This article is a preview of The Logic’s Daily Briefing newsletter, sent every weekday.
Get complimentary access to award-winning reporting to navigate these unprecedented times. Sign up now.
It’s day 45 since Canada’s 100th coronavirus case. The number of cases is 43,552 as of publication time, up 1,442 since yesterday, flat from the three-day prior average of new cases. On their respective 45th day, U.S. daily new cases were up one per cent from the three-day prior average; the U.K. was up 12 per cent in daily new cases from the three-day prior; and in Italy, new cases were down 28 per cent.*
The U.S. coronavirus death toll, the highest in the world, topped 50,000 on Friday, having doubled in 10 days.
“Because almost everybody has a landlord”: Commercial landlords who agree to cut small businesses’ rent by 75 per cent and not evict them will be able to get forgivable loans worth 50 per cent of what they’d normally collect from the Canada Mortgage and Housing Corporation (CMCH), the federal government announced Friday. The cash will flow to property owners’ lenders, and provinces and territories will pick up half the cost of the credit facility, called the Canada Emergency Commercial Rent Assistance (CECRA). Ontario Finance Minister Rod Phillips said the province has budgeted $241 million for the measure. Landlords can use the program for leases of less than $50,000 a month held by firms that have lost at least 70 per cent of their revenues to COVID-19. “We’re looking forward to seeing a very positive situation for tenants,” said federal Finance Minister Bill Morneau, while “landlords can now have more confidence that their tenants will be able to to stay in the property and bridge the time through this COVID-19 crisis, so they’ll be able to get back to business.” Phillips said the Ontario government was looking to maximize access: “We wanted to cover a broad swath of businesses, because almost everybody has a landlord.”
The CECRA will launch by mid-May, and cover April, May and June. Friday’s announcement follows weeks of lobbying by small-business groups for governments to do more for bricks-and-mortar operators who’ve shut their doors amid the pandemic. Prime Minister Justin Trudeau hinted at the program last week, but said Ottawa needed provincial and territorial buy-in to launch it.
Concerns about the CECRA remain. The Canadian Federation of Independent Business noted that it’s voluntary for property owners and some may choose not to participate, at cost to their tenants. “We think that this provides a very good incentive for both parties,” Morneau said on Friday. Jon Shell, managing director of Social Capital Partners and an organizer of the Save Small Business lobby group, said provinces must implement an eviction moratorium by May 1, or else “landlords hold all the negotiating power.” The coalition is also calling for some rent relief for businesses that have lost more than 30 per cent of revenue, but don’t meet the CECRA’s 70 per cent threshold. Still, it said the program will help many restaurants and personal services businesses that have been forced to close.
Both sides also have to come up with 25 per cent of the rent. Owners of small commercial buildings often pay as much for their mortgage as they receive in rent, hoping to earn a return as property values rise, Raman Bayanzadeh, a Vancouver-based retail real estate agent, told The Logic. “Unless they’re a big [real estate investment trust] or a big shopping centre, regular landlords don’t have that margin.” Trudeau suggested tenants who have no revenue to pay their share apply for the Canada Emergency Business Account (CEBA), which allows firms to get federally backed credit of up to $40,000 from financial institutions, a quarter of which is forgivable if they repay the loan by 2023. “That $10,000 actually represents an average month’s rent for a small business in this country, which means a quarter of that can actually last for four months,” he said. Firms can use the forgivable portion of the CEBA “without them having to indebt themselves further.”
BDC hangs out its shingle: Also on Friday, the Business Development Bank of Canada (BDC) announced firms will be able to start applying for loans of up to $6.25 million through their existing financial institutions; the Crown corporation will provide 80 per cent of the financing. The $20 billion co-lending program was originally announced in late March. Meanwhile, the parliamentary budget officer estimates Export Development Canada will earn $3 million in guarantee fees from its loan-underwriting program, which mirrors the BDC scheme in budget and scope.
$19.7 billion: That’s how much Ottawa’s direct support measures for businesses totalled even before the CECRA, for which it has yet to release a full costing. Government-backed credit-availability programs adds another $86.5 billion, while Finance Canada estimates the Canada Emergency Wage Subsidy—which it counts as aid for individuals, but goes through their employers—will cost $73 billion. That’s about 7.8 per cent of GDP in total. Ottawa is also deferring collection on $85 billion in taxes and duties.
The grand reopening: New Brunswick Premier Blaine Higgs has released early details of a phased reopening plan for the province, which reported no new cases for its sixth consecutive day. The first phase of the plan allows residents to embark on outdoor activities as of today; golf courses can also open as long as their restaurants and clubhouses remain closed; fishing and hunting season and religious meetings can begin. This initial phase is being organized with a concept Higgs called “two-family bubbles”: social-distancing rules will be dropped for every two households who decide to exclusively spend time together. The province believes a full return to normal won’t occur until a vaccine is developed; subsequent phases—including reopening businesses and sports—will be spaced out by two to four weeks, assuming the current trajectory holds.
