fortune--2020-02-29--To avoid the next coronavirus, we need a vaccine before the outbreak

As the number of people infected with the coronavirus (which causes the coronavirus disease 2019, or COVID-19) continues to rise, the full extent and severity of this outbreak still remains unclear. Will it continue to escalate into an even more deadly global pandemic, or will it burn itself out and prove to be more of a severe dress rehearsal for the next really big one?
Whatever the outcome, this outbreak has shown once again that we are not prepared for this kind of global threat. Even if a coronavirus vaccine were available today, demand would almost certainly outstrip supply, so who would get access to it? Those most at risk or those who can most afford it? If we truly want vaccines to play a role in preventing major global pandemics, then we need to invest more in their development before outbreaks occur.
This is particularly the case with influenza. With flu the fear is that one day a strain will emerge so virulent that it will be capable of causing an outbreak on the scale of—or worse than—the 1918 Spanish flu pandemic, which infected more than a quarter of the world’s population, killing between 50 and 100 million people.
Such virus strains are rare, but it is an evolutionary certainty that one will emerge again at some point. They are far more likely than, say, a nuclear war, which governments spend tens of billions of dollars preparing for. If the speed at which this coronavirus has spread is anything to go by, then the need for a universal flu vaccine has never been greater.
That is not to say that the threat posed by flu is not well understood. For nearly 70 years the Global Influenza Surveillance and Response System has existed to monitor new strains as they emerge and identify those most likely to spread and cause human suffering in the coming flu season. Because of this—in stark contrast to coronaviruses—outbreaks of flu can be largely anticipated so vaccines can be made available in a timely fashion. In the event of a potential pandemic strain emerging, this global vaccine manufacturing infrastructure would be used to rapidly produce global supplies of a pandemic flu vaccine.
That’s the theory at least. But given that seasonal flu still causes severe illness in 3-5 million people and respiratory deaths in 290,000-650,000 people annually, what does this say about our ability to actually prevent a pandemic?
First there is the issue of capacity. One of the key features of Spanish flu was that unlike seasonal flu strains, which tend to mainly kill elderly people, infants, and other high-risk groups, it also killed healthy young adults. Given that seasonal flu vaccines quantities are manufactured mainly with high-risk groups in mind, even with an aggressive scaling-up of manufacturing, it is questionable whether sufficient quantities of vaccine could be produced at short notice to protect a much larger population. In other words, it is unlikely we would have enough.
Taking this into consideration, then there is the issue of access. Between 2004 and 2015, only 5% of flu vaccine supply reached the World Health Organization’s Africa, Eastern Mediterranean, and Southeast Asia regions, which collectively make up 50% of the world’s population. The cost of providing an annual vaccine to populations, year over year, and the logistics required to deliver it is partly to blame for this. In low- and middle-income countries, where funds are scarce and competing threats to health are many, influenza vaccination can easily slip down the list of public health priorities.
Yet these same countries bear a disproportionate share of the global flu disease burden, the size of which remains uncertain because most of these countries have insufficient public health infrastructure to track the disease accurately. This can drastically hinder the ability to detect and respond to viral outbreaks, leaving people even more vulnerable. With Africa’s first case of COVID-19 in Egypt confirmed earlier this month, and Nigeria becoming the first country in sub-Saharan Africa to have a confirmed case this week, there are now concerns of a broader undetected spread of the virus elsewhere on the continent.
But another reason why so few influenza vaccine doses reach poorer countries is that access to available vaccines is not equal to all countries and can often come down to purchasing power. In the event of a pandemic flu and the inevitable vaccine supply constraints that will follow, poorer countries are least likely to get access to a vaccine. This is precisely what happened in 2009 with the H1N1 swine flu pandemic, where wealthy countries placed large advanced orders, effectively buying virtually all the vaccine doses manufacturers could supply.
The development of a universal flu vaccine, one which protects against every influenza virus—including novel strains with pandemic potential—is the only real solution to these challenges and our best shot at preventing a pandemic. By making it available to everyone through existing routine childhood immunization programs, the need to produce large volumes of vaccine at short notice in an emergency situation would be precluded, as would some issues relating to inequitable access to vaccines. And by ensuring everyone is protected, we stand a much better chance of preventing pandemics before they occur.
But while a universal influenza vaccine has been on the agenda for many years, there is still a need for greater scientific understanding of the virus, how the human immune system responds to it, and what characteristics makes it more virulent. Similarly, research efforts and funding for a universal vaccine remain fragmented, with a lack of a clear goal-oriented coordination. All of this creates barriers that are now hindering the development of a universal vaccine.
The Sabin Vaccine Institute and the Aspen Institute have proposed the creation of an independent entity to coordinate initiatives to overcome the obstacles to developing a universal vaccine, such as funding to encourage more data and asset sharing among involved entities, as well as to incentivize original research and collaboration among scientists, vaccinologists, and product developers. The entity would also work to build support—both within the universal vaccine research community and with the broader public—for more rapidly achieving the end goal.
But none of this will be possible without bold and coordinated action on a global scale, building on the strong and innovative scientific foundations and uniting the efforts of governments, industry, and philanthropy. That needs to happen now. Because if COVID-19 has highlighted anything, it is that waiting until an outbreak occurs before developing a vaccine costs lives.
Seth Berkley is CEO of Gavi, the Vaccine Alliance.
Update (March 2, 2020): We updated the headline to better represent the coronavirus outbreak in the U.S.
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fortune--2020-02-29--Before the new coronavirus, there was SARS and MERS: Do epidemics ever really end?

One way the wealthy hope to avoid coronavirus ?
Private jets

The coronavirus outbreak has reached 48 countries and sickened over 83,000 people as of Friday. Total deaths neared 3,000, the majority in China, but also 26 in Iran, 17 in Italy, and 13 in South Korea.
Alongside the rapid escalation of the coronavirus crisis has come the hope that—at some point—it will cease. South Korean president Moon Jae-in said on Feb. 13 that the virus would “disappear before long”—days before South Korea’s cases leapt up. And U.S. President Donald Trump in early February twice made the unfounded claim that the virus would likely “go away” in April because of the warmer weather.
Even the language used to describe this outbreak and those of the past, like “the 2003 SARS epidemic,” suggests that prevalence of such diseases are restricted to a specific point in time. But we shouldn’t assume the coronavirus will have a neat and tidy conclusion.
“Of course, yes, in an epidemiological sense epidemics do end. But the end of an epidemic doesn’t remove the threat. The potential for future outbreaks is always there,” said Robert Peckham, a University of Hong Kong professor who researches histories of infectious disease, epidemics, and global pandemic threats.
“Conventional ways of thinking about diseases—that they emerge, flare up into epidemics, and then end—is misleading,” Peckham said. “We need to reimagine this outbreak narrative and begin to understand that diseases are here to stay.”
Eradication, elimination, endemic
There are three possible outcomes of the coronavirus outbreak, according to Jonathan Quick, adjunct professor of global health at the Duke Global Health Institute and author of The End of Epidemics: The Looming Threat to Humanity and How to Stop It.
First, the disease could be eradicated, which would be a “permanent worldwide reduction to zero new cases of the disease through deliberate efforts,” Quick said, like smallpox, which was eradicated in 1980.
A commuter wears a face mask on a street in Karachi on February 28, 2020. The coronavirus has spread to 48 countries in a few short months. ASIF HASSAN—AFP/Getty Images
But eradicating the coronavirus—which would require an effective vaccine to eliminate human cases, and efforts to eliminate all animal sources—is “virtually impossible” right now, Quick said. The animal source of the virus is still a mystery. Other unknowns include the virus’s incubation period, the possibility of reinfection, whether antiviral drugs can help treat the illness, and whether the number of reported cases is accurate.
The second possibility is that the coronavirus is eliminated, which means cases fall to zero in a defined geographical area. This would be possible in the long term—five years at the earliest—with a highly effective vaccine, Quick said.
Pharmaceutical companies are racing through clinical trials to develop antiviral treatments and vaccines for the new coronavirus, but any drugs they develop won’t be released on the market for several months at the earliest.
Until a vaccine is developed, Quick said, the most likely outcome is the third: that the coronavirus becomes endemic.
When viruses are endemic, there is a continued occurrence of the disease in an area or population. The common cold is endemic—infections occur regularly, and have done so throughout human history. If the coronavirus turns endemic, it will no longer be an epidemic, a label given when there’s an unusual jump in the number of cases.
It appears that SARS-COV-2, the virus that causes the COVID-19 illness, “will be with us for a long time and likely cause periodic season respiratory disease like other common human coronaviruses,” said Gregory Gray, an infectious disease epidemiologist at Duke University.
Did SARS end?
COVID 19 is part of a family of coronavirus pathogens that’s caused well-known diseases like SARS, MERS, and the common cold.
According to researchers, the current coronavirus is closely related to the strain that caused the SARS outbreak. The first SARS cases were reported in late 2002; the World Health Organization declared SARS officially contained on July 5, 2003. (The date marked 20 days—or two 10-day incubation periods—since the last confirmed case.) Rapid and effective WHO action and strong responses in the 27 affected countries brought SARS under control, Quick said.
“Based on country surveillance reports, the human chains of SARS virus transmission appear to have been broken everywhere in the world,” the WHO announcement read. But, it cautioned, “the world is not yet SARS-free.”
Women wearing face masks and novelty hats leave Tokyo Disneyland on Feb. 28, the day it announced it will close until March 15th because of concerns over the Covid-19 virus. Carl Court—Getty Images
The last known SARS case occurred in China at the end of April 2004, in a lab where researchers had handled samples of the virus.
“[SARS] was effectively eliminated, in that there have been no naturally occurring outbreaks of it since,” Quick said.
Nevertheless, SARS remains on the WHO list of diseases with “epidemic potential”—diseases that pose a public health risk because of a lack of countermeasures, and which the WHO believes are a priority for public health research and development.
“The immediate challenge we’re facing is how to manage the COVID-19 outbreak. But tomorrow we could be facing an avian flu pandemic, outbreaks of MERS, or Ebola,” Peckham said.
The WHO list also includes the coronavirus MERS, which was first reported in 2012. Cases have declined since 2016, but 19 MERS infections and eight MERS-related deaths occurred as recently as the period between Dec. 1 2019 and Jan. 31 2020. There is no vaccine for MERS.
And after SARS was contained, incentive to roll out a vaccine faded, research lost funding, and vaccine development efforts were shelved.
“SARS was often held to be a turning point, but I don’t think there’s an understanding of the scale of the challenge we face,” Peckham said.
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fortune--2020-03-01--Pete Buttigieg expected to drop out of 2020 presidential race

