Written by rjs, MarketWatch 666
News posted last week about economic effects related to the coronavirus 2019-nCoV (aka SARS-CoV-2), which produces COVID-19 disease, has been surveyed and some articles are summarized here. We cover the latest economic data, especially GDP, employment, and some other Main Street economic impacts. There is coverage of two areas not previously in focus: (1) how the wealthy & connected managed to capture most of the virus bailout funds intended for the poor mom & pops; and (2) the push to open schools /colleges and the pushback. I conclude with a few reports from other countries around the globe. (Picture below is morning rush hour in downtown Chicago, 20 March 2020.) News items about epidemiology and other medical news for the virus are reported in a companion article.
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Three Strikes against the Fed – By Willem Buiter – The Fed’s current operating practices are afflicted with three serious flaws. Like most other central banks, the Fed refuses to set seriously negative policy rates; Like many other central banks, including the ECB, the Fed acts as an unaccountable fiscal principal rather than as a transparent and accountable fiscal agent of the federal government; and, unlike most other advanced economy central banks, it has emasculated the stress tests it imposes on systemically important banks to ensure their capital adequacy. Regarding negative policy rates, the Fed does not even go down to the effective lower bound (ELB), which equals the zero interest rate on currency minus the carry cost of currency (storage, insurance, etc.). The example of the ECB and other European central banks suggests that, even without reforms, the lower bound on the Fed’s target federal funds rate could be set at -75 basis points rather than at its current level of 0.00. Indeed, the rates on required reserves and on excess reserves, both currently 0.10%, could be lowered to -75 basis points, providing a modest but non-trivial financial stimulus. It would be better, however, to get rid of the ELB altogether. With regards to the non-transparent and unaccountable (quasi-)fiscal actions of the central bank, I will focus on the size and composition of the Fed’s balance sheet. I recognise that the setting of the policy rate(s), forward guidance, and yield curve control have unavoidable fiscal consequences – redistribution between borrowers and lenders and profits for the Fed and thus for its beneficial owner, the federal treasury. It is key to recognise that, whatever the formal (often bizarre) ownership structure of a central bank, the national treasury is its beneficial owner, ultimately entitled to its profits and responsible for any losses.The Fed also pays annual remittances to the US Treasury. If there is any systematic and transparent dialogue between the Fed and the US Treasury about these remittances, it remains well hidden. The amounts of money involved are non-trivial.1Since the COVID-19 pandemic struck, the Fed has taken on significant credit risk by lending to and purchasing risky debt instruments from private financial and non-financial corporations, state and local governments, and households. Only a small fraction, generally not more than 10% of the Fed’s maximum possible exposure to these high-risk activities, is covered by US Treasury guarantees or other means of indemnification.The Fed Board released, on 25 June 2020, the results of the full Dodd Frank Act Stress Test (DFAST) 2020, including the performance of 33 individual banks, designed in 2020 Q1, before the coronavirus.3 It also released the results of an additional sensitivity analysis that did try to take into account the economic consequences of the COVID-19 pandemic, by testing the resilience of 34 large banks under three recession and recovery scenarios: V-shaped, U-shaped, and W-shaped.4 Only aggregate results for loan losses and capital ratios of the 34 banks included in the sensitivity analysis were provided, however. The sensitivity analysis did not allow for the potential effects of government stimulus payments and expanded unemployment insurance. On the other hand, the recession and recovery alphabet soup that was considered leaves out the more pessimistic, and in my view realistic, L-shaped scenario, as well as other scenarios (V-shaped, U-shaped, and W-shaped), where the recovery does not reach the pre-COVID-19 path of potential output for many years, if ever.
Fed to start buying loan stakes in coronavirus rescue program – The Federal Reserve’s Main Street Lending Program is officially open and able to purchase participations in loans that meet the central bank’s criteria, the Federal Reserve Bank of Boston said Monday. The $600 billion program is aimed at helping small and medium-sized businesses stay afloat during the coronavirus pandemic. Loans will be made available via third-party banks to eligible companies with up to 15,000 employees or up to $5 billion in annual revenue.”This is an important milestone for the Main Street program,” said Eric Rosengren, president of the Boston Fed, which is administering the program. “Given the pandemic’s shock to the economy, and its uncertain duration, support for businesses and their employees through bank lending is critical.”The Fed through the program is purchasing 95% of all eligible loans. Last month the Fed increased its stake in all loans made through the program, lowered the minimum loan amount from $500,000 to $250,000 and increased the maximum loan size for each of the program’s three facilities.Lenders were able to register for the program and begin making loans as of June 15. The Boston Fed also said Monday that it would publish in the coming days a state-by-state list of Main Street lenders accepting new customers.
Prins- We’re Living In A Permanent Distortion – … Three time best-selling book author Nomi Prins says long before the Covid 19 crisis, the global economy was faltering big time. The Fed stepped in with the start of massive money printing in late 2019 to save the day. Prins explains, “We were already in crisis mode as I mentioned at the end of my last book going into 2019.” “What did we see at the end of 2019? We saw this pivot, and I call it phase two. . . . Central banks had pivoted to easing mode. . . . Come September, October, November and December, the Fed is producing repo operations. Those are short-term lending operations that are supposed to be the purview of the banks . . . . The Fed is not supposed to get involved, but it did. The Fed had all kinds of excuses. It said it was not QE, but it was. . . . The debt at the end of 2019 for the world was three times GDP. For every $3 borrowed, only $1 of economic activity occurred. That’s what we started 2020 with. Throw a pandemic into that . . . and you have a long drawn out financial and economic crisis.” Now, the money printing has gone into overdrive to save the system from the virus crisis. The social and economic damage, according to Prins, is profound and not going away. Prins points out, “We are not going to pay back this debt, and this is global. Nobody is even considering trying to pay back the debt that has been created. Let’s think about why that debt has been created. It’s not just because the economy slowed down. That’s one reason and kind of an excuse. The reality is the Fed is on steroids, and other central banks are on steroids . . . throughout the world in a larger number and larger magnitude than in the wake of the financial crisis of 2008. This means all this new debt created is even cheaper than the debt created going into the 2008 crisis. So, more debt, created more cheaply, means less incentive to pay it back and more incentive to push it down the road and grow it. You’ve got this snowball of debt rolling down this high mountain, and it’s rolling and growing and getting bigger. The mountain, which is the main street economy, is coming down as the snow ball is coming down, and the main street economy itself, that foundation, is really shaky. . . . How does this end? It ends with us, the foundation, which is the main street economy, by both that snowball of debt and the avalanche of the mountain. That’s going to be a multi-decade problem.” Prins says this next stage has a brand new name and explains, “I call this a ‘Permanent Distortion.’ I have not used this term in prior books, but I am using it because . . . the disconnect between financial assets, equity markets and the real economy . . . has become massive...
Goldman Lowers U.S. GDP Forecast, Sees 4.6% Contraction in 2020 — Goldman Sachs Group Inc. economists revised down their estimates for the U.S. economy this quarter, but predicted it will be back on track in September after some states imposed fresh restrictions to combat the coronavirus. While consumer spending appears likely to stall this month and next, economists led by Jan Hatzius said other economies have proved it’s possible to resume activity and changes in behavior such as wearing masks will help too. “A combination of tighter state restrictions and voluntary social distancing is already having a noticeable impact on economic activity,” the economists said in a report published on Saturday. The economists said they now expect the economy to grow 25% in the third quarter having previously predicted 33%. That would result in the economy slumping 4.6% this year, worse than the 4.2% previously seen. But the Goldman Sachs economists said they still expected growth of 5.8% next year and now project unemployment will be at 9% at the end of this year, down from the previous estimate of 9.5%.
Q2 GDP Forecasts: Probably Around 36% Annual Rate Decline – Important: GDP is reported at a seasonally adjusted annual rate (SAAR). So a 36% Q2 decline is around 10% decline from Q1 (SA). Note: I’m just trying to make it clear the economy didn’t decline by one-third in Q2. Previously I just divided by 4 (an approximation) to show the quarter to quarter decline. The actually formula is (1-.36) ^ .25 – 1 = -0.095 (a 9.5% decline from Q1) From Merrill Lynch: 2Q GDP tracking remains at –36.0% qoq saar. [July 10 estimate] From Goldman Sachs: We left our Q2 GDP forecast unchanged at -33% (qoq ar). We expect -29% in the initial vintage of the report, reflecting incomplete source data and non-response bias [July 9 estimate] From the NY Fed Nowcasting Report The New York Fed Staff Nowcast stands at -15.3% for 2020:Q2 and 10.1% for 2020:Q3. [July 10 estimate] And from the Altanta Fed: GDPNow: The GDPNow model estimate for real GDP growth (seasonally adjusted annual rate) in thesecond quarter of 2020 is -35.5 percent on July 9, down from -35.2 percent on July 2. [July 9 estimate]
US Budget Deficit Hits A Record $863 Billion In June, A 100X Increase – Those who have been following the record surge in US public debt (excluding the roughly $100 trillion in off-balance sheet obligations), which exploded by $3 trillion in just the past three months and hit an all time high $26.46 trillion on Tuesday, will likely have some inkling that the US budget deficit in June will be staggering. We can now confirm that: in its preview of the June budget deficit, the CBO reported that last month the US spent a record $1.105 trillion, an increase of $763 billion from last year… … while receipts shrank by $92 billion from a year ago to $242 billion, which on an LTM basis was $3.1 trillion, an 8.3% decrease Y/Y, the largest since the financial crisis and clearly confirming the US is in a recession. This means that the June budget deficit was was a mindblowing $863 billion, an increase of 101x compared to the $8 billion deficit in June of last year. Putting June’s deficit in context, it was greater than the full year deficit recorded in 2018, and in fact in any year from 2013 to 2017. It is also just $120BN shy of the $984BN full year budget deficit recorded last year when so many fiscal conservatives slammed Republicans for going crazy with spending on Trump’s tax cuts. Little did they know what was about to hit. According to the CBO, the record deficit stemmed “from the economic disruption caused by the 2020 coronavirus pandemic and from the federal government’s response to it, including actions by the Administration and the enactment of four pieces of legislation.” Furthermore, outlays by the Small Business Administration – which oversees the recently established Paycheck Protection Program – contributed significantly to the June deficit this year, accounting for almost half of the government’s spending.
Fed Deficit as a % of GDP now at new record – For once Trump is right to claim that he has set a new record as the federal deficit is now over 10% of GDP. It is now 10.7% of GDP as compared to the prior record of 10.2% that Obama inherited from Bush.The deficit is looking more and more like what happened in Japan. Despite ever expanding debt, Japan’s economy stagnated. Expanding federal debt may keep the economy from collapsing, but it can not stimulate growth. The strongest growth in recent decades was under Clinton when the federal government ran a surplus. But the real cause of growth under Clinton was the sharp drop in computer prices and the widespread adoption of personal computers. Clinton followed the wise policy of just stepping aside and letting it happen. Trump appears to just be following the pattern set by previous Republican administrations with their “starve the beast” strategy. That is to create such a severe deficit problem that when democrats get into office they can not afford to pass new liberal legislation.The quick and dirty rule of thumb is that when Republican presidents leave office the deficit is larger – as a share of GDP – than when they took office. It is just the opposite with Democratic presidents, that leave a smaller deficit than they inherited. But it is funny that you never have the press question Republican presidents about their claim that tax cuts will be self-financing.
China Is Unlikely to Meet Purchase Targets for U.S. Energy – WSJ – Economic fallout from the coronavirus pandemic has cast doubt on whether China can meet its targets to buy U.S. goods under this year’s trade deal – with energy emerging as the biggest casualty. China has made strides toward its agricultural and manufacturing targets, but it remains far behind – maybe hopelessly far – an ambitious target for purchases of oil, natural gas, refined petroleum products like propane and butane, and coal, prompting concerns from the U.S. energy industry which is encouraging the U.S. Trade Representative to increase pressure on China to reach the goal. The targets in the deal implied China would purchase around $25 billion of U.S. energy in 2020 and even more in 2021. The latest data on U.S. exports for the month of May, released on Thursday, show China has so far this year purchased only $2 billion of that sum, near the year’s midway point. The collapse in energy demand and energy prices amid the coronavirus pandemic explains part of why China is so far behind. Nevertheless, China’s U.S. energy purchases present contrast to the strides it has made toward targets for the acquisition of agricultural and manufactured goods. “It’s peculiar and concerning,” said Anne Bradbury, chief executive of the American Exploration and Production Council, which represents oil and natural gas exploration and production companies. “The energy sector has been incredibly hard hit by the pandemic and now, more than ever, this agreement is important to the industry.” As of May, China had purchased $5.4 billion of agricultural goods, with a goal for the year of $33 billion in purchases. That puts China behind, but it could still meet its targets, according to calculations from Chad Bown, a senior fellow and trade data expert at the Peterson Institute for International Economics. Agricultural purchases are 39% of the pace needed to hit the phase one goal. But agricultural purchases are heavily seasonal in the fall when major crops like soybeans are harvested, giving China time to catch up if the deal remains intact. And China has purchased $19.5 billion of manufacturing goods, where the goal for the year is $84 billion. That puts manufactured goods at 56% of the pace needed to hit the goal, according to Mr. Bown’s calculations. But energy is far behind – running at only 18% of the pace needed to reach the goal. Catching up in the next 7 months would require massive purchases to begin immediately. To hit the goal, China would need to start purchasing more than $3 billion a month of energy, more every single month than it has been able to purchase in the past five months combined. A surge in domestic energy production over the past decade has made the U.S. energy industry an exporter after decades of foreign dependence, and China – with its 1.4 billion-person population and the world’s second-largest economy – represents the single largest potential market for exports like American crude oil and liquefied natural gas
Trump administration discloses details on $521.5 billion in virus aid – The Trump administration released details of almost 4.9 million loans to businesses – from sole proprietors to restaurant and hotel chains – under the federal government’s largest coronavirus relief program so far, the $669 billion Paycheck Protection Program. The data, including the names of the program’s biggest borrowers, were posted Monday morning on the website of the Small Business Administration, which ran the program with the Treasury Department. The disclosures, which come after members of Congress and others voiced concern about the level of transparency surrounding the PPP, don’t provide full details for any loans. Names of companies that borrowed less than $150,000 – a group that comprises the vast majority of the program’s borrowers – weren’t made public. And larger borrowers’ loans were disclosed only in broad ranges of values, such as $5 million to $10 million. The program, passed hurriedly by Congress in March, was designed to provide small firms with loans of as much as $10 million, based on a company’s average monthly payroll before the pandemic. The loans can become grants if borrowers use the proceeds mostly to pay workers – with some spending allowed for rent and overhead costs. Almost from the beginning, the PPP was dogged by controversy as some publicly traded firms tapped it. Many returned PPP loans after their borrowing drew criticism. The program’s supporters say it has kept tens of millions of workers employed during the pandemic and contributed to the surprising 2.5 million U.S. jobs added in May, with an additional 4.8 million jobs in June. The SBA and Treasury said borrowers reported that PPP loans supported 51.1 million jobs, or as much as 84% of all small business employees before the pandemic. Treasury Secretary Steven Mnuchin has said the program supported at least 72% of the small business payroll in all 50 states. Monday’s release reflects loans totaling almost $521.5 billion, which were approved between the launch of the program on April 3 and June 30, when the SBA temporarily stopped accepting new applications. Congress voted last week to extend the program until Aug. 8, and it reopened Monday morning. Mnuchin had drawn opposition from transparency advocates for initially refusing to disclose names of companies that received PPP loans, saying the information is proprietary because loan amounts are based on borrowers’ payrolls. The administration relented after demands from lawmakers and agreed to release certain information while withholding other details. For those loans below $150,000, the agencies are disclosing specific loan amounts along with industry codes, ZIP codes, number of jobs supported and other data – but no personally identifiable borrower information. Meanwhile, SBA and Treasury officials said they provided access to the full data to congressional committees that have demanded it. Personally identifiable information in the data shared with Congress will be treated as confidential, according to letters the SBA and Treasury sent to the committees last month. Critics want to see which larger firms and chains took PPP loans after reports that entities such as Shake Shack Inc. and the Los Angeles Lakers got loans ahead of mom and pop borrowers, prompting those two and others to return their loans. The public outcry spurred the Trump administration to promise to review all loans greater than $2 million and to tell companies that had access to other sources of capital that they likely didn’t qualify for the bailout program.
Treasury Releases Partial List Of Small Businesses That Took PPP Loans – A list of all companies which took PPP loans of $150,000 and above was disclosed on Monday by the Treasury Department and the Small Business Administration, after Democratic lawmakers demanded greater transparency surrounding the Paycheck Protection Program, according to CNBC. The disclosure comes after Treasury Secretary Steven Mnuchin initially suggested in June that PPP borrowers might remain anonymous. Those loans represent nearly three-fourths of total loan dollars approved, but a far smaller proportion of the number of actual loans. About 87% of the loans were for less than $150,000, according to the SBA. The SBA released other details about the program Monday, including:
- It has approved 4.9 million loans for a total of more than $521 billion.
- The program has about $132 billion in funding left over
- The average loan is $107,000.
- Companies reported that the funding supported more than 51 million jobs. But the businesses reported the total when they applied for loans, and it is unclear how many of those employees stayed on payroll. –CNBC
Companies participating in the program who maintain most of their payroll throughout the duration of the loan may convert the funds to a grant. In June, Congress passed a bill which lower the bar for converting the loans – reducing the amount a company must spend on payroll, while giving recipients a longer period of time to use the funds. On Saturday, President Trump signed a temporary extension of PPP into law, moving the application deadline from Aug. 8 to June 30 – a move which both chambers of Congress voted to approve last week.
Governors’ companies among recipients of virus relief loans – – Governors who ordered shutdowns as their states responded to the coronavirus pandemic were among millions of beneficiaries of the loan program created to help small businesses weather COVID-19’s effect on the economy, data released Monday show. The governors of at least eight states have ties to companies that received loans through the Small Business Administration’s Paycheck Protection Program. Both Republicans and Democrats, their associated companies’ loans ranged from $150,000 to more than $11 million. It is legal for businesses owned by elected officials to apply for and receive the loans, which are forgivable if used to preserve jobs. A minor league baseball team part-owned by Ohio Gov. Mike DeWine received a loan, as did an investment company led by New Hampshire Gov. Chris Sununu’s family. A communications company in which New Jersey Gov. Phil Murphy has a stake, and a winery and hospitality company founded by California Gov. Gavin Newsom also were beneficiaries. At least six of billionaire West Virginia Gov. Jim Justice’s family businesses qualified for loans. Virginia Gov. Ralph Northam’s former medical practice, in which he’s still invested, a commercial real estate brokerage firm started by Maryland Gov. Larry Hogan, and an air conditioning and supply company partially owned by Mississippi Gov. Tate Reeves also received loans. Their businesses were able to successfully navigate a system that many Main Street businesses had trouble accessing before the application deadline was extended to early next month. The aid package is the centerpiece of the federal government’s plan to rescue an economy devastated by shutdowns and uncertainty. The data released by the Treasury Department presents the fullest accounting of the program thus far.
