The Independent Investor: When Times Get Tough, Call a Woman
We have all seen the heart-rending photos and videos. They are of nurses, mostly. As a large part of America's frontline against COVID-19, the media has determined that nurses and other healthcare workers are now "newsworthy." But there is a deeper story here. It is about American women in general.
Actually, it was the "Gray Lady," the venerable New York Times, that first focused my attention on the real unsung heroes of this pandemic — women. Underpaid, taken for granted, expected to work for less pay, raise the kids, take care of the parents, and when they have time, maybe sleep for a few hours.
During this pandemic lock-down of the nation, a number of industries have been deemed "essential." That means that without these jobs, the basic needs of an economy would freeze up, causing untold hardship for everyone. Obviously, healthcare workers are an essential industry, as are law enforcement and safety personnel. Other industries that supply goods and services are essential as are financial services, food processing, transit, defense, utilities, agriculture, delivery and transportation, just to mention a few.
Of these industries, women represent 52 percent of all essential workers. The Times cross-checked the latest Census data with the federal government's essential workers guidelines and determined that one in three essential jobs are held by women.
In some industries, like health care for example, women account for nine out of 10 nurses and nursing assistants, most respiratory therapists, as well as the majority of pharmacy aides and technicians. I have firsthand knowledge of this group of women, because many health-care workers are clients of ours. They are the hardest working, bravest slice of humanity I have ever had the pleasure to meet.
There are 19 million health-care workers in this country — almost three times the number employed in farming, law enforcement, and package delivery, which are mostly male dominated. But you can also find a preponderance of women in other jobs that force them into clear and present danger. Grocery clerks, bank tellers, like my sister, and those who man fast food counters are far more likely to be women than men.
But let's not confine this discussion to just essential workers. Women workers, overall, have suddenly been presented with at least double their normal workload. Under different circumstances, working from home might be considered a perk, but not during the pandemic, especially if you are married with children. My 40-year-old daughter is an example.
Married, with two children, ages 8 and 5, Jackie is working from home. Her normal support system has disappeared. There is no child care, school, or domestic help. Even take-out food is scarce. As a full-time employee, she is still expected to produce, show up (at least digitally), and devote the usual number of hours a day to her workplace.
"The virus has effectively quadrupled my workday," she said, as she and her family hunker down in Long Island.
"I am managing two kids in 'virtual' school, while working full time. In addition, I am cleaning constantly, managing the work/play schedules for two young kids, who have had to adjust to a whole new way of life. That's not to mention cooking three meals a day, every day."
As for the fact that her job is not listed as essential, she says, "That's BS. Three out of three women in this country are essential. We are essential to our households, to our families and to our jobs. This pandemic just makes it harder to deny."
I couldn't have said it better myself.
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@theMarket: Bulls Are Back in the Saddle
A spate of good news helped stocks this week battle the overriding pessimism of the last month. A possible drug to combat the COVID-19 virus coupled with a flattening of the virus curve in some regions helped the markets to gain ground. Can it continue?
It sure can, although a pause to catch our breath may be in order for next week. Gilead Sciences, the pharma/biotech company, has been working at breakneck speed to develop a drug to treat coronavirus patients. On Thursday, a report in a health-care publication indicated that its experimental drug, Remdesivir, was having some success in human trials. The indexes spiked higher on this news.
On the same day, Donald Trump and his crew basically turned the process of re-opening the economy over to the country's governors. That news was also greeted positively by investors, who have little-to-no confidence in an administration that has proven less than capable of handling the pandemic crisis.
As a result, stocks have continued their rally of last week, when the averages notched up better than 12 percent gains.
"How can this be?" inquired one client, who has a reputation for "chasing" the market up and down. We are getting the worst results in history — unemployment, earnings, COVID deaths — and the markets are going up?"
A client wanted to sell half of his portfolio on Tuesday, keeping the other half in the market. He proceeded to list for me all the reasons why that move was justified. But there was nothing I haven't heard or read over and over again for the last few weeks.
"Tell me something I don't know," I finally said. "If you and I are aware of all of this, then so is the market. Give me some new information that the market has not already discounted." He couldn't come up with anything. Fortunately, I convinced him not to act on his impulse, and as a result, he is better off today.
