The BAN Report: Vaccine Relief / PPP Update / Deposit Rates Tumble / NYC Hotel Woes / High-End Home Sales Soar-11/12/20
Pfizer announced on Monday that their COVID-19 vaccine was more than 90% effective, providing a light at the end of the tunnel from COVID-19.
The drug maker Pfizer announced on Monday that an early analysis of its coronavirus vaccine trial suggested the vaccine was robustly effective in preventing Covid-19, a promising development as the world has waited anxiously for any positive news about a pandemic that has killed more than 1.2 million people.
Pfizer, which developed the vaccine with the German drugmaker BioNTech, released only sparse details from its clinical trial, based on the first formal review of the data by an outside panel of experts.
The company said that the analysis found that the vaccine was more than 90 percent effective in preventing the disease among trial volunteers who had no evidence of prior coronavirus infection. If the results hold up, that level of protection would put it on par with highly effective childhood vaccines for diseases such as measles. No serious safety concerns have been observed, the company said.
Pfizer plans to ask the Food and Drug Administration for emergency authorization of the two-dose vaccine later this month, after it has collected the recommended two months of safety data. By the end of the year it will have manufactured enough doses to immunize 15 million to 20 million people, company executives have said.
According to some reports, taking the vaccine is no picnic.
THE first volunteers to get the Pfizer coronavirus vaccine have said they felt like they had a "severe hangover" after the injection.
Some of the 43,500 people to get the Covid-19 jab have compared its side effects to those of the flu vaccine, including headaches and sore muscles.
Trial volunteer Glenn Deshields, 44, from Austin, Texas, compared the side effects to "a severe hangover" but said symptoms quickly cleared-up.
Another volunteer, 45-year-old Carrie from Missouri, said she experienced a headache, fever and body aches, after her first shot in September.
The side effects - which she compared to those from the flu jab - were worse after having her second dose last month, she said.
We are optimistic that a vaccine while be widely distributed and taken by people by mid-year 2021. While it won’t be mandatory, people will ultimately be forced to take the vaccine if they want to resume their prior life. For example, if you want to attend your cousin’s wedding, all attendees must show they’ve taken the vaccine.
It is remarkable that the biotech industry has moved this quickly to get vaccine candidates nearly ready for distribution.
A DC Judge ordered the SBA to provide far more transparency on PPP loans, including names of all borrowers and precise loan amounts.
The SBA had previously released detailed information only for PPP loans above $150,000, a fraction of the loans issued. The ruling also applies to loans under the SBA’s Economic Injury Disaster Loan program.
“The significant public interest in shedding light on SBA’s administration of the PPP and EIDL program dramatically outweighs any limited private interest in nondisclosure,” U.S. District Judge James Boasberg in Washington wrote in his order.
The ruling followed a suit by news organizations that sought the data under the Freedom of Information Act. Plaintiffs included Dow Jones & Co., publisher of The Wall Street Journal.
The judge set a Nov. 19 deadline for the SBA to release the information on all individuals and entities that received a coronavirus-related loan through the PPP and EIDL program.
The SBA has argued that disclosing the names of loan recipients could violate their privacy because PPP loans correspond to the size of a business’s payroll.
In rejecting the SBA’s request to keep the information confidential, Judge Boasberg noted that “the PPP loan application expressly notified potential borrowers—admittedly in a form disclaimer—that their names and loan amounts would be ’automatically released’ upon a FOIA request.”
In his opinion, Judge Boasberg chided the SBA for advancing “a series of arguments that essentially all reduce to the unavailing contention that the agency did not mean what the loan-application forms actually said.”
Few knew that they were signing up for public disclosure of their precise PPP loan amounts, so this is a disappointing outcome. Meanwhile, the Wall Street Journal described the federal government as being “swamped with reports of potential fraud in the Paycheck Protection Program.”
The Small Business Administration’s inspector general, an arm of the agency that administers the PPP, said last month there were “strong indicators of widespread potential abuse and fraud in the PPP.”
The watchdog counted tens of thousands of companies that received PPP loans for which they appear to have been ineligible, such as corporations created after the pandemic began, businesses that exceeded workforce size limits (generally 500 employees or fewer) or those listed in a federal “Do Not Pay” database because they already owe money to taxpayers.
Tens of thousands of organizations also appear to have received more money than they should have based on their headcounts and compensation rates, it said.
The Treasury Department in September received 2,495 suspicious-activity reports involving business loans from banks and other depository institutions, more than the total for any year dating back to 2014, according to public data.
