance as president. Meanwhile, current Defense Secretary Mark Esper has broken with Trump on the issue of deploying the military to quell protests, and Joint Chiefs of Staff head Mark Milley has written to military commanders to remind them that the Constitution "gives Americans the right to freedom of speech and peaceful assembly." Atlantic
HSBC and China
HSBC's Asia-Pacific CEO Peter Wong, signed a petition in favor of the new national security law that China is set to impose on Hong Kong. The bank also issued a statement supporting the law, which critics say undermines Hong Kong's "one country, two systems" status. HSBC is a British bank but one with deep roots in Hong Kong, and it is increasingly reliant on the region. Fortune
SoftBank fund
SoftBank's image as an investor has been dented recently, to say the least, by bad bets such as WeWork. But now the Japanese conglomerate has announced a $100 million "opportunity growth fund" to invest solely in companies founded by people of color. SoftBank won't include a management fee or a carry, and a portion of the gains will go to organizations "focusing on creating opportunities for people of color." Fortune
AROUND THE WATER COOLER
Second slump
Hedge funds see another stock-market slump coming this year, the Financial Times reports, with some managers becoming concerned about surging prices ignoring the reality of slow economic recoveries and overestimating the impact of stimulus packages. Dymon Asia Capital's Danny Yong: "The stability in equity markets does not reflect the job losses and the insolvencies ahead of us globally…prices cannot diverge from fundamentals for too long." Financial Times
Tesla in Germany
Tesla is to revise its plans for its new factory outside Berlin, in order to soothe some of the environmental concerns that locals have raised, particularly regarding water. The new plans will reportedly reduce the amount of fresh water the plant requires, and the amount of waste water that it generates. Bloomberg
Don't start
The banking advisory firm Evercore is to pay incoming junior bankers up to $25,000 not to start work just yet—that's $15,000 to hang on until January, and $25,000 to wait until next summer, when everyone hopes the coronavirus pandemic will be under control. This sort of move hasn't been seen since the last financial crisis. Wall Street Journal
COVID-19 economy
How can companies thrive in the current economy? According to the Tembo Group's Jen Butte-Dahl and Denielle Sachs, the answer lies in embracing the idea of corporate citizenship. They write for Fortune: "The companies that succeed will be those that balance the need to look both inward and toward the horizon, and act with the empathy, courage, and vision this moment demands." Fortune
This edition of CEO Daily was edited by David Meyer.


fortune--2020-06-04--China’s economy should return to ‘near-trend growth’ by end of 2020: BlackRock

As the epicenter of the coronavirus outbreak, China was the first country to feel the full economic impact of a contagion that has since become a worldwide pandemic. Now, as China gradually reopens its economy, it’s beginning its journey on the long road back to pre-pandemic conditions—a recovery that may happen quicker than some expected.
The Chinese economy could return to “near-trend growth” as soon as late 2020, economic strategists at BlackRock said in a research note this week. They pointed to economic policy actions taken by the Chinese government, such as fiscal stimulus measures, as underpinning the asset management giant’s “overweight” outlook for Asian equities and credit markets outside Japan.
While China has targeted annual economic growth of around 6% in recent years, the coronavirus pandemic looks set to trim that growth to just over 1% in 2020, according to projections by the International Monetary Fund.
Still, recent data indicates that China’s manufacturing sector has begun to expand again, and BlackRock strategists cited the increased use of Chinese mobile apps enabling job and housing searches, ride-sharing, and travel bookings as “alternative data sources” that reflect a rebound in economic activity.
Policy actions taken by the Chinese government are providing “further support for the restart,” with authorities prioritizing job creation in an attempt to “balance economic growth with financial and social stability.” Coupled with a shift in monetary policy that could yield a spike in credit growth, there are signs of a “potential strong upturn in economic growth in the second quarter,” according to BlackRock.
Of course, the asset management firm pointed to economic and political tensions between the U.S. and China as “a key risk” to any recovery. The “phase one” trade deal agreed to earlier this year is now a distant memory, as the Trump administration has laid blame for the pandemic on Beijing. To that end, BlackRock noted an accelerated “decoupling” between the two nations’ economies that will force investors to rethink their strategies moving forward.
But it is China—as well as neighboring Asian countries that have “demonstrated their ability to curb the virus spread so far”—that looks to have a jump start on its economic recovery, while later-hit economies like the U.S. and Europe struggle to reemerge from the pandemic.


fortune--2020-06-04--Could this be the best bull run ever?