Investors are no longer focusing on the past nor the present, it is the future that has traders' attention. What states will get back to work first? When will there be promising results for a vaccine? When are Americans going to be able to be tested? Those are the unknowns and the direction of the stock market will depend on those outcomes.
Let's take the back-to-work dilemma. I want to go back and work in the office, but I have no way of knowing whether I will be infected if I do. None of my fellow employees have been tested, nor are there tests available to do so — unless they come down with the symptoms. By then, it would be too late for me.
That is the story playing out all over the nation. After all of this time, only one percent of the nation's population has been tested for COVID-19. All over the world, governments have focused on testing in an effort to control the spread of the virus, along with isolation. Why have we failed in achieving this objective, when so many others have succeeded? Is it because some in government are betting that what we don't know, won't hurt us?
And without widespread testing, there can be no back-to-work scenario
Opening up the country without the capability of wide-spread testing is simply playing Russian roulette with the lives of its citizens, in my opinion. It appears that for some corporations and politicians, the risks are worth it. My bet is that without this crucial element resolved, there can be no back-to-work scenario for the economy, and further gains in financial markets could be capped on the upside.
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The Independent Investor: Pandemic Reveals Weakness in U.S. Health-Care System
If it is not already apparent, our health-care system needs a lot of work. There is nothing like a global pandemic to point that out. The question is, that after decades of arguments, tinkering and promises, are Americans finally willing to do something to change it?
Now, I am not talking about how much a doctor is being paid, or what a pharmaceutical company can charge, or not charge, for a new wonder drug. Those are popular headlines that, time after time, distract us from the underlying weaknesses in the system. The main problem I have identified throughout this national disaster is the nation's inability to make centralized decisions.
It seems to me that we do not have the ability to provide Americans with a rational and efficient health-care supply and distribution system. Whether it is how to procure N95 masks and other protective gear, testing equipment, swabs, additional hospital beds, doctors, nurses and a thousand other variables, our system has been found sorely lacking when compared to other nations.
Think of it this way. You are a rancher, and pride yourself in growing the world's greatest beef products. What good does that do you if the livestock hitch you use keeps breaking down on the way to the slaughterhouse? And if the slaughterhouse is old and sloppy, and grinds up all your beef into ground beef (instead of steaks), and the packaging leaks, and the refrigerated train or truck they use to deliver your beef to the market breaks down constantly, in the end, what does it matter how good your product is?
Over the past few weeks, we have also witnessed the public rage and blame that has arisen over the bidding war between the states and the federal government over procuring the much-needed scarce supplies of life-saving medical equipment. This is insane, but understandable, given a health-care system with no central authority. No other country in the world competes against its own people in this matter.
Listening to Gov. Andrew Cuomo's daily briefing in the disaster afflicting New York City was also an eye-opener for me. There are 200 hospitals in New York state totaling 53,000 beds, of which 20,000 are in the city. These beds belong to both private, for-profit hospitals and state-run public hospitals, which are part of the New York State health-care system. Up until Cuomo took charge of this crisis, these hospitals were working independently, not only to assign beds, but to distribute and deliver medical services. It was not working, no matter how good their intentions.
The right hand had no idea what the left hand was doing until Cuomo took charge and effectively ordered them to meld their resources and form one big New York State hospital service. Cuomo effectively socialized the health-care system in a state that had more coronavirus cases than any other country in the world. His actions probably saved dozens of more lives.
As it stands, we still do not have nearly enough testing equipment, or the means to administer it. Like my rancher, when the product (a reasonable, low-cost coronavirus test) is finally developed, how long will it take, and how efficient will the supply and delivery system be to administer it to 331 million Americans?
There are so many other flaws in our present system that it would require several more columns to list them all. However, as an example, about 50 percent of Americans enjoy health-care insurance as a corporate benefit — unless they are fired, retired, or laid off. In which case, they can elect to pay Consolidated Omnibus Budget Reconciliation Act (COBRA) premiums for the next 18 months. The hole in this doughnut is that during an emergency, like this one, a laid-off worker will have to pay up for COBRA benefits at the very time they may need them most, while having no money to pay for them.
