WSJ : The 2020 New York City Marathon Goes Virtual

The 2020 New York City Marathon Goes Virtual
Race organizers from New York Road Runners opted to call off the in-person race, but the virtual format allows runners to design their own route and race day conditions

On the first Sunday in November, thousands of people usually gather at the entrance to the Verrazano Narrows Bridge on Staten Island itching to run the first miles of the New York City Marathon. This year, with coronavirus rendering large-scale road races verboten, the iconic race is taking place on sun-drenched streets in San Diego, sprawling cornfields in Central Illinois and thousands of other locales across the world.

Like most businesses operating during the coronavirus pandemic, the 2020 New York City Marathon has gone virtual. And it’s not just frustrated amateurs who are participating to ease the disappointment of the real race being called off—some elite runners also plan to run virtual races.

Race organizers from New York Road Runners in June opted to call off the in-person race. In a typical year, the marathon snakes through all five of New York’s boroughs and draws upward of 50,000 participants and thousands more spectators. Since 2018, there has also been a virtual version of the race, though it has seen much smaller engagement.

Making the race virtual in 2020 is an attempt to give the marathon life while the world waits out the pandemic. Anyone could complete the race this year from anywhere in the world, so long as they logged a 26.2 mile run between Oct. 17 and Nov. 1. Previous iterations of the virtual race had 425 and 2,828 participants, respectively; over 24,000 pledged to complete the virtual marathon in 2020.

Qualifiers for the 2020 road race were given the choice of complimentary access to the virtual race, a refund or deferred entry until at least 2021. For everyone else, running the New York City Marathon came at no cost (though receiving a finisher medal cost $60). Participants could also pay $150 to receive guaranteed entry to a future marathon upon competition of the virtual race.

Because there will be as many marathon courses as marathoners this year, New York Road Runners will not award prize money. Despite the lack of financial incentive, several elite athletes jumped at the opportunity to “race” New York, as the virtual format promised to give them unprecedented control over course design and race day conditions.

“In a sense it’s really a cool opportunity for me to practice,” said 36-year-old professional runner Steph Bruce. “There’s actually a lot I can control because it’s my own virtual race.”

Perhaps the most significant variable athletes can control in 2020 is the terrain. New York City’s point-to-point course is notable for its punishing uphills over five urban bridges and varied pavement conditions. Virtual marathoners can make those factors disappear, with many choosing to run on flatter, circuit courses that feature laps around the same route.

New York Road Runners discouraged virtual marathoners from attempting to follow the race’s traditional course because busy intersections throughout the city will not be closed off to let runners through. Instead, the organization crowd sourced route recommendations in each of the five boroughs, many of which are loop courses.

Circuit courses are more conducive to fast times, according to Alan Culpepper, who twice represented the United States in the Olympic marathon and now coaches runners in Boulder, Col. That’s part of the reason why Eliud Kipchoge ran his unofficial sub-two hour marathon on a flat 6-mile loop through Vienna last year. The advantage is especially true for average runners who will be responsible for maintaining their own aid stations during their marathon attempts.

Bruce will get her New York City kicks on a four-mile course in Camp Verde, Ariz., a small town located at 3,150 feet above sea level about 55 miles away and 3,700 feet below where she trains at altitude in Flagstaff, Ariz. She plans to run alongside a teammate for about 20 miles and her husband and coach Ben—a former Team USA steeplechase athlete himself—for the duration; sons Riley, 6, and Hudson, 5, will cheer for mom near a homemade fueling station.

“It’ll be a little different than standing on the Verrazano Narrows bridge and wondering how this race is going to go,” she said. The terrain of her course will also be starkly different: “We have two corners that have a slight uphill and slight downhill, but they would be like speed bumps in New York.”

The main downside to loop races is their repetitive nature, something American long distance specialist Emily Sisson, 29, cited as rationale for choosing an out-and-back course on a paved bike path on Coronado Island in San Diego, Calif. The 2020 New York City Marathon was slated to be Sisson’s second race at that distance, so her coach suggested she treat her virtual race like an especially long training session.

“More than anything it was something on the calendar to look forward to,” she said.

Virtual racing removes one of the most significant hurdles from the marathon equation: weather. There is no penalty for changing the date of the race so long as it occurs within the two-week window.

