fortune--2020-11-02--British online grocer Ocado, known for its automated warehouses, acquires two U.S. robotics companie

British online grocer Ocado, known for its automated warehouses, acquires two U.S. robotics companies

Ocado, the U.K. online grocer that has increasingly sold its e-commerce and automated warehouse technology to other supermarkets around the world, has acquired two U.S. robotics companies.
The acquisitions will bolster Ocado’s grocery technology, enabling the company and the other supermarkets it serves to replace some current warehouse workers. It also signals Ocado’s move into helping other kinds of retailers fulfill online orders.
The company said Monday that it has bought Kindred Systems, a San Francisco–based robotics company whose warehouse robots help customers such as Gap and American Eagle Outfitters, for $262 million in cash. It is also buying Haddington Dynamics, a small company based in Las Vegas that makes a sophisticated robotic arm for customers including DuPont and NASA, for $25 million in cash and stock.
“We have been investing in autonomous robots and picking for a decade,” says James Matthews, CEO of Ocado’s technology division, which builds the systems that Ocado’s own grocery business uses, as well as the tech it sells to other grocers through its Ocado Smart Platform. “This is about how we invest more to do more, more quickly.”
Ocado said that the acquisitions would add about $38 million in revenue to its annual revenues, which last year were about $2.3 billion. The company said the acquisitions would make a small dent in its profits, but overall it raised its full year profit forecast to $77.8 million, up from $52 million. Ocado’s shares, which are listed on the London Stock Exchange, jumped 7% in response.
Ocado has been one of the best performing publicly listed U.K. companies during the COVID-19 pandemic, as online grocery shopping has soared. Although its automated warehouses had trouble keeping pace with a surge in demand during March and April, the company soon recovered, in part by adding more warehouse workers and delivery drivers.
The company also sells its online ordering and automated warehouse systems to customers that include Kroger in the U.S. and Sobeys in Canada.
Ocado, which has no physical retail stores, runs some of the most automated grocery order fulfillment centers in the world. These warehouses use thousands of robots, each about the size and shape of an office copy machine, to grab items from crates stacked in a huge steel-and-aluminum lattice that the company calls “the hive.” The robots bring these items to a “pick station,” where in most cases, a human worker assembles each customer’s order, packing it into shopping bags for delivery.
Humans also have to “decant” items that are delivered to the warehouse from suppliers and feed them into the hive. This process involves removing items from shrink-wrapped pallets or unloading boxes and then packing them into the plastic crates that are fed into the hive.
These two human-driven processes—decanting and picking—cost about $9 million per warehouse per year, Ocado said in a statement. And it is these two processes that Kindred’s and Haddington’s robotics systems are designed to help automate.
Paul Clarke, Ocado’s chief technology officer, has said he envisions the company eventually moving to completely “dark” fulfillment centers—ones that would be fully automated and employ virtually no people.
Kindred’s robots are particularly good for handling boxed items or soft items such as clothing. Matthews said that Ocado’s purchase of the company would help Ocado and its supermarket clients add more general merchandise to their online offerings.
But, given Kindred’s existing relationships with retailers such as Gap and American Eagle, he said the acquisition also signals a long-anticipated strategic move by Ocado into selling e-commerce and automated fulfillment technology to other kinds of retailers besides just grocers.
Matthews said that Ocado would begin using Kindred’s robots almost immediately and would roll them out to its other customers within the next two to three years.
As for Haddington, its robot arm is considered one of the most lightweight and dexterous currently being sold. Matthews said that the arm would potentially enable Ocado to automate the sorting and picking of a wide range of items, including very delicate ones such as fruit, which is difficult for most robots to handle without bruising or damaging it.
Matthews said Ocado had conducted a yearlong search to find robotics companies that could help it further automate its operations, closely scrutinizing about 15 businesses before settling on Kindred and Haddington.


fortune--2020-11-02--Gift Guide: What you need to work(out) from home

Swing states , COVID , and the Electoral College : Why Trump ’ s odds of winning are better than @ @

Not everyone has time to shop around (not to mention most people have no desire to shop in stores at all right now) and look for the newest items on the market that could appeal to the loved ones and colleagues on their gift-giving lists. (Or for themselves, because let’s be honest, we look at holiday gift guides and deals for ourselves just as much as for others.)
And given everything that has happened in 2020, everyone needs a bit (or a lot) of self-care after this year. With that in mind, here is a helpful list of suggestions for the best gifts around promoting a healthy body and healthy mind this holiday season.
Reebok Forever Floatride Energy 2 men’s running shoe, Caraa face masks, Bala bangles, JBL Club One headphones Courtesy of Reebok, Caraa, Bala and JBL
Amazon: Amazon Halo is a new device and service dedicated to helping customers improve individual health and wellness. The app offers a suite of A.I.-powered health features that provide data and insights into overall wellness, and the accompanying band uses multiple sensors to accurately capture important health metrics such as body composition, activity, sleep, and even tone of voice. Note that the Halo is tied to a monthly membership for this analysis; the subscription is free for the first six months, and auto-renews at $3.99 per month thereafter. SRP: $65 is the early access price; the Halo will usually retail for $100.
Alala: Sometimes a good way to motivate yourself to work out is to simply upgrade your workout clothes. An old T-shirt and sweatpants don’t always cut it. After all, if you look good and feel comfortable in what you’re wearing, you’ll be more positive and energized. Alala makes luxury workout wear that is both sophisticated and high-quality and is meant to be worn all day. The brand’s Edge leggings are formfitting but don’t feel tight or restrictive, with a front key pocket inside the soft waistband and a power-mesh panel around the waist for extra support. SRP: $115.
Back Bay: Running outdoors is a great alternative to exercising at a gym in the COVID era. It will get chilly in many areas over the next few months, and many avid runners wear full face coverings, pandemic or not. Back Bay’s Running Face Mask sports a comfortable cooling fabric that regulates your body temperature to prevent overheating on your face. And all of Back Bay’s neck gaiters are designed to comfortably fit men and women of all sizes. SRP: $17.
Bala: For both beginner and experienced weight lifters, these wrist and ankle bangles can help strengthen your arms and legs without much work at all. Ranging from a half pound to two pounds, the Bala Bangles can be slipped on for wear while working at home, taking a walk through the neighborhood, or even doing household chores. (Not to mention you could also just add them on while doing regular workouts, such as running and yoga, to up your toning game.) SRP: Starts at $40 for the half-pound bangles.
Caraa: If you’re someone who likes to exercise outdoors regularly, you probably already know the struggle of finding a face mask that lets you breathe comfortably while moving at a faster clip. In my experience, disposable face masks are actually the best for this, but they’re not really a sufficient long-term option—not only because they’re disposable but with another COVID wave looming, PPE needs to be made available for first responders and frontline workers first. The next best thing I’ve found are these reusable, washable, nonmedical face masks from accessories brand Caraa, which pre-pandemic was probably best known for its convertible gym bags. Each pack comes with five lightweight masks made with dual-layer cotton fabrication for increased breathability and comfort, adjustable ear loops for fit, and a wide filter pocket for added protection. SRP: $25.
Cubii: Given how overwhelming 2020 has been, we’d be reluctant to encourage excessive multitasking. Nonetheless, this might be a simpler, perhaps even nervous stress-relieving method. The Cubii JR compact seated elliptical easily fits under even a small desk, allowing the owner to get work done while getting in a light workout at the same time. Users can work out with the built-in LCD monitor. It also comes with a workout mat and a set of wheel stoppers. SRP: $249.
Dr. Scholl’s: The venerable orthopedic foot care brand has a bevy of potential stocking stuffers. The Dr. Scholl’s sized running insoles (created specifically for runners) provide targeted support and cushioning for optimal performance and injury prevention. Additionally, they help prevent pain from runner’s knee, shin splints, and plantar fasciitis. Designed to protect the heel, arch, and ball of the foot, the cushions reduce shock by up to 40% as you run. Also crucial, they have the brand’s proprietary SweatMax technology to eliminate odor. Cushions are available for men’s sizes 7.5 through 14 and women’s sizes 5.5 through nine. SRP: $15.
JBL: Released this summer, JBL’s Club One headphones were designed by DJ and producer Armin van Buuren as a “do it all” headset that suits both professional touring and everyday use at home and at the gym. The result not only merges stage-ready performance with True Adaptive Noise Canceling, but also has a stylish but flexible design meant for long-term use and travel with durable metal hinges, a leather headband, cushioned over-earcups, and more than 45 hours of playback time on a single battery charge. SRP: $350.
Fitbit: The Sense is Fitbit’s top-of-the-line smartwatch, touted as the first to include an on-device electrodermal activity (EDA) sensor to help you manage stress. (Who doesn’t need help with that these days?) Then there are all the other bells and whistles, such as built-in GPS, phone calls via Bluetooth, more than 20 goal-based exercises, menstrual health tracking, and up to six days of battery life on a single charge. For power users, the device comes with a six-month free trial for Fitbit Premium, which offers extra personal health insights and analytics about metrics like your breathing rate, resting heart rate, heart rate variability, and skin temperature. The Sense also supports Fitbit Pay, which connects to your credit and debit cards and supports contactless payments—a plum feature to have during a pandemic for those on the go. SRP: $330.
Reebok: Simple but effective, these running shoes offer cushioned comfort while keeping feet light thanks to a breathable mesh upper. The Floatride Energy Foam also gives the shoes a soft step-in feel for a smoother ride, whether it be for a relay, a 5K, or a special race day. SRP: $100 for both women’s and men’s sizes.
Retrospec: Retrospec’s all-steel versatile mace bell is ideal for toning, CrossFit, and complete weight training at home. Sporting a rounded steel head fully welded to the metal stem, the Mace Bell is designed to target groups of muscles, large and small, for better strengthening and endurance. Touted to be “virtually indestructible,” the Mace Bell is available in five-, seven-, 10-, 15-, 20-, 25-, and 30-pound increments. SRP: $21.


fortune--2020-11-02--As tighter lockdowns threaten oil demand, the Russian ruble feels the pressure

