Image: United States Senate Majority Leader Mitch McConnell, Republican of Kentucky, pledged at mid-day Wednesday, March 26, 2020, that Congress would pass a $2 trillion Chinese coronavirus federal relief package, the largest relief package in American history, by the end of the day on Wednesday.
The Golden Hammer Staff Reports
Conroe, Austin, and Washington, D.C., March 26 – Montgomery County, Texas, has thirty-one (31) positive test results in individuals now diagnosed with the Chinese coronavirus, the COVID-19 virus which originated in the meat market of Wuhan, China.
Passage of $2 trillion relief bill
Despite an earlier agreement between the White House and Congressional leaders to pass a $2 trillion Chinese coronavirus relief bill to shore up the American economy and workers and families suffering from the related economic setbacks therefrom (as discussed below in detail in this article), four members of the United States Senate objected to the terms of the unemployment relief in the proposed legislation. Senator Lindsey Graham (R-South Carolina), Senator Tim Scott (R-South Carolina), Senator Rick Scott (R-Florida), and Senator Ben Sasse (R-Nebraska) discovered that the $600 per week increase in unemployment benefits within the legislation would result in some American receiving more money in unemployment than they would in their jobs.
After several hours of negotiations, Senate Majority Leader Mitch McConnell allowed a vote on Amendment 1577 to the legislation which would remove the weekly increase in unemployment and which Senator Sasse authored. The amendment died on a 48 to 48 vote.
The $2 trillion relief bill eventually passed the Senate late Wednesday night on a 96 to 0 vote.
The United States House of Representatives will vote on the legislation on Friday, March 27, at 9 a.m., Eastern Time.
President Donald Trump has indicated that he will sign the relief package into law immediately upon passage by Congress.
Montgomery County officials explain increase in positive test results, impose additional restrictions and closures
Montgomery County Emergency Director Jason Millsaps, who is also the Chief of Staff to Montgomery County Judge Mark Keough, explained, “The people who are testing positive today are individuals who have presented themselves to hospitals and who could’ve been infected 7 to 14 days ago, well before the current orders took effect.” Most of the current restrictive orders in Montgomery County went into effect last week.
Millsaps added, “We haven’t seen a bend in the curve yet, but we can expect that soon from the actions our community has taken to prevent the spread.”
On Wednesday afternoon, Montgomery County Judge Mark Keough ordered the shuttering of hair salons, barber shops, nail salons, massage parlors, and tattoo parlors, in order to prevent the spread of the Chinese virus. The amendments adds restrictions on nail and hair salons, spas, licensed massage businesses, tattoo parlors, and cosmetic businesses. Additionally, nursing homes, retirement, and long term care facilities are now required to limit visitation to critical assistance and end of life visitation only.
The following is the current Montgomery County Order regarding the closure of businesses, pursuant to the emergency powers under Chapter 418 of the Texas Government Code:
ORDER AFFECTING THE OCCUPANCY OF PREMISES THROUGHOUT MONTGOMERY COUNTY
(March 25, 2020)
WHEREAS, a local disaster declaration was declared on March 12, 2020, ratified and extended for 30 days by a duly called Emergency Meeting of Commissioners Court on the same day, and both the State of Texas and Federal disaster declarations were issued on March 13, 2020; and
WHEREAS, the COVID-19 virus is contagious and spreads through person-to-person contact, especially in group settings; and
WHEREAS, the U.S. Centers for Disease Control and Prevention (CDC) issued guidance to all Americans, requesting gatherings of 10 persons or more to cease for the fifteen (15) days; and
WHEREAS, an emerging public health emergency does currently exist and is expected to worsen, where Montgomery County desires to slow down and prevent the spread of COVID-19 throughout Montgomery County; and
WHEREAS, Montgomery County urges residents of the county to follow the guidance of the CDC and immediately begin social distancing; and
WHEREAS, Montgomery County urges private businesses to adhere to the CDC guidelines and begin to implement social distancing within their organizations where possible to include work from home options where practical; and
NOW THEREFORE, I, MARK J. KEOUGH, COUNTY JUDGE OF MONTGOMERY COUNTY, TEXAS, PURSUANT TO THE AUTHORITY VESTED BY TEXAS GOVERNMENT CODE CHAPTER 418, HEREBY ORDER:
Effective as of 8:00 a.m. on Thursday, March 26, 2020 and continuing through April 6, 2020, unless terminated or modified by an order, the County Judge of Montgomery County, Texas, deems it in the public interest to issue the following order(s):
1. Hair and nail salons, spas, licensed massage businesses, tattoo parlors, and cosmetic businesses shall cease operations.
2. Nursing homes, retirement, and long term care facilities shall prohibit non-essential visitors from accessing their facilities unless to provide critical assistance or for end of life visitation.
