Category: zerohedge

As part of the $2 trillion fiscal stimulus package that was signed into law by Donald Trump on Friday, the Small Business Administration will offer $350 billion in loans to US small businesses meant to preserve business solvency as part of the emergency federal response to the coronavirus pandemic; the loans, part of the so-called “Paycheck Protection Program” will be offered through banks and credit unions to cash-strapped businesses employing under 500 people (it’s not clear how a company employing 500 people is a “small business” but we can assume that this is just a stealthy bailout of some not so small businesses).

To be sure, the terms of the loans are generous: the full amount of the loan will be forgiven if it is used for payroll, mortgage interest, rent or utilities in the two months after the money is received. Less will be forgiven if the employees are sacked or salaries cut. Any amount that is not forgiven will accrue interest at just 0.5% rate and the principal will come due in two years.

Borrowers will need to fill out a two-page form and document that they were in business as of mid-February. Lenders will not need to wait for SBA confirmation before providing cash in hand, as soon as Friday. Businesses will be eligible to borrow the equivalent of 2.5 times their average monthly payroll with a cap of $10mm.

According to the SBA, there are 30m businesses with fewer than 500 employees in the US, employing 60m people, almost half of the private workforce. The National Federation of Independent Business, an advocacy group, says about three-quarters of its members have been affected by the crisis.

Yet some may be “shocked” to learn that like in any government bailout package, the biggest winners here will not be America’s vibrant small and medium business sector, which at best will get the bare minimum cash to fund 2.5 months of payroll (this assume the pandemic will be resolved by mid-June) but – drumroll – America’s banks.

As the FT reports overnight, banks stand to make billions by overseeing the distribution of these loans as they receive processing fees, paid by the federal government, for making the loans. The fees will vary with loan size: 5% for loans under $350,000, 3% for loans under $2MM, and 1% for loans greater than $2MM. The loans will not incur a capital charge.

This means that banks stand to earn as much as $17.5 billion – and $10 billion if one assumes an average rate of 3% – for doing something the government is incapable of doing: handing out hundreds of billions in loans/grants to America’s businesses in the shortest possible time.

On the other hand, maybe this time the banks will actually earn it.

Claudia Sahm, a former research section chief at the Federal Reserve, said offering banks fee-based incentives to administer and distribute loans, which function like grants, is a way to make up for the limited capability of the SBA to administer a program that senior administration officials say could pull in millions of application requests.

Small businesses “are used to going to their local bank to get loans”, said Ms Sahm, now at the Washington Center for Equitable Growth. This will make it easier for banks to act quickly on existing relationships. It also means the SBA will rely on banks to contact their own clients, giving large banks and favoured clients an advantage.

“Speed is the operative word,” said Jovita Carranza, the SBA’s administrator. “Applications for the emergency capital can begin as early as this week, with lenders using their own systems and processes to make these loans.”

But wait, there is more pork at this trough: the SBA has also laid out a role for agents, such as attorneys or accountants, who can help prepare documents, and can claim some of the lenders’ processing fee. Sam Tuassig, head of policy at Kabbage, a fintech that makes small business loans, said: “It is essentially a grant program that, if the borrower doesn’t use the money to pay their employees, turns into a super-low interest loan.”

Initially, only federally insured banks and credit unions will be eligible to make the loans. Tuassig said Kabbage was eager to participate, but that it remained unclear whether online lenders and fintechs would be allowed to do so. The Treasury’s statement on Tuesday said that “additional lenders” were encouraged to apply to the SBA for approval.

And with billions of dollars at stake to those who merely take money from point A and deliver it to point B, one can be certain that everyone will be applying.

Over the weekend, when we last looked at the unprecedented frenzy by corporations both big and small to draw down on their revolver as they rushed to take advantage of the last traces of liquidity in a market that may soon slam shut all funding windows, we showed that according to JPMorgan’s revolver tracker, corporates that have tapped banks for funding rose to a record $208 billion on Thursday, up $15 billion from $193 billion on Wednesday and $112BN on Sunday. In other words nearly $100 billion in liquidity was drained from banks in the past week.

Putting that number in context, according to JPM, the current aggregate corporate borrowings represent 77% of the total facilities.

And since by implication almost all companies have now  drawn down on their full revolver, it stands to reason that the bank liquidity draining activity will slow down, and sure enough, according to a report from Goldman Sachs, that’s precisely what is going on.