Trump-connected lobbyists reap windfall in federal virus aid – – Forty lobbyists with ties to President Donald Trump helped clients secure more than $10 billion in federal coronavirus aid, among them five former administration officials whose work potentially violates Trump’s own ethics policy, according to a report. The lobbyists identified Monday by the watchdog group Public Citizen either worked in the Trump executive branch, served on his campaign, were part of the committee that raised money for inaugural festivities or were part of his presidential transition. Many are donors to Trump’s campaigns, and some are prolific fundraisers for his reelection. They include Brian Ballard, who served on the transition, is the finance chair for the Republican National Committee and has bundled more than $1 million for Trump’s fundraising committees. He was hired in March by Laundrylux, a supplier of commercial laundry machines, after the Department of Homeland Security issued guidance that didn’t include laundromats as essential businesses that could stay open during the lockdown. A week later, the administration issued new guidance adding laundromats to the list. Dave Urban, a Trump adviser and confidant, has collected more than $2.3 million in lobbying fees this year. The firm he leads, American Continental Group, represents 15 companies, including Walgreens and the parent company of the Ultimate Fighting Championship, on coronavirus issues. Trump pledged to clamp down on Washington’s influence peddling with a “drain the swamp” campaign mantra. But during his administration, the lobbying industry has flourished, a trend that intensified once Congress passed more than $3.6 trillion in coronavirus stimulus. While the money is intended as a lifeline to a nation whose economy has been upended by the pandemic, it also jump-started a familiar lobbying bonanza. “The swamp is alive and well in Washington, D.C.,” said Mike Tanglis, one of the report’s authors. “These (lobbying) booms that these people are having, you can really attribute them to their connection to Trump.”
CNBC Talking Head And Tesla Mega-Bull, Ross Gerber Received PPP Loan Days After He Called Program “Another Trump Scam” – As we pointed out on Twitter earlier today, Tesla’s favorite uber-bull and useful FinTwit punching bag Ross Gerber’s firm, the Santa Monica-based Gerber Kawasaki (not to be confused with a motorbike dealer, although perhaps it would hope to be) Wealth Management, was approved for a PPP loan on May 3, 2020. The disclosure comes as part of a broader disclosure of firms who took PPP loans and confirms that Gerber’s firm took a loan ranging from $350,000 to $1 million through Wells Fargo Bank. While PPP loans were given out in exchange for “retaining jobs”, in the case of Gerber Kawasaki that particular number is unknown as the excel cell is empty.The irony, of course, comes from the fact that on April 27, 2020, just 6 short days before his firm’s loan was approved, Gerber virtue signalled to the #resistance by tweeting that “this whole PPP thing looks like a scam. Another big Trump scam” … .. A scam which Ross Gerber had applied for weeks prior and was eagerly waiting approval.Then, during the same thread about “another Trump scam”, when Gerber was called out for having Trump derangement syndrome, he doubled down and said “you can correlate PPP loans and Trump supporters” before suggesting “they should publish the list of companies and amounts.”
Small Business Loans Helped the Well-Heeled and Connected, Too – WSJ – Congress designed the Paycheck Protection Program to help small businesses weather fallout from the coronavirus pandemic, but the program’s $521 billion in loans also went to well-heeled and politically connected firms across the economy, including law offices, charities, restaurant chains and wealth managers. The Trump administration released the names of borrowers for the first time Monday, following pressure by Congress and others to disclose who received the taxpayer-funded loans. On the list: Boies Schiller Flexner LLP, the law firm headed by antitrust litigator David Boies; Newsmax Media Inc., the media company run by Trump donor Christopher Ruddy; and an Indianapolis service provider to charities part-owned by Education Secretary Betsy DeVos. P.F. Chang’s China Bistro Inc., a restaurant operator with more than 200 U.S. locations, got a loan. So did prominent real-estate investors and wealth managers. Nonprofits receiving funds included the Girl Scouts of the United States of America, the Sidwell Friends School in Washington, D.C., whose alumni include children of former presidents, and the foundation that runs the Guggenheim art museum in New York. “This critical financial support was paramount to the health of our organization during a time when other revenue streams were disrupted,” the Girl Scouts group said. The 660,000 companies named accounted for only the largest loans – those worth $150,000 or more. The loans can be forgiven if used largely to retain employees. The loans disclosed Monday represented about 15% of more than 4 million loan participants in the program but about $3 of every $4 distributed. While specific loan amounts weren’t disclosed, many of the best-known recipients took out loans of between $5 million and $10 million, the maximum allowed. All the borrowers may have the loans paid back by taxpayers, as long as they spend at least 60% of the funds on payroll and meet other requirements. The disclosure appeared likely to add to a continuing debate about whether the program, which distributed money rapidly, helped well-to-do businesses rather than those most in need. Some in Congress want to tighten requirements for receiving future pandemic aid. “Businesses shouldn’t have been taking loans if they didn’t need the money,” said Sen. Rick Scott (R., Fla.).
Investment Firms and Real-Estate Developers Took Stimulus Loans Too – WSJ – The former U.S. operations of a sanctioned Russian bank, a hedge fund partly owned by one of the biggest private-equity firms in the world and a real-estate developer behind two of Manhattan’s most expensive condominium towers were among the financial firms that benefited from a government program designed to help small businesses weather the coronavirus pandemic. The entities all received loans under the federal government’s Paycheck Protection Program. Since March, the program has extended about $521 billion out of more than $650 billion in authorized loans, but until now, the public hasn’t gotten a detailed look at who was benefitting from the cash. That changed on Monday, when the Small Business Administration published the names of businesses that accounted for about three-fourths of the loan dollars distributed. While small family-owned businesses and nonprofits benefited from the aid, so did many Wall Street firms that potentially have other sources of cash and didn’t suffer like restaurants and retailers. “The PPP program was designed for small businesses that had to shut down and lose revenues because of the crisis,” said Marcus Stanley, policy director for Americans for Financial Reform, which advocates for tighter financial regulations. “The markets never shut down at any point.” Loan recipients say they were justified to seek the aid and did so within the spirit and guidelines of the program. Xtellus Capital Partners, the former U.S. operations of Russian bank VTB Capital, said the pandemic hurt trading volumes, which made its effort to diversify after its 2018 spinoff riskier. VTB has been under U.S. sanctions for several years. Xtellus got a loan between $150,000 to $350,000, according to the SBA, which only disclosed loan amount ranges. More than a dozen floor brokerages at the New York Stock Exchange got loans of at least $150,000, Monday’s disclosures showed. NYSE floor brokers, who often work for smaller firms of a few dozen employees, were unable to work for about two months starting in March when the exchange shut down floor trading to prevent the spread of the virus. But others who sought the loans have subsequently had second thoughts. One such firm is BlackGold Capital Management LP, a Houston credit fund that received a $150,000 to $350,000 loan, according to the SBA. BlackGold is partly owned by private-equity giant KKR & Co. KKR co-founder George Roberts initiated the private-equity firm’s minority investment in BlackGold, which invests in natural resources and energy. A BlackGold spokesman said the firm applied for a loan at the recommendation of its banker and is in the process of returning the funds.
Private-Equity Firms Borrow From PPP, Despite Later Rule Barring Them – WSJ = A number of private-equity firms received millions of dollars in loans from a taxpayer-backed program despite being told they weren’t allowed to access the money, an analysis of U.S. Small Business Administration data shows.Hedge funds and private-equity funds were among those that tapped the Paycheck Protection Program, created to help small businesses get through the coronavirus pandemic. The SBA in April ruled that these investment firms weren’t eligible for the aid as they are “engaged in investment or speculation.” The…
Here Are The Thousands Of Investment Advisors And Portfolio Managers Who Received Government Bailouts – Today the Treasury and the Small Business Administration released the full list of companies that received Paycheck Protection Program loans – which become grants and are fully forgivable if used to pay employee salaries and/or rent – for an amount greater than $150,000. The complete data, which includes a total of 661,219 recipients, can be accessed here. As a reminder, the PPP was designed to help small businesses weather fallout from the coronavirus pandemic. It did so by funding small and medium companies with 500 employees or less; the loan/grant was meant to cover up to two and a half months of worker compensation (capped at an annualized $100,000) or in other words, the Treasury would provide at most $8,333 per employee for 2.5 months. That, at least, was the theory – in practice, things ended up being different. To be sure, the PPP program helped a broad swath of organizations, including small restaurants, construction firms, retail locations and non-profits. Many of the conventional recipients of PPP loans were restaurant chains were struggling before the pandemic and were hit particularly hard by the health crisis, since they focus on dine-in service instead of to-go sales. Among them was P.F. Chang’s China Bistro Inc., a restaurant operator with more than 200 U.S. locations. Other restaurant chains included Mexican chain Rubio’s Restaurants Inc. and California-based Black Angus Steakhouses LLC.That said, there was some “peculiar” recipients: among the recipients were Boies Schiller, the law firm headed by antitrust litigator David Boies, the Girl Scouts of the United States of America, Illinois-based megachurch Willow Creek Community Church and the prominent New York synagogue Temple Emanu-El. Yet while many businesses legitimately needed the funds to continue operations as without the PPP emergency cash infusion thousands of businesses would have shut down and been forced to layoff millions of workers, when it comes to a certain subset of recipients, questions have emerged. And yet, a casual search through the list of PPP recipients reveals that no less than 1,436 Investment Advisors applied for, and received PPP assistance, in many cases for well over $1 million. One of the most prominent firms, perhaps due to its daily appearances on CNBC, is Ritholz Wealth Management which as we noted previously repaid its PPP loan which according to the SBA was in the $350K-$1MM range. Ritholtz Wealth CEO Josh Bronwn even wrote a blog post explaining what he did in “Every cent, plus interest” in which he tried to justify why a successful RIA would need up to $1 million in government bailout loans.
Carnegie Hall got rescue aid, but not your favorite food cart – Few places illustrate the disparities in coronavirus relief assistance better than New York City. Wall Street firms, top art galleries, and the private-member club Soho House got millions of dollars in federal aid earmarked for small businesses. Evelia Coyotzi, who operates a food cart beneath the tracks of the No. 7 subway line that connects Manhattan to the outskirts of Queens, got nothing. Coyotzi – who sells tamales, the popular Mexican dish wrapped in corn husks – didn’t apply for the federal Paycheck Protection Program because she had been rejected by her bank for a loan in the past. Her three employees weren’t on payroll anyway, she said. “I didn’t think I had a chance,” Coyotzi, who is from Mexico, said through an interpreter from the Business Outreach Center Network Inc., a group that’s helping her apply for a state loan instead. “I thought my business was too small.” Coyotzi, one of the about 83,000 foreign-born entrepreneurs who own half of all small businesses in New York City, has so far managed to get through the downturn by using savings and stalling payments for the kitchen she uses to cook her tamales. The coronavirus hit Coyotzi more than financially. One of her former employees died of the disease. She closed her cart for two months, fearing her workers would get ill by being exposed on the streets of the Corona neighborhood, which was one of New York City’s virus hot spots. Data released this week showed that big-name law firms, Carnegie Hall and companies connected to President Trump and other politicians were among the recipients of 4.9 million PPP loans worth $521 billion as of June 30. But the forgivable loans, distributed by approved lenders and based on a company’s payroll, were out of reach for the myriad cash-based enterprises or underfunded businesses that are key to economic growth in the country. This could change the very fabric of New York City, with businesses that were part of people’s everyday life disappearing.
Televangelists, megachurches tied to Trump approved for millions in pandemic aid – (Reuters) – Megachurches and other religious organizations with ties to vocal supporters of U.S. President Donald Trump were approved for millions of dollars in forgivable loans from a taxpayer-funded pandemic aid bailout, according to long-awaited government data released this week. Among those approved for loans through the massive government relief program were a Dallas megachurch whose pastor has been an outspoken ally of the president; a Florida church tied to Trump spiritual adviser and “prosperity gospel” leader Paula White; and a Christian-focused nonprofit where Jay Sekulow, the lawyer who defended the president during his impeachment, is chief counsel. Evangelical Christians played a key role in Trump’s victory in the 2016 presidential election and have remained a largely unwavering contingent of his base. Vice President Mike Pence spoke at a rally last month at the First Baptist Church of Dallas, whose pastor, Robert Jeffress, has been on Trump’s evangelical advisory board. The church was approved for a $2-5 million loan, the data showed. Launched on April 3, the Paycheck Protection Program (PPP) allows small businesses, nonprofits and individuals hurt by the pandemic to apply for forgivable government-backed loans. Some say allowing religious institutions to qualify for loan forgiveness highlights a breakdown in the American tradition of a strict separation of church and state. “The notion of separation of church and state is dead, and the PPP loan program is the evidence of that,” said Micah Schwartzman, a professor at the University of Virginia School of Law. “The money is going to fund core activities of many organizations, including religious organizations. That’s something we’ve not seen before.”
Over 500,000 businesses got PPP loans but are listed as retaining zero jobs, Treasury Department data show – The Paycheck Protection Program was designed to help small business weather the coronavirus pandemic while keeping their workers employed.But government data suggests that hundreds of thousands of businesses across the country got access to funds without indicating how many jobs would be saved.On Monday, the Trump Administration released data on the small businesses nationwide that received loans through the $669-billion Paycheck Protection Program. The loans distributed through the program were partially or fully forgivable depending on how much of the proceeds were used to keep employees on payroll.The Small Business Administration has said the program has helped support about 51 million jobs. Yet, wrinkles in the data point to issues the federal government will face when keeping businesses accountable once it comes time to verify whether the loans they received will be forgiven.A MarketWatch analysis of the government data found that just over 554,000 small businesses who got PPP funds reported retaining zero jobs. Nearly 50,000 of these business had received loans larger than $150,000, and more than 300 have received loans between $5 million and $10 million. Thousands more companies did not report how many jobs their loans saved. “Government data is horrific,” said Veronique de Rugy, a senior research fellow at the Mercatus Center at George Mason University, a nonprofit think tank. “This is this common pattern of these government reports.”Businesses were asked to provide information on the number of jobs that would be saved on their applications for PPP loans, a Treasury Department spokesman said, but they were not necessarily required to provide it. To receive loan forgiveness, the companies will be asked to supply information regarding how people they employ and what those workers are paid.Some business said the data released regarding the number of employees retained was incorrect. Meridian Behavioral Healthcare, a mental health care provider in Gainesville, Fla., received a loan between $5 million and $10 million through the program, and according to the government data, it retained no employees. The company told MarketWatch that in fact it has retained all of its employees and used PPP funds to do so.
Over 500,000 businesses got PPP loans but are listed as retaining zero jobs, Treasury Department data show – The Paycheck Protection Program was designed to help small business weather the coronavirus pandemic while keeping their workers employed.But government data suggests that hundreds of thousands of businesses across the country got access to funds without indicating how many jobs would be saved.On Monday, the Trump Administration released data on the small businesses nationwide that received loans through the $669-billion Paycheck Protection Program. The loans distributed through the program were partially or fully forgivable depending on how much of the proceeds were used to keep employees on payroll.The Small Business Administration has said the program has helped support about 51 million jobs. Yet, wrinkles in the data point to issues the federal government will face when keeping businesses accountable once it comes time to verify whether the loans they received will be forgiven. A MarketWatch analysis of the government data found that just over 554,000 small businesses who got PPP funds reported retaining zero jobs. Nearly 50,000 of these business had received loans larger than $150,000, and more than 300 have received loans between $5 million and $10 million.
McConnell predicts Congress will need fifth coronavirus bill – Senate Majority Leader Mitch McConnell (R-Ky.) said on Monday that he believes there will be a fifth coronavirus relief bill, as the country sees an uptick in the number of cases. “We will be taking a look at – in the Senate in a couple of weeks – another package based on the conditions that we confront today,” McConnell said in Louisville, Ky. McConnell added on the potential for a fifth coronavirus bill that “I believe there will be one.” McConnell previously predicted in early April that there would be another coronavirus bill, but, since then, Republicans hit pause on talk of another relief package, saying that they wanted to see how the nearly $3 trillion already appropriated by Congress was being spent. Republicans are expected to make a final decision on a fifth coronavirus bill once they return to Washington from a two-week break on July 20. But McConnell said on Monday that he was “likely” to introduce a bill in a few weeks.
Goodbye extra $600. Unemployed workers should not get benefits higher than their old wages in next stimulus bill, Mnuchin says -Treasury Secretary Steven Mnuchin said Thursday that the Trump administration wants to cap enhanced unemployment benefits in the next coronavirus package to make sure workers do not get benefits amounting to more than their former wages.Under the coronavirus bill enacted in March, workers, to encourage compliance with stay-at-home orders, received as much as $600 per week in addition to their regular unemployment benefits, which critics say encouraged the jobless to not look for work.”You can assume it will be no more than 100%, so, yes, we want to incent people to go back to work,” Mnuchin told the cable channel CNBC.The House has passed legislation that would extend the $600 in extra weekly payments until December.The impact of the so-called enhanced unemployment benefits has been hotly debated among economists recently. Supporters say the add-on has been key in keeping families out of poverty as the jobless rate shot up, noting it typically only goes beyond offsetting a previously earned wage when that wage was very low. Critics claim companies are experiencing difficulty in recruitment, despite a national unemployment rate above 11%. The add-on expires in late July.”Enhanced unemployment is intended for people who don’t have jobs, particularly in industries that are harder to rebound, so we will not be doing it in the same way,” Mnuchin said.Mnuchin said he that and Mark Meadows, the White House chief of staff, talked with Senate Majority Leader Mitch McConnell on Wednesday and that their goal was to pass the next coronavirus aid bill between July 20 and the end of the month.Mnuchin said the administration wants to see another round of direct payment checks in that next package. “We do support another round of economic impact payments,” Mnuchin said, though he added that the level of and criteria for the new payments needed to be determined.