Fed ready to cut rates despite doubt they can fix virus fallout

Pete Buttigieg, who rose from being a small-town Midwestern mayor to a barrier-breaking, top-tier candidate for the Democratic presidential nomination, is ending his campaign.
The decision came just a day after one of Buttigieg’s leading rivals, former Vice President Joe Biden, scored a resounding victory in South Carolina that sparked new pressure on the party’s moderate wing to coalesce behind Biden.
Buttigieg had been critical of Biden, charging that the 77-year-old lifelong politician was out of step with today’s politics. But his criticism had shifted in recent days more toward front-runner Bernie Sanders, a polarizing progressive who was benefiting from the sheer number of candidates dividing up the moderate vote.
Buttigieg, the first openly gay candidate to seriously contend for the presidency, tried to make the case that his party thrived when it embraced candidates who offered generational change. But the 38-year-old Afghanistan war veteran ended up being more successful at winning older voters while Sanders, 78, captured the energy of younger ones.
“The Pete Buttigieg story isn’t over. It’s just beginning,” said Democratic strategist David Axelrod. “He’s 38 years old. He’s vaulted himself into the national conversation. He obviously has work to do on some things that — some weaknesses we’ve seen in this election — but whenever there is a conversation again about Democratic candidates, he’ll be in that conversation. And that’s a remarkable achievement, given where he started a year ago.”
Voters saw Buttigieg in the more moderate lane of the Democratic field, and he flourished early with a top finish in the Iowa caucuses and a close second place finish in New Hampshire. But as the race moved to more diverse states, less dependent on college-educated voters, Buttigieg struggled.
Despite robust organizations in Iowa and New Hampshire and supporters who included an influx of former independents and Republicans, Buttigieg failed to overcome daunting questions about his ability to draw African American support key to the Democratic base.
He earned just 3% of the nonwhite vote in South Carolina’s Saturday primary, according to AP VoteCast, a a wide-ranging survey of the electorate.
As mayor of a city that is 25% black, Buttigieg faced criticism for firing the first African American police chief in the history of South Bend and for his handling of the case of a white police officer who fatally shot an armed black man in June.
A Black Lives Matter group from South Bend released a statement saying it was “excited” that Buttigieg left the race. “We hope that he learned his lesson — that neoliberalism and anti-Black policies will no longer be tolerated,” the group wrote.
After his unexpected rise to contention in Iowa and New Hampshire last fall, Buttigieg became the target of Massachusetts Sen. Elizabeth Warren for the high-dollar fundraisers he was hosting, notably one in a wine cave in California.
Minnesota Sen. Amy Klobuchar also went at Buttigieg in the months before the caucuses for lacking national experience. She noted that he had lost his only statewide race as a candidate for Indiana treasurer in 2010, while she had won three statewide terms in Minnesota in part by carrying Republican-heavy regions.
Buttigieg presented a starkly different figure on the debate stage than the other leading candidates — all septuagenarians — and drew admirers for his calm, reasoned demeanor and rhetorical skills that reflected his Harvard-trained, Rhodes scholar background but that some voters and operatives described as “robotic.”
Buttigieg had modeled his campaign somewhat on that of former President Barack Obama, who won the 2008 Iowa caucuses largely based on a message of unity and by drawing in a healthy bloc of first-time caucus participants, often the key in a crowded, high-turnout contest.
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fortune--2020-03-01--Fed ready to cut rates despite doubt they can fix virus fallout

Pete Buttigieg expected to drop out of 2020 presidential race

The Federal Reserve is now prepared to reduce interest rates this month even though it recognizes monetary policy cannot completely shelter a U.S. economy increasingly threatened by the coronavirus. Fed Chairman Jerome Powell opened the door to a rate-cut at the Fed’s March 17-18 meeting by issuing a rare statement Friday pledging to “act as appropriate” to support the economy.
He was pushed into making that assurance by spectacular losses in U.S. stocks as investors turned fearful that the spreading virus would significantly damage the American and global economies. Traders and a string of Wall Street banks now expect the Fed to lower rates in the coming months, with some seeing the possibility of an emergency cut before the central bank’s March meeting.
In doubt though is how much effect rate cuts will actually have amid a health emergency that threatens to reduce both supply and demand in the economy. No matter what the Fed does, factories can’t churn out goods if they can’t get needed materials from abroad. Consumers are also unlikely to spend if scared to leave their homes.
But cheaper credit can still help drive an economic rebound and restore confidence once the virus is controlled. And while it doesn’t like to be depicted as racing to the rescue of markets, the Fed can limit the damage from tighter financial conditions on the economy.
“Monetary policy certainly can’t meaningfully affect how the virus spreads,” former Fed Governor Laurence Meyer said. “But that doesn’t mean you do nothing. You still do what you can.”
Powell’s intervention 90 minutes before the stock market’s close on Friday marked a sharp pivot from the previous message of policy makers that it was way too soon to judge the economic impact of the China-borne epidemic. It also called into question the Fed’s hopes that it could hold policy steady in 2020 after cutting rates three times last year.
Stock Rout
Driving the rethink was the worst week for U.S. stocks since the 2008 financial crisis.
“They didn’t want to have a continued free-fall,” said Peter Hooper, a former Fed official who is now global head of economic research for Deutsche Bank AG. “They know that the one thing that monetary policy can do is to give risk assets a bit of a lift.”
Stock prices bounced up in the wake of the Powell statement. The S&P 500 index ended 0.8% lower on Friday, rallying back in the final 15 minutes of trading from losses that topped 3%. For the week, the index lost 11%. But in the wake of a series of worrying virus-related headlines on Saturday, investors are on edge again.
Hooper expects the Fed to cut rates by a quarter percentage point in March and April. His counterparts at Bank of America Corp. predict a half-point cut this month. Those at Goldman Sachs Group Inc. see reductions totaling three quarters of a point through June.
The U.S.’s first fatality from the coronavirus was a man in his 50s, Washington State health officials said on Saturday. President Donald Trump, briefing reporters at the White House after the news, renewed his public attacks on the central bank and said it was “about time” the Fed acted like a “leader” and lowered rates.
If the market rout continues, the Bank of America economists said an “emergency cut” outside of the Fed’s normal schedule of meetings is also possible. It’s not done that since October 2008.
In trying to figure out what to do, policy makers are pondering the same imponderables that investors are. Their initial thought was that the contagion would be contained mostly to China and that the impact on the U.S. economy would be small and fleeting.
Not If But When
That assumption was thrown into question as the virus spread from China to the rest of the world, with the Centers for Disease Control and Prevention saying it’s not a question of if but when it affects the U.S.
“We’re going to get infections here and there for quite a while,” said former International Monetary Fund chief economist Olivier Blanchard, who is now with the Peterson Institute for International Economics in Washington. “The economic cost may be large.”
In a report released on Friday, Goldman Sachs economists led by Jan Hatzius said they anticipate the virus will inflict a “short-lived global contraction” on the world economy that stops short of an outright recession.
Such concern will have mounted over the weekend with news Saturday that Chinese manufacturing activity contracted sharply in February with an official gauge hitting a record low.
Supply Shock
Blanchard questioned though how much good a Fed rate cut would do in the face of what he called “an unusual supply shock,” where factories are forced to curtail production because they can’t get parts from abroad.
“Decreasing the policy rate by 25 basis points in that context doesn’t feel quite useful,” Blanchard said.
What’s more important, he said, is ensuring that credit keeps flowing to small and medium-sized companies that may face a liquidity squeeze due to supply chain disruptions from the virus.
Fed officials seem alert to the importance of maintaining the supply of credit.
“The first way I’m going to think about this is whether or not lending behavior is adversely influenced,” Chicago Fed President Charles Evans said on Feb. 27 in laying out his thinking on the potential for looser monetary policy.
Policy Support
With rates at a target range of 1.5% to 1.75%, Fed officials reckon that monetary policy is already accommodative and providing support to the economy.
Some of the dangers the committee was worried about last year have also diminished with the signing of a phase one U.S.-China trade and ebbing risks of the U.K. crashing out of the European Union.
All things equal, Fed watchers says the central bank would probably prefer to stay on the sidelines during a U.S. election year.


