fortune--2020-03-18--The global wine industry faces an unknown future in the wake of COVID-19

Trillions in stimulus spending fail to rally the global markets

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The wine industry has had a rocky start to the decade. In October, a 25% tariff was imposed on French, German, and Spanish wines imported into the United States as a retaliatory measure against Airbus aircraft subsidies, and in January the industry narrowly avoided a 100% tariff on all wines imported from the European Union into the U.S., a proposed response over a digital tax dispute.
Now and for the next several months, at least, the global wine economy again finds itself on uncertain ground with the coronavirus outbreak.
Exports
Italy has been one of the countries hit hardest by the virus, and with an entire nation under lockdown, the effects are being felt. Frescobaldi Toscana Group in Tuscany exports 67% of its production and first felt the impact when the company “lost the China market,” says Lamberto Frescobaldi, president of the winery, via email, during the initial wave of the virus. Although the unprecedented nature of this pandemic makes it difficult to form projections, he believes the virus’s trajectory toward other major markets—including the U.S., Canada, and Germany—will affect business within the next few weeks.
Lamberto Frescobaldi oversees seven estates in the Italian region of Tuscany. Courtesy of Frescobaldi Toscana
Matteo Ascheri, president of the Consorzio di Tutela Barolo Barbaresco Alba Langhe e Dogliani—the governing body of Barolo and Barbaresco wines in Piedmont, Italy—notes that German accounts are starting to cancel orders, and with 80% of its production exported, it’s an ominous sign.
“The major concern is that now with the situation spreading all over the world and other economies in Europe and the U.S., in the midterm, this can be even a worse problem than we’re facing nowadays here in Italy,” Ascheri says. “At the end of the day, we need to export. It’s a major part of our business.” He notes they are still able to ship without too much disruption. A few infrastructure slowdowns due to low employment create some delays, but wines still circulate through the normal logistical paths toward distribution for now.
Italy’s quarantine has trickle-down effects for other countries. Foulques Aulagnon, export market manager for Conseil Interprofessionnel des Vins d’Alsace (CIVA)—the trade organization for wines from Alsace, France—notes that Italy is restricting imported wines; bottles destined for supermarkets and small food shops can still get through. But wine orders designated for restaurants, bars, and wine shops aren’t making it into Italy. As Alsatian wines are primarily sold through these latter channels, exports into Italy have precipitously dropped. Aulagnon says he won’t have exact numbers for another month or so, but it’s easy to see how this interlinked web of distribution could easily disrupt the wine industry worldwide.
Travel and tourism
With scenic vineyards, well-appointed tasting rooms, and luxury accommodations, wine country is a hot destination—or was, until COVID-19 essentially stopped all travel. According to a recent Fortune survey, “68% of Americans who had international travel plans are either likely to cancel (45%) or have already canceled (23%).”
For wineries, the loss of traffic means diminished revenue as well as a loss of awareness among drinkers. Frescobaldi, who owns seven properties in bucket-list destination Tuscany, admits, “Frankly, it will be a very painful year. Italy relies on over 50 million tourists. We are facing to lose most of that business.” In addition, without an operating hospitality sector, wineries lose placements in restaurants and hotels that cater to visitors.
The lack of travel also impedes business development for wine companies and producers. Major trade shows such as ProWein in Düsseldorf, Germany, and Vinitaly in Verona, Italy, were canceled.
L’Aventure winery in Paso Robles, Calif., counts exports as 20% of its business. Brandon Stier Photography
For individual brands, not being able to work a market can harm sales. When speaking about the Hong Kong market, Chloé Asseo-Fabre, who oversees sales, marketing, and communications for L’Aventure—her family’s winery based in Paso Robles, Calif.—says, “We did our release back in September, so at the time there were no issues, and everybody got the wine. However, now for the promotion part of it, which is where traveling comes in, that’s where it gets trickier.” Current plans to visit Europe and meet with contacts are currently on hold for her as well.
Local consumption
Sales to restaurants and bars have plummeted around the world as venues close at an exponential rate, which has been one of the biggest blows to the industry. However, Rob McMillan, executive vice president and founder of Silicon Valley Bank, a financial service provider for the wine industry based in Napa, Calif., doesn’t think the situation is dire. He likens the current climate to the 2008 stock market crash.
“Back then we said wine is recession-resistant but not recession-proof,” McMillan explains. “Today we say wine is disease-resistant, but not disease-proof.” An average-size winery generates about 20% of its sales from restaurants, according to McMillan, a figure that will assuredly hurt a winery’s bottom line.
But there is a silver lining. In the U.S., “we don’t have to look further than Prohibition to know that people will still consume alcohol, especially if it’s a regular part of their lives,” he says. McMillan anticipates consumption will shift to the home, and people will order more online, buy directly from wineries, or place orders with stores that deliver. For the industry, this means a shift in sales channels, not a death knell. As evidence, the alcohol delivery app Drizly’s sales grew at a rate 50% faster the week of March 2 than the previous week, and March 12 was the company’s largest day for sales ever, according to a representative.
Although COVID-19’s ultimate effects are untrackable at this stage, CIVA’s Aulagnon has a vision: “When the crisis is over, people will consume more than ever.”
More must-read stories from Fortune:
—How coronavirus is affecting the global concert industry
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—Some of the most extreme ways companies are combating coronavirus
—How Europe is adapting to the coronavirus outbreak
—China’s box office was supposed to surpass North America’s this year.
—Growing coronavirus threat weighs on Apple
—Nearly half of American travelers are reconsidering their international trips due to coronavirus
Subscribe to Fortune’s Outbreak newsletter for a daily roundup of stories on the coronavirus outbreak and its impact on global business.


fortune--2020-03-18--Trillions in stimulus spending fail to rally the global markets

The global wine industry faces an unknown future in the wake of COVID-19

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. If yesterday was an “up” day then…yep, the rally is off. We’re solidly in the red today as the sugar rush of stimulus talk fades into global recession fears. The U.S. futures even triggered the limit down cool-off this morning. Again.
Let’s take a spin around the world to check in on global markets.
Markets update
We begin in Asia where all major indices are faltering. Sri Lanka and the Philippines have taken the unusual step of closing their markets as the ultimate circuit breaker measure. But there is a sliver hope: FedEx is seeing signs of a comeback in China.
Further west, Europe and the U.S. futures are following the Asia lead into negative territory. The Euro Stoxx benchmark opened down 1.58% today with most sectors in the red. News that the European Union is partially shutting its borders to combat the COVID-19 spread is spooking the markets.
Across the Atlantic, the Dow looks set to open about 820 points lower, as I type, wiping out a good chunk of yesterday’s gains. Clearly, Joe Biden’s primary sweep overnight is barely on investors’ minds.
On Tuesday, we had a big rally in the U.S. as details of a series of stimulus packages came in from both sides of the Atlantic. The markets cheered the various goodies proposed by the Trump Administration. The whatever-it-takes measure includes a tax holiday, checks in the mail, and small-business loans. Add it all up and the price tag for the U.S. measures could top $1.2 trillion. TARP seems downright wimpy in comparison.
The Fed was busy too, giving banks more firepower to lend to distressed companies and, in a recession-era move, intervening directly in the commercial paper market to prevent the kind of paralyzing credit crunch we saw at the height of the 2008-2009 financial crisis.
Today, the focus is on the economic impact of this devastating pandemic. Goldman Sachs and Morgan Stanley agree: we’re already in a global recession. (They’re hardly the only ones making such a call.) Closing bars, restaurants, office buildings and effectively slamming the brakes on global travel will put millions out of work.
In fact, Treasury Secretary Steven Mnuchin briefed GOP senators that unless they go big on stimulus the unemployment rate could soar to 20%. Twenty.
Elsewhere, the dollar is crushing global currencies again and crude continues to fall. And gold is down.
Let’s recap. It’s been a tumultuous week-and-a-half stretch. Just look at today’s chart.
***
Volatile times
Even after yesterday’s 6% rally, the S&P 500 is down nearly 15% since March 6. A lot’s happened in that time. We had the OPEC talks collapse, tanking crude. We had the Trump Administration finally acknowledging coronavirus poses a real threat to the economy. And then, yesterday, a series of stimulus plans, pledges of trillions of taxpayer’s money to get us through this historic contagion.
Taken all together and you can see why the markets have been so volatile. This health crisis is still raging in Europe. The scenes from the north of Italy are devastating. Nobody on the frontlines here dares even predict when we may see the peak. And so volatility will be with us for a while.
Postscript
I volunteered to go to the supermarket yesterday evening for some supplies. I was happy to get out of the apartment. It’s a chore that seems more alien by the day. Romans are not known to be the most courteous lot, but they’re doing their level best to respect the social distancing rules (it’s one meter here) and they’ve all but eliminated the national pastime of queue jumping.
Outside, there is almost no automobile traffic in my ordinarily bustling neighborhood of Rome. But that’s not to say the place is church-like. When I stepped out of the supermarket yesterday evening it was as if I’d been transported to a karaoke festival. It was a few minutes after 6 p.m., the flashmob hour in which Italians get on their balconies, blast music, play instruments and sing.
My neighborhood is a bit lame, to be honest. There are no stirring renditions of Figaro. But what they lack in talent, they more than make up for in enthusiasm. And volume. Yesterday evening, clusters of Romans were singing along to Volare. “Oh, oh. Cantare. Oh, oh.”
Okay, basta.
The songs are corny, even groan-worthy. The best kind.
I stood on the street, bulging shopping bags in hand, totally caught up in the emotion of neighbors serenading each other from distant balconies. The mini performance finished with the Italian national anthem. I can’t believe I know most of the words. I sang along too.
Over and out. I’ll see you here tomorrow.
Bernhard Warner
@BernhardWarner
Bernhard.Warner@Fortune.com
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Today's reads
A familiar pick. Europe’s biggest bank, HSBC, has confirmed interim CEO Noel Quinn will get the job to run the bank permanently after a seven-month search that included approaches to several high-profile outsiders. With markets melting down and the global economy headed toward recession, the bank opted for a known quantity to lead it through the mayhem, Bloomberg reports.
Zooming wealth. One billionaire has dodged the market meltdown as social distancing becomes the norm. Eric Yuan, founder of Zoom Video Communications Inc., has added $2 billion to his net worth this year, building his fortune to $5.6 billion. Demand for Zoom’s virtual conferencing software is exploding as the coronavirus pandemic prompts office closures and meeting cancellations.
PayPal warning. Dormant PayPal Credit accounts are coming back to haunt users—and hurt their credit scores. Before July 2018, neither PayPal nor its credit issuer reported to any credit bureaus. But when Synchrony, PayPal’s new partner, took over, it began reporting late payments and account closures to credit bureaus, leaving some customers shocked by an unexpected hit to their credit score, Fortune’s McKenna Moore reports.
Market candy
Goodies. Governments are taking extraordinary steps to help people through the coronavirus outbreak. Among the most unusual, the Trump administration wants to send Americans checks, possibly for $1,000, following Hong Kong’s example. France is suspending rent and utility bills for small companies. Italy will pay for babysitters and Britain is offering cash grants to retailers and pubs.