“In a typical New York City Marathon, you get what you get. And if it’s unpleasant or if it’s hot or windy, that’s what you have to deal with,” said Culpepper. “In this instance you could say, ‘Let’s wait another day.’”

That’s what happened for defending wheelchair division champion Daniel Romanchuk, who moved his race up three days to Thursday, Oct. 22, after seeing rain in the forecast for the weekend. The 22-year-old and his mother, Kim, scouted lightly trafficked roads near their home in Champaign, Ill., and drew up a route through soybean and cornfields, past deserted graveyards and weathered barns.

Racing in the autumn brought an added challenge: “It’s harvest time right now, so there’s a lot of farm equipment out, combines and things like that,” said Romanchuk. He and his mother tried to track when work got under way at the farms so they could avoid areas where heavy machinery might block roadways.

Romanchuk started the race near the town of Bear Creek, Ill., a place with a large Amish population that made him unexpectedly nostalgic for the Big Apple.

“I got a little taste of Central Park this morning, because there were some horses and buggies out,” he chuckled.

The bucolic course proved to be a boon for his finishing time: he completed the marathon in one hour 13 minutes and 57 seconds—about four minutes faster than previous world-best time for a men’s wheelchair race, though his time will not count as a new record because it did not occur on a certified course.

Romanchuk employed his imagination to stay motivated while racing without company. “When I’ve got tall corn on either side, that’s when the fans are really thick in that area. It’s fun,” he said.

Bruce is also hoping to stave off fatigue when she runs her virtual race on Sunday by visualizing Gotham’s vibrant crowds.

“I’m channeling the five boroughs and I’m hoping to section off the marathon in my head,” she said. “I will imagine how I’d be running up Fifth Avenue, about to turn into the park towards the finish line”

WSJ : Fed Turns Attention to Asset Purchases After Spelling Out Low-Rate Pledges

Fed Turns Attention to Asset Purchases After Spelling Out Low-Rate Pledges
Officials prefer more direct spending but see room to provide more stimulus by shifting Treasury purchases

Federal Reserve officials at their meeting in September reinforced Chairman Jerome Powell’s statement that they weren’t even “thinking about thinking about raising interest rates.”

By contrast, they offered little to guide expectations around their monthly purchases of $120 billion in Treasury and mortgage securities.

Officials aren’t preparing to announce any changes after their two-day policy meeting ends Thursday but could begin reviewing contingency plans for possible refinements, according to interviews and recent public statements.

Recent surveys show a range of opinions about how long investors and economists expect the Fed to continue to buy assets at the current pace.

More than half of large investment firms surveyed by the New York Fed in September expected the central bank to continue the current pace of bond buying into the first half of 2022. A separate survey of the banks that serve as the Fed’s counterparties on Wall Street shows those firms think the purchases could slow next year.

Fed officials are unlikely to trim those purchases so long as the coronavirus pandemic is menacing the U.S. economy. This means they are likely to focus their discussions on how to provide more stimulus, if they decide it is needed, by shifting the composition of these purchases toward longer-dated Treasurys.

They took one step in this direction in September by clarifying that these purchases were being conducted to support the economic recovery, after being initiated in March to quell market dysfunction.

Fed policy in the past decade has been guided by the theory that holding long-term securities stimulates financial markets and the economy by holding down long-term interest rates. That is thought to drive investors into riskier assets like stocks and corporate bonds and encourage business investment and consumer spending. Holding short-term securities, this theory holds, provides little stimulus.

The idea was at the core of former Chairman Ben Bernanke’s strategy to move the Fed’s holdings heavily into long-term Treasury bonds after the 2008 financial crisis. Fed estimates suggest the strategy lowered long-term interest rates by a full percentage point, making it less costly for millions of homeowners, car buyers, corporations and governments to borrow.

Right now, the Fed is buying $80 billion in Treasurys a month and $40 billion in mortgage-backed securities, net of redemptions. This is larger than the $85 billion in monthly purchases during the Fed’s largest bond-buying program after the 2008 crisis—the third round of quantitative easing, or QE3, between 2012 and 2014.

One important difference between QE3 and the current operation centers on the duration of securities purchased. Right now, the Fed is buying equal amounts of short-, medium- and long-term debt, while QE3 focused on long-term securities.

