The historic slump in oil completely ruined Wall Street’s rising euphoria. Investors fretted over possibilities that the plunge in crude would impact the oil and gas sector, adding to the recessionary fears sparked by the coronavirus outbreak.
But a new federal aid designed to support businesses is providing some relief. The Senate has lately passed a $484-billion package to pep up small business houses and hospitals devastated by the pandemic. Lest we forget, more than 22 million Americans have filed jobless claims. The bill was passed after two weeks of negotiations between the Republicans and Democrats the bill got passed, and now it is headed to the House, which aims to approve it by Apr 23.
So, what’s in the new relief bill? The earlier $349 billion as loans to small businesses in the Paycheck Protection Program ran dry in just two weeks. The lawmakers have thus decided to add another $310 billion to the fund. The new bill sets aside $60 billion for small lenders and credit unions that can allocate loans to small businesses. The bill also includes another $60 billion for Small Business Administration disaster assistance loans and grants.
Other measures that the bill includes are an additional $75 billion for hospitals and healthcare providers to meet coronavirus-related expenses, including buying additional protective gear and expanding the number of beds. The pandemic, by the way, has compelled many hospitals to suspend elective surgeries and procedures, resulting in financial losses. They had to trim employees’ wages and furlough workers.
Last but not the least, the bill would provide an additional $25 billion to expand coronavirus testing capacity, which several states are currently lacking in the United States. The relief amount will help states develop, administer and analyze tests as well as increase lab capacity.
The current relief bill is certainly the need of the hour as intensifying coronavirus crisis overwhelmed the healthcare system and ground the economy to a halt. It follows the historic rescue package worth $2 trillion, which also had a positive impact on investors’ sentiment. The deal had set aside $250 billion for direct payments to individuals, $500 billion for distressed companies, and $250 billion for unemployment insurance benefits.
The landmark deal injected enough cash to bolster the economy, and provide the required liquidity and stability to financial markets. The Fed has also stepped up and unleashed an array of stimulus measures to date. The central bank trimmed borrowing costs and pumped billions of dollars into the banking system to sustain the credit flow. Policymakers unanimously agreed to trim benchmark federal funds rate a full percentage point to a range of zero to 0.25%.
BWFA is watching the steady progress we are making on all fronts as we make decisions on what areas of the economy will do well and which ones will take longer to come back. We are overweight Technology, Online Retail, Financial Technology, Health Care, Biotech & Social Media which are leading the country in this stage of our recovery. We stay hopeful and optimistic about how we can turn the tide of this pandemic and slowly start to win the war for our country. We are here to help. If you need anything please don’t hesitate to reach out over the phone to set up a call or Zoom meeting for us to review your situation.
Robert G. Carpenter