Day: June 25, 2020

CityWatch: New York City on track to reach Phase 3 of reopening on July 6

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New York City, once the nation’s viral epicenter, is poised to enter the third and penultimate phase of reopening on July 6, Mayor Bill de Blasio announced on Thursday. 

Restaurants and bars will welcome patrons to dine inside for the first time in four months, albeit at 50% capacity; public basketball and tennis courts will reopen; and New Yorkers will be able to get massaged, tweezed and waxed once again as part of Phase 3. 

De Blasio kept his Phase 3 announcement brief and is expected to provide more guidance on Friday. He didn’t say how many workers could return to the job in the next phase, but told businesses “to get ready.” 

As many as 700,000 workers in New York City have returned since Phases 1 and 2 began this month, according to city estimates. 

“The good news is we’re on track, and it is such an important step forward that this city keeps moving,” de Blasio said on Thursday. “It’s important for people trying to get their livelihoods back. It’s important for businesses that are trying so hard to survive. It’s important for the future of the city.”

The latest data showed only 60 people walked into hospitals with suspected COVID-19 in the five boroughs on Tuesday, down from a daily high in late March of 850, while only 2% of the thousands of city residents tested for the virus on Tuesday were positive, according to the city’s health department. 

Separate data from the state looks even more promising, showing only 1.2% of tests in the five boroughs coming back positive on Wednesday. It reflects significant progress across the state, where there were fewer than 1,000 people hospitalized with the virus as of Wednesday, down from a peak in April of nearly 19,000. The state recorded 17 deaths Wednesday. 

Related: New York, New Jersey and Connecticut want people coming from hot spots to quarantine — but how will they enforce it?

The return of more outdoor sports will provide particular relief to young people, who’ve been cooped up at home with few diversions since the city’s schools closed in mid-March. Basketball, tennis, volleyball, soccer, handball and bocce would all be allowed to resume on July 6, said the mayor, who also announced this week that the city’s beaches would open for swimmers on July 1. 

“We have to help our young people,” de Blasio said. “We have to make this summer better for them.”

There are certainly signs people are looking for ways to release pent-up energy as reports of illegal fireworks have soared in recent weeks. The city’s strategy has been to root out illicit sales rather than go after those who set them off, de Blasio said. Police apprehended 12 illicit fireworks suppliers in the Bronx on Wednesday, and authorities caught another 11 dealers in Staten Island and Manhattan, the mayor said. 

Meanwhile, civilian agencies will continue to work with bars, restaurants and other businesses to make sure they follow state- and city-mandated guidelines as they reopen. The city would issue tickets to violators as a last resort, de Blasio said. 

See: These are your rights when a barber, gym owner or President Trump asks you to sign a COVID-19 waiver

“We know it will take hard work. We know it will take a lot of education, but we can do this and keep moving forward,” de Blasio said. “No one wants to go backwards.” 

New York City will be the last region of the state to enter Phase 3 next month. Five regions, mostly rural areas in the central part of the state, will enter the fourth and final phase of reopening on Friday. They include the Mohawk Valley, North Country, Southern Tier, Finger Lakes and Central New York.

Investing legend Burton Malkiel on day-trading millennials, the end of the 60/40 portfolio and more

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There aren’t many books about investing that remain relevant over 40 years after they were first published. Burton Malkiel’s A Random Walk Down Wall Street, first published in 1973 and now in its twelfth edition, is one.

Malkiel’s observation — that short-term fluctuations in the markets make stocks unpredictable and that it’s thus usually wiser for individual investors to put most of their money in broad index funds — helped spark the decades-long boom in passive investing.

With the coronavirus pandemic buffeting markets, Malkiel, who also serves as chief investment officer at robo-advisor Wealthfront, spoke with MarketWatch about a few of the big recent phenomena: the effects of the Federal Reserve’s massive stimulus, whether this time is different for the oft-anticipated “death of passive” investing and his thoughts on the rise of day-trading millennials.

The interview below has been edited for clarity.

MarketWatch: You’re most famous for writing A Random Walk Down Wall Street, in which you argue that investors are generally better off as buy-and-hold investors rather than trying to chase particular strategies or make short-term moves. How do you feel about seeing investors, mostly younger people, turning to speculative trading to replace other forms of entertainment during the coronavirus lockdowns?

Malkiel: I believe that for many of these people, it is a substitute for sports gambling. You know, in a way I am sympathetic. I don’t think there is anybody who devotes a life to studying and working on the stock market who doesn’t have something of a gambling instinct. I am the first to admit that I have gone to the horse races, I have sat at the tables at Las Vegas and Atlantic City, so I do not think there is anything wrong with gambling for entertainment. The problem that I see is that this is the diametric opposite to investing. For me, investing means buy and hold, as you said. The thesis of Random Walk was that you are much better off not buying individual stocks, but buying an index fund. To go and day trade and think that you are investing, that’s what I think is absolutely wrong and is likely to be simply disastrous for people. All the evidence is that day traders in general lose money. It’s not that they can’t make money in gambling, I’ve actually won from time to time. But over the long run, this is a losing proposition.

MarketWatch: There’s an idea out there that the big giants that helped popularize index investing — Vanguard, BlackRock, and State Street Global Advisors — are starting to have perhaps too much power, too much control over the market because of the sheer scale of the assets they hold. This has implications for how they will dominate voting shares of publicly-traded companies, for example. How do you think about that?

Malkiel: One of the arguments is that they’ve got too much control, that they’re going to ruin the market and the market won’t be efficient anymore because unlike active managers that will go and do research on individual companies, index funds just buy everything, and they’re going to put more money into the companies with the biggest capitalization, so the money is going to go into Apple AAPL, +1.32% and Microsoft MSFT, +1.26% , irrespective of whether those are good companies, and that screws up capital allocation.