Could this be the best bull run ever?

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, Bull Sheeters. Stocks are—shocker!—trading lower this morning even with the promise of more stimulus spending in the works. There’s data too showing the U.S. economy is not in such a dreadful state. The weak start to the trading day is a mere blip in what’s otherwise been a record two-month run in equities.
Let’s check in on the action.
Markets update
Asia
The Asian indices are mixed , with Shanghai edging lower in afternoon trade.
, with edging lower in afternoon trade. HSBC is the latest financial firm to publicly back Beijing’s new national security law, drawing criticism from Hong Kong’s top pro-democracy activist.
is the latest financial firm to publicly back Beijing’s new national security law, from Hong Kong’s top activist. Airlines look to be at the center of the latest spat between Beijing and Washington. China on Thursday said U.S. airlines are free to resume limited inbound service to the country a day after the Trump Administration said no to Chinese carriers. Your move, Washington.
Europe
European bourses fell at the open this morning, with the benchmark STOXX Europe 600 down 0.2% one hour into trade, down off its lows.
bourses fell at the open this morning, with the benchmark down one hour into trade, down off its lows. All eyes are on the ECB. The central bank meets again today to determine if its €750 billion PEPP asset-purchase plan is enough to revive the faltering eurozone economy. If it doesn’t boost that by a good half-trillion you could see equities take a hit, market watchers say.
The central bank meets again today to determine if its asset-purchase plan is the faltering eurozone economy. If it doesn’t boost that by a good you could see equities take a hit, market watchers say. You wanted €100 billion stimulus plan, Ms. Merkel? Here’s €130 billion, German lawmakers decided. It’s a creative package, involving a cut in VAT, and billions to build out 5G data networks, improve railways and double incentives for electric vehicles. (Germany, in case you hadn’t noticed, is having a pretty good pandemic.)
U.S.
U.S futures are down, but off their lows.
are down, but off their lows. A pause in the U.S. equities rally is bound to happen. Eventually. But until then, consider this: the S&P 500 is up more than 37% over the past 50 trading days , its best run ever. To repeat: Best. Run. Ever.
is up more than over the past , its best run ever. To repeat: This will be a big week for U.S. jobs data. The most timely of readings come out today with jobless claims. Forecasters are in accord: the labor market lost nearly 2 million jobs in the past week.
Elsewhere
Gold is down.
is down. The dollar is up, but that’s small potatoes. The euro is on its biggest winning streak in seven years against the greenback. Grumble, grumble.
is up, but that’s small potatoes. The is on its biggest winning streak in seven years against the greenback. Grumble, grumble. Crude is falling. After climbing above $40/barrel, Brent is down 1.2% in morning trade.
Fear of FOMO
From Japanese bluechips to American small-caps, stocks are having a bull run for the ages. Growth stocks and cyclicals are on fire, and that’s despite economic data showing record job losses and a collapse in growth.
As we’ve discussed many times here in this space, the stock market is seeing a V-shaped recovery while the global economy is seeing anything but.
This disconnect can also be seen in the mindset of the investor. Allianz released its latest quarterly survey of investors late last week, showing there’s still plenty of concern about the COVID-19 impact on portfolios and on the wider economy. Take a look at this morning’s chart.
Nearly two-thirds of respondents believe we’re entering not just a recession, but a major recession. And another 58% see COVID having a negative impact on their retirement plans. Oh, and 54% believe the market has yet to hit bottom.
Now here comes the disconnect. The same investors are suffering a big case of FOMO. A fairly significant number don’t want to miss out on this incredible bull run, as the next chart (pulled from the very same Allianz survey) shows.
Allianz asks the survey panel every quarter whether now is a good time to invest. There’s been a big jump in those responding in the affirmative in the latest quarter, as the chart above shows. It’s still in the minority, but the more bullish trend is worth noting.
So how is it that there are both fears of a mega-recession and a fear-of-missing-out mood hanging over investors? I’m picturing the proverbial angel-on-one-shoulder/devil-on-the-other gripping investors as they see all traditional economic indicators of a healthy economy—employment, GDP— crash, and the markets soar.
So I open it up to the Bull Sheet community: do you see conflicting signs as it pertains to the future of your portfolio and the future of the economy? More to the point, does it even matter?
Shoot me a line, if you have a moment. I’m curious to get your take.
***
Have a nice day everyone. I’ll see you back here tomorrow.
Bernhard Warner
@BernhardWarner
Bernhard.Warner@Fortune.com
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Today's reads
No takers. The Federal Reserve turned heads earlier this year when it promised a whatever-it-takes policy to bail out the ravaged corporate credit market. It vowed to buy corporate bonds, restoring calm. There's just one problem: the central bank is yet to buy a single bond, the Wall Street Journal reports.
It's the fiscal measures, stupid. Central bank intervention is probably responsible for much of the stock market run. What can keep it going? The wisdom of policy makers, explains The Wall Street Journal's Mike Bird.
(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
Blame it on millennials. The US Global Jets exchange-traded fund, (JETS) closed yesterday up 7%. More than $1 billion has now been poured into the fund, a favorite trade of Robinhood clients. What gives? As Frank Holmes, chief executive officer of JETS issuer U.S. Global Investors, told Bloomberg: “All these millennials, being stuck at home with no bars to go to and no beaches to travel to, took their money and became day traders. They’re bored, they want to make money.”


