Strome Business Minute With Dr. Jeff Tanner

Welcome to a Strome Business Minute, presented by the Strome College of Business. Colleges and universities will play an important role in rebuilding the economy according to Thomas Barkin, president of the Richmond Federal Reserve, and Steven Moret, president of the Virginia Chamber of Commerce. The two were part of a panel last Friday at Virginia Tech. As Barkin said, many old jobs won’t be available, at least not in the numbers they were before. Displaced Workers will need new skills, skills they can get from colleges. But with more than half a million Virginians without access to broadband, online education may not be possible. All of Virginia’s community colleges and universities, though, will be offering face to face classes this fall, so long as the state can remain open. But fall enrollment so far is down most places, Eastern Shore Community College being the exception. To learn more, visit odu.edu/business. This Strome Business Minute is presented by the Strome College of Business, Old Dominion Unive

Welcome to a Strome Business Minute, presented by the Strome College of Business. Last week at this time, corporate responses to the racial protests felt different based on the donations to African American organizations. African Americans said otherwise, based on the lack of direct support for black-owned businesses. Aurora James, founder of Brother Vellies luxury fashion accessories, posted on social media that retailers should pledge fifteen percent of shelf space to black owned businesses, as that’s the percentage of the national population that is black. One luxury brand retailer, Sephora, agreed, and quickly realized that less than three percent of its vendors are black-owned. In an NPR interview, the CEO said a similar initiative to support women-owned businesses proved very successful, so perhaps real change will happen. To learn more, visit odu.edu/business. This Strome Business Minute is presented by the Strome College of Business, Old Dominion University.

Welcome to a Strome Business Minute, presented by the Strome College of Business. According to Goldman Sachs, the average investor has beaten the pros in the stock market during the pandemic. The portfolio of stocks purchased by individual investors since the bottom on March twenty third has returned sixty one percent, compared to a forty five percent return on stocks purchased by mutual funds, hedge funds and other pros. Individuals looking for value purchased stocks that were beat up the most by the pandemic, including Penn National Gaming, MGM Resorts, Royal Caribbean Cruise Lines and Marathon Oil. Also doing well for individuals were GoPro, Snap, and Tesla. Most of the gains were made on stocks purchased in mid May when both the virus news and economic news got a little better and the market began its climb, though now it seems to beaded back down. To learn more, visit odu.edu/business. This Strome Business Minute is presented by the Strome College of Business, Old Dominion University.

Welcome to a Strome Business Minute, presented by the Strome College of Business. No tombstone ever read, “I wish I’d spent more time at the office.” With permanent telework offered at Facebook and Twitter, one has to wonder whether anyone will go back to the office. But some local business leaders have told me that they’ve seen productivity declines during the lockdown and Amazon is steadfast in its plans to build a second headquarters of four million square feet. One factor against permanent telework is the lack of spontaneous conversations that lead to new ideas. Pre-COVID, Google tested how to set up their offices to encourage spontaneous conversations, especially between people who didn’t know each other, to generate innovations. Why? Because research shows spontaneous conversations between people who DON’T know each other beats brainstorming sessions or personal reflection for innovations. To learn more, visit odu.edu/business. This Strome Business Minute is presented by the Strome College of Business,

I’m Jeff Tanner and this is a Strome Business Minute, presented by the Strome College of Business. Move over Amazon. Here comes ASGN. Well, okay, not quite the size of Amazon but the relocation of ASGN corporate headquarters from California to Henrico County could be a sign of things to come as more companies flee the high cost of California, bringing 700 jobs to Virginia, including an expansion of its Virginia Beach operations to 147 employees. ASGN provides IT consulting services to commercial and government clients, and already has 4,000 employees across the state. The company will spend more than 12 million on two locations to provide room for the growth and the governor kicked in 900,000. The CEO told Virginia's business that this move brings the two largest divisions together, but you can't overlook that they also save a lot of money. This has been a Strome business minute, presented by the Strome College of Business at Old Dominion University

Welcome to a Strome Business Minute, presented by the Strome College of Business. Kroger joined Target and Starbucks in ending its two dollar an hour hero pay to workers for hazardous duty due to the Corona virus. Kroger employees responded by protesting across Virginia, holding drive-through rallies and standing outside stores with signs calling for return of the hero pay. Target and Starbucks employees, though, haven’t protested. Starbucks sales are expected to be down some three billion dollars so maybe their employees were cutting them some slack. Meanwhile Dollar Tree announced last week that it is extending its hero pay at least through the end of June. Like the others, Dollar Tree’s hero pay is two dollars per hour, and the company estimates that the total additional cost will be about fifteen million dollars, having already spent about one hundred and five million on hero pay so far. To learn more, visit odu.edu/business. This Strome Business Minute is presented by the Strome College of Business, Old