The weighted average maturity of monthly Fed purchases since March has been just six years, compared with 12 years during QE3, according to TD Securities. “They could have been doing more while buying less,” said Seth Carpenter, chief U.S. economist at UBS and a former Fed economist.

Even if a composition shift provides a small economic boost that pre-empts a future rise in long-term yields, some economists say it would be worthwhile—particularly given threats to the economy from rising coronavirus cases, delays in new fiscal-relief measures and Fed projections in September that show officials don’t expect to meet their inflation and employment goals for at least three more years.

“I don’t know if you can be confident that rates will stay low,” said Mr. Carpenter. “The Treasury is continuing to issue lots of debt, and they have extended the duration of what they are issuing,” creating the potential for greater supply-demand imbalances of long-term debt.

Fed officials have said there is less reason to focus on the long end on the Treasury yield curve because with 10-year Treasury yields hovering at or below 0.8% since June, there is little to be gained by driving down already-historically-low yields.

By contrast, the 10-year rate reached 3.7% in 2011, before the Fed began discussing whether to shift the composition of its Treasury holdings. Rates on the 30-year mortgage fell from 5% to 3.5% over the next two years as the Fed embarked on steps to push down long-term yields.

“I don’t think very much decision-making of households or firms are going to be determined on whether the 10-year Treasury is 0.66% or 0.5%,” said Boston Fed President Eric Rosengren in a Sept. 23 interview.

Some officials and analysts said low yields give the Fed the luxury of waiting longer to shift the composition of their purchases, for example until yields start rising because the economy is stronger. “Current yields are not disrupting the recovery,” said James Sweeney, chief economist at Credit Suisse.

Others are reluctant to make further changes, absent a rise in long-term rates, because they don’t think the benefits outweigh potential costs. “My concern about asset purchases is they can distort markets,” said Dallas Fed President Robert Kaplan in an Oct. 2 interview.

Most Fed officials also have said what the economy most needs now is additional federal spending to improve public-health measures and to replace incomes lost due to depressed spending in leisure, hospitality and other high-contact service industries.

“The lack of fiscal policy is a much bigger problem than what we’re doing with our balance sheet,” said Mr. Rosengren.

The risks of a subpar economic rebound in the months ahead—together with political wrangling over further relief measures—leave the Fed in an uncomfortable spot. The danger is that any further slowdown lays bare the weakness in the Fed’s remaining tools.

FT : EY wins more blue-chip audits despite Wirecard fiasco

EY wins more blue-chip audits despite Wirecard fiasco
Big Four firm was sharply criticised for failing to spot a €1.9bn fraud at German payments group

EY has increased its number of multinational audit clients in Germany despite the high-profile collapse of Wirecard that saw the firm sharply criticised for failing to spot a €1.9bn fraud.

Since 2017, EY has doubled its market share of auditing for members of the country’s blue-chip Dax index, according to research by consultancy Lünendonk & Hossenfelder. By 2021, for the first time, it will have seven of the 30 Dax-listed groups as audit clients.

Among them are heavyweights like Deutsche Bank, Volkswagen, Siemens, Munich Re and Deutsche Telekom. EY also audits Lufthansa and Airbus, which are listed in the mid-cap MDAX.

Historically, the firm has had only three or four Dax clients. 

“EY in recent years successfully established itself as the third power among German blue-chips — a segment that was traditionally dominated by KPMG and PwC,” said Jörg Hossenfelder, partner at Lünendonk & Hossenfelder. 


Changing auditor is a complex and costly process that can take several years in Germany. However, audit and governance experts expect that fallout from the Wirecard scandal will limit EY’s ability to attract more clients.

The firm is now under investigation by Germany’ audit regulator Apas and faces lawsuits from Wirecard investors. 

Its Big Four rival KPMG, in a confidential addendum to a special audit of Wirecard, found EY missed the chance to look more closely into suspected accounting fraud in 2016.

“The damage to EY’s reputation will be immense,” said Hansrudi Lenz, a professor of accounting at Würzburg University.

Christian Strenger, a corporate governance specialist and former head of asset manager DWS, predicted EY will struggle to win new clients.