The Great Decoupling

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Good morning.
Coronavirus has replaced trade wars as the top topic of conversation for global business leaders. But the end result may be the same: further “decoupling” of the Chinese and U.S. economies. Fortune’s Clay Chandler—a long-time analyst of U.S.-China business relations—takes a look at the state of that relationship for the April edition of Fortune magazine. Digital subscribers can read his analysis online today here.
A couple of takeaways:
— Companies are actively moving to diversify their sourcing, regardless of the pause in the trade fight. Electronics retailer Best Buy, for instance, says it will reduce products made in China to 40% of the cost of goods it sells, down from 60%. CEO Corie Barry said the virus “was one more piece of evidence that will continue to put pressure on diversifying supply lines.”
— Many of the Chinese students enrolled in U.S. colleges and universities face travel restrictions that have prevented them from returning for their spring semester.
The irony, of course, is that as of this week, there are, for the first time, more cases of Covid-19 reported outside of China than within it. Indeed, the Chinese are now putting foreign travelers in quarantine to prevent new outbreaks at home. Meanwhile, tit-for-tat actions between the two countries continue: the latest was China’s decision yesterday to expel journalists working for The New York Times, The Wall Street Journal and The Washington Post. None of that helps the global economic outlook.
Other news yesterday: Marriott, hard hit by the virus-related drop in travel, said it will furlough tens of thousands of employees. Expect a steady stream of those kinds of announcements in the weeks to come, starting with the travel and oil industries—the first to be hit—but spreading to others. Fair to assume that budget conversations are going on in most companies this week, as the outlook dims.
And one last item: Since August of 2017, America’s big cap companies have repurchased a staggering $1.25 trillion in shares. Was that a smart use of their money? Well, it doesn’t look like it right now, with the market having lost all its gains since then. Particularly troubling are the big buybacks by the airlines, who, having given back all their cash, are now looking for a government bailout. You can read Shawn Tully’s analysis here.
More news below.
Alan Murray
@alansmurray
alan.murray@fortune.com
TOP NEWS
Markets fall
It was all looking good in Asia, until it wasn't. Towards the end of the day there, markets suddenly slipped into the red, with the Hang Seng down 4.2% and the Nikkei 225 down 1.7%. In Europe, the Stoxx 600 is down more than 4% at the time of writing. The S&P 500 may have gained 6% yesterday but futures look ugly. Volatility, volatility, volatility. Wall Street Journal
Government interventions
The stock-market drops follow more government interventions to mitigate the coronavirus fallout. The U.K. is putting $400 billion into the effort, mostly in the form of government-backed loans and guarantees, and the U.S. intends to deploy $1 trillion, including direct payments to households and businesses, as well as corporate loans from the Fed. Fortune
Recession scale
Deutsche Bank researchers now estimate—with an appropriate lack of certainty—that the world is about to tip into a very severe recession indeed: "The quarterly declines in GDP growth we anticipate substantially exceed anything previously recorded going back to at least World War II." (For more on the form it might take, Fortune has a recession Q&A.) DB Research
Hedge funds
Emerging markets-focused hedge funds Pharo Management and Autonomy Capital have taken significant hits this month (13% and 17% respectively) due to fears of coronavirus-induced economic damage, plus the impact of the oil price war. Financial Times
AROUND THE WATER COOLER
Changing tack
If you're wondering why the U.S. and U.K. have both drastically changed their approaches to fighting the pandemic in the last couple days, the answer lies in new forecasts by researchers from Imperial College London. In short, a strategy of slowing the virus's spread rather than suppressing it, China style, would probably kill 260,000 people in the U.K. and 1.1 million in the U.S. in the coming months. So, social distancing it is then. And when will that be over? Unfortunately, the tactic may need to be repeatedly deployed until a vaccine is found, and intrusive surveillance could become even more a part of life than it already is. New York Times
WeWork bailout
SoftBank's planned bailout of WeWork may not go ahead, according to the Journal. Apparently SEC and Justice Department probes into the business give SoftBank what it believes is an out under the $3 billion share-purchase deal it struck last fall. This is all separate from the $5 billion lifeline SoftBank agreed to give WeWork directly. WSJ
Joementum
Joe Biden is closer to the Democratic nomination for November, following big wins in the Florida, Illinois and Arizona primaries. Ohio officials postponed that state's primary, which was also due to take place Tuesday, due to the conflict between voting and social distancing. CNN
Online concerts
Musicians such as John Legend and Coldplay's Chris Martin are "touring" online as a replacement for the physical gigs they can no longer play. Estimates suggest the live music industry could lose something like $5 billion during the outbreak. CNBC
This edition of CEO Daily was edited by David Meyer.


fortune--2020-03-18--This crucial measure signals that stocks are nearing “buy” territory

