JPMorgan hoards cash as Dimon expects rates to rise

 Jamie Dimon's optimism about the economy is costing JPMorgan Chase & Co JPM.N money, the bank's latest financials show.

The CEO said this week the country's largest lender continues to stockpile cash instead of investing it in securities, such as U.S. Treasuries and mortgage-backed bonds, which pay more than cash deposits.

How the country's largest lenders manage an unprecedented glut of cash weighing down their balance sheets will be important in separating winners from losers in coming quarters as uncertainty grows over the inflation and interest rate outlook, according to analysts.

"The balance sheet mix will be a key driver for the stocks as we move into 2022," David Konrad, an analyst at Keefe, Bruyette & Woods, wrote in a recent report to clients.

"In our view, the risk/reward favors holding cash and under- earning in this environment."

JPMorgan is waiting for the chance to buy securities with higher yields once exceptionally strong economic growth kicks in and drives up inflation and interest rates, Dimon and Chief Financial Officer Jeremy Barnum told analysts on Tuesday.

"You may have growth in the second half this year that's stronger than it's ever been in the United States of America," Dimon said in a call with analysts on Tuesday.

The yield on 10-year Treasury notes, at around 1.35% versus 1.75% in March, could climb to 3%, Dimon added.

Dimon's comments came after JPMorgan posted quarterly financials on Tuesday that showed its average cash balance held on deposit at central and other banks increased by $89.6 billion while it added only $2.6 billion of investment securities.

JPMorgan made 0.06% on its cash while its securities paid 1.31%, its reports showed.

In contrast, Bank of America Corp's BAC.N results released on Wednesday showed it has let its cash decline by $31 billion while it added $107.3 billion to its securities holdings.

"The reality is that we generated $80 billion deposit growth, and we've got to put it to work," CEO Brian Moynihan told analysts. "We're not timing the market or betting."

JPMorgan's deposits grew by nearly $100 billion during the quarter.

TRADE-OFFS

Cash from government stimulus and Federal Reserve programs continues to pour into the financial system, dampening demand for bank loans.

U.S. financial markets are also wrestling with a spike in inflation, which they believe could prompt the U.S. Federal Reserve to raise interest rates.

During this quarter, analysts have pressed bank executives about their cash and securities mix because of how important it is for profits. Banks often hedge their positions with derivatives, making the analysis more difficult.

Executives have warned of tradeoffs in the decision on how much cash to accumulate until rates rise, and how much to invest in securities now.

Considerations include ensuring liquidity for customers who take deposits back and guarding against hits to regulatory capital from declines in the value of purchased securities.

Speaking before Congress on Wednesday, Fed Chair Jerome Powell said recent price spikes were associated with the post-pandemic reopening and will fade.

The central bank is staying the course, he said, with an inflation target of 2% and some time before it will be in a position to tighten monetary policy. Last month, Fed policy makers on balance projected inflation would climb to 3.4% this year and then fall back to 2.1% next year.

JPMorgan's decision to stockpile cash was "purely discretionary," Dimon said at a conference last month. "You'll find out one day whether we made the right decision or not."

https://www.nasdaq.com/articles/analysis-jpmorgan-hoards-cash-as-dimon-expects-rates-to-rise-2021-07-15

Lilly and Banner Alzheimer's Institute Collaborate on Phase 3 Trial of Donanemab

Eli Lilly & Co. said it is in a strategic research collaboration with Banner Alzheimer's Institute as part of the planned Phase 3 study evaluating donanemab in participants at risk for cognitive and functional decline related to Alzheimer's disease.

The TRAILBLAZER-ALZ 3 study will evaluate whether treatment with donanemab can slow the clinical progression of Alzheimer's disease in trial participants.

Starting in 2006, Banner Alzheimer's Institute seeks to find effective Alzheimer's disease prevention therapies.

Banner will support enrollment of trial participants through the Alzheimer's Prevention Registry's GeneMatch program, Eli Lilly said. The company and Banner will use the screening and treatment data as a shared scientific resource. Lilly said it remains the sole sponsor of the clinical trial and plans to begin enrollment later this year.

Donanemab is also being studied in the ongoing Phase 3 TRAILBLAZER-ALZ 2 study in early, symptomatic Alzheimer's disease patients.

https://www.marketscreener.com/quote/stock/ELI-LILLY-AND-COMPANY-13401/news/Lilly-and-Banner-Alzheimer-s-Institute-Collaborate-on-Phase-3-Trial-of-Donanemab-35870180/

UnitedHealth seeks more clarity on Biogen's $56,000 Alzheimer's drug coverage

 

UnitedHealth Group Inc said it needed more time to determine its coverage policy for Biogen's recently approved $56,000 Alzheimer's disease drug Aduhelm that is expected to raise costs for the U.S. government Medicare program.

