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Stocks Climb as Wall Street Weighs U.S. Rescue Deal: Live Updates

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If you want to shut down an economy to fight a pandemic without driving millions of people and businesses into bankruptcy, you need the government to cut some checks. The coronavirus response deal that congressional leaders struck early Wednesday will get a lot of checks in the mail, but they’ll soothe only a few months of financial pain.

The legislation, which is expected to be enacted within days, is the biggest fiscal stimulus package in modern American history, and more than double the size of the roughly $800 billion stimulus package that Congress passed in 2009 to ease the Great Recession.

Among the items in the bill are:

  • $350 billion in loans for small businesses to help bridge their expenses for up to 10 weeks. Firms would not need to repay up to eight weeks of the loans if they refrain from laying off employees, or move by June to rehire employees they have already laid off. Supporters of the measure say those loans, if rapidly deployed, could help thousands of firms survive, at least temporarily.

  • $500 billion in aid to airlines and other large corporations that have been hurt by a cratering of consumer demand amid the crisis. Much of the money would be used to backstop loans and other assistance that the Federal Reserve said it plans to extend to companies.

  • A $1,200 payment for each adult — and $500 per child — in households that earn up to $75,000 per year for individuals or $150,000 for couples. The assistance phases out for people who earn more.

Economists hailed the emerging agreement as a good start — one that works on multiple fronts to keep money flowing through the parts of the economy that have been suddenly rendered inactive. But some warned that it may not actually be large enough, given the enormous economic challenge the United States faces today.

“Much of the small business community is facing an extinction-level event,” said John Lettieri, the chief of the Economic Innovation Group think tank in Washington, who pushed heavily for a package of small business loans in the agreement. “Will this bill help? Absolutely. But the lending capacity needed to prevent mass closures and layoffs could be four or five times larger than what is being provided.”

Investors started sizing up a $2 trillion coronavirus rescue package to shore up the American economy, and stocks inched higher on Wednesday, adding to a surge the day before.

After opening slightly lower, the S&P 500 climbed in early trading. Some of the companies expected to benefit from government help led the gains. Boeing was up more than 20 percent, helping lift the Dow Jones industrial average by more than 3 percent; American Airlines jumped more than 15 percent; Carnival Corp. jumped 12 percent. All three had logged double-digit gains on Tuesday as talks on the package progressed.

Democratic and Republican leaders in the Senate finally came to agreement in the early hours of the day. On Tuesday, stocks on Wall Street had their best day since 2008 on expectations of the stimulus deal.

Lawmakers and their aides were still finishing the massive legislation that would enact the country’s biggest emergency spending plan ever, so only the broad outlines were known. The Senate was expected to vote Wednesday.

Governments elsewhere are also laying out plans to help. On Monday, Germany prepared an emergency budget and rescue fund for companies and state-supported loans. European Union leaders are working on additional measures to help loosen up money for some countries to help soften the economic blow of the virus.

Though investors have welcomed the plans, few are willing to conclusively say that the worst of the market sell-off is over.

On Wednesday, European stocks initially rallied but gains soon faded.

Widespread social distancing measures put in place to control the spread of the coronavirus have hammered consumer spending, the heart of the American economy. Economists are expecting almost unthinkable declines in the gross domestic product in the second quarter. Analysts at Capital Economics said on Wednesday that they now expect growth in the U.S. to fall 40 percent in the second quarter, at an annualized pace, as the unemployment rate jumps to 12 percent — higher than its 10 percent peak in 2009.

Markets have been volatile in recent weeks, seesawing on sentiment that has veered between hope that governments around the world will take strong measures to stem economic losses from the spread of the coronavirus, and fear that policymakers are not making bold enough decisions.

“Encouragingly, recent new lows in stocks have been accompanied by either sideways or even lower volatility, indicating markets are starting to become more comfortable with the potential range of outcomes we face,” Paul Haefele, chief investment officer at UBS Global Wealth Management, said in a note to investors.

On Monday morning, American Airlines Flight 1 departed John F. Kennedy Airport in New York, bound for Los Angeles. It had six passengers.

