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Airlines To Layoff Workers as Federal Aid Expires

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As federal aid expired, airlines layoff thousands of workers. October 1 arrived with Congress unable to come up with a new stimulus bill. This meant the terms of the previous $25 billion relief for airlines expired. Now comes the hard part.

RELATED: As Airlines Suffer, American Most Likely To File Bankruptcy

CEOs of American, United, Southwest, and JetBlue made efforts to prevent the airline’s layoff. They went to Treasury Secretary Steve Mnuchin to try to save airline jobs with more relief funds. Unfortunately, he and Speaker Nancy Pelosi were unable to come to terms.  Now, there are no indications that a new aid bill will pass before the elections.

Previous CARES Act gave airlines $25 billion

The travel industry was one of the biggest sectors affected by a coronavirus. Planes got grounds as fears of infection made people avoid huddling inside airplanes. Losses by major airlines reached billions of dollars. As they started bleeding money, executives began looking at laying off workers. Last March, Congress passed the CARES Act, which included $25 billion in grants for airlines. The funds helped airlines to pay for their worker’s salaries. The federal aid came with a string attached, though. Airlines aren’t allowed to furlough workers until September 30. By that time, everybody hoped a vaccine for coronavirus would be available. Or that the industry would have recovered somewhat. At least, everybody hoped for a new round of stimulus packages.

None of those happened. Airport statistics show demand remains at 30% of 2019 levels. And the threat of coronavirus remains. FactSet data showed that U.S. airlines will lose $30 billion in 2020. Airlines cut off losses by offering voluntary buyouts and early retirement to workers. Around 50,000 employees took the offer and left this year.

As October 1 arrived, the ax will start to fall on the remaining workers. As early as Oct 1, employees will begin receiving notices. United Airlines layoff will start handing out notices for 13,400 employees. They will be out of a job starting Thursday. American Airlines’ layoff will cut 19,000 employees from its workforce. Delta Air Lines said they will hold off furloughs at least until next year. 17,000 workers left on their own while 40,000 went on unpaid leaves. Delta plans to cut an extra 2,000 jobs but will discuss it with their pilots’ union. Southwest Airlines also says that with 25% of its employees voluntarily leaving, they won’t need to lay off workers until the end of the year.

Pressure now on White House, Congress

In a letter to employees, Parker shared his apologies. He said:  “I am extremely sorry we have reached this outcome. It is not what you all deserve.” Both the United and American promised to reverse the layoffs if new aid arrives within the next few days. In an interview with CNN last Wednesday, Parker remains hopeful but realistic. He said: “If there’s a clear and concrete path that says we’re not quite done yet but we will be done soon, of course. If it’s ‘we need much more time to work and it’s unclear whether we can get something done,’ that’s going to be much harder.”

By moving ahead with the airline layoff, pressure now hangs over the White House and Congress. Mnuchin asked airlines to delay the layoffs while they continued with the negotiations. He admitted that “substantial progress on the deal could not be made before the time limit.” He did assure that talks on “the larger package” will continue beyond Oct 1. Mnuchin added that “there’s money for airlines.”

American Airlines CEO Doug Parker says this isn’t about raising funds for airlines. He said that this “is about keeping the infrastructure in place by having us be paid to pass on to our team members who we otherwise don’t have work to keep them in place.”

A $25 billion aid to airlines did get bipartisan support. It became part of the $2.2 trillion aid package proposed by the Democrats last Monday. On Wednesday, Pelosi said she and  Mnuchin failed to agree to a deal when they met earlier.  Even with the assurance of continuance, airline share prices are dropping. Only United entered Thursday in the black, up 0.7%. American is down 0.21%, while  Delta fell. Southwest dropped 0.3% and JetBlue lost 0.8%.

Watch this as NBC Nightly News reports that around 50,000 airlines lay off workers without government Aid:

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Do you think that relief for airlines can still happen in a few days or weeks? After all, when the economy starts to recover, airlines will play a large part. The question remains, though. Can Pelosi and Mnuchin agree to put politics aside and do what they can to help a struggling industry? Let us know what you think by leaving your thoughts in the comment section below.

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Moderna Vaccine ‘Actively Preparing’ for Distribution

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In light of advanced stages in its clinical trial, a Moderna vaccine is actively preparing for distribution. One of the Covid-19 vaccine leaders, Moderna’s mRNA-1273 vaccine is expecting trial results by November. An independent data monitoring committee will conduct an interim review in November. This involves sifting through data from  30,000 volunteers.

RELATED: Multiple COVID-19 Vaccines Could Be Ready by Fall

Also, by the end of 2020, Moderna aims to produce 20 million doses, with another 500 million to 1 billion doses by next year.

Phase III Trial Infection Rates Meet Expectations

Moderna reported that trial infection rates were on track with expectations. Chief Medical Officer Tal Zaks said that they are “following the ZIP codes and the counties from which these participants come, we have pretty sophisticated models of what to expect.” He added that “I think we’re on track for those expectations.”

During Thursday’s results call, CEO Stephane Bancel said they hope for FDA approval soon. A U.S. regulatory green light for Moderna’s vaccine would endorse the biotech’s vaccine platform.