White House defends Trump’s claim that 99 percent of COVID-19 cases are ‘harmless’ with chart showing 5 percent are fatal – White House press secretary Kayleigh McEnany came to her press briefing on Monday prepared to defend President Trump’s claim over the weekend that “99 percent” of U.S. coronavirus cases are “totally harmless” with two charts illustrating the country’s COVID-19 death rate.But McEnany’s slides showed a case fatality rate – the percentage of confirmed cases that result in death – of 4.6 percent, not the 1 percent implied by Trump.During a July 4 “Salute to America” speech on the South Lawn of the White House, Trump boasted that the administration has conducted more than 40 million coronavirus tests.”But by so doing, we show cases, 99 percent of which are totally harmless,” Trump added.Asked about the remark during Monday’s briefing, McEnany said the president was merely pointing to “a factual statement, one that is rooted in science,” before calling for the charts to be displayed.The first showed the U.S. case fatality rate, or CFR, dipping to 4.6 percent after topping 6 percent in May; the second compared it to those of European countries – like France, Italy and the United Kingdom – where the rate is upwards of 10 percent. Both charts cited the European CDC as their source, and both showed the U.S. death rate from the coronavirus more than four times the rate Trump’s remark suggested. “What that speaks to is the great work of this administration,” McEnany said. “And that’s what the president was pointing out.”
South Dakota governor, exposed to virus, joined Trump on jet – – Shortly after fireworks above Mount Rushmore disappeared into the night sky on Friday, South Dakota Gov. Kristi Noem accompanied President Donald Trump aboard Air Force One despite having had close contact with Trump’s son’s girlfriend, who had tested positive for the coronavirus. Trump has been in a position all along to encounter a virus that spreads from people who don’t feel sick, such as Noem, who had interacted closely at a campaign fundraiser with Donald Trump Jr.’s girlfriend, Kimberly Guilfoyle, who turned out to be infected. Noem didn’t wear a mask on the plane and chatted with the president as the flight returned to Washington, D.C., according to her spokesperson, Maggie Seidel. Noem had tested negative for COVID-19 shortly before welcoming Trump to South Dakota on Friday, a day after she had interacted with Guilfoyle. One photo on social media showed Noem and Guilfoyle, who is also a Trump campaign staff member, hugging. The Trump campaign announced that Guilfoyle had tested positive on Friday. Guilfoyle’s infection prompted some Republicans, such as Rep. Greg Gianforte of Montana, to take precautions against the spread of the coronavirus. He suspended in-person campaigning for his gubernatorial bid after his wife and his running mate both attended a fundraiser with Guilfoyle earlier in the week. Noem doesn’t plan anything similar or to get tested again for the virus, Seidel said. She cast Noem’s decision to fly on Air Force One as a demonstration of how to live with the virus. Seidel pointed to comments from the World Health Organization that the spread of the virus is “rare” from asymptomatic people. But that runs counter to guidance from public health experts, including the Centers for Disease Control and Prevention, that advises people to wear masks when interacting with people outside their household.
America Faces a Critical PPE Shortage, Again — One of the initial reasons social distancing guidelines were put in place was to allow the healthcare system to adapt to a surge in patients since there was a critical shortage of beds, ventilators and personal protective equipment. In fact, masks that were designed for single-use were reused for an entire week in some hospitals. Now, five months into the pandemic, health care workers are raising the same concern. They are facing a shortage of masks, gowns, face shields and gloves, as The Washington Post reported.”We’re five months into this and there are still shortages of gowns, hair covers, shoe covers, masks, N95 masks,” said Deborah Burger, president of National Nurses United, who cited results from a survey of the union’s members, as The Associated Press reported. “They’re being doled out, and we’re still being told to reuse them.” In a survey of 23,000 registered nurses, National Nurses United found 85 percent were asked to reuse masks designed for single use, according to The Washington Post. The new shortage is not just affecting urban hospitals like it did in March. The rising demand for protective gear is now plaguing a broad range of health care facilities across the country, from urgent cares to doctors’ offices to nursing homes. Several major medical associations said this was a preventable problem that would have required swift and aggressive action from the federal government in the early days of the pandemic, according to The New York Times. If the government had aggressively procured and distributed critical supplies, this shortage could have been avoided. “A lot people thought once the alarm was sounded back in March surely the federal government would fix this, but that hasn’t happened,” said Burger to The Washington Post She, like many health-care workers, blamed the Trump administration for the lack of equipment. She pointed out that the administration has insisted the responsibility falls to state and local officials, with the federal government playing only a supporting role. Neurologists, cardiologists and cancer specialists around the country have been unable to reopen their offices in recent weeks, leaving many patients without care, according to a letter from American Medical Association to the the Federal Emergency Management Agency, Vice President Mike Pence and members of Congress.
Fed’s Quarles urges nations to strengthen bank resolution plans – Although too-big-to-fail banking reforms have strengthened the world’s financial system since the 2008 crisis, Federal Reserve Vice Chairman for Supervision Randal Quarles said regulators around the globe still have work to do to operationalize their processes for the resolution of distressed banks. Quarles – who serves as the chairman of the Financial Stability Board, an international body that works to bolster the resiliency of the global financial system – said all FSB members need to consider how to step up their resolution authorities to better prepare for the possibility of bank failures. “The benefits of reforms cannot be realized unless they are operationalized,” he said in remarks Tuesday to the Exchequer Club. “All FSB jurisdictions need to implement resolution reforms and to improve their resolution capabilities so they are fully prepared to respond to a bank failure or a crisis.” The FSB is made up of 24 central banks that span the globe, plus the European Central Bank. The Basel, Switzerland-based group is organized as an offshoot of the G-20. It is also organized as a complement to the Basel Committee on Banking Supervision, which is also based in Basel. Quarles’ remarks follow the FSB’s publication last month of an evaluation of the too-big-to-fail reforms for systemically important banks. That report found that the global banking system is in many respects better equipped to handle shocks and individual banks are less likely to require government bailouts. “Supervisors and firms are better equipped to deal with problems that occur,” Quarles said. “Supervisory oversight of systemically important banks has learned the lessons of the crisis and has added a macroprudential perspective.” The FSB report also concluded that post-crisis reforms have added “net benefits” to society, and that reforms like enhanced capital and liquidity standards required by the Basel III regulatory framework have yielded few negative side effects. Bank resolution planning has also improved around the world, Quarles said, citing the FSB report’s finding that investors now believe failing banks are more likely to be resolved than bailed out. “Recovery and resolution planning has improved banks’ capabilities to produce timely, accurate and granular information,” Quarles said. “Timely information in a crisis is key to assessing the scale of a problem and to deciding what to do about it. This additional information has already proved helpful to both banks and authorities during the pandemic.” However, Quarles highlighted the FSB report’s conclusion that noted important shortcomings in the current resolution planning processes that member countries must address. “The FSB’s evaluation shows that systemically important banks remain very complex, highlighting the importance of resolution planning,” he said. “The evaluation also highlights gaps in the information available to public authorities and to the FSB and standard setters, which reduces their ability to monitor and evaluate the effectiveness of resolution regimes.” The report also found that resolution authorities could do more to monitor and regulate a bank’s funding sources to ensure continuity and stability.
The coronavirus has given investors a ‘once-in-a-lifetime opportunity,’ says hedge-fund billionaire — ‘I know you’re not supposed to say this, but it’s a once-in-a-lifetime opportunity. You’re not going to see this again: Where you’ve actually got an economy that’s fine, and you’ve got a Fed pumping trillions of dollars in.’ That’s Marc Lasry, hedge-fund manager and billionaire co-owner of the Milwaukee Bucks, explaining his stance on the investment landscape in a chat Wednesday on Yahoo Finance. While stocks should also fare well in the scenario he described, Lasry said it’s debt investors like himself who are poised to do “extremely well” making loans to companies that falter. His $14 billion Avenue Capital firm has capitalized on such struggling brands as Hertz, Macy’s and J.C. Penney. “You’ve got a lot of companies that are in trouble,” Lasry explained, comparing what we’re seeing in the market now to what happened back during the Great Recession. “It’s a once-in-a-lifetime, but it happened 10 years ago, also,” he added with a chuckle. Bankruptcies represent good opportunities to buy from noneconomic sellers or people who need to sell, Lasry told Barron’s in an interview last month. That’s where Avenue Capital comes in. “If things turn out, I will do exceptionally well. If a company has to liquidate that’s OK, because I’ll make money on the liquidation,” he said at the time. Lasry also suggested the economy is better positioned to weather the storm brought on by the coronavirus than it was in the face of the collapse in 2008. “Today we all know something,” he said. “We will be fine in two years. People will be back out, there will be a vaccine. The question is: How long will it take to get back to normal?” Meanwhile, the stock market continues to hold up nicely in the face of all the uncertainty.
Black Knight: Number of Homeowners in COVID-19-Related Forbearance Plans Fall by 435K – Note: Both Black Knight and the MBA (Mortgage Bankers Association) are putting out weekly estimates of mortgages in forbearance.From Black Knight: Forbearances See Largest Weekly Drop Yet The latest data from the McDash Flash Forbearance Tracker shows that, following on last week’s decline, the number of active forbearance plans fell another 435,000 week-over-week – marking the largest drop yet. This brings the total number of active forbearances to its lowest point since April 28.As of July 7, 4.14 million homeowners were in active forbearance, representing 7.8% of all active mortgages, down from 8.6% the week prior. Together, they represent just under $900 billion in unpaid principal.The overall decline in active forbearance plans is likely driven at least in part by the fact that more than half of all active forbearance plans at the start of June were set to expire at the end of the month. While the majority have been extended, this week’s data suggests a significant share were not.Of those in forbearance, 37% have now missed at least three payments, whereas nearly 60% have missed two. Again, recent spikes in COVID-19 around much of the country and the scheduled expiration of expanded unemployment benefits both represent significant uncertainty for the weeks ahead.
Black Knight Mortgage Monitor for May, Cash-Out Refinance Activity Declined – Black Knight released their Mortgage Monitor report for May today. According to Black Knight, 7.76% of mortgages were delinquent in May, up from 6.45% in April, and up from 3.36% in May 2019. Black Knight also reported that 0.38% of mortgages were in the foreclosure process, down from 0.49% a year ago. This gives a total of 8.14% delinquent or in foreclosure. Press Release: Black Knight’s May 2020 Mortgage Monitor … despite record-low interest rates and record-high levels of tappable equity – the amount available to homeowners with mortgages to borrow against before reaching a maximum combined loan-to-value ratio of 80% – both the number of cash-out refinances and the volume of equity withdrawn via such loans fell in Q1 2020. “Tappable equity rose by 8% year-over-year in the first quarter of 2020 to a record high of $6.5 trillion,” said Graboske. “What’s more, with mortgage interest rates hitting record lows, 90% of homeowners with tappable equity now have first lien rates above the prevailing market average. But while Q1 2020 saw overall refinance lending climb to a 7-year high, the number of cash-out refinances, as well as the dollar value of equity withdrawn via refinance, fell for the first time since early 2019. All in, cash-outs accounted for just 42% of refinance loans in the first quarter, roughly half of what was seen at the recent high in Q4 2018 and the lowest such share since Q1 2016. Likewise, the $38.7 billion in equity withdrawn from the market via cash-out refinances was down 8% from the prior quarter. Further, rate lock data – a good indicator of lending activity – suggests the trend is likely to continue, as the cash-out share of refinance activity has continued to fall throughout the second quarter. Here is a graph from the Mortgage Monitor that shows the National Delinquency Rate. From Black Knight:
The national delinquency rate jumped again in May, climbing another 1.3 percentage points to its highest level since December 2011
May’s increase would have been the worst single month ever recorded if it weren’t for the 3.1 percentage point increase in the month prior
All in, the national delinquency rate of 7.8% is now up 4.5 percentage points from the record low of 3.2% in January 2020
There are now 4.3 million homeowners past due on their mortgages, including 200,000 currently in foreclosure
That number has ballooned by more than 2.3 million in recent months after falling below 2 million earlier in the year for the first time since 2005
There is much more in the mortgage monitor.
Mortgage Applications Increase in Latest MBA Weekly Survey – Mortgage applications increased 2.2 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending July 3, 2020. This week’s results include an adjustment for the Fourth of July holiday. … The Refinance Index increased 0.4 percent from the previous week and was 111 percent higher than the same week one year ago. The seasonally adjusted Purchase Index increased 5 percent from one week earlier. The unadjusted Purchase Index decreased 5 percent compared with the previous week and was 33 percent higher than the same week one year ago. Mortgage rates declined to another record low as renewed fears of a coronavirus resurgence offset the impacts from a week of mostly positive economic data, such as June factory orders and payroll employment. The 30-year fixed rate slipped to 3.26 percent – down 53 basis points since late March. Borrowers acted in response to these lower rates, after accounting for the July 4th holiday,” said Joel Kan, MBA’s Associate Vice President of Economic and Industry Forecasting. “Purchase applications continued their recovery, increasing 5 percent to the highest level in almost a month and 33 percent from a year ago. The average purchase loan size increased to $365,700 – also another high – as borrowers contend with limited supply and higher home prices.” Added Kan, “Refinance applications increased slightly, driven by a 2 percent rise in conventional refinances. Overall refinance activity was up 111 percent from last year.” … The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($510,400 or less) decreased to 3.26 percent from 3.29 percent, with points decreasing to 0.35 from 0.36 (including the origination fee) for 80 percent loan-to-value ratio (LTV) loans.
Almost One-Third of NYC Restaurants Missed June Rent, Survey Finds – The majority of restaurant owners around the city did not pay their entire rent in June, with 30 percent skipping out on it altogether, as the coronavirus pandemic continues to make it harder for eateries to survive, a new survey found. The nonprofit New York City Hospitality Alliance surveyed 509 restaurateurs around the city and found four out of five didn’t pay the full June rent. Of those, 90 percent said they paid half or less last month.”Pre-pandemic, it was incredibly difficult to run a successful restaurant,” Andrew Rigie, the executive director of the Hospitality Alliance, said. “These conditions, the longer that it goes on, is going to make it more and more challenging for small businesses to ever recover. The vast majority of small businesses will not be able to pay back months of missed rent.”The survey also found that landlords have been unwilling to give restaurants a break. Sixty percent of restaurant owners said their landlords refused to give them deferments during the pandemic, while only 10 percent were able to renegotiate their leases.Restaurant owners are “hanging on by a thread and they’re exhausting their personal savings in the hope of one day getting their business up and running again,” Rigie said.Even with the challenges and debts piling up, owners said most aren’t looking to close up shop. “The idea of walking away right now is not something that most folks want to do,” “They want to figure out how to make it through.” Emergency restrictions put in place to curb the spread of the coronavirus forced restaurants and bars to switch to take-out and delivery models since late-March. Owners dealt with a significant drop in revenue and were forced to lay off thousands of workers.
NMHC: Rent Payment Tracker Finds Decline in People Paying Rent in July – Without further disaster relief, there will a significant housing and financial issue. From the NMHC: NMHC Rent Payment Tracker Finds 77.4 Percent of Apartment Households Paid Rent as of July 6: The National Multifamily Housing Council (NMHC)’s Rent Payment Tracker found 77.4 percent of apartment households made a full or partial rent payment by July 6 in its survey of 11.4 million units of professionally managed apartment units across the country.This is a 2.3-percentage point decrease from the share who paid rent through July 6, 2019 and compares to 80.8 percent that had paid by June 6, 2020. These data encompass a wide variety of market-rate rental properties across the United States, which can vary by size, type and average rental price. “It is clear that state and federal unemployment assistance benefits have served as a lifeline for renters, making it possible for them to pay their rent,” said Doug Bibby, NMHC President. “Unfortunately, there is a looming July 31 deadline when that aid ends. Without an extension or a direct renter assistance program, that NMHC has been calling for since the start of the pandemic, the U.S. could be headed toward historic dislocations of renters and business failures among apartment firms, exacerbating both unemployment and homelessness.” It appears fewer people are paying their rent compared to last year (down 2.3 percentage points from a year ago). In the previous surveys, over the last few months, people were paying their rents at about the same pace as last year. The disaster relief has been key to helping people pay their bills, especially the extra unemployment benefits and the PPP.
More than 20 million Americans may be evicted by September – (video) The pandemic has intensified rent burden on households across the nation. We spoke to an economist about what it means for the economy.
Warren’s eviction bill is economically and politically savvy — Senator Elizabeth Warren has a new bill out to prevent evictions during the COVID-19 crisis. The bill imposes a 1 year moratorium on evictions nationwide. That’s it. On its face, the bill seems to have two deficiencies. First, millions of low-income tenants will be unable to repay their past due rent. To give them a fresh start we will probably need a streamlined process for consumer bankruptcy filings. Second, a rent moratorium may trigger a financial crisis, as landlords default on their mortgage payments. To prevent this, an eviction moratorium will need to be accompanied by a bank bailout if banks end up having their capital depleted by mortgage defaults. Although bank bailouts are unpopular, an eviction moratorium coupled with bankruptcy reform and a bank bailout will potentially be much cheaper for taxpayers than giving insolvent tenants money to pay their landlords in full, because it pushes losses due to tenant insolvencies from taxpayers to landlords and banks. In a rational world, these predictable problems would be addressed in Warren’s bill. But we do not live in a rational world, and an eviction moratorium is much easier to sell politically than a bankruptcy overhaul and a bank bailout. (We know this is true, because a 120 day limit on evictions included for federally financed properties was included in the CARES act, Democrats have made numerous proposals for a more comprehensive approach, and many states and localities have put a temporary freeze on evictions.) And – this is the critical part – Congress will deal with the bankruptcy problem and bank bailout if they lead to crises in the future. There is certainly some risk here, especially if a bank bailout is handled poorly, but the benefits to struggling tenants (avoiding homelessness) and savings to taxpayers could easily be worth the risk. Warren knows what she is doing.