Ontario Premier Doug Ford said his government will offer some details early next week about its reopening plans. Canada will be closely watching the United States for lessons about its own plan, Prime Minister Justin Trudeau said Thursday. U.S. President Donald Trump said he might extend federal social-distancing guidelines into the summer. Georgia became the first American jurisdiction to reopen today—a decision that has left many residents and experts confused. Many small businesses in the state are choosing not to reopen.
Newspapers in Italy are reporting that the country’s coronavirus lockdown, the longest and toughest in Europe, is to be eased over the next four weeks; there has been no official confirmation yet. Egypt will ease its coronavirus lockdown for Ramadan by allowing more businesses to reopen and shortening a night-time curfew. Israel is allowing some more businesses to reopen on midnight Saturday.
In the markets: Stocks were up today, with the major Canadian and U.S. indices extending yesterday’s gains. The TSX, Dow Jones, Nasdaq and S&P 500 all rose over one per cent each. The Canadian dollar, however, dropped slightly today, reaching 70.93 cents U.S. in late afternoon trading. The drop followed a report that Gilead Sciences’ drug failed to help patients in its first clinical trial and data on U.S. business activity mirroring similarly dismal levels from Europe and Asia. It also comes as U.S. banks are becoming more cautious in lending to European customers, in an early indicator that Wall Street may repeat its actions from the 2008 recession when it retreated to its home market. HSBC is pushing ahead with plans to cut costs despite the pandemic. The U.S. Federal Reserve is facing heavy political pressure as it implements up to US$4 trillion in financial aid for businesses.
“We have a monster mash-up of the Great Depression in size, the crash of 1987 in speed, and 9/11 attack in terms of fear”: The wide gap between the tumultuous stock market and the plunging economy continues to leave investors like Liz Ann Sonders, chief investment strategist at Charles Schwab, in shock.
Cross-country checkup: Quebec Premier François Legault suggested the province consider “herd immunity” as it prepares to announce its plan next week to eventually reopen the economy. The concept, once endorsed by U.K. Prime Minister Boris Johnson, involves gradually exposing large populations to the virus. Most public health officials believe that while letting the virus run its course through populations could create widespread immunity (though that is still not certain), it could overwhelm hospitals and lead to more deaths from COVID-19 and other illnesses. Quebec also happens to be the most vulnerable to the virus, based on its aging population, having the fewest hospital beds per 1,000 people in the country and an economy that’s highly exposed to supply-chain disruptions, according to an Oxford Economics scorecard.
Researchers and politicians are concerned that gaps in Canada’s health and economic data are hindering the country’s response to the virus. The Calgary Stampede, scheduled for July 3 to 12, has been cancelled—the first time in 97 years. The Toronto Raptors and Maple Leafs’ home, the Scotiabank Arena, is operating as a giant kitchen during COVID-19; owner Maple Leaf Sports & Entertainment is looking to scale up production to 10,000 meals a day for frontline health-care workers and their families, as well as vulnerable populations.
Bay Street to Main Street: National Bank has provided $800 million in interest-free loans to 20,000 applicants as part of its pandemic relief program, CEO Louis Vachon said Friday. Canada’s banks have processed about 710,000 mortgage deferrals or skipped payments so far, about 15 per cent of their home loan portfolios. Vachon also called for a stronger response from Canada to the “economic warfare” by Saudi Arabia in the oil markets. The call is the latest indication of tension between the Big Six CEOs and Ottawa, following a call from Trudeau earlier this month for the banks to do more.
- Ottawa is trying to prevent employers from gaming the wage-subsidy system.
- GM Canada plans to make about one million masks a month for the federal government.
- AIMCo is reviewing its investment strategy following a $3-billion loss.
- Eighty-five per cent of underrepresented entrepreneurs experienced a financial loss during COVID-19.
- Toronto-based Eddy Travels, which helps find deals on flights, has raised $912,000 to build features helping those travelling during the pandemic.
- Bondfield Construction Company is being investigated by Ontario’s Serious Fraud Office.
- Cargojet, which controls over 80 per cent of the country’s priority air cargo market, has seen its stock rise 72 per cent since March 18.
Trace me on my cellphone: Ottawa is trying to avoid a “patchwork” of contact-tracing technology across Canada, in an effort to ensure solutions to combat COVID-19 are widely adopted while protecting privacy. But several provinces and territories told The Logic they’re considering launching their own digital solutions, while others say they have no plans for such apps.
Apple and Google said they were strengthening the privacy of their global contact-tracing system, which includes encrypting Bluetooth metadata to make it more difficult for someone to use it to identify a person. The companies are at odds with France and Germany, which want the firms to let them collect and store data centrally. Australian Prime Minister Scott Morrision said it will be illegal to give information from the government-backed contact-tracing app, which hasn’t been released yet, “to any other person other than that for whom the whole thing is designed, and that is to support the health worker in the state to be able to undertake the contact tracing.” Britain’s Royal Air Force is also testing the technology. Meanwhile, police in the United Arab Emirates are deploying smart helmets that can scan the temperatures of up to 200 people a minute from five metres away. Companies including IBM and Ernst & Young are hoping blockchain will help with immunity verification and sourcing of medical supplies.
