Mar. 13, 2020

CENTRAL BANK AND GOVERNMENT REPONSE TO CORONAVIRUS (COVID-19)

  • Central Bank’s around the world have pledged to ‘proactively’ support the economy as the world deals with the COVID-19 virus. The last time we saw this coordinated support was 2008.
    • Bank of Canada cut interest rates by 0.50% in an ‘emergency rate cut today and is planning on injecting ‘billions’ of dollars to shore up stability
    • US Federal Reserve announced, that similar to Quantitative Easing in 2008:
      • they will be aiming $5 trillion in temporary loans for the banking system
      • they will purchase a broader range of government securities to insure liquidity
    • Bank of England cut interest rates by 0.50% and introduced a new program to provide easy and cheap credit and said they will take more action if necessary.
    • European Central Bank said they are looking at all their tools and stressed that governments needed to provide stimulus as well.
  • Federal Governments globally are also pledging support:
    • Canada’s Finance Minister, Bill Morneau, confirmed that they ‘would use their fiscal strength to make sure our economy stays strong’; announced $10 billion of stimulus today.
    • British Government to spend £12 billion ($21.2 billion) on range of measures including extending sick-pay benefits, cutting some taxes for small businesses, increasing funding the National Health Service, providing loans and grants to companies.
    • Italy announced $28 billion on stimulus measures to support workers, boost loans for small and mid-sized companies, as well as other measures.
    • US has approved $8 billion to combat the virus and Congress is developing a response plan which is expected to include a multi-phased stimulus package.
  • Italy shut down all shops except grocery stores, pharmacies, and a few others until March 25th.
  • South Korea reported more recoveries than new COVID-19 cases for the first time since January.
  • Apple, Starbucks and Disneyland are all back in full operations in China.

WHAT THE ANGUS WATT ADVISORY GROUP IS DOING TO PROTECT AND SUPPORT OUR CLIENTS

  • We have established a contingency plan to protect our team and office while still providing service to our clients. For example:
    • 2 of the 4 partners will work in the office while the other 2 work from home for 2 weeks; then we will switch locations for the next 2 weeks
    • We are also doing this with our team
    • We will receive all messages and emails regardless of whether we are at home or in the office
    • We are discouraging in-person meetings and are opting for video or conference calls in lieu
    • We are disinfecting our workspaces at least 2x per day and washing our hands hourly

WE KNOW THAT COVID-19 WILL PASS, IN TIME

  • 80% of cases are mild, but limiting contact is critical to limiting the spread.
  • Most people recover…there are currently 13x more cured cases than deaths and that proportion is increasing.
  • Symptoms are generally mild in children but more severe in older individuals.
  • The virus can effectively be ‘inactivated’ with disinfectants; frequent handwashing with soap and water is the best way to avoid contagion.
  • Gilead is testing an antiviral that has proven very successful in Japan with cruise ship passengers. All other pharmaceutical companies are working on vaccines and treatments as well.

TIDBITS

  • Canada is extending a plan to increase annual immigration targets by 10,000 to 361,000 per year to 2022.
  • Los Angeles is aiming to become the first American city to use renewable hydrogen to produce electricity, with the goal of ending the use natural gas entirely by 2045 and possibly by 2035.
  • Vladimir Putin has asked the Constitutional Court to change term limits so that he can stay in power to 2036.