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Morneau’s move: On Friday, Finance Minister Bill Morneau announced $10 billion in available credit for businesses through the Business Development Bank of Canada and the Export Development Bank of Canada. Morneau also said he’ll announce “a significant stimulus package” next week in response to the COVID-19 pandemic. The credit extension is a tactic the government most recently used during the oil and gas slump in December 2018. The Bank of Canada dropped its benchmark interest rate to 0.75 per cent—the second 50-basis point cut in as many weeks. Governor Stephen Poloz also announced a new program aimed at small- and medium-size businesses, while Superintendent of Financial Institutions Jeremy Rudin said the regulator will reduce the capital reserves large lenders are required to keep on hand, a move it estimates will create “in excess of $300 billion of additional lending capacity by the major banks.”
A modest recovery: U.S. and European stocks rebounded after the steepest sell-off since the Black Monday crash of 1987, while markets in Asia-Pacific frayed with Sydney’s S&P/ASX 200 swinging more than 12 per cent during the day before closing 4.4 per cent higher. Exchanges in India, which fell around 10 per cent, and Pakistan, which plunged by 6 per cent, each halted trading for 45 minutes.
The global fiscal response: Sentiment was boosted Friday as global authorities stepped in with an attempt to cushion the economic damage caused by the coronavirus outbreak. Germany delivered a “bazooka” stimulus package, or unlimited cash for companies hurt by the pandemic, while the EU pledged to do “whatever is necessary” to support the economy. The People’s Bank of China cut reserve requirements for banks to ease borrowing conditions for companies that have been disrupted. Norway’s central bank unexpectedly slashed interest rates, while the Bank of Japan signalled it will buy billions of dollars of Japanese government bonds, and the Reserve Bank of Australia injected A$8.8bn into the financial system. Here’s a roundup of the global fiscal fight against COVID-19.
Meanwhile in Canada: Sophie Grégoire-Trudeau tested positive for COVID-19 last night. All political parties came together and suspended the House of Commons as Prime Minister Justin Trudeau self-isolates. Transport Minister Marc Garneau said Canada will restrict international flights coming into Canada to a smaller number of airports, as the government asks Canadians to avoid all non-essential travel. Some 300,000 federal bureaucrats have been asked to work from home indefinitely. The University of Toronto, McMaster University, Western University, Concordia University, McGill University and York University have all followed Laurentian University’s lead and either cancelled classes or shut down their campuses.
Telecoms step up: Videotron, Telus and Rogers are suspending data overage charges on all home internet plans as a growing number of Canadians start teleworking in response to COVID-19. On Thursday, U.S. telecom AT&T suspended broadband data caps for home internet customers because of COVID-19. Global internet traffic was up 56 per cent Friday compared to the 60-day-over-day rolling average, according to Akamai’s global internet condition monitor. Shaw doesn’t impose hard data caps, but is offering its customers some free TV channels. Bell hadn’t responded to The Logic’s requests for comment by the time we pressed ‘Send’ on this newsletter.
Advice from Canada’s VCs: Canadian venture capital investors told The Logic they’re optimistic the country’s innovation economy will pull through as long as founders and CEOs follow three simple rules: stockpile on capital, be resourceful in their fundraising efforts and develop profitable long-term business plans. As the Chinese parable goes, “Maybe. We will see.”
The world declares: The United States and Spain are declaring a state of emergency over the coronavirus. India declared masks and sanitizers as essential commodities, and has empowered states to ask manufacturers to boost their production capacity of these items “to make the supply chain smooth” and distribute them to the populace. French President Emmanuel Macron tweeted that G7 leaders would meet by videoconference Monday to “work on an economic and financial response.” Africa imposed a restriction on European travellers. The World Health Organization declared Europe to be the “epicentre” of the global pandemic.
Stiff upper lip: The United Kingdom is taking a markedly different public health approach to the pandemic than most of its counterparts. Rather than impose extreme restrictions on British life the government is trying to delay and stretch the epidemic’s peak, in hopes of keeping the health care system from being overwhelmed and building up immunity in the population. It’s a controversial approach, one informed by the government’s in-house behavioural psychology team, or “nudge unit.” If you’ve got 6 minutes and 26 seconds, here’s an interesting BBC Newsnight segment with a professor of infectious disease modelling advising the government, who says: “This is the kind of event that will live on for decades in people’s minds.”
Airbnb still plans to IPO: Airbnb bookings have dropped by 40 per cent in China and large European cities due to COVID-19, according to data from analytics group Airdna. China was Airbnb’s fastest-growing market before the crisis; bookings in Beijing dropped 96 per cent from March 1 to March 7 compared with Jan. 5 to Jan. 11. Despite the dropoff, Airbnb is still going ahead with its plans to go public. Part of the calculus is pressure from employees, who want Airbnb to list before their stock options start expiring. Meanwhile, TripAdvisor is reportedly trying to sell its vacation rental business.
Green shoots: A team of researchers from Sunnybrook, McMaster University and the University of Toronto have isolated the COVID-19 virus, which will help teams around the world develop tests, treatments and vaccines. China’s Wuhan city, ground zero of the coronavirus outbreak, is reporting single-digit cases for the second day in a row and no reported infections in the rest of the country. South Korea reported more recoveries than cases. There will be prizes for good, innovative coronavirus work.
Leaving you with a song: On Friday evening, Italians rolled down their windows, camped on their balconies and started banging, clapping, honking and singing at the top of their lungs. The echoes of “Canto della Verbena” (“And While Siena Sleeps”) rung through the deserted streets. Meanwhile, an African choir offered a song of its own: “Don’t panic, we’ll beat corona.”