The ruble tumbled past 80 against the dollar, trading at its weakest level since March, as tighter lockdowns in Europe threatened demand for crude, Russia’s key export earner.
The ruble has been under pressure for months amid fears of new sanctions, low oil prices and rising coronavirus cases. Concern that Joe Biden may crack down on Russia should he win this week’s U.S. presidential vote has contributed to the currency’s more than 7% slide in the past three months.
Crude sank to a five-month low as a continued increase in Libyan production coincided with a wave of new restrictions to combat the virus. Swathes of Europe enter lockdown this week, with England joining nations from Austria to Portugal taking tougher action to counter virus infections.
Despite this year’s currency slump, foreign investors still hold more than 3 trillion rubles ($37 billion) of domestic government bonds, close to a record high. The Russian currency is undervalued by at least 10%, Amundi money manager Yerlan Syzdykov said at an investment forum in Moscow on Friday.
Russia’s currency fell as much as 1.3% to 80.5575 per dollar, close to the four-year low it reached at the peak of the market rout in March.


fortune--2020-11-02--Brace yourselves for the coming days

Brace yourselves for the coming days

This is the web version of CEO Daily. To get it delivered to your inbox, sign up here.
Good morning…and brace yourself.
There’s a chance the U.S. election won’t be settled in the next 72 hours. And there’s a chance it won’t be decided without court intervention. More disturbing, there are signs extremists on both sides are prepared to take to the streets if they feel things have gone awry.
Twenty years ago, I oversaw the Wall Street Journal’s pop-up Florida bureau, covering the contentious recount of 2000. I well remember the heightened emotions of the time, and the sense that U.S. democracy was at a breaking point. Yet in the end, it ended, and the country moved on. (For an interesting take on that episode, read Peter Baker and Susan Glasser’s new biography of James Baker, who outmaneuvered Democrats in the final 2020 election battle. And for a more pointed but entertaining version of the same, watch the new HBO Documentary, 537 Votes.)
This time could be harder. Emotions on both sides are higher. The odds that either side will stand down as graciously as Al Gore did are slim. Centrifugal forces are overpowering centripetal ones.
Why does this matter to business? Because we live at a moment when work and life are converging. Much is made of the role that the millennial generation plays in business, but here are some facts: millennials are less likely to be married than previous generations, less likely to join an organized religion, and less likely to join civic and social clubs. That means outside of social media—which can aggravate alienation as much as alleviate it—millennials depend on employers as their main formal connection to society. And the pandemic has only increased that dependence.
That puts an increased burden on corporate leaders, who feel greater responsibility for their employees’ health and well-being. It’s no surprise CEOs are staying out of the presidential race—the Wall Street Journal reported over the weekend that only six of the Fortune 100 had put money behind a candidate as of mid-October. That’s down from 11 four years ago and 32 eight years ago. They understand that, to effectively lead their employees, they need to avoid taking a public position, and be prepared to soothe post-election trauma.
Let’s hope, for everyone’s sake, this ends smoothly. As Fortune’s Jeremy Kahn reports, the betting markets think it will be closer than the pollsters do. And television networks are lining up lawyers to explain the potential legal twists and turns. Stay tuned. More news below.
Alan Murray
@alansmurray
alan.murray@fortune.com
TOP NEWS
Singles doubled
Alibaba's monumental "Singles' Day" sales event is this year running across two periods rather than one, to benefit merchants that have been suffering due to the pandemic. The first period began yesterday and runs through tomorrow, while the second will take place on Nov. 11 as is customary. China's economic recovery has largely been reliant on exports and government spending, and consumer spending remains depressed. Fortune
Aspen and J&J
Aspen Pharmacare, Africa's biggest drugmaker, has agreed to manufacture Johnson & Johnson's candidate vaccine at its factory in Port Elizabeth, South Africa. Aspen has the capacity to make 300 million doses a year there. The news sent Aspen's share price up by as much as 7.2%. Bloomberg
Huawei chips
Huawei reportedly intends to build a chip factory in Shanghai, featuring zero American technology—its output would power Huawei's telecoms equipment, which is suffering under U.S. sanctions, and perhaps ensure the long-term survival of the company. Note: Huawei has no experience making chips. Financial Times
Airline disappointment
Ryanair CEO Michael O'Leary has laid into the British government for the second lockdown that was just announced, saying it wouldn't have been necessary if the U.K. had better testing and tracing. Europe's new lockdowns have led Ryanair to slash its flying schedule for the next six months. O'Leary: "It is clear that air travel is in the frontline of this pandemic ... And we think the only way out of this is for governments, the British, the Irish and other European governments, to introduce pre-departure testing." CNBC
AROUND THE WATER COOLER
Independent contractors
The Labor Department is misguided in its push to make it easier for business to classify their workers as independent contractors, writes Scott Casabona, president of the Signatory Wall and Ceiling Contractors Alliance, for Fortune. "This will undermine the entrepreneurs who create American jobs and provide economic stability for working families in favor of those who pass their business risks on to individual workers and taxpayers," he writes. Fortune
Long haul
Researchers may be beginning to understand the long-term COVID effects some people suffer for months after contracting the virus, even if their initial infections were not very serious—effects like heavy fatigue, memory lapses, dizziness and gastrointestinal issues. The main theory is that this is all down to inflammation. Wall Street Journal
Women decide
Supermajority cofounder Cecile Richards and managing director Amanda Brown Lierman write for Fortune that it will be women who decide this election. "Women are voting because their lives depend on it," they write. "Nearly 37 million women have already cast their ballots, making up 53.4% of early voters. In key states, women are fueling Joe Biden’s lead in the polls, putting us on track to surpass the record-setting gender gap we saw in 2016." Fortune
Beijing's choice
Which candidate would Beijing like to win? That's not clear, as Fortune's Grady McGregor writes, but the chaotic aspect of the whole process is just fine: "For the election specifically, media coverage has highlighted issues like partisan battles and problems with voting as a way to draw contrast to—in Beijing's view—China's more stable governing system." Fortune
This edition of CEO Daily was edited by David Meyer.


fortune--2020-11-02--How Land O’Lakes saved its farmers’ milk during COVID-19

COVID-19 hit at the worst possible time for the dairy industry—during what’s known in the sector as “spring flush,” when cows are at the height of their milk production.
Just as the cows reached their most productive time, schools and restaurants shut down. A major outlet for dairy products evaporated overnight, forcing farmers around the country to dump their milk.
But at Land O’Lakes, a $14 billion farmer-owned cooperative, its members were spared. “We’re grateful and thankful for that, because it’s emotionally and financially devastating to have to dump milk,” says Heather Anfang, senior vice president of U.S. dairy foods at Land O’Lakes, on this week’s episode of Reinvent, a podcast about fighting to thrive in a world turned upside down by COVID-19.
The episode digs into a supply chain that left consumers with seemingly contradictory images this spring: On the one hand, there were empty store shelves as shoppers stockpiled goods. And on the other, farmers were destroying products they were unable to sell.
Land O’Lakes, meanwhile, was able to find a home for its more than 1,700 members’ milk—despite the fact that pre-coronavirus, about 40% of Land O’Lakes business came from items that it sold to the food service industry like enormous bags of shredded cheese or cheese sauce. When the pandemic hit, that business disappeared.
“We had to really step back and look,” says Anfang. “It’s a bit of a puzzle—where’s the milk, where’s it going, and what are the products that are now most relevant.”
To solve that puzzle, Land O’Lakes went back to basics. It scaled back on the number of items it produced so the co-op could pump out more volume. By just focusing on its core goods, it could run bigger items for longer on its production lines because it wasn’t stopping and starting for smaller items. “That simple thing allows you to get more butter out, to get more milk through the plant,” Anfang says.
Land O’Lakes also took items that it normally supplies to food service and instead sold them to grocers. For example, retailers typically sell one-pound blocks of butter separated into four sticks. But supermarkets were so desperate to keep up with consumer demand that they were willing to sell the one-pound block of butter used by restaurants.
Anfang says that Land O’Lakes will sell “significant butter this year, much more than we would have anticipated.” But the “swings have been very dramatic,” she adds. “If you’re selling butter to retail, you know that team is on fire. If you’re selling 50-pound bags of mac and cheese to school, there’s not a lot of sales happening right now.”
To hear more from Anfang and from market research firm Nielsen’s Scott McKenzie on how COVID-19 is remaking the supply chain, listen to the episode in its entirety.


fortune--2020-11-02--The world’s largest shopping event is taking place not once—but twice—this year

China’s largest e-commerce player, Alibaba Group, is doubling its Singles’ Day offerings this year, running the massive online sales event across two periods rather than one. Alibaba says it expanded the shopping window for Singles’ Day to provide more relief for merchants that have been hit hard by the pandemic.
“This year the festival expands from ‘single’ to ‘double,’ enabling merchants to double up on promoting their products across China not just once, but twice,” said Jiang Fan, president of Alibaba’s two consumer-facing e-commerce sites Taobao and Tmall, in a statement.
Singles’ Day—a counter to Valentine’s Day that celebrates being alone rather than being hitched—is ordinarily held on Nov. 11 because the date’s numeric value is a group of single ones: 11/11.
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Alibaba began commercializing the unofficial holiday in 2009, making it the world’s largest shopping festival; it shipped $38.4 billion in gross merchandise value (GMV) on Singles’ Day last year. Amazon’s Prime Day, by comparison, sold an estimated $6 billion in goods last year.
This year, Alibaba introduced a second sales period, from Nov. 1 to Nov. 3, increasing opportunities for consumers to pick up cheap deals. According to Alibaba, shoppers spent over $1.49 billion on goods within the first 111 minutes of sales on Nov. 1, with the first delivery taking place at a suspiciously precise 11 minutes past midnight. (Singles’ Day is also known as the “Double 11” festival in China, because it occurs on the 11th day of the 11th month. Consequently, a lot of Alibaba’s marketing for Singles’ Day centers around the number 11.)
That spending seems slow compared with last year, when Alibaba said merchants sold $1 billion of goods within the first minute of Singles’ Day sales.
While China’s economy has seen a remarkable recovery from the COVID-19 pandemic, exports and government spending on infrastructure are largely responsible for the comeback. Consumer spending has yet to make a significant return. Retail sales returned to growth only in August, rising 0.5% over last year; September growth clocked in at 3.3% versus 2019.
In the past, merchants have criticized Alibaba’s massive sales event, accusing the e-commerce giant of pressuring them to participate. On Singles’ Day, discounts start at 50% off, and some sellers complain they are compelled to sell items at a loss just to be involved. Introducing more sales days is unlikely to alleviate that burden.
But for wary consumers, the second Alibaba’s Singles’ Day event offers another opportunity for deals.
The inclusion of Tmall Global—Alibaba’s imports unit, where international merchants sell imported goods to Chinese consumers—also appears to be providing an outlet for consumers who would normally spend while traveling overseas. On the first day of discounts, sales on Tmall Global jumped 90% compared with the same period last year, Alibaba says.
Wine, in particular, saw a 400% increase in GMV in what’s perhaps a sign of the trying times.