fortune--2020-06-04--Investors don’t need to worry about Hong Kong—yet

On May 21, during the opening of China’s annual meeting of Parliament, Beijing announced it would impose a national security law on Hong Kong—circumventing the special administrative region’s local legislature and arguably violating the “one country, two systems” principle that has safeguarded Hong Kong’s autonomy.
Beijing says that the law is designed to target only a “small group of people” who supposedly threaten China’s national security. Hong Kong officials have assured investors that the city’s vibrant business community will not be affected. However, there are concerns within the business community that Hong Kong’s rule of law—central to the city’s economy—has been irrevocably tainted.
Fortune’s Clay Chandler and Grady McGregor sat down with Cora Chan, deputy head of the law department at Hong Kong University, to discuss the impending legislation. While optimistic about the future and maintaining a belief that, in the short term, businesses won’t be affected, Chan cautioned there is now always a risk the wind could change.
The Q&A has been edited for length and clarity.
Fortune: Why did Beijing push this legislation through now, 23 years after Hong Kong’s return? Is there some pressing new perceived threat that makes it necessary to enact it immediately?
Cora Chan: I think China genuinely sees Hong Kong as a security threat. Beijing genuinely considers, for example, that the protests last year indicate how Hong Kong might be used by foreign forces as a base for subverting the Chinese government.
For example, activities that some Chinese officials have cited as indicating the kind of security threat that Hong Kong poses include people waving Hong Kong’s colonial-era flag or waving American flags during protests and lobbying for the U.S. government to sanction Hong Kong and China.
Together with the fact that China sees that in the foreseeable future there would be no chance of a national security law being passed through Hong Kong’s legislature. [Editor’s note: Hong Kong’s legislature has been stalled for months owing to filibustering by pro-democracy lawmakers.]
Even if the local legislative council was able to pass a security law, it’s unlikely that such a law would meet China’s standard of security. So I think, coupled with COVID-19 [stopping people from going out to protest] right now, China thought this was the right time to do something to restore political and social stability.
What are some important issues that we don’t know about the impending law?
There are three key sets of unknowns about this law.
The first relates to the scope of power of the national security institutions that, according to the proposal, will be set up in Hong Kong. At the moment we don’t know whether those institutions will only have intelligence-gathering powers or whether they’re going to have law enforcement powers as well. For example, will they be able to arrest, detain, and interrogate people in Hong Kong? We don’t know.
The second very important unknown relates to the definition of the crimes of secession, subversion, terrorism, and the vague notion of foreign intervention. There are concerns that the crimes won’t be defined specifically enough nor defined in such a way that complies with Hong Kong’s common law legal system. The pan-democrats in particular worry whether peaceful advocacy for the democratization of China, for example, would violate the impending law.
The third set of unknowns is whether adjudication of this law is going to be within the power of Hong Kong’s courts. Then, even if so, there are also worries as to whether Hong Kong courts will have final powers of interpreting this law. From past experiences of dealing with the Chinese government we know it’s very important to know who has final say over what the law means.
One of the provisions of this legislation is that it will permit agents of mainland China’s state security agencies to operate more or less openly in Hong Kong. Are there any assurances in the law to restrict or put limits on the way in which those security agents can operate?
I think the question of what scope of powers these national security institutions will have is one of the biggest concerns regarding the new law. There isn’t much detail about it in the National People’s Congress decision. I think for businesses or foreign companies operating in Hong Kong that will be a real issue because we’ve got to think of all of this in the larger socioeconomic political context.
We have a very volatile U.S.-China relationship, and we’re in the middle of a trade war. Given that China’s “national security” could be interpreted to include economic development, one concern for foreign companies with competitors in mainland China could be: Will national security agencies in Hong Kong, under the guise of national security, have power to extract information from my staff?
You said how Hong Kong’s judicial system is vital in supporting the city’s financial system and that the two together make Hong Kong an attractive place for foreign investors. Is it possible for Beijing to selectively impose the national security law without jeopardizing that synergy?
There’s been a lot of rhetoric around the introduction of this national security law being the end of the rule of law in Hong Kong or the end of “one country, two systems.” Is it possible for Beijing to deal with this such that they selectively use the law only against certain people but not target businesses and investors? The answer is an absolute yes.
So should investors and businesses be worried about this law? I believe we will see that, at least in the initial period, the law will be used in a restrained manner. It won’t be used to target businesses and investors in Hong Kong. Beijing has enormous vested interest in not tarnishing the perception of the rule of law and not tarnishing the perception of Hong Kong as an international financial center.
However—and this is a very important caveat—the fact remains that Beijing could use the law if and when it feels the need to protect its sovereignty and economic interests. The law might also have an indirect impact on businesses and investors. For example, there might be tighter censorship over the free flow of information or tighter state surveillance compromising privacy. Even just generally, if Hong Kong becomes a less free city there might be a brain drain as a result, and it could become more difficult to recruit talent.
There are all these ramifications that people in the boardroom will have to think about, and I don’t envy them.
This story is part of Eastworld Spotlight, a series of conversations on matters of business, tech, and finance with executives, experts, entrepreneurs, and investors in Asia. Subscribe to Fortune’s Eastworld newsletter to get them in your inbox.


