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COVID-19 roundup: A new LEEFF

Minister of Finance Bill Morneau rises in the House of Commons on Parliament Hill in Ottawa, as Parliament was recalled for the consideration of measures related to the COVID-19 pandemic, on Saturday, April 11, 2020. The Canadian Press/Justin Tang
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It’s day 71 since Canada’s 100th coronavirus case. The number of cases is 80,081 as of publication time, up 969 since yesterday—an 11 per cent decrease from the seven-day prior average of new cases. From 30,000, the number of cases increased by 10,000 every five days to 60,000. It took seven days to get from 60,000 to 70,000, and eight more days to increase to 80,000. On their respective 71st day, U.S. daily new cases were down eight per cent from the seven-day prior average; the U.K. was down 16 per cent in daily new cases from the seven-day prior; and in Italy, new cases were down 30 per cent.*

Europe should brace itself for a second wave of coronavirus infections, according to the director of the EU agency responsible for advising governments on disease control. “The question is when and how big. That is the question in my view,” said Dr. Andrea Ammon.

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Credit for corporate Canada: Ottawa’s big-business loan program started accepting applications on Wednesday. There’s no cap on the amount of credit firms can get from the Large Employer Emergency Financing Facility (LEEFF), Finance Minister Bill Morneau said Monday; the minimum amount is $60 million, and companies need annual revenues of at least $300 million to qualify. “We’re really looking at those cash-flow needs for the next 12 months, to try and bridge through the COVID-19 crisis,” Morneau said.  

As The Logic reported last week, the government will ask public companies using the program for warrants convertible to equity or cash equivalents, allowing Ottawa to take stock. On Wednesday, it announced those options will be worth 15 per cent of the loan. The provision will “protect Canadian taxpayers and to make sure that they share in any upside borrowers see in the recovery to come,” Morneau said. Private companies will pay equivalent fees.

A fifth of the money will take the form of senior—i.e. first-priority—debt secured with existing lenders. The other 80 per cent will be a five-year unsecured facility, against which Ottawa will charge five per cent in the first year, eight per cent in the second, and an additional two per cent every subsequent year. Morneau suggested those rates will act as a barrier to overuse. “If [companies] have other sources of capital, presumably they’ll go to those sources of capital first,” he said. “We’re not expecting this to be low-cost capital.” 

No part of the loans offered through LEEFF will be forgivable, unlike its small-business equivalent, the $40,000 Canada Emergency Business Account. 

Forgivable rent: On Wednesday, Prime Minister Justin Trudeau also announced the government’s loan program for business landlords will start taking applications on May 25. The Canada Emergency Commercial Rent Assistance provides landlords with forgivable credit worth 50 per cent of rents up to $50,000 which—along with an additional 25 per cent reduction absorbed by the property owner—is passed on to tenants. Some landlords aren’t planning to use the program, because of what they consider unclear eligibility and coverage rules. Small-business lobby groups have also expressed concern that the lack of accompanying eviction moratoriums—most provinces have halted residential actions, but not commercial ones—put tenants at a negotiating disadvantage. “We really hope that [landlords and tenants] will take up on it,” Trudeau said, asked about concerns over low interest, adding that widespread business bankruptcies would “be bad for building owners who will see a slower regaining of economic activity.” He also said the government is planning a new support measure for large retailers.

Bankify: E-commerce giant Shopify announced a slew of new features for merchants at its annual Reunite conference. The company will launch a card and no-fee corporate account called Balance to U.S. clients later this year. Store owners will be able to access sales revenue “much faster than [they] would with any legacy bank,” COO Harley Finkelstein said. The new system will also integrate bookkeeping tools. Deposits will be held by as-yet unspecified financial institutions. “Shopify Balance is not a bank and we are not pursuing banking licenses at this time,” Jackie Warren, a Shopify spokesperson, told The Logic. The company will work with its partners to offer “deposit insurance, security and support.” Warren said Balance doesn’t yet have a Canadian launch date. The company also announced it will add installment functionality to its Shop Pay tool, giving merchants the full price upfront and handling collection of the four payments itself for no extra fee. Third-party services like Affirm already offer a similar service, but charge interest. Elsewhere, Shopify is opening its fulfillment network of warehouses and software to all its merchants for North American orders, following a limited trial phase. And it’s setting up a local delivery feature that allows merchants to take orders in a self-defined area where they can do their own drop-offs. Shopify’s stock rose three per cent in Wednesday trading on the New York Stock Exchange. 

