“These bunkers are already getting a bit crowded…” – Jeff
Hey there carnivores,
The markets rose on Tuesday.
Today we’re talking stimulus.
Jeff & Jason
Mnuchin Proposes $850B Stimulus Package
On Tuesday US Treasury Secretary Steven Mnuchin announced a proposal for an economic stimulus package that could be worth between $850B and $1T after the White House vowed to provide aid to businesses and the unemployed as a result of the current “situation.”
Later, Secretary Mnuchin warned GOP Senators that unemployment could reach up to 20% if they do not step in and help. Not great, Steve.
Give me the details
The proposed package includes up to $500B in direct payments via check or tax cuts for individuals (start sending Secretary Mnuchin those Venmo requests), up to $300B in small business assistance, and as much as $100B in airline and other industry relief. Plus, the government is allowing a 90-day extension on paying taxes. No word on if there are any handouts for breakthrough newsletters.
Both Mnuchin and POTUS have made it abundantly clear that the plan is to get cash directly into Americans’ hands faster than J.G Wentworth *dials 877-CASH-NOW*.
The most immediate relief would come in the form of an initial $250B tranche of direct payments that Mnuchin hopes can be sent to the public by the end of April *Checks calendar*. “Wait, that’s still like five weeks from now.” – literally everyone
The White House hopes that the injection will spur spending and keep the economy afloat. In case you had forgotten, consumer spending had been a driving force behind the continued economic recovery following the 2008 financial crisis.
And fear not, the payments will be vetted before being sent out to make sure that wealthy Americans aren’t receiving payments they don’t need. I bet you’re regretting that trust fund now, Chad!
So when do I get my check?
Hold your horses. Before Uncle Sam starts delivering Publishers Clearing House checks to every American’s doorstep the proposed stimulus faces an uphill battle in Congress before it reaches POTUS’ desk for signature.
The bottom line…
And just in case there wasn’t enough bad news… it’s officially #recessionszn. Womp, womp. That’s right, Morgan Stanley and Goldman Sachs have officially declared that we are in a recession. The banks are forecasting average growth of GDP this coming year to be just 0.9%, which for those of you tracking at home, is pretty damn bad.
In fact, that is the second-lowest growth rate since the 1990s with only 2009’s contraction of 0.8% being worse. So, you’re telling me there’s a chance?!
☑️ Mandatory vacation.
Mariott, the world’s largest hotel chain is not feeling well, and as a result, will be “furloughing” tens of thousands of employees as hotel stays expect to plummet over the coming months. Gee, I wonder why no one’s traveling? Employees won’t be paid, but most will continue to receive health-care benefits. Sorry, unpaid interns.
Everyone from GMs to the housekeeping staff is subject to time off, but there have been no layoffs or furloughs at the corporate level at this point…is that so? Mariott says it will bring employees back on board after this all blows over, but no one’s quite sure when that will be. Mariott employs more than 130K people in the US, and the company’s shares were down 12% on the day, while broader markets had huge gains.
☑️ This ride’s taken.
Uber and Lyft are suspending shared rides amidst the coronavirus outbreak. Sorry, people who don’t want to ride the bus but are too cheap to get their own ride-share. That means no more pool rides, with the companies only offering the single, economy-ride level. Think: UberX, not Black, you 1%ers, you.
The move comes as the companies, believe it or not, listened to their “independent contractors” for once. Drivers were complaining that they were still required to pack strangers into their cars, even as the virus’ outbreak continued to grow. There goes your 5-star rating.
☑️ Boeing broke.
Boeing shares fell 22% after Standard & Poors dropped its credit rating from A- to BBB (read: junk). The stock drop marks a more than 6-year low.
Despite talking with White House officials to get short term assistance in the form of a $50B for the airline industry, the company’s low was still tough to swallow. To date, Boeing’s down 74% since its fatal Ethiopian Airlines crash more than a year ago. March 17th, not so lucky for Boeing, is it?
☑️ Thanks, but no thanks.
SoftBank has had enough of WeWorks’s whole “losing money” thing. The company is backing out of part of its planned bailout of the rapidly failing office-space-rental firm. SoftBank citing regulatory probes into the startup’s business by the SEC and Justice Department as its “out.” As WuTang once said, “The SEC ain’t nothin’ to f*ck with.”
The $5B lifeline SoftBank offered to WeWork is still in effect, however. Which makes sense, seeing as more than $1.5B of that money has already been “invested” by WeWork. SoftBank also didn’t say it was pulling out of the deal completely. Maybe it’s just waiting for the markets to turn around… but then again, aren’t we all?