fortune--2020-11-03--How tech CEOs are spending Election Night

As the world waits for the results of the U.S. election, people are wondering how to spend their day: Obsessively watching cable news and doom-scrolling the internet, or distracting themselves with Netflix and the great outdoors? We wondered that too, and we asked the luminaries in tech how they were passing the hours. A few even answered us.
Here’s how tech heavyweights plan to spend Election Day:
David Barrett
Chief executive officer, Expensify Inc.
“In all honesty, I’m planning on working a regular day,” said Barrett, who last month wrote a memo to more than 10 million Expensify customers urging them to vote for Democratic nominee Joe Biden. Barrett’s memo was one of the most strident political statements from a private sector chieftan this election cycle.
After the workday, Barrett is planning to spend time with his 6-year-old daughter, he said. “[I’ll] maybe grill us a steak and veggies, probably play Minecraft with her for a while, watch some Scooby-Doo, eat some ice cream, read her two books in bed.” Later, “I’ll fix myself an old-fashioned, watch some Netflix, and then go to bed without checking the election results, if I can help it.”
Barrett said he wasn’t expecting final results on Tuesday night, adding, “If the world collapses, I’m sure it will let me know.”
Doug Leone
Global managing partner, Sequoia Capital
Leone is an investor in TikTok, the smash-hit social network that’s recently become a political football, as well as a donor to President Donald Trump’s reelection campaign. “I may bore you to death,” Leone said in an email, “but there are zero plans to do anything or to speak with anyone” on election night. “If I can stay up, I will, but there is a 50/50 chance I will fall asleep before the winner is announced.”
Howard Lerman
CEO, Yext Inc.
Lerman, who spoke out in support of the Black Lives Matter movement this summer, gave Yext’s U.S. employees the option to take the day off to cast their ballots. But “I already voted so I’ll be working,” he said in an email. After the day’s over, “I’m making a little evening of it,” Lerman added. “I’ve invited a couple others over, and we’ll camp out until midnight. I’m likely ordering some Dim Sum to power us along the way.” When the night wraps up: “I shall tweet my congratulations to the winner,” adding that he “sincerely” hopes that there is one.
Imran Khan
CEO, Verishop Inc.
While some people might try to get some distance from the news, Khan, the former chief strategy officer of Snap Inc., is going with an immersion approach. “I’ll be following the election results on both TV news and Twitter,” he said in an email. “I usually keep an eye on all the major news channels, and I also want to hear what people are saying on the ground via social media.” As for waiting it out until there’s a winner, Khan said he’s prepared to stay up until 1 or 2 a.m. to find out what happens. “It’s a really important and consequential election,” he said. “So I’d like to stay up as long as physically possible to learn the results.”
Marc Bodnick
Co-founder and executive chairman, Telepath
Bodnick and his family plan to watch the returns with another couple and their son. “I’m not taking the day off,” Bodnick said in a message, but he added he’ll be “writing and reading about the election all day.” He expects the night to be tense: “We’re extremely anxious—so much is at stake,” he said. “It would be terrifying if Trump won—an absolutely catastrophic outcome for our country. Of course, we’re also worried that Trump will try to steal the election if the window is open at all.”
Mark Johnson
CEO, GrainBridge LLC
Johnson, who runs agriculture tech company GrainBridge, plans to “avoid actually reading the news all day,” he said via text. Instead, the CEO will take a mellower approach, going to work “like normal,” then going to yoga “like I usually do on a Tuesday,” followed by a night of watching Lost (“I’m in the middle, don’t spoil”) or maybe Schitt’s Creek “because I need a comedy.” Johnson adds: “I’m just so, so, so burned out on politics right now and I can’t wait until it’s over.”
Siri Srinivas
Investor, Draper Associates
Srinivas is planning to visit a work friend’s house after her last meeting at 5 p.m. on the West Coast, around when East Coast polls start closing, “so I’m wondering if I should reschedule, but will likely wrap that up as soon as I can,” she wrote in an text message. “I can’t vote in this election as I’m not a U.S. citizen, but the results have pretty serious implications for my life and career. I’ve already had severe slowdowns in my immigration paperwork in the last year due to a mix of Covid shutdowns and the Trump administration’s policies, and a lot hinges on what happens in the elections.” She plans to stay up “till no new news emerges,” she said, and that might be all night. “I’ve cleared the morning for Wednesday,” she said.
Aaron Levie
CEO, Box
Levie, who runs online data storage company Box, will be following the election results “obsessively,” he said in an email, and has been since “about 10 days ago when early data and stories began to appear.” The CEO said he’ll be working throughout the day and that his employees are “encouraged to take all the time they need to vote or volunteer.” But he also plans to be in bed at a “normal time, so hopefully things are fully wrapped up by 2 a.m.”
Adam Neumann
Former CEO, WeWork
Neumann has kept a low profile since he resigned from WeWork following the company’s failed initial public offering, but he’ll be following election results on Tuesday, according personal familiar with his plans who asked not to be identified discussing private details. Neumann will probably be spending the day flipping between MSNBC, CNN and Fox, the person said, then monitoring the news for information on voter turnout and demographics, hoping for a peaceful election. In the evening, he’ll also watch for results on down-ballot races to see if Democrats will flip the Senate.


fortune--2020-11-03--New Yorkers and Londoners are fleeing to the suburbs, and that’s spurring a rally in these stocks

Real-estate companies are seeing clear evidence of New Yorkers and Londoners ditching city centers for suburbs as the pandemic changes the way people live and work.
IWG Plc, which operates Regus-branded serviced offices in cities around the world, has seen a “a strong pick-up in demand” for suburban space versus major cities, especially in places reliant on commuting. While deals for its downtown New York offices have collapsed by 30% since the virus outbreak earlier this year, activity in southern Connecticut has surged more than 40%, according to a statement Tuesday.
Across the pond, U.K. housebuilder Crest Nicholson Holdings Plc’s expected slump in full-year profit may not be as bad as previously flagged, partly thanks to developments in southern England outside of London, it said in a quarterly update. A “structural change to the balance of office and home working” featured strongly in customers’ buying decisions, it said.
Shares in IWG climbed as much as 11% in Tuesday morning trading in London, while Crest Nicholson shares jumped as much as 22.5%, the most on record.
The pandemic has turned the world’s financial capitals into ghost towns as nervous workers avoid mass commuting. While cities across Europe showed signs of recovery in the summer, a resurgent wave of the virus has prompted a series of new lockdowns in the region. New York is also tightening restrictions amid rising infections nationwide.
Both big and small companies are picking up on the suburban trend, IWG said. During the pandemic, sales of small offices accommodating one to two people have jumped 19% amid growing demand for working closer to home. The firm is also seeing strong demand for products supporting home and remote working, with September being its best-ever month for such sales.
Still, the shifts are a silver lining in a challenging year. IWG said revenue fell more than 10% in the third quarter compared to a year earlier, while Crest Nicholson’s full-year profit will be significantly down on last year.
“This shows the current trend of buyers wanting more space — inside and outside of the house,” London-based analyst Iwona Hovenko of Bloomberg Intelligence said following the Crest Nicholson report. “But it will be interesting if the trend lasts once the pandemic passes. I am a strong believer in London long-term.”


fortune--2020-11-03--Whoever wins the election will face one of the most challenging market environments to start a presi

Whoever wins the election will face one of the most challenging market environments to start a presidential term in history

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When it comes to the markets or economy, Presidents get far too much blame when things go poorly and far too much credit when things go well. There’s no way one person could single-handedly control the $30 trillion U.S. stock market or $20 trillion U.S. economy.
But that doesn’t stop us from trying, especially when the election rolls around every four years.
Sure, the President can have an impact on sentiment, and tax rates do play a role in the decisions consumers and businesses make, but where we are in the cycle typically has far more to say in regard to the performance of the markets over anyone’s time in the Oval Office.
These things require context.
To provide said context I went all the way back to the 21st President of the United States, Chester Arthur, to see what things looked like for incoming Presidents in terms of interest rates and S&P 500 stock market valuations when they took over, along with the inflation/deflation while they were in office:
Some observations on this data:
Market data going back to the 1800s is not necessarily useful in terms of how markets function in this day and age, but it can be instructive to see how different things are now in terms of our economy. Look at the wild swings back and forth between inflation and deflation back in the day. Things have been relatively calm on that front since Reagan took office in the early 1980s. It would be fascinating to see what the investor reaction was to higher than expected inflation.
Looking at the starting and ending valuations can be instructive to understand how things changed during a President’s time in office. The Coolidge years took place during the Roaring Twenties, which saw stocks go from insanely low valuations to insanely high valuations just before the onset of the Great Depression.
Clinton’s two terms saw markets go from above-average valuations to the highest valuations in history. George W. Bush was in office as those valuations were worked off, while Obama timed the lows pretty closely for the start of the next bull market.
Since Trump took over four years ago the S&P 500 is up more than 55% in total (12.4% annualized). In that time the CAPE ratio has gone from 28.1x to 31.6x the trailing 10 years’ worth of earnings. The relatively small increase in valuation tells us fundamentals have kept up for the most part. This may surprise some people who assume all of the gains are a mirage.
Whoever wins the election will be dealing with high starting valuations and low interest rates.
Not only will they start out with the second-highest starting CAPE ratio ever for a President, but they will also be dealing with by far the lowest interest rates in the 140 or so year history of this data. No matter who wins or what policies they implement, this is going to be one of the most challenging market environments to start a presidential term in history.
Stock market valuations can always go higher (especially in light of where interest rates stand) but investors should temper their expectations regardless of the winner. The market is bigger than any person or office. It will do what it’s going to do no matter who lives in the White House.
Try to remember this when people try to credit or blame the market’s performance on the President over the next four years.
Ben Carlson is the director of institutional asset management at Ritholtz Wealth Management. He may own securities or assets discussed in this piece.