In the markets: All major North American indices closed up today on investor optimism for an economic recovery, despite a steady stream of negative macroeconomic indicators. The U.S. Congressional Budget Office is predicting the economic recovery will drag on until the end of next year. Inflation in Canada dropped below zero for the first time since 2009. The consumer price index fell 0.2 per cent in April on a year-over-year basis, compared with a 0.9 per cent March gain. Prices for food and cleaning products ticked up, while hotels slashed prices. The dollar rose to 71.91 cents U.S. in late-afternoon trading. Global indicators were similarly dour, as eurozone inflation hit an almost four-year low in April and worldwide imports and exports fell to their lowest levels in at least four years. The U.K. is selling negative-yield government bonds for the first time, while Sweden’s central bank warned that the country’s financial institutions are vulnerable to credit losses. Sports gamblers without games to bet on are turning to the stock market. Charles Schwab, E*Trade and Interactive Brokers added a collective 780,000 new customers in March and April. 

“I am afraid that the real epidemic that we have undergone is an epidemic of fear. Fear of contagion”: Italian singer Andrea Boccelli is eager to get back to work and a sense of normalcy to help people forget the pandemic as a “bad memory.”

Cross-country checkup: Canada’s chief public health officer Theresa Tam updated guidance on wearing masks, saying they should be worn in public if physical distancing isn’t possible. “For the spring and summer months, strict adherence to the public health basics of physical distancing, handwashing and cough etiquette must continue as the bare minimum,” she added. Nearly half of Canadian believe at least one of four conspiracy theories or myths about COVID-19, according to a survey of 2,000 residents conducted by Carleton University’s School of Journalism and Communications. Ottawa is partnering with the Wu-Tang Clan to sell T-shirts, hand sanitizer and bowls, with proceeds going to the Ottawa Food Bank. 

Bay Street to Main Street: Average house prices will drop between nine and 18 per cent nationwide in the next 12 months, according to Canada Mortgage and Housing Corporation CEO Evan Siddall. He also warned that 20 per cent of mortgage holders could miss payments, compared with the 0.31 per cent who did last year. About 740,000 households, representing about 15 per cent of mortgages held by banks, have already been granted deferrals of up to six months. Siddall is preparing for when those deferrals expire. “The resulting combination of higher mortgage debt, declining house prices and increased unemployment is cause for concern for Canada’s longer-term financial stability,” he said. 

  • The number of job postings on Indeed Canada rose last week, although it’s still 48 per cent below last year’s trend. 
  • Telus is offering COVID-19 researchers aggregate de-identified data on Canadians’ movements.
  • Zoom will collect HST starting June 1, citing international developments. Canadian law on sales-tax collection has not changed. 
  • Waterloo-based DarwinAI has made a deal with Lockheed Martin to help the aerospace firm’s customers use artificial intelligence.
  • All Apple stores in malls in British Columbia, Manitoba, Nova Scotia and Alberta are reopening this week. The firm has not yet announced reopenings in Ontario or Quebec. Apple’s new safety protocols include temperature checks, social distancing, face coverings and an adjusted schedule. “Our social distance protocol means a limited number of visitors in the store at one time so there may be a delay for walk-in customers,” the company said in a statement.

Crowdsourcing the crisis: MediaSmarts, a non-profit centre for digital literacy, has launched a new campaign called Check First. Share After in an effort to combat COVID-19 misinformation. Here is their video on how to check information about the virus. 

Postcard from Whitehorse: For Jacqueline Bedard, the transformation of Yukon College into Yukon University, the first in Canada’s North, was a decade in the making. The celebration of its first official day was planned to every minute detail. On May 7, 250 people were supposed to attend an event marking the occasion, which would also serve as a party for the retiring president. On May 8, the university would host its first convocation, followed by a dinner that night with guests from across the country and the world who donated and supported the campus. On May 9, all 13 campuses of the university, spread across the territory, would be represented on food trucks at an outdoor festival complete with a pancake breakfast and lots of activities. “That’s what we hoped to do,” said Bedard, the executive director of external and government relations at the university. “Instead, we did none of the events.” 

The COVID-19 pandemic put an end to all in-person activities; with the territory’s borders shut, no one could visit, either. So Bedard and the university’s staff and professors improvised. They sent gift boxes to every student in the university’s first graduating class with the program of the convocation event that didn’t happen and instructions on how to celebrate online. (They’re all invited to the 2021 graduation ceremony, “assuming it happens.”) The university launched a rebranded website with a new logo. They delivered a Yukon University T-shirt to every employee and asked for selfies, and sent a card to every home in the territory telling them that “Yukon College is now Yukon University.” The prime minister recognized the new university on Tuesday, saying it was “some good news, something we haven’t had enough of lately.” 

“It was celebratory, but just not as we imagined,” Bedard said. “There was not a lot of opportunity to celebrate and recognize all the hard work. It feels less real, I suppose.”