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Peter Kraus spent decades at Goldman Sachs, helped pilot Merrill Lynch through the financial crisis, and for over seven years headed asset management colossus AllianceBernstein. Now, as CEO of newly launched Aperture Investments, he’s living through the coronavirus crash, his sixth financial crisis. In times of extreme turbulence, Kraus turns to what he considers the most reliable guide to pinpointing when stock prices shift from frothy to cheap. It’s a wonkish-sounding yardstick called the “equity risk premium,” or ERP.
“Determining the new ERP caused by fear in the market gives you the best point estimate for where people should say, ‘The market is cheap,’” Kraus told Fortune. He adds that with coronavirus fears prompting the 12% fall in the S&P on “Mad Monday” (a.k.a. March 16), “we’re almost there.”
The equity risk premium has been called the holy grail of investing by academic economists––and it’s the lodestar for Kraus as well. It’s simply the difference between the expected return on stocks and the what investors can garner holding supersafe U.S. treasuries. The ERP is the cushion required to compensate shareholders for the rough ride of owning equities—for weathering the wild, unforeseeable swings that can wipe out years of gains in a matter of weeks. A Rob Arnott of Research Affiliates notes, it could be renamed “the equity fear premium.”
As Kraus points out, the ERP is a volatile number. It’s low in times of economic calm and stability, and it spikes when investors view danger ahead. When the ERP jumps, investors are signaling that they’ve suddenly awakened to a much more fitful, unpredictable world. Hence, they demand extra juice from equities, because looming strife in the economy threatens to hammer what looked like a steady, strong parade of earnings.
That extra margin for safety can come only from one reaction: a drop in equity prices that raises the dividend yield, increases the number of shares companies can purchase with each $1 million in buybacks, and hence, boosts what folks can pocket in the future once the storm passes.
Kraus reckons that over the past several decades, the ERP has averaged around 3%. But, he adds, it fell far too low during the recent boom. “Over the last nine months, the market was too comfortable and complacent, and too expensive, showing low volatility for a long period,” he says. “That made me very nervous.” He adds that prices kept soaring while earnings rose only slightly, causing price/earnings ratios to expand, so that what investors could expect from stocks kept shrinking. “As a result, the ERP kept coming down,” he says. “That was a sign that the markets were fragile.”
The shift from exhilaration to near terror has swelled the ERP, says Kraus, and that explains much of the S&P 500’s 30% drop since mid-February. “The ERP by my calculation is now around 6%,” he explains, twice the historical average. Kraus uses that 6% estimate as a building block to determine when prices look reasonable, based on the jump in the fear factor the ERP reflects. The 10-year Treasury yield has recently careened to all-time lows of below 1%, but Kraus chooses that as a good bet on where the number will settle.
Here’s how Kraus does the math. The new, fatter, total return investors now expect from equities consists of the 6% risk premium plus the 1% projected yield on the 10-year, for a total of 7%. Given that, the market’s P/E ratio should be 14.3. That sure would promise a much more lucrative future for shareholders than the P/E of 24, and 4.2% return it posits, that reigned just a month ago.
Kraus forecasts that S&P earnings per share will drop 25% in each of the next two quarters compared with the year-ago periods. But he foresees a rebound to $160 per share in 2021, 14% above the level for 2019. Earnings of $160 and a multiple of 14 would put the S&P at 2240. At the close on March 16, the index registered 2386, just 6.5% above that level. Kraus predicts that only a slight decline would turn stocks into a bargain based on the future returns of 6 points over Treasuries that today’s gun-shy investors demand.
Kraus concludes that pessimism is too rampant, and as a result, at 2240, stocks would be even cheaper than investors reckon. He says that in 2008, the ERP jumped to 9%, and investors who bought then booked the best returns of the past half-century. Today’s 6-point ERP, he believes, will shrink as confidence returns, boosting multiples well above his estimate of 14.3 as the most likely benchmark. “The economic effect of this crisis is likely to be much more short-lived than the Great Recession,” he says. “My estimate is around six months to nine months.” If the ERP then returns to 3%, shareholders would see prices above the February peak.
This writer agrees with Kraus’s view that the ERP has jumped, and finds 6%, using his methodology, to be a good estimate. As Kraus says, it’s a good bet that as the hurricane passes, the ERP shrinks. The big issue will be earnings. The 2019 numbers were an all-time high, and that suggested a profits bubble. It might take a terrific economy to hoist them 14% higher a year from now, and if that doesn’t happen, it will be tough for markets to regain anywhere near their early-2020 highs. But Kraus’s rigorous analysis points to a plausible outcome. It’s good to hear reassuring words from a veteran who’s seen it all.
More must-read stories from Fortune:
—How to prepare your personal finances for a coronavirus recession
—The Fed made a bold move to calm shaky markets. But is it enough?
—Why return CEOs are usually bad news for a company’s stock
—Dormant PayPal Credit accounts are coming back to hurt credit scores
—Listen to Leadership Next, a Fortune podcast examining the evolving role of CEO
—WATCH: What’s causing the looming recession
Subscribe to Fortune’s Bull Sheet for no-nonsense finance news and analysis daily.


fortune--2020-03-18--This year’s Turing Award winners helped Pixar create hit films

Seeing the smiles on children’s faces during the premiere of the hit animated film Toy Story over 20 years ago was a huge moment in Patrick Hanrahan’s career. The spirited on-screen rivalry between homely cowboy doll Woody and the glitzy Buzz Lightyear action figure would not have been possible without the 3D technology Hanrahan and his colleague Ed Catmull had developed.
“I’ll never forget when I went to the premiere,” Hanrahan told Fortune. “I’m slaving away working on algorithms all day in a dark room, and then I see all the joy that was brought to those kids’ faces.”
Indeed, the software that Hanrahan, a former Pixar senior scientist, and Catmull, a former president of Pixar and Walt Disney Animation Studios, created has been used in many memorable films. From computer-animated blockbusters like Avatar and Finding Nemo to live-action movies loaded with special effects like Terminator 2 and Titanic, the duo’s technology helped link the wonky world of computer science with the creative sensibilities of the entertainment industry.
That’s why the Association for Computing Machinery (ACM) said Wednesday that it would present Hanrahan and Catmull with this year’s Turing Award, considered to be the technology industry’s equivalent to the Nobel Prize. The association presents the award, which comes with a $1 million prize, to individuals whose contributions to the field of computer science are so profound, that their work will likely have a major impact years from now.
Hanrahan and Catmull will officially receive the award in June during the ACM’s awards banquet in San Francisco.
Last year, the ACM presented the Turing Award to Yoshua Bengio, Geoffrey Hinton, and Yann LeCun for their research involving neural networks, the software that has led to several breakthroughs in artificial intelligence. This year’s award marks a shift from acknowledging the behind-the-scenes software responsible for automatically translating languages, among other tasks, to recognizing software that makes computer images in Hollywood movies look and move as if they are part of the physical world.
“I’m completely delighted,” said Catmull, who learned in a brief phone call last week that he and Hanrahan would win.
Catmull’s work in computer graphics began 50 years ago when he was researching how computers could represent “curved surfaces,” a far cry from the kinds of photo-realistic graphics seen today in cutting-edge video games and films. His early research also involved the technique of motion blur, used by computer animators to create a sense of movement in their graphics.
Filmmaker George Lucas would eventually hire Catmull to work at Lucasfilm, which was pushing the envelope between art and computer graphics with hits like Star Wars. The late Steve Jobs then bought Lucasfilm’s computer animation unit in 1986, changed its name to Pixar, and picked Catmull to be the animation company’s president. Catmull then hired Hanrahan to work at Pixar, and the two began their partnership pushing the frontiers of computer graphics, culminating in the software they developed, called RenderMan, that Pixar used and also licensed to other computer animation studios.
Hanrahan, who started his career as an A.I. researcher, remembers that much of the work the two did during the late 1980s was theoretical in nature, because the computing hardware wasn’t quite up to par with the software they had in mind. But computer-chip makers like Nvidia were following the duo’s work and used Hanrahan’s 1990 landmark academic paper about 3D graphics to inform their own chipmaking projects.
“Nvidia had a strategy to improve the chips, which we benefited from,” said Catmull.
The rise of graphics processing units, or GPUs, would eventually make it possible for Pixar to create the world’s first feature-length computer animated film in 1995—Toy Story. Still, Catmull considers Toy Story 2, released in 1999, to be Pixar’s “defining moment.” Several story-line changes resulted in Catmull’s team having “to remake the movie in about eight months,” resulting in numerous all-nighters and employee burnout.
Eventually, the movie came out and surpassed the original in terms of box-office sales and critical acclaim. Audiences considered the film both a technical and artistic marvel.
For Hanrahan, it’s that link between art and technology that he finds special. Much of his work, like trying to create realistic looking digital skin, was driven by Pixar’s art team who would spur him to push the limits of computer science.
“I have a lot of respect for artists,” Hanrahan said. “I would just love to see more attention paid to art in technology, and I think art doesn’t get the support it deserves.”
More must-read stories from Fortune:
—Inside Xerox’s audacious quest to buy much bigger rival HP
—How A.I. is aiding the coronavirus fight
—How early GPS gadget-maker Garmin mapped out success against big tech
—Dormant PayPal Credit accounts are coming back to hurt credit scores
—WATCH: Best earbuds in 2020: Apple AirPods Pro vs. the Sony WF-1000XM3
Catch up with Data Sheet, Fortune’s daily digest on the business of tech.


fortune--2020-03-18--Global food harvests at risk as coronavirus travel bans block migrant labor

