COVID-19 Update #3
Given the amount of good news that we’ve shared regarding our fight with COVID-19 over the last two weeks, there’s little surprise that the news is better than initially expected.
In almost all states, we have effectively flattened the curve and eliminated or minimized the shortages of major resources such as hospital beds, intensive care beds, and ventilators. According to some projections, America as a whole is only a few days away from the peak resource usage and will be heading down the curve as the COVID-19 cases continue to slow.
The CDC made an important addition to their recommendations this week in ways to keep yourself safe.
They now recommend that you use a cloth face mask when in settings where social distancing may be difficult. On their website, they even have instructions on multiple ways to make a face mask at home if you do not want to go and buy one.
There was a lot of news on the economic front this week. Initial unemployment claims came in at yet again another high 6.6 million claims and the market didn’t even flinch. While the number of continuing unemployment claims has now risen past the 2008-2009 period, the good news is that the continuing claims number is showing that roughly ¼ of the displaced workers were either rehired or able to find work.
Steven Mnuchin informed lawmakers that within just a few days, the administration had already approved over $100 billion of the Paycheck Protection Program (PPP) Loans. This is just over 1/3 of the amount allocated from the stimulus package that was passed two weeks ago. Steven Mnuchin, and many lawmakers, are already looking to inject another round of funding into the PPP loans in hopes to further eliminate fears that the funding will be available for all companies. The Federal Reserve announced a plan to inject another $2.4 trillion into the economy through loans to businesses and by purchasing short-term notes from states and large counties. Lawmakers are already starting to realize that they will likely need another stimulus package and have already started to debate what should be in the bill.
Finally, even with a historic agreement by OPEC members to cut production by 10 million barrels of oil per day, oil prices were sent lower because expectations were for a significantly higher cut to production and due to Mexico not supporting the deal. The pressure is now on the US to cut production along with other members, who have become a major oil exporter over the past few years; more details regarding the possibility of a US production cut will emerge after Friday’s G-20 meeting.
President Trump will be left with another difficult decision regarding the price of oil if the cuts agreed to are not significant enough to raise oil prices, which is to put a tariff on foreign oil. While we need low oil prices in order to spur economic recovery, we also need the price of oil to rise fairly significantly otherwise we will see even more unemployment due to many of the oil companies becoming insolvent.
This week has been busy on the economic front and we expect there to be more development over the coming weeks. It appears that in most parts of the country we are becoming less concerned about the direct result of COVID-19 and now more concerned about muting the effects that the necessary restrictions have had on our economy and the world’s.
Continue to be safe and responsible during these exacting times while we help you Traverse these turbulent markets.