fortune--2020-05-31--Why people are turning to crystals and not diamonds

I did not intend to become interested in crystals. It happened, as these things often do, during a long drive through the desert.
A chance pass through Quartzite, Ariz., piqued my interest. It corresponded with an annual crystal show where thousands of “rock hounds” convene in the aptly named outpost to sell glittering pillars of rose quartz, regal amethysts, and malachite as swirled and green as the back of an ancient gilded turtle. The RVs and tents parked alongside the highway, Burning Man style, demanded investigation.
I soon found myself haggling over the price of golden-colored citrine with a bolero-wearing man named Brian. Later I forked over a few bucks for a rotund couple of break-at-home geodes (dinosaur eggs, I called them as a child) that came with an oversize nutcracker that looked like it came from a construction site circa 1976.
Turns out, I am late to develop an appetite for “near-gemstones,” as diamond dealers call this $1 billion-plus industry. Virtually every Los Angeles-based celebrity you’ve heard of keeps them, whether Kate Hudson’s amethyst chunks credited with healing properties for emotional distress and issues with the nervous system, Adele’s performance-anxiety reducing crystals, or Gwyneth Paltrow’s rose quartz, which some believe promotes harmony and love. Victoria Beckham (black obsidian), Bella Hadid (blue celestites), and Kylie Jenner are fans. Kim Kardashian named her perfume collection Crystal Gardenia.
Today, the crystal-collecting set goes beyond the type of people who shop at health-food stores or practice reiki. The Astro Gallery of Gems on Fifth Avenue in New York attracts famous clients with its $30,000 pieces of barite and six-figure specimens of mesolite. (“Letterman was in here last month,” its star saleswoman Ruth told me the last time I was there.) Sotheby’s and Christie’s sell them for tens of thousands of dollars alongside meteorites and fossils. Mardani Fine Minerals reports annual gross sales of $25 million to $40 million, with profit margins varying from 20% to 70%.
The market was strong before Covid-19 and remains unaffected. The coronavirus pandemic is expected to dent the $76 billiondiamond industry (as of 2018) by 20% this year, but the value of near-gemstones such as quartz, amethyst, citrine, and malachite is holding steady.
“Near-gemstones are becoming very attractive,” says Martin Rapaport, chairman of the Rapaport Group and founder of the Rapaport Diamond Report and RapNet online diamond trading network.
The diamond market was already expecting a drop in 2020. Wealthier people are buying fewer, rarer gems, he says while those of more modest means are forgoing jewels and gemstones in favor of crystals.
“The diamond market is going to come down significantly this year, but there’s a lot of demand that has moved down to the lower cusp of [crystals and minerals], which are less expensive,” he says. “The need for emotional gifting is going to be intensified, and quarantining is going to drive more buying in general. Near-gems fall directly into this segment.”
James Hyslop, the head of the science and natural history department at Christie’s, agrees. Coronavirus has only strengthened a market that has been “historically undervalued. The sense that everyone has is that interest in the market for minerals and fossils and meteorites is at an all-time high,” Hyslop said on the phone from London. “It’s extremely healthy at the moment.”
Earlier this month, Christie’s “Sculpted By Nature” auction culled £820,375 ($1.09 million) in total sales, making it the most successful online sale for the company’s natural history department, outperforming a similar sale it held in October 2019. Many of the lots sold for more than their top estimated value. Among the top crystal sellers were three different rounded Gogotte formations formed from quartz crystals and calcium carbonate in Fontainebleau, France. They took £37,500 apiece.
“I’ve seen ones selling for a hundred times what they were selling for 20 or 30 years ago,” Daniel Trinchillo, the founder and president of Fine Minerals International, told Business Jet Traveler in December. “I’ve seen collections worth 5 and 10 times what they cost 5 or 10 years earlier.”
From the Earth, untouched
Mineral collecting became popular in the U.S. by the 1970s, when buyers began focusing more on how they looked than their scientific relevance. They are treasured as much for their beautiful hues as for their supposed healing benefits.
But if you believe the hype, some crystals are said to offer benefits perfectly in tune with the Covid-era anxiety: Ocean-blue azurite can assist in clairvoyance and intuition; sodalite obelisks allegedly encourage calm and rational thought; statuesque tourmaline pillars promote self-confidence; and polished, swirling agate is recommended by fans for rebalancing and cleansing.
The likes of calcite, quartz, and florite in myriad colors have become pieces of decor in hotels, cafes, and retail businesses. In the latest fashion campaigns for Celine, crystals show up in the brand’s Instagram ads as props for handbags and jewelry. At the Mandarin Oriental, they’re used in wine wands to help extrapolate tannins. The aptly named Crystal Bridges Museum of American Art in Arkansas held an exhibition earlier this year celebrating the role of crystals in culture.
“Acquiring crystals is a bit like acquiring art,” says Anthony James, an artist who showed his work at Crystal Bridges. “You’re forming a relationship.” James uses computer programming to mimic naturally forming crystals in a process he calls “organic digitization” of “polycrystalline shapes.” His unique pieces, which are the size of refrigerators and bigger, sell in the high six figures.
This is how you do it
The first rule of shopping for crystals? Buy the best you can afford.
“It’s better to buy one really good piece than spend the same amount of money on five mediocre pieces,” Hyslop says. Specimens with richer, more vibrant colors without flaws are worth—and will cost—more than those with broken edges, weak coloration, and pockets of milky sediment.
And size matters, but only to a point.
“The prices rise according to size—to the point where you can’t pick up the crystal anymore—then they drop again because some of these items these are just too big,” says Hyslop. (You try moving 500 pounds of solid fluorite into your upper-level loft.) “It isn’t necessarily the price that would be the inhibitor. It’s the logistics of moving these things around.”
The pricing scale generally follows a stable per-kilogram increment structure. At The Crystal Matrix in Glendale, Calif., you can purchase a piece of quartz that you can hold in your hand for a couple hundred dollars. A piece of malachite and azurite nearly 10 inches across sold for £12,500 in Christie’s May sale; a similar piece just over three inches across sold for £3,750.
On the other hand, there is something to be said for having the biggest piece of something.
“When you get into really big center pieces for a museum exhibition, prices shoot up again,” Hyslop says. “The biggest ones are incredibly valuable—six and seven figures.”
The third rule of crystal shopping: There’s no “right” crystal to collect. Focus on the ones that spark your interest, then learn as much as you can about their provenance, follow auctions that sell them, and ask insiders and experienced dealers for insight.
“Buy a crystal for its beauty or get a crystal to use for healing,” says James, the artist. “What is relevant is your intention.”
Intention, it seems, will strike from anywhere, even outside the desert. Last week, on the way to Malibu, I passed an unmarked van parked along the Pacific Coast Highway, rear doors opened wide to reveal towers of brilliant amethyst and tourmaline stacked inside.
I had half a mind to turn around and go back.


fortune--2020-06-01--5 new books to read in June

5 new books to read in June

When it comes to earnings , Wall Street has already moved on to 2021

A cursory look at Vladimir Putin’s rise to power, from a former Moscow correspondent for the Financial Times; a comprehensive treatise on voter rights from one of the fastest rising stars in the Democratic Party; and a memoir from the only female chef in the United States to attain three Michelin stars.
Here are five new books being published this month to consider reading this summer.
Courtesy of Simon & Schuster
Keep Sharp: Build a Better Brain at Any Age by Sanjay Gupta
UPDATE: Originally scheduled to be released June 2, the publisher has notified Fortune that the book’s publication date has been pushed back to January 5, 2021.
With the world upside down indefinitely, it can be hard to stick to what used to be normal routines or even stay focused these days. Although researched and written well before the current global dilemma, Sanjay Gupta’s latest work strives to serve as a manual toward maintaining and improving cognitive health, from debunking common myths about aging to prescribing which social interactions and games are actually beneficial.
Courtesy of Rodale Books
Act Like a Lady: Questionable Advice, Ridiculous Opinions, and Humiliating Tales from Three Undignified Women by Becca Tobin, Keltie Knight, and Jac Vanek
Available June 2
A tongue-in-cheek “manifesto” of sorts for Generation Z and younger millennial women, the hosts of the popular podcast and E! show LadyGang reflect on lessons about careers, relationships, and body image through personal essays about their own experiences. With essay titles like “Maybe She’s Born with It, Maybe It’s Photoshop” and “If You’re Happy and You Know It, Thank Your Ex,” the authors warn nothing is TMI (too much information), so consider yourself warned.
Courtesy of Penguin Press
Rebel Chef: In Search of What Matters by Dominique Crenn
Available June 9
With the success of her small but growing restaurant group in San Francisco, Dominique Crenn is one of the most lauded chefs in America. In 2018, she was awarded three Michelin Stars for her influential fine dining establishment Atelier Crenn, making her the first female chef in the United States to receive this honor. But Crenn overcame numerous obstacles to reach this pinnacle in her career, not least of which included surviving and overcoming the overwhelming misogyny in the culinary world. With her memoir, Crenn is using her prominence for good, speaking out about restaurant culture, sexism, immigration, and climate change.
Courtesy of Henry Holt & Company
Available June 9
Now one of the Democratic Party’s fastest rising stars (and even rumored to be on the short list to be vice president on Biden’s ticket), Stacey Abrams arrived on the national stage when she ran for governor of Georgia in 2018. The fallout from that election was not straightforward, to say the least, and it has continued to fuel a national discussion about voter suppression, especially among communities of color. In her latest book, Abrams offers what she describes as a blueprint to end voter suppression through census engagement, robust voter protections, and an elevation of identity politics.
Courtesy of Farrar, Straus, and Giroux
Putin’s People: How the KGB Took Back Russia and Then Took On the West by Catherine Belton
Available June 16
If you want to understand the extent of Vladimir Putin’s power, you need to now he got there. In Putin’s People, Catherine Belton, a former Moscow correspondent for the Financial Times, traces how Putin and a small group of KGB colleagues rose to power over the course of three decades, with a through-line from the fall of the Soviet Union to the Boris Yeltsin and rise of the oligarchs era in the 1990s to Putin’s election at the turn of the century. Over the last 20 years, Putin’s Russia has waged a campaign to expand its influence and undermine Western institutions, from sponsorship of extremist politics and military operations in Europe and the Middle East to the undermining of and interference of democratic elections in the United States. With the next presidential election only a few months away, Belton’s account is a chilling reminder of the unrelenting threat and what is at stake, not only for Russia or the U.S., but the entire global population.