fortune--2020-06-04--Why the U.S. acts as an enforcer of the Hong Kong deal between Britain and Beijing

U.K. Prime Minister Boris Johnson, in a Wednesday op-ed in the South China Morning Post, said the U.K. will expand immigration rights for roughly 2.9 million Hong Kong residents if Beijing proceeds with its controversial national security law in Hong Kong.
Johnson said the security law lies “in direct conflict” with Beijing’s obligations under the Sino-British Joint Declaration, the 1984 treaty between China and the U.K. that laid out the terms of Hong Kong’s switch from British to Chinese sovereignty in 1997.
The threat was the most forceful yet from the U.K. in the matter of Hong Kong’s autonomy, guaranteed in the 1984 treaty under the “one country, two systems” policy separating Hong Kong’s economy and administration from mainland China’s. Before Wednesday, the U.K. had been relatively quiet on the matter.
Instead, the U.S. has emerged as a sort of adjudicator of Hong Kong’s relationship with Beijing, with President Donald Trump saying on Friday that his administration would begin to roll back Hong Kong’s trade privileges with the U.S. as “it is no longer autonomous from China” in Washington’s eyes.
U.S. leadership on this front is a product of its own interests. But it also reflects the murky legal nature of the Sino-British Joint Declaration that set the terms of Hong Kong’s autonomy to begin with.
“The really interesting question here is not really legal at all but moral,” said Alex Green, an assistant professor of law at the University of Hong Kong. “Does the U.K. have a moral duty to hold the [People’s Republic of China] to account over this new law as a result of its unusual history with Hong Kong and the existence of the Sino-British Joint Declaration?”
U.S. interests
So far, the U.S. has led the backlash against the Chinese central government’s decision to bypass Hong Kong’s legislature and institute a national security law in the region.
When Beijing announced the measure on May 21, U.S. officials declared their opposition almost immediately. They called it a “death knell” for Hong Kong’s freedoms, introduced a bipartisan bill to sanction Chinese authorities who enforce the law, and released statements condemning it as a “violation” of the Sino-British Joint Declaration. Trump then promised to yank the city’s trade privileges.
A demonstrator shows a British National Overseas passport as another waves a colonial-era Hong Kong flag during a protest at the International Finance Center shopping mall in Hong Kong on May 29, 2020. References to the U.K. point to the sentiment among some Hong Kongers that Britain owes a debt to its onetime colony. Lam Yik/Bloomberg via Getty Images
The U.S. response is based on its own Hong Kong Policy Act of 1992, which laid out American policy toward post-handover Hong Kong and established a preferential trade status for Hong Kong that depended on its continued autonomy from mainland China. The U.S. evaluates the city’s autonomy by the degree to which “one country, two systems”—the policy laid out in the joint declaration—is upheld.
But the U.S.’s quick reflexes also underscore Washington’s growing anti-China rhetoric that has rare bipartisan backing. The U.S.-China rivalry—swelling in recent years over trade, technology disputes, and human rights—has only worsened as a result of the coronavirus pandemic, with each country attacking the other over their response to the crisis and the outbreak’s origins.
For better or worse, Washington sees Hong Kong and the city’s special trade status as a means by which it can retaliate against Beijing for its treatment of the city and for other, separate grievances. If the White House makes good on its promise to scrap Hong Kong’s privileges, the city’s standing as an international business and finance center could be in jeopardy.
“[Businesses] are going to be very concerned in terms of managing risk, and the political risk now is certainly ramping up in Hong Kong,” said Jonathan Kolieb, a senior lecturer at the Graduate School of Business and Law at Australia’s RMIT University who specializes in international law. “If you revoke the special status, all of the sudden tariffs, trade agreements, and customs duties will all have to be altered, and as America goes so too do several other countries.”
Uncertain recourse
At a protest in a Hong Kong shopping mall on Monday, one demonstrator held her British passport up in the air, while another waved the Union Jack–adorned colonial flag.
Nostalgia for the British colonial era is a fringe element of the Hong Kong protests, but it points to simmering sentiment that Britain should take action since Beijing’s commitment to the joint declaration is in doubt. But the declaration itself doesn’t clearly say how that might play out.
The declaration detailed the arrangements of “one country, two systems” and the legal system by which the soon-to-be special administrative region of China was to operate. Adherence to the treaty was based on a mutual agreement that is legally binding, but the deal does not prescribe any specific recourse if the terms are violated.
“A breach of the joint declaration would constitute a breach of the U.K.’s rights under that document,” Green said, and “it would be up to the U.K. to determine what action, if any, should be taken in response.”
