fortune--2020-09-02--A country that escaped a recession in 2008 is officially in one now

Australia’s economy contracted by the most on record last quarter, underscoring the need for unprecedented stimulus measures as the recovery from the nation’s first recession in almost 30 years is buffeted by Victoria state’s renewed Covid outbreak and lockdown,
Gross domestic product plunged 7% from the first three months of the year, the largest fall since records dating back to 1959, the statistics bureau said in Sydney Wednesday. The slump was larger than economist forecasts of a 6% drop. From a year earlier, GDP tumbled 6.3% versus an estimated 5.1% fall.
The Australian dollar fell after the report, and was trading at 73.52 U.S. cents at 1:02 p.m. in Sydney.
Australia’s early lifting of restrictions and reopening of its economy is now being offset by an almost two-month lockdown in Melbourne, the nation’s second-largest city with about 5 million people. That’s delaying the economy’s recovery.
“While the drop in GDP last quarter wasn’t much larger than the RBA had anticipated, it will keep the pressure on the bank to announce more stimulus,” said Marcel Thieliant, senior economist for Australia at Capital Economics.
The Reserve Bank of Australia on Tuesday expanded a lending facility for banks to A$200 billion ($147 billion) to help keep interest rates low for borrowers and keep credit flowing. Governor Philip Lowe also said that the board “continues to consider how further monetary measures could support the recovery.”
The central bank and government are working in tandem to try to support the economy. The former has kept its cash rate near zero and set a target of 0.25% on the three-year government bond yield, and the latter is extending its labor market assistance package.
Today’s GDP report showed:
Household spending — which accounts for about 56% of the economy — slumped 12.1%, subtracting 6.7 percentage points from GDP; government spending rose 2.9%, adding 0.6 percentage point
Investment in new and used dwellings fell 7.3% in the quarter
Net exports contributed 1 percentage point to GDP
The savings rate soared to 19.8%, the highest rate since 1974
The RBA predicts Victoria’s renewed lockdown will lift national unemployment to about 10% later this year. The government, meantime, has injected tens of billions of dollars into the economy including its signature JobKeeper wage subsidy program designed to keep workers attached to firms as it tries to maintain employment connections until activity can resume.
The economy’s deep contraction was heavily driven by services. The data showed:
Transport services, which includes airlines, plunged 85.9%
Hotels, cafes and restaurants tumbled 56.1%
Reflecting the government’s response to support the economy, social assistance benefits soared by 41.6%
Australia’s record run of avoiding two consecutive quarters of negative GDP, which included avoiding recessions during the 1997 Asian Financial Crisis, the Dot Com Bubble and the 2008 global financial crisis, has come to an end. It now joins much of the world in succumbing to a pandemic-induced downturn.
On the upside, China’s stimulus to revive its economy is fueling demand for Australian commodity prices, keeping the terms of trade elevated in the second quarter. Australia saw a record current-account surplus of A$17.7 billion in the three months through June, aided by the nation’s closed international borders which is keeping people from traveling abroad.
Yet its trade position has also fueled the nation’s currency, which soared almost 30% from a nadir in March.
The central bank’s expanded Term Funding Facility, in addition to supporting the economy, should also help ease some of the upward pressure on the currency by confirming the RBA’s commitment to keeping conditions accommodative until activity recovers.


fortune--2020-09-02--WHO says common steroids can slash death risk for the sickest coronavirus patients

Trump and Biden ’ s election odds are virtually even for the first time in 3 months

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An old drug can learn new tricks during the coronavirus pandemic.
That’s the main takeaway from the World Health Organization (WHO) in a new analysis of corticosteroids—a class of drugs which have existed for dozens of years and are far cheaper than new, experimental COVID treatments in development—suggesting that drugs like dexamethasone can slash the chances of COVID-19 related deaths by as much as 35% in the sickest patients.
The WHO analysis of coronavirus drugs encompassed seven separate studies. And while an analysis of this sort—what’s called a “meta-analysis”—isn’t as rigorous as other types of trials like a randomized controlled study, the data are compelling.
Corticosteroids have a very different action mechanism from many of the other coronavirus drugs in development. COVID-19 is a peculiar disease. Some who have been infected may be asymptomatic. For others, an active infection may spell misery for months. And for others yet, the misery may linger through their own immune systems’ response in attacking the pathogen.
The new WHO analysis suggests that steroids such as hydrocortisone and dexamethasone, which fight inflammation, can sharply cut the risk of death for COVID patients sick enough to require a ventilator or other extraordinary medical measures rather than just cutting down on the number of days one needs to spend in a hospital.
That doesn’t mean everyone infected with COVID should get such treatments. In new guidelines, the WHO issued a “strong recommendation” for corticosteroid therapy, either via IV or orally, for seven to 10 days for sickest patients. For those without severe illness—not so much at this point.
The recommendations may carry cost considerations, too. Dexamethasone, a generic steroid, can cost as little as six dollars. New treatments for COVID in the middle of an outbreak may well hike the prices of those therapies’ innovation costs for pharmaceutical companies.


fortune--2020-09-02--Stocks soar on vaccine optimism—but tech names falter

U.S. equities rose alongside European stocks as the nearly relentless rally in risk assets continued, but with a twist as tech shares underperformed.
The S&P 500 jumped the most in almost two months to an all-time high, with some of this year’s least-loved shares helping fuel the rally. The Russell 1000 Value Index rose 1.7%, beating its growth counterpart. Utilities and financial stocks — two of the three worst performing sectors in 2020 — each rose more than 1.4%. The Stoxx Europe 600 Index added the most in three weeks.
The dollar rose the most in almost two weeks as the euro slid further below $1.20, a level it breached for the first time in more than two years Tuesday. Oil fell with precious metals and Treasury yields dipped.
The rally in global stocks has pushed major indexes to record highs as traders bet that a flood of liquidity unleashed by central banks will make its way to equity markets. The rotation away from the tech titans that have led gains this year — with Apple, Tesla and Zoom Video all slumping Wednesday — could signal confidence in a broader economic recovery from the pandemic and a possible vaccine.
“We’ve seen all the major central banks stay very accommodative,” said Chris Gaffney, president of world markets at TIAA Bank. “Negative real yields across the globe are almost forcing people into finding investments that have a potential for gain.”
Amid the risk-on rally, key U.S. markets now appear to be pricing in chances of a delayed or inconclusive result from the November presidential election, JPMorgan Chase & Co. analysts said.
Elsewhere, 10-year bunds rose along with most of their sovereign peers across Europe, benefiting Germany, which took in 33 billion euros ($39 billion) of orders for its first green bonds.
Here are some key events to watch this week:
U.S. jobless claims for the week ended Aug. 29 are due Thursday.
Eurozone retail sales data for the month of July to be released on Thursday.
U.S. jobs report Friday is forecast to show payrolls continued to rebound in August from virus lows.
Here are the main market moves:
Stocks
The S&P 500 Index gained 1.5% as of 4 p.m. New York time.
The Stoxx Europe 600 Index jumped 1.7%.
The MSCI AC Asia Pacific Index increased 0.2%.
Currencies
The Bloomberg Dollar Spot Index gained 0.3%.
The euro fell 0.6% to $1.1842.
The Japanese yen fell 0.2% to 106.21 per dollar.
Bonds
The yield on 10-year Treasuries fell two basis points to 0.65%.
Germany’s 10-year yield sank six basis points to -0.48%.
Britain’s 10-year yield decreased six basis points to 0.23%.
Commodities
West Texas Intermediate crude fell 2.8% to $41.56 a barrel.
Gold declined 1.4% to $1,942.76 an ounce.
Silver decreased 2.4% to $27.45 per ounce.
–With assistance from Adam Haigh, Olivia Konotey-Ahulu, Todd White and Kamaron Leach.


fortune--2020-09-02--Trump and Biden’s election odds are virtually even for the first time in 3 months

Elon Musk is now the third-richest person in the world .
Here ’ s how much he ’ s worth

Joe Biden may still hold a comfortable lead over Donald Trump in the national polls, but betting odds are now indicating that this will be a closer presidential election than some may think.
According to betting website Smarkets, the incumbent president and his Democratic challenger are now virtually neck-and-neck in their chances of victory for the first time in three months. As of Wednesday morning, the site’s betting market data gave Biden a 50% probability of winning the presidency, with Trump only just trailing with a 49% chance of his own.
That’s a major turnaround from where the two candidates stood at this time last month, when Biden led Trump by 28 percentage points. It’s also the first time since the turn of June that Trump and Biden’s respective probabilities have been so close, according to Smarkets.
A number of factors have contributed to the president’s closing of the gap between him and Biden as of late—namely, the ongoing tumult between protesters, counter-protestors, and police in places like Kenosha, Wisc., and Portland, Ore., which Trump has sought to politicize in his favor.
“Growing civil unrest in Portland and Wisconsin over the summer has given Trump a chance to project his law-and-order stance, and he is seemingly turning the market back in his favor,” says Sarbjit Bakhshi, Smarkerts’ head of political markets.
Despite the toss-up probability, Smarkets’ live election forecast is still projecting a victory for Biden, with 302 electoral college votes for the Democratic nominee to Trump’s 236—though that margin has swung by 10 votes in Trump’s favor in the span of a week. The site is also projecting a 1-in-3 chance that the President repeats his 2016 feat of winning the election while losing the national popular vote.
Bakshi notes that trading activity on Smarkets’ platform “implies an 80% probability that the Democrats win the popular vote.” Still, he adds, “if our electoral college markets also start to move from their current prediction of a Democrat victory, things could be looking bleak for Biden.”
Yet the Biden campaign has also had its fair share of good news this week. On Tuesday, it emerged that the campaign had fundraised more than $300 million in August alone—shattering the monthly fundraising record for a presidential campaign.


fortune--2020-09-02--Why I signed a letter to Ivanka Trump urging her to protect human trafficking survivors