Across the globe, governments are imposing travel limits in a bid to stem the spread of coronavirus. The unintended consequence is a squeeze on migrant labor that’s a cornerstone of food production.
American produce growers preparing to harvest crops are warning of a devastating impact on fruit and vegetables after the U.S. Embassy in Mexico announced a halt to visa interviews for seasonal farm workers. Slaughterhouses also may face labor shortages.
In Australia, growers say that country may face shortages of some fruits and vegetables because of travel curbs, with the nation traditionally using overseas workers for one third of seasonal farming jobs. Kiwifruit pickers are in short supply in New Zealand. And in Canada, travel limits threaten meat processors that rely on temporary foreign workers to fill chronic labor shortages.
“There won’t be anyone to harvest the crops,” said Robert Guenther, senior vice president for public policy for the United Fresh Produce Association, which represents U.S. growers, distributors, wholesalers and retailers. “It will be devastating to growers and ultimately to the supply chain and consumers. They won’t have the food.”
Vulnerable supply chains
Expectations for a labor crunch reveal how interconnected the world of global agriculture has become, and expose the strains of production and areas of vulnerability to the supply chain. In many key food-making nations, the industry relies heavily on migrant and immigrant workers to fill jobs that middle-class citizens shun. Think of the back-breaking work of tomato pickers, the dangerous conditions at slaughter houses and what many would consider the unpalatable environment of large livestock-feed operations.
The timing for the disruptions in some ways couldn’t be worse. In the Northern Hemisphere, farmers are gearing up for their peak spring and summer growing seasons. Ranchers also tend to sell more animals to slaughter at this time of year.
While large grain and oilseed operations in the U.S. don’t rely as much on seasonal workers, many fruit and vegetable operators do. Leafy greens, berries and cucumbers are likely to be hit first by the loss of seasonal workers, Guenther said. Tree fruit such as peaches, plums, nectarines and citrus would be affected heading into May and June, he said.
The U.S. Embassy in Mexico posted a notice on its website announcing it was indefinitely halting visa interviews needed to process applications to come to the U.S., including for seasonal farm workers under the H-2A visa program.
The U.S. Department of Agriculture “is directly engaged with the State Department and working diligently to ensure minimal disruption in H2A visa applications during these uncertain times,” the agency said in an emailed response. “This Administration is doing everything possible to maintain continuity of this critically important program.”
Possible waivers
U.S. Agriculture Secretary Sonny Perdue told farm representatives in a conference call Tuesday that the State Department will process visa applications from returning farm workers who are eligible for interview waivers, said Dave Puglia, president of Western Growers Association, which represents 2,500 businesses in California, Arizona, New Mexico and Colorado. The USDA didn’t immediately respond to a request to confirm his account of the call.
The U.S. State Department didn’t respond to requests for comment on the visa interview halt.
Zippy Duvall, president of the American Farm Bureau Federation, the nation’s largest general farm organization, said the restrictions would still impede the harvest.
“Under the new restrictions, American farmers will not have access to all of the skilled immigrant labor needed at a critical time in the planting season,” Duvall said. “This threatens our ability to put food on Americans’ tables.”
In Canada, the restrictions may hold up visas for people who had jobs lined up at the nation’s protein plants from places such as Central America or the Philippines, said Chris White, president of the Ottawa-based Canadian Meat Council. The workers are “critical” to the nation’s meat production.
In Australia, the government on Monday imposed a two-week self-isolation period for anyone coming into the country. That restricts the agriculture industry’s access to a key source of seasonal labor.
The small coastal town of Bowen, in northern Queensland, is now readying for its winter vegetable harvest and is an example of an area that could be affected, said Richard Shannon, policy and advocacy manager at the state’s horticulture industry group Growcom.
“They supply during winter 90% of our tomatoes and capsicums, so that small town grows exponentially during harvest season and relies heavily on folks coming from interstate and overseas,” Shannon said.
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fortune--2020-03-18--Fearing a credit freeze, Fed gives big banks new tools to keep lending taps open

As Main Street begins to take stock of the economic damage caused by the current coronavirus-related lockdown, Wall Street’s eyes are on the big banks—and the measures taken by the Federal Reserve and other government entities to ensure that they stay liquid and functional.
This week has seen the Fed spring into emergency action to ensure major financial institutions are equipped to weather the headwinds. The big Wall Street banks now are taking advantage of an expanded 90-day “discount window” to borrow from the central bank, while Tuesday saw the Fed relaunch a recession-era credit facility for lenders and a commercial paper facility to provide lending to businesses.
The idea is to ensure that as the U.S. economy almost certainly gets worse in the coming months, American companies are able to borrow the money they need in order to continue operating and keep workers on the payroll. Thus far, the federal government has taken measures to ensure that is the case; in addition to the Fed’s measures, the Treasury Department’s Office of the Comptroller of the Currency is reportedly considering loosening leverage restrictions on banks.
That’s good news, because a lot of borrowers are expected to need help. Companies like Boeing, AB InBev, and Kraft Heinz are already drawing down billions of dollars of credit from their lenders as the coronavirus disrupts nearly every corner of the economy. There are also fears that the massive amount of triple-B-rated debt on the corporate bond market could cause trouble if those notes are downgraded to junk.
According to banking and capital markets consultant Mayra Rodriguez Valladares, it’s important that the banks are “well prepared” and “sufficiently liquid” when corporate borrowers rush to draw on their credit facilities.
“That’s where the danger is this time; in the run-up to the [financial] crisis, it was leveraged households, and now it’s leveraged corporations,” Valladares says. “Many of these companies have continued to get more levered…You can expect a cascade of [corporate bond] downgrades.”
Driving business
In the meantime, some banks may find themselves taking advantage of current dynamics to drive business. Speaking on CNBC on Tuesday, Truist CEO Kelly King noted that mortgage applications have been “off the charts” amid a lower interest rate environment in recent months, with the bank’s mortgage volumes having “quadrupled in the last two to three months.”
Of course, near-0% interest rates are generally a headwind for banks, given how they compress the margins that financial institutions are able to make through net interest income. But at least the heavy losses and extreme volatility seen in the stock markets in recent weeks have had the effect of boosting trading volumes and activity for many banks.
“Trading volumes are through the roof,” notes Brad Bailey, a research director in the capital markets division at financial consultancy Celent. “The [banks’] transactional businesses are doing well; you think about all the volatility and the trading taking place, and everyone becomes very reliant on people who know what they’re doing…It’s a big boost for most firms.”
That won’t be very comforting to Main Street investors who fear checking their 401(k) accounts in the midst of this month’s historic selloff. But if the banks keep functioning as intended, it should help many businesses weather the ongoing storm—and in the process, mitigate the impact on the lives of average working Americans.
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fortune--2020-03-18--Hong Kong dangles incentives for local face mask production as coronavirus stretches supply