The government's Medicare program and private health insurers such as UnitedHealth, which sell Medicare Advantage plans for those aged above 65 and are known to be susceptible to Alzheimer's disease, will be affected as they will have to bear most of the drug cost.

UnitedHealth said it was awaiting guidance on coverage from the Centers for Medicare and Medicaid Services, which earlier this week began its review process to cover the drug's cost under the Medicare program.

Biogen Inc's shares dropped about 5% after the comments on Aduhelm, which won the U.S. health regulator's nod last month despite strong objection from its expert advisory panel over lack of sufficient clinical evidence on the drug's effectiveness.

Wall Street analysts estimated peak annual sales of $10 billion to $50 billion for Aduhelm.

UnitedHealth on Thursday also raised its full-year earnings target for the second time this year, after a strong performance mainly in its Optum unit helped it beat second-quarter profit expectations.

The 2021 profit forecast of $18.30 to $18.80 per share includes a potential negative impact of $1.80 per share related to COVID-19 costs, which the company expects to record mostly in the back-half of the year.  

The guidance was conservative and leaves room for potential deferred care or COVID-19 costs in the back half of the year given uncertainty around the pandemic, Evercore ISI analyst Michael Newshel said.

The company said use of healthcare services, which trended below normal levels as patients put off non-urgent care during the height of pandemic, rebounded close to usual levels in the second quarter, especially in its employer-sponsored health plan business.

https://www.marketscreener.com/news/latest/UnitedHealth-seeks-more-clarity-on-Biogen-s-56-000-Alzheimer-s-drug-coverage--35865097/

CDC vaccine committee to discuss COVID-19 booster doses for immunocompromised

 The Centers for Disease Control and Prevention's influential vaccine advisory committee plans to meet July 22 to discuss the new safety warning for Johnson & Johnson's JNJ, -1.10% COVID-19 vaccine and whether immunocompromised people will need a booster dose of a COVID-19 shot. The CDC's Advisory Committee on Immunization Practices has met several times during the pandemic to discuss COVID-19 vaccines. The meeting will be webcast.

https://www.marketwatch.com/story/cdc-vaccine-committee-to-discuss-covid-19-booster-doses-for-immunocompromised-people-2021-07-15

UnitedHealth reports $4.3B in profit in Q2, down from massive Q2 2020 haul

 UnitedHealth Group reported $4.3 billion in profit for the second quarter of 2021, down from its massive haul in the prior-year quarter.

In the second quarter of 2020, the healthcare giant posted an eye-popping $6.6 billion in profit as healthcare utilization plummeted under the COVID-10 pandemic. The strong performance from insurers across the board a year ago prompted Congress to probe its finances.

Though profit was down year over year, the insurer did surpass Wall Street's expectations on both earnings and revenue, according to analysts at Zacks Investment Research. UnitedHealth Group brought in $71.3 billion in revenue for the quarter, up from $62.1 billion in the first quarter of 2020.

“The compassion, dedication and ongoing efforts of our 330,000 colleagues to advance peoples’ health and health system performance reinforces our confidence in delivering strongly on our strategies for those we serve and continuing to grow well into the future,” said Andrew Witty, CEO of UnitedHealth Group, in a statement.

Through the first six months of 2021, UnitedHealth Group brought in $9.1 billion in profit, down from $10 billion in the first half of 2020. Total revenues through June 30, 2021, were $141.5 billion, up from $126.6 billion a year ago.

At UnitedHealthcare, membership has grown by 1.2 million since the end of 2020, with Medicare Advantage a notable source of that growth. The country's largest health plan also pointed toward Medicaid contract awards in Ohio and Hawaii as growth opportunities, with a "strong pipeline" of potential awards and renewals for the rest of 2021.

By the end of the second quarter of 2021, OptumHealth had served 99 million people, up from 97 million people a year prior. Revenue per consumer served was up 43% year over year, Optum said.

OptumRx filled 342 million scripts in the second quarter, up 8% from the prior-year quarter and up 4% from the first quarter of 2021, UnitedHealth said.

Based on the results, UnitedHealth Group raised its full-year guidance to between $18.30 and $18.80 per share.

https://www.fiercehealthcare.com/payer/unitedhealth-reports-4-3b-profit-second-quarter-down-from-massive-q2-2020-haul

U.S. drug overdose deaths spiked in 2020: CDC

 The coronavirus pandemic took a major toll on the mental health of Americans, especially those struggling with substance use disorder (SUD), leading to an increase in fatal overdoes.

According to the latest data from the CDC, drug overdose deaths increased by 29.6% for the 12-month period ending December 2020. While each state varied in the number of fatalities, only two states saw a decrease in deaths: South Dakota and New Hampshire.