Chinese officials have, at times, seen things quite differently. They’ve gone so far as to argue that the declaration itself is invalid, a claim they reiterated on Thursday.
The declaration was “an important instrument” for “the transitional period” of Hong Kong passing from British to Chinese sovereignty, China’s foreign ministry said this week. “No single article in it grants the U.K. the right to interfere in Hong Kong affairs after its return. The U.K. has no sovereignty, jurisdiction, or right of ‘supervision’ over Hong Kong after the latter returned to China,” the statement said.
Seven former U.K. foreign secretaries, meanwhile, called Beijing’s national security law a “flagrant breach” of the declaration in a letter this week that urged Britain to lead the global response to Beijing. In his op-ed, Johnson said he hoped Beijing would refrain from “casting doubt over the joint declaration.”
There is “a lot of uncertainty,” Kolieb said, in the area of international law called state responsibility—the laws that determine when an international obligation has been breached and what the consequences should be. “A lot of this stuff is not written down either; a lot of this stuff is interpretation of treaties.”
All legally binding international treaties must be registered with the UN. Registration, however, does not give the UN power to enforce any aspects of the treaty, intervene if one country violates the terms of the treaty, or determine whether the treaty has been violated. “There’s no sort of higher authority that can go and lock someone up or punish someone,” Kolieb said.
UN registration does mean that if a dispute arose, either the U.K. or China could bring it up with “any relevant organ of the UN,” Green said, like the International Court of Justice.
“In theory the U.K. could take China to the International Court of Justice to mediate the dispute…But China can, as other countries have in the past, reject the jurisdiction of that court,” Kolieb said.
Besides, Kolieb added, it’s unlikely: “Usually the great powers of the world tend not to resort to the International Court of Justice to air their dirty laundry and solve their disputes.”
The U.K. could raise the issue with the UN Security Council, as Johnson said he did in the Wednesday op-ed, but China, a permanent member, could veto any actual resolution put forth to the council.
“International law is…based on consent of sovereign states,” Kolieb said. This means that while the declaration entitles the U.K. to take action against China if it believes the latter has violated the terms of the treaty, it does not obligate the U.K. to do so.
“In terms of the joint declaration, if they choose not to exercise their rights and hold China to it, then it’s their sovereign choice,” Kolieb said.
BNO overture
One lever the U.K. is willing to pull relates to the rights of those who hold British National Overseas (BNO) passports, documents created in 1985 to apply specifically to Hong Kong residents born before the handover in 1997. BNO passport holders currently have the right to remain in the U.K. for six months without a visa, but not the right to reside there permanently.
Johnson, in his op-ed, said that if China institutes the national security law, the British government will allow BNO holders to stay in the U.K. for “a renewable period of 12 months” and give them the right to work, which could place them en route to citizenship.
Entertaining that possibility is a marked shift from the U.K.’s past stance on the matter: Johnson himself described it as “one of the biggest changes in our visa system in British history.”
The British government has long been reluctant to convert these passports to full citizenship, in part because—the government has said—it would violate the terms of the handover. “I know what BNO stands for, it stands for Britain says no,” Lord Paddy Ashdown, former leader of the U.K.’s Liberal Democrats Party, joked in 2017.
Johnny Patterson, director of the London-based nonprofit, Hong Kong Watch, called the BNO policy shift “a strong diplomatic statement.”
Steve Tsang, a historian of modern China and Hong Kong and the director of the SOAS China Institute at the University of London, said the BNO proposal was “a gesture.”
“In reality it doesn’t amount to very much…But what it does show is that the government is willing to consider options to show the Chinese government that the U.K. will try to do something about [the law],” Tsang said.
Responding to Beijing’s moves in Hong Kong is a “very difficult balancing act” for the U.K., Tsang noted. “The reality is that with COVID-19 and the U.K. getting out of the [European Union], economically the U.K. feels very vulnerable, and you really don’t want to be antagonizing any potential friends who could be economically helpful.”
Chris Patten, the last colonial governor of Hong Kong, told the Times last week that the U.K. has a moral duty to oppose the national security law, and hit back at the idea of a political and economic tradeoff.
“We keep on kidding ourselves that unless we do everything that China wants we will somehow miss out on great trading opportunities. It’s drivel,” Patten said. “The British government should make it clear that what we are seeing is a complete destruction of the joint declaration.”