fortune--2020-06-01--Even Goldman bears are rethinking their stock picks after the May rally

Goldman Sachs Group Inc. has effectively bowed to pressure from the continuing rally in U.S. stocks and abandoned its call for another steep sell-off.
Strategists led by David Kostin have rolled back their prediction that the S&P 500 would slump to the 2,400 level — over 20% below Friday’s 3,044 close — and now see downside risks capped at 2,750. The U.S. equity benchmark could even rally further to 3,200, they wrote in a May 29 note.
“The powerful rebound means our previous three-month target of 2,400 is unlikely to be realized,” the strategists wrote. “Monetary and fiscal policy support limit likely downside to roughly 10%. Investor positioning has oscillated between neutral and low and is a possible 5% upside catalyst.”
The shift came just after JPMorgan Chase & Co.’s strategists shifted in the other direction — reining in their bullish outlook. JPMorgan’s Marko Kolanovic warned about rising U.S.-China tensions in a note May 28.
Goldman’s strategists maintained their year-end target of 3,000 for the benchmark U.S. stock gauge.
Goldman continues to argue that short-term returns are skewed to the downside — “or neutral at best” — thanks to the risk of an economic, earnings, trade or political “hiccup” to the normalization trend. A broader participation in the rally would be needed for the S&P 500 to move meaningfully higher.
The S&P 500 has climbed 36% from its March 23 low, helped by massive fiscal and monetary support, mega-cap outperformance and optimism about the economy restarting, according to Goldman. Last month it argued fear of missing out was a key driver of the rebound in stocks.


fortune--2020-06-01--The cofounders of kitchen concierge startup The Culinistas on the importance of listening to your cu

The cofounders of kitchen concierge startup The Culinistas on the importance of listening to your customers

This is an installment in a special series, Startup Year One, interviewing startup founders about the major lessons they have learned in the immediate aftermath of their businesses’ first year of operation.
Jill Donenfeld and Tiana Tenet, cofounders of kitchen concierge startup The Culinistas, approach in-home dining from two different vantage points.
Donenfeld had worked in the culinary industry before and during her studies at Barnard College, before graduating in 2006. Starting off as a barista at a coffee shop and then a cashier at a diner, Donenfeld worked her way up to the role of private chef and cookbook writer. “I’ve lived and traveled extensively in pursuit of culinary and hospitality research,” she says.
Tenet describes growing up in an Italian and food-loving family, further developing her passion for culinary pursuits while at Georgetown, from which she graduated in 2012. During those formative years, Tenet spent a summer cooking at the Castello di Vicarello in Tuscany, assisted on the set of Giada at Home, and contributed to Food Network Magazine. Postcollege, she shifted her focus to finance and spent five years in private banking at J.P. Morgan. “I always knew I’d circle back to culinary, but that I’d approach it from a business lens,” Tenet says.
“Tiana is focused on structure and scalability,” Donenfeld adds about her business partner. “She’s committed to high-touch customer service and making sure our clients get what we promise, but never at the expense of growth. We both find eating at home to be a necessity for a balanced life and to foster meaningful human connection.”
Fortune recently spoke with Donenfeld and Tenet to learn more about their first year in business, the lessons they’ve learned, the hurdles they’ve overcome, and their plans for the next year.
The following interview has been condensed and lightly edited for clarity.
Jill Donenfeld (left) and Tiana Tenet, cofounders of kitchen concierge startup The Culinistas. Courtesy of The Culinistas
Fortune: From subscription boxes to curated meal plans, culinary services is a space that has seemingly exploded over the past couple of years. Why do you think that is? How does The Culinistas stand apart?
Donenfeld: Our relationship to eating is always a swinging pendulum: We dine out, we want fast, and then we want slow food and back to the farm. We are on the side where people are thinking about the high cost of restaurants, the lack of transparency in how food is prepared, and, at the same time, the need for ways to effectively feed themselves and their households.
Tenet: Unlike subscription boxes and curated meal plans, The Culinistas is a personalized service. While we provide menus to make weekly planning simple, it’s a starting point, and each selection can be customized to meet your household needs: from gluten-, dairy-, and sugar-free to kid-friendly or vegan. We’re sending you a chef, who shops specifically for you, and that allows us to offer a truly personalized service that meal kits cannot provide.
Beyond tapping into dietary trends, how has technology shaped the development of The Culinistas, whether it be the influence of big data or social media?
Tenet: We embrace the motto: “High-tech, high-touch.” Our technology integrates culinary, logistics, and CRM [customer relationship management] so that The Culinistas services are seamless for both chefs and households. The Culinistas has a fully customized, back-end tool that allows the business to scale efficiently without sacrificing high-touch service, and the data we gather is used to inspire culinary innovation and our social media presence. We know our clients love meatballs, so we’re constantly reimagining that dish.
The Culinistas recipes include a sample grocery list, and they follow a blueprint style—no measurements required and lots of room for interpretation and experimentation. Courtesy of The Culinistas
What were some of the biggest hurdles you faced in the past year? What surprised you the most?
Donenfeld: It has been difficult to find the right marketing team. Not many understand the nuances of our industry, from the clients to the chefs and the food, thinking about both the grass-roots side of engagement as well as employing a more growth marketing approach. When you find the right people though, it’s always a pleasant surprise: You can move quickly and grow fast.
Tenet: Learning to trust and delegate is always difficult, especially when you build a team from scratch. At first, we were a small, scrappy team of four. Jill and I had our hands in everything—from client calls and invoices to copywriting and collateral design. Within a year the team expanded to 12, and I found it difficult to delegate while still maintaining control. Team composition really matters, so once we put the right people in place, it was easy to let go and find a balance between leadership and management and autonomy.
For in-home services, clients choose a menu from weekly options, and the chef will shop specifically and exclusively from the customer’s grocery store of choice, then come to his or her home to cook and pack meals for the week. Courtesy of The Culinistas
What kind of feedback have you received from your customers, and have you (or will you) apply that feedback to how you sell your products in the future?
Donenfeld: There is an almost constant feedback loop from both our chefs and our clients; we consider ourselves to be in service of both. Clients wanted salmon and broccoli every week, so now we have a classics section of our menu that always features it. Chefs wanted to travel, so we gave them the opportunity to be in the Hamptons in the summer and Aspen in winter to service clients.
Tenet: Aside from the verbal, we’re looking at client behavior and data. If a client emails or calls, we know the tech and messaging isn’t intuitive. And if they consistently ask for past menu selections, we know they want the ability to select past dishes from their dashboard. The same goes for chefs. If a chef stops accepting jobs, we know we are not meeting their expectations and can schedule a call to understand where we are falling short. As a startup, we’re small and agile and can make changes very quickly to enhance the user experience.
Obviously, amid the coronavirus pandemic, consumers’ purchasing habits, practices, and even their relationship to food is going to change. This could particularly affect your in-home services. How does The Culinistas plan to adjust and fit into whatever this new normal might be?
Donenfeld: Because we are a personalized service, we are built to adjust. This is present in micro tweaks like what we message to both chefs and clients about best practices pertaining to purchases and interactions.
We are also seeing two divergent paths: Either clients want a chef exclusively for their own use (this is how clients are thinking about their time in the Hamptons this summer) or we are seeing clients wanting to cook for themselves. And in that case we launched a Kitchen Concierge service—a subscription in which we’ll set you up for culinary success with access to our team for culinary tips, tricks, and hacks and who will help plan out a week’s worth of meals (or just hook you up with a great brownie recipe on Friday night), a grocery list, as well as the grocery run, and provide recipe cards that will help you think intuitively like a chef.
The Kitchen Concierge subscription includes access to culinary tips, tricks, and hacks from professional chefs, who will help plan out a week’s worth of meals. Courtesy of The Culinistas
At the same time, how does a shutdown of this nature affect the future of the business, from product development to raising capital?
Tenet: At times like this, we must be innovative and utilize the resources and assets we already have. There’s no room for excess, and cutting expenses is key, but that doesn’t mean you cannot grow the business. We have over 450 proprietary recipes, 125 talented chefs, robust technology, and a stellar team. We have a lot to work with when it comes to innovating on the product, even during turbulent times.
As far as raising capital, now is not the time. We’re being extremely thoughtful about our budget and have adjusted services to the current environment so we’re not behind on revenue. I believe that businesses that make it out of this pandemic stronger than when they went in will prove to investors that the right leadership team is in place to make the company a success. An idea is a starting point, but execution is key, and now is the perfect time to prove you have what it takes.
Looking beyond the post-pandemic era, which could be anywhere from a year to a few years from now, how do you plan to grow The Culinistas, and what do you want the business to look like five years from now?
Donenfeld: The good news is that people will always have to eat. In five years, our services will be available in more major cities and top vacation spots during peak season. With cracks in the restaurant system giving way, I don’t think there will be any problems with finding the talent.
Tenet: We’re on a mission to bring people back to the table, helping households access nourishing home-cooked meals, and in five years we’ll have a robust suite of services, content, and artisan products that makes this super simple.
More must-read lifestyle coverage from Fortune:
—The coronavirus puts the craft beer industry at risk
—Georgia’s staple cheesy bread is more than Instagram bait. It’s an economic indicator
—These dry ciders are made like wine and packaged like beer
—Listen to Leadership Next, a Fortune podcast examining the evolving role of CEOs
—File your taxes, get a free case of Natty Light
—WATCH: Can San Francisco Be Saved?
Follow Fortune on Flipboard to stay up-to-date on the latest news and analysis.


