Image: On March 31, 2020, President Donald Trump spoke about the coronavirus in the James Brady Press Briefing Room of the White House in Washington, as Vice President Mike Pence and Dr. Deborah Birx, White House coronavirus response coordinator, listen. Trump in recent days has grumbled that American companies such as 3M and GM are not doing enough to provide American medical workers and first responders with vital equipment they need. (AP Photo/Alex Brandon, File)
The Golden Hammer Staff Reports
Conroe, Austin, Washington, D.C., April 7 – President Donald Trump and leaders in the United States Congress are working on another stimulus package related to the Chinese coronavirus threat. The latest package will exceed $1 trillion in federal government spending.
Montgomery County presently has 132 active Chinese coronavirus cases, 26 recoveries, 3 deaths from the virus, and more than double that number of deaths from economic downturn-related suicides.
Congress, White House reach high for next virus bill
House Speaker Nancy Pelosi said another $1 trillion is needed, beyond the just-passed $2.2 trillion effort. She wants another round of direct payments to Americans and more money for companies to keep making payroll. Senate Majority Leader Mitch McConnell has said in recent days that health care should top the list, signaling his intent to get to work on a new bill.
“We’re going to take good care of our people,” Trump said Monday at his daily White House briefing. “It was not their fault.”
It’s a rare sign of emerging consensus as Washington responds to the public health emergency and severe economic fallout that is ransacking communities nationwide, a crisis on par with a war effort or the Great Depression.
The contours of the package are still being debated and any votes in Congress remain a logistical conundrum. The House and Senate adjourned for most of the month, as part of strict stay-at-home orders from public health officials to prevent the spread of the highly contagious virus.
On an afternoon conference call with House Democrats, Pelosi told lawmakers at least another $1 trillion would be needed, according to a person unauthorized to discuss the call and granted anonymity.
The California Democrat has vowed to put the next package together in time for a House vote this month.
Former Federal Reserve chief Janet Yellen joined the private call and warned Democrats the economic fallout will depend on the public health response to the pandemic, the person said. As businesses shutter to stop the virus’ spread, it has hurled the U.S. economy toward a recession.
Yellen said it was impossible to know how deep and long the recession would be, and added that it would depend on the health response.
The former Fed chair also told them the nation’s unemployment rate is now at least 13% and this week’s jobless report will show higher numbers than last week’s.
Yellen said she expects a 30 percent contraction of GDP this year, but has seen models as high as 50 percent, according to a Democratic aide unauthorized to discuss the call and granted anonymity.
The earlier relief package, approved in late March, included one-time $1,200 direct payments to Americans, along with forgivable small business loans for companies to keep making payroll. It also included a boost of unemployment pay, money for hospitals and a $500 billion fund for bigger corporations and industries.
Pelosi told Democrats said the $1,200 direct payments to Americans and the paycheck protection program for small businesses are not enough and more needs to be done, the person said.
She also said there needs to be more aid through the Supplemental Nutrition Assistance Program, also known as food stamps.
Trump has favored direct checks to Americans, and gave a nod to another round in the next package.
“It is absolutely under serious consideration,” he said.
The shifts from the political leaders are stark amid what officials warn could be one of the toughest weeks for the country, as the number of confirmed cases and deaths climbs.
McConnell told The Associated Press on Friday that there will be another package and health care must be at the “top of the list.”
McConnell, R-Ky., said Congress should focus on correcting any shortcomings in the earlier $2.2 trillion aid bill and rely on health care experts for solutions to “wipe out” the virus.
Pelosi, D-Calif., last week also backed off her more sweeping proposals for an infrastructure package to put people back to work, focusing on the more immediate health care and economic needs.
As governors plead for federal intervention to provide hard-hit hospitals in New York and elsewhere with vital medical ventilators, equipment and supplies, Senate Democratic leader Chuck Schumer called for a better-coordinated effort to care for the many sick people.
Schumer told reporters on a conference call Monday that he’s urging the White House to appoint a single, well-qualified “czar” to handle both the production and distribution of medical supplies and equipment to fight the pandemic.
Right now, Schumer said, governors and other officials have no choice but to search out materials helter-skelter.
“Everyone’s hunting and pecking for the equipment and the supplies they need,” he said. “It’s just not working. It’s like a scavenger hunt for their lives.”
Schumer, D-N.Y., said he spoke to both Vice President Mike Pence and new White House chief of staff Mark Meadows and suggested three potential candidates for the job: two former vice chairmen of the Joint Chiefs of Staff, retired Air Force Gen. Paul Selva and retired Adm. James A. Winnefield, and retired Vice Adm. Mark Harnitchek, former director of the Defense Logistics Agency.
Trump, displeased with Schumer’s effort, accused the senator of being overtly political.
This would be the third package from Congress since the start of the virus outbreak and bar far the largest, the most ambitious of its kind in U.S. history.
With so much federal aid expected to be pushed so quickly to the public, Congress is also trying to swiftly stand up oversight panels.
Pelosi late last week announced the formation of a House select committee with subpoena power to monitor the decision-making and cash flow.
A broader oversight board is being formed to track the Treasury Department’s dispersal of the aid to businesses, particularly the more than $500 billion in corporate and industry aid under Secretary Steven Mnuchin’s discretion.
Schumer named a top economic adviser to Sen. Elizabeth Warren, Bharat Ramamurti, as his choice for the pandemic response accountabilty committee established by recently passed legislation.