Americans leave large cities for suburban areas and rural towns – A combination of the coronavirus pandemic, economic uncertainty, and social unrest is prompting waves of Americans to move from large cities and permanently relocate to more sparsely populated areas. The trend has been accelerated by technology and shifting attitudes that make it easier than ever to work remotely. Residents of all ages and incomes are moving in record numbers to suburban areas and small towns. A perfect storm of factors makes the decision to leave major cities like New York very obvious. The dense nature of urban living and the lack of proper local government planning led to the coronavirus spreading five times faster in New York than the rest of the country. The city that never sleeps now resembles a ghost town in many areas after thousands of its wealthy and middle-class residents fled early in the pandemic. Many are moving to small towns north of the five boroughs. Four upstate counties have seen an incredible surge in real estate demand, while the rest of the New York market is cratering. In Ulster County, the number of homes now under contract nearly doubles the 2016 figures. It saw steady sales in March and April while the overall New York market fell by nearly 30 percent. Some people are staying at their vacation homes, but the data suggest there are many permanent moves in the works. An estimated quarter of a million New York residents will move upstate for good, while another 2 million could permanently move out of the state. More than 16,000 New York residents have already relocated to suburban Connecticut. The preliminary figures show New York is also losing citizens to rural New England and Florida in significant numbers. Similar trends are happening in other large urban areas. There is a political element within the domestic migration at play across the nation, but what is more telling is the level of movement to suburban areas and rural towns. Over 40 percent of urbanites have browsed online for real estate, more than twice the level of people who live in the country. Redfin reports that more than a quarter of searches on its website are by urbanites in Seattle, San Francisco, and the District of Columbia searching for homes across less populated places. While real estate sales are down in San Francisco, where prices are falling by more than 50 percent, demand in its suburbs has been soaring, where prices are rising by almost 10 percent. There has been a sharp uptick in interest in moving out to Montana, with the majority of new inquiries coming from California. Real estate sales in Montana are 10 percent higher than at this time last year. Rural Colorado, Oregon, and Maine have seen similar upticks in property sales. Vermont is going through a renaissance in real estate, with an agent there remarking that “people are buying houses without even seeing them.”
Hotels: Occupancy Rate Declined 30.2% Year-over-year — From HotelNewsNow.com: STR: US hotel results for week ending 4 July: U.S. hotel performance data for the week ending 4 July showed a slight decline in occupancy from the previous week, according to STR.
28 June through 4 July 2020 (percentage change from comparable week in 2019):
Occupancy: 45.6% (-30.2%)
Average daily rate (ADR): US$101.36 (-20.9%)
Revenue per available room (RevPAR): US$46.21 (-44.8%)
Occupancy had risen in week-to-week comparisons for 11 straight weeks since mid-April. “Demand came in 67,000 rooms lower than the previous week, and beyond that, July 1 was a reopening day for a lot of hotels, further impacting the occupancy equation,” said Jan Freitag, STR’s senior VP of lodging insights. “A rise in COVID-19 cases has led to states pausing or even rolling back some of their reopenings. Beaches have been a big demand driver for hotels, but with many beaches closed ahead of the July 4 holiday, all but two markets in Florida showed lower occupancy than the previous week. Growing concern around this latest spike in the pandemic has further implications for leisure and business demand alike.” The following graph shows the seasonal pattern for the hotel occupancy rate using the four week average.
Plunge In Consumer Credit Continues As Americans Repay Record Amounts Of Credit Card Debt – One of the striking changes to US consumer behavior spawned by the economic shutdowns from the coronavirus pandemic, was the unprecedented surge in personal savings which exploded to a record 32% of disposable personal income before easing modestly last month to 23.2%. Now, thanks to the latest consumer credit data released by the Fed, we know what much of that saving went to: paying down debt. According to the Fed’s latest G.19 statement, in May, total consumer credit tumbled by another $18.28 billion, which while less than the record $68.8 billion crash in April, was far below expectations for $15 billion drop. Just like March and especially April, most of the credit repayment took place in revolving credit which shrank by another $24.3 billion in May (after declines of $21.5BN in March and $58.2BN in April) as US consumption literally went into reverse and instead of spending wildly as it does every other month, usually spending what it can’t afford, US consumers repaid the most on their credit cards ever. In fact, over the past three months, US consumer have paid down a staggering $104 billion in credit card debt, bring the total outstanding credit card debt below below $1 trillion. Indicatively, the first time total credit card debt hit $1 trillion was back in December 2007, which means that the deleveraging of the past 3 months has sent US credit card balances to a 13 year low! At the same time, there was a modest return to normalcy in non-revolving debt, i.e., student and auto loans, which after plunging by a near record $12 billion last month, has again rebounded and was up $6 billion in May. Going back to the aggressive repayment of credit card debt, that is quite an ominous development for a US economy which is 70% reliant on stable – in many cases credit-card funded – consumer spending. Ominous, but not unexpected, because in a time of virtually no visibility on job prospects and how the pandemic is resolved, instead of doing what they do best, i.e. spend, Americans not only saved money but also went into credit paydown mode, crippling an economy where 70% of total output is a direct result of consumer spending; and needless to say, the tens of millions of Americans (depending on whether one believes the initial claims or the BLS jobs report) who have lost their jobs are not going to go out and spend like drunken sailors any time soon.
Low-Income Households Crushed By Covid Inflation Shock –As The Fed continues to flood the system with money – insisting that inflation is merely a boogeyman and it is doing everything in its power to support the middle class, Bloomberg has found that inflation due to coronavirus is real, and is disproportionately hammering poor households. Due to higher grocery and housing costs for the bare necessities during the pandemic lockdown, the study found that the bottom 10% of households by income currently face inflation of 1.5%, while those in the top 10% face 1%. Meanwhile, the official overall average in May was 0.1%. According to the report, the difference is primarily due to changes in consumption habits during the pandemic – as households have been forced to buy more food, which has shot up in price, while spending less on recreational activities and transportation. “In a period of protest and increasing anger about inequality, the differential inflation rate experienced by low- and high-income households is a concern,” said Bloomberg Economics’ Bjorn van Roye and Tom Orlik. “Taken together with concerns about central banks bailing out investors ahead of firms and workers, and the benefits rich, asset-owning households gain from quantitative easing, it adds to the sense that central banks are unintentional contributors to the problem of inequality,” Meanwhile, adding insult to injury, CCN points out that blue-collar workers are more likely to contract the virus, adding “If you can’t work remotely and you haven’t been laid off, chances are you’re headed into work and putting yourself at risk every day.”
Bed Bath & Beyond to close 200 stores over 2 years as sales fall almost 50% during pandemic -Bed Bath & Beyond said Wednesday its sales tumbled nearly 50% during its latest quarter, even as online sales surged more than 100% during April and May, with consumers stocking up on cleaning supplies and home decor. The company said it plans to permanently close roughly 200 of its namesake stores over the next two years, starting later in 2020, as it works toward getting back to profitability against the backdrop of the coronavirus pandemic. As of May 30, it operated a total of 1,478 stores, including 955 Bed Bath & Beyond shops.
Wholesale inventories tumble in May – (Reuters) – U.S. wholesale inventories tumbled in May as the COVID-19 pandemic drove imports to near a 10-year low, supporting expectations that the second quarter will see the sharpest contraction in economic growth since the Great Depression. The Commerce Department said on Thursday that wholesale inventories dropped 1.2% in May as estimated last month. Stocks at wholesalers gained 0.2% in April. The component of wholesale inventories that goes into the calculation of gross domestic product fell 0.7% in May. Goods imports dropped in May to their lowest level since July 2010 as the coronavirus crisis suppressed demand and upended global trade. Imports have also been curbed by the White House’s trade war with China. Though the shrinking import bill is a positive in the calculation of GDP, it has been overshadowed by an even bigger decline in exports. That has led a widening of the trade deficit, which together with the continued inventory drawdown are expected to contribute to the steepest decline in GDP on record. The economy contracted at a 5.0% annualized rate in the first quarter, the sharpest pace of decline in GDP since the 2007-2009 Great Recession. The economy fell into recession is February. Economists expect GDP shrank at as much as a 35% pace in the April-June quarter. The government will publish its advance second-quarter GDP estimate later this month. The decline in inventories in May was broad, with a 5.1% decline in stocks of motor vehicles and parts. Sales at wholesalers rebounded 5.4% in May after plunging 16.4% in April. At May’s sales pace it would take wholesalers 1.53 months to clear shelves, down from 1.63 months in April.
Wholesale prices drop in June, U.S. inflation very low due to the coronavirus pandemic – The wholesale cost of U.S. goods and services fell in June, reflecting depressed demand in retail and other major parts of the economy caused by the coronavirus pandemic. The producer price index declined 0.2% last month, the government said Friday. Economists polled by MarketWatch had predicted a 0.4% increase. Wholesale inflation has fallen 0.8% in the past year, unchanged from May. By contrast, wholesale inflation was rising at a 1.6% pace just a year ago. Most companies have had to cut prices to drum up sales as reluctant customers worried about the pandemic hoarded their cash. That trend is likely to persist until the virus is contained. Another measure of wholesale costs known as core PPI – which excludes food, energy and trade margins – rose 0.3% last month. It was the biggest increase since January, but the spike is unlikely to last. The core rate is slightly negative in the past year. Most of the increase in producer prices last month was tied to trade margins for wholesalers and retailers, a volatile category that often causes distortions in the underlying rate of inflation. As such economists tend to dismiss trade margins. The wholesale cost of goods, meanwhile, rose 0.2% mostly because of another increase in gasoline prices. The price of oil slumped earlier in the year, and while prices have rebounded, the cost of filling up is still very low with Americans driving less. Fewer people are going on vacation or driving far distances while the coronavirus is still very active. The cost of food went in the other direction. Price fell in 5.2% in June after a 6% increase in May. The cost of meat sank almost 28%. The viral outbreaks at meat-packing plants that triggered a surge in prices in May have been brought under control and the threat of shortages has receded.
Fleet Sales To Plunge 56% In June, Pressuring US Auto Market Further – Over the last few months we detailed how used car prices were set to cripple what little interest in new cars remains, how dealers are scrambling to offer incentives and how ships full of vehicles are being turned away at port cities due to the lack of space and inventory glut.And just as the industry was hoping for some respite, weak fleet orders for June are making it seem as though a recovery is still far away. Cox Automotive is forecasting that fleet sales will fall 56% to 1.3 million vehicles in June, after plunging 83% in May and 77% in April, according to Reuters.Cox is also predicting that further job cuts could occur if production at U.S. automakers doesn’t eventually ramp back up. Zohaib Rahim, economic and industry insights manager at Cox Automotive, said: “If we don’t see a rebound in 2021, this will be a problem for automakers. But right now they’re using all their production to supply dealers.” Cox is still predicting, however, that commercial sales will bounce back in 2021 despite government orders taking a hit. While fleet sales aren’t a main concern for automakers – higher margin sales to customers are – they can still put pressure on the industry as a whole. And with rental companies like Hertz now in the midst of bankruptcy, there is sure to be a profound effect not only on dealer sales, but the used car aftermarket. 62% of vehicles sold to fleet buyers in 2019 went to rental car companies. In 2019, fleet sales accounted for about 22% of GM’s sales, with about half going to rental fleets and the other half going to corporations and government agencies. Fleet sales made up about 28% of Nissan’s 2019 sales, with 93% of those going to rental car companies. John Ruppert, Ford’s general manager of commercial and government fleet sales said it “could be some time in 2021” before sales recover.
U.S. Heavy Truck Sales down 42% Year-over-year in June – The following graph shows heavy truck sales since 1967 using data from the BEA. The dashed line is the June 2020 seasonally adjusted annual sales rate (SAAR). Heavy truck sales really collapsed during the great recession, falling to a low of 180 thousand SAAR in May 2009. Then heavy truck sales increased to a new all time high of 575 thousand SAAR in September 2019. However heavy truck sales started declining late last year due to lower oil prices. And then heavy truck sales really declined towards the end of March due to COVID-19 and the collapse in oil prices. Heavy truck sales were at 305 thousand SAAR in June, up from 282 thousand SAAR in May, and down 42% from 527 thousand SAAR in June 2019.
No V-Shaped Recovery For Airlines- Ticket Sales Re-Slump As Second-Wave Strikes Sentiment – With Covid-19 cases surging in the US and in other countries, airline industry ticket sales for both domestic and international flights are declining again, as demand has turned south, according to a presentation to employees by United Airlines, filed with the SEC on July 7.UA‘s presentation included the two charts below of new ticket sales for future travel, by “all carriers and sales channels,” based on data by Direct Data Solutions (DDS) through July 2. They show the percentage decline in industry-wide ticket sales for domestic and international travel from the same period last year (in a 7-day moving average). The charts are titled, “Increase in Covid-19 cases negatively impacting industry demand”:The first chart shows the decline in ticket sales for domestic flights, in terms of the number of passengers (blue line) and dollar revenues by the industry (purple line): This second chart shows the decline in international ticket sales in terms of the number of passengers: So that’s the end of any pretense of a “V-shaped” recovery of ticket sales. And it’s likely that not just airlines are impacted by this resurgence in Covid-19 cases. But airlines are already teetering on the edge.Yesterday, United Airlines announced that 36,000 employees in the US, or 45% of its US workforce, could face “involuntary furloughs” on on or after October 1. That’s the day after the restrictions attached to the $25 billion in payroll aid under the CARES act expire.United’s memo of the layoffs went out to employees in order to comply with a federal law that requires employers to give employees at least 60 days’ prior warning before mass layoffs, the so-called WARN notices.The “involuntary furloughs” would include up to 15,000 flight attendants, 11,000 customer service and gate agents, 5,500 maintenance workers, and 2,250 pilots. Another 1,300 management and support staff will be laid off on October 1, the company said.“The reality is that United simply cannot continue at our current payroll level past October 1 in an environment where travel demand is so depressed. And involuntary furloughs come as a last resort, after months of company-wide cost-cutting and capital-raising,” the company said. Delta Airlines told pilots in late June that it would send WARN notices to 2,558 pilots, or nearly 20% of its pilots, notifying them of potential furloughs. Last week, Delta said that it may cut the number of flights it had scheduled for August due to lack of demand. A month ago, Delta issued the mother or all revenue warnings. All airlines have been trying to cut their workforce with voluntary measures and have been offering severance packages and early retirement packages to nudge employees out the door without having to lay them off. Over the next few weeks, as the 60-day period before October 1 approaches, more airlines will follow United in announcing mass layoffs.
AAR: June Rail Carloads down 22.4% YoY, Intermodal Down 6.6% YoY – From the Association of American Railroads (AAR) Rail Time Indicators. U.S. rail volumes in June weren’t close to where they would have been absent the pandemic, but for the most part they were better than in April and May, so at least they’re heading in the right direction. Whether that continues is, of course, a separate question, but the worst may be behind us. . This graph from the Rail Time Indicators report shows the six week average of U.S. Carloads in 2018, 2019 and 2020: Total originated U.S. rail carloads fell 22.4% in June 2020 from June 2019, a troubling result but better than the 25.2% decline in April and 27.7% decline in May. Average weekly total carloads in June were 198,564, the third lowest of any month in records going back to January 1988. The second graph shows the six week average of U.S. intermodal in 2018, 2019 and 2020: (using intermodal or shipping containers): U.S. intermodal originations were down 6.6% in June 2020 from June 2019, their smallest percentage decline since January 2020 and much better than the 13.0% decline in May 2020 and the 17.2% decline in April 2020. An average of 251,233 containers and trailers were originated each week in June, the most since November 2019 and up from a recent low of 219,085 in April 2020. Note that rail traffic was weak prior to the pandemic.
ISM Non-Manufacturing Index increased to 57.1% in June – The June ISM Non-manufacturing index was at 57.1%, up from 45.4% in May. The employment index increased to 43.1%, from 31.8%. Note: Above 50 indicates expansion, below 50 contraction. From the Institute for Supply Management: June 2020 Non-Manufacturing ISM Report On Business: “The NMI registered 57.1 percent, 11.7 percentage points higher than the May reading of 45.4 percent. This reading represents growth in the non-manufacturing sector after a two-month period of contraction preceded by 122 straight months of expansion. This is the largest single-month percentage-point increase in the NMI since its debut in 1997. (In April, the index suffered its biggest one-month decrease, a 10.7-percent drop.) The Business Activity Index registered 66 percent, up 25 percentage points from May’s figure of 41 percent. The New Orders Index registered 61.6 percent; 19.7 percentage points higher than the reading of 41.9 percent in May.The Employment Index increased to 43.1 percent; 11.3 percentage points higher than the May reading of 31.8 percent. This graph shows the ISM non-manufacturing index (started in January 2008) and the ISM non-manufacturing employment diffusion index.
Markit Services PMI: “Business activity contraction slows in June as new business nears stabilization – The June US Services Purchasing Managers’ Index conducted by Markit came in at 47.9 percent, up 10.4 from the final May estimate of 37.5. The Investing.com consensus was for 46.7 percent. Here is the opening from the latest press release:Commenting on the latest survey results, Chris Williamson, Chief Business Economist at IHS Markit, said:“June saw a record surge in the PMI’s main gauge of business activity in the US as increasing numbers of companies returned to work and expanded their operations amid the reopening of the economy. The survey points to a strong initial rebound from the low point seen at the height of the pandemic lockdown in April, with indicators of output, demand, exports and employment all showing steep gains. Financial services and technology companies are now reporting improved demand, as are many consumer-facing companies. Many, however, remain constrained by social distancing measures.“With business confidence in the outlook picking up again in June, a return to growth for the economy in the third quarter looks likely, though this will very much depend on the extent to which demand continues to strengthen. There remains a strong possibility that growth could tail off after the initial rebound due to weak demand and persistent virus containment measures. The need to reintroduce lockdowns to fight off second waves of coronavirus infections will pose a particular threat to recovery momentum, and could drive a return of the recession.” [Press Release] Here is a snapshot of the series since mid-2012.
COVID Impact – 1.5 Billion Pound Potato Mountain Trapped In Supply Chain – Nationwide COVID-19 lockdowns led to the collapse of the restaurant industry has disrupted critical food supply chains, such as potatoes, which had nowhere to go. The closings of restaurants, hotels, and catering firms had a chain effect that rippled down the production line to processors and growers, “trapping 1.5 billion pounds in the supply chain,” said Bussiness Insider. Some farmers gave away millions of potatoes to food banks, while others were forced to destroy millions more. Business Insider took a trip to a potato seed farm in Sheridan, Montana, and spoke with farmers Peggy and Bill Buyan, who described the emotional and financial impact COVID-19 has caused them. Courtesy of Business Insider, here’s an excerpt of the video transcript:
Minor League Teams Could Be Latest Casualties of COVID’s Disaster Capitalism – Minor League season. Teams releasing players. Some team owners continue to pay Minor League players, while others convey “tough luck” sentiments and cut the players off. More than 40 Minor League teams to be eliminated; untold damage for local economies as a result. All of this happening in the context of the COVID-19/economic crises, with the future of the Minor Leagues – indeed, the future of baseball – up in the air. There are three points to make here. First, just as with others in big business, Major League Baseball owners are taking advantage of this situation in order to bring about changes that they knew would have been met with steep resistance under other circumstances. Author Naomi Klein speaks of “disaster capitalism,” in which those of wealth and avarice take advantage of disasters in order to advance their agendas and/or make changes that would have been difficult to have made otherwise. We saw this in the aftermath of Hurricane Katrina in New Orleans and in Puerto Rico after Hurricane Maria. In today’s context, what is happening to Minor Leaguers and the MLB as a whole is representative of a design that the MLB owners had in place. Months prior to COVID-19, MLB owners were seriously discussing cutting the number of teams and cutting the number of draft rounds. The changes underway may result in Minor League jobs never returning. We may be looking at a dramatic and pro-corporate restructuring of baseball as an industry after both the pandemic and economic crises end, unless there is a loud and organized public response. Second, baseball may be a game, but what is unfolding for the Minor Leaguers is far from a game or a joke. The lives and careers of thousands of players and other workers in the industry are unraveling as the uncertainty of their situations grow in intensity. The pay for the highest-level Minor Leaguers – those at the Triple-A level, one step from the Major Leagues – was already outrageously low at $12,000 a year. The MLB requires them to conduct much work with no compensation (such as during spring training), purchase their own equipment, gain pitiful amounts of per diem while on the road, and share uncomfortably close quarters with other players due to a lack of resources to live on their own. Third, this dismal situation mirrors that faced by millions of workers across the U.S. who have lost their jobs or, in other cases, been compelled to work under unhealthy conditions in the midst of this pandemic. Not only are we forced to protect ourselves through social distancing, but families are forced to give up work, in many cases, in order to take care of their children. Already stretched budgets – due to the polarization of wealth we have been seeing grow in this country over the last 40 years – have reached the snapping point. Minor Leaguers are not cresting this situation but are being swamped by this catastrophe. .