fortune--2020-06-01--When it comes to earnings, Wall Street has already moved on to 2021

The cofounders of kitchen concierge startup The Culinistas on the importance of listening to your customers

No one can accuse Wall Street of being shortsighted right now—at least when it comes to earnings.
The coronavirus crisis dealt a heavy blow to markets in March, as earnings estimates for the year have increasingly become more grim—hovering around negative 20% or more for 2020. Yet the S&P 500 is currently trading at over 20 times the next 12 months’ earnings—a historically expensive level that’s caused valuations of many companies to skyrocket.
One reason? According to strategists, Wall Street is largely writing off 2020 earnings and looking to brighter days ahead. “I do think in the market, investors are kind of looking through the valley,” says Liz Ann Sonders, Charles Schwab’s chief investment strategist.
Indeed, “investors are basically saying, ‘When it comes to earnings, tell me something I don’t know. I already know that 2020 is going to be horrible,’” CFRA’s chief investment strategist Sam Stovall tells Fortune. “What they don’t know is truly how good they’re going to be next year.”
In fact, estimates for earnings growth next year are an entirely different picture. Some estimates are for a 30% increase in earnings in 2021. At the market’s current levels, “prices lead fundamentals, but I sort of wonder if they’re leading them too far,” says Stovall.
The problem is, “we still don’t know the answer to the question, Well, how deep is the valley?” says Schwab’s Sonders. Especially now, earnings estimates are a “moving target,” she says, but while estimates for 2021 are far more optimistic, with double-digit growth, “is it a 25% or 30% jump from $125 [S&P 500 earnings per share], or from $100 or $90?” she asks.
Hoping for a V-shaped recovery
Regardless where the jumping-off point is, with 2020 a muddled—but presumably negative—picture, investors are still hoping that the recovery looks more like a V-shape and not the dreaded L.
Experts say the markets are pricing in a “definitive trough” in earnings in the second quarter, and a “pretty significant liftoff from there,” notes Sonders. Just how bad (or good) those earnings turn out to be should either confirm or deny expectations of a V-shaped recovery into next year.
But with record numbers of businesses having withdrawn guidance recently (not to mention a large chunk of S&P 500 companies that weren’t even supplying quarterly guidance before the crisis), now, says Sonders, “estimates are just a dart game. The analysts are probably just closing their eyes and swirling their pencil around, landing on a number, and saying, ‘Well, that’s as good as any.’”
2020 is ‘entirely different’ from 2008
Back in the 2008 to 2009 financial crisis, the market bottomed before earnings improved. Markets looked ahead to brighter days then for earnings, and by the time the market bottomed, the forward P/E (price-to-earnings) was back up (the S&P 500 forward P/E was over 14 a couple of months after the market bottomed in 2009—up from 9 in November 2008). That pattern is consistent with most recent history, strategists say, and is also seemingly the case now—with the worst data in earnings expected to come in the second quarter of 2020, while the market (likely) bottomed in the first quarter.
But Sonders says this time is “so entirely different” owing to its nature as a health crisis versus a man-made financial crisis. In 2008 to 2009, there was an expectation that earnings would improve once the market bounced off its bottom. But, unlike today, “that expectation was less about hope and more about the simple fact that, largely based on what the Fed had done, the crisis was in the financial system,” Sonders suggests.
The 2008 crisis could largely be solved with tools from the Fed and policy to fix the financial system (what analysts note was the stem of the crisis). Once markets understood the crisis could largely be contained, “it was easier at that point in time to come up with a legitimate outlook for earnings off of that bottom,” Sonders points out.
But now, the fact that there is no simple fix to the current environment is why those like Sonders and Stovall believe it’s much harder for analysts to judge what a recovery in earnings will look like, because the hit is “across every sector in the economy,” says Sonders.
Yet the market now is far more expensive historically than even during the 2008 crisis. The S&P 500 traded at roughly 15 times the next 12 months’ earnings in early 2009, while the index trades at over 20 times forward earnings (several points above the historical average) today.
Set up for risks?
Some feel that taking the long view is a positive, especially in light of the growth prospects of some of the biggest names in the rally (think: tech stocks). “We’re pleasantly surprised at how quickly the market has looked forward to the recovery in 2021 and 2022,” LPL Financial’s Jeff Buchbinder recently told Fortune. “Looking at earnings two, three years out, then I think you can start to assess whether a P/E ratio is reasonable,” he said. And those ratios do look more reasonable a couple of years into the future (for a few big names at least).
Analysts at LPL Financial recently wrote in a note that valuations are “not as worrisome as they may appear,” given the potential for a steady recovery in earnings in the next of couple years and interest rates kept at a low level.
But strategists like Sonders and Stovall wonder if we’re still too cheery about the picture, even in a year or two. For one, Sonders thinks that with current valuations so high, “we’re set up for some risks here.”
That strikes a chord for Stovall as well. While he suggests that, for the most part, investors are not overly optimistic, “you do wonder, Okay, I can appreciate how Wall Street is anticipatory—it’s discounting the negative news now for positive news later,” he says. “But by how much is appropriate?”
Guess we’ll find out in 2021.


fortune--2020-06-01--Will the pandemic accelerate stakeholder capitalism?

This is the web version of CEO Daily. To get it delivered to your inbox, sign up here.
Good morning.
For the last three months, I have repeatedly asked, and have been asked, the same question: Will the pandemic accelerate the business community’s move toward stakeholder capitalism? Or slow it down as companies focus on short-term financial pressures?
The answer wasn’t obvious three months ago. But with each passing week, it is becoming more so. Most of the forces that have led to the stakeholder movement have become stronger during the pandemic. Among them:
1. The shift toward talent as the most important source of corporate value has continued. This trend could have been weakened by historic levels of unemployment, which have made labor plentiful. But plentiful labor is not the same as plentiful talent, and the pandemic seems to be leading an increasing number of talent-forward companies to take an “employees first” approach.
2. Demands for systemic change have intensified. The pandemic exposed flaws in our hyper-efficient approach to global markets, and it is deepening the divisions—both within countries and between them—that undercut support for the current economic system. (See Thomas Friedman’s interesting take on this here.) Business leaders need to respond, or risk losing their license to operate.
3. The dearth of leadership is ever more evident. In the U.S. in particular, our political ideologies have proven poorly suited for the moment. Practical-minded business leaders can, and should, step up to help fill the gap.
We will be exploring these themes Tuesday at a virtual gathering of CEOs, held in partnership with McKinsey, that includes Danone’s Emmanuel Faber, Levi’s Chip Bergh, Patagonia’s Rose Marcario, RBC’s David McKay, Edward Jones’ Penny Pennington, Guardian Life’s Deanna Mulligan, Henry Schein’s Stanley Bergman, and Royal DSM’s Geraldine Matchett, among others. I will report back here.
More news below.
Alan Murray
@alansmurray
alan.murray@fortune.com
TOP NEWS
Protests erupt countrywide
The U.S. saw widespread protests and demonstrations continue over the weekend over the death of George Floyd, an unarmed black man who was killed by a white police officer. Mayors and officials set curfews in dozens of cities, as protests occasionally turned violent, and police officers were filmed beating and pushing protestors and firing rubber bullets and pepper bullets directly on journalists and camera crews. On Monday morning, the White House was dark as fires burned nearby, and doctors were worried the protests could spread coronavirus, with at least 6 million infected worldwide. New York Times
SpaceX blasts off
Meanwhile, a SpaceX rocket blasted off from Cape Canaveral in the first-ever manned commercial space launch, carrying two astronauts to the International Space Station. SpaceX, led by Elon Musk, and Boeing were commissioned in 2014 by NASA to build launch vehicles, and the new launch could mark the start of the privatization of space. Fortune
A new G7
The G7 was supposed to meet at the White House this month, but U.S. President Donald Trump postponed the event after German Chancellor Angela Merkel said she would not attend in person. Trump called the G7 a "very outdated" group of countries, instead pledging to invite Australia, South Korea—and Russia. The country was expelled from what was then called the G8 in 2014 over its annexation of Crimea. FT
HSBC caught in the crosshairs
Businesses are facing waves of threats and pressure to back Beijing's line on Hong Kong, with Leung Chun-ying, its former leader, calling for a boycott on the bank HSBC because it had not publicly backed Beijing. The bank is formally based in London but its history and the bulk of its business is in Asia. Other reports surfaced that employees at Chinese and international banks were being forced to sign petitions or stay silent. New York Times
AROUND THE WATER COOLER
Oil trading probe
Trafigura, the global oil trader, is under investigation by U.S. authorites for market manipulation and alleged corruption, according to an investigation by the Guardian. The CFTC investigation has issued subpoenas relating to the company's oil trading activities, including in South America. Guardian
Plexiglass boom
We've seen the hand sanitizer boom, the toiler paper rush, the PPE flood, and now the plexiglass surge, all producing strained supply chains and skyrocketing prices, as companies—and hospitals—have searched for ways to keep their employees safe. But there's also demand for social-distance signage, cardboard dividers, and door handle covers. WSJ
'Best three months of my life'
Overworked lawyers are among that small group of people on the planet who really truly loved lockdown. The pandemic, and mandatory working-from-home measures, have reversed (at least temporarily) the grueling culture of long hours and mandatory face time that comes at the expense of family and work-life balance. Many are hoping the shift will be permanent. Fortune
Can Savile Row survive?
Savile Row has been making bespoke suits for the 1% for centuries. But now, the brands at the heart of a British tailoring empire are confronting a new reality, and new challenges: how do you fit suits for executives around the world if you can't travel? And in an age of social distancing, will a hands-on fitting—a crucial part of the process—still be what clients want? Fortune
This edition of CEO Daily was edited by Katherine Dunn.