In a press release, Bancel wrote: “We are actively preparing for the launch of mRNA-1273 and we have signed a number of supply agreements with governments around the world. Moderna is committed to the highest data quality standards and rigorous scientific research as we continue to work with regulators to advance mRNA-1273.”

How does the Moderna vaccine work?

mRNA-1273 uses synthetic messenger RNA (mRNA) to mimic the surface of the coronavirus. It then “teaches” the immune system to recognize and attack it. This technology is the same used by Pfizer and BioNTech to create a rival COVID-19 vaccine. The method has yet to produce an FDA-approved vaccine.

The Phase III trials, which involve 30,000 participants, expects to end by early November.  Moderna’s board will conduct its analysis only after there are 53 diagnosed cases of Covid-19.

The FDA will require a two-month safety data follow up after the final trial. So, Modena will have to file for emergency use authorization. This can happen as early as mid-November, upon completion of the trial review.

Moderna vaccine Getting Supply Deals Ready

This early, Moderna is readying its supply deals to its early customers. This includes governments of the US, Japan, Canada, and Israel. The US pre-ordered 100 million doses of the vaccine valued at $25/dose. They also have an option to buy an additional 400 million doses. All in, Moderna holds $1.1 billion in deposits from its customers. This includes grants and performance payments.

The most recent deal came via Takeda of Japan. Moderna announced earlier today that they will supply Takeda with 50 million doses. Pending local approval, this batch will arrive during the first half of 2021.

More inquiries are coming in. The company is in talks with the European Union for possible supplies to its members. It is also negotiating with the World Health Organization group COVAX. Discussions include vaccine distribution and scalable pricing.

Moderna Shares Up by 13%

Moderna stock prices rose as much as 13% in Thursday trades as investors warmed up to a potential vaccine. Shares traded higher by as much as 13%, as it reiterated that it is “actively preparing” for its vaccine launch.

During the earnings call, Moderna reported a 3rd quarter loss of $233.6 million, or 59 cents a share. This is greater than Refinitiv’s prediction of 43 cents per share. Moderna generated $157.9 million in revenue. This is more than double the expected $77.5 million.

Watch this as Yahoo! Finance reports that pharmaceutical firm Moderna is getting ready to distribute its vaccine across the globe:

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Stocks Post Its Worst Day in A Month

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Wall Street took a beating Monday as stocks posted its worst day in a month. Rising coronavirus cases and a fading stimulus relief led investors to sell-off.

RELATED: A Stock Market Rally On New Stimulus Bill Could Be ‘Short-Lived’

The Dow Jones Industrial Average closed 2.3% lower. It fell down 935 points during the day before settling 650 points lower. All Dow stocks closed in the red except Apple, which eked out a .01% gain. It was the Dow’s worst day since September 3.

Meanwhile, the S&P 500 closed for the day at 1.9%, marking its worst day since late September. The tech-heavy Nasdaq Composite, which bounced back from its lows in the morning, finished lower at 1.6%.

While all sectors across the board experienced losses, some got crushed more. These include energy, industrials, and financials.

Higher Cases of Coronavirus

With eight days remaining before the elections, investors are starting to get jittery. Despite lots of talks, Congress has yet to approve a stimulus package. Cases of coronavirus are jumping in all states, and it recently hit a daily high average of 68,767 last Sunday.

Meanwhile, big tech companies are set to report earnings later this week. This lot includes Microsoft, Apple, Google, Facebook, and Twitter.  Fawad Razaqzada of Think Markets noted that the reports can inject further volatility. In the note, Think Markets believed that “on a more macro level, ongoing US stalemate over US fiscal stimulus and the rapidly spreading Covid-19 is going to determine the direction for the wider markets.”

Tom Lee, head of research at Fundstrat Global Advisors, thinks Covid is a big influence over the market. He said “It’s almost as important as the Fed right now. Covid is suppressing the economy, and it’s essentially offsetting easy money. If we didn’t have Covid, people would be going out and spending money. It’s acting as a huge headwind.”

No Relief in Sight

Brad McMillan, CIO of Commonwealth Financial Network, thinks the reality hit investors hard. He told CNN business: “I think a big difference this time around [is]…there’s been a tremendous amount of hope baked into the market for quite a while, and we saw some things over this weekend that hit those assumptions hard.” The negotiations for a new relief package is gone at least until after the elections. Senate Majority Leader Mitch McConnel adjourned the Senate after confirming new Chief Justice Amy Coney Barrett. They will resume their session on November 9, or six days after the elections.

Without a clear stimulus plan, the US economy could start to double-dip. And if the rise in coronavirus cases continues, the business will shut down again. This nightmare scenario is haunting the market at present. Steven Wieting, the chief strategist at Citi Private Bank, sees dimmer prospects. “The ability to fight the virus further right now is very much in question, and it’s a political question.” Wieting believes that Washington could take months before anything gets done. This made investors tentative.