Regulators reject utility moves to recover revenue lost to COVID-19 as analysts, advocates see trend continuing -The Indiana Utility Regulatory Commission has issued an “immediate” and “decisive” rejection of a request to raise residential electric rates to compensate for COVID-19, leading consumer advocates and industry analysts to conclude that similar requests in other states are likely to suffer the same fate. “The utilities’ request to recover lost revenue was beyond the pale, and, simply put, a bridge too far,” said Kerwin Olson, executive director of Indiana’s Citizens Action Coalition. “The reaction from the public and elected officials was immediate, decisive, and left no doubt that this request was unacceptable.” On May 8, nearly a dozen Indiana utilities joined forces to request authorization to document and defer costs and losses associated with the COVID-19 crisis, including increased costs associated with responding to the public health emergency, losses associated with government orders suspending disconnections, and decreased revenue due to declining sales. They then sought permission to adjust utility rates in order to recover the deferred revenue within 24 months. The Indiana Utility Regulatory Commission rejected this proposal, citing the utilities’ obligation to provide “safe, reliable service” in exchange for “just and reasonable rates.” “Asking customers to go beyond their obligation and pay for services they did not receive is beyond reasonable utility relief based on the facts before us,” the order states. The Wisconsin Public Service Commission has stopped similar actions, while leaders in Michigan and Virginia have also expressed disapproval of revenue recovery efforts by utilities. Robert Mudge, a principal at The Brattle Group, said that while it remains to be seen how regulators across the nation will respond to the question of COVID-19 cost recovery, rushing to make a decision could result in negative outcomes for utilities and their ratepayers. Research by The Brattle Group suggests that utilities nationwide have experienced a 5% reduction in load, resulting in potential net income losses of up to 30%. That kind of loss could be “survivable” for the utility, but the money has to come from somewhere, Mudge said, taking money away from essential services. But if regulators and utilities aim to recapture these losses too soon, Mudge said, it could have a disproportionately negative impact on ratepayers if the 5% load reduction becomes permanent – or even increases as commercial and industrial bankruptcies continue. “Let’s say it’s implemented in 2021,” Mudge said. “That’s going to be a pretty concentrated step up in rates to customers who remain on the system, and are therefore being called upon to make up those differences. What does that look like in terms of a rate hike? That’s a question, but it might be sizable, and it might fall on customers who are economically challenged.”
Weekly Initial Unemployment Claims decrease to 1,314,000 –The DOL reported: In the week ending July 4, the advance figure for seasonally adjusted initial claims was 1,314,000, a decrease of 99,000 from the previous week’s revised level. The previous week’s level was revised down by 14,000 from 1,427,000 to 1,413,000. The 4-week moving average was 1,437,250, a decrease of 63,000 from the previous week’s revised average. The previous week’s average was revised down by 3,500 from 1,503,750 to 1,500,250. The previous week was revised down. This does not include the 1,038,905 initial claims for Pandemic Unemployment Assistance (PUA). This was an increase from the previous week, and the previous week was revised up. The following graph shows the 4-week moving average of weekly claims since 1971.
Almost 50 Million Americans Have Now Filed For First-Time Jobless Benefits Since Lockdowns Began – Despite the hope-restoring nonfarm payrolls “recovery” and the over-hyped bounce in retail sales (ignoring the lack of ‘V’ in industrial production) and ‘soft’ sentiment surveys (which are biased by their nature as diffusion indices to bounce back hard), for the sixteenth week in a row, over 1 million Americans filed for unemployment benefits for the first time (1.314mm was slightly better than the 1.375mm expected). Texas, New Jersey, and Louisiana suffered the biggest increases in jobless claims in the prior week… That brings the sixteen-week total to 49.993 million, dramatically more than at any period in American history. However, as the chart above shows, the second derivative is slowing down drastically (even though the 1.314 million rise this last week is still higher than any other week in history outside of the pandemic) Continuing Claims did drop very modestly but hardly a signal that “re-opening” is accelerating! And definitely not confirming the payrolls or sentiment data… Graphe: Bloomberg. And as we noted previously, what is most disturbing is that in the last sixteen weeks, far more than twice as many Americans have filed for unemployment than jobs gained during the last decade since the end of the Great Recession… (22.13 million gained in a decade, 49.993 million lost in 16 weeks)Worse still, the final numbers will likely be worsened due to the bailout itself (and its fiscal cliff): as a reminder, the Coronavirus Aid, Relief, and Economic Security (CARES) Act, passed on March 27, could contribute to new records being reached in coming weeks as it increases eligibility for jobless claims to self-employed and gig workers, extends the maximum number of weeks that one can receive benefits, and provides an additional $600 per week until July 31. Finally, it is notable, we have lost 378 jobs for every confirmed US death from COVID-19 (132,309). Was it worth it?
BLS: Job Openings increased to 5.4 Million in May — From the BLS: Job Openings and Labor Turnover Summary: The number of hires increased by 2.4 million to a series high of 6.5 million in May, the U.S. Bureau of Labor Statistics reported today. This was the largest monthly increase of hires since the series began. Total separations decreased by 5.8 million to 4.1 million, the single largest decrease since the series began. Within separations, the quits rate rose to 1.6 percent while the layoffs and discharges rate fell to 1.4 percent. Job openings increased to 5.4 million on the last business day of May. These improvements in the labor market reflected a limited resumption of economic activity that had been curtailed in March and April due to the coronavirus (COVID-19) pandemic and efforts to contain it. The following graph shows job openings (yellow line), hires (dark blue), Layoff, Discharges and other (red column), and Quits (light blue column) from the JOLTS. . Note: The difference between JOLTS hires and separations is similar to the CES (payroll survey) net jobs headline numbers. Note that hires (dark blue) and total separations (red and light blue columns stacked) are usually pretty close each month. This is a measure of labor market turnover. When the blue line is above the two stacked columns, the economy is adding net jobs – when it is below the columns, the economy is losing jobs. Jobs openings increased in May to 5.397 million from 4.996 million in April.The number of job openings (yellow) were down 26% year-over-year. Quits were down 41% year-over-year. These are voluntary separations. (see light blue columns at bottom of graph for trend for “quits”). Job openings increased in May, but were still down sharply YoY.
Job Openings & Labor Turnover: May 2020 Update – The latest JOLTS report (Job Openings and Labor Turnover Summary), with data through May, is now available. From the press release: The number of hires increased by 2.4 million to a series high of 6.5 million in May, the U.S. Bureau of Labor Statistics reported today. This was the largest monthly increase of hires since the series began. Total separations decreased by 5.8 million to 4.1 million, the single largest decrease since the series began. Within separations, the quits rate rose to 1.6 percent while the layoffs and discharges rate fell to 1.4 percent. Job openings increased to 5.4 million on the last business day of May. These improvements in the labor market reflected a limited resumption of economic activity that had been curtailed in March and April due to the coronavirus (COVID-19) pandemic and efforts to contain it. This release includes estimates of the number and rate of job openings, hires, and separations for the total nonfarm sector, by industry, and by four geographic regions. This news release contains corrections to previously released January 2020 data in tables 1-6. An error in federal government data affected estimates for government, total nonfarm, and all four regions. More information on these corrections as well as a complete list of corrections in this news release and in the JOLTS database can be found at www.bls.gov/bls/errata/corrections-to-jobopenings-and-labor-turnover-survey-estimates-for-january-2020.htm. Data collection for the JOLTS survey was affected by the coronavirus (COVID-19) pandemic. While 42 percent of data are usually collected by phone at the JOLTS data collection center, most phone respondents were asked to report electronically. However, data collection was adversely impacted due to the inability to reach some respondents that normally respond by phone. The JOLTS response rate for May was 45 percent, while response rates prior to the pandemic averaged 54 percent. BLS modified the JOLTS estimation methods starting in March and continuing through May to better reflect the impact of the coronavirus (COVID-19) pandemic. The estimation process usually includes an alignment of monthly hires minus separations to the over-the-month change in the Current Employment Statistics (CES) employment estimates. For May estimates, as in earlier months, BLS suspended the alignment process because the differing reference periods for the CES employment estimates (pay period including the 12th of the month) and the JOLTS hires and separations estimates (the entire reference month) led to substantially different measurement outcomes. For more information about the impact of the COVID-19 pandemic on the JOLTS survey, including more information about the JOLTS estimation methodology, please see www.bls.gov/covid19/job-openingsand-labor-turnover-covid19-may-2020.htm. The first chart below shows four of the headline components of the overall series, which the BLS began tracking in December 2000. The time frame is quite limited compared to the main BLS data series in the monthly employment report, many of which go back to 1948, and the enormously popular Nonfarm Employment (PAYEMS) series goes back to 1939. Nevertheless, there are some clear JOLTS correlations with the most recent business cycle trends. The chart below shows the monthly data points four of the JOLTS series. They are quite volatile, hence the inclusion of six-month moving averages to help identify the trends. For the last five years, the moving average for openings has been above the hires levels as seen in the chart below.
Hires up, layoffs down but more economic pain is on the horizon: Policymakers must act in order to protect workers’ health and economic well-being – EPI Blog – Today’s BLS Job Openings and Labor Turnover Survey(JOLTS) reports that the labor market was down 13.1 million jobs at the end of May. The number of hires increased by 2.4 million to a series high of 6.5 million – the largest monthly increase and largest number of hires on record (series began in 2000). The hires rate also rebounded significantly to 4.9%, the highest rate on record. At the same time, layoffs dropped considerably to 1.8 million, consistent with the average number of layoffs in the pre-coronavirus period. This is a significant fall off from previous months. In April and May, layoffs totaled 19.2 million. Further, 1.8 million layoffs is much lower than the initial unemployment insurance (UI) claims we saw in May. In May, there were more than 8 million initial UI claims in regular state programs. This suggests is that a significant share of the initial UI claims in May were from layoffs in March or April, and people either waited to file claims until May, or state agencies were working through backlogs of claims. Unfortunately, there are more recent indicators that layoffs are going to pick up again as people being laid off for the second time and hires will likely slow as well. Pre-coronavirus, there were typically around 3.5 million voluntary quits each month, or a rate of about 2.3%. A large number of quits signifies a healthy labor market where people can leave their job to find one that is better for them. The quits rate increased from 1.4% in April to 1.6% in May, but is still well below its pre-virus level, underscoring that workers lack confidence in the labor market. Even at this low level, it’s likely quits would have dropped even further if not for the fact that people were counted who had to, for example, leave a job to take care of a child whose school or child care center closed as a result of the virus. The ratio of unemployed workers (averaged for mid-May and mid-June) to job openings (at the end of May) is about 3.6 workers to every job opening. On average, there were 19.4 million unemployed workers while there were only 5.4 million job openings at the end of May. This demonstrates tremendous continued slack in the labor market; for every 36 workers who were officially counted as unemployed, there were only available jobs for 10 of them. And, this misses the fact that many more weren’t counted among the unemployed. Even with the measurable gains in May as shown in improvements in hiring and layoffs in the JOLTS data and in increases to payroll employment and declines in unemployment in the Jobs data through mid-June, the recovery thus far just begun to fill in the mammoth losses in March and April. Unfortunately, more trouble is on the horizon as coronavirus cases continue to rise, states begin to re-shutter, and unemployed workers face further economic devastation when the unemployment insurance enhancements expire on July 25. Without further aid to workers and their families as well as state and local governments, the economic pain will be with us for a very long time.
Racial Jobless Gap Hits Five Year High – The virus-related economic downturn has crushed the nation’s labor market and proven uniquely damaging for black workers. The road to recovery, so far, has been uneven for whites and blacks, though the Federal Reserve will never admit monetary policy exacerbates inequalities. We asked Neel Kashkari on Wednesday if the NYFed will launch QE6 and open market operations to buy equity ETFs until black unemployment reaches zero… Employment trends for June show more blacks were out of work than white folks (even after the Federal Reserve printed trillions of dollars, lowered interest rates to near zero and the federal government deployed trillions more over the last several months), fueling the racial unemployment gap to five-year highs. Jobless rates for both groups fell in June, but the rate for whites came down at a much faster rate. The white unemployment rate fell 2.3 percentage points to 10.1% from 12.4%, while the rate for Blacks dropped 1.4 points to 15.4% from 16.8%.At 5.3 percentage points, the gap is now the widest since May 2015 and exposes an important economic component of racial inequality at a pivotal moment in U.S. race relations. In recent weeks, the country has witnessed protests over police brutality against African Americans, particularly Black men. – Reuters Job loss and gains by race – notice the job recovery has been much slower for blacks than whites and Latinos.
Census: Household Pulse Survey shows 32% of Households Expect Loss in Income; 24.5% Concerned about Housing — Note: The question on lost income is always since March 13, 2020 – so this percentage will not decline. From the Census Bureau: Measuring Household Experiences during the Coronavirus (COVID-19) PandemicThe U.S. Census Bureau, in collaboration with five federal agencies, is in a unique position to produce data on the social and economic effects of COVID-19 on American households. The Household Pulse Survey is designed to deploy quickly and efficiently, collecting data to measure household experiences during the Coronavirus (COVID-19) pandemic. Data will be disseminated in near real-time to inform federal and state response and recovery planning. … Data collection for the Household Pulse Survey began on April 23, 2020. The Census Bureau will collect data for 90 days, and release data on a weekly basis. This will be updated weekly, and the Census Bureau released the recent survey results last Wednesday. This survey asks about Loss in Employment Income, Expected Loss in Employment Income, Food Scarcity, Delayed Medical Care, Housing Insecurity and K-12 Educational Changes. 32% of households expect a loss in income over the next 4 weeks. This is down from 38.8% in late April, but up from 31% the previous (the previous week was the reference week for the BLS employment report). This might suggest the job gains stalled after the data was collected for the June employment report. About 10% of households report food scarcity; households where there was either sometimes or often not enough to eat in the last 7 days. 41.5% of households report they delayed medical care over the last 4 weeks. This has not declined. 24.5% of households reported they missed last month’s rent or mortgage payment. This has increased from a low of 22.1% in the survey of June 4th – June 9th. Essentially all households with children are reporting were not being taught in a normal format.
Census: Household Pulse Survey shows 34.9% of Households Expect Loss in Income; 25.9% Concerned about Housing — Note: The details in the pulse survey this week are concerning – especially about loss in income and concern about housing. This graph is from Ernie Tedeschi (former US Treasury economist).Note: The question on lost income is always since March 13, 2020 – so this percentage will not decline.From the Census Bureau: Measuring Household Experiences during the Coronavirus (COVID-19) PandemicThe U.S. Census Bureau, in collaboration with five federal agencies, is in a unique position to produce data on the social and economic effects of COVID-19 on American households. The Household Pulse Survey is designed to deploy quickly and efficiently, collecting data to measure household experiences during the Coronavirus (COVID-19) pandemic. Data will be disseminated in near real-time to inform federal and state response and recovery planning. … Data collection for the Household Pulse Survey began on April 23, 2020. The Census Bureau will collect data for 90 days, and release data on a weekly basis.This will be updated weekly, and the Census Bureau released the recent survey results last Wednesday. This survey asks about Loss in Employment Income, Expected Loss in Employment Income, Food Scarcity, Delayed Medical Care, Housing Insecurity and K-12 Educational Changes. The data was collected between June 25 and June 30, 2020.
Expected Loss in Employment Income: “Percentage of adults who expect someone in their household to have a loss in employment income in the next 4 weeks.” 34.9% of households expect a loss in income over the next 4 weeks. This is down from 38.8% in late April, but up from 32% the previous (the previous week was the reference week for the BLS employment report). This might suggest the job gains stalled after the data was collected for the June employment report.
Food Scarcity: Percentage of adults in households where there was either sometimes or often not enough to eat in the last 7 days. About 10% of households report food scarcity.
Delayed Medical Care: “Percentage of adults who delayed getting medical care because of the COVID-19 pandemic in the last 4 weeks.” 41.5% of households report they delayed medical care over the last 4 weeks. This has not declined.
Housing Insecurity: “Percentage of adults who missed last month’s rent or mortgage payment, or who have slight or no confidence that their household can pay next month’s rent or mortgage on time.” 25.9% of households reported they missed last month’s rent or mortgage payment (or little confidence in making this month’s payment). This has increased from a low of 22.1% in the survey of June 4th – June 9th.
K-12 Educational Changes: Essentially all households with children are reporting were not being taught in a normal format.
A US senator wants to propose legislation blocking middle seats on planes after he flew on a crowded American Airlines flight – The US government is about to weigh in on whether airlines should block middle seats after a senator flew on a crowded flight Thursday that prompted him to take action. Sen. Jeff Merkley of Oregon was flying on an American Airlines flight just before the holiday weekend and saw firsthand the airline’s lack of social distancing policies in action. The masked-up Democrat then took to Twitter, where he posted a photo of his flight with a dark message for the airline:“How many Americans will die bc you fill middle seats, w/ your customers shoulder to shoulder, hour after hour,” the Democratic lawmaker wrote. “This is incredibly irresponsible. People eat & drink on planes & must take off masks to do so. No way you aren’t facilitating spread of COVID infections.”After receiving nearly 40,000 likes on the platform, Merkley followed up with a tweet saying he would address the issue when he returned to Washington and join an unnamed group of legislators already on airline-related reforms.”I will introduce a bill to ban the sale of middle seats through this pandemic,” Merkley said in a July 3 tweet. “And I’ll work with colleagues to include it in a package of airline accountability reforms they are crafting.”If Congress passes such a bill and the president signs it into law, it would be the first federal mandate regulating social distancing onboard airliners since the start of the pandemic. Most policy choices have been left up to the airlines, as Business Insider found when reviewing the social distancing policies of the 11 major US airlines, especially whether to mandate face coverings for passengers. American Airlines had been restricting flights at 85% capacity for the month of June – as Business Insider saw firsthand on two American flights in early June – and recently announced that it will be selling its flights to capacity starting July 1. Two of its main rivals, Delta Air Lines and Southwest Airlines, are taking the opposite approach and blocking middle seats until at least September 30, when provisions of the CARES Act stimulus package are set to expire.