Since the first outbreak of COVID-19 struck Hong Kong in January, wearing a surgical mask has become de rigueur for residents of the Special Administrative Region. The surge in demand has led to empty shelves of a once common product, prompting thousands to line up overnight and pay premiums for new shipments. With no sign of the pandemic coming to a close, local entrepreneurs are being encouraged to set up new production facilities.
“There is a global shortage of [masks] and more so with the epidemic spreading to other countries. So this will increase the difficulties for Hong Kong to acquire sufficient numbers of masks and other protective equipment for our own use,” said Secretary for Commerce and Economic Development Edward Yau, announcing an HK$1.5 billion ($193 million) subsidy scheme to encourage entrants to the mask-making business.
Under the scheme, companies can apply for an HK$3 million subsidy to support the operation of a surgical mask production line. The government set a quota of 20 production lines for subsidy payouts, totaling a maximum of HK$60 million. Applications for the subsidy are open until the end of the year. The remainder of the HK$1.5 billion fund will be used to purchase masks from the companies, which must commit to a yearlong guarantee of supply.
Evidently, Hong Kong’s leaders are preparing for prolonged high demand. However, conditions for receiving a subsidy might be too strict: Over 90% of subsidy applicants have been rejected, with only two of the 74 applicants qualifying, according to the Commerce and Economic Development Bureau (CEDB), in charge of the scheme.
According to the CEDB, 65 of the applications failed to meet all eligibility criteria—such as the need to have production equipment already in Hong Kong, or to have amassed a large enough supply of raw materials. The remaining seven applications are currently being reassessed.
Masking tape
In order to qualify for the scheme, applicants need to have all the equipment and materials ready in Hong Kong. They need to have rented a space to house the equipment and be able to guarantee the quality of the finished product.
The successful applicants are also required to produce a minimum of 500,000 masks per month with the first 2 million masks produced each month earmarked for the government. Any excess on 2 million can be sold to the public but are not allowed to be exported.
“Since the government is only subsidizing 20 production lines I think we’ll be quite lucky if we can get it,” says Denis Huen, founder and CEO of masHker—one of the numerous new mask manufacturers springing up in Hong Kong. Huen says his team has sunk about HK$2 million into setting up a production facility already and expects to be operational by the end of the month.
MasHker opened preorders for masks on March 10, allowing 20,000 people to register to order up to two boxes. All the registration slots were gone in a minute, Huen says. The company says it has also received inquiries for orders as large as 1 million masks per month already.
“At the moment I’d say it’s still possible to run the business without the subsidy, because there’s such a big gap in supply and demand,” Huen says. “But after six months, I’m not sure. That’s when the government orders would be helpful.”
Going alone
Some companies are forgoing the government subsidy scheme altogether, spending their own money to bolster supplies. Real estate developer New World Development (NWD) is investing HK$10 million through its charity unit to create its own mask production facility, establishing two production lines to churn out 200,000 masks a day. The company says the masks will be distributed for free to those “most in need,” such as low-income families.
“We have no shortage of scientific research capabilities, talent, and resources in this city, and we are absolutely equipped to produce high-quality masks locally to tackle immediate and long-term needs,” NWD general manager Adrian Cheng said.
However, many of the resources—such as the polypropylene, which commonly forms the mask’s inner filtration layer—are actually imported. With demand increasing globally, supply lines are tight, and prices are high. Huen says his company is sourcing fabric materials from Indonesia, China, Turkey, and Germany to maintain a constant supply; the costs have surged from roughly HK$100,000 per ton to HK$400,000. NWD sources its materials from places like Turkey and Israel.
The cost of the machines has jumped as well. One budding entrepreneur in Hong Kong paid twice the usual rate to secure a machine for $114,000—also imported from mainland China. Huen is sourcing machines from China, too, but says Beijing has prohibited the machines from being exported wholesale. They might need to be shipped in parts instead.
Long-term needs are another issue. Demand for masks won’t ride high forever as the coronavirus pandemic eventually abates. Companies that enter the business now could be left at loose ends. NWD says it will redirect production to meet internal company needs once the pandemic eases and will shift some supply to NGOs, while Huen says his company might expand into other protective gear or filters for air conditioning units.
“I think filters are actually a good investment for the future, because nowadays all offices are searching for them. Not many factories in China can produce those types of high-quality filter, so there’s room for Hong Kong to expand,” Huen says.
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fortune--2020-03-18--How hackers are exploiting the coronavirus – and how to protect yourself

We all have new worries thanks to the current coronavirus pandemic, but the old worries haven’t gone away. Among them: malicious hackers, some of whom are trying to use the outbreak to steal or ransom victims’ data.
Several recent attacks have attempted to leverage the coronavirus by getting people to click on links in messages about the illness, according to a report by cybersecurity firm Nocturnus on Wednesday. Hackers have also tried to use the influx of people working at home because of the virus to their advantage.
Chief among the techniques are coronavirus-themed phishing campaigns targeting countries hard-hit by the coronavirus, including China, Japan, South Korea, and Italy. As with many other phishing efforts, the hackers’ goal is to get a user to click on an emailed link that downloads malicious malware, which can be used to steal victims’ personal data or freeze their computers.
Nocturnus said the emails have tried to bait users into clicking with subject lines such as “Coronavirus: Important information on precautions” (in this case, in Italian). Other phishing emails spotted by a second security firm, Nuspire, include messages about a coronavirus vaccine (which doesn’t exist yet), deals on medical equipment, and investment opportunities related to the outbreak.
Coronavirus-themed ransomware, which can encrypt a computer’s hard drive, enabling hackers to demand payment to unlock it, has also been used. One piece of malware spotted warns victims: “Just because you’re home doesn’t mean you’re safe,” before demanding payment to unlock files, according to Nocturnus.
Software appearing to provide information about the coronavirus, while actually delivering malicious software, is another problem. “Coronavirus map” software that appears to track the global pandemic, for example, also hides the password-stealing malware AZORult, cybersecurity firm Reason Security said. The Nocturnus report also identified a mobile app that promises “Ways to Get Rid of Coronavirus,” which, in fact, delivers malware that steals banking information.
Nocturnus has also found suspicious domains claiming to distribute VPN, or virtual private network, software. Many white-collar workers who are now working from home may need such software. But attempting to download it from an untrustworthy site could leave computer with—again—a dangerous malware infection.
How to avoid malware
Broadly, avoiding most of these risks means following the same advice as during more normal times. Don’t click on links from unknown people. Only download or install software from trusted sources. And verify that the URL of any website that asks users to enter a password is accurate: Hackers often set up URLs that are similar to real websites to harvest passwords.
Remote-work vulnerabilities
The sudden increase in remote work that many companies have instituted over the past week introduces a new set of cybersecurity risks to organizations. The fundamental problem: Communication that is entirely online makes it much easier for bad actors to use deception to gain access to systems. This type of hack, generally known as social engineering, relies on con artistry rather than code.
Hackers may “call into a department and pretend to be another department” of an organization, says Marty Puranik, president and CEO of cloud computing provider Atlantic.net. Chris Wysopal, cofounder and chief technology officer of security firm Veracode, warns that hackers may pretend to be employees having remote access problems thus tricking IT staff into giving them access. Both scenarios suggest taking additional care when verifying identities remotely.
Even more worrisome, Puranik says hackers “could impersonate Department of Homeland Security [personnel] and call a police department, call a hospital chain and say, we need access to your system so we can, for example, enforce a curfew.” DHS did not respond to inquiries from Fortune about how companies can confirm the identities of government agents remotely, but one simple solution would be for them to contact DHS directly to investigate suspicious requests.
Hackers impersonating government agents may have goals well beyond stealing bank account information, or even infiltrating corporate systems. An attempted hack of the U.S. Health and Human Services agency website on Sunday appears to have been aimed at slowing emergency information systems and spreading false information through text messages.
Much is unclear about the attack, but some sources told Bloomberg that it was likely state-backed. The incident suggests that the coronavirus pandemic could become partly a replay of the 2016 U.S. election, with governments angling to destabilize opponents by sowing fear and distrust.
At their most extreme, hacks could even interfere with systems vital in the fight against the virus. A Czech hospital appears to have been hit by a ransomware attack, in which hackers shut down its information systems and asked for money to eliminate the problem, though there is no evidence that attack was state-backed.
The fluid situation is likely to make serious cyberattacks of many sorts easier, says Puranik. “Sometimes the rules go out the window when there’s a lot of volatility. Someone might let down their guard.
“It makes it easier for malicious actors to take advantage of the system.”
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fortune--2020-03-18--Panic buying goes beyond toilet paper—gun and ammo sales are spiking too

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U.S. sales of guns and ammunition have increased during the coronavirus outbreak as more people, including many first-time gun owners, are fearing unrest and purchasing protection.
“When people become scared in situations like this they buy lots of food, toilet paper, water, and for some reason, firearms,” Chris Lajoie, general manager of Second Amendment Sports in Bakersfield, Calif. told Fortune. “We see it a lot when firearms are threatened, but in a situation like this, they are buying because they truly want to make sure they can protect themselves.”
Lajoie said many of the customers who visited his store over the past few days were first-time gun owners. They aren’t looking for hunting rifles, he added, they’re buying handguns.
“For some reason, they are picking up on the household names and buying Glock and Smith & Wesson,” Lajoie said.
The store now has a limit of two boxes of 9mm rounds per customer per day to help ensure as many people as possible have the opportunity to buy the ammunition they need for their handguns.
Second Amendment is far from the only gun shop having a run on the products. Ammo.com, an online ammunition dealer, said that for the three-week period ending March 15 over the same time period immediately prior, revenue increased 309%, transactions jumped 222%, and there was a 78% bump in the conversion rate of site browsers to buyers.
Instead of the same day shipping the company usually offers, Ammo.com now needs two to three days to pack and ship orders. The company has seen the biggest sales spikes in Pennsylvania, Texas, Florida, Illinois, New York, Georgia, and North Carolina.
And Charlotte, N.C.-based Hyatt Guns, which bills itself as “America’s biggest gun shop” has seen demand increase “fourfold,” according to owner Larry Hyatt.
The store, which is housed in a giant warehouse, had an increase in customers beginning last Friday and through the weekend. Hyatt said demand is still strong, but started to slow down on Tuesday.
“Ammunition and self defense guns are what’s selling. It’s not hunting or target shooting. It’s self protection,” he told Fortune.
He said his customers over the past few days “are a change in the usual demographic” of people who visit his store. They’re women, senior citizens, and first time owners who want protection.
Like Second Amendment Sports, Hyatt has placed a limit on the sale of shells to two boxes per visit. He said the store is selling out of popular ammunition and he’s worried how long it will take to replenish his inventory.
“We are completely out of 40 caliber ammo, which is very popular, and certain others we are really low on. We have a lot of product in transit that will arrive over the next few days but after that is a real problem because the warehouses are emptied,” he said. “Even if the panic buying stops, it will still take 30 days or so to get more back on our shelves.”
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fortune--2020-03-18--Today I was tested for the coronavirus