Confirming that the month of March was indeed an unprecedented frenzy for bank credit facility departments, Goldman calculates that as April 1, we have seen $183bn of line draws, up from $76bn last week, with 20% of these in the auto sector, and 14% in retail (other sectors are all <10%).

However, in a slightly conflicting conclusion from that of JPM, Goldman then notes that over the last week (since 3/24), there has been a modest slowdown in activity, with $40bn of draws, of which nearly 45% of these have been in autos (all by GM), 14% in retail, and 10% in tech.

Indeed, as Goldman writes, “we note that the pace of revolver draws has slowed nearly 50% so far this week relative to last week, with only $40bn over the last 5 business days, relative to an average trailing 5 business days run rate last week of $75bn.”

Which, as noted above, makes sense: after all by now the only companies that are left hoping to draw down on their revolver, are those that – one way or another – won’t get access to what they are contractually owed, most likely because their bank syndicate deems them a default risk, and with use whatever legal loopholes it needs to avoid wiring even one cent.

Finally, now that the revolver frenzy is almost over, here is the full list of all companies that managed to get their money in time: below are all the corporations that have fully (or almost fully) drawn down on their revolver.

 

Calls are mounting for a Congressional investigation into the World Health Organization’s alleged role in helping China conceal the severity of the coronavirus outbreak.

On Tuesday, Florida Senator Rick Scott (R) issued a statement conveying demanding accountability over the WHO’s handling of the crisis, according to American Military News.

“The mission of the WHO is to get public health information to the world so every country can make the best decisions to keep their citizens safe. When it comes to Coronavirus, the WHO failed. They need to be held accountable for their role in promoting misinformation and helping Communist China cover up a global pandemic,” said Scott. “We know Communist China is lying about how many cases and deaths they have, what they knew and when they knew it – and the WHO never bothered to investigate further. Their inaction cost lives.“

Scott called on Congress to open an investigation of the WHO, once it comes back in session, “To review whether American taxpayers should continue to spend millions of dollars every year to fund an organization that willfully parroted propaganda from the Chinese Communist Party.” –American Military News

Also calling for WHO to be held accountable is Gen. Rob Spalding (Ret.), who wrote in the same publication that “The first global war of the 21st century began in December without a shot fired. A Wuhan doctor in China noticed some patients admitted to the hospital were exhibiting viral pneumonia consistent with SARS. Only it wasn’t SARS. When he tried to sound the alarm, he triggered the Chinese Communist Party’s (CCP) authoritarian control on information. Discussion of the illness was prohibited, and the doctor – who tried to warn colleagues through social media – was detained. The results of patient samples that had been sequenced to reveal their genomes were quickly squashed, and the samples destroyed before the results could be made public.”

More from Spalding via American Military News:

The WHO was notified early on, but they were prevented by the CCP to travel to Wuhan. Meanwhile, the CCP denied there was any danger to the public while 175,000 people traveled from Wuhan to all over China and the world. The virus was now set free to follow the new way of war detailed in the pages of Unrestricted Warfare. This book was written by two Peoples Liberation Army Colonels as a strategy to defeat a militarily superior United States.

The new way of war – trade, economic, propaganda and media – has now been unleashed to aid the Chinese Communist Party. To better understand this, forget everything known about how the world works. Instead, think of globalization and the internet turned into a weapon, in a no-holds-barred assault of competitive aggression unassociated with military might – and this is how China is waging war.

Following the Unrestricted Warfare thought, in CCP hands, globalization becomes weaponized. The CCP has spent decades utilizing globalization to slowly take control of the world’s trading system, dominate key industries and markets, build a global media and internet presence, and deploy subjects and diplomats around the world. Therefore, when the time comes these elements can easily be brought together for three intentional actions – deflect blame, cause panic, take advantage.

Deflect blame. Because the CCP controls Chinese language media everywhere with an iron grip, they can rile an army of ‘victims’ to deflect their own culpability for the pandemic. Chinese language social media uses the often-utilized practice of crying racism and stoking nationalism to instill fear and revenge in those inside and outside the country. These activated citizens can then be spontaneous in their response by creating “hug me I’m not a virus” campaigns. Meanwhile, the citizens under lock-down are blocked from sharing their boots-on-the-ground point of view as social media is further restricted and censored. Abroad, a full media and diplomatic blitzkrieg can be levied to ensure the virus is not named according to its origin, which gives way to another campaign to establish that it came from another country. Finally, flush with horded supplies the CCP can feign being good Samaritans as they earn profits on price gouging the world on personal protective equipment (PPE). Ultimately, deflecting blame props up the CCP message about the superiority of their Communist system.