New York City Democrats ensure budget protects NYPD and guts social services – On Monday, New York City’s “progressive” mayor Bill de Blasio and the Democratic Party-controlled City Council announced the final figures for the huge cutbacks in next year’s city budget. The justification for the latest set of austerity measures was the economic devastation caused by the uncontrolled spread of COVID-19, which has left the city with a spending deficit of $9 billion for the 2021 fiscal year. The budget was passed by the 51 members of the city’s Council, 48 of whom are Democrats, by a vote of 32 to 17. The new budget marks an escalation of the years-long cutbacks to social welfare and cultural services, overseen by local Democratic and Republican politicians alike. To placate anti-police violence protesters, the budget includes a highly publicized $1 billion “cut” to the New York Police Department (NYPD). Far from acceding to the calls to abolish or defund the NYPD that dominated the anti-police violence protests that rocked the city in June, however, the $1 billion figure is a fabrication. At least $350 million in “savings” were proposed through the transfer School Safety Agents – poorly paid, unarmed security guards who work inside public-school buildings – and school crossing guards from their current status under the NYPD to the Department of Education. Documents released last Thursday show that even this accounting trick was a gimmick, with Safety Agents remaining under the jurisdiction of the NYPD. Another $350 million is to be cut from the police budget by reductions in overtime. The NYPD has not stated how these reductions will be enforced. In the past, city agencies that have been instructed to cut overtime have ended up paying it out in full regardless. The only tangible cuts to the police budget are the cancelation of July 2020’s academy class, which will save $55 million, and delaying a new delivery of fleet vehicles, which will save $5 million. The cut of 1,200 new officers will only undo an increase to police numbers sanctioned by Mayor de Blasio in 2015. The NYPD will continue to maintain a force of 34,000 officers. Whether even these minimal cuts take place remains to be seen. While the NYPD budget has barely been touched, New York City’s social services, already in a decrepit state from years of austerity, face further crippling cuts. These come at a time when workers in New York City have filed 1.4 million new claims for unemployment benefits since the pandemic began in March.
Miami-Dade mayor closes restaurants, gyms and other facilities as COVID-19 cases rise – Miami-Dade County will close bars and restaurants amid an ongoing outbreak of the coronavirus in Florida, county Mayor Carlos Gimenez (R) announced Monday. “I am signing an emergency order that will close restaurants (except for takeout and delivery services), along with ballrooms, banquet facilities, party venues, gyms and fitness centers, and short-term rentals. These closings, among others that will be included in the order, will be effective Wednesday, July 8, 2020,” Gimenez said in an announcement Monday. “We want to ensure that our hospitals continue to have the staffing necessary to save lives. At this time, I plan to keep open various outdoor activities, including condominium and hotel pools with strict social distancing and masks rules, as well as summer camps and child daycare centers with strict capacity limits, requiring masks and social distancing of at least 6 feet,” he added. Gimenez said the county’s beaches will be open Tuesday but vowed to close them again if beachgoers fail to follow anti-crowding rules. Offices, retail stores and personal grooming businesses will remain open “for now,” he added. The mayor said county officials are continuing to track an uptick in younger patients that began in June, which he blamed on a combination of young people going to congested indoor and outdoor events without masks, specifically blaming graduation parties. Gimenez also attributed the uptick to street protests, echoing comments he made on CBS’s “Face the Nation” on Sunday, although the cities where the biggest protests took place – Minneapolis, New York and Washington, D.C. – saw no comparable spike. “We can tamp down the spread if everyone follows the rules, wears masks and stays at least six feet apart from others,” Gimenez said. “I am counting on you, our 2.8 million residents, to stop the spread so that we can get back to opening our economy.”
‘No shirts, no shoes, no mask – no service’: Gov. toughens COVID-19 requirements ⋆ Businesses will now be required to deny service to people who don’t wear masks indoors, with limited exceptions for individuals and houses of worship, according to an executive order signed Friday by Gov. Gretchen Whitmer. She summed up the policy in her order as: “No shirts, no shoes, no mask – no service.” Michigan has seen an uptick in COVID-19 cases in recent weeks. The order goes into effect immediately for individuals andat 12:01 a.m. Monday for businesses in order to stop the spread of the disease. Masks also are now required for people in crowded outdoor spaces, in light of recent congregations like the Diamond Lake beach party that made national news. Michigan has almost 68,000 cases and more than 6,000 COVID-19 deaths. “The heroes on the front lines of this crisis have gone hours without taking their masks off every day – doctors, nurses, child care workers, grocery store workers. We owe it to them to wear our masks when we’re on a trip to the grocery store or pharmacy,” said Whitmer. “Masks can reduce the chance of spreading COVID-19 by about 70%. By wearing masks, we can save lives and protect our family, friends, and neighbors from the spread of COVID-19. And by wearing masks now, we can put our state in a stronger position so our kids can return to school safely in the fall. For the sake of your loved ones, let’s all mask up, Michigan.”
New Jersey growers refuse to test migrant farm workers for COVID-19 – As many as 10,000 migrant workers have come to New Jersey during the past few weeks to pick blueberries and pack them for sale. Many of these workers have arrived after picking fruit under unsafe conditions in Florida, Georgia, North Carolina, and other states where the number of novel coronavirus infections is increasing. But a growing number of New Jersey farms are refusing to allow the seasonal workers they have hired to be tested for the virus. Driven by the demands of creditors, agribusinesses and supermarket chains to quickly harvest the crops, this indifference to the lives of migrant workers will only help spread the coronavirus again in New Jersey.Agriculture is the third-largest industry in New Jersey. The 2017 Census of Agriculture found that the state had 9,883 farms, which was 800 farms more than in the 2012 census. The value of New Jersey’s overall agricultural products was almost $1.1 billion in 2017, an increase from approximately $1 billion in 2012. About 9,000 acres of blueberries were harvested in New Jersey in 2018. These acres yielded 44 million pounds of blueberries, representing a value of $62.4 million. Approximately 80 percent of New Jersey’s blueberries are grown on 56 larger farms in Atlantic County. In May, the state’s Department of Health introduced a program under which federally qualified health centers (FQHCs) would, at no charge to growers, test the migrant workers who harvest fruits and vegetables. But the department made participation in this program voluntary. By refusing to divulge the number of growers who have refused testing, as well as their locations, the department is shielding these growers from public outrage.
Atlanta Mayor Announces Positive COVID Test Hours After Governor Declares State Of Emergency –Hours after Kemp declared a state of emergency, Atlanta Mayor Keisha Lance Bottoms announced over Twitter that she has COVID-19.COVID-19 has literally hit home. I have had NO symptoms and have tested positive. – Keisha Lance Bottoms (@KeishaBottoms) July 6, 2020 * * * Georgia governor Brian Kemp (R) has declared a state of emergency and authorized the deployment of 1,000 National Guard troops due to a sharp increase in violent crime and property destruction in the city of Atlanta. Five people were killed in shootings over the Fourth of July weekend, including an 8-year-old girl who was shot dead inside a car during a BLM protest. 30 more were wounded over the holiday weekend. “Peaceful protests were hijacked by criminals with a dangerous, destructive agenda. Now, innocent Georgians are being targeted, shot, and left for dead,” said Kemp. who threatened on Sunday to “take Action” if Atlanta Mayor Keisha Lance Bottoms couldn’t control the unrest, according to AJC. ‘Georgia has seen violent protests, looting and violence since the deaths of George Floyd in Minneapolis, and Rayshard Brooks at an Atlanta drive-thru. In late May, rioters vandalized CNN’s headquarters, broke into the College Football Hall of Fame and looted it, and started fires throughout the city.
Atlanta mayor rolls back city’s reopening: ‘Georgia reopened in a reckless manner’ — Atlanta Mayor Keisha Lance Bottoms (D) announced Friday she’s rolling back her city’s reopening, citing concerns over an increase in coronavirus cases in Georgia.Bottoms said in a statement that she’s bringing Atlanta back to the reopening’s first phase, mandating people to wear masks in public and urging them to frequently wash their hands and stay home except for essential trips. It also recommends businesses continue teleworking and conduct frequent cleanings of public and “high touch” areas.Nonessential city facilities will remain closed.”Based upon the surge of COVID-19 cases and other data trends, pursuant to the recommendations of our Reopening Advisory Committee, Atlanta will return to Phase I of our reopening plan,” said Bottoms. “Georgia reopened in a reckless manner and the people of our city and state are suffering the consequences.”The rollback comes as Georgia sees an alarming spike in COVID-19 cases, setting a record of nearly 5,000 new cases Friday alone. Bottoms’s move clashes with guidance from Gov. Brian Kemp (R), who has advocated for a more aggressive reopening approach and asked cities not to mandate mask-wearing. “Atlanta Mayor @KeishaBottoms’ action today is merely guidance – both non-binding and legally unenforceable. As clearly stated in my executive orders, no local action can be more or less restrictive, and that rule applies statewide,” Kemp said in a swipe at Bottoms.
GOP state lawmaker says he would like ‘to see more people’ get coronavirus to build herd immunity – Alabama state Sen. Del Marsh (R) this week told reporters that he would “like to see more people” contract COVID-19 in order to create herd immunity in the state.Marsh was asked about Alabama setting a new daily record for COVID-19 cases after the state reported 2,164 cases on Thursday.”I’m not as concerned as much as the number of cases – and in fact, quite honestly – I want to see more people, because we start reaching an immunity as more people have it and get through it,” Marsh said.”I don’t want any deaths, as few as possible in the state, I get it. So those people who are susceptible to the disease, especially more serious, those with pre-existing conditions, elderly population, those folks, we need to do all we can to protect them. But I’m not concerned.” Marsh added that he wants “to make sure everybody can receive care.” WSFA reporter Lydia Nusbaum shared footage of the exchange on Twitter. Marsh says he wants to see more people with COVID-19 because “we start reaching an immunity as more people have it and get through it.” pic.twitter.com/JH43IJCdUw – Lydia Nusbaum (@LydiaNusbaum) July 9, 2020Marsh, who serves as president pro tempore of the Alabama state Senate as well as on Alabama Gov. Kay Ivey’s (R) COVID-19 task force, appeared to be referring to herd immunity, which occurs when a large amount of the population becomes immune to a virus after being infected and recovering or through inoculation.The approach has been used by Sweden amid the ongoing coronavirus pandemic. The country has kept many businesses open and encouraged social distancing and other health measures to prevent the spread of the virus. However, thousands more people have died in the country than in neighboring countries that imposed stricter lockdowns, The New York Times reported. Sweden has also suffered a higher death rate than other countries.
Parts of U.S. scramble to shut down as country breaks another daily coronavirus record – The United States saw another record-breaking day on Friday with 66,600 new coronavirus cases, according to data from Johns Hopkins University. That’s up from the previous daily record of 63,200 cases on Thursday and marks the third time in less than a week the country has hit an all-time high for new, confirmed infections. The U.S. has now seen over 3.18 million COVID-19 cases and more than 134,000 deaths due to the virus. Parts of the country are scrambling to shut down once again as the virus spreads, Michael George reported for “CBS This Morning: Saturday.” Bars, restaurants and the young made their way into the crosshairs of governors in southern states where the virus is surging.South Carolina Governor Henry McMaster issued an executive order Friday to prohibit the sale of alcoholic beverages at bars and restaurants in the state after 11 p.m. It goes into effect on Saturday, affecting about 8,000 locations. “Many of the young people in our state as well as around the country seem not to be taking the virus as seriously as they should,” McMaster said.”We know that young adults who are rapidly contracting the virus and spreading it into our communities frequently congregate in late-night atmospheres which simply are not conducive to stopping its continued transmission,” said McMaster. At a Kentucky test site, bartender Michael Whitler knows what can happen after 11 p.m.”Once it gets too late at night, it’s just unbelievable,” said Whitler. “It’s been pretty nuts,” he said. “Enough to make you want to go get tested.”In Tennessee, Shelby County restaurants require customers to fork over their contact information before they’re seated.
Judge halts federal execution, citing coronavirus concerns – A judge halted the first federal execution set to take place in nearly 20 years over concerns regarding the coronavirus pandemic. Chief District Judge Jane Magnus-Stinson of the Southern District of Indiana Friday stayed the execution of Daniel Lee. Lee, 47, had been sentenced to death for the 1996 murders of gun dealer William Mueller, his wife, Nancy, and her 8-year-old daughter, Sarah Powell. Magnus-Stinson said she was putting the execution on hold over concerns from the victims’ family members over the coronavirus, which has spread like wildfire throughout prisons across the country. The judge cited Earlene Branch Peterson in her ruling; Peterson, whose daughter and granddaughter were killed by Lee, said she wants to be present for the execution. “The harm to Ms. Peterson, for example, is being forced to choose whether being present for the execution of a man responsible for the death of her daughter and granddaughter is worth defying her doctor’s orders and risking her own life,” Magnus-Stinson wrote. The execution was to be the first one in almost two decades after the Justice Department announced it was resuming capital punishment. Magnus-Stinson’s stay will delay the punishment until such time as there is no longer a national health emergency.
California to release another 8,000 inmates early due to coronavirus pandemic – California officials announced Friday that an additional 8,000 inmates would be released early from state prisons to prevent the spread of the novel coronavirus among both inmates and staff. “We’re glad the Governor is taking action to release more people. This is absolutely critical for the health and safety of every Californian. Too many people are incarcerated for too long in facilities that spread poor health. Supporting the health and safety of all Californians means releasing people unnecessarily incarcerated and transforming our justice system,” Californians for Safety and Justice Executive Director Jay Jordan said in a statement. The state Department of Corrections had already reduced the inmate population by 10,000 to help prevent the spread of coronavirus. To be eligible for release, inmates must have a year or less time to serve in their sentences, and must not be serving for domestic violence or a violent crime. They also must have no current or prior sentences that require a sex offender registration, and must not be considered at high risk for violence. Those over 30 years of age who are eligible will immediately be considered, while those ages 29 and under will have their release considered on a case-by-case basis. Inmates who are “high risk” such as those over 65 years old with chronic health conditions may also be considered for release.
After Years of Underfunding, Now Public School Teachers Are Supposed to Save the Nation’s Economy? – – Yves Smith – In the early months of the coronavirus outbreak, the nation relied on health care and grocery store workers for survival, but that labor force couldn’t possibly turn around a crashing economy. Then, conservative governors across the nation, particularly in the South and West, thought bringing back the leisure and hospitality workforce would revive business and commerce. That didn’t turn out so well. So now a broad range of policy makers and political actors are turning to school teachers to get the economy humming again. In May, as the pandemic was just about to explode from hotspots in the Northeast to a nationwide contagion, Forbes contributor Nick Morrison argued, “Until children go back to school, parents will have to remain at home looking after them, and it will be impossible to fully restart the economy.” New York Times op-ed writer Spencer Bokat-Lindell, marveling at how European countries were able to reopen schools, wrote, “Restarting classes is essential not only to parents’ mental health and children’s development, but also to reviving the economy.” “We cannot have a functioning economy, or any hope of reducing economic inequalities, without a functioning educational system,” wrote Paul Starr for the American Prospect in June. “A consensus is emerging among top economists and business leaders,” reported Heather Long for the Washington Post in July, “that getting kids back into day cares and schools is critical to getting the economy back to normal.” She quoted chief executive of JPMorgan Chase Jamie Dimon saying, “If schools don’t open, a lot of people can’t go back to work.” At a June hearing on Capitol Hill, senators and federal health officials called for “schools to resume some form of normal operations in the upcoming academic year, due in part to concerns about a weakened economy and the long-term welfare of children and families,” according to Education Week. White House counselor Kellyanne Conway declared, “[W]e know that opening our schools and getting our children back to their normal routines and their structural support is really the key … I think it’s the essential nervous system to this nation, and then people will be able to go back to work,” the Washington Post reported. Republicans in the U.S. House of Representatives have submitted the Reopen Our Schools Act that would prohibit Secretary of Education Betsy DeVos from providing funding to public schools and universities unless they return to in-person instruction, Fox News reported. A first cousin of these calls to reopen schools for the sake of the economy is the genre of commentary demanding school buildings be open full-time for the sake of parents who want to go to work after the economy fully reopens (if that ever happens).
Trump threatens to withhold funding to schools if they don’t reopen this fall – President Donald Trump put the nation’s schools on notice Wednesday that he may cut off their funding if they don’t reopen their classrooms this fall. One day after he promised to put “a lot of pressure” on schools to reopen, Trump served up a new threat on Twitter. “In Germany, Denmark, Norway, Sweden and many other countries, SCHOOLS ARE OPEN WITH NO PROBLEMS,” he wrote. “The Dems think it would be bad for them politically if U.S. schools open before the November Election, but is important for the children & families. May cut off funding if not open!” Trump issued the warning as the White House Coronavirus Task Force was preparing to meet at the U.S. Department of Education headquarters in Washington. Trump’s push to open schools comes amid a nationwide debate over whether children should return to the classroom amid the coronavirus pandemic. It also echoes Trump’s calls in the spring for states to reopen their local economies. Many states with Republican governors did so, but places like Texas and Florida are now seeing spikes in COVID cases. On Tuesday, the president and first lady Melania Trump staged a White House event designed to push local school districts to reopen in the fall. The event provided a forum for teachers, administrators, students and parents to discuss “best practices” for safely reopening schools around the country. “Everybody wants it,” Trump said. “The moms want it. The dads want it. The kids want it. It’s time to do it.” The first lady urged parents, teachers and schools to inform children about the Centers for Disease Control and Prevention’s guidelines on coronavirus at the start of the school year and to implement those guidelines when appropriate.