fortune--2020-06-01--A no-deal Brexit could plunge Britain into negative rates: Citigroup

Negative interest rates may eventually become unavoidable in the U.K., especially if there is a no-deal Brexit at the end of the year, according to Christian Schulz, director of European research at Citigroup.
The Bank of England would likely cut rates to –0.1% in the middle of 2021 if the U.K. leaves the European Union without a new trade deal in place, he said.
While more bond buying and fiscal stimulus would be the first lines of defense in that case, the economy would likely still need more of a boost. Monetary policy could have an important role to play during a big supply-chain disruption because fiscal policy might be less effective.
The risk of “a hard exit from the EU’s single market and customs union at the end of the year is too soon and too likely to ignore,” Schulz said in a note. “Negative rates could prove particularly effective in reducing bankruptcies, protecting rather than undermining monetary financial institutions.”
The comments add to a growing debate over whether the BOE should, for the first time, take borrowing costs negative. U.K. officials have until Dec. 31 to strike a free trade agreement with the EU, and talks have been deadlocked ahead of a key summit this month.
The central bank said U.K. output could plunge 14% this year in a scenario published last month, and policymakers are considering all options to revitalize growth. A hard Brexit could damp the recovery that officials are expecting.
A separate note from RBC said the BOE is likely to cut rates below zero in the second half of this year, most likely in November, after expanding its bond-buying program by 200 billion pounds ($250 billion) in June. U.K. officials can draw on six years of experience with negative rates from the European Central Bank, and their review of negative rates isn’t likely to make a strong case against them.
Governor Andrew Bailey has struck a conciliatory tone on whether negative rates might be needed. Last week, Michael Saunders, a fellow policymaker on the nine-member Monetary Policy Committee, said he wouldn’t rule the policy in or out.
Still, there will likely be resistance to negative rates within the MPC, Schulz said. They would therefore probably take some preparatory steps before taking the benchmark rate even lower.
For instance, they could take only the rate on the Term Funding Scheme, a loan program for banks, below zero. There’s a chance the MPC announces such a move at its next announcement on June 18, Citi’s Schulz said.
The BOE could also make preparations for tiering and reassess the lower bound.
One danger is that negative rates backfire. With bank lending so important to keeping businesses and households going during the current crisis, there’s a risk that they tighten financial conditions by reducing bank profit margins.
While building societies have been pointed out as a problem area for negative borrowing costs in the past, that risk seems to have fallen in recent years, Schulz said. Some smaller banks with a large exposure to mortgage lending could still be affected, but the immediate risks might be more manageable, he said.
And the lowering of real neutral rates might make negative borrowing costs hard to avoid. The interest rates that keep supply and demand, savings, and investment in balance have been trending down over the past three decades. Those trends have also been exacerbated in the U.K. because of sluggish productivity growth, depressed investment, and Brexit uncertainty.
A lower neutral rate “could now make negative interest rates inevitable if monetary policy is to avoid dragging on demand,” Schulz said.


fortune--2020-06-01--Global markets view America’s violent protests and declare: nothing to see here

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. Protests and violence on the streets in America are hitting U.S. futures. Asia and Europe are far calmer, and climbing.
Let’s check in on the action.
Markets update
Asia
The Asian indices are all in the green in afternoon trade, led by Hong Kong’s Hang Seng, up 3.4%.
in afternoon trade, led by Hong Kong’s up Investors can thank President Trump for the relief rally. His China-Hong Kong address on Friday was long on tough talk, but short on detail, appeasing the global markets .
for the relief rally. His on Friday was long on tough talk, but short on detail, appeasing the . Even still, Hong Kongers are flooding into the offices of migration experts inquiring: Should we stay, or should we go?
Europe
European bourses jumped out of the gates again this morning. The blue-chip Euro Stoxx 50 was up nearly 1% one hour into the trading session.
bourses jumped out of the gates again this morning. The blue-chip Euro Stoxx 50 was up nearly one hour into the trading session. European countries continue to ease lockdown measures , and that’s giving equities a lift. It’s not exactly a 100% open-for-business message, however. For example, tourism-dependent Greece drew up a list of 29 nations that can begin flying into the country as of June 15 . Neither the Turks nor Americans made the cut.
, and that’s giving equities a lift. It’s a 100% open-for-business message, however. For example, tourism-dependent drew up a list of that can begin flying into the country as of . Neither the nor made the cut. With commercial air travel a shambles, Airbus this week will convene a meeting of top officials to determine production priorities, including what to do about its top-selling A320-series narrow-body jet.
U.S.
The Dow , S&P 500 and Nasdaq futures are down as I type. They’ve been swinging from gains to losses all morning as street protests over the death of George Floyd rattle investors’ nerves.
, and futures are down as I type. They’ve been swinging from gains to losses all morning as street protests over the death of George Floyd rattle investors’ nerves. Shops, businesses and restaurants across the country closed as demonstrations flared into violence in cities around the country. The list of big brands and retailers to announce closures or limited operations include Nike, Adidas, Walmart, Target and Amazon.
and across the country as demonstrations flared into violence in cities around the country. The list of big brands and retailers to announce closures or limited operations include Nike, Adidas, Walmart, Target and Amazon. What’s on the calendar this week? We have ISM manufacturing data (today), Alphabet’s AGM (Wednesday), and the May jobs report (Friday).
Elsewhere
Gold is up.
is up. The dollar is down.
is down. Crude is flat. West Texas Intermediate just came off its best month on record. It climbed more than 80% in May.
“Buy in May, stay and play”
It’s June 1. We’ve turned the page on another month. Congratulations on getting this far. Last month at this time we were marveling at the April bull run. It was the best month for U.S. stocks in 33 years.
But there was a bit of unease too as the rally occurred even as the global economy was suffering one of its worst months on record. And that brought to mind the old Wall Street adage: “sell in May, go away.”
And, so, the thinking went: if, in May, we could merely cling to April’s gains, we’d have plenty to celebrate come the summer months when coronavirus infection and death tolls improve, and when major economies reopen and begin to grow again.
So how did we do in this most recent make-or-break month?
If you had followed your broker’s advice to cash out and sit on the sidelines in May, you’d be kicking yourself. It was another banner month for equities…but not everywhere, as today’s chart shows.
The big winner was… [drum roll]… Japanese equities. A series of huge stimulus plans by the Abe government helped give the Nikkei a big boost. The silver medal goes to small-caps; the Russell 2000 soared more than 10% in May. The Nasdaq gets the bronze, gaining a respectable 6.8%.
The big loser was Hong Kong’s Hang Seng, which crashed at the end of the month following Beijing’s decision to tighten its national security laws, a move that has thrown another wrinkle in U.S.-China diplomacy. But even that swoon was a muted one. Today’s gains on the Hang Seng have cut that negative-6.8 handle in half.
As I said last month, the “stay away” advice was based on nearly 70 years worth of stock market data showing equities tend to under-perform in the May-October period.
But, as we’ve seen in recent few months, you might be wise to just throw out the history books. Past performance offers little guidance for the ups and downs of the markets during this pandemic.
With that in mind, Bull Sheet would like to take a stab at a bit of market poetry. How about this?
“It’s way too soon to call the market for June.”
What do you think?
***
Have a nice day everyone. I’ll see you here tomorrow.
Bernhard Warner
@BernhardWarner
Bernhard.Warner@Fortune.com
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Today's reads
The Fab 5. You know these stocks by heart. Everybody now: Microsoft, Amazon, Apple, Google’s Alphabet and Facebook. They’re far outperforming the S&P 500, and so are becoming a bigger portion of index funds that track the benchmark index. Fortune’s Shawn Tully explains why piling into these big-name stocks, either directly or indirectly, is likely to end in tears.
The shape of recovery. It's beginning to look like a "V" in China. That's the assessment of IMA Asia’s Richard Martin, after crunching the numbers on China's better-than-expected PMI data. Alas, China's rebound may be something of an outlier.
(Some of these stories require a subscription to access. There is a discount offer for our loyal readers if you use this link to sign up. Thank you for supporting our journalism.)
Market candy
Quote
"I’m hearing from lots of people who are saying, ‘gee, we never considered ourselves as RV-ers, but we’re considering getting one.'"
That’s Jefferies analyst Bret Jordan. He spoke to Fortune’s Anne Sraders about the recent rally in RV stocks. People are itching to get out of the house and see the world. They don’t necessarily want to get on an airplane. Cruise ships are still mostly off-limits. That leaves recreational vehicles. RV stocks like Camping World Holdings, Winnebago Industries, and Thor Industries have soared over 100%—Camping World is up over 400%—from market-wide lows in mid March, Sraders reports.


fortune--2020-06-01--Phone sales plummet amid the coronavirus lockdown

Smartphone sales plunged 20% in the first quarter from a year earlier, the sharpest decline on record, according to market tracker Gartner, as the global pandemic forced wireless carriers to shutter stores worldwide.
“The coronavirus pandemic caused the global smartphone market to experience its worst decline ever,” Anshul Gupta, senior research analyst at Gartner, said in a statement. “Most of the leading Chinese manufacturers and Apple were severely impacted by the temporary closures of their factories in China and reduced consumer spending due to the global shelter-in-place.”
The report is consistent with data from other sources, all of which showed a huge drop in phone sales during the COVID-19 outbreak. IDC said first-quarter phone shipments from manufacturers to retailers dropped 12%, and Apple reported its revenue from iPhone sales fell 7% last quarter. Some other hardware categories, like laptops, have held up better during the pandemic as more people needed to buy gear to work from home.
Among the three largest smartphone sellers, Samsung saw the number of phones it sold shrink 23% to 55 million, Huawei’s sales fell 27% to 42 million, and Apple’s sales dropped 8% to 41 million, according to Gartner. Industrywide, phone sales dropped 20% to 299 million devices.
Chinese phonemaker Huawei, which suffered the largest drop, is also being hurt by U.S. efforts to cut off its access to American hardware and software suppliers, particularly Google.
“Huawei will have a challenging year,” Gupta says. “It has developed the Huawei Mobile Service ecosystem, but with the lack of popular Google apps and Google Play store, Huawei is unlikely to attract new smartphone buyers in international markets.”
Samsung’s decline was also significant as its new line of Galaxy S20 phones debuted in February and went on sale in March.