fortune--2020-11-03--The U.S.’s Electoral College is an epic design fail

This is the web version of Business By Design, a weekly newsletter exploring design’s transformative influence on industry and enterprise. Sign up to get it delivered free to your inbox.
Two weeks ago, I asserted in this space that, in the 2000 presidential election, bad design cost Al Gore the White House. A few of you wrote in to complain that the focus of that post—the misdesign of ballots—was too narrow, and ignored a far more fundamental design flaw in the way Americans pick their president: the Electoral College.
That’s a legitimate gripe. In fact, the Electoral College, cobbled together by a small committee chosen from the men who gathered in Philadelphia to draft the U.S. Constitution in 1787, is a design disaster. It’s complicated, unpredictable, and doesn’t function the way it was meant to.
“Our electoral system is just absurdly complex and distanced from its original design and the political world it was designed for,” says Alexander Keyssar, Harvard historian and author of a book entitled Why Do We Still Have the Electoral College?
“The Electoral College as it functions today is the most glaring reminder of many that our democracy is not fair, not equal and not representative,” argues Jesse Wegman, a member of the New York Times editorial board and author of Let the People Pick the President: The Case for Abolishing the Electoral College. “No other advanced democracy in the world uses anything like it, and for good reason.”
Five times in U.S. history, the Electoral College has produced presidents who failed to carry the popular vote. In 2000, the Electoral College enabled George W. Bush to claim the presidency because (with help from those badly designed ballots) he won Florida, a crucial swing state, by 537 votes—even though Gore carried the popular vote by 543,895 votes. In 2016, the Electoral College handed the presidency to Donald Trump even though Hillary Clinton won the popular vote by nearly 3 million.
As Americans go to the polls today, Joe Biden leads Trump by an average of more than 7 percentage points in the 10 most recent reliable public opinion polls, according to NBC News. That’s well ahead of where Clinton stood against Trump in the last days of the 2016 race. But political analyst Nate Silver cautions that Trump could win the Electoral College again because “projected margins in the tipping-point states are considerably tighter than the margins in the national popular vote.”
The Electoral College was unpopular almost from the moment it was adopted, and has been a source of discontent for two centuries. There have been more than 700 attempts to amend or abolish it. A recent survey by the Pew Research Center found that 58% of Americans favor amending the Constitution to require that the presidential candidate who receives the most votes nationwide wins, while 40% prefer to keep the current system.
Trump himself once denounced the Electoral College as a “disaster for democracy.” (He now calls it “genius”).
How did Americans end up with such a convoluted system for choosing the occupant of their most important public office? And can it be redesigned?
The answer to the first question is complex and troubling. As Keyssar told Harvard Magazine, the Founding Fathers couldn’t agree on how to choose the president. There were no models for democracy on the scale they envisioned.
James Madison favored a national popular vote. But others feared ordinary citizens wouldn’t have sufficient information or education to make enlightened decisions about a national leader. A second idea was to let Congress choose the president. But that risked making the executive branch beholden to the legislative branch and defeating the whole idea of separation of powers. A third solution was to let state legislatures make the choice.
In the end, the matter was left to a “Committee on Unfinished Parts,” which settled on a compromise design political scientist Robert Alexander describes as “a Frankenstein’s monster” that combined elements of all three approaches.
The Founders envisioned representatives to the Electoral College as men of property, education and political experience. But electors would be convened for the sole purpose of selecting the president and vice-president. States were afforded representation in the body equal to their membership in the House and Senate, and state legislatures were granted authority to choose electors and allocate their votes as they saw fit.
All these parameters conspired to make the Electoral College a dysfunctional design. The formula for deciding how many electors to assign to each state was especially problematic because it replicated the abhorrent three-fifths compromise used to distribute seats in the House. To appease the free white residents of southern states, enslaved Black people were counted as three-fifths of a person for the purpose of allocating representatives and electors, even though slaves were denied the right to vote. Wegman told the New York Times Daily podcast that southern states exploited that provision to perpetuate segregation long after Black Americans were granted the right to vote.
Nor did the Founders anticipate the rise of political parties and how, by the 1830s, the logic of partisan competition would drive nearly all states to adopt winner-take-all rules in which the candidate who won the majority of a state’s popular vote would be awarded all that state’s electoral votes. That development shaped the modern political landscape in which candidates campaign almost exclusively in a handful of “battleground” states where small shifts in voting results can determine Electoral College outcomes. Other states are reduced to “spectator” status.
In 1969, the House voted by an overwhelming 338 to 70 in favor of a constitutional amendment to dismantle the Electoral College, but a cadre of Southern segregationists blocked the bill with an epic filibuster in the Senate. That’s the closest America has ever come to an Electoral College redesign.
More recently, 15 states and the District of Columbia have endorsed an proposal called the National Popular Vote Interstate Compact, an agreement that pledges them to award all their electoral votes to whichever presidential candidate wins the popular vote. It’s a clever workaround that doesn’t require rewriting the Constitution. But so far signatories of the compact control a combined 196 electoral votes, far short of the 270 votes needed for a majority in the Electoral College.
More design news below.
Clay Chandler
— clay.chandler@fortune.com
NEWS BY DESIGN
Fluke
A tram car in Rotterdam charged through a barrier at the end of the line, hurtling over the end of a bridge. But the car, which was empty except for the driver, was saved from falling as it was propped up by a sculpture of whale tails installed at the end of the bridge by architect Maarten Struijs. The sculpture is called Saved by a Whale’s Tale.
Counting votes
A team from Stanford University’s design institute—the d.school—have been working with government officials to design systems to help poll staff work efficiently and safely. The d.school’s work also intends to prevent voters from growing disenfranchised with an increasingly fraught voting system.
Flagging
In Mississippi, voters today will decide whether to adopt the new state flag picked by a commission created this summer to replace the state’s 126-year-old flag that featured a Confederate emblem. The new design, picked from thousands of public submissions, features a magnolia flower surrounded by stars and the words “In God We Trust.” If it’s rejected, the old flag won’t return, but it’s back to the drawing board on new designs.
Still tracing
As England enters a new four-week lockdown, the U.K.’s contact-tracing app, built on software designed by Apple and Google, is receiving software updates that could make it more effective. A previous version was perhaps too sensitive to privacy, with designers deciding not to collect user contact information, so health workers couldn’t follow up with suspected cases. The standards for determining who counts as a “close contact” are also being updated, expanding the net to capture more potential cases early.
Back tap
Apple introduced a new iPhone feature through a software update that turns the entire back panel into a tap-sensitive function button. Users can program what functions they want the back panel to perform. As an Android user, I’ve always been frustrated by the iPhone’s dearth of function buttons, so this seems like a neat solution that doesn’t disrupt Apple’s single button design.
T.E.A.R. gas
A collapsible, pocket-sized gas mask designed to protect protesters from tear gas was awarded Bronze in the student category of the U.S.-based International Design Excellence Awards. The mask, which protects wearers against the effects of tear gas for up to 15 minutes, was designed using Hong Kong as a case study. Last year, around 16,000 gas canisters were deployed in Hong Kong during a six-month window as protests gripped the city.
Gone off
Enjoy this thought-investigation into what a $590 scratch-and-sniff T-shirt, designed by French fashion house Lanvin, is worth during a year of complete economic upheaval. Never mind, as theTimes points out, the irony of releasing a scented shirt that can only be smelled at close proximity in a year when social distancing is vogue and anosmia is trending.
EVENTS BY DESIGN
November
The AIGA Design Conference is being hosted online November 9-14. The event, hosted by the U.S. professional association for design, is pitching “building bridges” as the theme for its festival
Canada’s annual graphic design fest, DesignThinkers, is running online this year, November 10-21—the first time in the event’s 20-year history that it hasn’t been held in person.
Dubai’s inaugural architecture festival, d3 Architecture Festival, will run November 11-13 on the sidelines of Dubai Design Week. The event will focus on sustainability—an existential issue for the desert city.
Barcelona Design Week, bringing together architecture, tech, industrial and graphic design, is being held both online and on-site November 17-26.
Hong Kong’s Business of Design Week (BODW), billed as “Asia’s premier annual” event on design, will be in person and online from November 30 until December 5. Like many others, the event looks to provide guidance in a pandemic era.
December
Seoul Design Festival, a celebration of South Korea’s young designers and upstart design brands, is running December 9-13.
The National Gallery of Victoria’s art, design, and architecture exhibition, the NGV Triennial, will run from December 19 to April 18, 2021 in Melbourne, Australia.
QUOTED BY DESIGN
“I don’t think there is any scenario in the future in which fashion will exist online only…Fashion is a physical object: We’ll never be able to entirely digitize it, the way Spotify did with music or Netflix did with movies. But fashion needs to embrace digital if it is to survive.”
Fast Company interviewed four fashion aficionados on how the pandemic has altered the industry. José Neves, the CEO of online fashion retailer Farfetch, which connects customers to global boutiques, is advocating for an embrace of digital elements—such as showrooms and marketplaces. Steven Kolb, CEO of the Council of Fashion Designers of America adds that independent fashion designers are now more willing to work with major buyers previously shunned as too mainstream—like Amazon—to help shift unsold stockpiles.
This week’s edition of BxD was curated by Eamon Barrett. Email him tips and ideas at eamon.barrett@fortune.com


fortune--2020-11-03--Why Chinese regulators summoned Jack Ma just before his unicorn’s record-breaking IPO