Today I was tested for the coronavirus

Last Friday morning I woke up with a sore throat.
Normally that wouldn’t be a noteworthy occurrence, but in a world now inundated by COVID-19 news, it was alarming. The alarm bells rang a little louder particularly because I had returned a few days prior from a trip that took me through Switzerland, the Maldives, and Singapore with roughly 30 hours in airplanes and in airports each way. Those countries, which all seemed safe to travel through when I left for my trip on March 3, were now seeing a steady rise of coronavirus cases. Despite aggressively washing my hands every step of the way, bringing N95 masks, and wiping down my seat area on all my flights, I’d been self-quarantining since my return just as a precaution. Now it appeared as though I might be sick.
I started checking my temperature pretty regularly over the weekend, between bouts of yelling at people on social media who were out at bars rather than social distancing, and I rarely had a temp over 98.1. I was ready to call it a cold, and then Sunday afternoon I started having trouble breathing, along with a persistent cough and runny nose.
I have asthma, so a little trouble breathing isn’t exactly out of the ordinary. The combo of it all, though, made me think it was perhaps time to reach out to my doctor about getting a coronavirus test.
In San Francisco, I’m a patient at Google-backed One Medical. It has offices around the Bay Area and an online portal where you can email clinicians. When I logged in to contact my physician for advice, there was a huge notice at the top of the page asking anyone who thought they might have COVID-19 to call.
I called. The tone of the cheerful person who answered the phone changed rather dramatically as I listed my symptoms and told her where I had traveled to. She spoke to someone else who directed me to go into the office’s app, which allows you to seek medical advice without a visit, and essentially tell the online form what I had just told them. She said someone would most likely call me within an hour after completing the form.
And so I did. Later that afternoon an email came asking me about my asthma meds and confirming my symptoms and travel history. Afterward, I was sent a form letter, in a way confirming a COVID-19 diagnosis, with instructions suggesting that I separate myself from others and pets, wear a mask, and avoid sharing personal items.
No offer was made to test me.
Knowing at that point that we both agreed I checked a lot of boxes, I asked why.
According to the person I emailed with, they were trying to protect vulnerable patients—of which I am one—from further potential exposure by not having them tested since a positive test wouldn’t change their advice. It makes sense, but I responded to say that I thought not testing me—and reporting those results to the CDC and WHO—would be a negligent move. Minutes later, I received an appointment confirmation for a test the next morning.
Unlike some other places where tests seem to be done in a regular office setting, One Medical has closed one of its local offices and is using it expressly for COVID-19 testing.
Shortly after my appointment was confirmed, an email came with instructions for that testing visit. I wasn’t allowed to use the bathroom at the office. I needed to come alone. I should avoid public transit. I needed to arrive exactly when my appointment began, not before.
“For your safety and the safety of everyone in the test site, our team members, including your provider, will be wearing masks, face shields, and gowns. We’ll have a mask available for you to wear when you arrive (if you aren’t already wearing one).”
Luckily, the office is roughly half a mile from my home. I strapped on an N95 mask I thankfully had left over from San Francisco’s fire season last year and walked—slowly, because I can’t really breathe—to my appointment so I didn’t potentially expose anyone else.
When I arrived, I waited outside the closed office by the locked door. San Francisco went under a “shelter in place” order at midnight, so the streets were rather deserted. While I waited, a teenager on a scooter came by and grabbed my phone, accidentally dropping it on the street during his getaway from the would-be theft. That, or maybe he saw my mask and where I was standing and put two and two together.
After I retrieved my phone from the street, the door to the office opened, and a woman in scrubs and a mask confirmed my name and date of birth before opening the door for me to come inside.
Right inside the door was a large bottle of hand sanitizer, which I was instructed to use before coming any further. An exam room had my name written on it with a Post-it note.
I was the only patient in the office.
Once in the room, a clinician wearing three masks—one larger N95-like mask similar to my own, one surgical, and one hard plastic shield—came in. She explained the test, which if you haven’t read about it yet essentially involves shoving a long Q-tip further up your nose than you think is possible. They would do one nostril for flu, the other for COVID-19.
She performed the test, which is unpleasant but not painful, and then moved to the other side of the room where she removed a large full-body paper jumpsuit she had been wearing and discarded it in the trash by the door.
The woman who let me in returned to open the door to the exam room for me and the door to the building to let me out, successfully making it so I touched absolutely nothing in the office while I was there except for that hand sanitizer. From start to finish, I was possibly inside the building less than five minutes.
My flu test results came back before I made it home. Negative. That means I either have a cold, or I do in fact have COVID-19. I won’t know either way for four or five days.
I also have no idea how much all of this is going to cost. In the email to prepare me for the appointment, the company said: “Similar to other visits, we will process the appointment through your insurance plan. We will be updating or collecting insurance information via secure message once you are home.”
That said, I’m lucky to have been able to been tested at all. My travel, coupled with my symptoms and existing respiratory issues, potentially pushed me to the front of what is likely to become, if it’s not already, a very long line. I have no way of knowing if other people were turned down for tests when I was not, but I am thankful that I was able to get one.
Now I just have to make it through the next few days waiting on those results.
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—WATCH: The race is on to create a coronavirus antiviral drug and vaccine
Subscribe to Fortune’s Outbreak newsletter for a daily roundup of stories on the coronavirus outbreak and its impact on global business.


fortune--2020-03-18--With three more victories, Biden pulls further away from Sanders