fortune--2020-06-01--Wuhan’s mass testing blitz might have eradicated the coronavirus

Wuhan authorities said they found no new cases of “silent spreaders” for the first time in nearly two months as the city’s aggressive push to test its entire population appears to have succeeded in breaking hidden chains of transmission.
Of the 60,000 people tested on Sunday, no cases of asymptomatic infections were found, said the Wuhan municipal health commission on Monday. In an ambitious effort to guard against a resurgence of cases, Wuhan is testing its entire 11 million population for the virus and has found some 200 asymptomatic cases in the past two weeks.
The presence of infected people who show no outward signs of being sick but can nonetheless infect others has been an obstacle in worldwide efforts to contain the coronavirus, and a major reason why the pandemic spread so widely and quickly. In countries where testing remains inadequate, there is no way to detect such carriers and isolate them before they infect others.
In identifying the city’s asymptomatic carriers, Wuhan’s testing blitz could allow the city where the virus first emerged to eradicate the pathogen from its population. But its method is likely out of reach for other countries and even bigger Chinese cities as it requires a massive mobilization of resources and the full cooperation of residents.
Wuhan-dwellers were likely more willing to come forward for testing given the scars that the epidemic has left on the embattled city, which was sealed off for almost three months to contain the virus’s spread even as its local medical system nearly collapsed under the strain of the outbreak. Of China’s over 4,600 reported Covid-19 deaths, about 80% were in Wuhan.
Many countries, from developing ones like India and Indonesia to western nations like the U.S. and U.K., are still struggling to provide tests for everyone with symptoms, not to mention those without.
During the mass testing process, Wuhan found several dozen asymptomatic cases on a daily basis. The number has tapered down to single digits as testing came to an end, according to daily data released by the local health commission.
Despite having wrested its epidemic under control, China remains on high alert for sporadic infections which run the risk of a causing secondary outbreaks. A city in its northeastern province of Heilongjiang halted most of its train services last week after five asymptomatic cases were reported on a single day.
In nearby provinces Jilin and Liaoning, a cluster of over 40 infections caused authorities to levy lockdown measures over a region of 100 million people. How that cluster began remains a mystery.


fortune--2020-06-01--George Floyd protests hammer cities just as they try to reopen

The reopening of America was always going to be fraught, with competing fears of new virus outbreaks and economic meltdown. Now cities across the nation, from New York to Chicago to Los Angeles, are reeling from unrest that could worsen both.
Violence erupted in dozens of cities following the death of George Floyd, a black Minneapolis man who died after a white police officer pressed a knee into his neck for more than eight minutes. Some demonstrators broke off to rampage through shopping districts, including Rodeo Drive in Beverly Hills and Michigan Avenue in Chicago, and set fire to police cars and municipal buildings.
The chaos, amid otherwise peaceful protests, struck as the economy struggles to emerge from its coronavirus-enforced hibernation. After the Covid-19 deaths of more than 104,000 Americans, unprecedented government intervention and massive disruptions to business and everyday life, the scenes of unrest were a bleak contrast to the recent optimism of the markets. A 36% rally in the S&P 500 since March has pushed valuations to the highest in 20 years.
“I think people are coming to the realization that their jobs may not be coming back or coming back quickly. This is all conflating with the racial tensions and completely boiling over,” said Mark Zandi, chief economist at Moody’s Analytics. “This highlights the depth of despair in America,” he added, citing 20% unemployment and 50 million workers who’ve lost their jobs or had pay cuts.
The violence prompted Amazon.com Inc. to scale back deliveries and shut down delivery stations in a handful of cities including Chicago, Los Angeles and Portland. Target Corp., which had already shuttered 32 stores around its Minneapolis headquarters, said it was closing dozens more around the nation, at least temporarily. Apple Inc. issued a statement saying, “with the health and safety of our teams in mind, we’ve made the decision to keep a number of our stores in the U.S. closed on Sunday.”
The scenes of burning cars, looting, and violent arrests by baton-wielding police could reverse gains that business owners were making to lure back customers already concerned about going out in public.
After spiking in mid-March, the Federal Reserve Bank of Dallas’ new Social Distancing Index, which measures the extent of physical distancing and its relationship to economic activity, had started to decline once U.S. states began lifting restrictions on business and consumer interactions.
“The impact of the riots may be greater on the daily and weekly measures of consumer confidence, which were trending slightly upward since mid-April, but which may now post a pull-back into early June,” said Mike Englund, chief economist at Action Economics, which provides financial-market commentary.
Cities hammered by major budget hits from the pandemic can hardly afford the extra costs of police overtime, security measures and damages from the protests. Even before the demonstrations, the Fed and Trump administration have been under mounting pressure to do more for states and municipalities.
Progressive activists have questioned municipalities’ financial support for police departments as other services are cut.
Chicago Doubts
The unrest cast doubt on the partial reopening of businesses that Chicago planned for Wednesday. Mayor Lori Lightfoot, who imposed a 9 p.m. to 6 a.m. curfew on the city, restricted access to the downtown area to those who work or live there, and essential workers. At Lightfoot’s request, Illinois Governor J.B. Pritzker is sending 375 National Guard soldiers to the city, and all bus and rail service was suspended from 6:30 p.m. Sunday until Monday morning.
Lightfoot said the violence had forced the city to consider postponing the reopening of the businesses, which have been closed for 10 weeks. “To see their hard work and their money and resources literally go up in flame, their property reduced to kindling, that’s heartbreaking,” she said.
About 135 properties in Chicago’s central business district sustained millions of dollars in damages, and that number is expected to rise as more reports come in, said Kimberly Bares, president and chief executive officer of the Magnificent Mile Association. “We were focused on sanitation and cleanliness and creating a safe place for people to come back post Covid-19. Now we have to work on making sure people feel safe anywhere they go.”
Washington D.C. Mayor Muriel Bowser said Sunday she was concerned the protests could spark another increase in coronavirus cases in a city that started the first phase of its reopening on May 29.
“We saw a mass gathering, basically — we’ve been working hard for the last eight, 10 weeks on not having any mass gatherings,” Bowser said.
New York City Mayor Bill de Blasio raised similar concerns about a possible rise in virus cases because of the proximity of people at protests, which he called “inherently dangerous.” The city still has not met its threshold for available hospital beds to qualify for its scheduled June 8 reopening.
De Blasio said the violence wouldn’t delay the city’s plan to restart its construction, manufacturing, wholesale and curbside retail businesses. But the costs of policing the city during days of protests must be added to a budget already under stress from the lockdown’s economic costs.
“We certainly have had to employ a lot of resources for a few days and I think it could potentially go on a few more days. But I don’t think it will go on forever,” he said during a news briefing. “In terms of impact on our restart, I don’t see one. In terms of impact on our budget – something but nothing profound.”
Amazon Deliveries
The unrest has dented the supply lines feeding the U.S. economy. Amazon delivery drivers in Chicago and Los Angeles received messages Saturday night that said: “If you are currently out delivering packages, stop immediately and return home. If you have not completed your route, please return undelivered packages to the pick-up location whenever you’re able to do so.”
Some of CVS Health Corp.’s stores were damaged in the protests but no employees were hurt, spokesman Mike DeAngelis said in an email. A number of the stores were closed as a result, and some others were temporarily closed as a precaution.
Almost 30 of Rite Aid Corp.’s drugstores were affected by the protests, though no employees were injured, spokesman Brad Ducey said in an email. Walgreens Boots Alliance Corp. spokesman Jim Cohn said some Walgreens stores had been damaged and closed, but he didn’t give a precise number.
The fury over Floyd’s death comes as black Americans are dealing with a disproportionately heavy impact on their health and finances from the virus. In New York City, African-Americans have a higher rate of infection than other races, according to city data. A McKinsey & Co. report found that 39% of jobs held by black Americans are at risk from furloughs or layoffs due to the shutdowns meant to curb the spread of the pandemic.
Del Shea Perry, who filed a lawsuit alleging her son died in a Minnesota jail after getting inadequate medical care, spoke at a protest in St. Paul, Minnesota, on Sunday. She said she doesn’t condone the looting, but it reflects building frustration in the community over the deaths of black men like her son and Floyd. “Why must we fight like this to get justice?” she said.
People have stepped in to aid businesses affected by the protests in Minneapolis, with hundreds of residents joining the cleanup effort. More than $800,000 was raised on GoFundMe to help rebuild Scores Sports Bar, which delayed its opening during the pandemic only to be destroyed in the protests.
In Chicago, the South Loop neighborhood was one of the hardest hit areas. The long list of businesses hit by looting or vandalism included Trader Joe’s, Kasey’s Tavern, which holds the city’s second oldest liquor license, pet store Kriser’s Natural Pet, Bulldog Ale House and a knitting shop.
Many residents on Sunday morning took to the streets to help sweep sidewalks of broken glass from looted businesses.
“So many people have stopped by to buy brooms,” Mike Wiese, manager at Gordon’s Ace Hardware, said. The store’s cash registers were too damaged overnight to do any transactions, so he’s been giving the brooms away and asking people to come back later to pay.
By Sunday afternoon, similar efforts were underway in Los Angeles. Scores of young people, many of whom had been protesting the day before, were cleaning up graffiti and sweeping streets. Many structures, including an iconic tower at the Original Farmers Market in the Fairfax district, had already been painted clean.
Los Angeles hotel owners Peter and Ellen Picataggio boarded up the windows of their Farmer’s Daughter hotel in the Fairfax district before the neighborhood erupted in violence Saturday night with stores looted nearby. Fortunately for the Picataggios, their damage was limited to a stolen fire extinguisher and graffiti tagged on the plywood.
Reservations had just begun to pick up after a lockdown had limited hotel bookings to as few as one or two a night. He thinks the recovery will still come.
“Do I think this will impact it?,” Peter Picataggio said. “No, I think it will be a blip. If it ends here, I don’t think there will be a long term impact.”
Heather Johnson, a buyer for a shoe shop, works with the owner of Shiekh Shoes, a family-owned store that started in the Bay Area. On Saturday, thieves stole all of the merchandise and damaged the fittings on the walls.
“I don’t know how we’re going to bring the store back to life,” she said. “It’s going to be really, really hard.”


