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It’s day 125 since Canada’s 100th coronavirus case. The number of cases is 107,807 as of publication time, up 217 since yesterday—a five per cent decrease from the seven-day prior average of 228 new cases. At its peak on May 3, the seven-day average was 1,603 new cases a day.
The United States recorded more new COVID-19 cases over the weekend (123,387) than the total number of cases recorded in Canada since the pandemic began.
“Greater certainty”: Ottawa plans to extend its wage subsidy program “until December,” to “give greater certainty and support to businesses as we restart the economy,” Prime Minister Justin Trudeau pre-announced on Monday. An official unveiling of the extended timeline—and, business groups hope, expanded eligibility criteria—is set for some time “this week,” he said.
The Canada Emergency Wage Subsidy (CEWS) gives employers up to $847 per week per employee to pay staff salaries, provided their revenues dropped at least 30 per cent in April, May and June compared to the previous year or the average of January and February. The requirement disqualified high-growth companies and software-as-a-service business models; scale-ups like point-of-sale tech firm TouchBistro and fintech Borrowell cited their ineligibility for the program when they laid off staff in April.
In May, Trudeau said the government was considering updating the CEWS criteria. Business groups like the Canadian Chamber of Commerce (CCC) and the Canadian Federation of Independent Business (CFIB) have called for a ramping model, tying the value of support to the size of an employer’s revenue decline so that companies keep receiving the subsidy as they reopen and start selling again.
The CEWS has paid out $18 billion to 252,370 different organizations so far, and last week’s economic and fiscal snapshot projected a final cost of $82.3 billion. Ottawa’s plans to continue the program for an extra four months could account for the big difference between the sum it has spent to date and its expected outlay.
“By extending CEWS to December, the government has given more companies the confidence they need to keep hiring back workers and investing in their firms,” Benjamin Bergen, executive director of the Council of Canadian Innovators, told The Logic. In June, the organization recommended that the wage subsidy run through the end of the year. Bergen also called for Ottawa to “further increase access to capital for innovative firms,” since not all qualify for the program.
But if Trudeau is hoping to give businesses “greater certainty” about the support to which they’ll have access as the economy reopens, he’ll need to provide those additional details soon. “If they get the eligibility rules right, this will allow small firms time to hire back their staff (typically the largest expense) while their revenues slowly return to normal,” CFIB CEO Dan Kelly tweeted on Monday. “But for this to work, employers need to know what the program rules will look like for the duration of the extension.” He noted that criteria for the current qualification period have yet to be posted.
CCC CEO Perrin Beatty said a successful program update requires changing the revenue rules, and should also “provide absolute clarity and consistency” on eligibility criteria.
Finance Canada told The Logic it could not yet disclose further details of the CEWS extension.
In the markets: The TSX, S&P 500 and Nasdaq closed down after California rolled back its reopening plans. It was a volatile day in the markets, with all major North American indices initially up after earnings season kicked off with better-than-expected revenues from Pepsi, the first major firm to report. Expectations are generally low for this season, with S&P 500 firms earnings expected to drop 45 per cent quarter over quarter, though those low expectations are already baked into stock prices. The uptick came despite U.S. coronavirus cases exceeding 3.3 million and deaths topping 135,000, prompting public health officials to warn that it may become difficult to stop the spread.
The Shanghai Composite Index continued its rise, closing up 1.8 per cent; it has extended its gains to around 13 per cent this year as investors continue to bet that China’s nascent economic recovery will last. A growing number of investors are buying Chinese bonds as safe-haven assets, although it’s unclear if a domestic recovery will do much to power a global rebound. Some analysts are concerned the U.S. is poised for further economic pain, now that 70 per cent of the country has paused or reversed economic recovery plans.
The Bank of Canada purchased $600 million of 30-year bonds in a reverse auction, 50 per cent more than it ever has, in a bid to keep yields down despite increased federal government spending. The Canadian dollar fell to 73.47 cents U.S. in late afternoon trading. The price of gold continued last week’s rise, moving up 0.7 per cent to US$1,812 an ounce. Silver is doing even better, up 66 per cent since mid-March, buoyed by factory reopenings and investor demand for precious metals.
“I’m going to try something I’ve never done before. I’m going to have a No Scheduled Meeting week”: Brad Feld, a co-founder of Foundry Group and Techstars, is trying a calendar experiment.
Cross-country checkup: Most of Ontario will move into Stage 3 of reopening on July 17, with the exception of the Greater Toronto Area and some other regions. Nearly all businesses—including gyms, restaurants and movie theaters—will be able to reopen, though they’ll have to comply with health and safety guidelines like physical distancing, installing plexiglass barriers and following rigorous cleaning protocols. Nightclubs, buffet-style restaurants and amusement parks and water parks will remain closed. The province is also loosening restrictions on indoor gatherings from a maximum of 10 people to 50; a maximum of 100 people can gather outdoors.