A U.S. anti-trafficking law has been upended, lifting protections for vulnerable children. The Department of Homeland Security (DHS) has quietly decided to suspend those protections, including resuming deportations of minors who pose no health or safety concern, allegedly to protect the U.S. from COVID-19.
This is an atrocity.
In response, 15 different leaders of Christian organizations and I signed on to a letter to Ivanka Trump. We appealed to her as one of the most vocal advocates in the White House for survivors of trafficking, asking that the law in question, the Trafficking Victims Protection Reauthorization Act (TVPRA), be properly enforced.
When I signed my name onto the Aug. 24 letter, bound for Ivanka Trump’s desk at the White House, I did so with hope, determination, and a strong resolve that the words of the letter may have a positive impact.
In my work directing anti–human trafficking programs at World Hope International, and as the current chair of the Faith Alliance Against Slavery and Trafficking (FAAST), I fight on a daily basis to secure protections for survivors of human trafficking across the globe. So when I learned that the DHS had suspended protections for minors vulnerable to human trafficking at the U.S.-Mexico border, I was deeply troubled and felt called to act.
According to the White House, nearly 70% of migrants traveling north to the U.S. are victims of violence. According to the TVPRA, unaccompanied minors apprehended at the border must be screened to ensure they have not been and are not at risk of becoming a victim of human trafficking. These screenings are no longer happening.
The result is an unconscionable neglect of some of the world’s most vulnerable people. According to the Associated Press, children as young as 1 year old are currently being held in hotel rooms, prior to deportation, by people who may or may not have been subjected to an FBI background check. That means not only is the DHS neglecting to screen these children for their risk of becoming victims of violence and trafficking, but the DHS is also placing these children with strangers who are themselves potentially dangerous people.
This behavior contrasts sharply with the provisions outlined in the TVPRA. The TVPRA states that when a child is apprehended at the border, they must be transferred to the Department of Health and Human Services and put into the care of people who have specialized training in caring for vulnerable and traumatized children.
What’s worse, it seems that the threat of COVID-19 is simply being used as a baseless justification for these actions. As we outline in our letter, the DHS has recently acknowledged that children are being tested and expelled to their countries of origin after testing negative for COVID-19. This demonstrates quite clearly that these children do not present any risk of spreading COVID-19 to the U.S.
This is an abdication of responsibility, and it cannot continue. As we say in our letter, “We must not allow COVID-19 to serve as a pretext for abandoning our national commitment to standing for vulnerable children and against the scourge of human trafficking. Our faith compels us to speak up for these children.”
What I know as a trauma therapist, and have learned from years of working with survivors of trafficking in aftercare at World Hope International, is that survivors need specialized services and care. What I know as a U.S. citizen is that our country has legal safeguards specifically written to provide equal protections to all children, regardless of their country of citizenship. These laws should be adhered to at all times, even in—or rather, especially in—a time of international crisis, such as the COVID-19 pandemic.
What I know as a human being is that children should be treated with dignity and respect, no matter their nationality or the color of their skin.
And what I know as a person of faith is that belief in God’s call to practice justice and mercy requires me to cast away fear of the other and to seek to hold an open-armed stance to the vulnerable, regardless of which side of a border they originate from.
The TVPRA is just as important today as it was the day it went into effect in 2008, and it must be upheld; this I know. And that is why I’m proud to be a signatory of this letter of advocacy to Ivanka Trump.
Haley Clark is director of anti-trafficking at World Hope International and chair of the Faith Alliance Against Slavery and Trafficking.


fortune--2020-09-02--Prince Harry and Meghan have signed a wide-ranging Netflix production deal

Britain’s Prince Harry and his wife, the former Meghan Markle, signed a wide-ranging production deal with Netflix Inc., becoming the latest global celebrities on the streaming giant’s roster.
The couple, also known as the Duke and Duchess of Sussex, will produce an array of works including scripted and documentary series, documentary films, scripted features and children’s programming, the company said in an emailed statement Wednesday.
Harry and Meghan plan to focus on programming about stories and issues “that resonate with them personally,” including things that their nonprofit Archewell is working on, Netflix said. Projects already in production include a nature docu-series and an animated series about inspiring women.
“Our focus will be on creating content that informs but also gives hope,” the couple said in the statement. “As new parents, making inspirational family programming is also important to us, as is powerful storytelling through a truthful and relatable lens.”
Netflix, the world’s largest video streaming service, has invested billions of dollars in splashy programming deals in recent years. Among them, the company has a pact with Barack and Michelle Obama for a similarly broad slate of shows and movies.
Harry and Meghan stepped away from their royal duties earlier this year and moved to the U.S., seeking to build independent incomes and escape what had been harsh scrutiny in the U.K. since their 2018 marriage. Meghan had a successful acting career, primarily as a star of the cable series “Suits,” but Netflix said she doesn’t plan to return to performing.


fortune--2020-09-02--Fortune’s 40 Under 40 honorees in tech defy the pandemic

Meet the honorees of this year’s Fortune 40 Under 40 list—or, I should say, lists. This wide world simply contains too many young superstars worth recognizing.
Instead of hewing to the usual limit, we created five separate lists this year. The class of 2020 is divvied up by industry: technology, finance, government, media, and healthcare.
I spearheaded the technology list. As I was sorting through candidates, a common theme leaped out at me. So many of the tech listees are—in the midst of this grim year, marred by pandemic, protest, and pain—connecting people.
Anthia Cumming—Getty Images
There are people working directly on the coronavirus problem, like Carmela Troncoso, who is helping to build privacy into European contact-tracing efforts. Others are meeting people’s newfound needs, like Tony Xu of DoorDash, whose meal-delivery business soared during quarantine.
We may not be able to hug each other, for fear of infection, but we can keep in touch digitally. Leaders at social-media companies feature prominently; you’ll see the names of executives from Instagram, Reddit, Snap, TikTok, Twitter, WhatsApp, Zoom, and more.
The list highlights the big and the small. Akash and Isha Ambani, twin children of Asia’s richest man, Mukesh Ambani, are building Reliance Jio, India’s premier mobile carrier, into the world’s next tech giant. Meanwhile, Max Schrems, an Austrian activist, is hurling David-like missiles at tech giants, challenging them in the courts to keep people’s data safe and secure.
Many of the honorees know the future is just as important as the present too. Lucas Joppa at Microsoft is pushing the company—and, if he’s successful, the planet—to achieve ambitious environmental goals. Marissa Giustina at Google is engineering the next generation of computing with mind-bending quantum science.
The names mentioned above are just a smattering of the people recognized on the list. Peruse the whole lot here, and let these folks’ leadership offer us all a glimmer of hope.
Robert Hackett
Twitter: @rhhackett
robert.hackett@fortune.com
THREATS
If you build it they will come. Apple and Google are baking their coronavirus contact-tracing technology directly into smartphones. People won't be required to download separate apps created by different U.S. states (only six have apps so far), which has impeded adoption. Instead, iPhones running iOS 13.7 will come with a native "exposure notification" feature, and phones running Android 6.0 will get a similar auto-generated application.
Barking up the wrong tree. Amazon delivery drivers engaged in fierce competition for consignments are hanging phones in trees near Whole Foods stores. The odd practice enables them to game the system and claim dibs on routes. Meanwhile, Amazon posted—and then deleted—job listings for "intelligence analyst" roles whose duties included spying on labor organizing efforts across the company.
Time is running out. Negotiations over the sale of Beijing-based ByteDance's TikTok are apparently stalled over the question of whether a deal would include the app's core algorithms, reports the Wall Street Journal. The algorithms were considered to be part of the package until China implemented new technology export rules that require companies to seek permission before selling abroad.
Democracy dies in darkness. Facebook said it took down a Russian disinformation operation posing as a left-wing news site. As in 2016, Russian operatives are attempting to influence public opinion ahead of a presidential election by spreading fake news and conspiracy theories. One hopeful note: The phony outlets are attracting smaller audiences than they did in the past, thanks in part to tech companies taking more proactive measures and shuttering them.
If you take a walk, I'll tax your feet. Speaking of Facebook, the company is changing its terms of service to allow it to block content at will, even if the content isn't illegal. The company is trying to avoid having to pay media companies for any work of theirs shared across Facebook, as a proposed law in Australia would require. Meanwhile, tech giants like Apple, Google, and Amazon are responding to new European digital taxes by passing on the cost in the form of increased prices.
Double jeopardy. Samsung heir Lee Jae-yong, the company's vice chair and de-facto leader, has been indicted...again. This time he has been charged with stock price manipulation. He also faces charges of bribery from a lawsuit that started in 2017, now in an appeals court. Nevertheless, analysts are bullish about the business's prospects as new Galaxy phones debut and rival smartphone-maker Huawei struggles with U.S. sanctions.
Notes from the Chaos Communication Camp.
ACCESS GRANTED
People hailing from the Chagos Islands were expelled from their Indian Ocean archipelago home by the British government in the 1970s. Now they're fighting to reclaim control of their native homeland. The Chagossians are claiming damages, land rights, and control of an associated country-code top-level Internet domain, ".io," popular among technology industry websites. Fortune's David Meyer details the post-colonial feud, starting with the personal saga of one of the movement's leaders.
Bernard Nourrice was 5 years old when the boat came. Like the others, his family was told on short notice that they were to leave behind their lives on the island of Diego Garcia, in the middle of the Indian Ocean. Each family was allowed to quickly pack one suitcase and one mattress. “The British navy led us to the jetty. When we boarded the boat, they waited for when it got dark,” he recalls. Sharing the boat with a pig, a donkey, and a chicken, they set sail for the Seychelles, more than a thousand miles to the west.
The year was 1973, and the boat’s occupants were the last of around 1,800 people to be removed from the Chagos Islands under a five-year forced-deportation campaign perpetrated by the United Kingdom, which has claimed ownership of the islands for two centuries—and which refuses to give it up, despite a demand from the United Nations to decolonize the territory.
FORTUNE RECON
FBI says hackers haven’t stolen any U.S. voter data this year by Aaron Pressman
If you choose virtual learning for your kids, you’ll likely be disqualified from expanded paid leave from the government by Emma Hinchliffe
Official Biden-Harris campaign yard signs available for download in Nintendo’s ‘Animal Crossing’ by Robert Hackett
Tesla bulls dig in their hooves after company’s $5 billion capital raise announcement by Anne Sraders
Robinhood app stumbles amid surge in Apple, Tesla trading volume by Jeff John Roberts
Google bolsters its A.I.-enabled flood alerts for India and Bangladesh by Jeremy Kahn
Former Google chief Eric Schmidt warns of China’s “high-tech authoritarianism” by Jonathan Vanian
The humbling of Europe’s most-hyped startup incubator: Rocket Internet by Jeremy Kahn
Can Neuralink take a ride on Elon Musk’s reputation? by Lucinda Shen
Uber is cracking down on passengers who don’t wear face masks by Danielle Abril
(Some of these stories require a subscription to access.Thank you for supporting our journalism.)
ONE MORE THING
The video streaming wars see services like Netflix, Disney+, HBO Whatchamacallit, and plenty others competing over claims to the Iron Tube—the almighty screens we all watch. Netflix just scored a major coup in the subscription scuffle: David Benioff and D.B. Weiss, the Game of Thrones' show-runners, have signed on to produce an adaptation of the Three-Body Problem, an award-winning Chinese sci-fi trilogy.
Final season of GoT notwithstanding, I could not be more excited.