Wall Street leaps 7%, markets rally worldwide on virus hopes
The number of new coronavirus cases is dropping in the European hotspots of Italy and Spain. The center of the U.S. outbreak, New York, also reported its number of daily deaths has been effectively flat for two days. Even though the U.S. is still bracing for a surge of deaths due to COVID-19 and New York’s governor said restrictions should stay in place to slow its spread, the encouraging signs were enough to launch the S&P 500 to its best day in nearly two weeks.
“We’re running on raw optimism, maybe that’s the best way to put it,” said Randy Frederick, vice president of trading and derivatives at Schwab Center for Financial Research.
The S&P 500’s gains accelerated throughout the day, and markets in Europe and Asia rose nearly as much. In another sign that investors are feeling a bit less pessimistic about the economy’s path, they sold bonds. The yield on the 10-year Treasury rose for the first time in four days.
Investors have been waiting anxiously for signs that the rate of new infections may hit its peak, which would give some clarity about how long the upcoming recession will last and how deep it will be. Without that, markets have been guessing about how long businesses will remain shut down, companies will lay off workers and flights remain canceled due to measures meant to slow the speed of the outbreak.
“The virus is not everything, it’s the only thing, and nothing else really matters” to the markets, Frederick said, particularly in a week that is relatively light on economic reports.
The S&P 500 climbed 175.03, or 7%, to 2,663.68, and nearly all the stocks in the index were higher. It more than recovered all its losses from the prior week, when the government reported a record number of layoffs sweeping the economy.
The Dow Jones Industrial Average shot up 1,627.46 points, or 7.7%, to 22,679.99, and the Nasdaq rose 540.15, or 7.3%, to 7,913.24.
The latest gains are not likely to have much staying power, given how much uncertainty remains about when the pandemic will subside significantly and how much harm will have been inflicted to the economy, said Nela Richardson, investment strategist at Edward Jones.
“It’s not unusual, if you look back historically, within bear markets to have rallies,” Richardson said. “I wouldn’t take the uptick over the last two weeks as a sign of a bottoming or a sign of upside recovery from here on out. There’s still a lot of uncertainty to get through even as we’re hopefully nearing the peak in terms of new coronavirus cases.”
The S&P 500 is still down more than 21% since its record set in February, but the losses have been slowing since Washington promised massive amounts of aid to prop up the economy.
“Since this is a public health crisis, the response has been extreme,” Morgan Stanley strategists wrote in a report. “There are literally no governors on the amount of monetary or fiscal stimulus that will be used in this fight.”
In Japan, the prime minister said he’s preparing to announce a 108 trillion yen ($1 trillion) package to bolster the world’s third-largest economy. It would be Japan’s largest-ever package for the economy and nearly twice as much as expected.
Japan’s economy was already shrinking late last year before the outbreak forced the global economy into a protective coma induced by health authorities.
The announcement pushed Japan’s Nikkei 225 index to surge 4.2%. Elsewhere in Asia, South Kora’s Kospi jumped 3.9%, and Hong Kong’s Hang Seng rose 2.2%.
In Europe, Germany’s DAX rose 5.8% and France’s CAC 40 jumped 4.6%. The FTSE 100 in London rose 3.1%.
The yield on the 10-year Treasury yield rose to 0.67% from 0.58% late Friday. Yields tend to rise when investors are raising their expectations for economic growth and inflation.
Crude oil fell, giving up some of its huge gains from the prior week when expectations rose that Saudi Arabia and Russia may cut back on some of their production.
Demand for oil has plummeted due to the weakening economy, and any cutback in production would help prop up its price. A meeting between OPEC, Russia and other producers initially planned for Monday, though, was reportedly pushed back to Thursday.
Benchmark U.S. crude fell $2.26, or 8%, to settle as $26.08 a barrel after surging nearly $7 last week. It started the year above $60 per barrel. Brent crude, the international standard, lost $1.06, or 3.1%, to $33.05 a barrel.
Texas Governor Abbott provides briefing
Texas Governor Greg Abbott was joined by Texas Department of State Health Services Commissioner John Hellerstedt, Texas Division of Emergency Management Chief Nim Kidd and former state Rep. John Zerwas for the update at the TX Department of Public Safety warehouse in Austin.
Behind him were rows of boxes of PPE (gloves, gowns, masks).
Abbott opened the news conference by detailing a telephone conference he had earlier in the day. Vice President Pence and Dr. Deborah Birx were among those on call. Birx said mitigation efforts are working, Abbott says. “She said that we are getting close to beginning to bend the curve, but also she made clear that if we let up now all of our efforts that have led us to this point will have been for nothing,” Abbott said.
Abbott gave an update on travel restrictions in Texas. He said restrictions on people being able to fly into the state from “hot spot zones” remain in-tact. That includes Miami, Altanta, Tri-state area around NYC, Detroit and Chicago.
Last week Abbott announced TX DPS would start pulling over vehicles crossing the border from Louisiana into Texas. 14 day self-quarantine is required. “Beginning yesterday the Texas Department of Public Safety has now altered that policy to increase enforcement by establishing checkpoints from all border crossings from Louisiana into the state of Texas,” Abbott said.
Abbott noted a Texas City nursing home where a number of people there have tested positive for COVID-19. He said about 30 patients are being tested with hydroxychloroquine and are in the second day of treatment.
Abbott said as of today there have been 85,357 Texans who have been tested for COVID-19. 7,319 have tested positive. He said the number of those testing positive continues to remain less than 10% of everyone tested.
Abbott said the state is expected to exceed 100,000 in number of people tested. Abbott said there are 1,153 confirmed hospitalizations and 140 fatalities.