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COVID-19 roundup: 12 more weeks of CEWS

Prime Minister Justin Trudeau closes the front door behind him as he steps out of Rideau Cottage for a daily news conference on the COVID-19 situation in the country, in Ottawa, Thursday, May 14, 2020. The Canadian Press/Adrian Wyld
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It’s day 66 since Canada’s 100th coronavirus case. The number of cases is 74,532 as of publication time, up 1,044 since yesterday—a nine per cent decrease from the seven-day prior average of new cases. On their respective 66th day, U.S. daily new cases were up four per cent from the seven-day prior average; the U.K. was down 20 per cent in daily new cases from the seven-day prior; and in Italy, new cases were also down 20 per cent.*

Slovenia is the first European country to declare its coronavirus outbreak over. 

CEWS news: The federal government is extending its salary assistance program through late August, Prime Minister Justin Trudeau announced Friday. Ottawa will also consider changes to the eligibility criteria, including the requirement that businesses lost at least 30 per cent of their revenue in the month for which they’re applying. Many innovation-economy executives and tech associations say that rules out fast-growing startups and scale-ups, particularly SaaS companies. Trudeau said Ottawa doesn’t want the program to constrain applicants’ growth plans. “You have now some runway to catch your breath as you get restarted,” he said, speaking to business owners. Private schools, amateur athletic organizations and Indigenous government-owned corporations, among other previously-excluded organizations, will also be eligible. The changes will require parliamentary approval. Economists say fewer companies are using CEWS than expected. Trudeau also announced $450 million to provide a CEWS-matching $847 weekly allowance for staff at universities and health research institutes.

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The latest numbers from BDC: As of May 14, BDC Capital has signed deals with eight companies for financing worth a combined $14.2 million of the $150 million it has budgeted for the Capital Bridge Financing Program. There are 206 active applicants collectively seeking $386 million, according to Small Business Minister Mary Ng’s office. 

Kevin Talbot, a managing partner at Relay Ventures, said the amount of funding allocated in just over a month seemed reasonable, given it’s not strictly emergency funding, like other government programs. “If the numbers were lower I would be concerned about the process being too rigorous,” he said in an email to The Logic. “If the numbers were higher I would be concerned about a lack of discipline.” Relay is an investor in The Logic. 

BDC declined to disclose how much it’s given out thus far from a $20-billion budget to fund up to 80 per cent of loans of up to $6.5 million, which companies get through their existing financial institutions. “Numbers on the BDC Co-Lending Program will be available in June,” said spokesperson Jean Philippe Nadeau. Finance Minister Bill Morneau announced the program on March 27, and BDC declared it open on April 24.

By the numbers: 

$151.7 billion: According to Finance Canada’s latest tally, that’s how much Ottawa has budgeted for COVID-19 direct support measures.

Canada Emergency Wage Subsidy 

75 per cent of an employee’s wages, up to $847 a week, for employers whose gross revenues dropped by at least 15 per cent in March, and 30 per cent in April and May

An estimated 1.7 million workers will receive aid through this program; 123,642 applications have been processed and approved as of May 11.

Canada Emergency Response Benefit 

$2,000 a month for up to 16 weeks for workers who have lost income due to COVID-19 

As of May 11, 13.7 million Canadians have received a total of $35.9 billion.

In the markets: All major North American indices closed up Friday as U.S. consumer sentiment hit 73.7 points, well above the 68-point consensus estimate. The rise in American stock indices was marginal, with the Nasdaq closing highest with a 0.79 per cent increase, as a number of negative macroeconomic indicators also dropped today. The U.S. Census Bureau reported a 16.4 per cent drop in April consumer spending from a month earlier, ahead of the 12 per cent consensus estimate. Stocks dropped earlier in the day, following news that Washington moved to block shipments of semiconductors to Huawei, the latest indication of rising tensions between China and the U.S. China also reported rising urban unemployment and a 7.5 per cent drop in retail sales for April. 

The trade ministers of G20 countries issued a statement promising to “mitigate the impact” of COVID-19 on trade. The commitment comes as Canadian investors divested a record $42.2 billion in foreign securities in March and foreign investors reduced their exposure to Canadian investments by $9.8 billion. The Canadian dollar added to this week’s decline, dropping 0.46 per cent in late-afternoon trading to hit 70.89 cents U.S. Meanwhile, Hong Kong GDP shrank 8.9 per cent year over year, the worst quarterly decline since records began in 1974. Germany fell into a recession in the first quarter after a 2.2 per cent drop in GDP, and the economy ministry is predicting things will get worse in the second quarter. 

“I wish you vigorous health and a robust mindset”: COVID-19 is throwing corporate email etiquette into disarray as people struggle to acknowledge their new shared reality.

Cross-country checkup: Students in B.C. will return to school on a part-time, voluntary basis starting June 1 to prepare for schools to be fully opened in September. Lobster plants in New Brunswick are hiring high-school and middle-school students to fill their worker shortage, after the government blocked foreign workers—who made up about half of the industry’s labour force—from the province during the pandemic. About one in three Ontarians have been significantly impacted by the economic shutdown from COVID-19, according to the province’s Financial Accountability Office, which estimates that 1.1 million people in the province have lost their jobs and another 1.1 million have had their hours sharply reduced. International students studying at Canadian universities will be allowed to start their studies remotely; they can complete up to 50 per cent of their courses outside Canada, if necessary.