fortune--2020-03-02--10 journalists who deserve justice immediately

7 new books to read in March

The last thing journalists seek when they go behind the scenes of a story is to end up behind bars. But for many reporters, harsh interrogation, wrongful arrest, and brutal assault are all possible realities of doing one’s job.
Even today, as the world is in the midst of a coronavirus outbreak that originated in Wuhan, China, journalists who have reported on the situation have been punished for doing so. Chen Qiushi, a video journalist who revealed that hospitals in China were struggling to deal with the virus, has not been seen since Feb. 6. Meanwhile, three other journalists, who wrote an opinion piece regarding the crisis, have been expelled by the Chinese government.
When it comes to fighting a virus that has threatened public health, caused profits to plummet, and hit global markets hard, cracking down on free press does nothing to address the crisis at hand and only puts more people’s lives at risk. That’s only one of the reasons why Fortune remains committed to fighting for fellow journalists—and why publishing this monthly list of the “10 Most Urgent” press freedom cases is a moral imperative.
The One Free Press Coalition (OFPC) compiles the list (below), in partnership with the Center for Press Justice (CPJ) and the International Women’s Media Foundation (IWMF). This month marks one year of these organizations’ efforts to circulate their list. While some journalists have received justice since appearing on these lists, other cases remain unresolved, and new cases continue to arise. (You can read last month’s list here.)
Journalist missing as Chinese authorities stifle reporting on coronavirus outbreak.
Freelance video journalist Chen Qiushi has not been seen since Feb. 6, when he told family he planned to report on a temporary hospital. On Jan. 24, he traveled to the city of Wuhan in Hubei province from Beijing and began filming and reporting on the coronavirus health crisis, according to his posts on YouTube, noting local hospitals were short of resources and struggling to handle the number of patients who needed treatment. Later, China expelled three accredited Wall Street Journal journalists over an opinion headline relating to the crisis.
Tajikistan silences independent media ahead of March 1 elections.
Daler Sharifov is ordered two months of pretrial detention since Tajik police raided the independent reporter’s home on Jan. 28, confiscating a computer and books, and days later issuing a statement announcing charges of inciting ethnic, racial and religious hatred. The statement refers to “more than 200 articles and commentaries containing extremist content” he published between 2013 and 2019. CPJ calls this “a clear attempt to silence ahead of elections one of the few media critics that remain.” A guilty verdict could mean up to five years in prison.
Politicians join in online sexual harassment to undermine journalist’s integrity.
A reporter for Brazil’s largest daily newspaper, Folha de S.Paulo, Patrícia Campos Mello experiences ongoing harassment online in retaliation for her reporting. During a congressional hearing in Brasília last month, an individual falsely accused Campos Mello of engaging in sexual activity in exchange for a “scoop.” Hundreds of Facebook and Twitter users, including the son of President Jair Bolsonaro, shared the allegations, many using sexual language. The allegations were later referenced by the president himself, whose 2018 presidential campaign backers distributed misinformation through WhatsApp to millions of Brazilians, Campos Mello reported.
Trial underway for anti-government journalist held in undisclosed location.
Intelligence agents of the Islamic Republic Revolutionary Guards Corps arrested Iranian journalist Roohollah Zam in October. Founder of anti-government Amad News, Zam had been living in France and, following his arrest in Baghdad, was extradited to Iran. He is accused of working with French, Israeli and U.S. intelligence agencies, amounting to 17 charges, including espionage and spreading false news, although the government has made his platforms almost completely inaccessible for more than two years. In February, at least three trial sessions were held in his case.
5. Agnès Ndirubusa and the team at Iwacu (Burundi)
Court delivers prison sentence and fines for Burundi’s only imprisoned journalists.
Following their October arrest, a Burundi court convicted four journalists on Jan. 30 of attempting to undermine state security, fined them each $530, and sentenced them to two years and six months in prison. The four, who had been covering clashes in the country’s Bubanza Province and submitted their appeal on Feb. 21, include Agnès Ndirubusa, head of the political desk at Iwacu, one of Burundi’s last independent outlets, and three colleagues: broadcast reporter Christine Kamikazi, English-language reporter Egide Harerimana and photojournalist Térence Mpozenzi.
Kyrgyz court hears final appeal of journalist’s life sentence.
After nearly ten years in prison and his life sentence twice upheld, award-winning journalist Azimjon Askarov, 68, pursued a final appeal at the Supreme Court. The Feb. 26 hearing was quickly adjourned until April 7. The ethnic Uzbek’s reporting on corruption, abuse and human rights elicited trumped-up charges that included incitement to ethnic hatred and complicity in the murder of a police officer. Kyrgyzstan’s one imprisoned journalist experiences deteriorating health amid harsh conditions and limited access to medication.
U.S. executive branch idles while calls persist for Khashoggi’s justice.
Feb. 14 marked 500 days since Jamal Khashoggi’s murder inside Istanbul’s Saudi consulate. The Washington Post’s columnist’s fiancé, Hadice, observed the date with an op-ed calling for justice. The Trump administration has so far ignored a law passed by Congress, and signed by the president, that mandated the release of an intelligence report about Khashoggi’s murder by Jan. 19. That’s in addition to ignoring a deadline to reply to Congress regarding the killing, as required under the U.S. Global Magnitsky Act.
Journalist in hiding to evade arrest continues reporting.
Phan Doan Trang has been in hiding since August 2018, after Ho Chi Minh City police brutally beat her and confiscated her national ID card, on top of silencing measures including interrogation, monitoring and shutting off her internet and electricity. A colleague reports that Trang, cofounder of The Vietnamese and Luat Khoa news publications, has not fully recuperated from the assault and her health has deteriorated. While moving between safe houses, she has continued critical reporting on the environment, freedom of religion and online civil society.
Journalist held in extended pretrial detention for unspecified charges.
Mahmoud Hussein, a journalist working with Al Jazeera, has spent more than 1,000 days in pretrial detention in Cairo. Last May, an Egyptian court ordered his release, but authorities opened a new investigation with unspecified charges and returned him to prison. Hussein’s initial arrest dates to December 2016, and his detention has been repeatedly renewed every 45 days, with anti-state and false news charges stemming from a 2016 documentary about conscription in Egypt which the government claims uses fake footage and aims to incite chaos.
Communications blackout further delays imprisoned journalist’s trial.
Kashmir Narrator reporter Aasif Sultan has spent more than a year and half behind bars, since his 2018 arrest and charges months later of “complicity” in “harboring known terrorists.” He has been repeatedly interrogated and asked to reveal his sources for a cover story on a slain Kashmiri militant, whose killing by Indian security forces set off a wave of anti-government demonstrations in Kashmir in July 2016. A number of hearings have been postponed—and other journalists harassed and detained the past year.
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fortune--2020-03-02--The Robotic Process Automation debate continues