The flight is normally one of the airline’s busiest and most profitable. Now it is a money pit, a cross-country symbol of how thoroughly the coronavirus pandemic has decimated commercial air travel in a matter of weeks.

Never before has customer demand dropped so swiftly, and never before has it been less clear when — or even whether — the global airline industry will truly recover.

“This is scary,” said José Freig, American’s head of Latin America operations, who is managing the company’s coronavirus response team. “It’s difficult to find a bottom on this one.”

Dozens of American companies expect to resume normal operations in China by the end of April and keep their investment plans, a survey by the American Chamber of Commerce found.

While the pandemic has continued to cripple economies around the world, the Chinese authorities have started to revive production and ease their lockdown on Hubei Province, where the coronavirus first appeared. Last Thursday, China reported no new local infections for the first time since the outbreak began late last year.

After surveying nearly 120 firms, the chamber’s China branch said on Wednesday that some companies also planned to maintain investments they had previously set in motion, even as half the firms reported significant drops in revenue and others were pessimistic about economic growth amid the pandemic.

But reports have claimed that health officials in Wuhan, Hubei’s capital, are not publicizing the number of people with asymptomatic infections, raising fears that the virus is still spreading. Cases are also climbing among people arriving in the country from abroad, threatening to start a second wave of infections.

In the age of coronavirus, many people have transformed overnight from office workers into telecommuters. And they are increasingly relying on videoconferencing apps like Zoom and FaceTime to correspond with peers.

But inevitably, with homes and workplaces merging into one, the boundaries between personal and professional lives are eroding — and awkward situations have ensued.

By now, you may have had a few video calls with colleagues who took meetings in odd places, like their bathroom or closet, to avoid their children. Then there are the colleagues who surrender their boundaries entirely and let their children and pets be a part of the meeting.

We all get it: No one was really prepared for this transition, and there are limits to what we can all do. But now feels like an opportunity to bring up how to be kinder to your co-workers in workplace video calls, since they’re the ones the calls are really for in the end.

Where did President Trump get the idea about the economy being “opened up and just raring to go by Easter”? Today’s DealBook newsletter puts the pieces together.

Wall Street executives have been warning the president about the financial effects of a prolonged shutdown.

A pivotal moment in this campaign came on a call yesterday with the likes of Paul Tudor Jones, Steve Schwarzman of Blackstone, Dan Loeb of Third Point and Ken Griffin of Citadel, who told the president and vice president that the markets were eager to hear about a plan for reviving the economy. Later in the day, the president went on Fox News and put a date on it.

Reporting was contributed by Jim Tankersley, Alexandra Stevenson, David Gelles, Brian X. Chen, Elaine Yu, Daniel Victor, Jason Karaian, Kevin Granville and Carlos Tejada.

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Finance Minister Nirmala Sitharaman Reviews Progress Of COVID-19 Measures

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Nirmala Sitharaman Reviews Progress Of Atmanirbhar Bharat Initiatives

The government on Sunday released a progress report on the implementation of measures announced under its Atmanirbhar Bharat package after a review by Finance Minister Nirmala Sitharaman. In May, the government had announced fiscal and monetary support worth Rs 21 lakh crore to help the country battle the damage caused by the coronavirus pandemic. The finance and corporate ministries immediately started implementation of the announcements related to the economic package under the Atmanirbhar Bharat series of initiatives, an official release said.

Here are some of the key points on the progress reported so far: 

In a major relief to micro, small and medium enterprises, the Department of Expenditure has amended rules relating to global tenders, to ensure no global tender inquiry will be invited for tenders up to Rs 200 crore unless prior approval is obtained from Cabinet Secretariat. The government had earlier announced that global tenders will be disallowed in government procurement tenders up to Rs 200 crore.

In relief to contractors, various departments and ministries are implementing instructions to ensure central agencies like Railways, Road Transport and Highways and CPWD give an extension of up to six months for completion of contractual obligations.