Read the rest of the report here.

“The jump has no precedent in recorded history…” is how one analyst described the stunning surge in estimated firearm sales indicated by data from the Federal Bureau of Investigation’s National Instant Criminal Background Check System latest report.

While actual gun purchases aren’t tracked in the U.S., the FBI system is largely considered a proxy for sales by the firearms industry and the table shows a 41% surge year-over-year (and a 33% spike month-over-month).

Jurgen Brauer, chief economist at Small Arms Analytics, told Bloomberg News, that handgun sales increased 91.1% year-over-year, per Brauer’s analysis, and long-gun sales were up 73.6%.

“We expect continued positive headline growth numbers in coming months as Covid-19 uncertainty lingers,” Brett Andress, a firearms industry analyst at KeyBank Capital, wrote in a note on Wednesday afternoon, according to Bloomberg.

What does that look like?

The last time demand for protection even came close to this was the last three months of 2015 as a spate of mass shootings in the US put tougher gun controls back in the national spotlight.

The motivation for this sudden surge is evidently a concern that the current (and expanding) lockdown being enforced across The Land of The Free is rapidly transformed into a far more tyrannical control over Americans’ constitutional rights.

“The government is trying to do everything it can to keep society intact. But if society is unraveling, it’s up to us to protect ourselves,” said Andrew Dominguez, 36, a real estate agent in Pacifica who waited near the end of the slow-moving line to buy ammo for his shotgun.

John Chen, 40, agreed. He lives in Oakland but has construction outlets around the Bay Area, including in Pacifica. He was at City Arms to buy his first pistol for personal defense.

“This virus gave me the motivation,” Chen said.

“I’ve always wanted to have a gun, but I’ve been lazy. I see the news now, and the outbreak and the chaos.”

Jackson Lu, 24, came bounding out of the gun store, carrying a new $500 Glock 19 in its black plastic case. He wasn’t about to open it to show it off, though.

“I feel like there’s a lot of crazy stuff happening around the world,” he said. “I want to feel safe.”

Don’t think it could happen?

As a reminder, just last week, Los Angeles County Sheriff Alex Villanueva attempted to shutdown all gun stores (on the basis of safety concerns).

However, facing a lawsuit over his controversial decision, he has now changed his mind, citing a federal ruling that gun stores are considered “essential.”

The post-COVID-19 future is looking grim: economic collapse, censorship, production control, soaring surveillance, and increasingly martial law. So which dystopian future are we headed for?

It’s not like we weren’t warned humanity was heading south, however, and there’s a lot more doomsaying to explore beyond Orwell and Huxley…and, as Helen Boyniski notes, our curious historical moment owes just as much to some lesser-known nightmare futures, and since we’re all stuck indoors under coronavirus quarantine, we might as well get familiar with the ins and outs of some of these lesser-known dystopias.

At the very least, it will prepare us for what might be in store post-pandemic. 

As we detailed earlier, it’s only matter of time before this lockdown of American – leaving citizens jobless, broke, and without options – become the flashpoint that leads to an explosion of civil unrest and violent crime.

Last week, when consensus was expecting a “modest” 281K initial jobless claims, we said that SouthBay Research’s Andrew Zatlin, who has regularly been the most accurate predictor of labor market prints, expected no less than 2.4 million initial jobless claims. He was off by a million: the actual number was a staggering 3.28 million, quadruple the previous record set in the depths of the global financial crisis. The number was also too low in light of anecdotal evidence of the tsunami of unemployed workers, with a New York State official saying that the unemployment system had received a record 1.2 million calls just this Monday compared to 50,000 per week prior to the coronacrisis.

In short, tomorrow’s initial claims print is expected to be another catastrophe, the only question is just how bad will it get and how much above the consensus print of 3.7 million will the actual number be.

The claims report “will likely reflect both newly laid-off workers as well as states catching up on previously filed claims that had not yet been captured in the system due to overwhelming demand,” Wells Fargo economist Sam Bullard wrote in a note. He projects 3.15 million. He is also an optimist compared to some of colleagues.