3. All restaurants shall cease all onsite dining operations.
4. All restaurants may continue takeout, to-go, delivery, and catering operations.
5. Restaurants shall not allow any employee to report to work who is demonstrating signs of any form of sickness, or having a fever.
· Strict handwashing and sanitizing operations must be deployed.
6. All bars or private clubs shall cease operations.
7. Gyms, movie theaters, or amusement type businesses shall cease operations.
8. Any event sponsored or permitted by a political subdivision in Montgomery County shall cease.
9. Events greater than 10 persons at all publicly held facilities across Montgomery County shall cease.
10. Any event greater than 10 persons held at private facilities is urged to cancel.
11. Retail stores, private businesses, non-profit organizations and religious organizations to include churches, synagogues, mosques or other places of worship are urged to comply with the CDC guidelines related to 10 persons gathering in any one place or at one time.
12. Retail stores who sell groceries or medical supplies are exempt from this order.
13. Daycare facilities are exempt and must comply with DFPS and CDC guidelines.
THIS ORDER SUPERSEDES ANY PREVIOUS ORDER RELATED TO THE OCCUPANCY OF A PREMISE IN MONTGOMERY COUNTY, TEXAS.
Pursuant to Chapter 418, Sec. 418.173 Texas Government Code, any violation of this order constitutes an offense committed under this statute and is punishable by a fine not to exceed $1,000 dollars or confinement in jail for a term no greater than 180 days.
This order does NOT extend to law enforcement activities, emergency responses, and court operations or grand jury operations.
All Montgomery County Employees should report to work as directed by their Department Head or Elected Department Head.
Effective immediately and through the duration of this order, all Montgomery County employees shall cease any work related travel.
Signed this 25th day of March, 2020.
Stock Market Gyrations
United States Senate Majority Leader Mitch McConnell, Republican of Kentucky, pledged at mid-day Wednesday, March 26, 2020, that Congress would pass a $2 trillion Chinese coronavirus federal relief package, the largest relief package in American history, by the end of the day on Wednesday. “A fight has arrived on our shores,” said Senator McConnell. “We did not seek it, we did not want it, but now we’re going to win it.”
Stocks scored their first back-to-back gains Wednesday since a brutal sell-off began five weeks ago, but much of an early rally faded late in the day as a last-minute dispute threatened to hold up a $2 trillion economic rescue package in Congress.
The S&P 500 rose 1.2%, bringing its two-day gain to 10.6%. It had been up 5.1% earlier in the day as Congress moved closer to approving the plan to provide badly needed aid to an economy that has been ravaged by the coronavirus. The market is now down nearly 27% since setting a record high a month ago.
Many on Wall Street say they don’t think stocks have hit bottom yet, but optimism rose after the White House and Senate leaders announced an agreement on the aid bill early Wednesday. A vote had been expected in the Senate by the end of the day, but then some lawmakers balked at the proposed bill.
Senators Tim Scott, Ben Sasse and Lindsey Graham said that they found a “drafting error” in the legislation that could give employers incentives to lay off employees. Afterward, Sen. Bernie Sanders said he would put a hold on the bill unless the three Republican senators dropped their objections to it.
In reality, it was no drafting error at all. Instead, it was a Democratic attempt to increase unemployment compensation to a degree which would incentivize certain workers to seek layoffs rather than going back to work. As Senator Graham, Republican of South Carolina, noted, “The bill, as presently worded, would provide some unemployed workers higher unemployment compensation than they had earned in their jobs.”
Investors were anxiously waiting for the aid in the rescue package, which lawmakers hope will help blunt the blow to the economy as businesses shut down to slow the spread of the coronavirus.
“They’re hitting on all the right elements of what the U.S. economy needs during the shutdown to bridge itself to the other side to open up economic activity,” said Darrell Cronk, chief investment officer of Wells Fargo Wealth and Investment Management.
But even optimists say the package provides just the second leg of three that markets need to regain lasting confidence. The Federal Reserve and central banks are also offering tremendous aid by cutting interest rates and supporting lending markets, but investors say they need to see the number of new infections peak before they can feel comfortable knowing how deep the looming economic downturn will be.
“There’s a lot of bad news, there’s very little tangible good news and there’s a lot of uncertainty in between,” said Jack Ablin, chief investment officer at Cresset.
Investors are also still waiting to see the details of Washington’s plan, which will include direct payments to most Americans and aid for hard-hit industries.
“It’s too early to call a bottom because there’s way too much uncertainty,” said Tony Rodriguez, head of fixed income strategy at Nuveen. “The bottom implies it’s not going lower, and I don’t think that,” he said. “For it to become a bottom, you would need to see much better news coming out on the health care side of this.”
The number of known infections has leaped past 450,000 people worldwide, and more than 20,000 have died, according to Johns Hopkins University. Overall, more than 112,000 have recovered.