fortune--2020-09-02--MacKenzie Scott is now the wealthiest woman in the world

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MacKenzie Scott, the writer, philanthropist, and former wife of Amazon founder Jeff Bezos, is the richest woman in the world following a recent tech stock surge.
NBC News reports that the rise in Amazon’s stock—which has spiked from $2,000 to $3,500 per share since the beginning of 2020—has propelled Scott up the billionaires’ list. According to the Bloomberg Billionaires Index, Scott is now the 12th richest person and the No. 1 wealthiest woman in the world, sitting one place ahead of L’Oréal heiress Françoise Bettencourt Meyers, who previously held the distinction.
After her 2019 divorce, Scott was the fourth-richest woman in the world, behind Bettencourt Meyers, Alice Walton of the Walmart family, and Jacqueline Badger Mars of the Mars candy empire. The net worth of each of those women has remained relatively steady, less affected by the recent surge in tech stocks.
Scott’s net worth is currently pegged at $67.4 billion. In 2019, her fortune was estimated at $36 billion based on Amazon’s share price at the time. In her separation from Bezos, Scott retained 25% of the couple’s stock in Amazon, or about a 4% stake in the entire company.
Since her divorce, Scott—who announced a name change from Bezos in July—has emerged as a prominent philanthropist. That month, she revealed details of some of her charitable commitments, totaling $1.7 billion given over the prior year. Those donations included historic gifts to historically Black colleges and universities. She has also signed the Giving Pledge, a commitment among the wealthy to give away a significant portion of their money over their lifetimes—a notable decision because, in contrast to many couples who make the pledge together, Scott did so independently of her former husband, who has not made the same promise.
The recent tech stock tear has increased the wealth of Bezos, the richest man in the world, to $205 billion, making him the first person in history to be worth more than $200 billion.


fortune--2020-09-02--Oracle loses appeal in $10 billion Pentagon cloud-computing contract dispute

A U.S. appeals court rejected Oracle Corp.’s challenges to the Pentagon’s disputed $10 billion cloud-computing contract.
Oracle had raised a number of issues, including allegations of conflicts of interest with Amazon.com Inc., and claims the Pentagon violated its own rules when it set up the contract to be awarded to a single firm. The U.S. Court of Appeals for the Federal Circuit affirmed a lower court ruling that Oracle wasn’t harmed by any errors the Pentagon made in developing the contract proposal because it wouldn’t have qualified for the contract anyway.
Oracle was fighting its exclusion from seeking the lucrative cloud-computing deal, known as the Joint Enterprise Defense Infrastructure, or JEDI. The Pentagon awarded the contract to Microsoft Corp. in October over market leader Amazon Web Services. The project, which is valued at as much as $10 billion over a decade, is designed to help the Pentagon consolidate its technology programs and quickly move information to warfighters around the world.
Oracle argued that the Defense Department unfairly and unnecessarily tailored the contract requirements for Amazon.com Inc. and Microsoft. The company also alleged that the bidding process was fatally tainted by conflicts of interest, including former Pentagon employees who went on to work for Amazon after helping to craft the bid.
“Notwithstanding the extensive array of claims raised by Oracle, we find no reversible error” in the U.S. Court of Federal Claims’s decision to reject those arguments, Circuit Judge William Bryson wrote for the three-judge panel.
Representatives from the Pentagon, Amazon, Microsoft and Oracle didn’t immediately respond to requests for comment.
The ruling is a win for the Pentagon, which over the last three years has faced criticism from lawmakers, industry and even President Donald Trump over it’s decision to choose just one company for the lucrative cloud deal. The Defense Department has said picking one vendor for the project will reduce its technical complexity and security risks.
The Pentagon also faces vendor bias allegations in a separate lawsuit by Amazon Web Services, Amazon’s cloud unit, which is suing the Defense Department over claims the Pentagon failed to fairly judge its bid because Trump viewed Amazon Chief Executive Officer Jeff Bezos as his “political enemy.” Trump has long criticized Bezos over everything from the shipping rates his company pays the U.S. Postal Service to his ownership of the Washington Post, which heavily scrutinizes his administration.
A judge in that case has yet to rule on most of the substance of Amazon’s lawsuit. The Defense Department’s inspector general found in April that the contract award wasn’t affected by any interference from Trump, though it said its probe was limited by the White House.
The case is Oracle America Inc. V. U.S., 19-2326, U.S. Court of Appeals for the Federal Circuit (Washington).


fortune--2020-09-02--DraftKings stock jumps more than 6% on Michael Jordan investment

NBA legend Michael Jordan is taking an equity interest in DraftKings Inc. and becoming a special adviser to the online sports-betting company’s board of directors.
The six-time NBA Finals MVP will provide guidance and advice on company strategy, product development and marketing activities.
DraftKings shares rose as much as 12% at the start of trading Wednesday and were up 6.3% to $39.25 at 10:03 a.m. in New York.
“Michael Jordan is among the most important figures in sports and culture, who forever redefined the modern athlete and entrepreneur,” DraftKings co-founder and Chief Executive Officer Jason Robins said in a statement.
Details of the equity stake weren’t disclosed. Jordan is also the chairman and majority owner of the NBA’s Charlotte Hornets. The team is worth $1.4 billion, according to a Bloomberg analysis.
DraftKings started trading publicly in April after a reverse merger with Diamond Eagle Acquisition Corp. Shares have more than doubled since its debut.
Jordan’s affinity for gambling is well documented. ESPN’s “The Last Dance” documentary film spent an episode detailing the basketball great’s controversial history of gambling in casinos, on team flights and on the golf course. During the 1990’s, Jordan’s propensity for gambling often overshadowed his play on the court.
DraftKings is Jordan’s latest gig as a company pitchman. Nike Inc.’s Jordan Brand has brought in over $3.6 billion in wholesale equivalent revenue for the 12 months ended May 31.
DraftKings has been battling with competitors, like Flutter Inc.’s FanDuel, for market share in states where sports gambling is legal. The two company’s account for roughly two-thirds of online sports bets in the U.S., according to Bloomberg Intelligence.
FanDuel has made similar moves with sports personalities, announcing an official partnership with Pat McAfee in July.(Updates with share movement beginning in third paragraph.)
–With assistance from Devon Pendleton.


