This Isn’t Just JPMorgan’s Problem

https://www.nytimes.com/2020/09/16/business/dealbook/jpmorgan-office-covid.html

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JPMorgan Chase sent some of its workers home this week after an employee in its trading unit in Midtown Manhattan tested positive for the coronavirus, a person familiar with the matter told DealBook.

The timing isn’t great. The news broke days after President Trump brought attention to the investment bank’s plan to bring some of its senior workers back to the office, inaccurately tweeting, “Congratulations to JPMorgan Chase for ordering everyone BACK TO OFFICE on September 21st. Will always be better than working from home!” (The bank had, in fact, only asked some senior employees in its sales and trading division to return.) Mr. Trump’s tweet politicized a decision that JPMorgan, and other companies, would probably like to make without such fanfare.

Jamie Dimon’s reported comments about young people working from home didn’t help either. JPMorgan’s C.E.O. told analysts with Keefe, Bruyette & Woods in a private meeting that working from home “seems to have impacted younger employees, and overall productivity and ‘creative combustion’ has taken a hit,” one of the analysts, Brian Kleinhanzl, wrote in a note, according to Bloomberg. A spokesman for JPMorgan later clarified that the bank had noticed a productivity drop in all employees, though younger workers “could be disadvantaged by missed learning opportunities.”

The bigger story is how it highlights the calculations that companies are making as they bring people back to the office. The worries about productivity and weakening social ties are real, and so are the risks (including legal liability) of virus outbreaks in offices. The case numbers in New York are down, which could make people more comfortable with coming in; the same can’t be said about London, for example. How much pressure should companies put on employees to return to the office? How will sporadic outbreaks affect workers’ attitudes toward coming in? When, if ever, will workers get used to the cycle of going to the office until a new case emerges and they are told to stay home? Is it better just to deal with the consequences of remote working until there is a vaccine?

• A JPMorgan spokesman told The Times in a statement, “We’ve been managing individual cases across the firm over the course of the last few months and following appropriate protocols when they occur.”

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Today’s DealBook Briefing was written by Andrew Ross Sorkin in Connecticut, Lauren Hirsch in New York, Ephrat Livni in Washington, and Michael J. de la Merced and Jason Karaian in London.

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Judy Shelton’s Fed nomination appears to have stalled. Senator John Thune of South Dakota, the majority whip, said that the contentious Trump nominee did not have the votes to be confirmed, suggesting that fellow Republicans still had concerns.

A House report condemned Boeing and the F.A.A. for the 737 Max crashes. Mismanagement at the aircraft manufacturer and a “severe lack of federal oversight” contributed to the two fatal crashes of the jet that killed a total of 346 people, according to Democrats on the House Transportation and Infrastructure Committee.

ByteDance will keep a majority stake in TikTok. The deal to bring Oracle in as TikTok’s tech partner will see TikTok spun out as a U.S.-headquartered company in which Oracle and other American investors will own a minority stake. The proposal remains under review by U.S. national security officials, with a decision expected within days.

Kodak’s board claimed ignorance about the timing of stock option grants. An inquiry commissioned by the company concluded that Kodak’s general counsel had failed to properly brief directors on the legal risks of giving options to Jim Continenza, its C.E.O., the day before it announced a $765 million federal grant to make drug ingredients, which sent its share price soaring.

U.S. poverty hit a record low before the pandemic. The share of Americans living in poverty fell to 10.5 percent last year, according to the Census Bureau, the lowest rate since estimates were first published in 1959. Still, 26 million Americans lacked health coverage, according to the survey that serves as a snapshot of the economy just before the pandemic recession hit.

Apple announced a number of new products, including a $30-per-month subscription bundle of its new fitness program, Apple Fitness Plus, along with its cloud storage, music, TV, gaming and news services.

The rollout comes as Apple is under increased antitrust scrutiny. Bundling services alongside its popular hardware products sparked different reactions from rivals old and new.

• Spotify warned of “irreparable harm” if regulators don’t act: The music service said in a statement that, “Once again, Apple is using its dominant position and unfair practices to disadvantage competitors and deprive consumers by favoring its own services.” Spotify is currently suing Apple in Europe for alleged anticompetitive practices, on similar grounds to Epic Games’s lawsuit in the U.S.

• Peloton welcomed a new competitor: “Friendly competition is in our DNA. Welcome to the world of digital fitness, @Apple,” it tweeted.

Is the new bundle a threat? Apple’s control of its devices and operating system give it an enviable platform to host a range of services that compete with specialized rivals like Spotify, Netflix and others. Its pricing and actions as a gatekeeper will determine whether it attracts more attention from antitrust regulators (just ask Amazon). A test will come in its foray into digital fitness, a market flooded with streaming classes featuring providers, like Peloton, that have invested in years of relationships with top-tier instructors that are central to driving demand.

One final question: Where’s Apple’s rumored Tile competitor?

Splitting the difference — also known as compromise — is often a wise negotiation tactic. In that spirit, the bipartisan House Problem Solvers Caucus presented a $1.5 trillion coronavirus relief package yesterday. It was close to what the White House indicated it might be willing to spend on stimulus, not as much as the $3 trillion House Democrats are looking for and much more than the $300 billion bill most recently backed by Senate Republicans.

The bill went nowhere fast, swiftly dismissed by party leaders. DealBook asked the Democratic co-chair of the 50-member Problem Solvers Caucus, Representative Josh Gottheimer of New Jersey, about the point of this doomed attempt at compromise. “Ideally, you wouldn’t need us,” he conceded. “But clearly that’s not where we are.”