That one is dead wrong. It’s dead wrong because even though in the mutual fund business, index funds are about half the total, there are plenty of active mangers, hedge funds [and] private equity buying individual stocks. Indexing is not affecting valuations in the market. If there’s too much money going into Apple and Microsoft and some of the neglected stocks are really too cheap, believe me, money is going to go into those. There will always be people who think they can beat the market. This is a very well-paid business. People will say, buy our actively-managed fund or our hedge fund because we’re going to root out the real values. Indexing could be a lot larger and the market would still function just fine.

It is the case that there is no question that the index funds have enormous influence in voting. The three that you mentioned actually hold a significant amount of voting power on particular companies. I think one is correct to raise the issue of control. They are voting on things like compensation and whether to support management. They are looking at performance, but it’s relative performance. It’s whether United is doing better than Delta, it’s not that United is doing well. What that does is it puts a lot of responsibility on the index fund managers to vote their shares wisely and in a manner that’s helpful to the stockholders.

In some sense, they need to put a greater effort into voting because if you’re an active manager and you don’t like what they’re doing, you just sell. The index manager can’t just sell. He has a greater incentive to monitor excessive compensation. I think there’s probably a reasonable argument that they, at least in the past, had not put the effort into voting that perhaps they should have. I think they do understand now what the responsibility is. Can they do an even better job? I think probably yes.

MarketWatch: What do you think about the idea that the pandemic has caused so much disruption so quickly that this is going to be the moment when active managers really prove their worth and active management comes back into vogue?

Malkiel: I always love that argument. It’s dead wrong. At the beginning of each year when you read the market commentary you always see, this is the year for active management. With the pandemic, this is now the time for active management. We’ve got very good data on this: every year Standard & Poor’s publishes a SPIVA report (S&P Indices Versus Active) and every year it actually comes out that more and more active managers are beaten by the index. Every year it’s about two-thirds to 70% of active managers get beaten. Those that win in one year aren’t the same ones that win the next year. There is no evidence that some years are going to be active years. There’s no evidence whatsoever that because of COVID-19 it’s time for active management.

Related:More evidence that passive fund management beats active

MarketWatch: How do you think about the presence of the Federal Reserve in the financial markets right now? Is the Fed’s massive intervention since the pandemic skewing the normal patterns of risk and reward?

Malkiel: I don’t think there’s any question about that. A lot of people write about the disconnect between the real economy and the stock market because the stock market’s been going up and the real economy has been cratering. The answer is that the activities of not only the Federal Reserve but the European Central Bank, the Bank of Japan, they have been putting trillions of dollars of stimulus into the economy. There’s a significant amount of worldwide high-quality debt that sells at negative interest rates. Rates aren’t negative in the U.S. but the 10-year Treasury TMUBMUSD10Y, 0.688% has been stuck at [about 60-70 basis points.] Stocks don’t exist in a vacuum and that means that the stock market is going to be higher than it otherwise would be. Over the long haul, stocks have returned 10% and bonds produced 5% a year. Let’s say that’s the right risk premium. That will mean that if interest rates are zero, stock returns will be 5%. Future returns are going to be much lower.

In terms of whether this is the right policy, I think given the unusual nature of this recession or, if you want to call it a depression, I don’t think the Federal Reserve had a choice. To prevent our economies from total collapse as the shutdown occurred, this was absolutely necessary to prevent even more suffering than we’re having now. But sure, it had a massive effect.

MarketWatch: That’s a good segue into talking about bond yields and inflation. We knew we were in a lower-for-longer regime after the 2008 financial crisis. Are we in a lower-forever situation now?

Malkiel: That’s going to be a very interesting question. Will it be possible, once we’re on the other side of the pandemic, to reverse course? The Federal Reserve was unwinding some of their balance sheet from after the 2008-2009 crisis very, very slowly and hadn’t done much before they had to stop. The question would be, after COVID-19, when we get a return to some kind of normal economic conditions, will they be able to reverse quickly enough?

And is there a possibility with this massive amount of liquidity swishing around the world that our long period of benign inflation or even deflationary tendencies, like in Japan, whether that might be over. I don’t think any of us know the answer, but I would say that right now if you’re an investor looking at the long run and you all hear is ‘inflation is dead, there’s not going to be inflation ever again,’ I would be skeptical about that. With the amount of liquidity sloshing around the world, I think it’s certainly possible that we will get some inflationary pressures, certainly not in 2020 or 2021 and probably not in 2022, but I am not one who would argue we never have to argue about inflation again, it’s dead forever.

MarketWatch: Alternately, that could be a sign we’re in a liquidity trap.

Malkiel: We probably are in a liquidity trap. That’s Larry Summers’ argument, that the world is basically oversaving. That certainly has been the right model for today and is probably the right model for some time. But to say that is going to be the regime forever is more of a stretch. Remember that while there’s no question we have an excess of savings, we’ve just had $3 trillion of stimulus, and we’re talking about, you look at the headlines, another $1 trillion-2 trillion. Just remember that is dis-saving. The fiscal authorities are certainly doing their best to counteract the excessive savings.

While that is absolutely what’s characterizing the world today, on the other side of this, if we start getting inflationary pressures, people can start spending quite quickly. I’m old enough to remember when we were worried about inflation. We ought to be very circumspect because we economists do a terrible job of predicting the economy over the long run. We can definitely get a regime change.

MarketWatch: What does that mean for the traditional 60/40 portfolio of stocks and bonds?

Malkiel: I don’t think there ought to be a 60/40 portfolio. I think there ought to be a broad diversification. What I have recommended in the new edition of my book is, maybe for retired people, the bond allocation might be a lot less. Not that you don’t need some safe assets or some income-producing assets, but there may be a better way to get them than through bonds. Basically, safe bonds now do not provide income and in the long run may have some real risk, because if we do get some inflation in the future, yields will rise and their prices will go down.

