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Good morning.
Big bank profits took a beating in the first quarter, and analysts are saying the recession could cause full-year profits to crater by more than 60%. But unlike in the Great Recession, this time, the banks likely will stay afloat. Why? Because they entered this year with the strongest capital levels they have had since 1940, largely as a result of regulatory actions taken after the last downturn. (It’s comforting to know we do sometimes learn from a crisis.) Fortune’s Shawn Tully looks at the state of the big banks in a story for the May edition of the magazine, which you can read this morning here.
Separately, Fortune’s new podcast, Leadership Next, takes a break this week from our focus on the coronavirus. Instead, we are airing an interview I did before the crisis hit in full force, with the delightful Eileen Fisher, clothing designer and entrepreneur. You can listen to the podcast here.
Fisher has been in business for 36 years, and from the beginning, her company has been a pioneer in working with suppliers to assure sustainable practices, and more recently, working with customers to encourage recycling of clothes. She and her employees have maintained 100% ownership of the company so “we don’t answer to shareholders…or to quarterly numbers.” She also has adopted the B-Corp framework, to ensure that the company measures and tracks its sustainability efforts.
I asked her if she has seen more companies moving in that direction in recent years. “Radically more, in the last two years,” she answered. “I think it is becoming an urgent thing, especially with the next generation coming up, and the planetary crisis that everyone is aware of. The companies that aren’t doing this kind of work are going to be gone in five years, or 10 at the most.”
I wasn’t able to get back to Eileen to see whether the pandemic had altered her view of the next decade. But I did notice this story in The Hudson Independent: her company transformed its corporate offices in Irvington, N.Y., to make personal protective equipment. It expects to make 500 masks a week.
More news below.
Alan Murray
@alansmurray
alan.murray@fortune.com
TOP NEWS
Oil prices
The oil price is in the red again. The price of a barrel of WTI crude collapsed yesterday to minus $37.63; the first time in history that it went negative. The drop was, however, in many ways a case of technical trading and a weak market colliding. The May contract will close later on Tuesday, and whoever is left with the contracts risks taking delivery of real oil—and limited options for where to store it, as a backlog of oil risks filling up storage tanks completely. This morning the price recovered to the lofty heights of $1.60 or so…before falling as low as minus $7.80. Futures for the coming months are also sinking, as are the markets in general. Fortune
Bust airline
Virgin Australia has gone into voluntary administration, under the weight of $4.8 billion in debt. The Australian government refused to bail out the airline by taking a stake. For now, Virgin Australia's 10,000 staffers get to keep their jobs, but it's hard to predict what will happen after it exits the bankruptcy process under new ownership. Expect more of this—a lot of airlines are perilously close to the edge. Guardian
Facebook ban
Facebook has banned events that contravene social distancing orders put in place by state governments. Specifically, the social network has trashed listings for anti-quarantine protests in California, New Jersey and Nebraska. As a result, Donald Trump Jr. has attacked Facebook for "quashing people's free speech." BBC
Immigration ban
President Trump said he would temporarily shut the U.S.'s borders to immigrants, "in light of the attack from the Invisible Enemy, as well as the need to protect the jobs of our GREAT American Citizens." The enemy in question—the novel coronavirus—is of course already well established within American borders; the U.S. has the highest infection and death figures in the world, by quite some margin. As for jobs, it's hard to see how the move might revive the collapsed demand for labor. Fortune
AROUND THE WATER COOLER
Contact tracing
Most experts agree that we're all going to need to carry around smartphone apps that will allow us to be warned when we have been in contact with a COVID-19 carrier. But how the matching and warning process takes place will have major privacy implications—as is clear from a massive argument taking place among European technologists, who are working on such systems. Fortune
Retail survivors
Which retailers are doing relatively well in the coronapocalypse? As Fortune's Phil Wahba explains, it's those that take seriously the integration of stores and shopping technology. Gartner's Kimberly Becker: "The retailers that were already doing it successfully are the ones that are going to recover much more quickly." Fortune
Israel deal
Israel won't be heading for a fourth straight national election, after Benjamin Netanyahu and rival Benny Gantz—neither of whom won a majority in the last three—finally struck a deal. Netanyahu will remain prime minister for the next 18 months, with Gantz as his deputy; then they will switch roles. Washington Post
Oh nein
Oktoberfest is off. In what will be a blow to the Munich economy, Bavarian state president Markus Söder and Munich mayor Dieter Reiter decided that the risk was too high to allow the September-to-October event to go ahead. The cancellation demonstrates how, even though Germany is starting to slowly open up its economy again, mass gatherings will remain verboten for quite a while yet. Bloomberg
This edition of CEO Daily was edited by David Meyer.