Critics of this column will argue that I am advocating for universal health care. It will evoke memories of the Bernie Sanders' primary campaign platform of health care, which was rejected by many as far too expensive to contemplate. My answer is that when all is said and done, the cost of the Sanders' program will look cost-effective compared to the money the government ultimately will spend to repair the damage to the health-care system and our economy that we have now.
Others will argue that this pandemic is a once-in-a-lifetime event. Many politicians will argue that things will go back to normal (inefficient and disorganized), in six months or so. Why, therefore, worry about it?
If recent history is any indication, the spread of global epidemics is increasing. They could remain a danger to the world's health system for years to come. SARS, the West Nile virus, Ebola, Marburg virus, and Lassa fever are just the latest plagues to bedevil us. Our present system provides no defense for the spread of such dangers, in my opinion.
Am I convinced that universal health care is the only answer? Not quite yet. When I look around the world, I see countries such as Italy and Spain, which do have universal health care. Their systems did not work well enough to stem the number of deaths and cases of the virus. But in places like Germany and Norway, their health-care system worked exceptionally well.
Maybe in the U.S. case, we might need a centralized governmental system for supply, distribution, and delivery, while maintaining private-sector incentives for research and development. As for maintaining the high quality of doctors, nurses, and other trained medical professionals, some system of free or discounted education costs could be offered in exchange for lower salaries. These are simply suggestions to jump-start a conversation. Please feel free to contribute your own ideas.
The point is that the system needs to be changed, but in a way that is uniquely American. Let's dispense with all those dated, nonsensical reasons why not, and come up with a system that we can all be proud of and that will, in the process, save lives.
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@theMarket: Virus Numbers Help Stocks
Stocks rose this week on the hope that the U.S. may be close to a peak in virus cases, at least in the country's "hot spots." Adding to the reduced case count, the government's efforts to support the economy and the market have had a positive impact on most financial instruments.
Some strategists have warned that the market's gains will prove to be ephemeral, once the fallout from this pandemic begins to seep into the economic data. Some of that data is already showing up. For example, Thursday's unemployment data revealed that another 6.6 million Americans filed for unemployment benefits this week. That brings the total close to 20 million people in three weeks. That is a historical pace of losses. Yet, the stock market gained on the news.
One reason the market went up (instead of down as many expected), was yet another stimulus program announced by the Federal Reserve Bank almost simultaneously. The Fed committed an additional $2.3 trillion to support the new Coronavirus Aid, Relief and Economic Security Act (CARES) Act, called the Payroll Protection Program and the Economic Injury and Disaster Loan Program. There was some concern by banks that loans to all these small-business owners might be a risky proposition, especially in the time frame that the government was demanding.
Stepping up to the plate to support these loans, the Fed has come in at just the right time to ensure the success of the government's fiscal stimulus effort. There is no telling what else the central bank may be willing to do. As it stands, Fed Chairman Jerome Powell said this week that "there's no limit on how much we can do as long as it meets the test under the law."
The only thing they can't do, I suspect, is buy equities out right. Of course, the U.S. Treasury could do so, and the Fed could fund the purchases. Given that kind of power, is it any wonder stocks skyrocketed again this week? It is for these reasons that I have cautioned readers not to sell. In this era of corporate socialism, even financial markets are fair game. The government's control of the economy and financial markets has never been this vast and far-reaching.
In addition to these events, there are also plans by the Trump administration to get people back to work as early as May. The success of this plan is largely dependent on the ability to test Americans for the COVI-19 virus. That is nowhere near possible today, but the hope is that it will be soon.
The White House plan would be for a gradual reopening of the economy, starting with those areas and cities that have low or non-existent cases of the virus. The risk here is that the effort might backfire. The transmission rate could reignite, for example, giving a second life to the spread of the virus.
As we enter this three-day holiday, readers should expect that after a 28 percent rebound in the S&P 500 Index from its lows on March 23, a period of profit-taking could be in order. We have reached an important technical level at 2,790. If we can hold above it, we might have a chance to close in on 2,900, however, the odds are not in our favor.
