Berna Barshay's inaugural Empire Financial Daily yesterday; Nordstrom and TJX; I tested negative for coronavirus; Possible vaccine from Oxford; The Secret Group of Scientists and Billionaires Pushing a Manhattan Project for COVID-19; Millions of Credit-Card Customers Can't Pay Their Bills
1) Berna Barshay's inaugural Empire Financial Daily yesterday was the best – and most up-to-date – analysis of the department store sector I've ever read.
In it, she predicts that many department stores will likely never recover, including Macy's (M), JC Penney (JCP), and privately held Neiman Marcus. Similarly:
Apparel companies with a large portion of sales to U.S. department stores could also be in trouble. Some vulnerable apparel companies include Ralph Lauren (RL), Calvin Klein and Tommy Hilfiger's PVH Corp (PVH), and G-III Apparel (GIII), whose brands include DKNY and Karl Lagerfeld.
Another group with substantial risk if the department stores go under would be the mall real estate investment trusts ("REITs").
Berna isn't a perma-bear, however. Amidst the carnage in the sector, she's intrigued by both Nordstrom (JWN) and TJX Companies (TJX).
Berna is a stone-cold moneymaker with two decades of experience, who made a profit during both the bursting of the Internet and housing bubbles.
We haven't yet launched a subscription newsletter for her, so Empire Financial Daily readers will get her best ideas for free... for now... so I suggest reading her closely and taking advantage!
2) In Thursday's e-mail, I described taking a quick, free COVID-19 test, and included details on how you can get one as well.
I got the results back yesterday – a very slow five days later – and was happy to see that I was negative. (I wasn't surprised, given that I can't remember the last time I was sick, knock on wood!)
3) Here's some incredibly exciting news from Oxford University: In Race for a Coronavirus Vaccine, an Oxford Group Leaps Ahead. Excerpt:
In the worldwide race for a vaccine to stop the coronavirus, the laboratory sprinting fastest is at Oxford University.
Most other teams have had to start with small clinical trials of a few hundred participants to demonstrate safety. But scientists at the university's Jenner Institute had a head start on a vaccine, having proved in previous trials that similar inoculations – including one last year against an earlier coronavirus – were harmless to humans.
That has enabled them to leap ahead and schedule tests of their new coronavirus vaccine involving more than 6,000 people by the end of next month, hoping to show not only that it is safe, but also that it works.
The Oxford scientists now say that with an emergency approval from regulators, the first few million doses of their vaccine could be available by September – at least several months ahead of any of the other announced efforts – if it proves to be effective.
Now, they have received promising news suggesting that it might.
Scientists at the National Institutes of Health's Rocky Mountain Laboratory in Montana last month inoculated six rhesus macaque monkeys with single doses of the Oxford vaccine. The animals were then exposed to heavy quantities of the virus that is causing the pandemic – exposure that had consistently sickened other monkeys in the lab. But more than 28 days later all six were healthy, said Vincent Munster, the researcher who conducted the test.
"The rhesus macaque is pretty much the closest thing we have to humans," Dr. Munster said, noting that scientists were still analyzing the result. He said he expected to share it with other scientists next week and then submit it to a peer-reviewed journal.
4) Kudos to these scientists and wealthy donors working together to fight this pandemic, profiled on the front page of today's Wall Street Journal: The Secret Group of Scientists and Billionaires Pushing a Manhattan Project for COVID-19. Excerpt:
A dozen of America's top scientists and a collection of billionaires and industry titans say they have the answer to the coronavirus pandemic, and they found a backdoor to deliver their plan to the White House.
The eclectic group is led by a 33-year-old physician-turned-venture capitalist, Tom Cahill, who lives far from the public eye in a one-bedroom rental near Boston's Fenway Park. He owns just one suit, but he has enough lofty connections to influence government decisions in the war against COVID-19.
These scientists and their backers describe their work as a lockdown-era Manhattan Project, a nod to the World War II group of scientists who helped develop the atomic bomb. This time around, the scientists are marshaling brains and money to distill unorthodox ideas gleaned from around the globe.
They call themselves Scientists to Stop COVID-19, and they include chemical biologists, an immunobiologist, a neurobiologist, a chronobiologist, an oncologist, a gastroenterologist, an epidemiologist and a nuclear scientist. Of the scientists at the center of the project, biologist Michael Rosbash, a 2017 Nobel Prize winner, said, "There's no question that I'm the least qualified."
This group, whose work hasn't been previously reported, has acted as the go-between for pharmaceutical companies looking for a reputable link to Trump administration decision makers. They are working remotely as an ad hoc review board for the flood of research on the coronavirus, weeding out flawed studies before they reach policy makers.
The group has compiled a confidential 17-page report that calls for a number of unorthodox methods against the virus. One big idea is treating patients with powerful drugs previously used against Ebola, with far heftier dosages than have been tried in the past.
The Food and Drug Administration and the Department of Veterans Affairs have already implemented specific recommendations, such as slashing manufacturing regulations and requirements for specific coronavirus drugs.
National Institutes of Health Director Francis Collins told people this month that he agreed with most of the recommendations in the report, according to documents reviewed by the Wall Street Journal and people familiar with the matter. The report was delivered to cabinet members and Vice President Mike Pence, head of the administration's coronavirus task force.
(If you wish to subscribe to my coronavirus e-mail list, simply send a blank e-mail to: cv-subscribe@mailer.kasecapital.com)
5) Speaking of the front page of the WSJ... In Friday's e-mail, I wrote:
If I were czar, one of the many things I'd do is prevent banks and other consumer lenders (mortgages, credit cards, student and auto loans, etc.) from profiting from the economic hardship of tens of millions of folks. Specifically, starting retroactive to March 1 and extending at least through June if not the end of the year, I'd ban all financial fees and penalties, and limit annual interest rates on any new debt added to existing accounts to 5%.
Sure enough, this article was on the front page of yesterday's WSJ: Millions of Credit-Card Customers Can't Pay Their Bills. Lenders Are Bracing for Impact. Excerpt:
Millions of Americans are skipping their credit-card payments as the coronavirus pandemic puts them out of work. Banks and other lenders that for years relied on heavy consumer spending to create big profits are preparing to struggle alongside their customers.
As the economy spirals, credit-card payments are one of the first places where the effects will show up. They are often the first loans people stop paying when money is tight. They are usually unsecured, which means lenders have little recourse if a borrower stops paying.
Many large card issuers, including Capital One, Discover Financial Services and Synchrony Financial, are letting borrowers pause their credit-card payments for a month or longer. Some are lowering or waiving late fees and interest charges, or even forgiving portions of customers' balances.
Those suspensions will allow some borrowers to stay afloat, but only temporarily. Companies and analysts expect delinquencies and charge-offs to soar later this year. Banks and other lenders can only shoulder the unpaid loans for so long before they face a reckoning too.
I'm glad that some companies are "lowering or waiving late fees and interest charges," but this should be mandatory, not some huge favor these businesses are doing for a handful of customers!
Best regards,
Whitney