Going back to Zatlin, he is now expecting around 6.5 million initial claims having revised upward his weekly estimate on at least two prior occasions. “We are in unprecedented waters and fast moving, on-the-ground data requires equally fast updates.  Due to more recent information, I am raising the forecast again”, he wrote in a note to clients, adding the following:

“At least 6.5M Americans filed for Initial Jobless Claims last week. States are unable to process the tidal wave of claims. I now believe that States will stop trying for accuracy and rely on estimates.  After all, funding will flow based on the number they submit and States need to get funding asap.“

If Zatlin is right and states do opt for shock value, we may even get a 10 million print or more. Not that anyone is predicting that: curiously Zatlin is not even the biggest pessimist: the most dire prediction sees tomorrow’s initial claims at 6.5 million, and belongs to Thomas Costerg at Banque Pictet. BofA estimates 5.5 million, Goldman is at 5.25 million and Citigroup is at 4 million.

Trying to chart tomorrow’s worst case scenario is simply meaningless:

A snapshot of the distribution of tomorrow’s forecasts together with some of the high-fliers is shown below:

As Bloomberg notes, the new jobless claims report will come days after President Trump announced that social distancing would extend until at least April 30, amid rapidly rising infections and deaths across the nation. The president previously said he hoped that the economy would be “raring to go” by the Easter holiday, but that’s no longer the plan.

Curiously, the weekly initial claims report – traditionally ignored and seen as a B-grade economic datapoint at best – now has more import than the monthly jobless report. The reason: while Friday’s payroll figures are forecast to show a more-modest decline in jobs in March, like today’s ADP report, they reflect data from the first half of March, before most virus-related shutdowns. So, the bigger job losses – and an unemployment rate potentially rising by several percentage points – are more likely to show up in the April data due in May.

“The March jobs report will vastly understate the extent of labor dislocation occurring as a result of the economic ‘hard stop’ resulting from containments efforts of the Covid-19 crisis. Instead, the more important information regarding the speed of labor market deterioration will be the weekly data on filings for unemployment benefits, a.k.a initial jobless claims.”

Which is not to say the unemployment rate won’t eventually reflect the unprecedented halt of the US economy. According to Goldman, in the next few weeks the US unemployment rate will rise to 15%, a level on par with the Great Depression.

We leave readers with the following big picture assessment from SouthBay Research:

By the time this mess settles, at least 20M American workers will have been furloughed.  The math is relentless.

Self-isolation is crushing the Leisure & Hospitality sector (17M workers).  Most of them are set to be out of work.  Indeed, confirming the sector’s pain, SouthBay’s review of local job postings found a massive collapse: Leisure & Hospitality postings fell 80% compared to the same period last year.  That figure will only worsen as more States and cities impose a lock down.

And that’s just one sector.  Every sector is taking a hit, some more than others, but the average drop in labor demand is >50% (as reflected in job postings).  Things will get a bit uglier before they level off.

But a turnaround will happen and sooner than most expect.

In a different age, under these conditions, you would gather the family and head to a remote cabin in the hills.  You would be very scared because conditions are ripe for riots and looting and worse: too many people with too much time and opportunity on their hands.  At least 20M people will have nothing to do, no job to go to.  Schools are closed (56M students K-12).  They are at home and driving their parents crazy, who are also forced to work from home.  All in all, some 150M Americans people are now hunkered down.

It’s a classic recipe for public disorder, and officials know it.  I was recently at a shopping mall where the only store open was Target.  At the opposite end of the mall, the empty end, a lone police car was stationed.  Forget protecting the public in case of a brawl at Target over toilet paper – the empty stores are of bigger concern because they have turned into perfect targets for theft.  A case in point: a Van Gogh was just stolen from the COVID-shuttered Singer Langer museum.

Why aren’t we scared?  Because we have an even more powerful opiate of the masses: the Internet.  Pacifying the people is Netflix.  And Facebook and Disney+.  And for old school players who require real opiates or something similar, cannabis is now broadly legal and sales have doubled.

Crowd control via the internet has become an important tool.  Recently, on a long flight to New York, I was speaking to flight attendants about the move by airlines to provide free movies via wifi.  Considering that airlines charge for everything, giving away movies seemed counter-intuitive.  But the flight attendants explained that it was actually a huge cost savings.  Fewer passengers were asking for drinks and snacks.  Fewer drunks causing problems.  Instead people sat docile for hours, entertained by their screens.