7 new books to read in March

This is the web version of CEO Daily. To get it delivered to your inbox, sign up here.
Good morning.
I’ve been disparaging in this column about businesses rushing to adopt Robotic Process Automation as their first step toward technology transformation. RPA—which automates computer processes by learning from the actions of a human computer operator—isn’t transformative; it simply automates existing processes. And it’s usually done with an eye toward saving labor costs, rather than creating new value for customers.
But I had a visit last week from a man who disagrees. He’s Daniel Dines, CEO and co-founder of UiPath, which sells an RPA tool and ranked number one on Deloitte’s fastest growing tech companies list last year, with three-year growth of 37,000%. Dines argues RPA is just a tool, and like any other tool, it can be used in good ways and bad.
“The journey toward good processes is long and arduous,” he said. “Our theory is that if we can build a tool that is as easy to use as other tools—say Microsoft Excel—and put it in the hands of people on the ground, a certain percentage will be able to automate processes in a transformative way. This is not transformational in a direct sense; but it is transformational in an indirect sense.” Fair enough.
Incidentally, Dines told me his “passion in life” is reading fiction. Kafka is his “all-time favorite.” More recently, he enjoyed A Gentleman in Moscow, which I would recommend as well.
And speaking of books, this weekend I read The Great Influenza, John Barry’s book about the deadly 1918 epidemic. It offers a couple of useful lessons for the current pandemic threat. One is that the 1918 flu largely disappeared during the summer of that year, but came back in an even more virulent form in the fall. The other is that officials at various levels ignored the experts and tried to downplay the threat—with disastrous consequences in the end. Always better to expose the facts.
You can read Fortune’s latest coverage of the virus here. News below.
Alan Murray
@alansmurray
alan.murray@fortune.com
TOP NEWS
Rebound unravels
Markets were up in Asia today, though not nearly enough to compensate for last week's omnishambles. The driver appeared to be imminent or potential rate-cutting moves by central banks. The Shanghai Composite was up a juicy 3.2% and the Nikkei 225 jumped by almost 1%. But in Europe, while things started similarly brightly, they unraveled within hours when authorities raised the continent's coronavirus risk level to high. At the time of writing, the Stoxx Europe 600 was down 1.7% and U.S. futures are firmly in the red. Sky News
New cases
Markets aside, the coronavirus marches on. The U.S. has had its second death. Berlin has its first case, as does Indonesia. There has now been a community transmission of the virus in Australia. Mohammad Mirmohammadi, a top advisor to Iranian supreme leader Ali Khamenei, has died from Covid-19. The Iranian death toll is now 54, and the Italian death toll is 34. South Korea, with 4,000 infections, has a death toll of 22. And Nike has had to shutter its European headquarters due to an employee's infection. Guardian
Buttigieg out
Pete Buttigieg has dropped out of the race to be the Democrats' presidential candidate, following disappointing results in Nevada and South Carolina. It seems increasingly likely that the race will narrow to one between democratic socialist Bernie Sanders and centrist Joe Biden, though let's see how Super Tuesday pans out tomorrow—it will be the first real test for Michael Bloomberg (now the only billionaire in the running, following Tom Steyer's withdrawal) and could prove a deciding day for Elizabeth Warren. CNN
U.K.-EU trade
There are growing fears that trade talks between the U.K. and EU, which begin today, could break down within weeks. That would mean trade on WTO rules as of the start of 2021. So observers are hoping that the two sides will show some flexibility on their red lines soon. Bloomberg
AROUND THE WATER COOLER
China economy
Elon Musk reckons the Chinese economy will end up at least twice as big as the U.S. economy, and "maybe three times". The Tesla and SpaceX chief predicted this will have a military effect: "The foundation of war is economics…If you have half the resources of the counterparty then you better be real innovative, if you’re not innovative, you’re going to lose." CNBC
AmEx signups
The Wall Street Journal reports that American Express salespeople have been "strong-arming" small business owners to boost signups for its credit cards. According to the piece: "the salespeople have misrepresented card rewards and fees, checked credit reports without consent and, in some cases, issued cards that weren’t sought." WSJ
Electric VW
The Financial Times has an interview with Volkswagen CEO Herbert Diess, which focuses on the German giant's plans to leapfrog Tesla as the world's biggest electric carmaker. Remarkably, VW intends to make this shift profitable very early on, while rivals such as Toyota and GM only see petrol-level profitability coming many years into the future. FT
CEO survival
Aflac CEO Dan Amos has held that position for three decades now. His secret? Risk management. As Amos writes for Fortune: "Don’t risk a lot for a little. Don’t risk more than you can afford to lose. Always consider the odds…In every situation, Aflac carefully determines if potential benefits exceed possible consequences. We ensure that we are in fact taking a risk rather gambling resources, and we always make sure we are more likely to win than lose." Fortune
This edition of CEO Daily was edited by David Meyer.


fortune--2020-03-02--Over 70 museums across the U.S. have committed to showcasing feminist art

7 new books to read in March

After witnessing the first Women’s March in Washington, D.C., in January 2017, Apsara DiQuinzio, curator of modern and contemporary art at the Berkeley Art Museum and Pacific Film Archive in California, wrote to a few of her art world colleagues and pitched the idea of a coalition dedicated to the advancement of feminist causes.
“We consider art as a catalyst for critical discourse and civic engagement, and we are creating a platform that’s informed by feminisms to establish a collaboration between art institutions in order for them to make their commitment to social justice and feminist causes known,” says DiQuinzio. “In general, we’re hoping to generate cultural awareness of feminist thoughts, experiences, and actions.”
That has resulted in a nationwide project that will kick off in September 2020, and will include a wide variety of museums—more than 70, as of today—that have committed to exploring all things feminist through exhibits, films, lectures, performances, and more.
“It is not only [about] focusing on women or projects by women,” DiQuinzio explains. “It is very much gender inclusive in the sense that it can be focusing on transgender artists or male artists who take up a specific feminist issue.”
Claudia Bernardi, “Pasa un Angel” (1998). Monotype fresco; 33 x 43 inches. Museum purchase, Segura Publishing Co. Archives. Scottsdale Museum of Contemporary Art. Courtesy of the Scottsdale Museum of Contemporary Art
To DiQuinzio and her team at the Feminist Art Coalition (FAC), the term “feminism” is a comprehensive one. “That’s why we put it in the plural,” she says. “There are many different definitions and ideas about it, going back to before the word was even used. We want to be as open as possible when we’re talking about feminist-related issues.”
Artists and projects that want to be associated with the coalition must to be tied to an artistic institution in their respective cities. “Institutions are places where people can converge and have organized discussions, and ideas can be exchanged,” DiQuinzio explains. “So if you are an independent curator who wants to do a project, then you’d have to link up with a specific organization and present that project with an institution.”
Linda Stark, “Stigmata” (2011). Oil on canvas over panel; 36 × 36 × 3 inches. University of California, Berkeley Art Museum and Pacific Film Archive; purchase made possible through a gift of the Paul L. Wattis Foundation. Courtesy of the University of California, Berkeley Art Museum and Pacific Film Archive
Although the application window is still open, a slew of exhibits are already part of the cause. DiQuinzio herself is working on “New Time: Art and Feminisms in the 21st Century.” Set to open at the Berkeley Art Museum in the San Francisco Bay Area, the exhibit will delve into the scope of feminist art practices within the past 20 years.
In “Witch Hunt,” Los Angeles’ Hammer Museum is focusing on more than a dozen artists—Bouchra Khalili, Yael Bartana, and Vaginal Davis among them—exploring their work in depth. The Carpenter Center for the Visual Arts at Harvard University, on the other hand, is programming a series of public conversations and lectures.
Since the project’s inception, changes have taken place already: Starting off as a group of 12 women, the team is now led by a steering committee of six people. The project’s name has also undergone a transformation. “Initially, we were thinking of naming ourselves You Call Yourself a Feminist?” DiQuinzio says. “Then we realized we needed a larger umbrella that would work for many different-sized institutions, so we came up with the Feminist Art Coalition.”
Deborah Roberts, “Glass Castles” (2017). Mixed media on paper, 30 x 22 inches. The Tang Teaching Museum collection. Courtesy of the Tang Teaching Museum collection
Although scheduled in line with the upcoming U.S. presidential election, DiQuinzio notes that they are not trying to influence the political outcome of the race. “It’s more about creating spaces where important conversations about feminisms or gender issues or equality or ending oppressive regimes can take place in the lead-up to the election,” she says. “It’s about generating awareness around feminist-related issues, and those issues can be conservative or they can be liberal. It’s not meant to be a partisan-related issue.”
Although the initiative will come to a conclusion by the end of November, the founder is open to potentially expanding the scope of her original plans. As of now, there is nothing planned for beyond November. “It will depend on the interest and desire to continue it,” she says.
One thing is clear to DiQuinzio: Political and artistic efforts share commonalities. “Artists are people who are always engaged with the world around them,” she says. “So artists are some of our best barometers for social engagement and critical awareness, activism, and change. We can find those overlapping threads, and it is always important and necessary to do so.”
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fortune--2020-03-02--Coronavirus spreads to a previously healthy sector: corporate earnings