Chinese financial regulators met with senior executives of financial technology giant Ant Group and Ant’s billionaire founder, Jack Ma, on Monday just days before Ant’s initial public offering, which is expected to be the biggest in history.
China’s top regulatory body, the China Securities Regulatory Commission, said in a statement on its website that Ant executive chairman Eric Jing, Ant chief executive Simon Hu, and Ma attended the meeting. Ma is Ant’s controlling shareholder, but he holds no management or operational role in the company.
The official statement didn’t say what the meeting was about, but Bloomberg reported on Tuesday that Ma and the executives met with the Chinese officials to discuss curbing Ant’s growth and to warn that Ant may be subject to more financial regulations.
“Views regarding the health and stability of the financial sector were exchanged [at the meeting],” Ant said in a statement. “Ant Group is committed to implementing the meeting opinions in depth and continuing our course based on the principles of stable innovation; embrace of regulation; service to the economy; and win-win cooperation.”
Beijing is wary of high-profile companies in the private sector that could pose a challenge to government control and dominance. It has cracked down on private firms and tycoons in the past, even as it nurtures homegrown businesses.
The Monday meeting follows China’s September announcement that it was stepping up regulations on nonfinancial companies that do business in financial sectors; the central bank identified Ant as one such company.
Ant defines itself as a technology company, but it operates various financial tools, including investment products and credit rating services. It works with banks to provide loans to individuals and small businesses, offering banks its digital platforms to access consumers.
The reach of Ant’s financial platforms is unprecedented. Ant operates Alipay, China’s largest online payment platform that’s become an essential digital tool for its more than 700 million monthly active users. More than a third of China’s population has invested in Ant’s Yu’e Bao money market fund, and some 500 million people borrowed from Ant’s lending platforms Huabei and Jiebei in the first half of 2020.
Ant’s trading debut in Shanghai and Hong Kong on Thursday is set to raise $34.5 billion. The IPO will be the biggest in history, surpassing Saudi Aramco’s $29.4 billion debut in 2019.
Ant’s success has made it a national tech champion for China, even as its rapid growth and disruption of China’s largely state-run banking system have come under regulatory scrutiny.
Ant’s IPO listing document mentions “future laws and regulations” as a risk factor that could adversely affect Ant’s business and operations, and specifically mentions the “evolving and extensive regulation” facing the financial services industry.
“[T]he intersection of finance and digital services is a new phenomenon but one that has attracted significant regulatory attention,” the document says.
In a speech late last month, Ma appeared to criticize the banks that dominate China’s financial system, calling them “big rivers” that need “ponds, creeks, and small channels” in their ecosystem to avoid “floods and droughts.”
He embraced the idea that innovation needs some regulation, but he warned against “outdated supervision.”
“We cannot manage an airport in the same way as we manage a railway station,” he said. “We cannot manage the future with the same old approach of yesterday.”


fortune--2020-11-03--Stakeholder capitalism: Is it working, or is it all talk?

In a departure from the usual CEO interview format, Leadership Next cohosts Ellen McGirt and Alan Murray chose to debate how stakeholder capitalism is being implemented in the business world on the podcast’s latest episode.
“Business is changing,” Murray says, and many business leaders recognize that and see that the way forward must include focus on equality, racial justice, climate change, and more.
But not everyone agrees, including Harvard Law’s Lucian Bebchuk, who recently published a paper titled The Illusory Promise of Stakeholder Governance. Joining the episode along with Bebchuk is Harvard Business School’s Rebecca Henderson, whose book Reimagining Capitalism: How Business Can Save the World expands on ideas that put her squarely at odds with Bebchuk’s thoughts on stakeholder capitalism.
Bebchuk believes that all the corporate talk of stakeholder capitalism is “largely cosmetic.” In his research, he and his colleagues have found that when faced with decisions, CEOs rarely give weight to the wants and needs of stakeholders, largely because there is little value or profit incentive to do so.
He also points to his study’s finding that many CEOs who signed 2019’s Business Roundtable statement on stakeholder capitalism didn’t get board approval to do so because they felt the statement did little to change business as usual at their companies. But Henderson doesn’t see that as negatively as Bebchuk does.
“I believe that shifting the goals of the corporation would make an enormous difference,” Henderson says. “I don’t think you need to do a wholesale shift in corporate governance in order to do that.”
Both Bebchuk and Henderson agreed that society can not expect business leaders to choose to do good with no incentive to do so. Henderson says she believes there is a class of actions that benefit both the shareholders and stakeholders that have been overlooked owing to years of shareholder primacy. Murray notes that the CEO guests on Leadership Next often echo that view that there are many win-win strategies that allow profit and social good.
Murray also says that Fortune has found that the companies that are doing best are those that have a long-term view and are focusing on their employees and other stakeholders. Bebchuk, however, says that there are many actions that are not win-win, and in the economics of business, there are tradeoffs that must be reckoned with. Henderson answered that concern by saying she thinks that business has a collective action problem, wherein individual businesses must act because all businesses will be worse off if the glaciers melt and the cost of labor keeps getting pushed down below a living wage.
Around the 24-minute mark, the debate turns to the role of government leadership in addressing the causes at which stakeholder capitalism takes aim. Bebchuk says that part of the reason governments are often slow to act is the thought that the private sector will come to the rescue, but his findings and other research have shown that is often not the case. So perhaps, he posits, stakeholder capitalism is slowing the rate of societal change. Henderson doesn’t disagree, but she says she thinks one of business’s most crucial responsibilities is to rebuild government and the institutions that have failed to make progress on these issues.
“What we should do is look at what people do, rather than what people say,” Bubchek says in closing. And Henderson agrees but still thinks that the rhetoric from purpose-driven CEOs matters and says she feels that pushing them to act on their messaging is a way forward out of the “desperate” times society finds itself in today.
To hear the debate in its entirety, including back-and-forth on barriers to changing the status quo in business and how investors can drive change, listen to the full episode.


fortune--2020-11-03--Saudi Aramco is still promising a dividend—even though it hasn’t got the cash

Saudi Aramco failed to generate enough cash to cover its dividend, yet left the payout unchanged at $18.75 billion for the third quarter even as profit fell 45% and debt continued to rise.
The Saudi Arabian state energy firm’s free cash flow was $12.4 billion between July and September, compared with $20.6 billion a year earlier. Gearing climbed to 21.8% from 20% in June and from minus 5% in March, when Aramco had more cash than debt.
Aramco’s dividends are a vital source of cash for the Saudi government, whose budget deficit is expected to widen to 12% of gross domestic product this year amid a coronavirus-triggered crash in crude prices and a severe economic contraction.
Yet the company, 98% owned by the government, probably won’t be able to continue paying out such high dividends unless oil prices, down 40% in 2020, rise, Moody’s Investors Service said last month. Aramco’s total payments to the kingdom, including dividends, taxes and royalties, fell 30% in the three months to the end of September to $24.6 billion.
“Aramco covered the lion’s share of its dividend this quarter, which, given the macro environment at $42 a barrel and abysmal refining margins, is quite an accomplishment,” Royal Bank of Canada analyst Biraj Borkhataria said in a research note.
Net income at the world’s biggest oil company was 44.2 billion riyals ($11.8 billion), slightly ahead of analysts’ expectations.
Aramco’s shares rose 1.3% to 34.60 riyals by 12.37 p.m. in Riyadh, paring this year’s drop to 1.8%. The stock has been bolstered by management’s pledge to pay a $75 billion dividend annually for five years after the completion of last December’s initial public offering.
That promise, combined with a $69 billion acquisition of chemicals maker Saudi Basic Industries Corp., has seen debt levels balloon even with Aramco cutting capital expenditure and laying-off hundreds of foreign workers. Net debt rose $6 billion to $83 billion by the end of the third quarter, putting the company even further from its gearing target of between 5% and 15%.
The company may have to take on more debt to fund the dividend payments given its slumping cash flow. It drew down a $10 billion loan in late July. That revolving credit facility matures in May 2021, but Aramco can extend it for another year.
Income still increased for the first time in five quarters as oil prices steadied following their battering earlier in the year as the coronavirus spread globally and demand for energy cratered.
“We saw early signs of a recovery in the third quarter due to improved economic activity, despite the headwinds facing global energy markets,” Chief Executive Officer Amin Nasser said. “We continue to adopt a disciplined and flexible approach to capital allocation in the face of market volatility.”
Although the results suggest the worst of the pandemic’s impact on energy demand may have passed, Aramco still faces a brittle market. Oil prices fell to a five-month low this week amid fresh travel restrictions in Europe aimed at stemming a surge in virus cases.
OPEC and allied producers — who agreed to slash crude exports in April — are weighing whether to delay an easing of those curbs to buttress crude prices.
In addition to crushing demand for fuel, the pandemic has also hit Aramco’s refining and chemicals businesses. The downstream unit swung to a $795 million loss before interest and taxes in the third quarter from an $801 million profit a year earlier.
Aramco had gross refining capacity of 6.4 million barrels a day at the end of September. It’s seeking to cement its position as one of the world’s biggest crude processors by having the capacity to turn some 8 million to 10 million barrels a day into fuels such as gasoline and diesel.
–With assistance from Bruce Stanley.