Postcard from Pictou County: Doug Jones is busier than he used to be. On top of being the CEO of Ignite Labs—Nova Scotia’s rural innovation hub, which has been closed since April—Jones is part of a 10-member “skunkworks team” of outside-the-box thinkers who’ve come together to solve unprecedented challenges. Jones’ team is coordinating with industry and 3D printers to boost the supply of personal protective equipment in the province. He lives in the home of the world’s biggest lobster industry, where workers are still on the job and need face shields and masks. “Everything is changed, but I feel like I’m more connected to people on a day-to-day basis than before because of technology,” he told The Logic.
Outside his home, however, there are few people to interact with. “The normal East Coast friendliness is there, but it’s different,” Jones said. “We’re used to stopping and saying hi and talking. But now, everybody is a little scared to stop and talk to people.” It’s more than the pandemic: the recent mass shooting that killed at least 22 people has rattled the community. “It was an out-of-nature thing to happen in Nova Scotia,” he said. “With [COVID-19], we know that if we stay home and keep distance, we’re going to get through this crisis. But how do you deal with someone who impersonates a police officer and kills a whole bunch of people? That’s out of our control. You can’t stop that.” Last night at 8 p.m. local time, Jones said he, along with Nova Scotians across the province, went out on their front steps and lit a candle for those who were killed. A virtual vigil is planned for today; Jones said they’ll do a “a real one” once the pandemic is over.
If there’s a silver lining from the double crisis, it’s that Jones is more prepared for the future. “I’m 50 years old, and I’ve realized it’s important to have a bit of a back-up plan and the ability to pivot very quickly,” he said. “I’m a lot stronger because of this. What else could happen that’s worse than this?”
Drinking from the firehose: Google is planning to cut its marketing spend by as much as half and set hiring freezes for full-time and contract workers in some of its divisions. The measures to mitigate the impact of COVID-19 are more drastic than what CEO Sundar Pichai described last week.
- Facebook is jumping into videoconferencing with a tool called Messenger Rooms, in a bid to compete with platforms like Zoom Video Communications and Houseparty as usage surges amid global lockdowns.
- Entrepreneurs in San Francisco and New York are recruiting volunteers who have recovered from COVID-19 and are thought to be immune to resume daily activities and help vulnerable people carry out tasks like getting groceries.
- A French court has rejected an appeal from Amazon on a ruling requiring the e-commerce giant to restrict delivery in the country to IT products, health items, food and pet food during the pandemic.
- The U.S. Treasury Department is asking for equity stakes in publicly traded national security contractors it approves for COVID-19 relief funds.
- Credit-card issuer American Express plans to cut spending by as much as US$3 billion this year after reporting a 76 per cent drop in quarterly profits.
- Peloton led 23,000 people in a single online cycling class on Wednesday, a record for the home-workout company.
Speaking of vaccines: The World Health Organization, along with the leaders of France and Germany, has launched the Access to COVID-19 Tools Accelerator, a global initiative aimed at speeding up the development and distribution of medicines and vaccines. European Commission President Ursula von der Leyen said the project requires raising US$8.1 billion. German Chancellor Angela Merkel said Germany would make a “substantial” contribution and urged countries to adopt new methods and capacities of production. Trump was notably absent from the video conference; the only American presence was Melinda Gates, head of the Bill & Melinda Gates Foundation. The foundation is working on seven vaccines, with musicians like Madonna donating US$1 million to its efforts. Bill Gates told late-night host Stephen Colbert that, overall, more than 100 vaccines are being tested. “There’s almost too many in a way,” Gates said.
Around the world: Zhang Ming, China’s top envoy to the EU, has denied allegations that Beijing is spreading coronavirus disinformation, saying the world should “forget the politics for now” to focus on COVID-19. Ecuador’s confirmed coronavirus cases more than doubled to a total of 22,719 after the government released delayed test results. U.K. Prime Minister Johnson could be back at work as soon as Monday. A U.S. civil rights agency said companies can test employees for COVID-19 before permitting them to enter the workplace as long as the tests are accurate and reliable. Japan has had to recall government-mandated masks due to defects. Millions of washable face masks will be provided to residents in France from May 4. The World Trade Organization said 80 countries and customs territories have banned or restricted the export of personal protective equipment to mitigate shortages since the coronavirus outbreak began. Italian scientists have detected the coronavirus on particles of air pollution.
Rollercoasters and psychedelic effects: Rapper Travis Scott’s 15-minute performance on Fortnite had everything for its 12.3 million viewers: Scott as a cyborg, a giant spaceman underwater. At one point, everything was just on fire.
* 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 three-day prior average. Numbers may also vary based on countries’ individual testing capacity and reporting.
Our reporting team is working tirelessly around the clock to deliver the very latest information on the COVID-19 crisis. If you like our journalism, please consider subscribing. You can get a subscription today for more than $100 off your first year.