Welcome to a Strome Business Minute, presented by the Strome College of Business. Wow, what a rough couple of days on the stock market. After erasing just about all of the pandemic-related losses of the past ten weeks, the market was easily overpriced but as the media focuses on the apparent second wave of increased corona virus positive tests, investors got nervous and sold off, driving prices down. The Fed added to the worries on Wednesday by warning of high unemployment for some time to come. The Dow fell seven percent and the NASDAQ six yesterday. Some of the hardest hit were retailers, airlines and cruise lines, companies more likely to be hurt by a return to lockdown. What investors forgot is that many companies stopped forecasting earnings, afraid of the pandemic’s effects, and those that did guided to lower earnings, so this correction seems like it was probably overdue. To learn more, visit odu.edu/business. This Strome Business Minute is presented by the Strome College of Business, Old Dominion Univ

Welcome to a Strome Business Minute, presented by the Strome College of Business. The Fortune 500 list was just issued by Fortune magazine, and as you might expect, there have been some changes. Walmart still holds on to the top position for the eighth year in a row but Amazon jumped past ExxonMobil and Apple to claim the second spot. CVS Pharmacy moved into fifth because of its purchase of Aetna, the insurance company. Walmart’s profit doubled last year but the fastest growing company in profit was internet equipment maker Cisco Systems. Cigna doubled revenues last year, the most of any company on the list. Walmart may have the largest revenues but the largest in terms of shareholder value or market cap is Microsoft – Walmart is seventh on that list. The biggest money loser in the 500 last year? That was Uber, followed by Pacific Gas & Electric. To learn more, visit odu.edu/business. This Strome Business Minute is presented by the Strome College of Business at Old Dominion University.

The protests over George Floyd’s death and the other recent deaths of African Americans feel very different this time. For one thing, businesses are taking tangible action. The most eye opening was Bank of America’s pledge of one billion, that’s billion with a b, over a four year period, to go to local programs to support economic mobility and access to healthcare. BOA, which also owns Merrill Lynch, also pledged an equal amount for loans to black-owned businesses. Other companies don’t have that much money to give but are giving what they can and are redoubling efforts to create inclusive work environments. Nike launched a For Once Don’t Do It campaign against racial intolerance. This time it feels different, in part because businesses have decided that statements alone are not enough. To learn more, visit odu.edu/business. This Strome Business Minute is presented by the Strome College of Business at Old Dominion University.

Covered California, the open marketplace for California’s health insurance, conducted a study that predicts significant increases in healthcare insurance costs thanks to the COVID crisis. Their study predicts increases of forty percent, mirroring what some organizations have been saying about their healthcare premium renewals. The Society for Human Resource Management predicts much lower increases, only seven percent. An average corona virus related stay of twelve days will cost seventy two thousand dollars, with total commercial payouts estimated to range from thirty one billion dollars to two hundred and thirty eight billion dollars. The wide range in projected insurance payouts is partly due to separating out patients covered by Medicare. The wide range of estimates, though, also shows that we still know very little about the longer term effects of this pandemic. To learn more, visit odu.edu/business. This Strome Business Minute is presented by the Strome College of Business at Old Dominion University.

The Trump administration is examining European taxes on American digital service providers and considering a tax, or tariff, of its own. In addition to the EU, Brazil, Indonesia, and others are considering similar taxes. Jordan Hass, of the Internet Association, a trade group representing companies like Amazon, Google, and Facebook, said in the Washington Post that taxes that target only American companies are discriminatory but to be fair, these taxes target an industry which happens to be American-dominated. Britain is considering a two percent tax on search engines with the European Commission going with three percent. Brazil is looking to pass an e-commerce sales tax, just like what we have here in the states. Trump has signaled that he will respond with tariffs on goods from those countries if the taxes are passed. To learn more, visit odu.edu/business. This Strome Business Minute is presented by the Strome College of Business at Old Dominion University.

Elon Musk is celebrating the successful launch of his Space-X flight to the space station. But don’t worry, he isn’t neglecting Tesla. In fact, he had the astronauts ride to the rocket in a Model X, snow white to match their space suits. This isn’t the first Tesla Space-X convergence. He strapped a car to a rocket in twenty eighteen, complete with a mannequin driver. The trip was live streamed courtesy of NASA, to over 2 million viewers. Other brands have also enjoyed space rides. Toy Story’s Buzz Lightyear rode into space in two thousand eight, and Disney got more mileage out of it when the Smithsonian accepted the action figure into its permanent collection. Other brands include Coke, which flew into space on the Challenger while Omega is the official watch since Apollo 11. To learn more, visit odu.edu/business. This Strome Business Minute is presented by the Strome College of Business at Old Dominion University.

Another round of fiscal stimulus is coming from Congress and there’s one group that won’t be included, at least directly, and that’s large companies that were already in trouble. Regular listeners know that I’ve long touted the importance of low debt levels, as the piper always wants to be paid. According to three Harvard professors and one from the University of Chicago, that payment may come in the form of up to eight million jobs if all of those companies went under. The choice, though, is to include them in the stimulus and run the risk of burdening the taxpayer with their debt as they may fail anyway. Congress is also loathe to reward companies for poor decisions as it would encourage others to do the same, a lesson learned in the last financial crisis. To learn more, visit odu.edu/business. This Strome Business Minute is presented by the Strome College of Business at Old Dominion University.