Nora Volkow, the director of the National Institute on Drug Abuse (NIDA), noted that it’s the highest number of overdose deaths ever recorded in a 12-month period and the largest increase since at least 1999.

“These data are chilling,” Volkow told Yahoo Finance. “The COVID-19 pandemic created a devastating collision of health crises in America.”

Opioids were the leading cause of drug overdose deaths. In the 12-month period ending in December 2020, 68,821 individuals died as a result of the drug.

Synthetic opioids were also a main driver, accounting for 56,688 deaths in that same period. These include drugs like fentanyl, a drug that’s 50 times stronger than heroin.

“These numbers are absolutely heartbreaking — each of these people was a beloved family member, friend, and neighbor,” Sheila Vakharia, deputy director at the Drug Policy Alliance, told Yahoo Finance. “And each of their lives mattered and was worth saving, yet our policies continue to fail people like them every day. Their deaths were preventable.”

A year of despair

Since the pandemic went into full force back in March 2020, it’s become increasingly clear how much of an emotional toll that it had on Americans.

The forced isolation and social distancing, record job losses, and millions of cases created a mental health crisis unlike ever seen before.

“This has been an incredibly uncertain and stressful time for many people, and we are seeing an increase in drug consumption, difficulty in accessing life-saving treatments for substance use disorders, and a tragic rise in overdose deaths,” Volkow said.

Though the number of cases has drastically decreased compared to last year thanks to the widespread distribution of COVID-19 vaccines, there was still a significant amount of damage done in that time.

An October 2020 survey from TransUnion Healthcare found nearly six in 10 patients had deferred non-coronavirus-related medical care, which included mental health care and addiction treatment, over the previous six months.

And a CDC survey from June 2020 found that 40.9% of Americans reported at least one adverse mental or behavioral health condition, with 13.3% of respondents having started or increased substance use to cope with stress or emotions related to COVID-19.

“The COVID-19 pandemic clearly exacerbated the many conditions that have fueled our overdose crisis for over 20 years now, and this moment calls for leadership and courage to actually promote science-based public health measures that work,” Vakharia said, citing measures like expanding medication-assisted treatment (MAT) and syringe service programs.

MAT is defined by the Substance Abuse and Mental Health Services Administration (SAMHSA) as "the use of medications, in combination with counseling and behavioral therapies, to provide a 'whole-patient' approach to the treatment of substance use disorders."

A study from the Journal of American Medical Association (JAMA) that analyzed a cohort of 100,000 patients over 5 years found that MAT therapy could be cost effective in addition to lowering the number of overdose deaths.

Unfortunately, there are still barriers for medical providers trying to prescribe MAT for those struggling with SUD. That needs to change, according to Volkow.

“As we continue to address both the COVID-19 pandemic and the opioid crisis, we must prioritize making treatment options more widely available to people with substance use disorders,” she said.

Health and Human Services Secretary Xavier Becerra recently issued guidelines offering waivers for prescribers, though it is still limited. And in the meantime, on Tuesday, the president nominated Rahul Gupta, a former West Virginia health official, as the new head of the Office of National Drug Control Policy (ONDCP) after months of speculation.

“It’s time to get to work,” Vakharia stressed.

https://finance.yahoo.com/news/us-drug-overdose-deaths-pandemic-162738504.html

Most Britons want COVID restrictions to remain – poll

  Two thirds of people in Britain think at least some coronavirus restrictions should stay in place after July 19 when Prime Minister Boris Johnson plans to do away with them in England, according to an opinion poll published on Thursday.

Sixty-six percent of people taking part in the poll by Kantar Public wanted some, most or all of the restrictions to remain and 60% thought everyone should continue to wear face masks in shops and on public transport.

Johnson has said people in England should use their own judgement about whether to use masks after July 19.

However, Scotland’s devolved government said on Tuesday that masks would remain mandatory after most other rules are lifted on Aug. 9, and London’s Mayor Sadiq Khan has said they must be worn on the capital’s public transport system.

The Kantar poll found 29% of respondents agreed that Britain needed to learn to live with COVID-19 without any restrictions.

On the economy, it found the highest level of job security since the pandemic began, with 21% of those in work saying their job felt safer than a year ago. The proportion who felt their job was insecure, also 21%, was the lowest since September 2019.

One in four said their savings decreased since the start of the pandemic, 41% said they stayed the same and 20% said their savings have increased.

Of the people who saved extra money, 11% intended to spend it all by the end of the year while 63% said they will spend some or none of it this year.

The Bank of England is keeping a close eye on how much of the extra savings racked up by consumers during the lockdowns is spent as the central bank gauges whether to ease up on its huge stimulus programme for the economy.

Kantar surveyed 1,057 people online between July 7 and 12.

https://kfgo.com/2021/07/14/most-britons-want-covid-restrictions-to-remain-poll/