Investors who have been battered for three solid weeks of extreme volatility finally got a reprieve this week. After failing to agree on a stimulus package to support American workers and businesses on Monday, it would appear that Congress and the White House have come to terms.
A $2 trillion package of loans and grants would support individuals and families with direct payments of up to $1200. Expanded unemployment benefits are also in the cards, including for so-called "gig workers", along with $250bn in support for small businesses through the SBA. Airline industry support is also in the offing, and Boeing is in line for billions in loans.
Importantly, $100bn will go to health care providers, and hospitals will get increased payments for treating coronavirus patients. Another $16 billion will go toward building a stockpile of medical equipment, including personal protective gear.
The is unquestionably good news and the market has bounced more than 12% over the past two days. Companies that appeared to be critically affected rebounded the most -- airlines, cruise operators and other deeply impaired industries. We'll take it!
We're not out of the woods yet, though. The economy is in for a deep recession -- perhaps the deepest we have ever seen. Unemployment will spike, and there will be companies who will not survive. The human toll is also immeasurable at this point. We must remain vigilant in our social distancing and quarantines, as directed by local authorities.
Wishing you all the best of health in the coming weeks,
(Local business owners: This SBA support will come through banks and other finance companies. If your local bank is overwhelmed, reach out to me for some of my contacts in the industry who might be able to assist...)