fortune--2020-09-02--Rocket Internet comes down to Earth

Rocket Internet comes down to Earth

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It’s hard to talk about the rise of U.S.-based startups following the 2008 financial crisis without mentioning Rocket Internet, the German startup incubator that’s simultaneously beloved as a poster child of Europe’s tech scene yet dreaded for its reputation for growing a “clone factory” of many companies that copied Silicon Valley counterparts.
Short-term rental platform Airbnb popped up in 2008. Then two years later, so did Wimdu, a Berlin-based company that some dubbed a clone. There was Square in the U.S., and there was also Payleven in Germany shortly thereafter. Don’t forget Pinterest, which was followed by Pinspire.
Now, Rocket Internet plans to delist from the Frankfurt and Luxembourg stock exchanges after the company’s valuation taken a beating. Rocket says it has ample access to private funding and therefore does not need the public side of the equation, but the story isn’t so straight and narrow, per my colleague Jeremy Kahn.
PATREON: The rise of the independent creator economy—think YouTube stars, Instagram influencers, online novel writers—is certainly something venture capitalists are thinking about. On Monday, Patreon, a platform for artists to run subscriptions for their services, raised $90 million in Series E funding for a valuation of $1.2 billion. Investors in the round included New Enterprise Associates, Wellington Management, and Lone Pine, as well as existing investors Brook Capital, Thrive Capital, DFJ Growth, and Index Ventures. And other startups in the ecosystem have raised funding: Karat, a credit card for influencers and online creators, recently raised some $4.6 million.
FORTUNE 40 UNDER 40: Fortune released its annual list of 40 influential people under the age of 40—with a twist. The list this year has no repeat candidates from prior iterations, and has expanded to highlight 40 people in each of five categories: Finance, technology, healthcare, government and politics, and media and entertainment. You’ll find quite a few hidden gems: There’s the youngest SoftBank executive with direct access to Masayoshi Son, the man who led Xiaomi to its smartphone dominance in India, and a woman helping redistribute surplus medications in a pricey healthcare system. Read more.
Lucinda Shen
Twitter: @shenlucinda
Email: lucinda.shen@fortune.com
VENTURE DEALS
- Yuanfudao, a Chinese online education platform, is set to raise $1.2 billion in funding in a round that will value it at about $13 billion, per Reuters. Existing investors, Tencent Holdings, Hillhouse Capital and Boyu Capital, will invest in this round. Read more.
- Neon Pagamentos, a Brazilian fintech, raised $300 million in Series C funding. General Atlantic led the round and was joined by investors including BlackRock, Vulcan Capital, PayPal Ventures, Endeavor Catalyst, Monashees, Flourish Ventures, and BBVA.
- PropertyGuru Group, a Southeast Asian online realty company, raised S$300 million ($220.4 million) from its existing investors KKR and TPG Capital.
- Bambuser, a Stockholm-based live video startup, raised $45 million in funding this year. Investors include Consensus Asset Management, Handelsbanken, Harmony Partners, Lancelot Asset Management, Tenth Avenue Holdings, and TIN Fonder. Read more.
- PicnicHealth, a San Francisco-based company for secure medical records, raised $25 million in funding. Felicis Ventures. Read more.
- InCountry, a San Francisco-based provider of solutions for data residency, raised $18 million in additional funding. Caffeinated Capital and Mubadala Capital led the round and was joined by investors including Accenture Ventures, Arbor Ventures, Felicis, Ridge Ventures, Bloomberg Beta, and Team Builder Ventures.
- Lumen Bioscience, a Seattle-based, clinical-stage biopharmaceutical company developing biologic drugs for highly prevalent diseases, raised $16 million in Series B funding. WestRiver Management and Bioeconomy Capital led the round and were joined by investors including Avista Development and Columbia Pacific.
- Mosaic, a construction technology company for homebuilding, raised $14.3 million in Series A funding. A16z led the round. Read more.
- Toss Lab, a South Korea-based creator of enterprise collaboration platform JANDI, raised $13 million in Series B funding. SoftBank Ventures Asia led the round and was joined by investors including SV Investment, Atinum Investment, Must Asset Management, Shinhan Capital, SparkLabs, and T Investment. Read more.
- springbig, a Boca Raton, Fla.-based in cannabis marketing company, raised $11.5 million in Series B funding. TVC Capital led the round and was joined by investors including KEY Investment Partners.
- Trade, a New York-based coffee subscription brand, raised $9 million in funding. Madrona Venture Group led the round and was joined by investors including JAB and Launch.
- Boundless Immigration, a Seattle-based system for navigating immigration, raised $7.5 million in Series A-1 funding. The Foundry Group led the round. Boundless also acquired RapidVisa. The deal will allow Boundless Immigration to help thousands of additional immigrants each year and improve organizational efficiencies.
- Carewell, a Charlotte, N.C.-based online supplier of home health products, raised $5 million in seed funding. Investors included e.ventures, NextView Ventures, and Primetime Partners.
- Honcho, a Denver, Co.-based maker of governance software, raised $4 million in Series A funding. FINTOP Capital led the round and was joined by investors including Peter Thiel.
PRIVATE EQUITY
- Baird Capital has invested in Blue Matter, a strategic consulting firm serving the life sciences industry. Financial terms weren't disclosed.
- Oaktree Capital Management acquired a non-controlling stake in Jones Industrial Holdings, a Houston-based parent company of behind Universal Plant Services. Part of the proceeds were used to acquire a minority investment previously held by MML Capital Partners. Financial terms weren't disclosed.
- Kellermeyer Bergensons Services, a portfolio company of Cerberus Capital Management, acquired Clearview Cleaning, a Boise, Id.-based provider of commercial cleaning services. Financial terms weren't disclosed.
- OANDA, backed by CVC Capital Partners, has acquired TMS, a Polish multi-asset class broker. Financial terms weren't disclosed.
- Circle Graphics, backed by H.I.G. Capital, acquired Bay Photo, a California-based provider of albums and specialty prints. Financial terms weren't disclosed.
- Squla, a portfolio company of Levine Leichtman Capital Partners, acquired Scoyo, a German online learning platform for primary and secondary school students. Financial terms weren't disclosed.
- Churchill Asset Management invested in Trojan Lithograph Corporation, a Renton, Wash.-based provider of graphic packaging solutions. Financial terms weren't disclosed.
- Wrench Group, backed by Leonard Green & Partners, acquired All About Water, a Chandler, Ariz.-based plumbing and water treatment service. Financial terms weren't disclosed.
IPO
- Boxed, a New York-based wholesale retailer, is exploring strategic options including a sale or going public through a merger with a blank-check acquisition company that could value it at around $1 billion, per Reuters. The company has raised funding from investors including American Express and GGV Capital. Read more.
- Bumble, the dating app operator, is preparing for an IPO that could value it at between $6 billion to $8 billion, per Bloomberg. Read more.
- ChinData Group, a Chinese data center owner, is preparing to file confidentially for a U.S. IPO to raise up to $400 million, per Reuters. Bain Capital backs the firm. Read more.
- Geely Automobile Holdings, a Hangzhou, China-based automaker, plans to raise 20 billion yuan ($2.93 billion) from a public share sale on Shanghai’s STAR Market. The company is already listed in Hong Kong. Read more.
- Pague Menos, a Brazilian drugstore chain, raised 746.9 million reais ($136 million) in an IPO. General Atlantic backs the firm.
- Nuvei, a Canadian payments processing fintech, filed for an IPO in Toronto. Novacap backs the firm.
EXITS
- TPG is exploring a sale of Astound, a cable operator, that could fetch a valuation of over $8 billion, per Reuters. Read more.
- TCV acquired Oversight, an AI-powered platform for spend management, from Luminate Capital Partners, which will maintain a minority interest. Financial terms weren't disclosed.
- Cognizant (NASDAQ: CTSH) agreed to acquire 10th Magnitude, a Chicago-based cloud company. Pamlico Capital backed 10th Magnitude. Financial terms weren't disclosed.
- Gong acquired Vayo, an Israel-based startup specializing in data analytics for sales teams. Financial terms weren't disclosed.
- Dialpad acquired Highfive, a video conferencing company. Highfive investors have included Lightspeed and Dimension Data. Financial terms weren't disclosed.
- Unilever agreed to acquire Liquid I.V., a California-based electrolyte drink mix brand. Liquid I.V. was backed by investors including CircleUp. Financial terms weren't disclosed.
PEOPLE
- Point72 Ventures hired Scott Barclay to lead its new healthcare investing team.
- Brighton Park Capital named Jeff Machlin as a partner. Previously he was with General Atlantic.
- Riverwood Capital promoted Joe De Pinho and Alex Porto to principal.


fortune--2020-09-02--Five days is long enough for a coronavirus quarantine, says Germany’s top virologist

Germany’s top virologist thinks the standard two-week coronavirus quarantine period is far too long.
Research shows people are no longer infectious after five days, so that should be the limit of the quarantine period, Christian Drosten, the head of virology at Berlin’s Charité hospital, said in a Tuesday podcast published by the broadcaster NDR.
Drosten said it was important for quarantines not to turn into effective lockdowns. “It’s no use having all kinds of school classes, all kinds of workplaces, under weeks-long quarantine,” he said, explaining that shorter quarantines would prove more palatable to the public.
Germany’s answer to the U.S.’s Anthony Fauci—at least, in terms of pandemic celebrity—made the recommendation shortly before Health Minister Jens Spahn ruled out the need for another nationwide lockdown of the sort seen in the early stages of the pandemic.
That’s not to say new lockdowns of some kind definitely won’t be needed—case numbers continue to rise in the states of Baden-Wuerttemberg, Bavaria, and Bremen—but Spahn said Wednesday that outbreaks could be handled regionally.
“We can go into autumn and winter with confidence,” Spahn said, adding that the virus was much better understood now than it was in March.
According to Drosten, the five-day quarantine period he is recommending should not be “wasted” on tests to confirm the COVID-19 diagnosis. Instead, he said, there should be tests after the quarantine to see whether the individual was indeed infected, and whether the person is still infectious.
Mask debate
Drosten also held forth on other issues relating to the pandemic, including the utility of masks and reports that have emerged of people being reinfected.
The doctor said “ill-fitting” masks don’t stop the aerosol spread of the coronavirus—there is increasing scientific consensus that exhaled air is a major infection vector—but he insisted that masks do hinder the virus’s spread, particularly if widely worn.
He dismissed as “attention-grabbing” a recent study in Hong Kong that confirmed the reinfection of a 33-year-old man with the novel coronavirus. Drosten said such cases were “rarities” that should not be interpreted as bad signs for the development of a vaccine, and he argued that they likely have no impact on the spread of the pandemic due to lower virus concentrations on reinfection.
Drosten’s podcast is extremely popular, and this was the first episode following a break of a couple of months. The virologist said he had taken only two weeks’ vacation during that time, with the rest being spent working on the development of faster coronavirus tests.
The doctor built his career on the study of coronaviruses, developing the first diagnostic test for SARS back in 2003. Now he finds himself regularly advising the German government and the public on SARS-CoV-2, the coronavirus that causes COVID-19.
Drosten’s role in advising the government has led to his receiving death threats. “For many Germans, I’m the evil guy who is crippling the economy,” he said in an April interview with the Guardian.
Like many other countries, Germany is seeing a growing movement of people protesting against coronavirus restrictions—though it should be noted that, compared to many other countries, Germany’s restrictions are by this point very light.
A coronavirus-skeptic rally took place in Berlin on the weekend, catching international headlines when some far-right protesters attempted to storm the Reichstag, Germany’s parliament, while brandishing flags with Nazi connotations. Some protesters also carried banners mocking Drosten, as well as Spahn, Chancellor Angela Merkel, and Bill Gates—a frequent target of coronavirus-related conspiracies.
More generally, though, the protest was notable for participants’ refusal to wear masks—a decision that led Berlin’s authorities to announce Tuesday that masks would be obligatory in all open-air gatherings of more than 100 people. Previously, masks were required only on public transport, in shops, and in some school contexts.
Separately, Spahn was spat at and subjected to homophobic taunts when the health minister tried to engage with protesters outside an event in the state of North Rhine-Westphalia on Saturday.