Bay Street to Main Street: Nationwide home sales dropped 57 per cent between April and March, the biggest one-month drop since 1984, according to data from the Canadian Real Estate Association (CREA). The average selling price was down 11 per cent, from $533,504 to $475,310, with the Greater Toronto Area dropping 12 per cent and Vancouver down six per cent. There are some signs sales are picking up in May. “Preliminary data for May suggest things may have already started to pick up a bit for both sales and new listings,” said CREA senior economist Shaun Cathcart. At the same time, though, large banks are tightening their requirements for real estate investors, which could slow down buying activity. Scotiabank is no longer permitting people to use a home equity line of credit to make a down payment on rental properties. The tightening comes as the country’s biggest banks have provided mortgage deferrals for over 740,000 homeowners so far. 

  • Onex posted a US$1.1-billion loss and wrote down the value of WestJet Airlines. Onex declined to break down how much the airline’s value has declined, but analysts estimate the drop at 65 per cent since it bought it for $3.5 billion in December 2019 . 
  • Moody’s has revised its outlook for Newfoundland and Labrador from stable to negative, and S&P Global has done the same for British Columbia.
  • Ottawa is planning to announce COVID-19 support specifically for women entrepreneurs. 
  • The Canadian Institute for Advanced Research is launching 14 projects that use AI to address COVID-19, while the Ocean Supercluster is planning to invest up to $35 million in short-term projects that will help the sector during the pandemic. 

Eviction day looms: On Friday, Ontario Premier Doug Ford urged “vicious” landlords to “be flexible” and give small businesses “a break.” The province has not put a moratorium on commercial evictions, despite increasing calls to do so as landlords get ready to shut businesses out tomorrow for non-payment of May’s rent. A federal-provincial rent relief program has been announced, but has not yet taken effect. 

The Logic surveyed all 13 provinces and territories to inquire about any updated relief. A spokesperson for Prince Edward Island said it has expanded its budget for rent relief from $1 million to $1.5 million; so far, 1,288 Islanders have been approved for the program, which pays landlords $1,000 per applicant over three months. A spokesperson for Nova Scotia said 379 landlords have registered for the province’s rent relief program, deferring approximately $10.7 million in rent for 1,157 tenants. Representatives for Saskatchewan and Ontario said they are continuing to consult with the federal government. “We have no regulatory mechanism to ban commercial evictions, nor to force landlords to access the CECRA,” said Paula Steckler, a spokesperson for the Saskatchewan executive council. A Manitoba government spokesperson said only residential, not commercial, tenants are eligible for the province’s freeze on rent increases and non-essential evictions. Alberta is “continuing to monitor the situation,” while New Brunswick said it was “too early to give any specific numbers” about the relief it has so far delivered for rent. A full breakdown of provincial rent relief can be found here

Trace me on my cellphone: Shopify CEO Tobi Lütke said it would be vital for “everyone” in Canada to have an app using Apple and Google’s technology; in a tweet, he said “a small group of Shopify volunteers” is working on an open source design for a “reference implementation.” Apple reportedly refused Alberta’s requests to weaken iPhone Bluetooth restrictions for the province’s contact-tracing app; health officials are now considering switching to the tech giants’ app. Not everyone, however, is a fan. The board of advisers assessing the U.K.’s contact-tracing app is divided over whether to switch to Apple and Google’s technology, citing “many failings around communication and transparency” from the government. The head of the board said public trust could be lost if the app doesn’t work properly. While several countries in Europe have created national contact-tracing apps, there are concerns about their effectiveness once cross-border travel resumes.

In the lab: U.S. President Donald Trump announced Operation Warp Speed on Friday, which brings together private pharmaceutical companies, government agencies and the military to develop a vaccine by the end of the year. (Experts say it may take much longer based on the history of vaccine development.) The government plans to stockpile hundreds of millions of doses of vaccines that are currently under development. One trial from the U.S.’s National Institutes of Health and the University of Oxford has reported promising results against COVID-19 in six rhesus macaque monkeys. Quebec-based Medicago said its vaccine candidate “induced a positive antibody response only 10 days after a single dose in mice.”

Drinking from the firehose: 

  • U.S. retail sales and industrial production both saw record declines in April of 16.4 per cent and 11.2 per cent, respectively. 
  • About eight per cent of U.S. companies plan to use immunity testing for employees as part of their return-to-work plans, according to a survey by Mercer, which advises firms on health benefits.  
  • U.S. private flight activity was down two-thirds in the first 13 days of May compared to the same period last year; that’s down from a 77 per cent drop in April. 
  • Indian meal-delivery firm Zomato—in which Uber holds a 9.99 per cent stake—has laid off 13 per cent of its workforce and is instituting pay cuts for remaining staff, as the virus has made customers leery of ordering takeout. 
  • U.K.-based digital bank Monzo is raising funding at a nearly 40 per cent smaller valuation from its last funding round. 
  • WeWork said it cut its cash burn by nearly 60 per cent sequentially, and revenues rose 45 per cent, helping buffer the impact of COVID-19. 
  • Zoom Video Communications is expanding its engineering team in the U.S. by about 60 per cent over the next two years. 
  • Amazon stakeholders with a combined US$4.2 billion in shares in the firm urged Judith McGrath, Amazon’s chair of the committee responsible for overseeing employee health and safety, to report on how the company plans to protect workers during COVID-19. The company also announced it would reopen warehouses in France as of May 19, after a labour dispute over protecting workers from the coronavirus closed them for over a month.

Find a seksbuddy: That’s the advice Dutch officials are giving single people during the lockdown, warning that chosen partners should be coronavirus-free. “Discuss how best to do this together,” the government suggests.

* We’re emphasizing new cases, rather than running totals, because “flattening the curve” is when each day’s new cases are fewer than those of the previous day. The percentage increase is determined based on how today’s cases compare to a rolling seven-day prior average. Numbers may also vary based on countries’ individual testing capacity and reporting.

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