Joe Biden swept to victory in Florida, Illinois and Arizona on Tuesday, increasingly pulling away with a Democratic presidential primary upended by the coronavirus and building pressure on Bernie Sanders to abandon his campaign.
The former vice president’s third big night in as many weeks came amid tremendous uncertainty confronting the Democratic contest as it collides with efforts to slow the spread of the virus that have shut down large swaths of American life. Polls were shuttered in Ohio, and although balloting went ahead as scheduled in the three other states, election workers and voters reported problems.
Biden’s quest for his party’s nomination now seems well within reach. He needs less than half of the remaining delegates. The party establishment has also lined up behind him as the best option in November to try and unseat President Donald Trump.
Using a livestream to address supporters from his home state of Delaware, Biden seemed ready to move past the primary. He paid tribute to Sanders for advancing key issues like affordable health care and combating climate change.
“Sen. Sanders and his supporters have brought a remarkable passion and tenacity to all of these issues. Together they have shifted the fundamental conversation in this country,” Biden said. “So let me say, especially to the young voters who have been inspired by Sen. Sanders, I hear you. I know what’s at stake. I know what we have to do.”
For his part, Sanders made no immediate move on Tuesday to contact Biden, according to people familiar with the situation who spoke on condition of anonymity because they were not authorized to speak for the candidates. During remarks early in the night, the Vermont senator said little about the future of the race and instead focused on the coronavirus outbreak.
As Biden and Sanders considered their next steps, Trump formally clinched the Republican presidential nomination after facing minimal opposition.
But much of the action was on the Democratic side, where higher vote totals in some key states suggested enthusiasm that even the coronavirus couldn’t contain. Turnout in Florida’s Democratic primary was on pace to approach 2 million, surpassing the 1.7 million who cast ballots four years ago.
Sanders’ path to the nomination is quickly narrowing, and some Democrats are now calling on him to drop out in the name of party unity. Top advisers have said he’s considering whether the political landscape could look different as the virus continues to reshape life across the country, though.
Still, the race increasingly favors Biden. He maintained the strength on Tuesday with African Americans and older voters who have been the hallmark of his campaign. He also appeared to chip away at Sanders’ previous advantage with Hispanics that helped him win Nevada and California early in the race.
In Florida, Latinos were roughly 20% of Democratic primary voters, and they largely sided with Biden. The former vice president received the support of 65% of Puerto Rican voters and 56% of Cubans, according to AP VoteCast, a broad survey of primary voters.
Still, the public health and economic havoc wreaked by the coronavirus will influence how the presidential contest unfolds. Rallies and other big events have been canceled. Democratic National Committee Chairman Tom Perez urged states with upcoming primaries to expand vote-by-mail and absentee balloting, as well as polling station hours — trying to ensure the primary isn’t further hampered going forward.
“The right to vote is the foundation of our democracy, and we must do everything we can to protect and expand that right instead of bringing our democratic process to a halt,” Perez said in a statement.
But the damage may have already happened.
Four states — Louisiana, Georgia, Kentucky and Maryland — have joined Ohio in moving to push back their upcoming primaries, and others may yet do so. That has left the Democratic primary calendar empty until March 29, when Puerto Rico is scheduled to go to the polls. But island leaders are working to reschedule balloting there, too.
That means there is nowhere for Sanders to gain ground on Biden anytime soon, even if he could find a way to mount a sudden surge.
At least one of Sanders’ top advisers chided party officials for going forward with voting on Tuesday.
“The Democratic Party rightly berates the GOP for ignoring scientists’ warnings about climate change,” David Sirota tweeted. “The same Dem Party just ignored scientists’ warnings & pushed to continue in-person elections during a lethal pandemic, rather than delaying until there is vote by mail.”
There were problems across the country on Tuesday. In Illinois, for instance, there was a push to relocate about 50 Chicago-area polling places after locations canceled at the last minute.
Jim Allen, a spokesman for the Chicago Board of Election Commissioners, said that the board asked Gov. J.B. Pritzker last week to cancel in-person voting, but the governor refused. Pritzker countered that state law doesn’t give him the authority to make the sweeping changes that elections officials wanted.
“Let me tell you this: It is exactly in times like these when the constitutional boundaries of our democracy should be respected above all else. And if people want to criticize me for that, well, go ahead,” the governor said.
There weren’t problems, everywhere, though. Mel Dockens, a 49-year-old small-business owner, voted in the Phoenix suburb of Glendale and said it was a tough choice. But he went for Biden because he thought Sanders’ progressive views might turn off some Democratic voters.
“It’s all about electability,” Dockens said. “It’s not that I don’t trust Bernie Sanders, but I trust (Biden) a little more.”
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fortune--2020-03-18--3 things Facebook is doing to counter criticism of its coronavirus response

There are still more questions than answers about the costs of coronavirus testing

Facebook promised to do more to combat misleading information on its service about the coronavirus outbreak amid a deluge of false cures and claims that the virus is a hoax.
Facebook CEO Mark Zuckerberg said on Wednesday that the company would roll out a new section on the Facebook news feed providing coronavirus information from trusted sources. The company also said it will better police posts with misinformation about the virus. He also pledged that Facebook wouldn’t share users’ personal data with the government without permission, a big privacy concern for many users.
“It’s clearly a very difficult and stressful time for people,” Zuckerberg said during a call with reporters on Wednesday. “We want to make sure we’re doing what we can to help the public health response.”
In recent weeks, Facebook has faced intense criticism for allowing on its service misleading posts about the epidemic. The posts have undermined efforts by the government and health officials to provide information to the public about the health crisis, such as precautions they should take.
Here are some highlights from Zuckerberg’s call on Wednesday:
Guiding all users to trusted information
Facebook plans to introduce a new coronavirus information center aimed at giving people access to authoritative information. The center will appear at the top of Facebook and Instagram users’ news feeds and will include trusted health information, visual materials from academics and health experts, and content from celebrities and politicians that encourage behaviors to prevent the spread of the virus. It is expected to debut in the U.S., Italy, Germany, Spain, and France in the next 24 hours and then to more countries soon.
“It’s not necessarily that people haven’t heard the message,” Zuckerberg said. “People need to be convinced it’s important for them and know how to do it.”
Bolstering content moderation—on some posts
Facebook will better police misinformation about the coronavirus and will remove content that could cause “imminent harm,” Zuckerberg said. For example, one hoax suggested that people who caught the coronavirus could be cured by drinking bleach—advice that could lead to people poisoning themselves.
Most Facebook employees, including contractors, are working from home in recent days. As a result, Facebook said it expects content moderators to be less effective at removing misleading information.
To help bolster the policing of certain content, including such subjects as suicide, self-injury, child exploitation, and terrorism, Facebook is shifting the responsibility of those categories from contractors to its full-time employees, Zuckerberg said.
But categories that are “less extreme” may get less attention than usual, Zuckerberg said. While he didn’t specifically list any such categories, they could include harassment or adult nudity, for example.
“The overall force will be less on the human side,” Zuckerberg said about content moderation. “It will be compounded that we’re shifting focus to suicide and self-harm so other categories will get less focus than before.”
Protecting users’ privacy
Zuckerberg said that Facebook won’t work with the federal government to provide location information about its users to help combat the spread of the coronavirus. The message contradicts recent media reports that said the company and others were talking about working with the government to provide personal information to track the spread of the outbreak.
Zuckerberg called the media reports “largely overstated.” The company does provide disease prevention maps, which show where people are moving based on publicly available data like Census numbers. A group of Facebook’s health partners also get access to more specific maps that provide anonymized Facebook user data. But with regard to personal data, “We’re not aware of any convos or asks from the U.S. or governments asking for that data,” Zuckerberg said.
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fortune--2020-03-18--Will the future of meat be animal, vegetable, or lab-born?