Democratic Governor Gretchen Whitmer pushes unsafe reopening of Michigan schools -Last week, Michigan Governor Gretchen Whitmer released her “Return to School Roadmap,” which demands the reopening of schools even as COVID-19 cases are spiking in the state and expected to surge again in the fall. The Democratic governor’s program largely adopts state Republicans’ reckless “Return to Learn” outline released a week earlier.Whitmer also released the outline of a budget deal with the Republican-led legislature to fill a $3.2 billion budget shortfall for the fiscal year that just ended through deep cuts to state employees and school districts. The state still faces an overall $3 billion shortfall for the 2020 – 21 fiscal year, not including additional funding needed for vital pandemic containment and protection measures. For the 2019 – 20 fiscal year, the state deal includes $512 million in funding from the CARES Act to cover coronavirus protection measures, far lower than the estimated $1 billion that is required. It entails $256 million in direct cuts to state funding for K-12 public education, which translates to average cuts of $664 from the $8,111 total per-pupil spending across the state. Additionally, Michigan schools face a massive $1.2 billion shortfall for the coming school year, which translates to another $700 cut in per-pupil spending, bringing the combined total for both years to 16.8 percent in cuts, a devastating blow to public education.Michigan is currently experiencing a spike in COVID-19 cases due to the premature, bipartisan back-to-work drive. Michigan is experiencing a 59.7 percent increase in new cases from two weeks ago. As with much of the country for which studies show an enormous undercounting of COVID-19 deaths, the Michigan Department of Health and Human Services reports 3,346 deaths from the virus in April, but 4,907 more total deaths than in April 2019. This 19.5 percent jump in non-COVID identified deaths likely include many miscategorized as, among others, pneumonia and the seasonal flu, which showed a jump of 26 percent from April 2019 to April 2020. Nevertheless, stating that she is “optimistic that we will return to in-person learning in the fall,” Whitmer is making it clear that she is determined to reopen schools even as cases spike and schools will likely serve as new and powerful vectors for community transmission of the virus.
Florida orders schools to reopen as COVID-19 cases surge – On Monday, the Florida Department of Education issued an emergency order requiring school districts to reopen all “brick and mortar schools at least five days per week for all students” in August in order to facilitate “a return to Florida hitting its full economic stride.” The order, which specifically complains that school closures “limit many parents and guardians from returning to work,” is part of the murderous back-to-work campaign that has led to a spike in COVID-19 cases across Florida and dozens of other states. The number of new cases in Florida has surged from an average of 700 each day at the beginning of June to a seven-day moving average of 8,587 daily cases on July 6. With the number of cases continuing to escalate, it is certain that COVID-19 will be present throughout the school system next month and face-to-face instruction would become a significant vector for further transmission. Teachers, including those nearing retirement or with health vulnerabilities, will almost certainly contract the deadly disease, while countless students will bring it home to their parents and grandparents. The order immediately sparked outrage and protests from teachers and parents across the state. Teachers in Orange County, which includes Orlando, organized a protest caravan that blocked traffic. On Facebook, an Orange County teacher, Mia, wrote: “We the People … We can’t let the Governor and the head of the DOE make these decisions without the input of the Teachers. We’re the ones risking our lives. We need to make our voices heard and stand together. This is literally life and death.” A parent, Angela, added, “I’m a Mom and at risk due to an autoimmune issue…why for political reasons am I being forced to expose my child, her teachers, our families and communities to a virus that is not under control. Hell No! We won’t go!” The Florida order comes as part of a nationwide push to end lockdown measures, “reopen” the economy and force workers into unsafe conditions. . During the nearly four months since Florida schools were closed – when there were only 217 confirmed cases acknowledged in the state – no effective measures were implemented to contain or mitigate the disease, such as contact tracing. Now that there are 1,000 times as many confirmed cases in the state, they are trying to open up schools. The Trump administration and Governor DeSantis are so adamant about getting children physically into school regardless of health cost or educational value, because they need schools as day care centers in order to push parents back to work. Safer, more effective distance learning would require that families take care of children during the day.
Teachers “Scared” After All Florida Schools Ordered To Reopen In August – In what is sure to be discussed with some “blood on their hands” headline in the next 24 hour news cycle, Fox35 Orlando reports that Education Commissioner Richard Corcoran on Monday ordered public schools to reopen in August and offer “the full panoply of services” to students and families. The full Emergency Order says that all public schools will be required to reopen in August for at least five days a week and to provide the full array of services required by law, including in-person instruction and services for students with special needs. “Required services must be provided to students from low-income families, students of migrant workers, students who are homeless, students with disabilities, students in foster care, students who are English-language learners, and other vulnerable populations,” the order says. Corcoran’s order also instructs school districts to follow the advice of state and local health officials as well as executive orders issued by Gov. Ron DeSantis. Read the full emergency order below: Of course, as one would imagine, teachers are concerned. According to Florida Education Association President Fedrick Ingram.“It’s clear in commu nications with our members that educators are scared. They don’t trust politicians to make sure things are safe — rightly so, with the record-breaking number of cases being reported,” Ingram told the News Service of Florida in an email Monday.“The governor is trying to brush that off.” The average age for those testing positive for COVID-19 in Florida is now only 21, Gov. Ron DeSantis said Monday in an update in The Villages. He said the younger age of those testing positive is contributing to lower mortality rates from the virus across the state. The fatality rate in Florida is currently less than 2%.
CDC director: Keeping schools closed poses greater health threat to children than reopening – Centers for Disease Control and Prevention (CDC) Director Robert Redfield said Thursday that the health risks of keeping schools closed are greater than those of opening them, amid a push by President Trump to have students in classrooms this fall. “I’m of the point of view as a public health leader in this nation, that having the schools actually closed is a greater public health threat to the children than having the schools reopen,” Redfield told The Hill’s Steve Clemons. The comments in favor of reopening schools from Redfield come as Trump presses for schools to reopen. On Wednesday, the president criticized the CDC in a tweet for “their very tough & expensive guidelines for opening schools,” raising fears about the politicization of the country’s leading public health agency. Redfield said in Thursday’s interview, as he did earlier in the day on ABC, that the CDC is not changing its existing guidelines for schools, but will be issuing additional guidance to provide more clarity. He said that guidance will address the role of parents and the importance of facial coverings in schools. “I think really people underestimate the public health consequences of having the schools closed on the kids,” Redfield said at an event hosted by The Hill and sponsored by the Biosimilars Forum. “I’m confident we can open these schools safely, work in partnership with the local jurisdictions.” The American Academy of Pediatrics has also called for students to return to classrooms, citing the educational and social harms to children of being away from school for a prolonged period of time. But education groups like the American Association of School Administrators and the American Federation of Teachers say much more funding is needed to safely reopen schools, and that districts are already facing severe budget shortfalls due to the economic downturn sparked by the coronavirus. Redfield demurred when asked about the need for more funding on Thursday. “I think we’ve got to see the plans that the different schools and jurisdictions come up with,” he said.
Trump economic adviser says returning to school amid pandemic is ‘not that hard’ – White House economic adviser Larry Kudlow told reporters Friday that it was important for schools to reopen in the fall despite risks from the novel coronavirus, saying safely bringing students back is “not that hard.” “The president has been very vocal about going back to school. And I would add to that, as I said, all these fancy colleges and universities, of which I went to one,” Kudlow told reporters. “They should get with the drill, you know? Put the guys in classrooms and let them learn. Or, God knows what they’re teaching, but whatever. I’ll put it in good faith.” “Just go back to school, we can do that,” Kudlow continued. “And you know, you can social distance, you can get your temperature taken, you can be tested, you can have distancing – come on, it’s not that hard.” The safety of school reopenings has been at the center of national debate as the start of the school year draws closer and the nation sees climbing cases of COVID-19. President Trump has pushed for students to go back to school, and this week threatened to cut funding of those that don’t fully reopen this fall. He also this week criticized the Centers for Disease Control and Prevention’s (CDC) guidelines on reopening schools, calling them “very tough and expensive.” Vice President Pence later announced the CDC was rolling out more guidance on the matter, following Trump’s criticisms. CDC Director Robert Redfield also said Thursday that the health risks of keeping schools closed are greater than those of opening them. “I’m of the point of view as a public health leader in this nation, that having the schools actually closed is a greater public health threat to the children than having the schools reopen,” Redfield told The Hill. Meanwhile, some teachers and teachers’ groups are worried about returning in the fall. The president of the nation’s largest teachers union hit Trump this week for calling for schools to resume in-person classes this fall, saying reopening cannot take place without guaranteeing the safety of students and staff. “We see what happens when they let bars open prematurely,” National Education Association President Lily Eskelsen Garcia said. “This isn’t a bar. We’re talking about second graders. I had 39 sixth graders one year in my class. I double-dog dare Donald Trump to sit in a class of 39 sixth graders and breathe that air without any preparation for how we’re going to bring our kids back safely.”
Doctors, teachers reject Trump’s pressure to reopen U.S. schools – (Reuters) – Groups representing the nation’s doctors, teachers and top school officials on Friday pushed back against pressure from President Donald Trump to fully reopen U.S. schools despite a surge in coronavirus cases, saying science must guide the decisions. “Public health agencies must make recommendations based on evidence, not politics,” the American Academy of Pediatrics, two national teachers’ unions and a school superintendents’ group said, following days of threats by Trump to choke off federal education funds if schools do not open their doors for the upcoming academic year. “We should leave it to health experts to tell us when the time is best to open up school buildings, and listen to educators and administrators to shape how we do it,” AAP, the American Federation of Teachers, the National Education Association and the School Superintendents Association said in a joint statement. Their call was echoed by two medical groups – the Infectious Diseases Society of America and the HIV Medicine Association. Trump ramped up his threat on Friday, saying the Treasury Department would re-examine schools’ tax-exempt status and their federal funding. The Republican president this week also moved to eject foreign students attending universities in the United States if their schools do not offer in-person classes, prompting at least two lawsuits. His push to reopen schools comes as cases of the novel coronavirus surge in some of the country’s most populous areas, prompting some state and local authorities to roll back plans to relax restrictions. School administrators are weighing the risk of opening their buildings to students and staff as U.S. cases have topped 3 million this week. Some universities have announced online-only instruction plans, while others may change their calendars. New York City schools, the nation’s largest public school district, announced a hybrid plan mixing both on-site and online classes. Trump has accused Democrats of exploiting the pandemic for political gain by refusing to reopen schools and businesses to hurt the economy and his re-election prospects, even as health experts caution against easing restrictions too quickly. “Too many Universities and School Systems are about Radical Left Indoctrination, not Education,” he said in a Twitter post on Friday. “Therefore, I am telling the Treasury Department to re-examine their Tax-Exempt Status and/or Funding, which will be taken away if this Propaganda or Act Against Public Policy continues. Our children must be Educated, not Indoctrinated!” It was not immediately clear how Treasury could restrict funds, and the department could not be immediately reached for comment. Most primary and secondary school funding is local.
DeVos ‘very seriously’ considering withholding funding from schools that don’t reopen – Education Secretary Betsy DeVos said Tuesday that she is “very seriously” considering withholding federal funding from schools that don’t reopen in the fall. “We are looking at this very seriously. This is a very serious issue across the country,” DeVos told Fox News host Tucker Carlson. DeVos recently told state leaders on a conference call that plans to allow in-person activities only a few days a week were unacceptable, arguing that another semester of remote learning would hurt students. She told Carlson on Tuesday that fears of coronavirus transmission from public health officials was an example of “fearmongering.” “Kids have got to continue learning, and schools have got to open up,” DeVos said. “There’s got to be a concerted effort to address the needs of all kids, and adults who are fearmongering and making excuses simply have to stop doing it and turn their attention to what is right for students and for their families.” However, critics of the Trump administration’s threat said that if the government truly cares about children, they would readily give money to schools. “The federal government, if they were serious about this and cared about kids, wouldn’t be threatening to withhold money,” Arne Duncan, a former secretary of Education under former President Obama, said in a press call with reporters Wednesday. President Trump on Wednesday also threatened to cut off federal funding for schools if they do not resume in-person learning this fall and criticized the Centers for Disease Control and Prevention (CDC) for being too tough with its guidelines to aid that process. The existing CDC guidance, which is voluntary, emphasizes opening safely and that schools should dismiss classes for longer than two weeks only if there is “substantial” COVID-19 spread in their communities. The CDC is set to release another round of guidelines next week. According to the Congressional Research Service, public schools rely on local taxes for 90 percent of their funding. However, the Department of Education would be able to withhold the billions of dollars in stimulus funding allocated by Congress. The American Federation of Teachers launched an ad this week saying they require more funding in order to reopen schools safely.
Foreign Students On Visas Must Leave USA If Schools Go Online-Only- ICE – International students in the US whose colleges switch to online-only classes this fall will have to leave the country or transfer to another school, according to a Monday afternoon order by Immigration and Customs Enforcement (ICE). Foreign nationals participating in the Student and Exchange Visitor Program (SEVP) had previously been allowed to take their spring and summer 2020 courses online due to the COVID-19 pandemic.If affected students don’t transfer to in-person programs and remain in the US, they will be subject to “immigration consequences including, but not limited to, the initiation of removal proceedings.” The move comes as colleges across the country – including Harvard, announce that undergraduate classes for the 2020-21 academic year will be held online. “Students will learn remotely, whether or not they live on campus,” wrote Harvard officials. And now, with colleges standing to lose thousands of immigrant students, the pressure is on to resume in-person classes this fall.
ICE threatens international students with deportation unless their college resumes in-person classes –Immigration and Customs Enforcement (ICE) announced Monday that international students holding F-1 visas will not be allowed to remain in the country if their college fails to hold in-person classes this fall. The F-1 visa is the most popular study visa in the US. Last year, there were 1,095,299 studying in the US, the vast majority of whom reside in the country on F-1 student visas. In 2019 alone, 388,839 F-1 visas were issued. The ICE press release states that “F-1 and M-1 students attending schools operating entirely online may not take a full course load and remain in the United States.” It went on to disclose that new visas for incoming international first-year students will not be granted and that all students currently in possession of visas who are not attending in-person classes will be denied entry at the border. The statement goes on to note that all active students currently in the US enrolled in such programs must, “depart the country or take other measures, such as transferring to another school with in-person tuition.” The measure was undoubtedly meant to place pressure on colleges to pursue a reckless reopening of campuses in the fall. The announcement from ICE came only hours after Trump tweeted, in all caps, “SCHOOLS MUST OPEN IN THE FALL!!!” If the measure is not reversed and colleges do not reopen in-person classes, thousands of international students will be compelled to unenroll in universities across the country. Many US colleges, whose finances have become increasingly reliant on international student tuition in recent years, are now facing a choice between a deadly reopening of campus and financial collapse. In practice, the Trump administration is holding colleges hostage, with the release fee being the lives of students and their families. The rule change is a reversion to a pre-existing regulation originally meant to prevent students from using cheap online classes as a method of coming to and staying in the US. However, the regulation was suspended following the shift to online learning in the midst of the COVID-19 pandemic. ICE has now reinstated the pre-existing regulation, in order to force international students out of the country.
Harvard, MIT seek temporary halt to Trump administration rule on international students – (Reuters) – Harvard University and Massachusetts Institute of Technology sued the Trump administration on Wednesday, seeking to block a new rule that would bar foreign students from remaining in the United States if their universities move all courses online due to the coronavirus pandemic. The two universities filed a lawsuit in federal court in Boston asking for an emergency temporary restraining order on the new directive issued by the government on Monday. “We will pursue this case vigorously so that our international students – and international students at institutions across the country – can continue their studies without the threat of deportation,” Harvard President Lawrence Bacow wrote in a statement addressed to the Harvard community. The lawsuit filed by Harvard and MIT, two of the most elite U.S. universities, is the first to challenge the order that could force tens of thousands of foreign students to leave the country if their schools switch fully to remote learning. Harvard had announced it would hold all classes online in the coming fall term. [L1N2EE0CA] The Trump administration announcement blindsided academic institutions grappling with the logistical challenges of safely resuming classes as the coronavirus pandemic continues unabated around the world, and surges in the United States, especially among young people. There are more than a million foreign students at U.S. colleges and universities, and many schools depend on revenue from foreign students, who often pay full tuition.
Harvard is keeping classes online this fall, placing it among the 8% of US colleges planning to do so. Here’s the list so far.– After a semester of remote courses and online graduations, some colleges and universities are deciding not to return for in-person classes this fall.Harvard announced Monday that all its undergraduate courses will be online for the entire academic year, through spring 2021. The university will allow up to 40% of students to live on campus in the fall, but they must agree to get tested for COVID-19 every three days.Six of Harvard’s graduate and professional schools, including Harvard Medical School, have also announced that their students will take classes online in fall.California State University, the largest four-year public university system in the US, has cancelled in-person classes for the fall semester at all 23 of its campuses. However, just 8% of colleges are taking the online approach to fall, according to an analysis by The Chronicle of Higher Education. Most schools – 60% – are planning for in-person classes, while others are considering a hybrid approach, with some classes online and some in-person, or with blended classes. The virus could easily spread between students and professors if they meet face-to-face in campus classrooms. “Every way we approach the question of whether universities can resume on-campus classes, basic epidemiology shows there is no way to ‘safely’ reopen by the fall semester,” Shweta Bansal, Colin Carlson and John Kraemer – three health and biology professors at Georgetown University – wrote in The Washington Post. “If you were to design a place to make sure that everyone gets the virus, it would look like a nursing home or a campus,” Paul LeBlanc, the president of Southern New Hampshire University, told The Atlantic. Here are the colleges and universities that plan to remain online for the fall 2020 semester:
Yale University to open campus without sophomores in fall and without freshmen in spring – Yale University will reopen in the fall without sophomores living on campus and then will be open in the spring without freshmen living on campus in an attempt to slow the spread of coronavirus, Yale’s president and provost announced in a letter to the community Wednesday.Juniors and seniors can choose to live in on-campus housing both semesters. The decision will allow the university to lower its student population living in the campus colleges to about 60% of normal, President Peter Salovey and Provost Scott Strobel said.In addition, most undergraduate courses will be taught remotely so all students, whether living on or off campus, can attend. A small number of classes, such as labs or studio work, will take place in person in socially distanced settings, the university said.Undergraduate students living on or off campus will be required to be tested weekly. As per rules in Connecticut, where Yale is located, all students arriving from abroad or from states with high Covid-19 transmission rates will be required to quarantine for 14 days. And overall, all students will be asked to wear face masks and social distance.”These decisions are possible because of the continued decline in community transmission of COVID-19 in Connecticut, the creation of a university-wide COVID-19 screening program, and the implementation of other health and safety actions,” Salovey and Strobel wrote.Yale’s decision comes as schools and colleges across the country are grappling with how to reopen safely while still mitigating the spread of a virus that thrives in places with close contact. Some colleges have made plans to bring students back but with delayed starts to classes, shortened semesters and attempts to reduce travel. For K-12 schools, the American Academy of Pediatrics is pushing for students to be physically present in classrooms rather than continue in remote learning for the sake of their well-being. The group, which represents and guides pediatricians across the country, updated its back-to-school recommendations to say evidence shows the academic, mental and physical benefits of in-person learning outweigh the risks from the coronavirus.