As we enter Passover, I find some similarity between those in Egypt and our own plight today. It may have been the blood of the lamb brushed above the door, or the mask and gloves we wear today, but I am sure the feelings are the same. I will take this time to hope and pray that this modern-day plague will pass over your homes and the loved ones who dwell within it. And for all the Christians and Easter Bunny believers out there, have a Happy Easter!
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The Independent Investor: Small-Business Owners Run Into Red Tape
The $2 trillion Coronavirus Aid, Relief and Economic Security (CARES) Act has two programs that can help America's business owners to weather the COVID-19 storm.
The $349 billion, first-come, first-served loan programs have seen an overwhelming response from troubled small-business owners nationwide. The job is to get the money into their hands quickly.
The challenge will be to remove or amend a mountain of regulatory requirements that the Small Business Administration and the financial sector have had in place for decades. Adding to the confusion are the owners themselves, who are either not aware that there are actually two loan programs or aren't sure which to apply for.
The Economic Injury and Disaster Loan (EIDL) offers owners up to $2 million for working capital needs like fixed debt and payroll. The interest rate is 3.75 percent (1 percent less, if you are a non-profit) and the term of the loan can be up to 30 years.
There is an automatic one-year deferment of repayment. That means the first payment is not due for 12 months, although interest starts on the date of disbursement.
If you apply for the EIDL you can also apply for a up to $10,000 advance for working capital at the same time. This entire application can be done online and no additional documentation, like tax returns or personal financial statements, are required. The SBA claims that the $10,000 grant (which does not have to be repaid) will be on its way within three days after the application is filed.
The second loan program is called the Paycheck Protection Program (PPP). This loan can amount to as much as $10 million or 2.5 times the average monthly payroll costs of the company's previous year. The proceeds can be used for payroll costs, health insurance, salaries/commissions, rent and mortgage interest, utilities and other business interest incurred after Feb. 15, 2020.
In order to receive this loan, you need to apply through an SBA-certified lender beginning on April 3. This process can take several weeks. This loan, which may be partially forgivable, must be applied for by the end of June 2020.
The greatest potential benefit of the PPP loan is that the amount of the loan eligible to be forgiven is the amount you spend during the first eight weeks of the loan on group health insurance premiums and other health-care costs, payroll costs, rent (pursuant to a lease in force before Feb. 15, 2020), and utilities such as electricity, gas, water, transportation, telephone or internet access expenses for services. These expenses must have been in place before Feb. 15 of this year.
If it sounds too good to be true — wait — because there is a catch. In order for the amount to be forgiven, the company must maintain the same number of employees during a certain time period, for example, from Jan. 1, 2020, to Feb. 29, 2020. There are further stipulations involved, so be sure to read the guidelines of the PPP loan.
You can apply for both loans, but you cannot use the proceeds for the same expenses. Further, the up to $10,000 grant (EIDL) gets deducted from the forgivable portion of the PPP loan.
The potential demand for these loans by the roughly 30 million small businesses in this country could swamp the program. The government recognizes this and promises to replenish the well once it has gone dry. Congress is now working on another $250 billion bill to supplant the existing programs. But in the meantime, there appear to be all sorts of hurdles from the simple intake and processing side to questions of risk and security.
Banks, for example, are worried about the creditworthiness of these new customers. Loan officers like to lend to those they know, companies with a credit history with their department.
As such, from the bank's point of view, it would only make sense to grant those existing small-business customers priority in the loan processing. But that's not the program's intent.
And then there is the Financial Crimes Enforcement Network (FinCEN). Money laundering has long been a challenge. FinCEN has charged the nation's banks to develop and uphold an exacting process, which involves stringent background checks of every new client ever since the terrorist attack on the World Trade Center.
These know-thy-customer regulations, together with the processing time and credit checks, could mean months before approval is granted. Of course, that flies in the face of the congressional intent of the bill, which is get the money in the hands of small businesses immediately.
This week, the Federal Reserve Bank added its weight to backstop the programs. They have committed an additional $2.3 trillion to buy up these CARES loans like PPP and EIDL, as well as other fixed income financial securities.
Hopefully, between the Fed's actions, pressure from lawmakers, and the business public, the SBA and the banks that elect to provide loans, will work out the kinks. We are all counting on them to deliver. I think they will.
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