fortune--2020-06-01--Read Apple CEO Tim Cook’s memo on George Floyd protests

Apple Inc. Chief Executive Officer Tim Cook said protections for people are “still not universally applied” as he discussed discrimination and inequality in the U.S. in an internal memo to employees.
Cook, who has spoken up for human rights and against inequality, made the comments after the killing of George Floyd in Minneapolis that sparked protests and riots across the country on Saturday night. Many employees have raised concerns about discrimination in their communities, according to the memo obtained by Bloomberg News.
The Apple executive said that the company would be donating to a number of groups, including the Equal Justice Initiative, a non-profit focusing on racial injustice. The iPhone maker will also offer a two-for-one match for employee donations in the month of June.
“We have to reexamine our own views and actions in light of a pain that is deeply felt but too often ignored,” Cook said. “George Floyd’s death is shocking and tragic proof that we must aim far higher than a ‘normal’ future, and build one that lives up to the highest ideals of equality and justice.”
With protests taking place in cities across the country Sunday, the company said it temporarily shuttered the majority of its U.S. stores, citing the “health and safety” of its employees.
Cook’s memo in full is below:


fortune--2020-06-02--TikTok apologizes after being accused of censoring black users

What history can teach us about the economic impact of the coronavirus pandemic

TikTok apologized on Monday after complaints that posts with the hashtags #BlackLivesMatter and #GeorgeFloyd were marked with zero views on the popular short-video app.
Users accused TikTok, owned by China’s ByteDance, of censoring black voices during protests that erupted across the U.S. after the death of George Floyd at the hands of police in Minneapolis.
Some TikTok users changed their profile pictures to a raised black fist symbolizing black power, while urging others to unfollow users who didn’t support the protest over what one popular TikTok user called “the unfair censorship of black creators.”
“We acknowledge and apologize to our Black creators and community who have felt unsafe, unsupported, or suppressed,” Vanessa Pappas, TikTok U.S. general manager, and Kudzi Chikumbu, director of creator community, wrote in a blog post.
The company said it was not censoring posts and blamed a display issue stemming from a technical glitch that affected wide array of hashtags. In reality, videos with the #BlackLivesMatter hashtag have generated more than 2 billion views, according to TikTok.
“We understand that many assumed this bug to be an intentional act to suppress the experiences and invalidate the emotions felt by the Black community,” Pappas and Chikumbu wrote. “And we know we have work to do to regain and repair that trust.”
TikTok said it would create a special council to amplify diverse voices and will donate $3 million to nonprofits that help the black community and $1 million to fight racial injustice and inequality in the U.S. The company also said it would shut certain sound features on the app on Tuesday in solidarity with “Black Out Tuesday,” a protest by the music industry.
“Words can only go so far. I invite our community to hold us accountable for the actions we take over the coming weeks, months, and years,” said Kevin Mayer, who took over as TikTok chief executive officer last month, in a separate post on TikTok.
TikTok has been accused of censorship before, including allegations that it suppressed posts related to anti-government protests in Hong Kong, as well as videos by disabled, queer and overweight creators.


fortune--2020-06-02--We can’t let the coronavirus slow the march toward gender equality

Speaking with business leaders recently, the conversation about the post-coronavirus path forward has shifted. There is now a greater focus on how to safely reopen economies, get people back to work, and repair the financial and cultural havoc this virus has wrought. In particular, there is a desire to ensure that we use this pandemic as an opportunity to rebuild society in a way that heals long-standing social inequities.
The theme of the World Economic Forum in Davos this year—held before the outbreak of COVID-19—was stakeholder capitalism, the notion that companies must look beyond shareholders and also consider the interests of customers, suppliers, employees, and the communities where they operate. Now that we are in a global crisis, it is all too easy to set aside one of the tenets of stakeholder capitalism—gender equality—as a “nice to have” rather than a “need to have.” Let’s not make that mistake.
The future of the workforce hinges on the success of major stakeholders notably absent from much of the conversation in Davos: women. A recent report from Boston Consulting Group found that closing the entrepreneurship gender gap could boost global GDP by up to $5 trillion, or 6%. There is tremendous opportunity to unlock this economic growth—but if gender issues were overlooked pre-coronavirus, there is even greater risk that they will be forgotten today.
It’s true that women are part of all stakeholder groups. Yet if we don’t explicitly include this underrepresented half of our population in the stakeholder model as we build more responsible companies, the status quo is unlikely to change. While gender equality is improving in some countries, globally only a little over half of all women participate in the workforce, versus nearly 80% of men, according to a World Economic Forum report. And pay equity still lags far behind: Women’s average income worldwide is nearly half of men’s.
And the statistics only tell half the story. Once in the workplace, women are still not regarded equally by their colleagues. This is something I know from experience. Even as the founder of a major e-commerce company, I still experience what it means to be treated differently, to be the only woman in the room. Women earlier in their careers or who haven’t had the opportunities I’ve had face this challenge even more acutely.
You’d be hard-pressed to find any corporate leader who thinks the status quo is acceptable, yet we’re not seeing many willing to act boldly or take the risks that are necessary to make real progress. That needs to change.
Achieving target numbers for board diversity—as companies like Goldman Sachs have done—is important, but not enough. Every company has an opportunity—and an obligation—to use its resources to empower female-owned small businesses and entrepreneurs.
The company I founded, Hepsiburada, has launched a companywide program that helps women entrepreneurs open virtual stores at no cost while receiving a range of benefits such as lower commissions, free cargo shipping for six months, and training in e-commerce. We even design our search results to place women-owned businesses at the top. In just three years, we have increased female merchant participation from 4% of Hepsiburada’s sellers to 20%.
We are not alone. Some companies, like S&P Global, support women entrepreneurs through mentoring and connecting women to financial services. In April, Accenture and Springboard Enterprises announced a collaboration to increase opportunities for female health tech entrepreneurs by giving them access to relevant experts and helping them secure funding. Yet examples like this are surprisingly hard to find.
The largest e-commerce companies have the scale and influence to make this a priority. I want to offer a friendly challenge to my colleagues at the other big e-commerce companies: Leverage the scale of your platforms to put opportunity for women at your core. The impact will likely be measurable and immediate.
As businesses focus on their fundamentals during the coronavirus crisis, we can’t risk putting gender equality aside. It’s not a “nice to have”; it’s a social and financial imperative.
Hanzade Dogan Boyner is the founder and chairwoman of Istanbul-based Hepsiburada, the largest privately held e-commerce company in the world.


fortune--2020-06-01--Trump threatens to deploy military unless states halt violent protests

Amid racial unrest across the nation, President Donald Trump on Monday declared himself “the president of law and order” and threatened to deploy the United States military to American cities to quell a rise of violent protests.
As Trump spoke, an incredible TV split screen developed around the White House. While he addressed the nation in the White House’s idyllic Rose Garden, a series of military vehicles rolled out front on Pennsylvania Avenue and military police and law enforcement clashed with protesters at Lafayette Park.
Trump said he would mobilize “thousands and thousands” of soldiers to keep the peace if governors did not use the National Guard to shut down the protests. Loud tear gas explosions could be heard as authorities moved what appeared to be peaceful protests in the park. The escalation came just after Attorney General William Barr came to the park to to survey the demonstrators.
According to senior defense officials, between 600 and 800 National Guard members from five states were being sent to Washington to provide assistance. Those troops were either already on the ground or will arrive by midnight.
Under the Civil War-era Posse Comitatus Act, federal troops are prohibited from performing domestic law enforcement actions such as making arrests, seizing property or searching people. In extreme cases, however, the president can invoke the Insurrection Act, also from the Civil War, which allows the use of active-duty or National Guard troops for law enforcement.
The officials said that some of the National Guard in D.C. will be armed and others will not. They said that the D.C. guard members do not have non-lethal weapons. The military police that are visible in the city are members of the Guard.


fortune--2020-06-01--What history can teach us about the economic impact of the coronavirus pandemic