fortune--2020-09-02--The women of Fortune’s 2020 40 Under 40 list

This is the web version of The Broadsheet, a daily newsletter for and about the world’s most powerful women. Sign up to get it delivered free to your inbox.
Good morning, Broadsheet readers! Naomi Osaka will honor Black lives during each of her U.S. Open matches, Nike debuts a maternity collection, and Fortune’s new 40 Under 40 list is here. Have a wonderful Wednesday.
– 40 Under 40. Fortune this morning published its 2020 40 Under 40 list. Just as we’re shaking up this year’s Most Powerful Women lists, we’ve also given this collection an update. Instead of a single list recognizing influential leaders under age 40, there are separate lists across five industries—finance, technology, health care, government and policy, and media and entertainment. Another change? This year’s honorees are fresh faces who have not been on the list before, which means it features 200 new stories and voices, ones you’re less likely to have encountered before now.
For instance, there’s Margaret Anadu, head of Goldman Sachs’s urban investment group. Since becoming the bank’s youngest female Black partner ever at age 37 in 2018, Anadu has helped spearhead its efforts to invest in underserved areas and particularly communities of color.
Elizabeth Hamon Reid was the first female engineer in Google’s New York office when she joined the tech giant in 2003. She helped architect early products that power Google Maps. She’s now head of engineering for Google’s “geo” unit and has led Google Maps’ technical response to the coronavirus pandemic.
Helen Adeosun is CEO of digital training platform CareAcademy, which provides health care organizations with online video coursework to help employees stay up-to-date on their certifications and training requirements. More than 110,000 caregivers have completed 400,000 of its classes so far; the company wants to reskill more than 1 million new home-care workers by 2023.
Amanda Litman cofounded Run for Something and has recruited more than 15,000 young people to run for office in down-ballot races across the country.
And Emily Ramshaw is cofounder and CEO of The 19th, a nonprofit, nonpartisan news organization. Its mission is to “empower women—particularly those underserved by and underrepresented in American media—with the information, community, and tools they need to be equal participants in our democracy.” The former Texas Tribune editor-in-chief says she got the idea for the site four years ago while on maternity leave.
You can dive into the all the lists—combined, they feature more than 100 women—here.
Claire Zillman
claire.zillman@fortune.com
@clairezillman
Has your company introduced a new employee benefit aimed at supporting working parents through this unprecedented back-to-school season? We’d love to hear about it—please email emma.hinchliffe@fortune.com.
Today’s Broadsheet was curated by Emma Hinchliffe.
ALSO IN THE HEADLINES
- The richest woman in the world. MacKenzie Scott, the ex-wife of Amazon founder and CEO Jeff Bezos, is the world's new richest woman. Her fortune worth $67.4 billion has surpassed that of L'Oreal heiress Francoise Bettencourt Meyers as Amazon's stock continues to soar. Scott received a 4% stake in the e-commerce giant in her divorce from Bezos. NBC News
- Going public? Bloomberg reports that Bumble, under CEO Whitney Wolfe Herd, is considering an initial public offering that could come early next year. The IPO would reportedly value the family of apps at between $6 billion and $8 billion. Bumble did not respond to Bloomberg's request for comment; neither did Blackstone, the private equity firm that bought a majority stake in the company, then known as MagicLab, last year. Bloomberg
- School's in session. The Department of Labor last week answered a question about the emergency paid leave Congress passed in March for parents without access to childcare during the coronavirus pandemic. As schools reopen, parents who opt to keep their kids at home—for their children's safety or their own—won't be eligible for that leave. At schools with hybrid learning, families still qualify for leave on days when their child is not permitted to attend in-person instruction. Fortune
- Trump-eting the cause. GM CEO Mary Barra is set to meet with Ivanka Trump today, giving the first daughter a tour of the automaker's Technical Learning University in Detroit. The tour is connected to Trump's "Find Something New" campaign, which encouraged Americans to find new jobs. CNBC
MOVERS AND SHAKERS: Former Walmart CMO Barbara Messing joins Roblox as CMO and chief employee experience officer. Halogen Ventures GM and partner Jesse Draper joins the board of Trust & Will.
IN CASE YOU MISSED IT
- Seven games, seven names. Naomi Osaka's face mask bearing the name of Breonna Taylor on the first night of the U.S. Open was just the beginning of her advocacy at the tournament. Osaka will wear a mask with the name of a different Black person killed by police during each of her potential seven matches. "It's quite sad that seven masks isn't enough for the amount of names," the tennis star said. In other U.S. Open news, Serena Williams broke a record last night, becoming the all-time leader in matches won at the tournament.
- Just wear it. Last year, track and field athletes who were sponsored by Nike spoke out about how they were treated and paid—or not—when they became pregnant. Now, the athletic brand has introduced a maternity collection. Senior design director Carmen Zolman began working on the project before Nike's public reckoning over the issue. Fast Company
- Polling up. Old Navy, led by Gap Inc. CEO Sonia Syngal, will pay store employees their usual rate to work the polls rather than clock in at their normal retail location on Election Day. The initiative is meant to meet a shortage of poll workers due to the coronavirus pandemic. Fortune
ON MY RADAR
52 Black former franchisees sue McDonald’s, alleging discrimination Fortune
Jesmyn Ward: On witness and respair: A personal tragedy followed by pandemic Vanity Fair
Tommy Hilfiger embraces modest fashion with launch of first hijab Guardian
Chika is for lovers The Cut
PARTING WORDS
"To be a good ally, you need to be willing to protect people at all costs."
-Demi Lovato on what she's learned about the movement for racial justice


fortune--2020-09-03--How the son of strawberry pickers became Japan’s most likely choice for next prime minister

Beijing confirms it has the right to make or break TikTok U.S. deal

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.
Yoshihide Suga, Japan’s 71-year-old chief cabinet secretary, begins each day by reading all Japan’s major newspapers, doing 100 sit-ups, then embarking on a brisk 40-minute walk. At the end of his workday, Suga returns to his quarters in a modest dormitory for legislators and, before turning in, does 100 more sit-ups.
The Nihon Keizai Shimbun, Japan’s leading business daily, detailed Suga’s daily routine in a profile published last year. Such habits, the paper concluded, reflect a “dedicated and determined character” that has helped propel Suga, the son of strawberry pickers from the frozen fields of Japan’s northern Akita prefecture, to the pinnacle of political power.
For nearly eight years, Suga has served as Japanese Prime Minister Shinzo Abe’s most trusted consigliere. In Japan’s political system, chief cabinet secretary is a position that combines formidable powers. As the New York Times noted recently, if translated into American terms, the office is “roughly equivalent to a White House press secretary, chief of staff and liaison with Congress all rolled into one.”
Suga, by all accounts, has wielded that authority with remarkable skill. “Suga is a real power politician,” Tokyo-based economist Jesper Koll told me. “Everybody’s afraid of him. He’s the guy who gets things done.”
This week Suga, to the surprise of many Japan analysts, emerged as the front-runner in the race to replace Abe, who announced on Aug. 28 that he will step down to undergo treatment for an incurable intestinal ailment.
Suga often has been mentioned as one of many possible successors to Abe, especially in recent months as the prime minister scaled back public appearances and faced a series of political scandals involving friends and family.
But he was seen as an unlikely choice. The conventional wisdom, as I reported Friday, held that Abe would back former foreign minister Fumio Kishida to spite Abe’s long-standing Liberal Democratic Party nemesis, former defense and agricultural minister Shigeru Ishiba. Suga was expected to stay on as wingman.
By Tuesday it was evident the factional balance of power had shifted. Senior members of Japan’s ruling LDP moved to exclude ordinary party members from a leadership vote on Sept. 14 and allow only members of parliament and representatives from prefectural chapters to cast ballots. That left the selection of prime minister in the hands of the small coterie of senior power brokers who control the party’s largest factions.
The avuncular Ishiba may be the most popular candidate among the general public and the LDP’s rank-and-file. But the Japanese press reports that, among the faction bosses, Suga is overwhelmingly perceived as far more capable than Ishiba or Kishida of controlling the spread of the coronavirus, reviving Japan’s faltering economy, and pushing forward with the rest of Abe’s policy agenda.
Suga formally announced his candidacy on Wednesday. If anointed, Suga would be an atypical prime minister. In Japan, politics is a family affair, with parliamentary electoral machines handed down from one generation to the next. Abe is the grandson of former premier Nobusuke Kishi and the son of former foreign minister Shintaro Abe. Kishida’s father and grandfather were also members of Japan’s lower house. Ishiba’s father was a prefectural governor.
Suga lacked a famous name or political network. His parents were ordinary farmers. Akita’s winters are so harsh that he had to live in a boarding house to be able to get to high school. After high school, he moved to Tokyo and worked for two years at a cardboard factory before winning admission to Hosei University. He worked part-time to put himself through college and landed a job as secretary to a member of parliament from Yokohama, thanks to an introduction from the head of his university’s alumni association, the Nihon Keizai Shimbun reports.
Twelve years later, at age 38, he was elected to the Yokohama municipal assembly, where he served for eight years before winning a seat in national legislature’s lower house. The Nihon Keizai Shimbun profile credits him with pioneering tsuji-dachi, the now commonplace practice of making “soapbox speeches” in front of train stations to connect with morning commuters.
No less remarkable is that Suga isn’t currently affiliated with any LDP faction. In 1998, he bolted from the faction of Keizo Obuchi, a party bigwig who later became prime minister, to support a rival Suga believed more capable. Moreover, he has managed to thrive despite being a teetotaler in a political party whose leaders are famed for wheeling and dealing at extravagant late-night drinking sessions.
“Suganomics” aren’t likely to differ that much from “Abenomics.” But the one area where Suga remains unproven is diplomacy. It is likely that he will continue Abe’s foreign policy agenda, which included loosening restrictions on Japan’s military and support for at least two major international initiatives—the Paris climate change agreement and the Transpacific Partnership—that have been renounced by Japan’s most important ally under President Donald Trump.
It’s also unclear whether the reserved Suga can replicate the kind of personal rapport Abe established with Trump during rounds of golf.
In this week’s Eastworld Spotlight conversation, Jesper Koll assesses Abe’s legacy as prime minister and argues that, although prime ministers from Japan’s conservative ruling party have traditionally favored Republican presidents over Democrats, whomever the LDP picks to succeed Abe would much rather deal with Joe Biden than Trump.
Next week, I will kick off the Fortune Global Tech Forum virtual discussion series with ‘The Race for a Vaccine,’ a conversation with top Chinese vaccine executives Dr. Hui Aimin, president of global R&D and chief medical officer at Fosun Pharma, and Dr. Chen Ling, chairman of Guangzhou Biomed. The discussion will take place on Sept. 10 at 9:00 p.m. Beijing time. Participation is free and you can register here.
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
A tech ban, extended
Tensions are escalating once again on the China-India border after a Chinese land mine reportedly killed an Indian soldier this week. Following the reports, the Indian government announced that it will block an additional 118 Chinese apps in India, including ones owned by Chinese tech giants Tencent, Baidu, and Ant Group. The measure adds to the 59 Chinese apps India banned earlier this year following a Sino-India border clash in June that killed dozens. New York Times
Beef with Australia
China’s relations with Australia are rapidly deteriorating. Australia confirmed this week that Cheng Lei, an Australian-national working for Chinese state broadcaster CGTN, was detained in Beijing. Some observers argue that the arrest was politically-motivated and meant to punish Australia, but China denied the allegations and said Australia has been “infected with paranoia.” The news follows Australia’s decision to launch investigations into Chinese influence at Australian universities and Australia accusing China of mishandling the pandemic. For its part, the Chinese government has placed restrictions on Australian imports like beef, barley, and wine, and the Chinese tech giant Huawei recently pulled its sponsorship of an Australian sports league. ABC News Australia
The dragon has three problems
This week, Netflix and Game of Thrones show-runners David Benioff and DB Weiss announced they will adapt the bestselling Chinese sci-fi novel, the Three-Body Problem, into a television series. To produce the show, Netflix will partner with Chinese gaming company Yoozoo, which has long owned filming rights to the novels but has spent years unsuccessfully trying to bring it to movie and TV screens in China. In June 2019, New Yorker writer Jia Yangfan profiled the book's author Liu Cixin, giving an inside look at the background and mindset of China’s most successful sci-fi writer. New Yorker
A (re)balancing act
The U.S. announced a fresh round of restrictions on Chinese diplomats in the U.S., saying Chinese representatives will need to seek approval to visit universities or meet with local U.S. government officials. U.S. Secretary of State Mike Pompeo also said on Tuesday that he expected to close China’s Confucius Institutes, a soft-power arm of China’s government that teaches language and cultural classes, on U.S. universities by the end of the year. China has condemned the measures, but Pompeo says the U.S. is "simply demanding reciprocity." The Guardian
Detention in Xinjiang
Buzzfeed uncovered 268 new compounds the Chinese government built in recent years to intern Uyghurs, a Muslim minority in China’s western Xinjiang province. The investigation, which was conducted through cross-referencing blanked-out spots on Chinese digital map services with satellite pictures, reveals a broader scale of China’s internment program than has been previously reported. China has reportedly detained roughly 1 million people in the region since 2016 and claims that the camps are education centers used to combat terrorism. The U.S. has argued that the internment program may be the largest human-rights violation since World War II. Buzzfeed
Tick tock on the TikTok deal
U.S. firms have until Nov. 12 to purchase TikTok, the Chinese-owned video streaming app, in order to avoid the U.S. government's ban on the app. Recent talks, however, have hit a snag over the powerful algorithm that powers TikTok's platform. Sources told the Wall Street Journal that potential TikTok buyers are wary that Beijing may block a U.S. buyer from accessing TikTok's algorithm after the Chinese government issued new restrictions on exporting artificial intelligence technologies last Friday. Prospective buyers of the app include Walmart, Microsoft, and Oracle. Wall Street Journal
Coronavirus by country
The Philippines has become "the land of COVID-19," a Thai newspaper declared this month. The Philippines pushed back at the label for being "insensitive" and "unhelpful," but in early August the country surpassed Indonesia for the most confirmed coronavirus cases in Southeast Asia. The country plans to open up its economy this week after lifting lockdown restrictions imposed in Manila and other major metro areas on Aug. 10. Yet even after the country's second major lockdown, the Philippines appears no closer to containing the virus; the country has reported half of its 225,000 cases in the last 30 days. Benjamin Co, an infectious disease expert in Manila, recently told the SCMP that the government's strategy in combatting the virus has been reduced to “waiting for a vaccine.” South China Morning Post
Markets and movers
Sinochem Group, Chinachem – China’s top two chemical makers confirmed on Wednesday that they are discussing plans to merge. The two companies report a combined $146 billion in annual sales, and a potential merger would create the world's largest chemical maker. Nikkei Asian Review
GSX Techedu – The U.S. Security and Exchange Commission has launched an investigation into the New York listed Chinese education tech start-up. Short sellers have accused the company of inflating its sales and creating fake users. GSX Techedu has denied the allegations. Wall Street Journal
Geely Auto – The Chinese carmaker may raise $2.9 billion in its debut on Shanghai’s STAR market. Geely, already listed in Hong Kong, will be the first automaker on STAR, which is predominantly made up of tech firms. Caixin
Samsung – A court in Seoul indicted Lee Jae-yong, Samsung vice chairman and de facto leader, along with 11 other Samsung executives on charges including stock manipulation, perjury, and illegal trading related to a 2015 merger that prosecutors claim was rife with corruption. The executives deny the charges and were not taken into custody since the court rejected the prosecution's request to issue arrest warrants. If convicted, they face jail time. CNN
Final figure
23.9%
India’s economy shrank by a staggering 23.9% in the second quarter, compared to the same period in the previous year, marking the most precipitous drop among major economic powers during the pandemic. The grim news reflects the strict lockdown that Prime Minister Narendra Modi imposed during March and April, but the restrictions didn't have the public health pay-off they were supposed to. India is now recording roughly 80,000 new COVID-19 per day. For now, it appears that restarting India's economy is taking precedence over containing the virus. “We had to open up because of the economy,” a young professional in Bangalore told Fortune. But now coronavirus is "getting really bad. There’s no panic about it at all.”Fortune