What can you do? Let me suggest a couple of strategies that I talk about in the book. One is preferred stock. You can buy a very good quality preferred stock, say, in a company like JPMorgan Chase JPM, +3.48% or AT&T T, +1.02% . You’ll get a return of 5% and under current tax laws, the tax is less than the tax on bond interest (because of the dividend credit.) You can buy a preferred stock ETF and get a 5.5% dividend return. You could even think about buying high quality dividend-producing (common) stocks. Let’s say IBM IBM, +2.24% . It’s very well covered by cash flow, dividend yield is about 5.5%. Verizon VZ, +0.64% is 5%. The company had been in trouble but is coming back.

MarketWatch: How have you been keeping busy during the lockdown?

Malkiel: I’m writing a few things. I’m still on some boards. I’ve gotten very familiar with Zooming ZM, +1.41% . I’m actually watching more streaming movies on HBO or Turner Classic Movies. You get a chance to see “Casablanca” again that you haven’t seen since you were a kid.

Related:Wall Street’s road warriors have spent the past three months grounded. How’s that working out?

Investors are making big ‘BETZ’ on this online sports and gaming ETF

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Investors have plowed money into a new exchange-traded fund that tracks the sports betting and online gambling industries, even as professional competition remains closed.

It’s a sign, industry-watchers say, of confidence in the longer-term outlook for the sector, as well as a reminder that many people are substituting play in the financial markets for real sports and gaming during the global coronavirus lockdown.

The fund, the Roundhill Sports Betting & iGaming ETF BETZ, -3.23%, launched June 4, had attracted $68 million in investor dollars as of Monday, according to Roundhill CEO Will Hershey.

That’s a “remarkable vote of confidence for a fund that’s only a few days old,” said Dave Nadig, a longtime industry veteran now at ETF Database. “I am a fan of this fund. If you believe online sports betting is the next big thing, this fund will capture everything from back-office infrastructure to front-facing retail plays.”

While there’s a small irony in the fund’s launch amid the COVID-19 sports hiatus, Hershey maintains that the launch has been serendipitous. Roundhill had been developing the idea for a few months, even as online-gambling and fantasy-sports company DraftKings Inc. DKNG, -5.05% completed a complicated initial offering.

DraftKings shares have more than doubled since trading began in mid-April. That performance “speaks both to the demand and to the use case for an ETF, if you’re an investor who believes in the thesis but missed the DraftKings run-up,” Hershey told MarketWatch.

The company accounts for a little more than 6% of BETZ’ portfolio. Another recent IPO, GAN GAN, -4.72%, which offers the back-end technology Nadig referred to, including the GameSTACK software, makes up more than 5%.

The fund holds such big positions in part because the space is still relatively new, but Hershey says it’s also intentional: “Our goal is to try to always provide the most pure-play exposure possible, while taking into consideration liquidity and market cap.”

BETZ hasn’t just seen strong inflows. It’s also trading so heavily — an average of 2 million shares a day since inception, according to Nadig — that it ranks in the top 20% of all ETFs, putting it at a par with funds that have hundreds of billions of dollars under management and have been around for decades.

Read: A first-of-its-kind racial empowerment ETF is ‘flying under the radar.’ Maybe it shouldn’t.

And while it’s attracting strong interest from retail investors, with a position in nearly 18,000 accounts on Robinhood, the online brokerage that caters to millennials, both men think it’s a healthier situation than the market hiccups that ensnared investors in a cratering oil market in April.

After years of thematic funds grabbing media attention but just nibbling around the edges of overall market share, their time may have come, Nadig said. “I’m not sure it’s true that everyone’s sitting around in their pajamas day-trading, but there is certainly a new generation that’s thinking about investing, and this is designed for retail use.”

Hershey acknowledges that some interest in the fund may fade as sports competition returns, but says he believes in the longer-term sector investing case, as well as the utility of ETFs for individuals.

“I have always believed in the Peter Lynch idea: invest in what you know, invest in what you believe in,” he said. “And since most individuals should not be investing in single securities, that’s our job in putting out ETFs.”

Related:Are ETFs safe… for retail investors?

Outside the Box: Day-trading tales remind us that humans are poor investors and even worse traders

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The shocking death of Alex Kearns, a 20-year-old day trader who recently died by suicide, highlights a broader caution to young people: do not get sucked into digital trading platforms — no matter whether they have noble-sounding names or are “free.” You will most likely lose your money or worse. There are better ways to make money.

With the exception of people like Warren Buffett, humans are poor investors and even worse traders. Sure, the occasional human might get lucky, but in general, the odds are heavily stacked against you. Unless you have some special information or expertise, you are best off investing in a market index as early in life as possible and enjoying the benefits of compounding.

Read:The rise of mom-and-pop investors in the stock market will ‘end in tears,’ warns billionaire Cooperman

I have been teaching and engaging in systematic investing for over 20 years. My core message to all students and professionals is to not overestimate their competence or the quality of their beliefs, but to continually challenge them.

The second reason for caution is more sinister. It involves the “objective functions” of the platforms where you park your money. How do they make money if they are free to users?

Digital trading platforms make money through a complex web of rebates for funneling trading activity downstream to various venues, and collecting interest on money flowing through the system. Their objective is to therefore maximize the flow of dollars through the system, period. All accounts of any size are welcome. How you perform is largely irrelevant to their business model as long as there are some “intermittent rewards” for the user, like a winning trade. Indeed, the experience created is one of gamification. It is fun, like being in a casino, which is pumped with oxygen to stimulate flow. As a former designer of Google recently remarked “if you’re an app, how do you keep people hooked? Turn yourself into a slot machine.”