The department issued a communication to all state governments for additional borrowing of 2 per cent (of projected gross state domestic product in 2020-21) subject to implementation of specific state-level reforms. The government had earlier announced its decision to increase borrowing limits of states from 3 per cent to 5 per cent for 2020-21 in view of the situation caused by the COVID-19 disease. The move will provide the states with extra resources worth Rs 4.28 lakh crore.

In a period of about one and half months, noticeable progress has been achieved in identifying units, sanctioning as well as disbursing of loans to MSMEs. The government had announced collateral-free automatic loans worth Rs 3 lakh crore for businesses and MSMEs.

Rs 45,000 crore Partial Credit Guarantee Scheme 2.0 for NBFCs

Banks have approved purchase of portfolio of Rs 14,000 crore and are currently in process of approval/negotiations for Rs 6,000 crore as on July 3.

Additional Emergency Working Capital Funding for farmers through NABARD

When kharif sowing is already on its full swing, Rs. 24,876.87 crore out of Rs. 30,000 crore has been disbursed as on July 6 out of this special facility.

Between April 8 and June 30, the Central Board of Direct taxes (CBDT) has issued refunds in more than 20.44 lakh cases amounting to more than Rs. 62,361 crore, and the remaining refunds are under process.

The Rs 30,000-crore Special Liquidity Scheme for non-banking financial companies, housing finance companies and microfinance institutions has been launched, following the Cabinet’s approval. The first application in this regard has received its approval and the remaining are also being considered, the government said.

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West Kelowna way behind in tax revenue collection – West Kelowna News

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City tax hole $11.5M

The COVID-19 pandemic has had a detrimental affect on businesses and residents across West Kelowna.

That is no more evident than the value of municipal taxes remitted by business and residential taxpayers by the July 2 deadline.

In a report for council, director of finance Warren Everton says in 2019, about 92 per cent of taxes were paid by the July deadline. Penalties would kick in if monies were not paid by then.

However, due to the pandemic, city council has eased off on penalties and taken other steps to ease the financial burden of taxpayers.

As a result of financial hardships endured, Everton says only 80 per cent of overall taxation has been paid to the municipality, leaving an $11.5 million shortfall.

Ten per cent penalties won’t kick in until Oct. 1.

Everton says there is presently a $9.36 million (81 per cent) shortfall in residential tax payments and $2.2 million (72 per cent) deficit in collection from business and other categories.

Despite the shortfall, Everton writes in his report the city remains on”solid financial ground” despite COVID-19.

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I won’t quit: Lebanese PM defiant as his critics blast financial chaos

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BEIRUT: Beleaguered Lebanese Prime Minister Hassan Diab on Saturday defied a barrage of criticism to declare that his government alone ruled Lebanon and it was determined to implement reforms to resolve the financial crisis.

Diab dismissed as “fake news” reports that he was on the verge of resignation, and said: “Lebanon will not be under anyone’s control as long as I am in power.”

The prime minister spoke after UN human rights chief Michelle Bachelet warned that Lebanon was enduring “the worst economic crisis in its history” and was “fast spiraling out of control.” 

She urged Diab’s government to initiate urgent reforms and respond to “the people’s essential needs, such as food, electricity, health, and education.”

Diab also faced harsh criticism from the American University of Beirut (AUB), where he was vice president and a professor before becoming prime minister.

BACKGROUND

UN human rights chief Michelle Bachelet urged the Lebanese government to initiate urgent reforms and respond to ‘the people’s essential needs, such as food, health and education.’

AUB president Fadlo Khuri said Diab’s government was the worst in Lebanon’s history in its understanding of higher education.

“I have not seen any shred of competence in this government since its formation six months ago,” said.

“The government owes the AUB $150 million in medical bills,” Khuri said, and he urged Diab to “at least discuss with us a payment timeline.”

Lebanon’s financial plight is illustrated by its currency, the lira, which has lost 80 percent of its value. 

The black market  dollar exchange rate on Saturday was 7,500, compared with the official rate of 1,507.

Bailout talks with the International Monetary Fund were suspended in a dispute over government debt, but Diab insisted on Saturday: “We have turned the page … and started discussing the basic reforms required and the program that the IMF and Lebanon will agree upon, which will restore confidence and open the door to many projects.”

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