White House Projects 100,000 to 240,000 Deaths from Covid-19

Posted on 04/01/2020 6:06 AM

More info released by SBA on loan programs; White House sends staff to help


In Today’s Updates

* White House projects 100,000 to 240,000 deaths from Covid-19
* Trump warned Americans of a 'very, very painful two weeks'
* CDC to consider broadening its guidelines on who should wear masks
* France pushing for common EU fund to help Europe through coronavirus crisis: FT
* More info on SBA loan programs
* White House dispatching staff to help SBA: Bloomberg
* Trump also focusing on oil production, price war between Saudis and Russia
* World oil production expected to fall by 10 mil. barrels a day
* DOE mulling leasing out open SPR capacity
* Hoarding & export bans have pushed wheat and rice prices higher
* Australia to subsidize flights for transport of ag goods to certain markets
* Trump resurrects $2 trillion infrastructure spending proposal; Dems to brief today
* Morgan Stanley: U.S. deficit will total at least $3.7 trillion in calendar year 2020
* Putin offered President Trump medical aid and equipment
* Trump to give 90-day deferral for some tariffs
* USTR releases annual report on foreign trade barriers
* Calls mount to investigate potential meat market manipulation
* DFA cooperative won its bid to acquire swaths of Dean Foods’ dairy operations but...
* API to consolidate state-level advocacy work into regional offices in eight states
* China gets upbeat economic report
* Manufacturing activity in two largest economies of euro zone slumped in March
* CCC loan interest rates slashed
Groups press European Commission on suspension of biofuel blending targets



Markets: European and U.S. stock futures are pointing to another down day in markets following a mixed session in Asia — Japan’s Nikkei 225 lost 4.5% and Hong Kong’s Hang Seng closed 2.2% lower. Meanwhile, Australia’s ASX 200 gained 3.6%. Dow futures dropped 3%, suggesting that blue-chip stocks will decline a day after U.S. equities closed out their worst quarter since the financial crisis.


The yield on 10-year U.S. Treasuries, viewed as a haven during times of market uncertainty, slipped 0.09 percentage points to 0.611%. Yields fall as bond prices rise.


Hoarding and export bans in some countries have pushed wheat and rice prices higher. Difficulties moving grain within countries and across borders, coupled with frenzied buying, could exacerbate the impact of the pandemic on the global food market, according to the Wall Street Journal (link).


     Wheat prices


     Ag prices and Covid


Consumers’ rush to buy groceries is fueling a rally in orange-juice prices, making the usually sedate asset the best-performing commodity in the first quarter of 2020. The price of frozen orange-juice-concentrate futures is the highest level since June, when traders were anticipating a strong hurricane season bearing down on states including Florida, the Wall Street Journal reports (link).


     OJ prices


World oil production to fall by 10 million barrels a day. The price crash, free-falling demand, and a lack of storage will cause world oil production to decline by up to 10 million barrels per day from April through June, the consultancy IHS Markit projected Tuesday. In a low-price environment, Saudi Arabia and Russia are better positioned to maintain or increase production compared to the U.S. going forward, IHS Markit said. "If there is no international agreement to curtail oil production then brutal unadulterated market forces will bring the oil market into balance," said Jim Burkhard, IHS Markit’s vice president and head of oil markets.


President Trump making a call to Russian President Vladimir Putin this week raised at least some odds that an oil-war truce could be in sight, but Saudi Arabia is making good on its pledge to pump more in April as the OPEC+ deal on output cuts expires and Iraq is planning to follow suit. Trump said during his daily coronavirus briefing Tuesday that he spoke with Putin and Saudi Arabia Crown Prince Mohammed bin Salman about their continuing oil production standoff. Trump warned of impacts to U.S. drillers, saying "you could lose an industry" over the conflict. "The two countries are discussing it and I'm joining at the appropriate time if need be," he said. Meanwhile, Trump is considering crude oil import limits for U.S. refiners:, according to S&P Global Platts (link). Meanwhile, today marks the end of the agreed production limits by OPEC and its allies. Saudi Arabia has boosted output to more than 12 million barrels a day, while other major producers such as Iraq also plan increases.


President Trump is resurrecting a $2 trillion infrastructure spending proposal, calling on Congress to approve the measure to create jobs at a time when many workers are being laid off. Trump called for a possible fourth congressional coronavirus relief package to include significant investment in infrastructure, citing an opportunity in low interest rates. Congress has already passed three major pieces of legislation to address the pandemic. Trump said none of the funds should go toward environmental initiatives called for in the Democrats’ Green Deal. Meanwhile, Speaker Nancy Pelosi (D-Calif.), Majority Whip James Clyburn (D-S.C.), House Transportation and Infrastructure Committee Chairman Peter DeFazio (D-Ore.) and House Energy and Commerce Committee Chairman Frank Pallone (D-N.J.) will hold a press conference call today at 11:30 a.m. ET to discuss infrastructure priorities for Phase 4 legislation. House Democrats proposed a $760 billion infrastructure plan in late January, which covered roads, bridges, rail, broadband, and water. However, they have yet to convert it to legislation.


A new study by Morgan Stanley estimates the U.S. deficit will total at least $3.7 trillion in calendar year 2020 and an additional $3 trillion in 2021, financed by the sale of Treasurys, largely to the Federal Reserve. If the economy shrinks this year, the fiscal deficit relative to the size of the economy could even approach 15% to 20% (those numbers haven't been seen since WWII).