But digital platforms are worse than casinos, where most games are relatively simple and easy to understand. And the casino doesn’t loan you money to make your bets.

The trouble is that most people, including professionals, don’t often understand the subtle but important nuances of the financial products they trade, which increase in complexity by the day. Many products, for example, provide “free leverage,” like a triple-levered version of the SPDR S&P 500 ETF Trust SPY, +0.81%, an exchange-traded fund that tracks the S&P 500 index. A common misconception is that the triple-levered version, which is called a “derivative” product, will result in triple the performance of the single-levered ETF. In reality, however, performance can diverge considerably even over a few days, depending on how the product is managed, which is typically in fine print that retail investors don’t read. The marketplace is full of ways to harm yourself.

A student from my most recent Systematic Investing class at New York University gleefully shared how the class had helped him make 150% on his investment and pay off his student loan. I congratulated him, but told him he could just as easily have lost more than that amount, and to be cautious about leverage. A less cheerful account from 10 years ago involved a more experienced trader, whose family money was wiped out during the flash crash of May 2010 due to how his orders were executed. He never recovered it.

The bottom line is this: don’t trust digital platforms that appear to be “free.” You will pay the price one way or another and may not be aware of it. Over the long run, the more you trade, the more you will lose. And do not trade products you don’t understand, especially if they involve fine print.

But what if you really want to trade? Perhaps it is an addiction you cannot control. Perhaps it is the rush of making money, or engaging with the markets for its own sake and taking risk intelligently. In this case, one path I recommend is to apply the scientific method to the problem using large amounts of data. This requires a conceptualization of the problem, hypotheses, data and algorithms. Specifically, it requires a process that is applied consistently to the data and is not impacted by emotions or preferences. This is more involved in terms of setup than making discretionary day-trading calls, but if it done properly, will provide you with outcomes that are based on applying a concept consistently instead of becoming a victim of fear or greed.

A second path I recommend requires an analysis of fundamental factors like the economy or the company’s business prospects. For example, there are significant opportunities created by crises like the current pandemic. We might analyze, for example, what changes COVID-19 will induce in human behavior that are likely to be permanent.

One such irreversible trend is “virtualization,” which favors entities and sectors where products and services can be delivered digitally, and punishes those with large physical assets and heavy debt burdens. In my analysis, I drew parallels with the previous crisis of 2008-09 and teased out what is likely to be different about the recovery this time. For example, commercial real estate rebounded incredibly strongly after the financial crisis, but this would be surprising with the increase in remote work.

Such an analysis can be supported by data, but there is no getting around the hard work of poring through financial statements and assessing economic trends, and then picking the investments most likely to profit if you are right about your assumptions.

There are very things in life that are more important than money. Acquiring it is difficult and growing it is challenging. The last thing you want to do is gamble. Do not trust the “objective functions” of digital trading platforms since their objectives are unlikely to align with yours. Think deeply and invest wisely.

Vasant Dhar is a professor at New York University’s Stern School of Business and the director of the Ph.D. program at the university’s Center for Data Science. He is the founder of SCT Capital Management, a machine-learning-based systematic hedge fund in New York City.

New York, New Jersey and Connecticut want people coming from hot spots to quarantine — but how will they enforce it?

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As the coronavirus infection rate drops in New York, New Jersey and Connecticut but rises elsewhere, the tri-state area’s governors say people arriving from new hot spots will have to self-isolate for 14 days.

Now, state officials will have to try enforcing the new “joint incoming travel advisory” in a densely-populated region with major cities, international airports and the Interstate-95 highway running through.

So how will they do it?

‘I think they’re going to honor it because people at the end of the day, they get it now. It took them too long to get it but this country gets it now.’

— New York State Gov. Andrew Cuomo

In New York at least, Gov. Andrew Cuomo said there will be “random checks” on visitors after they fly into the state, potential police questioning for people with out-of-state license plates, a hotline to report violators, and fines up to $10,000.

“I think they’re going to honor [the advisory] because people at the end of the day, they get it now. It took them too long to get it but this country gets it now,” Cuomo said Thursday on CNN.

’We welcome everyone to New Jersey, but we simply ask you to join us in our shared sacrifice to keep ourselves moving in the right direction.’

— N.J. Gov. Phil Murphy

In New Jersey and Connecticut, officials make it sound more like an honor system. “We welcome everyone to New Jersey, but we simply ask you to join us in our shared sacrifice to keep ourselves moving in the right direction,” New Jersey Gov. Phil Murphy said Wednesday, later adding, “This is not a polite recommendation. This is a strong advisory.”

The quarantine advisory starts Thursday as the country grapples with a new surge of coronavirus cases. Wednesday marked the largest daily number of COVID-19 cases since late April, with 34,700 new confirmed cases nationwide.

A hot spot is defined as a state with a COVID-19 positivity rate of 10% or higher over a seven-day rolling average, according to the advisory. It can also apply to states where the rate is higher than 10 cases for every 100,000 residents.

States above those levels as of Wednesday were Alabama, Arkansas, Arizona, Florida, North Carolina, South Carolina, Washington, Utah and Texas, according to Cuomo. New York was once America’s epicenter for the outbreak and the point of the quarantine advisory is to avoid that happening again, he said.

The three states say they will update their websites to specify the states under the quarantine advisory. New York’s site can be found here. Essential workers and first responders are exempt. So are people from hot spots who pass through and stay under 24 hours.

Cuomo and Murphy have acknowledged they can’t put up travel checkpoints.

Cuomo and Murphy acknowledged that state authorities can’t set up travel checkpoints.

