After months and months of delay, Congress has passed a $900 billion stimulus package that promises to accelerate vaccine distribution and deliver much-needed aid to small businesses and Americans who have been struggling to get by.
What’s happening: The White House has said that President Donald Trump will sign the legislation once it reaches his desk, clearing the way for the bill to quickly become law.
Key provisions include:
- Direct payments of up to $600 per adult and child
- Enhanced jobless benefits of $300 per week
- Assistance for small businesses, including $284 billion for forgivable Paycheck Protection Programs loans and $15 billion for live venues, independent movie theaters and cultural institutions
- $25 billion for rental assistance and an eviction moratorium extension
- $45 billion to support transportation services, including airports, Amtrak and airline employees
It’s the second-largest federal stimulus package ever, behind only the $2 trillion CARES Act that Congress approved in March. But some are already warning it won’t be sufficient. The final deal did not include aid for state or local governments, a priority for Democrats, or protections for businesses against coronavirus lawsuits, a Republican aim.
Pandemic unemployment benefits are set to run out for millions by the middle of March.
“The package is a fraction of what is required to address the monumental economic damage caused by [the] inadequate response to the Covid-19 pandemic,” Thea Lee, president of the progressive Economic Policy Institute, said in a statement. She added that it would take roughly $3 trillion to “stop the economic bleeding … and build a strong recovery.”
Democrats are signaling that more help could be on the way early next year.
“Our work is far from over,” President-elect Joe Biden tweeted. “Starting in the new year, Congress will need to immediately get to work on support for our Covid-19 plan.”
Wall Street thinks this is easier said than done. Goldman Sachs economist Alec Phillips told clients that this “looks like the last major Covid-focused fiscal package,” assuming Biden faces a divided Congress next year.
Much hinges on the outcome of elections for two Senate seats in Georgia in early January. If Democrats win control of the chamber, another ambitious package could be on the table. Otherwise, deadlock is expected to continue.
“We do expect another debate over fiscal support in [the first quarter], ahead of the expiration of the extended unemployment provisions in March,” Phillips said. “However, since Congress left the most difficult issues out of the current package, it seems unlikely that lawmakers will be able to agree on those in subsequent legislation.”
Investor insight: Stimulus news helped rescue stocks from the plunge seen in Europe on Monday, triggered by concerns about a new variant of Covid-19 in the United Kingdom. But it’s not yet clear which attitude will prevail — enthusiasm about ongoing government support, or fresh fears about the trajectory of the pandemic.
UK supermarkets warn of shortages because of border chaos
Fears about the potentially highly-infectious coronavirus variant have left the United Kingdom increasingly isolated, causing disruptions to the country’s economy just days before the Christmas holiday and the end of the Brexit transition period.
The latest: France’s decision to suspend transport links with Britain for 48 hours has led to long lines of trucks waiting to cross the border. UK supermarkets and supply chain experts have warned of potential shortages of some products as early as this week if the restrictions aren’t eased soon.
“If nothing changes, we will will start to see gaps over the coming days on lettuce, salad leaves, cauliflowers, broccoli, citrus fruit — all of which are imported from EU at this time of year,” Sainsbury’s said in a statement. “We hope UK and French [governments] can come to a solution that prioritizes immediate passage of produce and food.” Its rival Tesco issued a similar warning.
Prime Minister Boris Johnson sought to assuage public fears in a press conference Monday, saying he had spoken with French President Emmanuel Macron and that both sides were working toward a quick resolution.
He stressed that British supermarket supply chains are “strong and robust,” and that the “vast majority of food and medicine supplies are coming and going as normal.”
Groceries are not the only products affected, however. Toyota decided to shut its manufacturing plants in France and the United Kingdom earlier than planned for the winter break, blaming the traffic chaos and “uncertain nature of how long the borders will be closed for logistics activities.”
Testing truck drivers for coronavirus is under discussion as one possible solution. But it’s not clear that could quickly clear the logjam.
The Brexit factor: The chaos at UK ports is giving the country a taste of the potential disruption to food and other vital supplies that could accompany a “no-deal” Brexit in just nine days’ time.
The United Kingdom left the European Union earlier this year but has continued to enjoy free trade with its top export market and supplier under transitional arrangements that expire on Dec. 31. Talks on a new agreement to avoid tariffs and quotas have so far failed to produce a deal, raising the specter of further disruption and price rises in the new year.
SoftBank join Wall Street’s SPAC craze
SoftBank wants in on one of Wall Street’s hottest trends as it looks to beef up its tech portfolio again.
The Japanese conglomerate revealed plans this week to raise over half a billion dollars in New York through an initial public offering of a special purpose acquisition company, or SPAC, my CNN Business colleague Michelle Toh reports.
The newly created firm — SVF Investment Corp. — will list on the Nasdaq under ticker symbol “SVFAU.” It will initially seek to raise $525 million, but that figure could rise to nearly $605 million if there’s strong interest.
Remember: SPACs, or so-called “blank check” firms which go public solely to raise money to buy existing businesses, have taken off this year. More than $75 billion has been raised through the IPOs of US-listed SPACs in 2020, according to Refinitiv. That’s a huge jump from 2019, when such firms only raised $13.1 billion.
The challenge now will be finding appropriate takeover targets, with no shortage of investors hunting for deals.
SoftBank’s investment record could be both a blessing and a curse. The conglomerate’s early bet on Alibaba has paid huge dividends. But after a string of embarrassing losses, including the botched IPO of SoftBank-backed WeWork, CEO Masayoshi Son was forced to hunker down, and spent this year building up piles of cash.
The SPAC announcement signals he’s ready to go back on the offense. The question is, will Son be welcomed back with open arms?
US consumer confidence data for December and existing home sales for November both post at 10 a.m. ET.
Coming tomorrow: The most recent batch of personal income and spending data for Americans will show how pocketbooks fared before Congress approved another stimulus package.