We can ’ t let the coronavirus slow the march toward gender equality

The war against COVID-19 is unlike other wars in that the enemy is invisible and inhuman, without armies, generals, or deadly hardware, and all the more insidious for being microscopic. Yet in terms of its economic consequences, the global struggle against the coronavirus does resemble previous wars in some—but not all—respects. As countries tackle reopening, history can provide helpful clues about what to expect next, in terms of the speed of recovery, potential winners and losers, and the changed role of government.
The current economic cycle is similar to the mass mobilization of the two world wars. This time, though, the mobilization is happening in reverse, an at-home mobilization of residents being asked to stay home, forgo paychecks, and risk unemployment rather than enlist to fight.
Government spending has ramped up to finance this reverse mobilization, paying workers directly or through their employers, just as it did soldiers in war. Across Europe’s five largest economies, more than 30 million furloughed workers continue to receive much or all of their pay via government subsidies to companies. In the United States, roughly half the Coronavirus Aid, Relief, and Economic Security (CARES) Act package includes direct payments to households, expanded unemployment benefits, and paycheck protection for employed workers. This at-home mobilization, which totals to about $1.23 trillion, amounts to nearly 6% of U.S. GDP—roughly the U.S. military budget’s share of GDP in 1941.
Government during the two world wars became the primary actor and purchaser in the economy—and while that isn’t yet the case in this crisis, its role has certainly grown substantially. At the start of the First World War, government consumption in Britain jumped from 8% of GDP in 1913 to nearly 40% in 1917, according to analysis of the Bank of England’s millennium data set. During the Second World War, America’s government consumption rose from 15% of GDP in 1940 to 48% by 1943.
Public debt today is much higher to begin with, and central banks have massively increased their assets. The U.S. federal balance sheet jumped from about $4 trillion in 2019 to $7.1 trillion, and in Europe, central bank assets have also risen sharply, increasing in recent months by around 800 billion euros ($887 billion) to 5.5 trillion euros ($6.1 trillion). The public purse is thus already as stretched in many countries as it was at the end of the Second World War. Yet, if this wartime economy continues for more than one or two quarters, growth in government consumption is what will keep GDP growth going as households cut back on consumption, businesses cut back on investment, and exports fall.
As in previous wars, there are likely to be clear winners and losers among sectors. Resources move quickly from one area to another in wartime. Governments call the shots for anything deemed strategic, from tanks to food. Meanwhile sectors that depend on households’ discretionary spending could see a fall in output; between 1941 and 1944, for instance, urban American households reduced their spending on household furnishings, appliances, recreation, and entertainment by 25%, according to analysis of data from the U.S. Bureau of Labor Statistics. Likewise, during this pandemic, economic loss has been disproportionately in sectors affected by the lockdowns, like the transportation, entertainment and recreation, and hospitality industries.
The war analogy does not always hold up. During the two world wars, mobilization ramped up to absorb all the slack in the economy, tightening the labor market, and raising inflation. Unemployment essentially disappeared. Today, it is hard to imagine that most of the 33 million U.S. workers that filed for unemployment since the pandemic spread or the 30 million furloughed workers in France, Germany, Italy, Spain, and the U.K. will be absorbed by mobilization. Instead, countries may settle for a half-normal situation, one in which travel and hospitality operate well below capacity, bankruptcies and financial hardships continue at a steady pace, and persistent worries remain about a new wave of infections.
Could this war end with a recession? That is what happened in the U.S. after both world wars, the American Civil War, and the Korean War. While government consumption shrank quickly, households did not have the income growth to step up as economic engines. This time, some of the conditions for a post-pandemic slowdown have already been seeded. Governments will pull back their extraordinary fiscal measures, and rising public debt could trigger concerns and calls for cutbacks and austerity. Household spending may take time to recover if unemployment continues to be high.
This pandemic has highlighted the economic insecurity of millions. But if the past is a guide, social reforms could follow. In Britain, France, and some other European countries, major welfare reforms were enacted during or at the end of the Second World War. In the U.S., the GI Bill gave returning soldiers an opportunity to upgrade their skills and education. Thus, the post-pandemic recovery could potentially accelerate changes such as universal incomes, remote work, and greater resilience for households, workers, and companies in supply chains. If such changes are enacted, we could end up with a renewed social contract that improves income security, expands access to technology, and creates a rising tide of productivity and economic prosperity.
Gary Pinkus is chairman of North America for McKinsey.
Sree Ramaswamy is a partner at the McKinsey Global Institute.
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fortune--2020-06-01--A look at the antifa movement Trump is blaming for violence

President Donald Trump has blamed antifa activists for violence at protests over police killings of black people, but antifa isn’t an organization and targeting it isn’t simple.
A look at what antifa is and is not:
What is antifa?
Short for “anti-fascists,” antifa is not a single organization but rather an umbrella term for far-left-leaning militant groups that confront or resist neo-Nazis and white supremacists at demonstrations.
There is no hierarchical structure to antifa or universal set of tactics that makes its presence immediately recognizable, though members tend to espouse revolutionary and anti-authoritarian views, said Mark Bray, a historian at Rutgers University and author of “Antifa: The Anti-Fascist Handbook.”
“They do different things at different times in different ways, some of which there is evidence of them breaking the law. Other times there is not,” Bray said.
Literature from the antifa movement encourages followers to monitor the activities of white supremacist groups, publicize the personal information of perceived enemies, develop self-defense training regimens and compel outside organizations to cancel any speakers or events with “a fascist bent,” according to a 2018 Congressional Research Service report.
People associated with antifa have been present for significant demonstrations and counterdemonstrations over the last three years, sometimes involving brawls and property damage.
They mobilized against a white supremacist march in Charlottesville, Virginia, in August 2017 and have clashed repeatedly with far-right groups in Portland, Oregon, including at a rally last summer that resulted in arrests and the seizure of shields, poles and other weapons.
What role is antifa playing in these demonstrations?
Trump and members of his administration have singled out antifa as being responsible for the violence at protests triggered by the killing of George Floyd, a black man who died after a white Minneapolis police officer pressed his knee into his neck for several minutes even after Floyd stopped moving and pleading for air.
In a pair of statements over the weekend, Attorney General William Barr described “antifa-like tactics” by out-of-state agitators and said antifa was instigating violence and engaging in “domestic terrorism” and would be dealt with accordingly.
White House press secretary Kayleigh McEnany told reporters Monday that antifa is a “big element of this protest,” though deferred to the Justice Department on the question of how one could be identified as a member.
But it’s unclear how big its involvement is.
Bray said that although he believes people associated with antifa are participating in the demonstrations, it is difficult to determine how big of a role they’re playing since there is no membership uniform or calling card and since the movement lacks the numbers to mobilize nationwide in such a dramatic, forceful way.
“The radical left is much bigger than antifa, much, much bigger, and the number of people who are participating in the property destruction are much, much bigger than the radical left,” Bray said.
Others have seen evidence of right-wing extremists.
What does the Trump administration want to do about antifa?
Trump tweeted Sunday, “The United States of America will be designating ANTIFA as a Terrorist Organization.”
It’s not the first time he’s endorsed that approach. Trump tweeted a similar sentiment last summer, joining some Republican lawmakers who called for antifa to be designated as a terror organization following the skirmishes in Portland.
Can the administration do that?
For one thing, antifa is not a discrete or centralized group, so it’s unclear how the government could give it a designation.
Beyond that, though, antifa is a domestic entity and, as such, not a candidate for inclusion on the State Department’s list of foreign terror organizations. Those groups, which include Islamic extremist organizations and the Real Irish Republican Army, are based overseas rather than in the U.S.
That designation matters for a variety of legal reasons, not least of which anyone in the United States who lends support to an organization on that list can face terrorism-related charges.
But “there is not a domestic equivalent,” said Joshua Geltzer, a former senior counterterrorism official in the Obama White House and founding executive director at the Institute for Constitutional Advocacy and Protection at the Georgetown University Law Center.
There have been periodic calls, particularly after mass shootings by white supremacists, to establish a domestic terrorism law, but none has passed.
Asked Monday what legal authority the president would have for labeling antifa a terror organization, McEnany pointed to the existing statute under the U.S. criminal code that defines acts of domestic and international terrorism.
But defining an act of terrorism is different than designating an entire group as a terror organization.
“US law does the 1st. It doesn’t permit the 2nd,” Geltzer tweeted after McEnany’s remarks.
Even if antifa is not a designated terror organization, FBI Director Chris Wray has made clear that it’s on the radar of federal law enforcement. He has said that while the FBI does not investigate on the basis of ideology, agents have pursued investigations across the country against people motivated to commit acts of violence “on kind of an antifa ideology.”