New York is home to John F. Kennedy International Airport and LaGuardia Airport. New Jersey has Newark Liberty International Airport. The states can’t regulate in-bound and out-bound flights in the area’s airports, because that’s a job for the federal government.

But Murphy and Cuomo — especially Cuomo — say they will put teeth on the rules if people are caught breaking the quarantine on their turf. (The quarantine advisory also applies to in-state residents returning from hot spot states.)

For example, Cuomo said Thursday that state officials can get the names of people who fly in. “You fly in here from another state, we know what flight you came in on. And we’ll have inspectors who are randomly looking at the names on the list and calling to follow up to make sure you’re quarantining.”

A New York traffic stop could lead to a violation too, Cuomo said a day earlier. “You get pulled over by a police officer, ‘Oh, you’re a Florida license. When did you get here?’ You can’t lie, because he can look it up. Port Authority has all the records and Port Authority is going to make all the travel records available,” Cuomo said. People can also report a non-compliant individual to state authorities, he noted.

Cuomo said each state will enforce the advisory differently, but in New York, fines for someone found breaking the quarantine start at $2,000 and run to $10,000. The quarantine advisory relies on people doing the right thing just like all sorts of laws, Cuomo has noted.

‘You could argue that every law is the honor system until you get caught, right?’

— Gov. Andrew Cuomo

“You could argue that every law is the honor system until you get caught, right?,” Cuomo told reporters when announcing the advisory Wednesday. “You can speed in a car until you get caught, and then you get penalized. So, it’s almost any law. … You can violate the quarantine until you get caught. And then when you get caught you’re in mandatory quarantine and you’re fined thousands of dollars.”

Murphy said in New Jersey, the health department has the power to fine individuals if it finds “specific instances of flagrant non-compliance.” Despite that potential power, Murphy emphasized the quarantine is asking “folks to take on a big amount of personal responsibility to do the right thing.” The states will “aggressively pursue a public relations campaign” at airports, highways and train stations to spread the word on the quarantine advisory, Murphy said.

“The key here with the mandate when it comes to the travel guidance is the uniform messaging and the personal responsibility elements,” said Max Reiss, a spokesman for Connecticut Governor Ned Lamont. “The state has been successful in mitigating the spread of COVID-19 by utilizing a similar strategy in the past when it has come to social distancing and the wearing of face coverings.”

For the time being, Connecticut has no plans to use police, National Guard or fines for enforcement, Reiss told MarketWatch.

‘Even leaky or partial quarantines are effective’

The three states will have difficulty enforcing the quarantine advisory, according to Dr. Jeff Engel, senior advisor to the COVID-19 Response at the Council of State and Territorial Epidemiologists, a professional association.

‘I just don’t think we have the capacity to track people that carefully in the U.S.’

— Dr. Jeff Engel, senior advisor to the COVID-19 Response at the Council of State and Territorial Epidemiologists

“I just don’t think we have the capacity to track people that carefully in the U.S.,” he said. But it’s still worth testing out, Engel said. “Even leaky or partial quarantines are effective in reducing disease transmission.”

Several states have 14-day mandates for out-of-state visitors, such as Alaska, Maine and Hawaii. But this new advisory is innovative because it’s regional, Engel said. “Particularly in metropolitan areas that cross state borders, state borders are absolutely trivial” in a pandemic, Engel said.

The advisory may deter some visitors, but at the very least, Engel said, “it’s a potent way to enforce the public messaging” on the steps needed to slow the spread.

President Donald Trump is at least one person who won’t be getting fined for breaking the quarantine advisory. He’ll be traveling to his golf club in Bedminster, N.J. this weekend and will not be subject to the quarantine. Murphy has said Trump counts as an essential worker and a White House spokesman has added “the president of the United States is not a civilian.”

Back in late March, President Trump briefly mulled the idea of quarantining three states, but backed off the idea.

Outside the Box: The pandemic is accelerating the racial wealth divide. Here’s how we turn it around.

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Behind the anger in the streets at police abuse is the awareness that Black, brown, and Native people are disproportionately disenfranchised, suffering, and dying.

It’s not just police brutality or the inequality of the COVID-19 pandemic, deadly as those are.

It’s also the ongoing crisis of socio-economic marginalization faced by people of color in this country, most dramatically illustrated by our racial wealth divide. Median white families own literally dozens of times more wealth than Black and Latino families, who have far fewer resources to endure disasters like the pandemic and recession.

While we are several years away from understanding the pandemic’s impact on racial asset holdings, the most recent pre-pandemic data is alarming.

Between 1983 and 2016, the median Black family saw their wealth drop by more than half after adjusting for inflation, down to a minuscule 2% of white wealth. Latinos saw only a marginal increase, to just 4% of median white wealth. White households, by contrast, increased their wealth by a third.

Also read:A Juneteenth revival: we must end economic violence, too

The Great Recession — and the inadequate response to it — made all this much worse. Back then, the government bailed out corporations but ignored distressed homeowners and low-wage workers who were disproportionately Black and Latino. It would be a crime not to learn from these mistakes.

Eight solutions

In a new report, we identify eight solutions to recover from the pandemic while reducing the racial asset divide.

In the short term, millions of families desperately need cash. Stimulus aid has been a critical, but insufficient, support during this time. With much of it set to expire soon, we’ll need immediate, emergency income support that could gradually evolve into a universally guaranteed income or federal jobs guarantee, like the Depression-era Works Progress Administration.

We could also expand the mandate of the U.S. Postal Service to include basic financial services, which would help the “unbanked” in rural and inner-city communities get access to basic financial services — and avoid predatory lenders. According to the FDIC, Black households are five times more likely, and Latino households are four times more likely, than white households to be unbanked or underbanked. In a crisis, that makes them prime targets for exploitation.

As we emerge from the crisis, other universal social programs could have a profound impact on closing the racial wealth gap.