fortune--2020-09-03--Want to see Japan’s future? Look past Shinzo Abe’s immediate successor, economist says

How the son of strawberry pickers became Japan ’ s most likely choice for next prime minister

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Shinzo Abe, the longest-serving Japanese Prime Minister, announced his resignation on Friday, citing ill health.
Abe’s sudden decision to stand down was a shock, but his successor is unlikely to be a disrupter, says Jesper Koll, a Japan-based economist and senior adviser for WisdomTree Investments. All the contenders to lead Japan next have policy outlooks similar to Abe’s, Koll said, and whoever gets the nod is unlikely to be in power long.
Abe’s immediate successor will not be selected by Japanese voters or decided by the Diet, the country’s Parliament. Instead, Abe’s ruling Liberal Democratic Party (LDP) will decide. Abe is expected to continue his duties until LDP votes on the new leader.
“In my personal opinion, whoever is going to run the country is going to be relatively short-lived because there is a younger generation of LDP politicians” who could lead to “real change” when its members are ushered in in the next election, Koll said. That “structural change” will introduce “real forward-looking policies,” he said.
In an Eastworld Spotlight conversation with Fortune’s Clay Chandler this week, Koll talked about Abe’s potential successors, the Prime Minister’s legacy, and the country’s short-term economic outlook. The conversation below has been edited for length and clarity.
Fortune: Were you caught off guard by the announcement last week that Abe would resign?
Jesper Koll: There’s no question that the timing was a big surprise. Prime Minister Abe himself had become a little bit of a “lame-duck” over the last four or five months. He seemed to have lost his mojo, not just because of the complications of a policy forced by COVID, but really in terms of having forward-looking visions. So yes, it’s a surprise. But…after basically eight years in power, we knew he was going to leave anyway at some point over the next 12 months. And it leaves the LDP in a very interesting position. Because after eight years of a very strong grip on power that Prime Minister Abe had, now it’s back to the old work of smoky backroom dealings, trying to pick a successor.
Looking back at Abe’s legacy and what he’s accomplished, do you consider him one of Japan’s better Prime Ministers?
Absolutely. I think he’s done a tremendous amount of good in Japan not just by the stability and the consistency of the grip of power, but by really…the coordination. And that’s where Prime Minister Abe was unbelievably strong. His group of basically 12 core ministers, which he kept very, very consistent over the last eight years, ruled Japan with an iron grip, extremely coordinated. Whether it’s the monetary and fiscal policy or whether it is the regulatory policy; whether it’s the coordination with the business community, even the coordination with the GPIF, the Government Pension [Investment] Fund…[an] unbelievably powerful and well-coordinated grip on power.
Abe has introduced reforms to make Japanese companies more competitive—in particular, to fix the problem of a shrinking and aging labor force—and to get more women into the workforce. How has he done on that?
I think the answer is it’s a work in progress. If you look at the female participation rate in Japan, it’s now surged above that of the United States and even some of the Scandinavian countries. Having a genuine conversation about female empowerment before Prime Minister Abe was basically impossible in Japan, now even the most established and conservative companies are engaging in this structural reform. When you look at foreign labor, the number of foreign workers in Japan has basically doubled during Abe’s tenure. It’s still relatively low compared to some European countries or the United States, but the overall mindset that has been engineered, I think, is actually a very powerful one.
There’s a crowded field of Abe successors. Do you have a sense of which process they’ll take to choose a successor?
What’s important is that, actually, the candidates are very similar. Of the current candidates who’ve raised their hands, if you ask me what’s the difference in terms of the policy outlook, it’s splitting hairs trying to come up with one. It’s about personality, it’s not about policy.
The interesting thing is that—in my opinion—whoever is going to run the country is going to be relatively short-lived, because there is a younger generation of LDP politicians. For example, the current Defense Minister [Taro] Kono, who is Georgetown-educated, is a very global person. He’s definitely a contender, not this time around, but the next time around, really sort of leading Japan into the future. It’s not the immediate successor but the one afterwards; that’s when Japan is going to get interesting again, because the generational change actually happens.
Prime Minister Abe has been around for eight years, there’s a lot of people inside the LDP who feel entitled; [that] they are in line for the job. The real issue is switching the generations into people who are in their forties and fifties. If you get that structural change, that’s when you’ve got a likelihood of real restructuring, of real forward-looking policies coming. I think it will happen in the LDP, but not this time around, but the one afterwards.
There could be some dramatic changes in the nature of the U.S.-Japan relationship depending on the outcome of the U.S. presidential election in November. What are the scenarios you see for that?
I think from a Japanese perspective, a victory of a Democratic candidate opens the door for greater multilateral activity. And as you know, Japan has been pushing for a multilateral approach particularly here in Asia. From that perspective, a Democratic victory would be a little easier for the Japanese to handle, rather than the sort of unilateral, slightly erratic, and personality-driven policy that you’ve got under the current President in the United States.
One of the real hidden and unfortunately not enough discussed legacies of Prime Minister Abe is the relationship between Japan and India. Because look at an Asian map, and you say, “Fine, so there is something happening with the People’s Republic of China, how do we deal with that?” It’s very obvious that Japan on the one side of the Pacific and India on the other side…If you have close relations between those two countries, you’ve got a pretty powerful containment mechanism that kicks into place. And so in my opinion, the real question about the Abe legacy is not the U.S.-Japan relationship, [which] is so dense at so many levels that it doesn’t really matter. However, the relationship between Japan and India is a relatively new one…It was Abe’s initiative, his rapport with Prime Minister [Narendra] Modi that made it happen.
One big part of his legacy is that certainly for the first six years of his reign, once a month he was outside Japan, promoting Japan. He wasn’t just sort of going for cocktail parties. He came, armed with businesspeople. They had an industrial policy to promote Japan, in particular the ASEAN [Association of Southeast Asian Nations] world, but also in the Middle East and to some extent even in Africa.
What’s your outlook for Japan throughout the rest of the year?
Unlike many Western or advanced industrial economies, Japan doesn’t really have a big employment shock. I mean the unemployment rate has risen from about 2.2% to 2.9%. But for all intents and purposes, the structural shortage of labor is actually a positive in this respect, so that companies are not hiring and firing.
In addition, you find that business investment expenditure moving towards better capital, to more productive technology is deeply entrenched amongst corporations. As a result of that, after this volatility that we had in the first half of this year, you’re looking at a Japanese economy that’s growing at around 1.5%.
This story is part of Eastworld Spotlight, a series of conversations on matters of business, tech, and finance with executives, experts, entrepreneurs, and investors in Asia. Subscribe to Fortune’s Eastworld newsletter to get them in your inbox.