But it doesn’t last.  People will get restless.  Pressure will build to get-back-to-business.  Especially if the data suggests that things are ‘less bad’ or that only certain demographics are at risk (the elderly, the already ill) or that there are treatments that seem to work.  

And that’s the positive.  As Americans emerge from self-imposed hibernation, they will want to go out.  If you’ve ever been camping for an extended period of time, then you find yourself seeking out a hot shower and an equally hot meal.

Demand for services will return, and so will jobs.  But it might be a while. 

After President Trump’s talk of up to 240k coronavirus-related deaths rattled markets on Wednesday, Bloomberg reported Wednesday evening that the Pentagon is seeking up to 100,000 body bags for FEMA, lending the federal coronavirus response a real natural-disaster feel.

Per BBG, the Federal Emergency Management Agency has requested 100,000 body bags, known in the business as “Human Remains Pouches”, vian an interagency group that directed the request to the Pentagon. The Pentagon is looking into sourcing more bags, but will initially provide 50k from a stockpile of 50,000 HRP they have…probably languishing in some underground bunker in Virginia.

Bloomberg described the anxiety-provoking headline as “a somber counterpoint to the Pentagon’s highly-praised deployment of two hospital ships to New York and Los Angeles to help alleviate pressure on regional hospitals overburdened by the pandemic.”

The Defense Logistics Agency’s Troop Support unit manages the Pentagon’s stockpile of the HRPs, which consist of green nylon, 94-inch by 38-inch body bags that are typically distributed to war zones. The unit has been in talks with a contractor about their production capabilities, but the agency has yet to place an official order.

President Trump said last night that he’s preparing for between 100k and 240k deaths, as per the official White House projections, but some of the more alarming projections have called for as many as 1 million deaths, without the ‘mitigation’ efforts being enacted by millions of Americans, who are working from home, or otherwise staying inside.

FEMA hasn’t requested a formal delivery date from the DLA, according to the report, but the agency has purportedly told the contractor that it wants the bags ready ASAP.

A spokesman for FEMA told BBG that the bags are part of the “prudent planning” process for anby potential future needs. The bags specifically apply to any “mortuary contingencies” from US states that might occur.

Earlier this week, the director for the Joint Chiefs laid out the liaison process for working with FEMA, and explained how the JC is working “in close partnership” to make sure all needs are addressed.

It sounds almost unimaginable that anybody in the country right now would wish harm on sweet, innocent Dr. Anthony Fauci, the gifted doctor whose pioneering work on HIV and AIDS has been credited with saving millions of lives, and whose work leading the federal COVID-19 response has been lauded as a “port in the storm” for millions of terrified Americans.

And yet, somebody somewhere apparently does.

The Hill reports that Dr. Fauci has been given a security detail after receiving threats, according to an anonymous “person familiar with the matter.”

Before taking his job as a top figure on the White House federal task force leading the government’s effort to suppress the outbreak, Dr. Fauci was the director of the National Institute of Allergy and Infectious Diseases, a position he has held since 1984.

Dr. Fauci

The doctor’s absence from two White House press briefings last week sparked rumors that Trump was sidelining him after he had “contradicted” the president (something the president has said he encourages his ‘expert’ advisors to do), and the PR hit was apparently enough of a concern that the doctor was swiftly returned to the lineup.

Asked whether he had been given security protection, Dr. Fauci refused to respond at Wednesday night’s briefing. But President Trump interjected, saying “everybody loves” Dr. Fauci, while noting that the good doctor was a formidable basketball player during his younger days.

“He doesn’t need security. Everybody loves him,” Trump said. “Besides that, they’d be in big trouble if they ever attacked him.”

Certainly, an attack on Fauci at such a sensitive time would garner very little sympathy, though there are some conservatives who have blamed the doctor for allegedly trying to undermine President Trump. As the Hill noted, Bill Mitchell and Tom Fitton are among those who have tweeted criticisms of Dr. Fauci recently. However, the motivations of those issuing the threats remain unclear, along with their identities.

Days after the FDA approved the use of hydrochloroquine as a treatment for COVID-19, weekly prescriptions soard from 100k to 300k in one week.