7 new books to read in March

First China. Then Italy. Then Iran and the U.S. Now coronavirus had breached another barrier: the corporation.
According to Amenity Analytics, a natural language processing company, references to “coronavirus” have been made over 8,000 times across over 1,000 companies on earnings call transcripts, as of Feb. 26.
Several of the biggest names on the market to announce coronavirus-related setbacks include heavy-hitters like Apple, Microsoft, and United Airlines.
Nela Richardson of Edward Jones predicts the trend is likely to continue. “Everyone is putting their thumb up against the headwind and trying to figure out the direction at this point, but I think it’s safe to say we’ll see an impact [on earnings] in the first half of the year,” Richardson tells Fortune. “Whether that revenue growth actually improves and snaps back in the second half is still to be determined.”
In fact, the recent spread of the virus has Goldman Sachs revising earnings predictions, now estimating 0% earnings growth for 2020—a far cry from the Street’s current consensus of 7% earnings growth this year. Over the past 10 years, earnings have overall been growing—earnings growth was around 20% in 2018, although growth in 2019 remained relatively flat.
Apple was one of the first to announce the impact the virus might have on earnings. The tech titan recently announced it wouldn’t meet its revenue projections for the current quarter due to limited iPhone production and lower demand for products in China as a result of the virus spreading.
Microsoft also announced that disruptions in Chinese manufacturing would cause the company to miss sales predictions for its fiscal 3rd quarter due to coronavirus. “Although we see strong Windows demand in line with our expectations, the supply chain is returning to normal operations at a slower pace than anticipated,” Microsoft said in a statement. MasterCard also announced it was reducing its forecasts for first quarter and full-year revenues, citing problems with travel and e-commerce from coronavirus. The company also announced it expects quarterly revenue growth to slow by 2% to 3% if the outbreak spreads at its current pace.
In hospitality, hotel chain Marriott International says it expects a roughly $25 million hit to its monthly fee revenue from the coronavirus, while airlines like United Airlines have officially withdrawn revenue guidance for 2020 due to uncertainty over how the virus will impact demand for flights. The airline said that currently, it is experiencing “an approximately 100% decline in near-term demand to China,” according to a regulatory filing last week.
Coca-Cola Co. also announced a 1 cent to 2 cents knock on its earnings per share in the 1st quarter, citing coronavirus’ impact on its supply chain. And, unsurprisingly, Royal Caribbean Cruises has been issuing continued updates about the impact of the virus on the company, as the cruise company has now canceled 30 trips and announced the virus would dock 90 cents from 2020 earnings per share.
Edward Jones’ Richardson thinks we’re likely to see more companies revising outlooks in the near future, but that at this point, the “impact overall will be transitory, not permanent.” Areas likely to (continue) seeing a virus impact include retail, airlines, hospitality, semiconductors, and energy, according to Richardson.
Still, for some like Brad McMillan, chief investment officer at Commonwealth Financial Network, the drastic cuts to companies’ outlooks may be overblown.
“Companies typically try and tend to downplay what they’re going to do—they would rather underpromise and overdeliver,” McMillan tells Fortune. “What better chance to dial expectations way down than to say, ‘hey, the coronavirus might really hit us’?”
Dialing back expectations is what SEI’s Jim Smigiel calls “a prudent move.” While he acknowledges (as other analysts have) that we don’t know what’s going to happen, Smigiel sees coronavirus as “potentially what could be a 2020 issue for the global capital markets and the global economy” on the whole.
“It’s too early” to know
Some companies still don’t have a handle on how badly earnings might be hit.
JCPenney CEO Jill Soltau said on an earnings call last week that while “the coronavirus continues to be a fluid situation that we are of course watching closely,” the company thinks it “remains too early to quantify any financial impact of the virus”—noting the retailer’s diversified supply chain and lack of exposure to retail locations in China.
Others like Best Buy are also waiting it out, as Best Buy CEO Corie Barry said on an analyst call that, at present, it’s “very difficult to determine exact financial impact.” For Macy’s CEO Jeffrey Gennette, it remains “too early” for the company to comment on any impacts of coronavirus on its supply chain, the CEO said last week.
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fortune--2020-03-02--Coronavirus is threatening a manufacturing comeback in the Eurozone

Over 70 museums across the U.S. have committed to showcasing feminist art

Euro-area factories saw the first clear signs of the coronavirus hitting their business in February, with widespread delivery delays and steep declines in foreign orders.
The epidemic, which has spread to the European continent after emerging in China late last year, is threatening to halt a much-awaited gradual recovery in manufacturing. It could also test the ability of the European Central Bank and euro-area governments to respond with fiscal stimulus.
An IHS Markit survey showed that lead times for the delivery of inputs lengthened for the first time in a year, mainly as a result of factory closures in China. To meet orders, companies reduced inventories at the pace rarely seen over the past decade. They also pulled back from buying.
“The concern is that coronavirus-related delays in shipments threaten to constrain production in the coming months,” said Chris Williamson, an economist at IHS Markit. That could prolong “a downturn that already extends to over a year.”
The virus-related disruptions come just as the euro area’s factory downturn was starting to ease. While still indicating contraction, IHS Markit’s Purchasing Managers’ Index for manufacturing rose to the highest level in a year. At 49.2, it was slightly above an initial estimate.
In February, investment-goods producers saw the weakest performance; consumer goods grew modestly. Output continued to fall in Germany but reached its highest level in more than a year. The situation worsened in France and Italy.
With the spread of the coronavirus showing no signs of abating, Bundesbank President Jens Weidmann said on Friday the outbreak will almost certainly weigh down growth in Europe’s largest economy. Yet he also echoed comments from ECB President Christine Lagarde that no monetary-policy response was needed for now.
Workers returning to factories in China could help ease supply constraints, according to IHS Markit. But manufacturers remain vulnerable as they face deflationary pressures from weak sales and stiff competition.
“Any further spreading of the COVID-19 epidemic risks driving increased risk aversion and a reduction of spending by both businesses and consumers,” said Williamson.
–With assistance from Harumi Ichikura and Mark Evans.
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fortune--2020-03-02--Coronavirus stock market slide hits pause as another central bank promises ‘appropriate’ actions

The worst stock rout since the global financial crisis showed signs of at least a pause on Monday, prompted by optimism that central banks will again save the day.
U.S. futures saw modest gains after the S&P 500 Index closed out its worst week since 2008. Monday began with further declines in stocks and gains in bonds, before the Bank of Japan joined the Federal Reserve in issuing a rare statement assuring that “appropriate” actions will be taken. In Australia, an interest-rate cut by the central bank is now seen as a done deal Tuesday. U.S., Australian and New Zealand 10-year bond yields hit fresh record lows. The yen slid.
China’s CSI 300 Index rose more than 3% even after that country saw a much deeper contraction in manufacturing than economists had anticipated.
On the coronavirus front, the number of cases and deaths outside of China continues to climb. The global death toll has surpassed 3,000. The number of U.S. cases climbed over the weekend, including the first positive test for a person in New York State, while cases in Italy and South Korea jumped.
“We’ll start to see more rhetoric from governments to address the situation both from a fiscal and central bank easing standpoint,” said Damien Loh, chief investment officer at Ensemble Capital Pte in Singapore. “We might see one leg of risk-off but it feels to me most of the bad news has been priced in.”
Goldman Sachs Group Inc. economists now expect the virus to inflict a “short-lived global contraction” on the world economy that forces the Fed to slash rates in the first half. Fed Chairman Jerome Powell has opened the door to a rate cut, citing the “evolving risks” posed to the U.S. economy from the virus, in a rare statement issued Friday.
Elsewhere, the Mexican peso tumbled about 1% after U.S. President Donald Trump said he is considering increased controls on the border since Mexico reported its first coronavirus case.
Here are some key events coming up:
A key factory gauge on Monday is projected to show that U.S. manufacturing came close to stagnating last month. The ISM purchasing managers index is estimated to fall to 50.5 from 50.9.
The Reserve Bank of Australia sets policy on Tuesday.
U.S. citizens in states including California and Texas will vote on “Super Tuesday” for a Democratic candidate to run against President Donald Trump in November’s election.
The Bank of Canada has a rate decision on Wednesday.
OPEC ministers gather in Vienna on March 5-6.
These are the main moves in markets:
Stocks
Futures on the S&P 500 rose 0.4% as of 3:08 p.m. in Tokyo. The underlying gauge fell 0.8% on Friday.
Euro Stoxx 50 futures rose about 0.5%.
Japan’s Topix index rose about 1%.
South Korea’s Kospi index added 0.8%.
Australia’s S&P/ASX 200 Index slid 0.8%.
Hong Kong’s Hang Seng gained 0.9%.
Shanghai Composite rallied 3.3%.
Currencies
The yen dipped 0.4% to 108.28 per dollar.
The offshore yuan rose 0.1% to 6.9723 per dollar.
The euro added 0.2% to $1.1048.
Bonds
The yield on 10-year Treasuries slid about six basis points to 1.09%.
Australia’s 10-year yield fell about one basis point to 0.80%.
Commodities
West Texas Intermediate crude surged 3.1% to $46.13 a barrel.
Gold rose 1.2% to $1,605 an ounce.
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fortune--2020-03-02--The coronavirus is giving China cover to expand its surveillance. What happens when the virus is gon

The coronavirus is giving China cover to expand its surveillance. What happens when the virus is gone?