Harvard and Princeton announce plans to bring back students for the fall semester – Harvard and Princeton universities will bring back students to campus this fall, but not everyone will return at the same time. The pandemic has forced universities to formulate plans to keep educators and students safe from Covid-19. Harvard University plans to bring up to 40% of undergraduates back to campus for the fall semester, including all first-year students, the school announced on Monday. In addition to first-year students, Harvard will allow students who need to be on campus “to progress academically” to return as well.Princeton University will welcome undergraduate students back to campus in the fall with a reduced capacity, the school announced on Monday. First-year students and juniors will be allowed to return to campus for the fall semester, while sophomores and seniors will be welcomed back in the spring semester.Princeton is also offering 10% discounted tuition for the school year. Both universities will emphasize online instructions. At Harvard, all course instruction will be delivered online, including for students living on campus. Princeton said that most academic instruction will remain online.”Over the last two months, my colleagues and I have been studying the pandemic and identifying measures we can take to accommodate students on campus,” Princeton President Christopher L. Eisgruber said in his message to the university community. “Based on the information now available to us, we believe Princeton will be able to offer all of our undergraduate students at least one semester of on-campus education this academic year, but we will need to do much of our teaching online and remotely.”Testing will be required for everyone returning to campus, both universities announced, with regular testing throughout the semester. Harvard will implement social distancing and dedicated quarantine space in dorms. Every person on Princeton’s campus, including visitors, will be required to wear a face covering when inside, except in a dormitory or apartment. Princeton undergraduate students returning to campus must sign what the university is calling a “social contract” — which outlines their commitment to following the health and safety protocols designed by the school.
Coronavirus roundup: Surge in cases forces universities to change their fall plans – Two universities that were planning on in-person fall terms are now backing away from those plans due to the rise in coronavirus cases, and a third university is shifting its second summer session courses online. Meanwhile, Florida State University clarified that employees can care for children while working from home after facing a backlash over a memo it sent June 26 suggesting employees working remotely would need to secure childcare by Aug. 7. Here’s an update on some of the latest news developments regarding the impact of COVID-19 on higher education:
- The University of Southern California announced last week that undergraduate students will take all or most of their courses online, reversing course from earlier plans to invite undergraduates back to campus for an in-person fall semester. In announcing the decision, USC administrators cited “an alarming spike in coronavirus cases [in Los Angeles], making it clear we need to dramatically reduce our on-campus density and all indoor activities for the fall semester.”
- Across the country, in Virginia, Hampton University also cited the rise in coronavirus cases in announcing it was changing its plans to reopen the campus in favor of a remote-only fall. Hampton president William R. Harvey said the “COVID-19 situation has changed drastically,” forcing the university to change its plans. “Not reopening the campus to students will minimize the risk of the spread of COVID-19 on campus and in the Hampton, Virginia community. It is our hope that this will also allow sufficient time for the threat of the virus to diminish,” Harvey wrote in a July 1 message.
- Texas State University said it would shift almost all of the classes for its second summer session online, with the only classes that will remain face-to-face being those “that require a face-to-face component for licensure or degree requirements.” Texas State is still planning a return to face-to-face instruction and full campus services for the fall term, which is scheduled to start Aug. 24.
- Florida State University has clarified that employees can continue to care for children while working remotely, backing away from a memo it previously sent on June 26 saying otherwise. The previous memo, which said that employees would no longer be able to care for children while working remotely starting on Aug. 7, was widely criticized on social media and received widespread media attention, including an article in People magazine.
Universities in a Mess Over Upcoming Year; Some Reopenings Meeting Fierce Resistance – Yves Smith – US universities and colleges are already in serious financial trouble due to coronavirus, and the coming fall season won’t do much to improve matters. Schools were already all over the map about what they are doing for the coming school year. And some of them are changing course midstream as infections rise in their state.It isn’t just that schools had to refund room and board fees for their aborted spring terms. Universities make about $50 billion from non-tuition charges, not just room and board but also renting out university space and tickets to sporting events. That has evaporated and is not coming back any time soon.Even at the campuses that say they are reopening, things will not go back to the old normal. Foreign students only account for 5.5% of the student population, but over the years, Chinese students have become the most heavily represented nationality and they pay full fees and tuition. Between travel restrictions, China-bashing, and high Covid-19 risks, foreign enrollment is expected to plunge, and that will have a disproportionate impact on revenues.It isn’t clear whether it is possible to reopen a university safely, at least in an America which has done plenty to get coronavirus wrong and still has far too few people wearing masks. One academic has told me the administrators he has spoken to at several universities have admitted they see no way to reopen dorms safely, yet many are doing just that. Lowering density of occupancy would reduce but not eliminate risk.And that raises the question of safe for whom? The universities’ decisions appear to be driven by concerns about safety of their students and their faculty. The fate of support staff like cafeteria workers and dorm crews gets nary a mention. Nor does the safety of the communities in which they live, even when the school is tax exempt, appear to rate high, if at all. The lack of criticism from locals seems odd until you factor in the dependence of many communities like Charlottesville, VA on their school. Imagine the hostility if you took what would be perceived as a position opposing the survival of the biggest employer in town. Nevertheless, these reopenings, even ones on a more limited scale, are all superspreader events in the making, particularly since it will be impossible to regulate student behavior in student housing and on their free time. And the whole point of an on-campus experience is to get to know classmates. Hard to do that at a six foot remove.
Trump tells Treasury to review universities’ tax exempt status – President Trump on Friday threatened the tax-exempt status of and funding for universities and colleges, claiming that “too many” schools are driven by “radical left indoctrination.” “Therefore, I am telling the Treasury Department to re-examine their Tax-Exempt Status and/or Funding, which will be taken away if this Propaganda or Act Against Public Policy continues,” Trump tweeted. “Our children must be Educated, not Indoctrinated!” Trump did not name specific institutions whose tax-exempt status he wants the Treasury Department to review. Most private and public colleges and universities are exempt from taxes because they qualify as 501(c)(3) organizations. It would fall to the IRS, a bureau of the Treasury Department, to conduct the review that Trump described. However, federal law prohibits the IRS from targeting groups for regulatory scrutiny “based on their ideological beliefs.” Trump’s latest remarks come amid his escalating battle over schools’ plans for learning during the coronavirus pandemic. The president has sought to pressure schools to physically reopen come fall, even suggesting he could withhold federal funding from those that do not comply with his demands. Schools across the country shuttered in the spring and moved to virtual learning amid the pandemic, and local officials are contemplating plans for safely restarting classes in the fall while preventing the spread of the coronavirus. Trump has suggested local officials want to keep schools physically closed for political reasons and not health ones. The president has recently complained about schools being driven by what he describes as a radical left-wing ideology. He spent a decent portion of Independence Day remarks at Mount Rushmore warning of a “far-left fascism” controlling American schools, newsrooms and other institutions. “The violent mayhem we have seen in the streets of cities that are run by liberal Democrats, in every case, is the predictable result of years of extreme indoctrination and bias in education, journalism and other cultural institutions,” Trump said, referencing recent protests that have grown across the country in the wake of the police killing of George Floyd, some of them turning violent and resulting in the destruction of property and statues. “Against every law of society and nature, our children are taught in school to hate their own country and to believe that the men and women who built it were not heroes, but that were villains,” Trump continued.
Ivy League Cancels All Fall Sports On Pandemic Fears Through 2020 – Another coronavirus-related bombshell this week: after Harvard announced its Fall semester is going to online instruction only, with only 40% of students invited back to live on campus, the Ivy League on Wednesday announced the suspension of all Fall sports.It’s the first Division I conference to make the drastic move nixing football and all other collegiate sports over fears of the coronavirus pandemic. It plans to hold no competitions until after January 1.”We simply do not believe we can create and maintain an environment for intercollegiate athletic competition that meets our requirements for safety and acceptable levels of risk,” the Ivy League Council of Presidents explained in a statement. The league has left open the possibility of transferring the sports, especially football, to the Spring semester contingent on COVID-19 numbers significantly declining.”We are entrusted to create and maintain an educational environment that is guided by health and safety considerations. There can be no greater responsibility – and that is the basis for this difficult decision,” it said.The suspension of games includes football, soccer, volleyball, cross country, field hockey and even later fall into winter sports like basketball. Meanwhile, there’s already pressure for all other divisions and college leagues to follow suit: U.S. Sen. Richard Blumenthal (D-Conn.) called on other leagues to follow the Ivy League’s lead again.“There’s absolutely nothing different between the Ivy League and any division except for the money, to be very blunt,” he told USA Today Sports. “It’s about the money. And if the other schools fail to follow the Ivy League’s lead, it will be only because of the money. And, in fact, it will be another misguided act in a long litany of putting school profits ahead of the people who play for them.”
“I have serious news”: A cancer patient in the COVID-19 epidemic –It’s 3:00 AM, July 3rd, 2020, in the Ottawa Hospital Civic Campus emergency department. I have been here since 3:00 PM, July 2nd. The journey began in mid-January when I started to experience occasional difficulty swallowing my food. Come early March, the swallowing problem is recurring, and there is now a soreness in my throat. My wife notices that the register of my voice seems to be changing. OK, time to do something. Getting a problem looked at in Canada requires one to go through your family physician. By US standards, the Canadian health care system is conservative in its use of diagnostic procedures. The bigger problem, though, is the pandemic. All non-urgent care is postponed. I get a chest x-ray and standard bloodwork, but they reveal nothing. I try to get a videofluoroscopic study of my swallowing problem, but I can’t get through the waiting list. Weeks pass. My PCP pleads with the diagnostic clinics. They promise to get back to me for a phone appointment to evaluate whether I need a diagnostic procedure. It doesn’t happen.Then, on July 2nd, I start coughing blood. A quick conference with my PCP, the only course is to go to the ED. I get there at 3:00, and it’s standing room only. This is Canada, so the crowd is orderly and cooperative, but it’s not a good scene. Five hours of waiting and I see a resident. I tell him my story. He responds using medical words that translate to “uh oh,” and he sends me to get a CT scan. I get scanned at about 11:00 PM. And then I wait.Which brings us to 3:00 AM. I am called to an exam room. An attending physician comes in. She says, directly but gently and gracefully, “I have serious news.” I have been through this with friends and family. Now it’s my turn. The CT scan shows that I have a mass in my oropharynx, the middle component of the throat. Later that morning, I see an ENT surgeon who had the same view as the ED doc, “This is an oropharyngeal squamous cell carcinoma [OPSCC] until proven otherwise.” He did a biopsy with a needle through the side of my neck. On the 7th, I got a call from my PCP with the results from the biopsy. “I am going to be straightforward. This is bad news.” The mass is indeed an OPSCC, with lymph node involvement to boot. The report also included word salad about the staining of cells on the slides. I’m sure it’s crucial, but it made no sense to either of us, which we found hilarious. Thank God that my PCP speaks my native tongue, which is Black Humour. The other good news is that OPSCC can often be treated with success. The upshot is that I am now a cancer patient during the COVID-19 pandemic.
Coronavirus pandemic threatens lives of at least one million people at risk from AIDS, tuberculosis, malaria – Estimates from the United Nations, the International AIDS Society, the Stop TB Partnership and the Imperial College London predict the supply chain disruptions caused by the coronavirus pandemic could lead to at least one million extra deaths caused by AIDS, tuberculosis and malaria as resources traditionally used to fight these diseases are diverted to combat outbreaks of COVID-19.A majority of these deaths are likely to occur in Africa, where there have been more than 481,000 cases and at least 11,400 deaths caused by the coronavirus. Countries including South Africa, Egypt, Nigeria, Ghana and Algeria have been particularly hard hit. While the total case and death numbers are currently lower than other regions of the world, including the United States, India and Brazil, the World Health Organization (WHO) has repeatedly warned of the dangers of the pandemic in Africa, which has some of the least developed health care infrastructure in the world. At the same time, the virus is claiming the lives of nurses, doctors and other medical workers as they try to fight and contain the pandemic. The situation has also meant that institutions such as Medecins Sans Frontieres, which have in the past provided resources to fight HIV/AIDS, have been forced instead to focus on treating patients with COVID-19.The United Nations Global AIDS Update 2020 paints a dire picture for the years-long progress in eliminating the HIV/AIDS pandemic. Its models show that, if medical supplies for AIDS are disrupted for six months, there will be between 471,000 and 673,000 excess AIDS-related deaths in in sub-Saharan Africa alone by the end of 2021.
China New Car Sales Crash 37% In 4th Week Of June – — June does not appear to be shaping up to be the month where Chinese auto sales “bounce back”. Dealing with recessionary headwinds pre-Covid, the world’s largest auto market has been decimated by the effect of the pandemic and doesn’t look to be leading the world to any type of meaningful recovery any time soon.Overnight the China Passenger Car Association said that retail car sales were down 37% YOY for the 4th week of June. Average daily sales were down to 51,627 during June 22-27. This is a 6% sequential fall from the same week in May, indicating little respite or improvement from the pressure of the coronavirus pandemic on the industry. PCA blamed “seasonal factors” for the drop, which is a funny way to say “Chinese-borne virus ravaging the entire planet”. This also paints an ugly picture for June’s new car sales number, since we reported about 3 weeks ago that the first week in June was also off to an ugly start. In that article, we noted that retail car sales fell 10% year over year – but more importantly 20% from the same period in May – in the first week of June. June’s interim data comes after what looked like the beginning of a rebound for the industry in May, to the extent that we can trust the numbers coming out of Beijing. This news comes despite better than expected results in May, where sales showed a 12% increase year over year. According to The Detroit Bureau, premium and luxury passenger car retail sales led the charge in May, rising 28% last month compared with year-ago results. Those vehicles accounted for 1.61 million of the month’s 2.14 million vehicles sold.
Will the real Kim Yo Jong stand up? –It is incredibly difficult to get any reliable information about the leaders in North Korea. For a variety of reasons, North Korea practices extreme information denial. And the little information it does release is heavily tainted by North Korea’s particular political objectives of the day. This is especially true with Kim Jong Un‘s younger sister, Kim Yo Jong. For years she exuded a smiling and personable image while acting in a servile relationship to her brother. While being part of the supposed “god” Kim Family, she avoided any appearance of leadership, carrying an ashtray for her brother’s cigarette, bringing him a tray with the scissors for a ribbon cutting ceremony and pulling back the chair to seat President Kim Yong Nam, the official leader of the North Korean delegation, when they met with South Korean President Moon during the 2018 Olympics. During the North Korean theater ballistic missile tests last September, pictures of Kim Jong Un at the tests with his advisers show Kim Yo Jong in the far but visible background. Then in early March of this year, the situation changed. Kim Yo Jong began taking on a spokesperson role. Kim Yo Jong issued her first statement representing the North Korean regime, accusing the South Korean Presidential Offices of being “idiotic” and having an “incoherent and imbecile way of thinking” for denouncing the North’s first missile tests of 2020. Later in March she thanked President Trump for offering assistance against COVID-19, which she declined. Her tone then escalated in early-June, when she lashed out in extremely harsh terms against North Korean defectors sending leaflets into North Korea, calling them “human scum” and “rubbish-like mongrel dogs” and severely criticizing the South Korean government before threatening to abort the North’s role in inter-Korean peace talks. North Korea subsequently severed most communications with South Korea, which were symbolic of inter-Korean rapprochement. Then she again officially criticized the defectors, expressed her exasperation with inaction by the South Korean government against the defectors and said she had directed the “department in charge of the affairs with enemy” to take the next action, implying that South Korea had become the North’s enemy. On June 16, North Korea destroyed the inter-Korean joint liaison office in Kaesong, which had also been a key symbol of rapprochement. This was a serious shock to the South Korean government. Kim Yo Jong then escalated the crisis by blaming Moon personally for the breakdown of inter-Korean relations, “accusing Moon of ‘pro-U.S. flunkyism and submission.'”North Korea was clearly trying to disrupt the South Korea/U.S. alliance, and also trying to get the South Korean government to start joint economic projects with the North to break the North’s economic troubles associated with international sanctions. President Moon’s office responded most seriously to this personal criticism. Fortunately, Kim Jong Un stepped in a week later and deescalated this confrontation.
Fired Ukraine Minister Dons Skimpy Bikini, Launches New Party To Fight Corruption Of “Pants-Wearing Idiots” – Ukraine’s former deputy infrastructure minister, Aleksandra Klitina, recently released a racy video announcement of a new political party while partially exposing upper chest cleavage, reported RT News. Klitina, 37, apparently knows how to attract a new base – her ‘physique’ was the centerpiece in the video as she called for a new political party called “Ukraine against corruption” – she posted the video on YouTube in late June. In the short clip, Klitina is wearing a skimpy swimsuit while giving a political speech outdoors, standing feet in front of a camera, where she said: “I decided to fight for truth myself because those pants-wearing idiots are hopeless,” she proclaimed, promising that her party will “finally deal with those male political prostitutes.””They think that if they have something in their pants, it’s enough for them to be successful and be eligible to abuse women. But women are a hundred times smarter and a hundred times more honest than you.”
French bus driver left brain-dead after asking passengers to wear masks – A bus driver in the southern French city of Bayonne has been left brain-dead from a brutal assault, after he ordered a group of passengers to either wear masks or get off the bus, on Sunday evening. According to police accounts, the driver, Philippe Monguillot, 59 years old, was attacked by one or multiple passengers at a stop. He had told one passenger attempting to get on the bus that he would not be allowed on without wearing a coronavirus mask, which is required by law on public transport. At the same stop he reportedly told three other passengers on the bus that they would have to get off if they did not put on masks. After the assault, Monguillot was transported unconscious to a hospital and placed on life support, but was declared brain-dead. He has a wife and three adult daughters. On Sunday, a 34-year-old man was placed under arrest and remains in police custody. Four other men were arrested on Monday, one of whom is a minor and has subsequently been released. The prosecutor reported last night that two men would be charged with intentional murder. On Monday, the bus drivers at Chronoplus, where Monguillot worked, announced that they were on strike until after Monguillot’s funeral service. Chronoplus serves bus routes in Bayonne, Anglet and Biarritz, a sea-side resort on the south-west Atlantic coast of France. Routes in all three areas were stopped on yesterday. The drivers are demanding greater protection.
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