Tom Lee added that “We have a lot of things to be anxious about in the next couple of weeks. That’s why this is a pre-election market. But post-election, I think a lot of things that make people nervous turn into a tailwind. The post-election stimulus is a when not an if. Even if it’s a mixed Congress, I think there’s still some common ground. It’s just the scope that’s different. It would be a smaller package.”

Eight Days Remaining

The final eight days before the elections usually brings good vibes for Wall Street. This year, the bulls will need some extra running following Monday’s selloff spree.

Sam Stovall, chief investment strategist history, observed this bull phenomenon. Since 1944, the S&P 500 rose on average 2.5% in the eight days before elections. The index is up 17 out of 19 times, or 89%. The biggest rise came during the recent financial crisis, with the S&P 500 roaring back 18.5% in a bear market rally. That year, Democrat Barack Obama won over the GOP’s John McCain. The market sunk back to new lows after the election. It bottomed out four months later. The first decline in 1968 (-0.8%), happened as Richard Nixon won over Democrat Hubert Humphrey. The other was in 1988 when Republican George H.W. Bush won against the Dems’ Michael Dukakis.

Wall Street needs to get its act together with eight days remaining. A short, decisive victory by either party can help uplift America’s image. And with all the drama removed, maybe the market can go back to its winning ways.

Watch this as Stocks fall sharply at open amid Covid-19 resurgence:

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US Housing Sales Boom Will Last Until 2021

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Redfin CEO Glenn Kelman told CNBC on Thursday that he sees the US housing sales boom will last until 2021. Total US Home sales increased 9.4% in September, surpassing estimates. Meanwhile, median prices went up 15% year over year. This is according to data provided by the National Association of Realtors.

RELATED: Biden Is Latest Dem to Support Ridiculous Free Housing Proposal

Shares of Redfin, a real estate brokerage firm, were higher by 1% Thursday to $45.60. The stock more than doubled during this year. It now has a market cap of $4.5 billion. 

Why do people buy houses during a recession? 

During this time when the economy is reeling and jobs are tight, people buy homes. Why? There are a couple of reasons.

The bigger acceptance for remote work freed many people from living in the city. The opportunity to leave cramped apartments and expensive city living. The pandemic gave enough reason for workers to pack up and head for greener pastures. Next, interest rates are going down hard. From 3.7%, 30-year mortgage rates are now 2.9%, the lowest rates ever. Despite higher prices, people know this is the best time to buy on the cheap. 

The intent is there. The pandemic allowed you to work anywhere. And interest rates allow you to pay the lowest interest rates. People are taking the plunge and buying. So what’s the problem? We’re running out of houses to buy. 

Demand coming from the rich 

Rich professionals who can work from home are the reason for the uptick in housing demand. Kelman said that many remote workers moved from major cities to distant suburbs. Kelman said these workers began “taking a permanent vacation where they’re working from those homes.”

People are taking advantage of low-interest rates to snap up homes. Kelman noted that “part of what is fueling this boom is that the economy has just split into two and rich people are able to access capital almost for free.” The opportunity to buy homes for cheap may be too much to resist. “Of course, they’re going to use that money to buy homes,” he added.  

Meanwhile, there’s another group of people who would like to buy but can’t. Kleman said:  “There’s just another group of Americans who are still struggling, who can’t access the credit because we’ve raised credit standards, and you have high unemployment. I just think those two trends, at some point, have to collide.” 

Kelman foresees demand to continue until 2021 at least. Many undecided buyers will buckle down next year and take the plunge. He said: “There’s no way it can last forever. This level of demand is absolutely insane. I would expect it to last into 2021, at least.” Why 2021? “There are so many people now who have decided they’re not going to be able to buy a home by year-end,” he said. Kelman expects them to buy next year, “as their kids shift school districts. I do think we’re going to see this for some time.”

Shrinking inventory of houses for sale

With homes fast disappearing from the market, higher purchase prices are coming back. Based on data from the National Association of Realtors data, only 2.7 months’ supply of houses is available last month. This represents the lowest level since 1982 when the NAR began tracking data. 

Kleman expects supply to increase after the elections. Uncertainty will decrease after voters elect a new president. Listing and selling a home can take months to process. That’s why sellers have a lower risk tolerance than buyers. “Buyers, when they see a house they love, they pounce,” he said. “I think the sellers are just looking long term in the economy and still feeling some anxiety. Many of them are going to put their homes on the market in January and February.”

Demand won’t last forever  

The Wall Street Journal’s Justin Lahart thinks not everybody can live outside the big cities. A remote job in a vacation spot may pose difficulties for some. Winter conditions may also make some remote workers rethink their strategy. He also believes that the housing boom now made people buy houses sooner than later. He thinks many of the workers who moved to the suburbs would’ve done so in a few years. When the pandemic subsides, a smaller group might follow the exodus out of big cities. 

The number of people who can afford houses will shrink as well. Many workers’ careers derailed during the year. Many millennials got burned during the financial crisis in the early 2000s. Now, a new career-threatening crisis is in full swing. The post-coronavirus landscape may depend on how well the economy rebounds. We’ll have next year to find out.

Watch this as CNBC reports on the US housing sales boom. Redfin CEO Says “people are buying vacation homes, then taking a permanent vacation:

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