For most people, the new coronavirus causes mild or moderate symptoms, such as fever and cough that clear up in two to three weeks. For some, especially older adults and people with existing health problems, it can cause more severe illness, including pneumonia and death.
With widening swaths of the economy shutting down and layoffs mounting, economists are sure a steep drop-off is coming. They’re forecasting a report on Thursday will show a record number of Americans filed for unemployment benefits as layoffs sweep the country. What’s unsure is how long it will last.
That uncertainty has led to wild swings in the stock market over the last month. The S&P 500 surged 9.4% Tuesday as expectations built that Washington was nearing a stimulus deal. That was a better performance than the index has turned in for 10 of the last 20 full years.
But the market has also had a couple days within the last few weeks that packed entire years’ worth of losses, including two days down 10.4%. The last time the S&P 500 had a back-to-back gain was Feb. 12, a week before the index set its record high.
The uncertainty has carried over even to trading within a certain day or a certain hour.
On Wednesday, for example, the S&P 500 was down as much as 1.6% Wednesday morning before it turned decisively higher.
Boeing soared 24.3% in part on expectations that it stands to gain from the aid package brokered on Capitol Hill. Other travel-related stocks also stormed higher to recoup a fraction of their huge losses over the last month. Royal Caribbean Cruises jumped 23%, but it’s still down by 68.2% for the year.
Nike climbed nearly 9.2% after it said stronger online sales in China during the coronavirus outbreak helped it offset plunges in revenue caused by the shutdown of stores across the country. The company said it will follow a similar playbook in other countries as the outbreak has spread around the world. It also said sales are bouncing back in China, where the outbreak has eased and most Nike stores have reopened.
European markets ended with sizable gains. France’s CAC 40 rose 4.5% and Germany’s DAX rose 1.8%. Asian markets rose broadly, led by an 8% jump in Japan.
Treasury yields were mixed. The yield on the 10-year Treasury rose to 0.84% from 0.81% late Tuesday.
Massive relief bill
The White House and Senate leaders agreed early Wednesday on a $2 trillion economic rescue package, the largest in the country’s history. The bill comes in response to the viral pandemic that has shut down businesses and crippled economies around the globe. It would give direct payments to most Americans, expand unemployment benefits and provide direct grants and loans to businesses and hospitals.
Here’s how various industries will benefit:
AIRLINES: Airlines could get a key part of their request — cash grants from taxpayers — under the massive spending bill. As of Wednesday afternoon, the deal includes $25 billion in direct grants and up to another $25 billion in loans or loan guarantees to passenger airlines. Cargo airlines like FedEx would get $4 billion in grants and up to $4 billion in loans, and airline industry contractors could get $3 billion in grants. Terms could still change, however.
The bill says grants are exclusively to pay employee wages, salaries and benefits based on how much the airline spent on them from April through September of last year. Loans would carry conditions, including bans on companies buying back their own stock or paying dividends. Airlines would have to avoid layoffs “to the extent practicable,” and would be required to keep at least 90% of current employment levels.
The White House and Senate Republicans had initially balked at grants. Robert Mann, an aviation consultant and former airline executive in New York, called the final deal “an initial victory for airlines.” He cautioned, however, that airlines face months of battling the virus-related downturn in travel before they can recover.
BANKS: The banking industry pushed for mostly regulatory changes that will let banks make more loans without hurting their balance sheets. For the most part, they got what they wanted.
The big issue in this crisis has been individuals and businesses who were paying regularly on their debts but suddenly do not have income because of quarantines or lockdowns. Banks have been trying to defer individuals’ payments, but modifications to loans are typically booked negatively on a bank’s balance sheet.
Under the new measure, banks who do loan modifications for individuals and businesses during this crisis will not have to immediately mark the losses on their balance sheet. Smaller banks with under $10 billion in assets will also get a temporary reduction in how much capital they need to hold in order to meet regulators’ requirements. The change is small, going from a leveraged ratio of 9% to 8%, but banking lobbyists say it will give banks leeway to make more loans in the crisis.
A large part of the bill — $367 billion — will be going to the Small Business Administration to help keep businesses keep paying workers. Banks large and small are the point persons for SBA loans and earn fees for doing so. That is likely to provide some sort of revenue bump for the banking industry.
AUTOS: The auto industry appears to have gotten at least some of what it wanted in the bill, mainly loans and loan guarantees for companies struggling to stay open when they’re not producing vehicles or parts. Companies could tap into $1 billion through the Defense Department to invest in manufacturing to increase production of medical protective gear for health care workers. Ford and Fiat Chrysler, for instance, say they will make masks and other devices to protect medical workers. The bill also has $1.5 billion in assistance to help rebuild manufacturing supply chains and to provide capital to local loan funds for economic recovery. There’s also $562 million for SBA loans.