Several hundred PPP-related investigations have been opened, involving nearly 500 suspects and hundreds of millions of dollars of loans, according to the Federal Bureau of Investigation.
Prosecutors are focusing on the most egregious cases, as proving someone didn’t need the money when they said they did is a tall order.
Deposit Rates Tumble
Banks are flush with cheap deposits even though they are paying almost nothing for deposits.
Big banks can afford to be stingy because they already are awash in deposits. Total deposits at U.S. commercial banks have swelled to about $15.9 trillion, up from about $13.2 trillion at the start of the year, according to the Federal Reserve.
The biggest banks, such as JPMorgan Chase & Co. and Bank of America Corp., generally keep their rates low no matter what is happening in the rest of the economy. They already have mountains of deposits, as well as loyal customers who bank with them not for high deposit rates but for ubiquitous branches, flashy apps or because their paychecks and bills are already tied to their accounts there.
Online-focused firms including Ally Financial Inc. and Goldman Sachs Group Inc.’s Marcus, on the other hand, have touted their high rates over the past few years as a way to attract deposits. But even those banks are now cutting rates. Ally, Marcus and Capital One Financial Corp., for example, have dropped their deposit rates from about 1.6% to around 0.5% over the past eight months.
Already-low deposit rates at bricks-and-mortar banks have trended downward along with those at online banks. The average rate on savings accounts at U.S. banks stands at 0.08%, down from 0.1% in early spring, according to Bankrate.com, a personal-finance website.
“Banks are trying to get rid of deposits,” said Gary Zimmerman, founder of MaxMyInterest, which matches bank customers with higher-yield accounts. “The only way they know how to do that is lowering rates and hoping people go away.”
If you take away PPP, loan demand has been very weak, so banks just don’t have many good places for their cash today.
NYC Hotel Woes
Over 80% of CMBS hotel loans in New York City are under duress, according to Trepp.
Vijay Dandapani, chief executive of the Hotel Association of New York City, said that if half the city’s 640 hotels survive it will be a “great” outcome. Occupancy rates in September remained 20 per cent lower than for the same month in 2019, despite recovering from their worst point in April where occupancy was down more than 60 per cent year on year, according to data from STR. Mr Dandapani said the vaccine would have “zero impact” on the hotel industry for the rest of the year, with the possibility of some tourism-related business returning early in 2021.
According to figures from Trepp, a CMBS data company, 37.7 per cent of all New York hotels underpinning CMBS deals now sit on a watchlist designed to warn investors of impending trouble before a mortgage is transferred to debt collectors known as special servicers. A loan may be added to the watchlist for a number of reasons, such as if the borrower’s income has dropped or they have recently missed a payment on their mortgage.
A further 44.7 per cent of loans have been transferred to special servicers to either find a way to get borrowers paying their mortgage or to foreclose on the properties. Together, it means more than 80 per cent of the city’s hotels backing CMBS deals — equivalent to $3.1bn — are exhibiting signs of strain from coronavirus, more than the national average of 71 per cent.
“It’s terrible. There is no demand right now,” said Manus Clancy, head of research at Trepp. “We’re going into a period of time when you would normally expect demand to be high. It’s the holiday season. People want to come to New York. They want to see the Thanksgiving parade and see the store fronts and go to Broadway. It’s now going to be a very dark time.”
Since 2010, there was a whopping 42% growth in hotel rooms in New York City and thousands more rooms under development. While many hotels won’t make it, the more drastic predictions may be avoided if travel starts to return sometime next year. Like much of the future of the economy post-vaccine, no one knows anything.
High-End Home Sales Soar
The upper end of the housing market is seeing strong activity, according to the National Association of Realtors.
Nearly one in four home buyers between April and June bought houses priced at $500,000 or more, up from 14% of buyers during the preceding nine months, according to a Wednesday report from the National Association of Realtors.
Home buyers during the coronavirus pandemic had a median household income of $110,800, compared with $94,400 for pre-pandemic buyers, the survey showed.
“The buyers who purchase during Covid[-19] want a larger home,” said Jessica Lautz, vice president of demographics and behavioral insights at NAR. “There’s certainly more homes being purchased that are expensive.”
The pandemic has caused the economy to sputter and businesses to close, a condition usually associated with slower home sales and lower home prices. But white collar professionals have largely avoided the worst of the downturn. Many of those who can work remotely are seeking a bigger house with more outdoor space or are buying vacation homes.