“After Wirecard, supervisory boards will find it very difficult to argue in favour of the firm,” he said.

So far, only DWS and German lender Commerzbank — both listed but not members of the Dax — have said they will drop EY as auditor. Both companies suffered big losses in the Wirecard collapse and are considering suing EY.

Deutsche Bank, which switched to EY in 2020 after more than 60 years with KPMG, said it will “closely monitor all further developments and analyse their impact on the bank”.

VW chief financial officer Frank Witter told shareholders in September that the group’s appointment of EY — after 70 years with PwC — was “based on a selection process that takes several months” and added that the carmaker had “no findings that would cast a doubt on the selection process”.

Volkswagen’s auditing contract is among the most lucrative on the Dax. The group paid PwC €19m for audit work in 2019, as well as €33m for tax consultancy and other services. 

Dax-listed MTU Aero Engines, which has used EY since 2014, said it has no plans to change auditor until the end of the 10-year term.

“MTU’s business model is quite complex and it needs considerable industry expertise for auditors to exercise their duties effectively and efficiently,” the company said. “We consider the current auditors at EY as qualified in that respect. MTU’s AGM followed this view in August.”

Lufthansa said it had no plans to change its auditor. Siemens, EY and KPMG declined to comment.

EY’s increasing dominance in the blue-chip audit market has been driven by three factors, said Dirk Hildebrandt, an independent Cologne-based auditor: new rules that oblige listed companies to change their auditor more often, aggressive pricing by EY and a lack of choice for multinational companies. 

Multinational businesses need an auditor with a global network and experience of dealing with complex corporate structures. This level of service can generally only be offered by the Big Four firms of EY, Deloitte, KPMG and PwC.

FT : Japan rethinks its opposition to hostile takeovers

EY wins more blue-chip audits despite Wirecard fiasco
Big Four firm was sharply criticised for failing to spot a €1.9bn fraud at German payments group

EY has increased its number of multinational audit clients in Germany despite the high-profile collapse of Wirecard that saw the firm sharply criticised for failing to spot a €1.9bn fraud.

Since 2017, EY has doubled its market share of auditing for members of the country’s blue-chip Dax index, according to research by consultancy Lünendonk & Hossenfelder. By 2021, for the first time, it will have seven of the 30 Dax-listed groups as audit clients.

Among them are heavyweights like Deutsche Bank, Volkswagen, Siemens, Munich Re and Deutsche Telekom. EY also audits Lufthansa and Airbus, which are listed in the mid-cap MDAX.

Historically, the firm has had only three or four Dax clients. 

“EY in recent years successfully established itself as the third power among German blue-chips — a segment that was traditionally dominated by KPMG and PwC,” said Jörg Hossenfelder, partner at Lünendonk & Hossenfelder. 


Changing auditor is a complex and costly process that can take several years in Germany. However, audit and governance experts expect that fallout from the Wirecard scandal will limit EY’s ability to attract more clients.

The firm is now under investigation by Germany’ audit regulator Apas and faces lawsuits from Wirecard investors. 

Its Big Four rival KPMG, in a confidential addendum to a special audit of Wirecard, found EY missed the chance to look more closely into suspected accounting fraud in 2016.

“The damage to EY’s reputation will be immense,” said Hansrudi Lenz, a professor of accounting at Würzburg University.

Christian Strenger, a corporate governance specialist and former head of asset manager DWS, predicted EY will struggle to win new clients.

“After Wirecard, supervisory boards will find it very difficult to argue in favour of the firm,” he said.

So far, only DWS and German lender Commerzbank — both listed but not members of the Dax — have said they will drop EY as auditor. Both companies suffered big losses in the Wirecard collapse and are considering suing EY.

Deutsche Bank, which switched to EY in 2020 after more than 60 years with KPMG, said it will “closely monitor all further developments and analyse their impact on the bank”.

VW chief financial officer Frank Witter told shareholders in September that the group’s appointment of EY — after 70 years with PwC — was “based on a selection process that takes several months” and added that the carmaker had “no findings that would cast a doubt on the selection process”.

Volkswagen’s auditing contract is among the most lucrative on the Dax. The group paid PwC €19m for audit work in 2019, as well as €33m for tax consultancy and other services. 