For instance, we could delink health insurance from employment and guarantee universal health coverage through a program like Medicare for All. With Black and Latino workers losing their jobs at higher rates than white workers in the current crisis — and with Black Americans dying from COVID-19 at more than double the rate of other groups — this pandemic shows how inequities in health care and the broader economy are closely linked.

Baby bonds

Another idea? Baby bonds. That is, Congress could seed savings and investment accounts for every child born in this country, which they’d get access to as adults to get an education, start a business, or otherwise fund their next steps. This step alone, researchers suggest, could reduce the racial wealth gap tenfold.

Finally, paying for these programs with a more progressive tax structure — including more progressive wealth, income, and estate taxes — would also narrow the racial wealth divide, as the sharply declining tax burden of America’s wealthiest 0.1% over the last few decades has enriched an economic elite that is almost entirely white.

These ideas, along with programs to expand homeownership and other wealth-building opportunities, would lift up millions of households of all races that have been left behind in this unequal economy, but they would especially lift up Black and brown people who are poorly served by the current health and financial systems.

While these programs would be universal, some initiatives should be targeted to those historically excluded, due to racially based practices, from past wealth-building programs. For example, we advocate for a rigorous “racial wealth audit” for each new federal policy to ensure programs reduce racial wealth divisions, not worsen them.

Americans of all colors are hurting right now. But because white supremacy is the pre-existing condition — and in the face of a massive uprising for racial justice — our path out of this crisis must have a strong racial equity lens. The health of our country, and countless lives, demand it.

Dedrick Asante-Muhammad is the chief of race, wealth, and community at the National Community Reinvestment Coalition. Chuck Collins directs the Program on Inequality at the Institute for Policy Studies. They are coauthors of the report, “White Supremacy Is the Pre-existing Condition.”

Here’s how many Americans are able to save their stimulus checks

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While plenty of Americans used their stimulus checks to pay rent, utilities, food and other essential expenses some 14% are saving their stimulus checks.

The majority of Americans saving their stimulus checks or using it to pay off debt have an annual household income between $75,000 and $99,999, the U.S. Census Bureau reported this week in its experimental Household Pulse Survey.

By contrast, “87.6% of adults in households with incomes of $25,000 or less planned to use their stimulus payments to meet expenses,” the survey of over one million Americans found.

Don’t miss: ‘It’s alarming to look at how many Americans used these funds to keep a roof over their head’

This news comes as Treasury Secretary, Steven Mnuchin said that the Trump administration is “very seriously considering” a second stimulus bill.

That package could include a second round of direct stimulus payments, Mnuchin told lawmakers in a testimony on June 10. In the first round $1.4 billion went to deceased people, the Government Accountability Office reported on Thursday.

The $3 trillion stimulus package, known as the HEROS Act, House Democrats passed last month also called for a second round of direct payments, at $1,200 per family member with a limit of $6,000 per household.

Under the HEROS Act, college students who were considered dependents of their parents would qualify for a stimulus payment. Previously they were ineligible under the first stimulus package, the CARES Act.

Airlines must take extreme precautions to keep passengers safe, experts tell Congress

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You might need to show up four hours before your next flight.

During a hearing Tuesday before the House of Representatives Subcommittee on Space and Aeronautics, experts laid out the challenges airlines will face in keeping their passengers and crew healthy, while continuing to fly amid the coronavirus pandemic.

Guaranteeing that there will be no transmission of the virus that causes COVID-19 would likely be an involved ordeal.

‘If the SARS-CoV-2 virus is as contagious as the influenza virus with the transmission rate that we super-sized in our simulation, one can expect one to two passengers or crew to become infected on a full flight of 4 hours.’

To do this, airlines would need to mandate that all passengers and flight crew members show up at least four hours in advance of departure, said Vicki Hertzberg, a biostatistician and professor at Emory University.

At that point, all people boarding the flight would need to undergo a nasal-swab test for COVID-19, and anyone who tested positive would be barred from flying.

Without this process, “there is no way to absolutely guarantee that SARS-CoV-2 virus will not be transmitted during flight,” Hertzberg told lawmakers during the hearing.

Also read:If airlines keep the middle seat empty due to fears of coronavirus transmission, will air travel become more expensive?

Hertzberg previously co-led research, funded by Boeing BA, -3.02%, simulating passengers’ habits during flights to see how infectious diseases spread on aircraft that are at or near full capacity.

“If the SARS-CoV-2 virus is as contagious as the influenza virus with the transmission rate that we ‘super-sized’ in our simulation, one can expect one to two passengers or crew to become infected on a full flight of 4 hours duration” amid the coronavirus pandemic, Hertzberg said.

Airlines are implementing precautionary measures in a bid to entice people back to flying after the coronavirus pandemic severely reduced air travel across the globe.

Some airlines, including JetBlue JBLU, +2.19%, have said that they would block out the middle seats for passengers not traveling together to aid in social distancing onboard flights.

Industry trade group Airlines for America said last week that its member carriers, which include JetBlue, United Airlines UAL, +0.93%, Alaska Airlines ALK, +0.52%, American Airlines AAL, -3.10%, Delta Air Lines DAL, +0.14%, Hawaiian Airlines HA, +0.58%, and Southwest Airlines LUV, +0.31%, will impose strict face-mask rules, including potential bans for passengers who don’t follow the rules.

Some airlines, including JetBlue, have said that they would block out the middle seats for passengers not traveling together. Others have proposed putting plexiglass barriers between passengers.

Others have proposed putting plexiglass barriers in between passengers on flights.

But the experts at Tuesday’s hearing said they still don’t know enough about the virus that causes COVID-19 and how it may spread on airplanes to say whether these precautionary measures are effective.