Keeping in mind this is a business minute, what has been the reaction of businesses to the deaths of three black men? Some do nothing and some issue a statement supporting the protests. But some are taking it a step further, including Target, whose stores in Minneapolis were looted. Target will provide aid to the community, pay employees whose stores closed due to looting until reopening, and more while also working on longer term solutions. GM, whose CEO will chair an inclusion board working internally and externally to advocate for inclusion. YouTube is giving one million dollars to The Center for Policing Equity, an organization that works with law enforcement to promote more equitable practices, as well as reviewing its own algorithms so that the social media site’s content is more balanced. Let’s all do more. To learn more, visit odu.edu/business. This Strome Business Minute is presented by the Strome College of Business at Old Dominion University.

For some people, the toughest aspect of the virus is not getting to travel. Travel companies are promoting travel destinations already so that when people feel comfortable, they’ll go. And the research says that’s not a bad thing. In fact, it’s been well documented that the planning and dreaming about a trip is more satisfying than the actual trip. Several studies have found that when planning for the trip involves learning about the destination and imagining what it must be like to be there, for example, dreaming of looking over the ancient city of Machu Picchu or sipping espresso at a café in Paris, can be just as satisfying as being there. But if anxiety over the virus turns this activity sour, pack it away, and save it for another day. To learn more, visit odu.edu/business. This Strome Business Minute is presented by the Strome College of Business at Old Dominion University.

Amazon and Netflix may be big winners in the economic crisis, but other businesses have done surprisingly well. One such local business is Garrett Realty Partners, a residential real estate agency that enjoyed the strongest month in sales in its twelve year history in April, a record broken in May. When the pandemic hit, the company decided to operate safely but fully, without layoffs. As a result, they were able to capitalize on a robust local housing market, setting astonishing sales records. Across the state, home sales declined during the month of April but at a lower rate than expected. Here in the 7 5 7, April home sales actually increased. New listings are down more than twenty eight percent across the Commonwealth and the lack of supply is driving prices up. To learn more, visit odu.edu/business. This Strome Business Minute is presented by the Strome College of Business at Old Dominion University.

When COVID struck, ventilators became central in the fight to keep patients alive. But high levels of use quickly overwhelmed the equipment and companies’ ability to repair the equipment. Technicians were further hampered by supply chain disruptions for parts, the inability to travel to distant cities to do repairs, and just the sheer volume of repairs needed. Some parts, like valves, can be three D printed. But hospitals couldn’t do the repairs because they didn’t have the manuals. That changed last week when iFixit, a website promoting the right to repair the products you buy, posted the repair manuals of thousands of medical equipment products. The right to repair movement, though, faces copyright restrictions on the manuals, setting up the chance for legal consequences from manufacturers who don’t want to lose the business. To learn more, visit odu.edu/business. This Strome Business Minute is presented by the Strome College of Business at Old Dominion University.

The Hampton Roads Economic Development Alliance or Her-ed-ah was renamed last week as the Hampton Roads Alliance or just the Alliance. The new brand looks like a transition as they are minimizing the Hampton Roads moniker toward the 7 5 7. Whatever you call it, though, the new Alliance is shaking things up in a good way. The Alliance lures new businesses to our region while helping existing local businesses grow. It partners with the Chamber and the municipal economic development offices to make sure that this is a business-friendly region. When Rick Weddle resigned, many including me, thought a merger with the Chamber would be best. But Doug Smith has built strong relationships with the cities and business community. In this time of crisis, we’re better prepared because of a strong Alliance. To learn more, visit odu.edu/business. This Strome Business Minute is presented by the Strome College of Business at Old Dominion University.

RISE is a Hampton Roads based non-profit, economic development organization funded by a federal HUD grant to accelerate innovation and business growth in developing solutions to coastal flooding. One of the ways it does this is to offer challenge grants to companies with innovative business ideas. RISE announced five grant winners receiving up to two hundred fifty thousand dollars each to set up shop here and begin their business. Winners include Natrx which offers a digital technology to architects and engineers that incorporates nature-based solutions to flooding and Storm Sensor which makes sensors for smart cities to measure flooding. Other winners include a customizable mapping solution, a financial service that offers capital for flood mitigation, and an artificial intelligence-based weather forecasting service. In addition to the money, the companies also get business assistance. To learn more, visit odu.edu/business. This Strome Business Minute is presented by the Strome College of Business at Old Dom

Towne Bank’s stock price has plummeted to well under twenty dollars per share, falling more percentage-wise than its peers to sixteen dollars and fifteen cents before climbing back to nearly eighteen dollars but well off its one year high of twenty nine dollars. Analysts are mixed on Towne’s future, with BidAskClub lowering from sell to strong sell, Zacks reiterating a sell rating, and Value Engine improving its rating to hold. With a consensus price target of nearly twenty eight dollars, you’d think there would be some buy recommendations, and indeed, the bank’s largest investors, BlackRock, State Street, and Geode Capital have increased their holdings during the first quarter. But April also saw an increase in shorting activity, meaning more investors thought the price would fall, in spite of an earnings report that beat estimates. To learn more, visit odu.edu/business. This Strome Business Minute is presented by the Strome College of Business at Old Dominion University.