Compounding the issue is a study, which shows that the commonly used treatment for lupus, arthritis and other disorders which was touted by President Trump has proven to be effective in a small study reported by The New York Times. As such, the drug has been placed on the FDA’s list of shortages – leaving those with the aforementioned afflictions at risk of not being able to refill their prescriptions, according to Bloomberg.

The news comes after Novartis AG’s Sandoz donated over 30 million doses of hydroxychloroquine, while Bayer AG donated 1 million doses of chloroquine to the national stockpile.

While we are still waiting on the results from clinical studies, compelling anecdotal evidence of the drug’s efficacy when combined with azithromycin (Z-Pac) and zinc sulfate has caused several countries to place them on their recommended treatment regemin for the disease.

Some of the nine companies on the FDA’s list that make hydroxychloroquine, including generic-drug giant Teva Pharmaceutical Industries Ltd., said there is a limited supply that is subject to allocation. 4

Others said the drug is available, particularly for existing customers. Increasingly larger shipments of chloroquine are scheduled over the next eight months, according to Natco Pharma Ltd., whose chloroquine is distributed by Rising Pharmaceuticals Inc. -Bloomberg

“The agency is working with manufacturers to assess their supplies and is actively evaluating market demand for patients dependent on hydroxychloroquine and chloroquine for treatment of malaria, lupus and rheumatoid arthritis,” the FDA said in a Tuesday evening statement, adding that all manufacturers are ramping up production.

As US intelligence agencies dispute China’s surprisingly low mortality stats, and as researchers ponder what’s causing Italy’s outrageous 10%+ mortality rate, one thing is indisputable: mortality rates are climbing even as the number of cases being reported in places like Italy are tapering off. And that is freaking out scientists, who are scrambling to find a cure.

As analysts at Commodore Research pointed out, the issue is not unique to Italy: Virtually every nation that has a large number of reported cases has continued to see mortality rates climb.  In Spain, the mortality rate now stands at 8.7%.  Ten days ago, it stood at 5.4%.  In the Netherlands, the mortality rate stands at 8.3%.  Ten days ago, it stood at 3.8%.  In the United Kingdom, the mortality rate stands at 7.1%.  Ten days ago, it stood at 4.6%.  In France, the mortality rate stands at 6.7%.  Ten days ago, it stood at 3.9%.  In Belgium, the mortality rate stands at 5.5%.  Ten days ago, it stood at 2.4%.

Even nations where the mortality rate has been relatively low have seen the rate climb: In Portugal, the mortality rate now stands at 2.2%.  Ten days ago, it stood at 0.9%.  In the US, the mortality rate stands at 2%, 10 days ago, it stood at 1.2%.  In South Korea, the mortality rate stands at 1.7%.  Ten days ago, it stood at 1.2%.  In Austria, the mortality stands at 1.3%.  Ten days ago, it stood at 0.4%.  In Germany, the mortality rate stands at 1%.  Ten days ago, it stood at 0.4%.

Italy’s more detailed breakdown of virus-related data and other mortality statistics have showed that virus-related deaths in Milan and the surrounding area, which has a population of 10 million, has caused the mortality rate to double from normal times.

According to AFP, the region registered 12,399 COVID-19 related deaths last month, thousands more than officially reported by any other country. Meanwhile, last Friday, the civil protection service disclosed a record 969 deaths.

Some have speculated that the death toll in Italy simply doesn’t add up, suggesting that Italy’s 10% reported death toll might be too low.

It might sound hard to believe, but AFP reports that by comparing data from 2018, its journalists determined that the average monthly deaths from 2018 in the same region was 8,300, and that March 2018 was likely a “statistically average” month. However, the city reported 7,176 coronavirus deaths in March, which is 15% below the average in normal times. Some say that this suggests local officials are deliberately misreporting the numbers.

Even some public officials are suspicious. Bergamo Mayor Giorgio Gori said Wednesday he does not trust the official figures and thinks the real toll for the region may be twice as high. The mayor tweeted a newspaper analysis suggesting that the COVID-19 toll in the Bergamo province was “between 4,500 and 5,000, and not the 2,060” officially reported.

One expert in Italy said that the data suggest Italy’s crisis has peaked, but that the peak in hospital deaths will arrive shortly, per the Hill.

“The data suggest that the increase in numbers of patients in intensive care in both the Lombardy region and Italy as a whole are likely to have peaked,” the report said.

But “”he numbers of deaths in hospital will continue to increase at the maximum rate for several days to come.”