Debating stakeholder capitalism

This is the web version of CEO Daily. To get it delivered to your inbox, sign up here.
Good morning.
In honor of election day, Ellen McGirt and I hosted a debate on our podcast Leadership Next. The topic: Stakeholder capitalism, pro or con?
Taking the con was Lucian Bebchuk, professor at Harvard Law School, who published a major academic paper earlier this year called The Illusory Promise of Stakeholder Governance. It’s long, but in a nutshell, he thinks the Business Roundtable’s statement last year that companies have responsibilities to society equal to their responsibilities to shareholders is “largely cosmetic.”
“First, corporate leaders do not have significant incentives to protect stakeholders beyond what would serve shareholder value. They simply don’t. And secondly, we have to look at the evidence, and the evidence colleagues and I have put forward is that in fact when CEOs and other corporate leaders face choices, they do not give independent weight to the interests of stakeholders.”
On the pro side, we went (virtually) across the Charles River and found Harvard Business School’s Rebecca Henderson, author of Reimagining Capitalism in a World on Fire:
“I respectfully disagree. I think the BRT statement is quite important. I believe what we might call rhetoric or culture or our understanding of what the goals of the corporation are, is super important. For the last 40 years, we said the goal of the corporation is to maximize shareholder value. Shifting the goals makes a lot of difference.”
I don’t want to give it all away here, but their disagreement—which they had never debated together before—comes down to this: Bebchuk said CEOs still have incentives and rules that require them to deliver primarily to shareholders. Henderson acknowledges that, but goes on:
“I think the debate is more interesting than this. I believe there are an important class of actions that benefit both the shareholder and the stakeholders that many firms have not focused on (in the past) because they have been so focused on shareholder value that they have not taken a longer-term perspective.”
This, of course, is what we heard from many of the corporate leaders on our podcast this year—that stakeholder capitalism is about “win-win” solutions, which deliver benefits to society and to shareholders. Bebchuk responded that there is “something puzzling” about the idea “that corporate leaders have not noticed this is important for maximizing value” before now. To which Henderson emphatically responded:
“Leaders of major corporations are bad at seeing discontinuous changes in their environment…I spent the first 20 years of my career working with firms like Kodak trying to persuade them the world was changing. I spent six months with Nokia in Finland in saunas in the middle of February trying to convince them that Apple was really a threat to their business…There are real cognitive barriers to doing things differently.”
Readers of this newsletter know where I fall in this debate. But these two professors animate it with an eloquence I never could. Take the time to listen, on Apple or Spotify (but not on Nokia.)
More news below.
Alan Murray
@alansmurray
alan.murray@fortune.com
TOP NEWS
Bayer writedown
Bayer has taken impairment charges of $10.8 billion over two big issues: lower biofuel prices causing weak demand from farmers, and the Roundup settlement proving pricier (by around $750 million) than anticipated. CFO Wolfgang Nickl: "The impact of the (coronavirus) pandemic is placing additional strain on our Crop Science Division. We are also facing negative currency effects." Reuters
Honda, FCA and Tesla
Honda has joined Fiat Chrysler Automobiles and Tesla's pooled fleet, for the purposes of meeting European emission standards. As FCA has been doing for a while, Honda will get to benefit from Tesla's regulatory credits, garnered from the fact that Tesla's cars are all-electric. It is not yet clear how much Honda is paying Tesla for the privilege; Tesla pulled in almost $1.2 billion in revenue from selling such credits this year. Bloomberg
Robots 1
Ocado, the U.K. online-grocery giant known for its forward-thinking warehouse technology, has bought two U.S. robotics companies to continue its automation push. The biggest buy is that of Kindred Systems, whose customers include Gap and American Eagle Outfitters, for $262 million in cash and stock. Ocado is also shelling out $25 million in cash and stock for Haddington Dynamics, which makes a sophisticated robotic arm for the likes of DuPont and NASA. Fortune
Robots 2
Walmart has ended its longstanding push to have inventory-tracking robots roving around its store aisles, after learning that humans do just as good a job. It was also worried about customers' reactions to seeing robots in stores. The end of Walmart's five-year contract with Bossa Nova Robotics led the latter firm to lay off half its staff. Wall Street Journal
AROUND THE WATER COOLER
PayPal crypto
PayPal has put flesh on the bones of its planned cryptocurrency push. According to CEO Dan Schulman, PayPal will from early next year let customers pay for stuff using their cryptocurrency accounts, and to use the firm's Venmo peer-to-peer payment service to buy and shop using cryptocurrencies. Schulman said the bullishness came from a better-than-expected reaction to PayPal's initial crypto announcement last month (that it will allow customers to buy cryptocurrency within its app.) Fortune
Too close
Raghavan Mayur, president and founder of TechnoMetrica and leader of the IBD/TIPP poll, writes for Fortune that the presidential race is actually too close to call, despite Biden's apparent lead. Why? Because there's a larger margin of error in swing-state polls, and because of the COVID effect in swing states. Fortune
German fail
The EU's markets regulator has criticized German watchdogs over their deficient supervision of the collapsed payments firm Wirecard. The European Securities and Markets Authority began a fast-track review of the situation in July, and today reported back on failures by BaFin, the German regulator, which it suggested was overly susceptible to political influence. Reuters
Alphabet vs depression
Google parent Alphabet revealed that, for the last three years, its X division has been working on a mental-health "moonshot" called Project Amber. The project's researchers have developed an EEG cap for monitoring electrical activity in the brain, and tools to analyze the data, so they can look for signs of depression and perhaps even predict episodes. They originally worked on a depression diagnosis tool, but doctors said this wasn't needed. CNBC
This edition of CEO Daily was edited by David Meyer.


fortune--2020-11-03--Why we shouldn’t give up on bipartisanship, even now

This Election Day, many Americans are wondering whether bipartisanship is even possible anymore.
For the millions suffering from cancer and other debilitating diseases, I hope so. Because 18 years ago, when I faced a deadly diagnosis of non-Hodgkin lymphoma (NHL), bipartisanship laid the foundation that gave me my life back.
The treatment that saved me resulted from years of research that would have amounted to nothing without the law authored by two senators, Indiana Democrat Birch Bayh and Kansas Republican Bob Dole, in 1980.
Known as the Bayh-Dole Act, this law allows universities, small businesses, and nonprofit organizations to own the early stage inventions they make in the course of their research using federal grants. These institutions can then license their intellectual property to private firms, which have the resources and experience to turn promising ideas into widely available medicines. Partnering with the private sector makes sense, because university laboratories usually lack the resources and manpower to nurture ideas through the lengthy and expensive research, testing, and development processes.
Prior to Bayh-Dole, the government retained ownership of intellectual property rights, and only occasionally translated them into real-world products for patient use. At the time the law passed, fewer than 5% of these government-owned inventions were licensed for commercial production. And not a single drug was developed from federally supported R&D when the government took patent rights away from the inventor.
Fortunately, Senators Bayh and Dole set partisanship aside to fix this logjam. Their landmark legislation has helped create a legal framework for private firms to pioneer more than 200 groundbreaking medical innovations—including the one that saved my life.
When I was diagnosed with an incurable form of NHL in January 2002, my only treatment option at the time was chemotherapy. It was known to slow the disease’s progression but it would inevitably return. Back then, the median life span from diagnosis to death was just eight years. My heart broke, knowing that wasn’t enough time to grow old with my husband or see my grandchildren through grade school.
But chemotherapy didn’t slow the progression of my disease. A few months into treatment—and in the nick of time—a new type of treatment for NHL hit the market: radioimmunotherapy (RIT). Unlike chemotherapy, which attacks both cancerous and healthy cells and requires up to eight treatments, RIT targets cancerous cells only, and takes only one or two injections.
In September 2002, I received two doses of the cutting-edge RIT drug Zevalin and have been in remission and healthy ever since. Without medical innovation, my life might have taken a very different turn.
A crucial part of Zevalin’s therapeutic regimen is the infusion of the drug rituximab, a medication designed to reduce the number of cancerous B cells in the blood. Using grants from the National Institutes of Health, researchers at Stanford University unearthed this B cell technology in the 1970s and 1980s.
But it takes a lot of time and investment to turn good ideas into tangible treatments. And this discovery may never have become a commercially viable cancer treatment had those researchers not left Stanford and formed Biotherapy Systems in 1985 to further develop and commercialize their B cell technology.
Just one year later, Biotherapy Systems merged with IDEC Pharmaceuticals to take its B cell therapy across the finish line. After years of tweaking its product, IDEC kicked off clinical trial testing of rituximab in 1993. And by 1995, biotech giant Genentech joined forces with IDEC to fine-tune the drug.
Finally, in 1997, the FDA approved their drug rituximab under the brand name Rituxan.
Without the technology transfer process enabled by the 1980 law, this research could have died in Stanford labs. But because of Bayh-Dole, the private sector has created a market-ready medicine.
I’m far from the only patient who owes her life to the drug innovation ecosystem Bayh-Dole supports. Under this law, private companies have been able to bring patients hundreds of treatments—including the epilepsy drug Lyrica, the ovarian and breast cancer therapy Taxol, and the multiple sclerosis medication Tcelna.
Now, though, activist groups are pressing politicians to exploit a never-used provision of the law to seize patent rights for COVID-19 medicine, to the detriment of private drug companies and patients. There would be no legal basis for this course of action—Bayh-Dole only allows the government to grab patents in rare instances such as where a company is not making a product widely available. Still, with the pressure on, our lawmakers need to cooperate to keep Bayh-Dole protections strong.
Lives literally depend on it.
Patients owe a debt of gratitude to senators Bayh and Dole, who recognized that empowering private drug companies to turn government-sponsored research into usable medicines and treatments is not a partisan issue. Their bill found its way through Congress at a divided moment, when Ronald Reagan had just won election but Jimmy Carter was still in office. Their willingness to work together in the service of public health and patients like me should inspire us today.
Betsy de Parry is a patient advocate and the author of Adventures in Cancer Land.


