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Is Facebook foreshadowing the future of work?
It’s one thing for smaller tech companies to promote remote-first work policies. But it’s a much bigger matter when a titan of Silicon Valley announces sweeping changes for its 45,000 employees. The office may never be the same, as we flagged in yesterday’s newsletter.
Up to half of Facebook employees could work remotely within a decade, Mark Zuckerberg told employees in a livestreamed meeting yesterday. “It’s clear that Covid has changed a lot about our lives, and that certainly includes the way that most of us work,” the Facebook chief said.
It’s a stark change from the culture of “getting workers into giant offices and keeping them there,” The Times’s Kate Conger notes. It’s unclear whether other tech giants will follow suit, though Google searches for “Twitter jobs” spiked after Twitter announced a similar measure.
Internal surveys indicated that 40 percent of Facebook employees are interested in remote work. Within that group, 45 percent said they’d probably move to another city if remote working were a permanent thing. Mr. Zuckerberg said he was considering establishing hubs in cities like Atlanta, Dallas and Denver for employees in those areas to visit occasionally.
People are grappling with the implications:
• Mr. Zuckerberg said compensation would be lower for employees in less expensive cities, with internal checks to verify where workers are logging in from.
• The Times’s Conor Dougherty wondered whether workers would move farther into the suburbs rather than completely leaving, say, the Bay Area.
China gives up on 2020 growth targets
Beijing has highlighted the economic turmoil from the pandemic by not setting an annual growth target for this year, for the first time in 25 years.
“Our country will face some factors that are difficult to predict,” Premier Li Keqiang, the country’s No. 2 official, said today at the National People’s Congress, the annual gathering where priorities are unveiled.
• China isn’t adopting the huge, expensive stimulus plans seen elsewhere, wary of borrowing enormous amounts of money. Leaders have instead called for initiatives worth just 2 percent of economic output. (Rescue programs in the U.S. are worth around 14 percent of G.D.P.)
Goldman’s mixed record on consumer relief
The bank pledged to provide $1.8 billion in relief to homeowners as part of a settlement with federal prosecutors over the 2008 financial crisis. As a result, it’s become a big buyer of distressed mortgages — and as a result of that, has since foreclosed on over 10,000 homes, The Times’s Matt Goldstein reports.
Goldman’s mortgages purchases are part of its relief efforts, Matt writes. Distressed investors, who buy the loans at steep discounts from the likes of Fannie Mae and Freddie Mac, try to make money by modifying the debt to help borrowers with repayment. But they can also foreclose on the properties.
Those foreclosures help offset the cost of other homeowner assistance. That has led critics to accuse the bank of acting like any other distressed investor, while getting credit for helping struggling borrowers.
Insurers brace for impact
The pandemic is producing enormous losses for business insurers worldwide: “It will be $100 billion or greater,” said Evan Greenberg, the C.E.O. of the insurer Chubb.
Claims will come from all sides — people exposed to the coronavirus at work, patients injured by overwhelmed hospital workers, travelers whose trips were canceled. In addition, because of market turmoil, insurance companies have racked up investment losses on reserves they had set aside to pay claims.
Speaking to editors and reporters from The Times yesterday, Mr. Greenberg said that the pandemic had turned businesses upside down, but that it doesn’t mean every business with a policy has a valid claim.
Far from it. Business interruption insurance “is an outgrowth of a traditional fire insurance policy,” he said. Policyholders have to show that they “have direct physical damage,” and shelter-in-place orders by mayors or governors do not qualify.
Trial lawyers don’t necessarily see it that way. As the pandemic continues, they have been advertising their services to companies whose business-interruption claims have been rejected. And some lawmakers have been calling for legislation that would make pandemic-related business interruptions insurable.
Mr. Greenberg — who said that Chubb was receiving tens of thousands of pandemic-related claims in the 55 countries where it does business — said he sympathized with struggling business owners. But the general exclusion of pandemic losses from business insurance coverage is no accident.
“If you had insurance to cover the pandemic, you’d be underwriting the whole U.S. economy,” Mr. Greenberg said. “It’s impossible. With a finite balance sheet, you’d be taking on an infinite risk.”
Chubb is, however, paying some business interruption claims related to the pandemic, “and we’ll be paying many more over the next weeks and months,” he said.
Don’t believe it? Mr. Greenberg said the payouts would be “quite visible” in the company’s next quarterly results.
Restructuring, reinvention and the retail industry
Our DealBook Debrief call yesterday discussed the rise of restructurings and outright bankruptcies as a result of the pandemic. Listen to the full recording here.
Retailers were among the first to feel the pain. Our special guest, Sapna Maheshwari, who covers the retail industry for The Times, said that stores were planning to reopen by the end of July and hoping that the trickle of revenue keeps them afloat until the holiday season. But many are closing some stores permanently, like J.C. Penney, which recently filed for bankruptcy protection.
• The loss of big department stores could trigger co-tenancy clauses, Sapna said, giving malls’ other shops leverage to demand rent reductions, which feeds a downward financial spiral.
And what about all those empty department stores? For big-box buildings that won’t reopen, owners will have to be creative, Sapna said:
In the past, there have been experiential companies that make kids’ game centers in them, but that’s probably not the best idea right now in a social-distancing world. Maybe they become distribution centers, or in some cases we’ve even seen them become housing.
What awaits this year’s Wall Street interns
When Bill Keenan’s dream of becoming a professional hockey player ended, he became an investment banker. That didn’t work out either, which he describes in a new memoir, “Discussion Materials: Tales of a Rookie Wall Street Investment Banker.”
He spent nearly two years at Deutsche Bank in New York, and quit in early 2018 with a famously sarcastic farewell email. (Always better with words than spreadsheets, he is now the C.O.O. of Graydon Carter’s digital media start-up, Air Mail.) As this year’s banking interns prepare for a shortened, virtual stint at the “office,” we asked him what they might miss from the experience.
What are the downsides for interns working remotely?
Without immersion in the environment, it’s going to be really difficult to get as much out of the experience. Once you’re finished with the menial work, like changing the fonts in pitch decks and all that, there is a lot of waiting around. You won’t be able to capitalize on those in-between periods.
I didn’t know what was going on as an intern, so I’d just stay later. If you start building good will by picking up M.D.s’ Seamless orders, hanging out and talking shop, you earn their respect and all of a sudden, they want to help.
Are there any benefits to a virtual internship?
For the people who are a little more introverted, they are going to have an opportunity. This is now a time when work product from junior bankers will have to stand alone. There are people that may not have the personality, but if an M.D. needs something done perfectly, they can do it right.
What advice, generally, would you give this year’s interns?
I can’t tell you what it’s going to be like when you start your career on Zoom, but banking is all about adapting. You just have to commit to it. But if it’s not for you, you don’t have to stay.
They’ll try to apply pressure to make you feel that you’re making a mistake if you leave, but it’s not the end of the world. Without banking, I wouldn’t have my new job.
The speed read
• Shares in SelectQuote, the biggest company to go public amid the coronavirus, jumped 36 percent in their debut. (WSJ)
• Magic Leap, the augmented-reality headset maker, raised $350 million in new funding — but hasn’t disclosed the investors. (Business Insider)
Best of the rest, bumper long-weekend edition
• The state of crypto hedge funds: “It’s an understatement to say it’s a blood bath across the board.” (FT)
• The businesswoman and reality TV star Bethenny Frenkel tried to procure medical masks for New York. It didn’t go well. (NYT)