fortune--2020-06-04--China will allow U.S. flights after Trump administration threatens ban on Chinese airlines

China on Thursday said it will allow U.S. passenger airlines to resume limited service to China, one day after the Trump administration said it will bar Chinese passenger airlines flying to and from the U.S. starting in mid-June.
It’s not immediately clear whether the U.S. will go forward with its ban on Chinese airlines in light of China relaxing its restrictions on U.S. carriers. On Wednesday, a U.S. Department of Transportation statement announcing the suspension of Chinese carriers’ service to the U.S. said the department “will allow Chinese carriers to operate the same number of scheduled passenger flights as the Chinese government allows ours.”
Beijing’s move on Thursday is a rare instance of de-escalation in U.S.-China affairs. Relations between the two countries are at their worst in decades as disputes over the coronavirus, technology restrictions, and Beijing’s actions in Hong Kong have deepened a rift that January’s phase one trade deal failed to alleviate.
The U.S. ban on Chinese airlines was itself a response to China’s aviation authority not acknowledging appeals in May from Delta Air Lines and United Airlines to resume their China flights in June.
The Trump administration ban, if enacted, would block seven Chinese airlines, including Air China, which flew 19% of the 8.5 million passengers who traveled between the U.S. and China on direct flights in 2018, the most recent data available. United carried around 17% of U.S.-China direct flight passengers, and Delta transported over 10% of passengers in 2018.
When China’s aviation authority reduced foreign airline flights into China to one per week on March 26 amid the pandemic, the three major U.S. carriers—American Airlines, United, and Delta—had already voluntarily stopped their service to China owing to the spread of the coronavirus within the country.
The coronavirus has decimated the global air travel industry. As the first country hit by the coronavirus outbreak, China was also the first to curtail air travel.
Domestic air travel in China dropped from 12,814 flights on Jan. 23 to 1,662 flights on Feb. 13 after flight cancellations and government-imposed travel lockdowns. Outbound international flights from China sank too, from 2,032 departing flights on Jan. 23 to 354 on Feb. 13.
The measures in question only pertain to passenger flights. Cargo flights—including unused passenger planes repurposed as cargo carriers—continue to flit between the U.S. and China.
According to the U.S. DOT statement, the ban on Chinese carriers will go into effect on June 16, but could start before that date “if the President so orders.”