The group’s mission is “putting country first” and “actually trying to govern,” Mr. Gottheimer said. The goal was to show areas of agreement and get negotiators back on track. The caucus presented a road map it not-so-subtly called the “March to Common Ground” for the next six to 12 months, with “boosters” and “reducers” adjusting the costs of a bill, tied to circumstances (like the discovery of a vaccine).

“We represent the voices of 50 million Americans screaming out to Congress, ‘Do your job!’” said Representative Tom Reed of New York, the Republican co-chair of the caucus. Undeterred by the rejection of his preferred plan, he said he was heartened by the news that House Speaker Nancy Pelosi had told the chamber to stay in session until there was a deal, and by signs of a “thawing in the gridlock” from the White House chief of staff, Mark Meadows. “Stay tuned, you’re going to see more of this,” Mr. Reed predicted.

After George Floyd was killed by police officers in Minneapolis in May, a deluge of executives spoke out against racial injustice and pledged to address systemic inequality. Now, the focus is shifting internally, as boardrooms confront their own lack of racial diversity. Advisers and investors are pushing directors to back up their rhetoric with action or face financial, regulatory and reputational consequences.

Racial diversity has become one of the most pressing agenda items in boardrooms, DealBook hears. Underrepresented ethnic and racial groups make up 40 percent of the U.S. population, but just 12.5 percent of board directors at the 3,000 largest listed companies, up from 10 percent in 2015, The Times’s Peter Eavis writes. Black directors account for 4 percent of all directors, versus 13 percent of the population.

“This is the singular topic of governance discussions,” Daniel Wolf, a partner at the law firm Kirkland & Ellis, told DealBook, adding, “Boards are going to try and get ahead of it.” Kirkland recently sent a 19-slide PowerPoint deck to clients that highlighted the importance of diversity and inclusion amid increasing shareholder and regulatory scrutiny.

“This seems like a fundamentally different time than the other times Black men were murdered by the police,” said Ursula Burns, a former Xerox C.E.O. who is a director at Exxon, Nestlé and Uber. She is helping to lead the Board Diversity Action Alliance to help companies add Black directors, an organization that has Dow, Mastercard and UPS among its supporters. A similar initiative, the Board Challenge, counts Merck, United Airlines and Verizon among its members.

• “You cannot look your stakeholders in the eye and say, ‘It doesn’t affect us, we are color blind, we don’t need to make changes,’ ” said Rebecca Thornton, the head of director advisory services at JPMorgan. More than 40 percent of the requests for board candidates she has received from clients this year asked for people of color, she noted.

Shareholders — and regulators — are watching. When major institutions put pressure on companies to add women to their boards a few years ago, it had a measurable impact. Now, some of those forces are turning their focus toward racial diversity, hence the warnings about the price of inaction. The evidence of stronger financial returns at more diverse firms also helps.

Who is doing what:

• California passed a bill last month requiring publicly traded companies headquartered in the state to have board members from underrepresented communities.

• New York City’s comptroller called for companies to adopt a version of the NFL’s “Rooney Rule,” requiring companies to consider gender and racial diversity in searches for C.E.O.s and directors.

• State Street said it would start to ask companies to explain their risks, goals and strategy related to racial and ethnic diversity.

• ISS, the proxy adviser, said it would begin sending letters to listed companies asking for more details on the racial diversity of board members and executives.

The father of Microsoft’s co-founder died on Monday at the age of 94. Though best known in his later years as the man who oversaw his son’s enormous philanthropy, he was also a successful lawyer who played a major role in the life of another future billionaire, Howard Schultz of Starbucks.

Mr. Gates Sr. laid the foundation for his son’s charitable giving, starting with an $80,000 check from what was then the William H. Gates Foundation to a cancer program in the Seattle area. Mr. Gates Sr. laid out his philosophy on philanthropy in his 2009 book, “Showing Up for Life,” this way:

As a lawyer, he helped Mr. Schultz take control of Starbucks. Mr. Gates Sr. co-founded what became the prominent Seattle law firm K&L Gates and was president of the Washington State Bar Association. One of his career achievements was helping Mr. Schultz beat out a competitor to buy Starbucks in 1987.

• Mr. Schultz recounted Mr. Gates Sr. taking him to his rival bidder’s office: “All I remember him saying is: ‘You should be ashamed of yourself that you’re going to steal this kid’s dream. It’s not going to happen. You and I both know this is not going to happen.’ ” The investor quickly backed down and Mr. Schultz bought Starbucks for $3.8 million.

Deals

• The cloud software company Snowflake raised $3.4 billion in its I.P.O., the biggest U.S. public offering so far this year. (Reuters)

• The house-sales platform Opendoor will go public by merging with the blank-check company Social Capital Hedosophia II in a deal valued at $4.8 billion. (CNBC)

• Oatly, the popular oat-milk brand, reportedly may go public next year at a potential $5 billion valuation. (Bloomberg)

Politics and policy

• Joe Biden has increasingly surrounded himself with left-leaning economic advisers as the Democratic Party and voters favor more economic stimulus measures. (Politico)

• President Emmanuel Macron of France defended his country’s introduction of 5G wireless services, saying critics preferred “the Amish model” and “going back to the oil lamp.” (AFP)

Tech

• The Justice Department has reportedly begun an inquiry into whether the electric-truck maker Nikola misled investors with exaggerated claims about early models’ capabilities. (WSJ)

• Celebrities like Kim Kardashian West are planning to protest Facebook’s misinformation and hate speech policies with an “Instagram freeze.” The public’s reaction was, shall we say, divided. (NYT)

Best of the rest

• An unexpected new use of Zoom: sentencing people to death via virtual courts. (Rest of World)

• The parent company of Chuck E. Cheese wants a bankruptcy court’s approval to shred seven billion prize tickets. (Bloomberg Law)

• “The Billionaire Who Wanted to Die Broke … Is Now Officially Broke” (Forbes)

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