fortune--2020-09-03--Turkey’s push for energy security needs more renewables than gas

On Aug. 21, Turkey President Recep Erdogan announced the discovery of some 320 billion cubic meters of natural gas in the Tuna-1 fields in the Black Sea—roughly seven times the volume of gas Turkey imported in 2019. Erdogan claims the gas would “fundamentally resolve” Turkey’s reliance on energy imports, but it might not help energy security in the long run.
Erdogan claims the newly-found gas will be ready to pipe by 2023, although experts doubt the speed of that development. Extraction projects can take a decade while the size and quality of the gas discovery has yet to be independently verified. Moreover, seven years’ worth of gas is hardly enough to ensure Turkey’s energy security.
Turkey is a net importer of energy, costing the country $43 billion in 2019—or 20% of its total import bill. Some 99% of the country’s gas needs come from abroad. Erdogan has pushed to, at the very least, diversify Turkey’s source of gas imports since the Turkish air force downed a Russian jet over the Turkey-Syria border in 2015.
At the time, Russia supplied 55% of Turkey’s gas. That volume shrank to 24% in the first quarter of 2020, with Turkey increasing supplies from Azerbaijan and the U.S. Turkey’s recent discovery in the Black Sea could give the country extra leverage when it comes to renegotiating contracts with its existing suppliers. A contract with Russia’s Gazprom, for example, is due for renewal in 2021.
But Erdogan’s push for greater energy security has brought Turkey closer to conflict with its neighboring states. Last month two warships—one Turkish, one Greek— collided in the Mediterranean. Both countries are scouting for fossil fuels in the azure waters there, where their overlapping territorial claims threaten to spark a conflict.
Interestingly, Erdogan has an ambition for Turkey to not only eradicate its dependence on energy imports but to become a net exporter of energy, too. Achieving such a dream would require not only discovering new deposits of fossil fuel (which countries need to stop drilling for) but also installing significant amounts of renewable energy.
Here, Turkey is actually on track to become one of the top five producers of renewable energy in Europe by 2024, according to the International Energy Agency. Solar power is leading Turkey’s expansion of renewable energy and the IEA expects wind power to be an import contributor, too.
Yet increased energy security for Turkey could mean greater insecurity for neighbors—as evidenced by Erdogan’s desire to export. If not carefully managed, the global distribution of renewable energy in the future could be just as much a source for conflict as the distribution of fossil fuels today.
More below.
Eamon Barrett
eamon.barrett@fortune.com
CARBON COPY
Exxon exit
Exxon Mobil was removed from Dow Jones Industrial Average this week, which the Journal called the “latest sign of the waning influence of America’s struggling energy sector.” The Dow now includes just one energy company, Chevron, which accounts for just 2.1% of the price-weighted index.
Hydrogen growth
Three energy companies in New York are spending over $3 billion to establish three power plants that will eventually produce electricity from hydrogen. In their initial stage, the plants will run on natural gas but will eventually shift to “green hydrogen,” which is produced from water in a process powered by renewable energy. Mitsubishi is providing the technology for the hydrogen-powered plants.
Plastic dump
A cohort of the world’s largest plastics companies are lobbying the U.S. government to pressure Kenya into reversing its limits on plastic usage and waste imports, according to the New York Times. Across Africa, imports of plastic trash quadrupled in 2019—a year after China blocked such imports.
Re: location
The U.S. Federal Emergency Management Agency launched a new program with $500 million of initial funding to relocate Americans at risk of flooding. The funding could increase by billions. The Department of Housing and Urban Development has a similar program worth $16 billion. The funds mark a dramatic change in government policy, which has long preferred to subsidize people living in flood-prone areas rather than admit “defeat” at the hands of climate.
IN CASE YOU MISSED IT
Uncharted Power’s Jessica O. Matthews has a plan to revive America’s crumbling infrastructure by Brooke Henderson
We won’t have a true economic recovery until we tackle the racial wealth gap by Dinesh Paliwal
This online tool can tell you if your home is likely to flood this hurricane season by Andrew Nusca
Revisiting the Business Roundtable’s ‘Stakeholder Capitalism,’ one year later by Geoff Colvin
Google bolsters its A.I.-enabled flood alerts for India and Bangladesh by Jeremy Khan
CLOSING NUMBER
28 trillion tonnes
That’s the total mass of ice that has disappeared from the Earth’s surface since 1994, which scientists investigating the melt have described as “staggering.” The research team says the runoff could mean sea levels rise one meter by the end of the century, with roughly 1 million people displaced for every 1cm rise.


fortune--2020-09-03--Beijing confirms it has the right to make or break TikTok U.S. deal

China emphasized its right Thursday to approve or block the sale of technology abroad, confirming it will play a critical role in the sale of TikTok’s U.S. operations to suitors including Microsoft Corp. and Oracle Corp.
Beijing’s assertion jeopardizes negotiations over the sale of ByteDance Ltd.’s prized international asset, a complex deal already under scrutiny by Donald Trump’s administration. The Chinese government on Friday added several artificial intelligence features to a list of export-restricted technologies, effectively gaining the right to block a deal by targeting features such as the recommendation algorithms essential to the viral video service.
The regulatory changes aren’t targeted at specific companies, Gao Feng, spokesman for the Ministry of Commerce, stressed during a weekly online briefing. But companies should consult with the relevant government agencies should any technology they employ fall under the list, he added.
“If related enterprises are transferring technology abroad during trade, investment or technical cooperation that fall under the regulations, they are advised to immediately consult provincial-level commerce department offices and handle that in accordance with the law,” he said.
Beijing’s last-minute entry and its opaque deal-approval process increase the likelihood a sale could get held up and Trump will then move ahead with a TikTok ban ahead of November’s election. It’s likely the need for approval from two geopolitical rivals will push any final deal beyond the November vote in the U.S., a person familiar with the matter has said.
ByteDance founder Zhang Yiming is now said to be reconsidering his options and may well seize upon Beijing’s last-minute involvement to tie up a deal. For China, the move helps it gain leverage to prevent what state-run media called the “theft” of technology while underscoring to the U.S. it has intellectual property worth protecting.


fortune--2020-09-03--Pressure builds on Merkel to exit Russian pipeline deal to punish Putin

Chancellor Angela Merkel is under pressure from within her own party to drop support for a controversial gas pipeline with Russia after links point to the Kremlin in the poisoning of Russian opposition leader Alexey Navalny.
Norbert Roettgen, head of the German parliament’s foreign affairs committee and a candidate to head Merkel’s Christian Democratic party, said the Nord Stream 2 pipeline needs to be stopped because completing it would reward rather than punish Russian President Vladimir Putin.
“After the poisoning of Nawalny we need a strong European answer, which Putin understands: The EU should jointly decide to stop Nord Stream 2,” he said Thursday on Twitter. “Diplomatic rituals are no longer enough.”
#Russia pursues inhuman & contemptuous politics. Diplomatic rituals are no longer enough. After the poisoning of #Nawalny we need a strong European answer, which #Putin understands: The EU should jointly decide to stop #NordStream2. — Norbert Röttgen (@n_roettgen) September 3, 2020
Merkel said tests showed “unequivocally” that Navalny was poisoned by a military-grade novichok nerve agent and called on the Russian government to provide answers. The substance was used in the March 2018 attempted murder of former Russian spy Sergei Skripal and his daughter on British soil, prompting a concerted expulsion of 150 Russian diplomats.
Merkel plans to consult with European Union and NATO allies to formulate a response in the coming days, but didn’t make a proposal.
Alexander Dobrindt, the deputy caucus leader and a member of the Bavarian branch of Merkel’s bloc, demanded new EU sanctions against Russia. There will have to be a “common European response to this deed,” the lawmaker said at a press briefing Wednesday, as well as “uncomfortable and serious” discussions between the Russian and German governments.
Before a special German armed forces laboratory confirmed Navalny’s poisoning with novichok, the chancellor decoupled the status of the Nord Stream 2 gas pipeline from the attack on the Putin critic. The project is a joint Russian-European economic venture and linking it to the Navalny case “isn’t appropriate,” she said on Friday.
The Nord Stream 2 consortium is led by Russia’s Gazprom PJSC. The group, which includes BASF SE’s Wintershall DEA unit and Austria’s OMV AG, has invested close to 8 billion euros ($9.5 billion) so far on the 745-mile pipeline. Even before the Navalny poisoning escalated tensions with Russia, the project was in limbo amid renewed efforts by U.S. senators to torpedo its completion.
Ralph Brinkhaus, head of the parliamentary caucus for Merkel’s bloc, raised doubts about whether it will now be possible to proceed with Nord Stream 2.
“We will have to see in the next few days what kind of responses we get and what discussions will take place,” he said. “But this is indeed a very serious case,” Brinkhaus said Wednesday.
After realizing his statement ran counter to Merkel’s position on Nord Stream, he rowed back, saying: “I didn’t construct a direct link between the Navalny case and Nord Stream, but just meant general German-Russian relations and what consequences this might have.”