Dax-listed MTU Aero Engines, which has used EY since 2014, said it has no plans to change auditor until the end of the 10-year term.

“MTU’s business model is quite complex and it needs considerable industry expertise for auditors to exercise their duties effectively and efficiently,” the company said. “We consider the current auditors at EY as qualified in that respect. MTU’s AGM followed this view in August.”

Lufthansa said it had no plans to change its auditor. Siemens, EY and KPMG declined to comment.

EY’s increasing dominance in the blue-chip audit market has been driven by three factors, said Dirk Hildebrandt, an independent Cologne-based auditor: new rules that oblige listed companies to change their auditor more often, aggressive pricing by EY and a lack of choice for multinational companies. 

Multinational businesses need an auditor with a global network and experience of dealing with complex corporate structures. This level of service can generally only be offered by the Big Four firms of EY, Deloitte, KPMG and PwC.

FT : Japan rethinks its opposition to hostile takeovers

Japan rethinks its opposition to hostile takeovers
Looming Nitori bid for Shimachu could reshape the landscape for M&A

In a crowded field, the discount furnishings group Nitori can make a fair claim to having Japan’s catchiest advertising jingle: eight lilting notes and a cheeky assurance that you get something more than the price you pay.

That line worked beautifully when used to peddle good-value coffee tables and laundry racks. The question is how amicable the jingle will sound now that Nitori has become the belligerent in a potentially landmark hostile takeover bid for the DIY chain Shimachu. Specifically, this gambit will test just how much the Japanese stock market believes that corporate control should ever be about something more than price.

There are two reasons why Nitori’s role as aggressor here might, on the face of it, seem surprising.

The first is the way the company has presented itself. Even as it has expanded to more than 560 stores across Japan, it has sought to remain the loveable firm from the northern island of Sapporo. The 76-year-old founder, Akio Nitori, has been carefully sculpted to media as an avuncular and ideal version of the hard-grafting, never-give-up Japanese businessman who built something great from the provinces.

Even more striking is the arena in which this drama will play out. According to a recent paper by legal expert Stephen Givens, no classic unsolicited tender offer against a major target has ever succeeded in Japan, even though hostile bids have been commonplace elsewhere in the world since the 1980s. Why that is the case, and whether that taboo has been broken by a number of prominent hostile attempts since 2019, are two questions that investors want answered as Japan hovers on the brink of fundamental upset. 

Nicholas Smith, a strategist at CLSA, argues that the Japanese market is still priced as if hostile takeovers do not exist. About half of companies in the Topix index are trading below their book value, and more than a dozen have market capitalisations below their levels of cash. Instincts and disciplines that arise from the fear of unsolicited bids, and that define governance patterns and corporate behaviour elsewhere, don’t appear in Japan’s weirdly peaceable and non price-sensitive ecosystem.

The most common explanation for this is the complex networks of shares that Japanese companies hold in one another, which means that deep ranks of “allegiant” shareholders can be depended upon to stand against any hostile bid. There has also been a history of government or media backlash against hostile bid attempts and official endorsement of poison pills and other defences. 

But there are now plausible signs that Japan could develop a more rough and tumble market for corporate control. Even though companies have long appeared to be allergic to hostile bids, they may instead have been keeping their teeth and claws out of sight until it was acceptable to bare them.

Corporate cross shareholdings are slowly unwinding and are being replaced by institutional investors who have clear mandates to assess takeover bids — whether hostile or friendly — on price. There have been a number of unsolicited takeover attempts in the past two years that, while not succeeding as planned, have begun to normalise the idea. Indeed, the companies behind two recent actions are respected names, the trading house Itochu and the industrial giant Hoya.

Nitori’s unsolicited bid for Shimachu, which it will launch this month, may draw a counterbid. It is designed to come in 30 per cent higher than an agreed offer from another Japanese DIY store operator, DCM. A tussle between household names, triggered by an unsolicited offer and fought with cash, would make it immeasurably easier for other hostile attempts to follow elsewhere in the market.

For Nitori arrives not just with hard cash, but also a wad of respectability that may further erode the public perception of unsolicited bids as inherently un-Japanese.

For all of Mr Nitori’s parochial charm, his board includes a former chairman of the formidable Keidanren business lobby and the former chief executive officer of the country’s largest non-bank financial conglomerate, Orix.