fortune--2020-11-03--What you can expect from TV news today

What you can expect from TV news today

Election night. It’s an occasion so definitive in the minds of some Americans that some, in years past, have taken to throwing parties in anticipation of celebrating the declared victor that evening. Americans are used to seeing elections unfold over the course of a single evening, as news organizations are able to project winners with confidence as the results are tallied in real time.
The surge in mail-in ballots this year owing to the threat of the coronavirus pandemic has changed that dynamic. Election officials have forewarned that votes may take several days to count—especially those in key battleground states like Pennsylvania and Wisconsin, where mail-in ballots can’t be processed until the morning of Election Day. According to the U.S. Elections Project, a nonpartisan data-tracker run by University of Florida professor Michael McDonald, more than 62 million ballots have been cast by mail. That’s part of a staggering 97.6 million–strong early voting turnout—more than two-thirds the votes cast in the entire 2016 election.
The huge volume of mail-in ballots doesn’t just mean a potential delay in counting votes but also “mirages” showing skewed results for either side of the aisle. Democrats, who voted by mail more than Republicans, may appear to build a significant lead, only to see the gap closed on election night and in the days after—or vice versa.
News organizations and the major broadcast networks will need to communicate these fluctuating changes to Americans. The one theme that broadcasters have repeatedly stressed for this election: transparency.
“We’ve been very careful not to necessarily telegraph how long this is going to take,” says Rashida Jones, senior vice president of NBC News and MSNBC. “We know the possibility that things could extend beyond the night, but it’s not out of the question. That’s something that we’re gonna be very open and transparent with our viewers. If we do get a call on election night, that doesn’t mean that there’s something wrong with the system. If we don’t get a call on election night, same thing—there’s nothing wrong.”
Jones says that NBC will be utilizing more data and visual elements during its broadcast this year, including augmented reality elements, to accurately convey information to viewers. One example she points to is the tally of votes in, measured by the amount of precincts reported. Compared with previous elections, a total of, say, 80% of precincts, could be enough to call a state. But that won’t be as accurate this year owing to the amount of mail-in votes that may not have been counted in time.
“And so one thing that we’re doing differently this cycle is really putting on high display the amount of votes that we’re expecting from any individual state,” says Jones. “That’s based on assessment and analysis from state and local election officials. How much is expected, and how much has been counted to date? So we have an assessment of, if 8 million votes are expected, but only 2 million have been counted, and they haven’t been counted in Democratic- or Republican-leaning counties, we feel we can give a better assessment to the audience of what to expect from the remaining 6 million votes.”
Rick Klein, political director at ABC News, says the network is going to emphasize the percentage of expected votes that are in and break the results down “more than we’ve ever had in the past.” That means detailed, visual looks at early voting, absentee ballots, places where votes have yet to come in, snapshots of battleground states, and more. And echoing Jones, he says ABC will make clear to viewers that Election Day is merely the last day to vote, not necessarily the date to expect complete results.
“It’s sort of a marvel of modern television and journalism that the country’s become used to knowing immediately,” he says. “There’s never been an election in history where all the votes are counted immediately. It doesn’t happen that way. But the process has changed substantially, and because it’s changed, we’re going to have to just be more careful on this. People have short memories of these things. I mean, the 2000 election famously didn’t get settled on election night,” he adds, referencing the face-off between George W. Bush and Al Gore.
Similar to the impact of in-person voting, the coronavirus pandemic has also changed the way journalists do on-the-ground reporting in the buildup to the election. Along with polls, interviewing locals provides opportunities for news organizations to understand the electorate. “It’s not just about election night itself. I think one thing that the media admitted they need to do a better job of after 2016 was getting out of the coast and actually listening to voters,” says Caitlin Conant, political director of CBS News.
“I was worried if we’re not actually out in the field, that might make us miss the story again,” she adds. “From a coverage standpoint, that is the most difficult thing. Thankfully [our reporters] are out, they’re safe, and they’ve been in battleground states. So pretty early on I assigned them to cover battleground states and to start sourcing up basically from their mom and dad’s homes.”
Conant says that the situation actually ended up being beneficial because “they really became experts on these states and knowing all the ins and outs of the legal rules of these states,” which will come in handy on election night. “We need to constantly remind people when we are talking about states what their rules are, why we may know, and why we may not know tonight,” she says.
Ultimately, Conant says: “We want to be right. And we want to be right rather than being first.”


fortune--2020-11-03--Investors are in a bullish mood as Americans head to the polls

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. It’s a risk-on Election Day. The markets and U.S. futures are gaining as Americans queue up to vote— and then, of course, the big wait begins.
Usually, investors sit things out until the results are clear. But that would be so uncharacteristic of this 2020 bull market.
Let’s see where investors are putting their money.
Markets update
Asia
The major Asia indexes are higher in afternoon trading with the Hang Seng up nearly 2% .
are higher in afternoon trading with the up nearly . The buzz around the forthcoming Ant Group IPO has hit a fever pitch. In so-called gray market trading, institutional investors are paying a 50% premium for shares, Bloomberg reports, a strong sign this will be a blockbuster event. That might be why Chinese officials called founder Jack Ma into a closed-door meeting yesterday to go over the rules of fintech regulatory oversight.
IPO has hit a fever pitch. In so-called gray market trading, institutional investors are paying a for shares, Bloomberg reports, a strong sign this will be a blockbuster event. That might be why Chinese officials called founder into a closed-door meeting yesterday to go over the rules of fintech regulatory oversight. Alibaba Group is running Singles Day , the world’s most popular online shopping event, twice this year: this week and next week. As Fortune‘s Eamon Barrett reports, Alibaba “shipped $38.4 billion in gross merchandise value (GMV) on Singles’ Day last year. Amazon’s Prime Day, by comparison, sold an estimated $6 billion in goods last year.”
, the world’s most popular online shopping event, twice this year: this week and next week. As Fortune‘s Eamon Barrett reports, Alibaba “shipped in gross merchandise value (GMV) on Singles’ Day last year. Amazon’s Prime Day, by comparison, sold an estimated in goods last year.” Saudi Aramco reported a rough Q3, with profits down 45%. Still, it’s dead set on paying its quarterly $18.75 billion dividend to investors.
Europe
The European bourses are in the green with Germany’s DAX and France’s CAC 40 both up 2% , the latter helped by a big top-line beat from French lender BNP Paribas.
are in the green with and both up , the latter helped by a big top-line beat from French lender BNP Paribas. U.K. online grocer Ocado, a high-flying pandemic stock, announced on Monday it had acquired two U.S. robotic firms for a combined $287 million in cash and stock to speed the automation of warehouse operations for itself and clients.
in cash and stock to of warehouse operations for itself and clients. Shares in CureVac closed down 3% on Monday after the German biotech firm reported promising results in its trial COVID vaccine.
U.S.
U.S. futures are climbing this morning, looking to add to yesterday’s gains. That’s after all three exchanges rebounded on Monday as investors bought up stocks on last week’s dip.
are climbing this morning, looking to add to yesterday’s gains. That’s after all three exchanges rebounded on Monday as investors bought up stocks on last week’s dip. Shares in PayPal were down 5% in pre-market trading after the digital payments company posted record revenues , but provided a murky outlook. PayPal did detail how it plans to go big on cryptocurrency starting next year.
in pre-market trading after the digital payments company posted , but provided a murky outlook. PayPal did detail how it plans to go big on starting next year. Tech shares rebounded yesterday after a late afternoon bounce, but there are still swirling questions about how the sector will fare after Election Day. Fortune‘s Anne Sraders takes a look at what investors can expect.
Elsewhere
Gold is up, trading around $1,890/ounce .
is up, trading around . The dollar is down.
is down. Crude is up, with Brent trading at tick above $39/barrel .
is up, with trading at tick above . Bitcoin is off 2% at $13,430.
***
The big V
V for volatility that is.
Last week, we saw a trio of worrying signs that volatility had overtaken the markets: the dollar soared, as did Treasurys and the VIX. All three took off as polls tightened, COVID cases spiked on both sides of the Atlantic, and stimulus talks collapsed.
The VIX, or so-called fear index, looks out 30 days, seeking to measure the relative riskiness of what lies ahead. Fund managers and Wall Street analysts see the volatility gauge as a helpful tool to measure investor risk appetite. As such, the VIX has become a particularly helpful tool during major events like presidential elections when so much is at stake.
And so last week, when we saw the VIX rocket above 40, it got Wall Street’s attention. (It’s come down since, hovering below 37 this morning).
“The volatility of volatility—the rate at which volatility itself is changing—can often signal even bigger market shifts,” Lisa Shalett, CIO of Morgan Stanley Wealth Management, wrote in an investor note issued yesterday. “Most recently, we have seen volatility of the VIX, the major metric of stock market volatility, hit its third-highest level in five years.”
Morgan Stanley charted out the VIX going back five years, putting last week’s pre-election spike into perspective.
“The last two times this occurred,” she continued “in December 2018 and February 2020, we saw structural change: the Federal Reserve’s reversal of monetary policy to easing from tightening and the acknowledgement that COVID-19 was leading toward national lockdown. Could the VIX volatility be signaling a structural shift or a shift in the business cycle? We think chances are decent of both, which is why we don’t recommend sticking with yesterday’s leaders.”
Those leaders, of course, are the Big Tech, work-from-home darlings. Shalett suggests investors would be wise to rethink their portfolios to consider sectors instead that might benefit “from a new policy regime.” Those sectors, she says, would be industrials, clean energy, construction, consumer durables and financials.
She doesn’t explicitly say it, but it sounds like she’s watching the polling data closely, and penciling in a change in power in Washington.
The question remains—would such a change be a smooth or rocky one? If it’s the latter, expect yet another swing of extreme volatility, and the whole calculation to reset.
***
Have a nice day, everyone. I’ll see you here tomorrow.
Bernhard Warner
@BernhardWarner
Bernhard.Warner@Fortune.com
As always, you can write to bullsheet@fortune.com or reply to this email with suggestions and feedback.
Today's reads
America, as the country goes to the polls. The labor market is depressed, but gaining some ground. Data on consumer spending and home sales look promising, while manufacturing and business investment is muddling along. Here's an interesting look at the health of the U.S. economy as told through a half-dozen important metrics.
A mauling at the malls. The collapse of America's brick-and-mortar retail sector came into sharp focus this weekend as two of America's biggest mall operators filed for Chapter 11 protection. As Fortune's Phil Wahba reports, it doesn't help that "many tenants, notably Gap Inc, have stopped paying rent or negotiated reductions as the pandemic forced them to shutter stores in the spring, and a number of large tenants, including J.C. Penney and Macy's, have left some malls for good."
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
4.6 billion
Wall Street just posted a record year—for the amount companies have been forced to pay out to settle claims of dodgy dealings. In fiscal year 2020, regulators have issued $4.6 billion in fines, the Wall Street Journal reports. The wrongdoings involve everything from unsanctioned cryptocurrency trades to faking customer accounts to overseas corruption scandals.