The outbreak of Covid-19 has been anathema for most of China’s economy but the novel coronavirus was a shot in the arm for the state’s surveillance apparatus, which has expanded rapidly in pursuit of the epidemic’s spread. Facial recognition cameras, phone tracking technology and voluntary registrations have all been deployed to monitor the flow of people and the possible transmission of disease.
“When we talk about the Chinese surveillance systems currently, it has two purposes: the first is to monitor public health and the second is to maintain political control,” says Francis Lee, a professor in the school of journalism and communication at the Chinese University of Hong Kong. Once the outbreak is controlled, however, it’s unclear whether the government will retract its new powers.
Look closely
Beijing’s surveillance systems rely heavily on domestic private enterprise. Computer vision companies like Sensetime—often called the world’s most valuable A.I. start-up, with a $7.5 billion private valuation—provide facial recognition algorithms that help authorities track individuals through crowds. Participants in Hong Kong’s pro-democracy protests last year wore masks to shield their identity from such practices.
Following the Covid-19 outbreak, however, Sensetime has tweaked its algorithms to develop software that can recognize individuals from just their eyes—as many in China are now wearing surgical masks. Conversely, Sensetime has also developed a program that can detect when someone is not wearing a mask—a useful tool as authorities in Wuhan, the outbreak epicenter, and other locales have made wearing masks mandatory in public.
Sensetime’s new software that can recognize people wearing masks has only been deployed in office buildings, where staff use facial scans to gain access, a representative for the firm said in an email to Fortune. However, the potential business applications of the technology—such as granting security access to offices or even to face-locking smartphones—provides it with more staying power once the virus has faded.
“Once these systems are in place, those involved in its developments—particularly companies with money to be made—argue for their expansion or their wider use, a phenomenon known as ‘mission creep,” Maya Wang, a senior researcher at Human Rights Watch, told CNBC.
Checking in
While facial recognition provides a way to monitor crowds from a distance, governments have deployed close-range means of tracking individuals too, taking advantage of the nation’s high level of smartphone usage and developing apps to track migration flows.
The municipal government of Hangzhou worked with ecommerce giant Alibaba to launch a feature through the company’s mobile wallet app, AliPay, that assesses the user’s risk of infection. Users answer questions about their recent travel history and current health and the app generates a QR code based on their responses. Guards at checkpoints in residential buildings and elsewhere can then scan that code to gain details about the user, such as whether they’re low risk and can be let in or are high risk and should be quarantined.
Tencent, the operator of China’s most popular mobile messaging service, WeChat, launched a similar product in conjunction with China’s state planner, the National Development and Reform Council. Meanwhile, China’s national transport authority is working with services-on-demand superapp Meituan to roll out a system to collect contact information from public transport users. The system, targeted for launch across ten cities, requires bus passengers to scan a QR code when boarding that grants the authority access to contact information stored on the phone.
China already implements ID checks for intercity passengers, who have to produce their ID to board long-distance trains or buses. Under the cover of coronavirus, monitoring has crept to the municipal level. As of Friday, passengers riding Shanghai’s subway are required to scan QR codes plastered inside train carriages that will verify the user’s phone number, which is linked to the phone holder’s ID, creating a record of their movements.
Lee is skeptical that these more intrusive surveillance techniques will stick around once the virus subsides, arguing that in normal times the imposition might be seen as “too much of a nuisance for ordinary people.” However, John Bacon-Shone, associate dean of sociology at Hong Kong University, thinks that the ongoing threat of outbreaks will provide a constant justification for the new systems.
“In short, I am rather pessimistic that there will be full rollback of data collection once it has been implemented for several months with public health justification. I believe that much of the collection will continue, using public health fears to gain public support,” Bacon-Shone says.
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fortune--2020-03-02--Harley-Davidson starts search for a CEO who can rev up the motorcycle maker’s sales

7 new books to read in March

Harley-Davidson is starting the week in search of a new boss, seeking someone who can stem years of declining sales at the iconic American motorcycle maker just as it’s starting to roll out some new products.
Chief Executive Officer Matt Levatich unexpectedly stepped down Friday, parting ways with the board after a 26-year career at Harley-Davidson—including five years as CEO in which the company lost more than half its market value. Board member Jochen Zeitz will fill the job for now, the company said after the close of business Feb. 28.
Harley shares rose as much as 5% to $32.06 in after-hours trading following the news, suggesting investors were ready for a change at the Milwaukee-based manufacturer.
“An external hire that can look at the business with fresh and critical eyes is needed,” Joseph Spak, analyst at RBC Capital Markets, wrote in a note to investors. That said, “the stock could be in limbo until a new, permanent CEO is named.”
Levatich had been wrestling with several headwinds as CEO, including an aging customer base in the U.S., its biggest market, and heightened tariff costs from President Donald Trump’s trade wars. Harley’s first electric motorcycle, LiveWire, won positive reviews but has yet to kickstart sales or help it achieve greater market share abroad.
We gave #LiveWire cynic Jeff C. the opportunity to ride on #LiveWire for the first time. Check out his reaction. ⚡
When will you take it for a ride? pic.twitter.com/DViyTPt6u4 — Harley-Davidson (@harleydavidson) February 21, 2020
Harley was caught flat-footed by competition from more affordable, lightweight bikes as heavy motorcycles like the one Marlon Brando rode in the movie The Wild One went out of style, said David MacGregor, an analyst at Longbow Research in Independence, Ohio.
“They’re finally figuring it out, but they’re three years behind the curve,” he said by phone. “The board members and investors were just not willing to wait.”
The new CEO would come aboard as Harley is entering new segments with less expensive middleweight bikes, small displacement motorcycles for Asia, and a slew of electric bikes. It’s also been trying everything from tweaking its iconic logo to acquiring a kids e-bike company to attract younger riders.
Even with the yearslong slump in sales, “we are surprised by the timing of the leadership change ahead of major new product launches scheduled over the next few years,” analysts Sharon Zackfia and Tania Anderson of William Blair & Co., wrote in a note.
Road to Recovery?
Harley’s shares have plunged 18% this year, and its $4.6 billion market capitalization is down by more than half from when Levatich took over.
U.S. sales dropped for a fifth straight year in 2019. That period covers most of Levatich’s tenure as CEO, which began in May 2015. Retail sales in the U.S. have risen only once in the past 21 quarters. That inability to spur growth presaged an earnings miss when Harley reported its latest quarterly profits in January.
As recently as last month, Levatich expressed confidence the company was on the road to recovery. “Our return to growth is not in the distance—it’s right around the corner, and 2020 is our pivotal year,” the CEO told investors on a Jan. 28 earnings call.
Levatich’s departure comes after the company moved in January to grant long-term shareholders the power to directly nominate board members, a concession meant to boost investor influence.
Millennial scooters
Harley’s effort to investing in new products to appeal to a younger demographic has added pressure to margins. To help find younger buyers, Levatich hired the company’s first-ever brand president last April, only to dismiss him six months later, citing unspecified conduct that didn’t align with its corporate culture.
The stock staged a recovery in late 2016 when a new engine briefly boosted U.S. sales volumes and Levatich, 55, announced a restructuring plan designed to save the company millions. But the boom proved short-lived.
“They had it, they lost it, they got it back, and lost it again,” said Ken Harris, co-founder of Cadent Consulting Group, a Chicago-based marketing and sales consulting firm. “When people aged out, they had no one to replace those buyers.”
“A millennial would rather have a powered scooter than a Harley Davidson,” Harris said. “I’m not surprised that they had to make a change.”
Trade War Woes
Levatich’s tenure came at a time when many manufacturers were tested by mounting tensions between the U.S. and its biggest trading partners. The Harley CEO went from being one of the first company leaders to be welcomed to the White House in early 2017 to contending with angry tweets about closing a U.S. factory and adding production overseas to avoid tariffs.
Those extra costs dented profits at the company, which had pinned its near-term turnaround hopes on growth in international markets. After Harley announced in June 2018 that it would shift some production out of the U.S. to sidestep tariffs imposed by the European Union in retaliation for U.S. levies on imported aluminum and steel, President Trump attacked the company for months—even threatening to back a boycott of the company’s bikes.
Harley went ahead with plans to ship motorcycles to Europe and China from a new factory in Thailand, which allowed it to mitigate almost all of a $100 million cost burden from the tariffs on U.S.-made bikes. This was part of an effort to get half of its revenue from outside the U.S. by 2027, but that promised growth hasn’t come fast enough to offset the drag from the steady decline in sales in its home market.
Acting CEO
Levatich’s acting replacement, Zeitz, who’s been on Harley’s board since 2007, was named chairman as part of the reshuffling announced Friday. The company said he will remain in that role “once a new CEO is appointed” as a permanent replacement.
Zeitz was the youngest executive to head a German public company when he became CEO of sporting-goods maker Puma in 1993. The 56-year-old led the company for nearly 18 years, increasing sales about 15 times over his tenure.
He also is a philanthropist who collects African art, which is in the eponymous Zeitz Museum of Contemporary Art Africa in Cape Town, South Africa.
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fortune--2020-03-02--To contain COVID-19, Japan urges companies to let employees work from home