Read more:Is there a big risk of getting coronavirus from food? As restaurants reopen, the CDC has an answer

“If we put a barrier between the seats, does that reduce the risk by 5% or 95%? We just don’t know that,” Byron Jones, an engineer and professor at Kansas State University, told lawmakers. “It’s very difficult to get those data.”

Jones added that other precautions may not be financially feasible for airlines. For instance, in order to reduce the probability of exposure to a very low level, “you would need to make the seating density so low that it would be impractical to operate an aircraft economically,” Jones said.

Another issue is the consistency across the industry. The witnesses during Tuesday’s hearing noted that a national preparedness plan for the airline sector was not implemented by the Department of Transportation, despite a recommendation from the U.S. Government Accountability Office.

As a result, airlines and airports have been left to their own devices to a large extent in coming up with safeguards to prevent the spread of COVID-19 among travelers and workers, they said. With the process varying so much from carrier to carrier and airport to airport, public trust becomes a concern.

“If passengers start to find that their experiences are inconsistent or confusing, that may impact their confidence in the system,” said Heather Krause, director of physical infrastructure issues at the Government Accountability Office.

Disney will overhaul Splash Mountain ride following criticism over connections to racist film

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Disney DIS, -1.60% will revamp the popular ride Splash Mountain at Walt Disney World and Disneyland, the company said Thursday, after facing criticism that the attraction was inspired by a racist film.

The ride will be completely overhauled and will be “rethemed” to be based the 2009 film, “The Princess and the Frog.” The announcement comes after a petition to redo Splash Mountain garnered traction online.

Theme park fans sought to get the ride made-over because of its connections to the 1946 film “Song of the South,” which has been widely criticized for its racist depictions of Black people and allusions to slavery. Splash Mountain featured characters and stories from the film. A petition to redo the log flume ride garnered more than 21,000 signatures.

Disney has never made “Song of the South”available on VHS or DVD in the U.S., and the company has declined to include it on its streaming platform, Disney+.

Don’t miss:Disney fans say a popular ride is racist and should be overhauled — it wouldn’t be the first time Disney has changed with the times

“The retheming of Splash Mountain is of particular importance today,” Disney said in a statement provided to MarketWatch. “The new concept is inclusive — one that all of our guests can connect with and be inspired by, and it speaks to the diversity of the millions of people who visit our parks each year.”

An artist’s rendering of the concept for the new version of Splash Mountain.

Courtesy of Disney

A spokeswoman for Disney said that the company has been working on “plussing” Splash Mountain, as Walt Disney referred to the practice, since last year. The company’s “Imagineers,” who create its theme park attractions, are still working on the conceptual design for the new ride. The designs will soon undergo preliminary reviews and the company will then create a timeline for the revamp.

“While this work takes time, we look forward to ramping up production as businesses start to recover from COVID-19,” the company said. Disney did not say whether the version of the ride located at Tokyo Disneyland in Japan would be overhauled.

Also see:Unlimited decks of cards, no doubles in ping-pong and a ‘snitch’ hotline: 7 really specific rules for NBA players at Disney World

“The Princess and the Frog” was the first Disney animated film to feature a Black princess. While the film was less successful at the box office than other Disney films such as “Frozen,” the lead character, Princess Tiana, has remained popular among children and is frequently seen at meet-and-greet events and parades at Disney’s theme parks.

‘On the list of priorities given how much red ink the parks are hemorrhaging right now this is way down there.’

— Jim Hill, a theme park historian and blogge

Some travel experts have suggested that redoing Splash Mountain could be a draw for visitors. “This is a huge opportunity for Disney — new rides bring in customers,” Len Testa, president of travel website Touring Plans, previously told MarketWatch. (Testa noted that he had signed the petition regarding Splash Mountain.)

The new version of Splash Mountain will pick up where the film left off, the company said, and follow Princess Tiana and her alligator friend Louis as they prepare for their first Mardi Gras performance. The film’s setting in New Orleans and the bayous of Louisiana works well thematically at Disneyland, where Splash Mountain is situated adjacent to New Orleans Square.

While many fans clamored for a new theme based on “The Princess and the Frog,” others argued against the change on Twitter TWTR, -1.32% , saying that the film deserves a unique attraction.

And as calls for an overhaul of Splash Mountain grew in the wake of anti-racist protests sparked by police killings of people of color, theme park experts suggested that the coronavirus pandemic could stymie efforts to redo the popular attraction.

Read more:Walt Disney World cancels dining reservations and stops taking new hotel bookings ahead of planned July reopening

“On the list of priorities given how much red ink the parks are hemorrhaging right now this is way down there,” Jim Hill, a theme park historian and blogger, told MarketWatch before Disney’s announcement.

Disney’s theme parks around the world were closed for months because of COVID-19. Walt Disney World in Florida is currently set to reopen in July, but the company said Wednesday that it had delayed its reopening of Disneyland in California, which had also been planned for next month.

The pandemic has already cost the company’s theme-parks division $1 billion in profit, and the company has said it would reduce capital spending to compensate.

Shares of Disney have been down 24% this year to date compared to a nearly 11% decline for the Dow Jones Industrial Average DJIA, +0.38% and a nearly 5.6% dip for the S&P 500 Index SPX, +0.33% .

Tax Guy: Making sense of the new July 15 deadline for filing — and paying — your taxes

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As a COVID-19 federal tax relief measure, the IRS postponed to July 15 many of the usual tax filing and payment deadlines and the deadlines for taking certain other tax-related actions. While this deadline relief is welcome, it has created confusion. We aim to dispel that confusion. Here goes.

July 15 deadline for individual tax actions

Assuming you use the calendar year for tax purposes (as almost all individual taxpayers do), July 15 is the revised deadline for the following actions.

