*Thinks of ways to invest government check and profit handsomely* – Jeff

 

Hey there carnivores,

If we told you last week markets had two days in the black, would you believe us?

Today we’re talking stimulus.

Keep raging,

Jeff & Jason

House party

“Nice package.” – 96 Senators

The coronavirus bailout, er, stimulus package is on its way to the House after the Senate unanimously voted in favor of saving America (four Senators are quarantining and were not able to vote). *USA chant breaks out*

In case you’ve been self-quarantining without wifi (read: you are Amish), there’s something you should probably know: this ain’t your daddy’s stimulus package. It is f*cking massive. The bill includes $2T in “stimuli.”

Hit me with the highlights

There is a lot to unpack but here are the cliff notes… 

  • Individuals making less than $75k stand to receive direct checks of $1,200, ($2,400 for couples, with $500 added for every child). It’s probably worth noting that the benefits begin to phase out over $75k and anyone making over $99k (or $198k as a couple) is sh*t out of luck.
  • The available unemployment benefit is increased by $600 per week for the next four months.
  • $350B will become available for small businesses as loans to help fund payroll, rent, utilities, and other short term operating costs. These loans can be forgiven and effectively become grants.
  • An additional $500B will become available for businesses to take out as loans that will have favorable interest rates.
  • There will also be bailouts for hard-hit industries (like $25B in grants to airlines), $117B earmarked for hospitals and tax credits for employers that retain employees.

So, it’s a done deal?

Not exactly… The House still has to vote on the bill. And since we’ve all seen ‘Schoolhouse Rock‘ and ‘House of Cards’ we know getting a bill passed is not easy. Not to mention, members of the House are, let’s say, social distancing… read: the House is not in session.

Rumor has it that to remedy the absentee lawmaker issue the decision in the House might go to a “voice vote” as soon as today. This would allow reps to phone it in if they can’t make it to DC, thus expediting the process and saving America. *Again, USA chant breaks out*

“But, what about The White House?” – you, a worrywart

The good news is that POTUS and The White House worked closely with the Senate on the bill, meaning that the President should lend his John Hancock to the bill should it get past the House.

The bottom line…

For what it’s worth, this isn’t the government’s first rodeo. Johnny Gov doled out payments, in the form of tax rebates, to individuals in 2001 and 2008 to help boost the economy. Who can forget that “Boosting Our Economy” sign President Bush sat behind which appeared to be hastily made with clip art?

The good news? According to at least one really smart person, former Fed economist Claudia Strahm, people did pour that money back into the economy which helped alleviate at least some of the pain.

☑️ Negative rates (but positive attitude!).

The one-month and three-month Treasury bill yield dropped below zero yesterday, hitting lows of -0.053% and -0.033% respectively. This was the first time in four and half years that temperatures have reached sub-zero, and occurs only a week and a half after the Fed cut its benchmark rate to near zero.

America joins good (bad?) company, as Japan and many countries in Europe (shoutout Germany at -0.26) are already in the negative rates cesspool. Move on over, America’s fat a$$ is coming through.

☑️ Feeling down.

“We got no food, we got no jobs, OUR PETS HEADS ARE FALLIN’ OFF!State unemployment websites have been crashing thanks to higher than expected traffic. As more users search for jobs thanks to layoffs and furloughs from COVID, they have experienced page timeouts, dropped phone calls, and an inability to verify their identities. I receive the same responses from my ex. “New phone, who this?”

In Michigan, 108k people filed for unemployment benefits last week, which is 20x the typical count. As if living in Michigan wasn’t bad enough. Potential websites and server upgrades might need to be put on hold though, because more than twenty states may see their unemployment reserves go in the negative if the US enters a severe recession. 

This would force some states to take on more debt by taking out loans from the US Treasury, which was an approach several states took during the Great Recession. 

☑️ I’m glad that’s settled.

Looks like we had an ol’ Mexican standoff down in Houston. Occidental Petroleum and activist Carl Icahn had been disagreeing over the company’s direction ever since the OP acquired Anadarko in May. That scuffle has seemingly come to an end, as the two sides have shaken hands (virtually, I hope) and made a truce. Hopefully neither had their fingers crossed. iCarl walks away a happy man, with two of his lackeys gaining board seats at the O. 

Just because there was an agreement doesn’t mean there were good times had by all. Occidental will cut salaries for its stateside employees by up to 30%. Certain executives will face steeper pay cuts, by up to 80% in order to cut expenses in the face of lower crude prices, slowing global demand, and a freefalling stock price. “You guys are getting paid?”

☑️ Dumped.

SoftBank is doing the conglomerate equivalent of taking its ball and going home, as the company plans to drop Moody’s Investors Service after the ratings company downgraded it from Ba1 to Ba3 yesterday. The investment fund received criticism after it unveiled that it plans to sell up to $41B in assets in order to fund a stock and bond repurchase program. IN THIS ECONOMY?!

Elsewhere, Ford received a downgrade of its own, as its rating was dropped to ‘BB+’ (junk) by S&P Global Ratings. Ford factories are closed around the world (thanks to the ‘rona) with no timeline of reopening, all the while it has $27B of debt maturing by the end of next year. 

 

Author: Jeff Williams

Jeff Williams is a full-time day trader with over 15 years experience. Thousands of entry-level and experienced traders alike – day-traders and swing-trade small cap stock traders – credit Jeff with guiding them to turning small accounts into big accounts.

Jeff’s "Small Account Challenge" shows people how to transform accounts from a few thousand dollars into $25k, $50k or even $100k.

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