The coronavirus outbreak is forcing Japan to examine some of its longest-held aspects of workplace culture, in a country where spending long hours in the office is still regarded as crucial to success.
Authorities have urged companies to break long-standing taboos and encourage their employees to work from home to curb the spread of the virus, and Prime Minster Shinzo Abe’s call Thursday to shut down schools across the country will likely force millions of parents into a work-from-home experiment the country’s firms are ill-prepared for.
Panasonic, NEC, and Mitsubishi are among the growing number of firms that have mandated or recommended remote work for tens of thousands of staff. The change is testing the ability of the nation’s companies to embrace a more flexible work style—overturning a workplace culture that dates back decades and values physical presence and endurance of long hours over productivity or efficiency.
“Employers are unable to evaluate workers appropriately, so they put emphasis on length of hours worked. Those who work long hours are rated highly,” Naohiro Yashiro, a professor at Showa Women’s University in Tokyo, said in an interview. “The failure to promote remote working is just the tip of the iceberg. The real problem is Japan’s low labor productivity.”
Many firms also force employees to use legally mandated vacation days instead of sick days when they’re ill, which pressures people to come into work even when they are feeling unwell. That presents a challenge for authorities increasingly desperate to prevent the spread of the disease by keeping those who might be infected at home.
“There’s a strong belief that work happens when you’re at the workplace,” said Rochelle Kopp of Japan Intercultural Consulting, who advises and trains Japanese firms. “If you leave, you’re thought of somehow letting down your team. People tend to feel badly or are made to feel guilty if they aren’t physically present.”
Workers Endure
Well before the virus outbreak, face masks were common throughout the year as those with colds forced themselves into the office.
“Even if you cancel public events, it won’t help when there’s a group of people that have to go to work even when they feel unwell,” one Twitter user quipped, pointing to a popular over-the-counter cold drug which promotes itself as the “cold remedy even when time-off is not an option.”
And it’s not just illness that workers are expected to endure—during last summer’s record typhoons, which twice paralyzed public transport in the capital, many workers on social media were vocal about companies that forced them to come to the office instead of seeking shelter.
“There’s a sense of tacit knowledge, that work know-how is embedded in individuals and can’t be replaced,” said Hiroshi Ono, a professor of human resources management at Hitotsubashi University. People think, “‘If I’m not there, things won’t get done.’ Japanese people think that it’s their responsibility. They think if they take time off, they’re causing bother to others.”
Even as the virus forces companies and workers to accept the reality of remote work, many are complaining that that in reality, firms are simply not equipped or prepared to let employees work remotely. Despite government encouragement, the IT infrastructure at many firms isn’t yet able to support remote working.
A survey compiled by the Ministry of Internal Affairs and Communications in 2018 found that fewer that one in five companies had implemented “telework,” as working from home is frequently referred to in Japan, while a Workport poll from August found 90% of staff had no experience of working remotely.
Lack of access to laptops and strict security protocols not designed for remote work make it difficult for firms to open up to the practice, Kopp said.
“The problem is, it’s not something a lot of companies can just snap their fingers and do,” she said. “I don’t know how many Japanese companies will be able to get anything together quickly, as it’s an IT challenge.”
‘Unintended Merit’
For Japan, the outbreak is also a moment of truth for labor reform measures launched to great fanfare in 2018. Those measures, aimed at combating a decline in the labor force, were designed to make the labor system more flexible and make it easier for those with children or elderly parents to contribute.
With Tokyo Governor Yuriko Koike having already called for more companies to set up remote work protocols to alleviate the pressure on rush-hour commutes during the upcoming summer Olympics, the virus outbreak could yet help to spur change.
“Companies’ way of thinking will change,” Showa Women’s University’s Yashiro said. “By being forced into doing it, it has the unintended merit of showing companies that they can in fact do remote work. If these companies increase, it could be a useful strategy during disasters.”
And not everybody is struggling. GMO Internet was the first Japanese company to send its workers home following the outbreak, citing the proximity of its offices to major destinations for tourists from China. So far, management is pleased.
“Looking at these results, I’m seriously thinking about the need for an office at all,” CEO Masatoshi Kumagai tweeted on Feb. 16.
In an interview with Bloomberg News, Kumagai—speaking from home—said that the the company had conducted remote work training each year for the past decade or so. “We’ve been in remote work for a month now, but this is a first for us,” he said. “It’s a massive social experiment.”
Kumagai says the company had learned many lessons from the experience so far, and hopes to make use of it in the future.
“There were many things we didn’t initially expect,” he said. “After a month, there are some people who prefer working from home, and others who find it stressful. It really depends on each individual.” Kumagai also sees the experiment as having benefits going forward.
“Personally, I think the results of this will lead to reduced office costs in the mid-term,” he said. “With a hot desk system, you could increase workers by 20% with no increase in office costs if employees work from home once a week.”
Bic Camera, one of the country’s largest electronics stores, said it saw a 20% increase in laptop sales in February, as inquiries around remote working surged.
And some companies are developing novel responses to workers’ ingrained habits. Software developer Asteria said staff with a fever of 37.5 degrees Celsius (99.5 Fahrenheit) or higher will be forbidden even from working from home, the Sankei reported, and will be considered “in attendance” so that staff with little paid leave don’t have to worry about struggling in to work.
“I think this may ‘turn misfortune into a blessing’,” Hitotsubashi University’s Ono said, referencing a Japanese proverb in describing the decision to close schools. “It’s an opportunity for more people to be at home, for remote work to be pushed forward, for a more flexible lifestyle to progress.”
Many workers have reacted positively to the new normal.
“Working from home is the best! I want to do this forever,” said one engineer on Twitter, citing a superior computer monitor, a lack of wait for the bathrooms, and an absence of meaningless meetings.
But of course for many workers in Japan’s economy, remote work will remain a pipe dream.
“There’s no such thing as remote work for us truck drivers,” said one Twitter user. “If we don’t load up our trucks and drive, there’s no salary for us.”
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fortune--2020-03-01--Pete Buttigieg drops out of 2020 presidential race


fortune--2020-03-02--Biden nabs Klobuchar, Buttigieg backing on Super Tuesday eve

Dow surges 5 % on hopes for central bank help on the economy

Rivals no more, Amy Klobuchar and Pete Buttigieg united behind Joe Biden’s presidential bid on Monday as the Democratic Party’s moderate wing scrambled to boost the former vice president just hours before voting began across a series of high-stakes Super Tuesday states.
The urgency of the moment reflected deep concerns from the Democratic establishment that Bernie Sanders, a polarizing progressive, was positioned to seize a significant delegate lead when 14 states, one U.S. territory and Democrats abroad vote on Tuesday.
Klobuchar suspended her campaign and endorsed Biden just a day after Buttigieg announced his exit. Both Klobuchar and Buttigieg, who had been Biden’s chief competition for their party’s pool of more moderate voters over the last year, were set to declare their public support for Biden on Monday evening at a rally in Dallas.
The sweeping shifts come at a key crossroads in Democrats’ turbulent primary season as the party struggles to unify behind a clear message or messenger in its urgent quest to defeat President Donald Trump. Yet as a field that once featured more than two dozen candidates shrinks to just five, the choice for primary voters is becoming clearer.
On one side stands Biden, a 77-year-old lifelong politician who represents a pragmatic approach to governing that emphasizes bipartisanship and more modest change. On the other stands Sanders, a 78-year-old democratic socialist who has for decades demanded aggressive liberal shifts that seek to transform the nation’s political and economic systems.
Yet the primary isn’t yet a two-man race.
New York billionaire Mike Bloomberg, in particular, could create problems for Biden’s establishment appeal. The former New York City mayor, who will appear on a 2020 ballot for the first time on Tuesday, has invested more than a half billion dollars into his presidential bid and wracked up many high-profile endorsements of his own.
And Massachusetts Sen. Elizabeth Warren, who has struggled for delegates and momentum over the last month, has vowed to stay in the race until the party’s national convention in July.
On the eve of Super Tuesday, however, Biden received a significant boost following his resounding victory over the weekend in South Carolina.
He posted his best two-day fundraising haul in more than a year, raising roughly $10 million over the last 48 hours. And the former vice president added to his considerable endorsement lead in recent days as elected officials began to coalesce more meaningfully behind him. He has long been the favorite of many elected officials even as he struggled through the first three primary contests of the year.
Biden’s new backers feature a who’s who of current and former Democratic officials across the nation: former Nevada Sen. Harry Reid; Obama national security adviser Susan Rice; former Colorado Sen. Mark Udall; former California Sen. Barbara Boxer; Rep. Jennifer Wexton, D-Va.; Illinois Secretary of State Jesse White; former Arkansas Sen. Blanche Lincoln; and Rep. Gil Cisneros, D-Calif.
Virginia Rep. Don Beyer, the first member of Congress to endorse Buttigieg, said he planned to endorse Biden and expected Buttigieg to as well.
“I do think it’s the most logical,” Beyer said of a Biden endorsement, given his echo of the former vice president’s call for civility, a mantra of the Buttigieg campaign. “I think Joe is the next best possibility.”
Perhaps the most powerful endorsement would come from former President Barack Obama, who has a relationship with most of the candidates and has talked with several in recent weeks as primary voting has begun. He spoke with Biden to congratulate him after his South Carolina victory, but still has no plans to endorse in the primary at this point.
Sanders’ team shrugged off Biden’s success.
“It’s becoming increasingly clear that the candidates funded by big money and super PACs are coalescing behind Joe Biden, and that’s not a surprise,” said Jeff Weaver, Sanders’ senior strategist. “I think it’ll add a lot of clarity to this race.”
And while Biden’s momentum is undeniable, not everyone in his party’s moneyed establishment is convinced.
Some major donors preferred to wait until after Super Tuesday to decide whether to join the Biden movement.And even some of his more loyal fundraisers remain frustrated by disorganization within the campaign.
For example, the former vice president has struggled to raise money in Silicon Valley, where many wealthy donors prioritize organization and a data-driven plan. The inability of Biden’s team to demonstrate such competence pushed many donors toward his rivals, and others are taking a wait-and-see approach.
“We need to see what happens tomorrow, which is going to be very telling,” said Alex Sink, a Democratic donor and former Florida gubernatorial candidate who endorsed Bloomberg.
And the former vice president’s strategy for the coming days, which relies on media coverage and dispatching his new collection of surrogates, reflects a stark reality: Compared to Sanders and Bloomberg, Biden is understaffed, underfunded and almost out of time as he fights to transform his sole South Carolina victory into a national movement.
Biden announced he raised $18 million in February, compared to an eye-popping $46.5 million for Sanders and $29 million for Warren.
Sanders has struggled to win over his colleagues in Congress but earned a high-profile endorsement of his own on Monday from Democracy for America, a national grassroots organization originally led by former Vermont Gov. Howard Dean that boasts thousands of members across the county.
“The overwhelming support for Bernie we saw in our member vote should be a wake-up call to the broken, visionless, corporate Democratic establishment,” said the organization’s chair Charles Chamberlain. “Americans want fundamental change in Washington, not a return to the status quo.”
Some Democrats also bemoaned the distinct lack of diversity in the shrinking field.
The National Organization for Women’s political action committee endorsed Warren on Monday. The group’s president, Toni Van Pelt, said she’s alarmed about the lack of attention paid to the female candidates, who have often had to defend their “electability.”
“It’s time to support a woman,” she said. “We want to make sure we’re not looking at all these old white men again.”
Through four primary contests, the AP allocated at least 58 delegates to Sanders, including two added Sunday as South Carolina’s remaining votes trickled in. Biden vaulted past Buttigieg into second place with at least 50 delegates — shrinking Sanders’ lead from what had been 30 delegates before South Carolina to eight. Buttigieg, Warren and Klobuchar remained stuck at 26, eight and seven, respectively.
Candidates who drop out of the race keep the delegates they’ve won until each state party selects the actual people who will serve as those delegates at the Democratic National Convention in Milwaukee. At that point, delegates won based on statewide primary and caucus results are given to the remaining viable candidates. Delegates won based on results in congressional districts become free agents, who can support the candidate of his or her choice on the first ballot at the convention.
The first four states were always more about momentum more than math. Super Tuesday states offer a trove of 1,344 new delegates based on how candidates finish. Just 150 delegates have been awarded so far.
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fortune--2020-03-02--Home Depot renovated its holiday merchandising, and Black Friday sales followed