To be sure, one new report published in the Lancet suggested that mortality rates might be smaller than initially suspected.

The study, published Monday in The Lancet Infectious Diseases medical journal, estimated that about 0.66% of patients who become infected with the virus will die. Previously, when undetected infections weren’t being taken into account, researchers found the coronavirus death rate was 1.38%. That’s still significantly deadlier than the seasonal flu.

 

“I have never seen anything like this in my lifetime,” one small business owner was cited in Reuters as saying. The real question now is how long can small and family businesses — which account for some half of all US employment and are fast blowing through whatever cash remains (many say they’re good for no more than two weeks)— wait till they actually feel the effects of the $2 trillion stimulus package? After all it could take weeks to process checks and get loans out, and yet April remains essentially “cancelled”.

“Without something we wouldn’t be able to keep our employees,” another business owner with just five employees said. “My biggest goal is to keep them and of course make sure there’s a business for them to come back and work for.”

Congress’ $2 trillion includes $349 billion meant to rescue small firms through the Payroll Protection Program, intended for businesses to cover eight weeks of payroll and basic operating expenses via a forgivable loan of up to $10 million, which companies of up to 500 employees or fewer can access, available through June.

This as 50,000 retail stores have already shuttered in just over a week nationwide with no clear re-opening date, resulting in over 600,000 workers on furlough, based on Bloomberg data — also as new soaring unemployment numbers come out weekly, with last week the Labor Department reporting a record 3.3 million people filing unemployment insurance claims in the week prior.

“Speed is the operative word,” spokesman for the specific Treasury Dept. agency (the Small Business Administration, SBA) which is to oversee getting the funds to businesses, Jovita Carranza, said. And CEO of the Bank Policy Institute, Greg Baer, pointed out that “This is the kind of program that in ordinary times would take a year to get started.”

Indeed as details and crucial processing elements on the rollout continue to come into focus, investors will remain wary of bottlenecks which would detract from the economic upside, given that ensuring as many firms as possible remain operating in the wake of the outbreak is vital to preserving as much of the previously robust employment market as possible.

We noted last week that now with the stimulus passed into law, it’s precisely this next hurdle of speed and timeliness which will be as great (if not greater) than the first and presents a significant degree of execution risk. There are several aspects of the proposed stimulus measures which have well-established distribution channels; unemployment benefits and the injection of cash directly to households. As for the corporate, small business, and state/local government allocations, this leg of the process presents a greater challenge.

“There’s a fair amount of money,” Yale University finance professor Andrew Metrick told Bloomberg this week:

“But ultimately we have capacity problems getting the money into the hands of the small businesses fast enough, without fraud or bad actors effectively figuring out how to siphon money off.”

And Reuters adds further on the question of timing: “Banks have been telling customers to be patient and asking them to get relevant paperwork ready so that loans are processed quickly when it all comes together. Some expect cash to begin moving as soon as Friday.”

In short, there’s the classic question of speed vs. qualitative oversight. Either the government gives everyone what they want without checking — leaving the potential to unleash unprecedented fraud — or they do a meticulous check of everything and businesses fail during the long wait in limbo.

But the following doesn’t lend toward optimism: 

The White House is dispatching staff to the Small Business Administration as that agency struggles with a flood of requests for financial aid, according to people familiar with the matter. So many people tried to access one SBA loan program last week that the agency’s website failed repeatedly.

Mnuchin has vowed to have the small business loan program “up and running” by the end of the week.

Via Brookings: Sifan Liu and Joseph Parilla observe that small business, particularly newer ones, were hit hardest during the 2007-09 recession. As the economy continues to suffer impacts from coronavirus-induced measures, they look back at what happened to such businesses then. In 16 of the largest metro areas, they find, small businesses were responsible for more than 90% of the net job loss:

But assuming we’re still having this discussion into next week, and possibly the next after, and as confused business owners struggle to fight through the red tape, it is sure to be too late for many who are still paying the bills today only on revenue from yesterday (or rather, from two weeks ago).

“This last week we’ve been working diligently with our banker to keep every single cash reserve dollar we’ve got to take care of things we absolutely have to pay until some of these loan programs become available and we can get cash out of them,” Jerry Akers, who co-owns over a couple dozen Great Clips hair salons locations in Iowa and Nebraska, told Bloomberg. “I’m not a big government-subsidy guy by nature, but right now, that’s our lifeline.”