fortune--2020-09-03--Workers trust their employers during the pandemic—for now

This is the web version of CEO Daily. To get it delivered to your inbox, sign up here.
Good morning.
I received an email yesterday from Karlyn Bowman of the American Enterprise Institute, who is one of the most reliable analysts of polling data I know, pointing out an interesting trend in recent tracking polls. Across a variety of them—Axios/Ipsos, Gallup, Harris—employers are consistently getting kudos for their performance during the pandemic.
The Axios/Ipsos poll, for instance, asked people how much trust they had in various organizations “to look out for the best interests of you and your family.” In its latest wave, 72% said they had either “a great deal” or “a fair amount” of trust in their employer, compared to 60% for local government, 53% for state government, and 34% for the federal government. The employer result has remained above 70% since March, while all levels of government have seen sharp declines. And in the Gallup poll, 77% gave their employer strong marks for communicating the “right amount” of information about the pandemic.
“Across the polls, employers are getting high marks. Large majorities of workers trust them to look out for their best interest,” says Bowman. “Workers say their employers have clear plans, are stepping up to provide workplace protections, and are looking out for their wellbeing.”
That’s impressive, particularly given trust in business normally declines during an economic downturn. But Edelman CEO Richard Edelman—who also polls on trust issues—says the real test could come this fall, as more people return to the workplace. “Government had its moment in April and May, “ says Edelman. “Now the story is being written for business. The return to workplace is a fundamental part of that. People are going to go back only when companies answer their fears, and the way to answer their fears is to have companies insist on multiple levels of protection—masks, social distancing, so on.”
More news below.
Alan Murray
@alansmurray
alan.murray@fortune.com
TOP NEWS
Chinese apps
As geopolitical tensions between China and India continue to ratchet up, India has banned 118 apps with Chinese links, including major games and apps from the likes of Tencent, Baidu and Ant Group. The Indian tech ministry said the apps were blocked "since in view of information available they are engaged in activities which is prejudicial to sovereignty and integrity of India, defense of India, security of state and public order." CNBC
Navalny poisoning
The Russian opposition leader and anti-corruption activist Alexei Navalny was poisoned with Novichok, a Soviet-era nerve agent, according to the German government. Navalny is currently in a medically induced coma in Berlin's Charité hospital. Angela Merkel's accusation of attempted murder has been joined by a chorus of outrage from other world leaders, who are calling for answers from the Putin regime. Deutsche Welle
Juul cuts
Juul is planning more job cuts (it's already laid off a 1,000 people or so) and may pull out of Europe and Asia. The e-cigarette firm has been hit hard by parental condemnation and regulatory scrutiny over its alleged courting of underage sort-of-smokers. Now Juul has reportedly designed a new version of its vaporizer that will only be unlockable for people over the age of 21. Wall Street Journal
Five days
While most coronavirus quarantine periods last a couple weeks, Germany's top virologist says five days should be sufficient. Christian Drosten said research shows little risk of infection after such a period, and shorter quarantines would also be more palatable for the public. Fortune
AROUND THE WATER COOLER
About that V
Economists expect the global economy to get worse again before it gets better. Société Générale strategist Albert Edwards: "The recovery will peter out, even if we don’t tip into another outright recession because of unemployment." Most experts don't expect global output to recover fully until the end of 2021—and that's if there's no severe second wave this coming winter. Politico
Vaccine distribution
DHL and McKinsey have identified a hitch with the distribution of any potential COVID-19 vaccine that needs to be stored at freezing temperatures: the necessary cooling facilities are missing in many places across Africa, Asia and South America. The German logistics giant and U.S. consultancy reckon existing infrastructure would only allow for the delivery of such a vaccine to 2.5 billion people in around 25 developed countries. Financial Times
Digital mortgage
Intercontinental Exchange CEO Jeff Sprecher digitized energy trading and the NYSE. Now he plans to do the same for home loans, and to that end he's paying $11 billion for software provider Ellie Mae. Sprecher says the mortgage process, which currently lasts two months or more and costs around $8,000, will end up taking a couple weeks at most and costing $2,600 less. Fortune
Scott wealth
MacKenzie Scott is now the richest woman in the world, ahead of L'Oréal heiress Françoise Bettencourt Meyers. The writer and philanthropist's new status is thanks to the recent rise in Amazon's stock price (she is the ex-wife of Amazon CEO Jeff Bezos, and got a lot of stock in the divorce settlement.) Fortune
This edition of CEO Daily was edited by David Meyer.


fortune--2020-09-03--Investors send global stocks higher on vaccine hopes and stimulus goodies—but tech shares continue t

Investors send global stocks higher on vaccine hopes and stimulus goodies—but tech shares continue to lag

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. European stocks are powering on in early trading on Thursday , lifted by fiscal stimulus spending measures and COVID vaccine breakthroughs. U.S. futures are off their lows, pointing to another positive open.
Let’s see where investors are putting their money.
Markets update
Asia
The major Asia indexes are mixed in afternoon trading, with Japan’s Nikkei up nearly 1% .
are mixed in afternoon trading, with Japan’s up nearly . The Chinese markets may be in the red, but the latest economic data looks solid. For a fourth straight month, China’s service sector , which represents roughly 60% of the economy, showed solid growth.
, which represents of the economy, showed solid growth. The China-India tensions are heating up again as India drew up an updated list of banned Chinese tech. Popular apps from the likes of Tencent, Baidu and Ant Group made the list.
Europe
The European bourses opened solidly in the green with France’s CAC up more than 1.5% in the first half-hour after Emmanuel Macron’s government unveiled a huge €100 billion stimulus spending package.
opened solidly in the green with up more than in the first half-hour after Emmanuel Macron’s government unveiled a huge stimulus spending package. Sanofi announced promising results from its latest COVID vaccine trials, giving stocks an added boost.
announced promising results from its latest COVID vaccine trials, giving stocks an added boost. Is the ECB plotting an end game for its €1.35 trillion emergency bond-buying program? Policy hawk Jens Weidmann thinks it’s time to start thinking about when to wind it down, or at least limiting its scope.
emergency bond-buying program? thinks it’s time to start thinking about when to wind it down, or at least limiting its scope. Royal buzz. Netflix added the Duke and Duchess of Sussex, Prince Harry and the former Meghan Markle, to its production lineup. Netflix shares teetered yesterday 0.7%.
U.S.
The Dow and S&P futures point to further gains with Nasdaq futures in the red. On Wednesday, all three indexes soared, breaking a few records along the way, despite lousy ADP payrolls data and a worrying tabulation of America’s finances.
point to further gains with Nasdaq futures in the red. On Wednesday, all three indexes soared, breaking a few records along the way, despite lousy ADP payrolls data and a worrying tabulation of America’s finances. According to the Congressional Budget Office, U.S. debt will reach or exceed 100% of GDP this year, putting U.S. indebtedness in the company of Japan, Greece and Italy. Spoiler: that’s not good company. You can add staggering sovereign debt to the list of things the bulls don’t care about. (It’s a long list.)
will reach or exceed this year, putting U.S. indebtedness in the company of Japan, Greece and Italy. Spoiler: that’s not good company. You can add staggering sovereign debt to the list of things the bulls don’t care about. (It’s a long list.) Can the U.S. once again return to a jobless claims number in the six-figure range? Economists forecast that about 950,000 Americans filed for unemployment benefits in the past week. Warning: there’s a new counting methodology in this week’s numbers, which may trigger a wild spike in either direction.
Elsewhere
Gold is having an incredibly volatile week. It’s trading under $1,940/ounce after nearing 2,000 bucks a few days ago.
is having an incredibly volatile week. It’s trading under after nearing 2,000 bucks a few days ago. The dollar is up slightly. Again.
is up slightly. Again. Crude is flat with Brent hovering below $45/barrel.
***
Are tech stocks overheating?
Yesterday was an odd day for the S&P 500. The benchmark went up, which wasn’t odd. But it did so with little help from Big Tech.
Utilities, materials and real estate were the big three winners while IT came in 10th place out of the eleven S&P industry components. (Yes, unloved energy stocks remain the most unloved of all. That’s unlikely to change any time soon.)
And while a few days of upside-down trading (Nasdaq futures are the lone downer this morning) is by no means enough to call a floor to the tech rally, it’s worth nothing that a new level of wariness has settled into the markets in recent days. In short, August’s un-August-like performance is adding uncertainty to the tech bull rally. As several market watchers have noted, tech-trading volatility—as measured by the VXN, the so-called “fear index”—has spiked over the past two weeks in line with a spiking Nasdaq 100.
And here’s the trailing 30-day VXN from this morning. You want to see this chart flat-lining—a sign of market stability—not climbing. The VXN, like the VIX, measures market risk and investor sentiment. When it climbs, there’s a greater sense of perceived risk.
What’s the source of the volatility? Sky-high valuations, for starters. The Nasdaq 100 is powering to its best run in a decade. There’s a lot of knockout earnings packed into those valuations, but is such a rally justified when the rest of the economy is hardly back on its feet?
Another explanation is the way many investors are trading tech stocks: through put/call trading options. The periodic unwinding of these positions adds further price volatility to tech stocks.
Back in June when the Nasdaq topped 10,000—yes, it wasn’t even three months ago—market observers watched in awe. It’s climbed a further 20% since then. Could it climb another 10-20% in the next three months? Could it fall by just as much?
Again, it’s too early to say whether this tech rally is running out of steam. But fears are growing.
***
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 read
Dunking on the Nasdaq. Shares in DraftKings closed up 8% on Wednesday. That's after the company announced Michael Jordan had taken an equity stake in the online sports-betting company, and was named an advisor to the board of directors.
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Market candy
Forty Under Forty
Fortune's annual list of young, influential earth-shakers came out yesterday. And it's bigger and better than ever. Why's that? We actually published five lists, broken down into five general segments: finance, technology, health care, government and politics, and media and entertainment. You'll find entrepreneurs, scientists, executives and finance whizzes hailing from all corners of the planet. And they were all born after 1979.


fortune--2020-09-03--From superstar cities to ghost towns: Two-thirds of workplaces in major hubs have yet to reopen

Even as COVID-19 cases drop across the nation, most workplaces in large metropolitan areas remain closed.
Only 27% of U.S. workplaces in America’s 20 largest metropolitan areas will be reopened by the end of September. That’s the finding from a poll of more than 1,000 executives by the Conference Board between Aug. 19 and 26, which was shared exclusively with Fortune.
Another 8% of workplaces in large metros plan to reopen before the end of the year, and 21% sometime in 2021. While 40% have either no timeline to reopen (35%) or are waiting for a vaccine (5%). And 3% say they’ll stay remote permanently.
This spells trouble for both the finances of big cities and small businesses, like restaurants and shops, which are dependent on foot traffic from nearby offices.
And as workplaces in big cities remain closed, some employees are already looking to leave town. Americans living in urban areas are twice as likely to say they’ll move out as a result of the pandemic (11%), compared to Americans living in rural areas (5%), finds a Fortune-SurveyMonkey poll of 2,478 U.S. adults between Aug. 17 and 18.
The Conference Board poll was conducted among 1,100 businesspersons across 20 U.S. metropolitan statistical areas. It included CEOs, C-suite executives, vice presidents, and senior managers.