The growth of the plant-based meat sector started to take hold a decade back. Thanks to rapidly increasing sales, even traditional meat companies—those of the animal protein world—want in on the game. But as the sector matures, many people are beginning to ask tougher questions about the long-term potential of the trend, the nutritional value of the products, and whether faux meat production can really help reduce the harm traditional meat production causes the environment.
While companies that produce plant-based meat substitutes are pushing money into telling the public about the benefits of their products, the data behind the environmental and long-term health impacts of the products are just beginning to trickle in.
The Good Food Institute reports that the current retail market for plant-based foods is valued at $5 billion. In 2019, plant-based meats accounted for $939 million of those billions, a 38% jump from 2017.
And according to IRI, 14% of U.S. households are buying plant-based meat, driven primarily by growth in the refrigerated segment.
Still, plant-based meats make up only 1% of all dollar sales of total retail meat, according to the Good Food Institute.
Recent moves by animal-based meat producers make it clear that they see room for themselves in the plant-based market. “It’s still very early, which is exciting because there is so much growth still,” Jennifer Lamy, a sustainable seafood initiative manager with the Good Food Institute, told Fortune. “The big meat companies that are jumping into the space are indicating, either through their investments or their own product lines, that this is being perceived in the industry as a whole as an enormous shift, not just a fad.”
And it’s not just vegetarian millennials buying up the products.
During an earnings call with analysts, Beyond Meat CEO Ethan Brown said the company’s core customers are “people who are over 40” and are driven by health concerns, as well as environmental factors and animal welfare.
Other reports suggest that the majority of consumers of plant-based meats still like to chow down on beef burgers on other nights. According to the NPD Group, 90% of the consumers buying plant-based meat are neither vegans nor vegetarians.
“Building on the incredible success of the latest generation of plant-based burgers, we’re seeing rapid product innovation across a wide variety of plant-based meat products from startups, leading [consumer packaged goods] companies, and even the world’s largest meat companies,” said Good Food’s Bushnell. “This is a tipping point, with so much product innovation yet to hit the market.”
Big (faux) meat
What Beyond Burger, Impossible Foods, and other plant-based companies have accomplished in the past decade is no small feat.
Wall Street investors are paying attention; the big meat companies are watching their every move (Tyson Foods invested in Beyond Meat back in 2016); and new competitors continue to come on the scene.
A public company, Beyond Meat is the most heavily scrutinized player in the plant-based space. “One of the most interesting aspects of Beyond is the amount of money they spend on R&D, compared to an average food company. In some ways they are more like a tech company,” said Nigel Barrella, regulatory counsel at the Good Food Institute.
Beyond Meat’s promise is similar to that of a lot of venture capital darlings that pledge to make the world a better place. But, when it comes to environmental impact, the Good Food Institute rates the company the runner-up against the other big name in plant-based meats, Impossible Foods.
Launched in 2011, Impossible wants to eliminate animals from the food production system by 2035. “Animal agriculture is a prehistoric technology to turn plants into delicious protein. It’s also the most destructive technology on earth. There is a better way: meat from plants,” said an Impossible spokeswoman. The company closed on a $500 million funding round earlier this week, bringing the total for outside investment to $1.3 billion since 2011.
Beyond Meat declined to comment for this story.
As for expansion, during the investor call, Beyond’s Brown said the company is still just “scratching the surface” of the U.S. restaurant market and remains optimistic about moving into Europe, Asia, and the Middle East, despite concerns about the coronavirus outbreak.
“We continue to focus on Asia with the goal of producing in the region before the end of 2020, pending some level of resolution of the coronavirus crisis,” Brown said on the recent earnings call. “The magnitude of the opportunity merits significant investment. We believe that the core price in Asia provides an unprecedented opening to introduce new production models for meat.”
Beyond Meat reported a gross profit margin of 34% for the last quarter, meeting analysts’ projections, although a decline from the previous quarter’s gross profit margin of 35.6%. Sales during the fourth quarter of 2019 came in at $98.5 million, topping analyst estimates.
Despite concerns about margins and aggressive expansion risks, many Wall Street investors and industry analysts view Beyond Meat’s outlook favorably. “Beyond Meat should be a major beneficiary of PBM (plant-based meat) growth, given its first-mover advantage, and the brand’s strong performance in taste tests (consistently second only to privately held Impossible Foods),” said a research note from Morningstar. “Beyond has significant opportunity to expand into new product offerings (bacon, chicken nuggets) and geographies (Europe and Asia).”
There are still questions, however, about whether or not the company will be able to control consistency of its products as sales grows, in particular to fast-food chain restaurants across the United States. Fast-food chains that already sell Beyond Meat products include McDonald’s, KFC, Starbucks, and Dunkin’.
Also, while the marketing of many plant-based companies focuses on what they say is the nutritional superiority of their products compared to conventional meat, there is still little comprehensive independent data to back up a lot of these assertions.
According to Morningstar: “Beyond Burger’s relative lack of health benefits as compared with lean beef may garner increased consumer attention as the category gains additional retail and food-service distribution, limiting PBM product adoption. Consumers have been shifting away from products with long ingredient lists (such as Beyond’s fare), opting toward fresh, natural products, which could also limit ultimate demand.”
And though Impossible’s spokesperson said the company’s production process could potentially “turn back the clock on climate change,” there are plenty of people who remain unconvinced of those claims.
“Plant-based meat can be just as dirty as a T-bone steak, depending on how it’s produced. In both cases, pesticides enter the environment, novel genetic material is passed from crop to livestock to the environment, workers and communities are drained of their wealth and vitality,” said Alan Lewis, a director of special projects at Natural Grocers by Vitamin Cottage who focuses on government affairs and food and agriculture policy. “Impossible Foods has far more in common with JBS, Purdue, and Cargill than with a small holder grass-fed rancher.”
And those companies are starting to add meat alternatives to their protein lineups. A JBS USA spokesperson said the company is launching new products in response to consumer cravings.
JBS has previously tested its plant-based products in Brazil, the U.K., Europe, and Australia. And, in April, the company will start distributing its Ozo brand in the U.S.
Get ready for lab-grown meats
Smaller startups that produce lab-derived meat alternatives have started to join the category. The companies claim that their production processes beat both traditional and plant-based meat companies on the environmental front.
And they often cite population statistics—and the need to feed the world’s fast-growing population—as a reason for their faster-to-create products to win out over anything that starts out growing in or walking on the ground. Current estimates put the global population at 10 billion people by 2050, which will require a 70% increase in the demand for food production, according to the World Resource Institute.
“This means an increased need for land and resources to meet this need, both of which are not realistic with our current supply chains,” said Lisa Dyson, CEO of Air Protein. Dyson’s company, which was spun off from a space tech startup, is in the early stages of developing “air-based meat” made of carbon, wind, and microbes.
“Current food production accounts for over 20% of greenhouse gases,” she added, “more than all of transportation combined, and uses over 37% of the planet’s land mass—the amount of land equivalent to the size of both Africa and South America.”
Dyson said her company’s goal is to compete by using a much smaller environmental footprint.
“Our innovation enables a path to producing meat from air in a way that’s far cheaper than meat from cows or even meat from soy—that’s because air-based meat production starts with air, water, and renewable energy,” said Dyson. “It takes two years to grow a steak, which is an extremely costly process that’s both taxing on the environment and resource inefficient. Our way of producing meat [takes just a few days and] doesn’t require the use of arable land, which has even more exciting upsides for a sustainable food system and bottom lines.”
Some meat sectors, however, have made clear that they’ve made strides in reducing their own environmental footprint. According to the National Chicken Council’s “Chicken Check In” site, the environmental impact of chicken production decreased by 50% since 1965, including the reduction of resources needed to raise a chicken. Farmland dropped 72%, water 58%, and fossil fuels 39%.
For lab-derived meat substitutes, there’s still a good deal of regulatory oversight to put in place, as well as finding ways to win over consumers on taste, something Impossible and Beyond took years to do.
“We may need an actual example of a product getting approval to get the full outline of what regulators are going to require,” said Good Food’s Barrella.
In the meantime, companies including Air Protein and Sustainable Bioproduct as well as plant-based companies like Beyond Meat and Impossible Foods remain “entirely outside the USDA/FDA framework,” he said. “USDA’s involvement is solely limited to products traditionally under USDA’s jurisdiction—actual meat from certain live animals (beef, pork, chicken). Once you’re talking about plant-based products or products grown from microbes (like yogurt or air protein), FDA is the sole regulator.”
The USDA and FDA joined forces in 2019 to regulate cell-based meat, but the details of this framework and how it will be implemented remain to be seen as most lab-based meat companies are still in the early stages of product development.
And constant innovation, multiple core ingredients, sourcing, distribution, and packaging practices can be confusing for consumers in the absence of the kind of public watchdog that is proactive in other countries.
What’s the real cost?
For companies built on offering alternatives to animal products, it’s time to back up claims of environmental and health benefits with proof. Beyond Meat offered few details on either front during the earnings call.
“The problem is not whether we can mimic nature, it’s about unintended consequences,” said Shen Tong, a founder of the FoodFutureCo accelerator for food tech startups. He argued that historically the promise of processed food, driven by lower costs and profitability, didn’t turn out so well in terms of long-term nutritional value. The allure of plant-based food presents the same risk.
“That’s where you get into dangerous territory,” said Tong. “You start playing God.”
Clarification: The article was updated to include more information from Nigel Barrella about regulation by the USDA and FDA.
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fortune--2020-03-18--‘Uncharted territory.’ U.S. Census Bureau suspends field operations over coronavirus concerns

A week after starting its 2020 count, the U.S. Census Bureau on Wednesday suspended field operations for two weeks out of concern about the health and safety of its workers and the U.S. public from the novel coronavirus.
Census Bureau officials said they were continuing to monitor all operations related to the once-a-decade head count amid the global pandemic. As of Wednesday, 11 million households had answered the census questions.
Most census workers won’t head into the field until May, when they’ll knock on the doors of homes that haven’t turned in their questionnaires. But some workers are already in the field, primarily working on counts for college students, nursing homes, prisons and other institutions, as well as places with no fixed addresses.
Census historian Margo Anderson called the move unprecedented.
“I don’t think I’ve ever heard of such a suspension, nationwide,” said Anderson, a history professor at the University of Wisconsin-Milwaukee. “We’re in uncharted territory on the census, as well as everything else since last Friday.”
For most people, the new coronavirus causes only mild or moderate symptoms, such as fever and cough. For some, especially older adults and people with existing health problems, it can cause more severe illness, including pneumonia. The vast majority of people recover from the virus.
This is the first decennial census that has encouraged most people to answer the questionnaire online, although respondents can also answer by telephone or mailing back a form. The Census Bureau is hoping a strong self-response rate will decrease the need for census takers to knock on doors for face-to-face interviews this summer.
“The public is strongly encouraged to respond to the 2020 Census online using a desktop computer, laptop, smartphone, or tablet, and can also respond by phone or mail,” the Census Bureau said in a statement.
The 2020 census will help determine how many congressional seats each state gets and the distribution of $1.5 trillion in federal spending.
In a statement, the chairwoman of the House Committee on Oversight and Reform said lawmakers were monitoring the suspension of field operations and encouraged people to self-respond.
“By responding now, you will ensure that the Census Bureau does not need to send a census worker to your door,” Democratic U.S. Rep. Carolyn Maloney of New York said.
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