The credo that Japan’s market is on the cusp of a revaluation depends, to its adherents, on a large, breakthrough hostile bid actually being seen to work. There is good reason to suspect that Nitori’s could be the one.

>>> Barron’s Weekend Summary

Barron’s Weekend Summary: Fed chairman Jerome Powell is arguably a more important figure in Washington than whoever will occupy the White House after the election.
* Cover Story: On Wednesday, Federal Reserve chairman Jerome Powell, the Washington leader who has done more than any other to stabilize the US economy and steady markets, will lead the Federal Open Market Committee in a two-day session on the economy and monetary policy—for investors, Powell is arguably a more important figure in Washington than whoever will occupy the White House after the election.

* Tech Trader: Story reports on takeaways from the earnings reports of AAPL, AMZN, FB, GOOGL, and TWTR, all of which beat sales and profit expectations in their recent quarterly reports: AAPL will be fine despite some headwinds, no company has benefited more from the acceleration in online shopping than AMZN, online-ad platforms are also benefiting from the e-commerce surge, there is a lack of pure plays on the public cloud, and there’s a reason Twitter’s valuation is just five percent of Facebook’s.

* Trader: To convince investors that it is in the clear, Gordon Haskett analyst John Inch says GE should sell shares in a secondary offering—though selling stock at low equity prices isn’t normally good for shareholders, during the current pandemic market, “investors sleep better when balance sheets have low debt levels.”

* Profile: Haruki Toyama and Rich Eisinger, co-managers of the Madison Mid Cap fund, follow a Warren Buffett approach of seeking cheap stocks and trying to invest in businesses with strong, durable cash flow; the fund is also concentrated, another Buffett hallmark (top 10 holdings: Liberty Broadband, CPRT, DLTR, INFO, ACGL, BRO, IT, MKL, LH, KMX).

* Interview: Warren Pierson and Mary Ellen Stanek of Baird Advisors talk about how bond investors should be positioned in a market with rock-bottom yields the norm and a presidential election looming; They expect continued recovery with slower growth in the last couple of months of 2020 and into 2021, and note that unless wages rise significantly, it will be hard for inflation to have any staying power.

* Features: 1) Positive on ZNGA: The gaming company has seen huge growth—it now has eight games with at least $100M worth of sales—but the stock has long trailed those of larger game publishers ATVI, EA, and TTWO, creating an opportunity for investors, who could see significant upside in the year to come; 2) Semiconductor deals have reached a frenzy—with more than $100B worth of acquisitions announced this year, including two major ones this past week, the chip sector is being rethought and remade by the companies rich enough to strike deals; 3) Positive on LFUS, PH, TEL: China, which is recovering from the coronavirus pandemic, offers a glimpse into what business may look like in North America over the next few months if the US matches its progress, a situation that would benefit industrials—cautiously optimistic investors should keep their eyes on these three compaies; 4) Positive on ABT, NEM, SBAC, ROP, CSL: “No matter who wins the US presidential election on November 3, and regardless of which party controls Congress, the country will still be wrestling with a viral pandemic and the uncertainties of a battered economy,” but these five companies should outperform regardless of who takes the White House; 5) Positive on ANTM: Shares of Anthem, the country’s second-largest managed-care company, should see shares rise after the election—discounts in managed-care stocks have tended in recent presidential cycles to expand ahead of Election Day and contract in the months after; SVB Leerink analyst Stephen Tanal says the company is in a compelling position, with an attractive valuation.

* Emerging Markets: After decades of piling up cash, China needs outside money to leap further forward, with foreign reserves almost flat and the current account surplus near zero—which is why despite tensions with Washington, Chinese leaders are talking with C, BLK, JPM, Vanguard, and other Wall Street titans.

* Commodities: “Wheat futures have touched their highest prices in nearly six years as dry weather threatens global supplies of the commodity, but some analysts urge caution with months to go before the harvest.”

* Streetwise: Robinhood users aren’t driving tech stocks to absurd valuations, says Nasdaq chief Adena Friedman—instead, low bond yields have flattered stocks, and tech stocks stand out because fast growth is scarce and because companies have separated into two classes, based on how vulnerable they are to the virus.