ENERGY: The energy sector didn’t get much of what it was seeking. President Donald Trump had sought $3 billion to purchase oil to beef up the country’s strategic oil reserves, which may have provided limited relief to oil and gas producers struggling with record-low prices. But that plan, which Democratic Sen. Chuck Schumer referred to as a “$3 billion bailout for big oil,” was not included in the bill.
The American Exploration and Production Council, which represents 25 of the top oil and gas production companies in the country, said Wednesday it’s confident the Department of Energy will be able to meet the president’s directive and buy the oil.
The coal industry unsuccessfully sought more than $800 million in benefits for mining companies through reduced royalty payments and mine reclamation fees and lower taxes that fund beneficiary payments for black lung disease in miners. Meanwhile, the renewable energy industry had asked for — but did not get — extensions of deadlines related to construction or completion of solar and wind projects, without which they could lose access to time-sensitive tax credits. Industry associations were hopeful they’d be included in any later relief package.
RETAIL: Retailers found a lot to like in the bill. The industry, much of which has been temporarily shuttered, pushed for cash infusions for businesses that would serve as a bridge until the virus abates. The industry was also looking for cash payments and unemployment insurance that would replace the salaries of workers who lost their jobs because of the pandemic.
Under the bill, retail workers who lost their jobs because of store closures will be able to receive unemployment insurance to replace their salaries up to $100,000. Retailers will be able to tap into the $454 billion in loans available to companies that were hurt by coronavirus. Companies that retain their workers during the crisis will be able to get a tax credit.
Brian Dodge, the president of the Retail Industry Leaders Association, called the bill “bold and swift action.”
David French, senior vice president of government relations of the National Retail Federation noted that the success of the bill will depend on “how efficiently the programs will be administered.”
A lot is at stake. More than 180,000 “non-essential stores” are temporarily closed, accounting for more than 40% of retail space, according to Neil Saunders, managing director of GlobalData Retail, a retail research firm. One of every four workers supports the retail industry.
Texas Attorney General Paxton tells local governments to back off from interfering with State employees
Texas Attorney General Ken Paxton yesterday issued a letter explaining that political subdivisions may not restrict the ability of State agencies, agents and contractors from providing governmental services, including travel to and from their places of employment. As declared in Executive Order GA-08, which holds the full force and effect of the law, “all critical infrastructure will remain operational, and government entities and businesses will continue providing essential services.”
“Our state government offices provide services that are essential to the public. Governor Abbott’s executive order makes the need for continued, unburdened operation of state offices clear,” said Attorney General Paxton. “It is our duty to protect and provide for Texans, and we are committed to serving our citizens during this health crisis.”
Local officers, like the Governor, may control the movement of people and occupancy of premises within a disaster area during a health event; however, quarantine orders cannot supersede the jurisdiction of the State. As a free and sovereign state, Texas is subject only to the United States and Texas Constitutions. Local government regulations must remain consistent with the State constitution and laws.
Governor Abbott acts to increase hospital capacity
Governor Greg Abbott yesterday temporarily waived certain hospital licensing rules and the Texas Health and Human Services Commission (HHSC) has adopted an emergency rule to meet Texas’ need for additional hospital capacity while the state responds to COVID-19. These actions allow for certain facilities that have pending licenses or facilities that have been closed for no more than 36 months to come online under existing hospital building licenses. These facilities will be administered and operated by hospitals with existing licenses. The waivers also remove certain mileage restrictions which will allow hospitals to operate additional facilities that are more than 30 miles away from the main licensed hospital.
“One of our top objectives is to ensure that COVID-19 patients in Texas who need a hospital bed will have access to a bed,” said Governor Abbott. “There are healthcare facilities across the state that have either recently closed or have yet to receive a license, but are otherwise ideal locations to aid in our COVID-19 response. By waiving these rules, we can quickly bring many of these facilities online to help Texas communities maximize their hospital capacity and provide care to Texans in need.”
Additionally, Governor Abbott has directed HHSC to waive certain regulatory requirements regarding facility license renewals. These waivers will allow general, special, and psychiatric hospitals, free-standing emergency medical facilities, and end-stage renal facilities to renew their license without submitting a fire marshal’s report. The facilities will still be required to update their records at a later date.
Governor Greg Abbott also yesterday released a statement thanking President Trump for issuing a Major Disaster Declaration for the State of Texas. This announcement comes after the Governor requested the declaration—citing the need for additional federal assistance to save lives, to protect property, public health, and safety, and to lessen or avert the threat of COVID-19.
“Texas is aggressively pursuing and implementing all necessary strategies to limit the impact of COVID-19, and I thank President Trump for his swift action to issue a Major Disaster Declaration for the State of Texas,” said Governor Abbott. “The President’s declaration opens up new sources of funding for individual and public assistance that will help Texas respond to this public health emergency and protect public health and safety.”