fortune--2020-11-05--Bitcoin bulls eyeing a $20,000 price target

Biden received more total votes than any presidential candidate in U.S. history

Bitcoin is in rally mode once more.
Whether it’s uncertainty from the U.S. election, the future of the pandemic or simply more investor interest, the cryptocurrency is at the highest level since January 2018. Bitcoin was up 3.3% at $14,463 as of 8:33 a.m. in London.
The digital currency has been benefiting from high-profile investments from the likes of Square Inc. and Paul Tudor Jones. JPMorgan Chase & Co.’s JPM Coin was reportedly used to make a payment for the first time. Proponents argue bitcoin can be a diversifier in times of uncertainty, so events like lockdowns across Europe or delays of U.S. election results could be fueling its rise.
After taking out the June 2019 highs at $13,800, the next resistance is around $20,000, Fundstrat Global Advisors LLC technical strategist Rob Sluymer said in a note last month.
The cryptocurrency world is, of course, famously volatile. Bitcoin has made parabolic runs upward before, notably December 2017 and mid-2019, before major tumbles. And many strategists and investors are skeptical. Empire Financial Research’s Whitney Tilson said in an email Wednesday that he still regards cryptocurrencies as “a techno-libertarian pump-and-dump scheme” and recommends most investors avoid them.
Still, some see the cryptocurrency’s march higher as poised to continue.
“Previous Bitcoin resistance at about $10,000 may transition toward $20,000 in 2021,” said Mike McGlone, commodity strategist at Bloomberg Intelligence. “Certain supply leaves demand as the primary price metric, and most indicators remain positive.”


fortune--2020-11-05--China’s 2020 election ‘indicator’ showed a closer race than U.S. polling

This is the web version of Eastworld, Fortune’s newsletter focused on business and technology in Asia. Subscribe here to get future editions in your inbox.
Days ahead of the U.S. presidential election, the New York Times and NPR dispatched reporters to the sprawling wholesale market in Yiwu, in China’s eastern Hangzhou province, to interview local vendors selling hats, T-shirts, flags and other merchandise for the Trump and Biden campaigns.
It’s a clever (if obvious) journalistic trope. A vast share of the “Ridin’ with Biden” T-shirts and “Make America Great Again” hats carpeting the American campaign trail were actually made in China. They’re sold to global distributors in Yiwu, the world’s largest consumer wholesale market, who ship them on to the U.S.
The Yiwu vendors claim that during the 2016 U.S. presidential election, they knew exactly who was going to win because orders for Trump merchandise far exceeded those for Hillary Clinton. The Times calls this the “Yiwu Index,” and reports that this year as well, Trump paraphernalia “has been selling briskly at shops in the vast wholesale market” while bulk orders for Biden merch “have been almost nonexistent.” NPR was more cautious. It reported that this year sales for Republican and Democratic candidates were “more balanced” than in 2016.
Either way, those Chinese vendors were onto something. The Yiwu Index proved as reliable a political indicator as any in this crazy race—better than some of the most sophisticated (and expensive) polls in America, which predicted a Biden blowout right up until Election Day.
This morning, Asia awoke to the prospect that Biden, by a whisker, may have unseated Donald Trump as the next president of the United States.
Around the region, reaction was mixed.
Asian financial markets shrugged off the uncertainty Thursday. In China, stocks rose and the yuan rebounded on expectations of a less tumultuous relationship between the world’s two largest economies if Biden triumphs. Japan’s Nikkei 225 hit a nine-month high. The Hong Kong Hang Seng Index gained 3%.
The state-controlled China Daily opined that the U.S. presidential election offers “an opportunity for the world’s two largest economies to reboot their relations” that “shouldn’t be squandered.” But China’s government leaders mostly refrained from comment about the American cliffhanger.
In Beijing, the prevailing view is that the U.S.-China relationship will remain fraught no matter which candidate wins the White House. There is little affection for Trump, who has hiked tariffs on Chinese products and blacklisted Chinese companies including Huawei Technologies and TikTok. But many Chinese analysts fear Biden will hector Beijing on human rights issues that Trump mostly ignored—and likely will prove more effective than Trump in mobilizing American allies to act jointly in pressuring China to change its economic policies.
In Japan, America’s closest Asian ally, Trump’s attempt to claim victory before all votes are counted, provoked expressions of horror in the media. Leaders of Japan’s ruling Liberal Democratic Party have developed a wary rapport with Trump administration counterparts, but consider Biden an enigma. As Foreign Policy put it: “Japan Doesn’t Trust Trump and Doesn’t Know Biden.”
In South Korea, another key U.S. ally, a spokesman for President Moon Jae-in stressed Seoul will work closely with the U.S. “regardless of the election outcome.” But a Biden victory could bring big changes to American policies in Northeast Asia. Unlike Trump, who threatened to pull troops from Japan and South Korea unless they pay billions of dollars more for U.S. military support, Biden is expected to work closely with both countries to increase pressure on North Korea to denuclearize.
American national security experts tell Japan’s Nikkei Asia Weekly that Biden will try to mend frayed relations between Japan and South Korea. And unlike Trump, he is unlikely to meet personally with North Korean leader Kim Jong-un before securing verifiable nuclear concessions.
The Philippines’ rightwing president Rodrigo Duterte and India’s Hindu nationalist prime minister Narendra Modi have developed close personal friendships with Trump. Duterte even encouraged Filipino Americans to vote for Trump. Leaders of Modi’s Bharatiya Janata Party, by contrast, have explicitly advised overseas affiliates in the U.S. not to campaign under the party banner—a tacit acknowledgement that the party is perceived to be pro-Trump. Spokesmen for both Asian leaders have been quick to offer assurances that they can work closely with the next president no matter which candidate wins.
More Eastworld news below.
Clay Chandler
clay.chandler@fortune.com
This edition of Eastworld was curated and produced by Grady McGregor. Reach him at grady.mcgregor@fortune.com.
Eastworld news
Beijing gets antsy
Ant Group, the Alibaba-backed fintech giant, announced this week that it is postponing its blockbuster dual-debut in Hong Kong and Shanghai set for today after regulators in Shanghai raised questions about the company's ability to meet the exchange's regulatory requirements. Ant Group was poised to raise $34 billion in the debut at a valuation of over $310 billion, which would have made it the largest IPO ever recorded. Observers believe Beijing, in part, is bringing Ant Group and Alilbaba founder Jack Ma to heel weeks after he sharply criticized the country's banking system. Fortune
The King's wealth
Thai royalty has long been a red line in the country's politics, but pro-democracy protesters in Thailand are now raising unprecedented objections to the role of the country’s monarchy. King Maha Vajiralongkorn is facing questions over his estimated $40 billion fortune. The challenge comes after the King eliminated a government agency that oversaw his wealth and consolidated the monarchy's fund into his personal coffers. Fortune
A Samsung squeeze
Samsung, the South Korean tech giant, has long counted on China for growth, building its first factory in China in 1992. Samsung’s revenues in China mirrored China’s economic rise, and by the mid-2000s Samsung was drawing over half its global revenues from China. Now Samsung appears to be stepping away from the market by withdrawing from two of its three core China businesses. It appears the political risks of getting between China, the U.S., and Korea are too much for the tech giant to stomach. The Wire China
Vaccine diplomacy
Pressure from the U.S. and China's hawkish ambitions in the South China Sea have made some Southeast Asian countries wary about developing close ties with China in recent years. A successful Chinese vaccine may change that and provide China with a chance to increase its economic and political influence across the region. “Given the lack of alternatives, China's vaccines are increasingly seen in Southeast Asia not just as salvation, but also as once-in-a-generation geopolitical leverage [for China],” the Nikkei Asian Review writes. Nikkei Asian Review
Surveillance state
China's mass surveillance network—the largest in the world—has rapidly expanded in recent years, according to a new report in Chinafile. Chinafile reviewed 76,000 government procurement documents and found that orders for surveillance-related products shot up 1,900% between 2010 and 2019. Cities and small villages across the country are now deploying a range of new technologies, from facial recognition to predictive policing to other tracking practices, on a scale that was previously unknown. Fortune
Coronavirus by country
Myanmar
The U.S. is not the only country holding a presidential election this month amid a surge in COVID-19 cases. In Myanmar, cases of COVID-19 are reaching record highs and its capital Yangon remains in lockdown even as voters are set to take to the polls next week. Opposition parties say that holding an election amid the country’s largest outbreak is not safe. The country is recording upwards of 1,000 cases per day for the first time since the beginning of the pandemic. Still, Myanmar’s leader Aung San Suu Kyi is widely expected to cruise to victory, with the pandemic dampening the chances of her facing a reckoning at the polls. The Diplomat
Markets and movers
Gland Pharma – The Indian pharmaceutical firm, backed by China’s Fosun Pharma, is expected to raise $871 million in the largest IPO for a pharmaceutical firm in India. Gland Pharma is set to debut in Mumbai on Nov. 20. Bloomberg
Meituan – The Chinese meal delivery giant is weighing a second listing on Shenzhen’s ChiNext stock exchange; its share price has more than quadrupled since it first debuted in Hong Kong two years ago. Bloomberg
Amazon – The U.S. e-commerce giant is attempting to block Indian conglomerate Reliance Industries’ $3.4 billion acquisition of Indian retailer Future Group. The potential battle in Indian courts sets up a showdown between two of the world’s richest men: Amazon’s Jeff Bezos and Reliance’s Mukesh Ambani. Deal Street Asia
TikTok – The video-sharing app, backed by China’s Bytedance, signed a deal with Sony Music on Monday to give its users access to Sony's catalogue of artists. TikTok and Sony have not disclosed the deal's financial terms. Reuters
Nvidia – The American tech giant is facing problems in China related to its $40 billion deal for U.K.-based chip designer Arm. Until recently, Arm’s Chinese joint venture company, Arm China, was run by Allen Wu, but he is now suing the company in China for wrongful dismissal. Wu’s lawsuit may potentially get in the way of Nvidia’s Arm acquisition. Financial Times
Final figure
$1.49 billion
In 2019, Taylor Swift helped launch e-commerce giant Alibaba’s Singles Day event to record highs, helping the e-commerce giant earn more sales in seven hours of the online shopping day than were generated during the U.S.'s Black Friday and Cyber Monday combined. This year, Alibaba split Singles Day into two separate events, the first taking place between Nov. 1 and 3 and the second on Nov. 11. In the first 111 minutes on Nov. 1, shoppers purchased $1.49 billion worth of online goods. The figure is down from last year's pace, perhaps a signal that China's consumer recovery is lagging behind other economic indicators. Fortune