In Quebec, Premier François Legault announced that masks will be mandatory in all indoor public spaces across the province starting July 18. Newfoundland and Labrador is loosening restrictions on visits to hospital patients and long-term care residents; visitors from out of country and province are allowed into the province on a case-by-case basis. A health-care worker in Charlottetown, P.E.I. has tested positive for COVID-19 after returning from a trip to Toronto. The man worked seven shifts—coming into contact with 125 staff and 100 patients—after initially testing negative for the virus upon reentering the province. B.C. health officials have identified four businesses linked to new cases of COVID-19 in Kelowna after the province reported its highest one-day increase in daily new cases since May.
Bay Street to Main Street: Canadian consumer confidence has stalled for the first time in 10 weeks, according to data compiled by Bloomberg. Fifty-seven per cent of Canadians believe the economy will get worse over the next six months, up from 53 per cent two weeks ago, according to a poll of 1,000 people conducted by Nanos. Similarly, 16 per cent of Canadians reported feeling insecure about their employment, a one percentage point increase. The data is the latest dour economic indicator Canada is facing. Sixty per cent of jobs lost during the pandemic have yet to be reinstated, according to Statistics Canada.
- TD Bank has made loans under the U.S. Paycheck Protection Program worth between US$8.2 billion and US$12.1 billion, the sixth highest of any bank. RBC, BMO and CIBC have collectively processed hundreds of millions either directly or through subsidiaries.
- Cash in circulation jumped in March and April, according to a Bank of Canada study. Seventy-four per cent of respondents said they had no plans to go cashless in the next five years.
- WestJet will offer flights to 48 destinations between July 15 and September 4, a 10 per cent increase compared with its July flights, but a 75 per cent decrease year over year from August 2019.
- Telemedicine firm Wello, which has offices in Calgary and Toronto, has built a self-screening tool it’s marketing as a way for employees to return to their offices.
- Inflation dropped by 0.1 per cent in May, according to a revised estimate from Statistics Canada, which initially announced a 0.4 per cent drop.
- Toronto-based chip maker Untether AI raised US$7 million in a round led by Radical Ventures.
In the lab: A Health Canada-approved human trial at Dalhousie University has been delayed because the Chinese government hasn’t yet approved the delivery of the vaccine candidate, made by CanSino Biologics, needed for testing. Pfizer and BioNTech said two of their vaccine candidates have received “fast track” designation from the U.S. Food and Drug Administration. A Russian university has reportedly completed clinical trials of its candidate; according to the chief researcher, the 20-person study “proved that the vaccine is safe.”
Meanwhile, researchers are offering their gratitude to their most valuable lab mates: mice. The animals have been employed in mass numbers in clinical trials globally; just as many have been euthanized due to lab closures and more frequent experimentations. “I try to think that they’re sacrificed for human health and for science,” said one researcher.
Drinking from the firehose:
- Disagreements between leaders at the U.S. Federal Reserve and Treasury Department delayed the launch of a US$600-billion Main Street lending program, with both sides unable to decide the terms with which the relief money should be delivered.
- WeWork chairman Marcelo Claure said the company is poised to turn a profit in 2021, citing increased demand from large firms for flexible office space during the pandemic.
- A group of 83 of the world’s richest people is calling for “immediate, substantial and permanent” tax hikes on the wealthy to help pay for COVID-19 recovery.
- More firms are using blank-cheque companies as a vehicle for going public, a quicker and more reliable route for some than a traditional IPO, given the market’s pandemic-induced volatility.
- Yelp will rehire nearly all the 1,100 staff it furloughed due to the pandemic. But the firm is keeping offices closed into 2021, resulting in about 63 layoffs.
- Cocoa prices, which some analysts view as an indicator of global economic health, have dropped to a 15-month low.
The grand reopening: According to a Reuters tally, it has taken the world just five days to climb to 13 million cases from the 12 million recorded on July 8. California has ordered many businesses to close; two of the state’s largest public school districts said they won’t reopen in the fall. Florida reported a record number of cases on Sunday: 15,300 new infections over a 24-hour period. Despite the surge, Disney World reopened over the weekend, with the park’s new chairman saying it was ready to resume “independent of what’s happening on the outside of our gates.” After reopening last month, Hong Kong Disneyland announced it would close again on July 15 due to a new outbreak, which experts are determining to be a third wave of infections, and the most severe yet; the city has already reimposed sweeping social-distancing restrictions. About 250,000 people in Manila will return to lockdown to stall a surge. Save the Children warned that almost 10 million kids “may never return to school” after pandemic.
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* 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.
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