The mention of Black Friday usually conjures up images of frenzied shoppers buying a TV at Best Buy, a coffee maker at Walmart, or a sweater at Macy’s.
The Home Depot executives thought the same thing and had accepted being a mere afterthought for consumers during retail’s busiest time of the year.
But over the last few years, the home improvement chain has emerged as a serious player during Black Friday and beyond. What changed? The chain rehabbed their approach to merchandising and it had a dramatic impact on sales.
“Home Depot wasn’t a Black Friday destination,” Ted Decker, the company’s executive vice present for merchandising, tells Fortune. “We weren’t a gifting destination, we didn’t have a holiday decorations program.” Paint, nails, and plywood don’t exactly make for exciting holiday gifts.
That has clearly changed: Home Depot chief executive officer Craig Menear last week called out a strong Black Friday-Cyber Monday performance as a key factor in its blockbuster fourth quarter results, including a 5.3% jump in comparable sales, noting customers’ “excellent response to our Black Friday and holiday events.”
The fourth quarter was, and remains, its slowest period of the year. The second quarter, when people ramp up home projects as spring arrives, is much more important. Still, Home Depot felt it was leaving money on the table by sitting out Black Friday. Why not try to get in on the action with consumers who were already at nearby strip centers or shopping rivals like Target and Best Buy?
To lure people in, Home Depot launched its “Gift Center.” Though the idea has evolved over the years, its most recent incarnation included a seasonal display at the front of each store filled with items that have good gift potential, such as power tools and mechanics tools, as well as products—like batteries—that pair well with gifts from other stores—say, children’s toys.
And just a few years ago, Home Depot started to offer doorbuster deals à la Walmart or Kohl’s: this past Black Friday, for instance, the chain offered a 270-piece Husky mechanics tool set for $99, a steep cut from the usual price of $229.
Home Depot also started to sell more seasonal decorations, in addition to the live Christmas trees that had always been on offer. The stores have done brisk business in new products including artificial trees with LED lights and the giant inflatable characters that wave from front yards throughout the holiday season.
Many of the products Home Depot has given prominent space to were already part of its assortment. But showcasing those items in one prominent place, spurring the kind of impulse shopping Target and Macy’s are known for, brought more shoppers and sales into Home Depot stores, Decker says.
And that approach is used throughout the year, with different regions showcasing seasonal wares when the time is right. The space used for artificial trees in November and December displays winter storage products like totes and shelving after the holidays end. In the South, stores are already using that area to display patio sets.
That improved merchandising has been part of a larger effort to expand Home Depot’s assortment: a few years ago, the company started adding more cleaning products and moving boxes. The reasoning: people who are buying a new home are also moving so sell them related products, as long as they are consistent with its home maintenance and improvement raison d’être.
The efforts have paid off: both Lowe’s and Home Depot have benefitted from the last decade’s booming housing market, yet Home Depot has consistently outperformed Lowe’s in terms of sales growth since the financial crisis ended.
The chain is also getting a ton more mileage from its stores: sales per square foot at Home Depot rose to $447 in 2018, the last year for which data are available, from $279 a decade earlier.
Analysts credit Home Depot’s merchandising know-how for the boost. “The execution in categories like holiday décor, winter home preparation, and other festive assortments was far stronger at Home Depot than Lowe’s,” says Neil Saunders, managing director of GlobalData Retail. “This underlines the executional prowess of Home Depot and its ability to take advantage of seasonal events—both things that ultimately drive footfall.”
As for this past holiday season, one category that did well was smart home products, not typically Home Depot’s bailiwick. But, executives thought, why should Best Buy have all the fun? “We’re not going to do electronics like TV’s,” Decker says. “But we will do smart home, like lighting and thermostat control.”
Another category that performed well during the holidays was appliances, a market Sears and J.C. Penney have largely ceded to rivals like Home Depot and Lowe’s.
But big appliances like washing machines, historically purchased only when they’ve broken down, have become a bigger part of holiday season gift giving, Decker says, helped by having better aesthetics than they used to. “They used to be white, white, white. Now we have stainless, matte black, slate, and graphite,” he says. “There is a design, discretionary element to them now.”
And for consumers, discretionary shopping is exactly what Black Friday (and, at times, the rest of the year) is all about.
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fortune--2020-03-02--Recording Academy fires ousted CEO, citing investigations

The Recording Academy on Monday fired Deborah Dugan, its former president who called into question the integrity of the Grammy Awards nominations process and said she was sexually harassed by a top lawyer for the organization, which she called a boys’ club that coddled and favored powerful men.
The academy said the decision was reached after “two exhaustive, costly independent investigations” about Dugan and her allegations. It said the reviews found “consistent management deficiencies and failures,” though no specifics were offered.
Dugan had been on administrative leave since mid-January, when she was ousted amid a complaint about her treatment of a longtime Recording Academy employee. Dugan had also raised several issues about the way the organization ran and accused its top lawyers of acting inappropriately toward her during a business meeting, which she detailed in a discrimination complaint filed with the Equal Employment Opportunity Commission.
Dugan’s attorneys Douglas H. Wigdor and Michael J. Willemin said in a statement that the academy’s decision to fire her and immediately notify media outlets “further demonstrates that it will stop at nothing to protect and maintain a culture of misogyny, discrimination, sexual harassment, corruption and conflicts of interest.”
“The decision is despicable and, in due course, the Academy, it’s leadership and its attorneys will be held accountable under the law,” the statement said.
Dugan’s ouster played out days before the academy’s most important night, the Grammy Awards, a ceremony that made no mention of her or her allegations of a rigged voting process for some of the ceremony’s top awards.
The academy said it had engaged in some settlement discussions with Dugan but opted to fire her instead, and will begin the search for a new CEO.
“We could not reward her with a lucrative settlement and thereby set a precedent that behavior like hers has no consequence,” the academy’s executive committee wrote in a letter to members. “Our members and employees, and the entire music industry, deserve better than that.”
Dugan’s EEOC complaint alleged that Joel Katz, an influential music attorney and the academy’s general counsel, tried to woo her romantically and attempted to kiss her against her wishes during a dinner last year that had been presented as a business meeting. Katz said he “categorically and emphatically denies her version of that evening.”
Dugan said her ousting was also retaliation for calling out the culture of the academy, saying she learned as CEO that her predecessor, Neil Portnow, had left the post over a rape allegation, yet she was still expected to give him a lucrative consulting position. Portnow said Dugan’s assertions were “false and outrageous” and that he had been “completely exonerated” in an investigation.
The academy said Monday that it had conducted exhaustive investigations of the complaints made by Dugan and those made against her by others, including the academy’s Director of Administration Claudine Little, who said Dugan had been abusive and bullying as a boss, which Dugan denied.
“The investigation overwhelmingly confirmed the serious complaints that had been lodged against her by a multitude of academy staff members,” Tammy Hurt, vice chair of the academy’s National Board of Trustees, said in a statement. “The damage she has caused this organization is truly heartbreaking.”
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