Trace me on my cellphone: Apple and Google released the first public versions of their exposure-notification API. The companies said 22 countries and several U.S. states have already asked for and received access to the API. Meanwhile, cybersecurity experts have found seven security risks in the U.K.’s contact-tracing app, including one that would allow hackers to intercept notifications that inform people they have come into contact with someone with COVID-19 to either block them or send out fake ones. Starting May 22, all residents in Qatar must download the government’s app or face imprisonment. 

BlackRock stays green: “We believe that we are still in the early stages of a persistent and long-lasting shift toward sustainability – the full effects of which are not yet included in market prices, given the long transition. This is a transformation that we expect to see through the current pandemic, recovery, and long after.” So reads “Sustainable Investing: Resilience Amid Uncertainty,” a report from BlackRock, in which the world’s biggest fund manager said companies employing environmental, social and governance criteria are more resilient during economic downturns. In January, BlackRock CEO Larry Fink pledgedto place sustainability at the center of our investment approach” with the goal of achieving “a more sustainable and inclusive capitalism.” Yet critics say BlackRock’s rhetoric outmatches its action. The fund manager recently voted against resolutions calling for two Australian oil companies to set broad carbon-reduction targets.

In the lab: Moderna, the Cambridge, Mass.-based maker of an experimental COVID-19 vaccine, saw its stock price jump 20 per cent after reporting that eight study participants who took the drug developed antibodies that killed the virus in a lab dish. The potential vaccine is one of eight worldwide approved to test on humans, and the first to report any results. Some have called the news premature, however; the company did not say how the other study participants reacted to the drug, nor did it publish any data to support its findings. Moderna’s market cap is at US$27 billion, and it does not yet have a product on the market. Meanwhile, the ruling Communist Party in China, where half of the experimental COVID-19 vaccines are being developed, is fast-tracking testing in a bid to find a “silver bullet” for reopening the economy. Switzerland has tasked its defence department with securing enough vaccines for the country, amid fears that there won’t be enough to go around once it’s available. Research published in Science shows a prototype vaccine tested on monkeys saw the animals develop antibodies to the virus—after a bout of pneumonia.

Drinking from the firehose: 

  • India-based ride-hailing firm Ola, whose investors include SoftBank and Tencent, is laying off 1,400 employees after its revenue dropped 95 per cent in two months. 
  • Rolls-Royce is cutting 9,000 jobs, mainly from its civil aerospace division in the U.K., as it plans for a years-long recovery in the airline industry. 
  • The International Energy Agency is predicting a slowdown in the growth of renewable energy sources this year for the first time in 20 years, as COVID-19 halts progress on wind and solar projects. The sector is expected to rebound following the pandemic. 
  • The music industry is poised for a 25 per cent revenue hit this year, largely due to concert cancellations amid the pandemic, but Goldman Sachs analysts predict the sector is set to grow 84 per cent by 2030, buoyed by growth in paid subscriptions, new licensing opportunities and regulatory developments. 
  • Target followed retail giant Walmart in posting better-than-expected earnings results for its latest quarter; earnings and revenues were both above analysts’ estimates, driven largely by a 141 per cent increase in digital sales. 
  • Amazon launched shooter game Crucible on a swell of interest in gaming during the pandemic; it’s the company’s first big-budget game since launching its gaming studio in 2012.

Around the world: All 50 U.S. states have begun to reopen, as the U.S. Centers for Disease Control and Prevention released a 60-page guideline today that recommends schools and bars remain closed. A Florida scientist in charge of maintaining the state’s COVID-19 database said she was fired after refusing to “manually change data to drum up support for the plan to reopen.” U.S. President Donald Trump said he is planning to host G7 leaders at Camp David for their annual summit, rather than by video conference, as a sign of “normalization.” The U.S. is sending 200 ventilators to Russia, where coronavirus cases near 300,000. 

New Zealand Prime Minister Jacinda Ardern suggests employers consider a four-day working week to encourage domestic tourism. Britain’s parliament has ended its virtual sittings, citing slow and restrictive videoconferencing; in-person sitting resume June 2. Germany will veto hostile foreign takeovers of health-care companies. Singapore delivered a death sentence via Zoom video call to a man convicted of drug trafficking. Cambridge University has moved all classes online for the full 2020–2021 academic year. The 2021 Academy Awards may be postponed.

“I did this tattoo to remember this sad moment, to remember it forever, and to learn something from it”: People are inking their bodies with various reminders of the pandemic: toilet paper, masks, hand sanitizer, Corona beer bottles in various stages of explosion and cartoon renderings of the virus itself. 

* 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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