1. Filing your 2019 personal federal income tax return (Form 1040).

2. Paying what you owe Uncle Sam with that return. If you don’t pay up by July 15, the government will start charging interest on the shortfall at a current annual rate of 3% (the rate can change every quarter). You will also be charged a failure-to-pay penalty of 0.5% per month on the shortfall (up to a cumulative 25% of the shortfall). The interest charge and penalty go away as soon as you pay up.

3. Paying your first and second quarterly estimated federal income tax installments for the 2020 tax year. If you don’t pay up by July 15, the government will start charging interest on the shortfall at a current annual rate of 3% (the rate can change every quarter). The interest charge goes away as soon as you pay up.

4. Making a traditional IRA or Roth IRA contribution for your 2019 tax year.

5. Making a Health Savings Account (HSA) contribution for your 2019 tax year.

Reason: The revised July 15 deadline applies to federal income tax return filing deadlines (including any extensions), federal income tax payment deadlines, and IRA and HSA contribution deadlines that would otherwise fall on or after April 1 and before July 15. Therefore, the July 15 deadline applies to all of the aforementioned actions if you use the calendar year for federal income tax purposes, as do virtually all individual taxpayers. If you don’t use the calendar year, ask your tax adviser if any COVID-19 deadline relief is available to you.

July 15 deadline for individuals who own pass-through entities

The revised July 15 deadline for federal income tax return filings and federal income tax payments that would otherwise be due on or after April 1 and before July 15 also greatly helps individuals who use the calendar year for federal income tax purposes and also own interests in pass-through entities. By that we mean sole proprietorships, single-member LLCs treated as sole proprietorships for tax purposes, partnerships, multi-member LLCs treated as partnerships for tax purposes, and S corporations.

Example 1: Pass-through business owner

Like almost all individuals with ownership stakes in pass-though business entities, you use the calendar year for tax purposes.

The normal 4/15/20 deadline for filing your 2019 personal federal income tax return (Form 1040) is postponed to July 15.

You can also defer paying any federal income tax (including any self-employment tax) that is still owed for your 2019 tax year until July 15. The normal payment deadline is 4/15. Finally, you can defer your first and second quarterly estimated federal income tax installments for the 2020 tax year until July 15. The normal deadlines for those payments are 4/15 and 6/15. All this relief is automatic. You don’t need to submit anything to the IRS to take advantage, and you won’t owe any interest or penalty if you do.

Key point: If you are among the few individuals who do not use the calendar year for federal income tax purposes, consult your tax adviser for COVID-19 deadline relief that might be available to you.

July 15 deadline for business entities

July 15 is also the revised deadline for business entity federal income tax return filings that would otherwise be due on or after April 1 and before July 15 (including any extensions) and federal income tax payments that would otherwise be due on or after 4/1/20 and before 7/15/20. By business entity, we mean a C corporation, an S corporation, a partnership, or an LLC.

Some business entities use non-calendar tax years that don’t end on December 31 (fiscal years). The revised July 15 deadline can potentially apply to them too, for federal income tax return filings and federal income tax payments that would otherwise be due on or after 4/1/20 and before 7/15/20.

Example 2: Calendar-year C corporation

Your C corporation uses the calendar year for tax purposes. The normal deadline for filing your corporation’s 2019 federal income tax return (Form 1120) is 4/15/20. That deadline is postponed to 7/15/20. The normal 4/15/20 deadline for paying any federal income tax that is owed for the corporation’s 2019 tax year is also postponed to 7/15. Finally, the normal deadlines for making your corporation’s first and second quarterly estimated federal income tax installments for the 2020 tax year are 4/15 and 6/15. Both deadlines are postponed to 7/15. All this relief is automatic. You don’t need to submit anything to the IRS to take advantage, and your corporation won’t owe any interest or penalty if you do.

Example 3: Fiscal-year C corporation

Your C corporation uses an 8/31 tax yearend, because its business is seasonal. The original due date for the corporation’s federal income tax return (Form 1120) for the tax year that ended on 8/31/19 was 12/15/19, but you extended the due date to 5/15/20. Since that date is on or after 4/1 and before 7/15, the filing deadline for your corporation’s federal income tax return is postponed to 7/15. This relief is automatic. You don’t need to submit anything to the IRS to take advantage, and your corporation won’t owe any penalty if you do.

Extending federal income tax returns past July 15

As this was written, the normal procedures must be followed to extend federal income tax return filing deadlines past July 15. For example, your 2019 Form 1040 can be extended to October 15 by filing Form 4868 with the IRS by July 15. Federal income tax returns of business entities can be extended past July 15, if a further extension is allowed, by filing Form 7004 with the IRS by July 15.

Warning: Extending a return past July 15 does not extend the due date for paying any tax that will be shown as due with that return, when it is eventually filed.

Same July 15 deadline for many other federal tax filings and payments

The IRS has granted the same July 15 deadline relief for many other federal tax return filings and payments that would otherwise be due on or after 4/1/20 and before 7/15/20. For example, the July 15 deadline potentially applies to the following.

* Federal income tax returns for trusts and estates (Form 1041) and federal income tax payments owed by trusts and estates.

* Federal estate tax returns (Form 706) and federal estate tax payments owed by estates.

* Federal gift tax returns (Form 709) and federal gift tax payments owed by gift givers.

* Quarterly estimated federal income tax payments due with various IRS forms.

This relief is automatic. You don’t need to submit anything with the IRS to take advantage, and there is no penalty if you do.

Key Point: The preceding is not even close to the complete list of federal tax filings and federal tax payments that can be postponed to July 15. Your tax adviser can provide full details.

The last word

Will there be additional deadline relief? It’s possible, but right now I would bet not. If I’m wrong, we will get back to you. Stay tuned.