fortune--2020-06-01--Local and state leaders plead for more federal pandemic aid

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One small-town Oklahoma mayor testified before Congress she’s worried the city’s 18-bed hospital can’t handle a second COVID-19 wave. Many counties are slashing sizable chunks of their government work force. States are staring down red ink as the fiscal year comes to a close.
As local leaders are pleading for more federal aid — even before protests over police violence erupted in almost every corner of the country — the Senate resumed session Monday with no immediate plans to consider a fresh round of relief. Instead, Senate Republicans are focused on ending the pandemic’s stay-home economy by trimming unemployment benefits to push some of 41 million suddenly jobless Americans back to work when jobs return.
The standoff is perhaps standard Washington negotiating, but “they’re playing a very dangerous game of chicken,” said Meredith McGehee, executive director at Issue One, which advocates for a government reforms to ease political gridlock.
Congress is confronting mounting crises — the virus outbreak, the shattered economy and now nationwide protests over the killings of black people at the hands of police — all crashing into an election year. It’s a moment that calls for steady leadership. But the House is working remotely rather than risk convening in the pandemic, while the Senate wants to wait to see if nearly $2 trillion in previously approved aid is sufficient while it focuses on President Donald Trump’s priorities.
A bipartisan group of economists called on Congress Monday to provide $1 trillion in additional aid to states and cities.
Mark Zandi, chief economist at Moody’s Analytics, said roughly 3 million state and local government employees could lose their jobs in the next year — in addition to the nearly 1 million that have already been laid off.
“I can’t imagine a successful (relief) package without that,” said Glenn Hubbard, an economist at Columbia University and a former economic adviser to George W. Bush, on the conference call organized by the liberal Economic Policy Institute. “This is about as close to a no-brainer that you could do as possible.”
Republicans pushed ahead with the back-to-work strategy.
Rep. Kevin Kevin Brady of Texas, the top Republican on the Ways & Means Committee, introduced legislation for a return-to-work bonus — two additional weeks of an existing $600 weekly jobless benefit if recalled employees go back to workplaces. Senate Republicans are mulling a similar proposal.
Republicans worry that the $600 unemployment boost is preventing workers from returning to their jobs. They also want to develop a liability shield to protect businesses that do reopen from lawsuits related to COVID-19.
Senate Majority Leader Mitch McConnell has said the Senate won’t be considering the $3 trillion “grab bag” of the House-passed Heroes Act, which includes almost $1 trillion in aid to the states and cities.
Republicans who control the chamber will also focus on investigations Trump wants of the Obama administration’s handling of the probe of Russian interference in the 2016 election.
McConnell on Monday urged the federal government to intervene if necessary to end the wave of national protests following the death of George Floyd in Minnesota. Reading the names as he opened the Senate, McConnell said Floyd’s death, along with those of other black Americans — Ahmad Arbery and, in his home state of Kentucky, Breonna Taylor — do not appear to be simply three isolated incidents but rather “the latest chapter in our national struggle to make equal justice and equal protection under the law a fact of life for all Americans.”
In urging action from Congress, House Speaker Nancy Pelosi on Sunday linked Floyd’s death in Minnesota to the “injustice” of the virus outbreak’s impact on African American and other minority populations.
Democrats are quickly focusing on a legislative response to the police involvement in Floyd’s death, including a proposal Monday from Sen. Cory Booker, D-N.J., for a comprehensive overhaul of law enforcement tactics.
Senate Democratic leader Chuck Schumer called on McConnell to cancel the “conspiracy hearings” and focus on law enforcement reforms and the mounting health and economic crises of COVID-19.
Deadlines are fast approaching. Most states have budget deadlines with the new fiscal year starting July 1. The $600 boost to unemployment benefits approved in the previous CARES Act aid package is set to expire July 31. Small businesses that tapped the Paycheck Protection Program will start seeing loans come due without adjustments by Congress.
Teryn Zmuda, chief economist at the National Association of Counties, said local governments have been ”on the forefront” of the COVID response but there is a dollar amount associated with that.
Many jurisdictions faced the double whammy of increased overtime pay for essential workers and declining revenues as stay-home orders cut sales and gas taxes, toll fees and other revenue streams.
At a hearing of the new House Select Subcommittee on the Coronavirus Crisis, Mayor Mary Jane Scott of Mangum, Oklahoma, testified Friday that the area’s small hospital, which receives patients from across the rural region, was overloaded when the community faced an outbreak. She can’t imagine trying to withstand a second wave.
Republicans argue against what some call bailouts for states, warning some have overextended with generous services, pensions or mismanagement.
Sen. John Thune, R-S.D., the majority whip, said at a Friday forum with a conservative group that Congress has already “flooded the zone” with a “staggering amount” of funds.


fortune--2020-06-01--Police scanner apps surge as protests grip America

“They just reported a building engulfed in flames.”
“Gunshots in my area. Currently freaking tf out. I’m not getting sleep tonight. 🤦♀“
“Bro I literally live 5 minutes away from this, hearing this is making me shake 🥶.“
Police radio scanner apps have exploded in popularity since protests erupted across America over the death of George Floyd, a black man who died in Minneapolis police custody last week. The apps allow volunteers with special radio equipment to broadcast first-responder communications to thousands of listeners online.
The comments above were from an online message board associated with one such app, 5-0 Radio Police Scanner, which soared to the top of the iPhone download rankings over the weekend. Costing $5, the app became the most downloaded in the “top paid apps” category in Apple’s App Store.
Another version of the 5-0 app that’s free vaulted over TikTok, Twitter, YouTube, Facebook, and Instagram—no small feat—to place third in “top free apps” in the App Store. However, the app could not touch Zynn, effectively a TikTok clone, and Zoom, the unshakeable videoconferencing app, which maintained the Nos. 1 and 2 spots on the “free app” leaderboard, respectively.
Interest in rival police radio scanner apps has been surging amid the current strife. Among the top 10 “free” apps on Monday were rivals Citizen (No. 5) and Police Scanner Radio & Fire (No. 7), while Broadcastify Pro ($3, No. 13) and Police Scanner + Pro Edition ($5, No. 17) were among the “top paid.”
Protesters and bystanders alike are flocking to the eavesdropping apps as people seek to keep tabs on flare-ups of civil unrest. The apps offer raw, real-time information about incidents involving looting, fires, shootings, as well as the deployment of law enforcement officers.
Some government officials and law enforcement oppose the apps. Fearing that smartphones have made it too easy for criminals and others to track their pursuers, some police departments are moving to encrypt their radio communications to prevent eavesdropping.
Tuning in to the free version of the 5-0 app on Monday, Fortune listened to crackle-voiced reports of missing persons, the whereabouts of suspects, and descriptions of vehicles followed by police officers in various U.S. cities, including Los Angeles, Chicago, and Davenport, Iowa. The snippets of conversation represent reports from in the field, including some unverified claims and misleading information.
While the protests and state countermeasures have provoked angst, disruption, and violence nationwide, the situation has created a lucrative opportunity for the entrepreneurs behind these apps.
In a statement to Vice Motherboard, which first noted the surge in popularity of police scanner apps, Allen Wong, the 5-0 app’s developer, described the rush of interest as “the largest spike overall” since the app’s debut more than 10 years ago. For four days running, “the numbers of users have almost doubled the previous day,” Wong added, noting that “almost half a million active users” had tuned in on Sunday.
Protests and conflict continued to unfold on Monday. As one 5-0 app user put it to another user worried about an onrush of police sirens: “Don’t stress out. Just breathe and it will be ok. Stay safe.”


fortune--2020-06-01--The stock market has a long history of ignoring social upheaval

Markets closed higher on Monday, as investors largely ignored widespread protests over the weekend and looked instead to optimism over the economy beginning to recover.
Despite increasing civil unrest this weekend due to protests in cities all across America following the killing of George Floyd by police in Minneapolis, the S&P 500 rose roughly 0.4% and the Dow followed suit on the first day of June.
“The markets are taking in stride a lot of concerning political developments and an economy that is just emerging from a nationwide lockdown,” says Edward Jones’ Nela Richardson. “One of the reasons is that markets are forward-looking, so they’re not just looking at present circumstances.”
Markets continued gains from last week, as investors watch for optimism around the slow reopening of many states and marginally higher manufacturing numbers. The Institute for Supply Management’s May manufacturing index rose to 43.1 from 41.5 in April, up from a four-month decline, the ISM reported on Monday. Eli Lilly also reported starting a human trial for its coronavirus antibody treatment amid a backdrop of disappointing virus drug testing results from those including Gilead Sciences.
Yet market observers may be scratching their heads at why markets have seemed to brush off much of the horrible headlines in recent weeks—from massive unemployment numbers to nationwide outrage over the death of Floyd and other African-Americans at the hands of police.
Edward Jones’ Richardson suggests the market has consistently looked to the unprecedented fiscal response and support from the Fed and the federal government, “rather than the near-term challenges that the country is facing, both economically when it comes to the job losses, the drop in 2nd quarter GDP, and politically—the fact that we are seeing such a divisive and polarized reaction nationally in an election year,” she notes.
Historical impact
Historically, “social unrest issues have very little long-term impact on markets,” David Trainer, CEO of investment research firm New Constructs, said in a note Monday.
During previous periods of civil unrest and protests, markets similarly largely ignored tumultuous events. After the assassination of Martin Luther King Jr. in 1968, markets dipped briefly on the day of his death, down 0.5% from April 4 to April 5, but rose roughly 3.5% by April 11, 1968. Similarly, the riots following the acquittal of police officers who had beaten motorist Rodney King in 1992 didn’t disrupt markets too dramatically, as the S&P 500 remained relatively flat from the beginning of riots on April 29 to May 1, and rose some 1.2% from April 29 through May 4, 1992. In 2014, the riots in Ferguson, Mo., triggered by the fatal shooting of Michael Brown by police, prompted markets to fall only 0.16% on the Monday through Tuesday following the start of protests on August 9, and saw markets gain 2.86% from August 11 through August 21, 2014.
In fact, strategists and analysts suggest markets often disconnect from horrible realities and headlines. Even in 1968, markets finished the year up over 7%. “1968 was the year that ‘shattered America’ and many tumultuous events and violence took place in that year. And despite that, the equity markets managed to perform solidly,” Tom Lee, head of research at Fundstrat Global Advisors, wrote. “1968 is a reminder that stocks and world events are not always connected.”
Second wave, unemployment, and China concerns
While the impact of nation-wide protests on markets and consumer sentiment may remain to be seen, investors are grappling with several other headwinds this week.
According to those like Richardson, “the identified, big bad villain” in the recovery is the potential for a second wave of the coronavirus—and as the economy begins to reopen, the threat of spiking infections is a top concern.
Some voiced worries that “mass gatherings could spark concerns about a second wave of the virus,” Lori Calvasina, head of U.S. equity strategy at RBC Capital Markets, said in a note Monday. “Second wave fears could halt reopening or keep behavior cautious.”
Richardson suggests that “whether that second wave comes from a bunch of people having a pool party or something more extreme to watch, which is mass protests, … the full spectrum of that civil engagement … is a concern,” she says.
Additionally, fears over increasing tensions between the U.S. and China persist, following new reports that China is telling some agricultural companies to pause purchases of American farm goods, according to Bloomberg, which could throw the U.S.-China trade deal into jeopardy. (On Friday, President Trump said the U.S. would end its preferential trade treatment toward Hong Kong.)
And while markets have largely brushed off abysmal unemployment numbers in recent weeks, Richardson for one will be watching jobless claims on Thursday, and looking for signs that much of the job losses are temporary. “If there’s a change in that narrative, I think that would have an effect on the markets,” she says.