China got some more positive economic data today, as the Caixin manufacturing purchasing managers index (PMI) in March rose to 50.1 compared to 40.3 in February. A reading above 50.0 suggests growth in the sector. Output expanded on eased travel restrictions, but new export orders fell sharply in March on the increase in COVID-19 cases outside of China.




If there is a one-stop shop for seeking help via Covid-19 relief programs, this could be it from the Treasury Department: Link.


     Assistance for Small Businesses

     The Paycheck Protection Program (PPP) prioritizes millions of Americans employed by small businesses by authorizing up to $349 billion toward job retention and certain other expenses. Small businesses and eligible nonprofit organizations, Veterans organizations, and Tribal businesses described in the Small Business Act, as well as individuals who are self-employed or are independent contractors, are eligible if they also meet program size standards.

     • For a top-line overview of the program CLICK HERE

     • If you’re a lender, more information can be found HERE

     • If you’re a borrower, more information can be found HERE

     • The application for borrowers can be found HERE


     Preserving Jobs for American Industry

     The CARES Act assists eligible businesses looking for payroll support to keep Americans working. For more information, CLICK HERE.


     Other Links:


     Link to Payback Protection Program info from the Small Business Administration


     This important info comes from the respected ag consulting firm Combest, Sell & Associates: “Unlike past loan programs or even current Emergency Loan programs from SBA that exclude farmers and ranchers and agriculture (or tell them to go to USDA first), we are told the new law allows agriculture to qualify for the loans/loan forgiveness made under the Paycheck Protection Program. We have researched the statute and regulations and found nothing that would prohibit agricultural producers and have also gotten affirmation agriculture is eligible from the Senate Small Business Committee, but we have also requested and will be looking for an affirmative statement from the SBA. Meanwhile, given this is a limited amount of funds, we would encourage you to consult a lender and begin the application process. Keep in mind the bill was crafted quickly and just signed into law less than 100 hours ago. Guidance is still being written and there are still questions that will arise.”


     Paycheck Protection Program (PPP)


     “Loans will be available for any business concern, nonprofit organization classified as 501(c)(3), veterans organization, or tribal business concern classified as 31(b)(2)(C) if they employ not more than 500 employees. Sole proprietors, independent contractors, and eligible self-employed individuals also qualify for PPP loans. Sub-entities, franchisees, etc. may also qualify.


     “Our current understanding of the language would allow farmers and agricultural cooperatives to qualify for PPP loans.


     “Applications are made not at SBA, but at local cooperating banks and lending institutions.


     “Borrower requirements include a good faith certification that the uncertainty of current economic conditions makes necessary the loan request to support the ongoing operations, and that the funds will be used to retain workers and maintain payroll or make mortgage payments, lease payments, and utility payments.


     “Eligible recipients can receive a loan for up to 2.5 months of their average monthly payroll costs capped at $10 million. Payroll costs will be calculated from the payroll costs incurred during the 1 year period before the date on which the loan is made. Seasonal employers would use the 12-week period beginning either February 15 or March 1 to determine an average monthly payroll cost.


     “Payroll costs can include salary, wage, commissions, cash tips, leave, payment for group health care benefits, retirement benefits, etc. Payroll costs cannot include the compensation of an individual in excess of $100,000, any compensation of an employee whose principal residence is outside of the United States, or wages that have already been credited under the Families First Coronavirus Response Act.


     “Loans can then be used for payroll costs, interest payments on any mortgage obligation, rent, utilities, and interest on any other debt obligations. Mortgage, rent, utility, and debt obligations must have all been agreed upon before February 15, 2020.


     “These loans will be due in 2 years with an interest rate of 0.5%. All payments are deferred for 6 months; however, interest will continue to accrue over this period. “


     Loan Forgiveness

     “PPP loans can be forgiven after a period of 8 weeks beginning on the date of the origination of a covered loan.

     “PPP loans will be forgiven for payments made in the 8 weeks following the beginning date of the loan on payroll costs, interest payments on any mortgage obligation, rent, and utilities.

Amounts forgiven under PPP will be considered canceled indebtedness by a lender.


     “The amount forgiven cannot exceed the principal amount on the covered loan. Employers are also required to retain their employees or the forgiven amount will be reduced. Forgiven amounts will also be reduced if employers reduce salaries and wages greater than 25%.


     “Employers will be required to provide documentation to be eligible for loan forgiveness.“


     Link for more information for borrowers.


     Link for more information for lenders.


     Link for a copy of the application form.


     Meanwhile, Bloomberg reports the White House is dispatching staff to the Small Business Administration as the agency struggles with a flood of requests. President Donald Trump’s daughter and senior adviser Ivanka Trump is sending one aide, as is the National Economic Council and the White House communications office, Bloomberg reported. Other staff from the Office of Economic Initiatives, the NEC, and the Office of Science and Technology Policy have been working with SBA and Treasury Department since before the coronavirus stimulus package was passed.

Coronavirus update:

  • Summary: Globally, the number of confirmed cases of the virus has passed 858,000, according to Johns Hopkins data. The death toll rose to more than 42,000 on Tuesday. More than 178,000 people world-wide have recovered. The U.S. has more confirmed cases than any other country, with more than 189,000 infections, according to data compiled by Johns Hopkins University. The death toll, now greater than China’s, passed 4,000. That is still far less than Italy, where fatalities rose to 12,428 Tuesday, or Spain, which has reported 8,464 deaths. “We underestimated this virus,” New York Gov. Andrew Cuomo said Tuesday. “It’s more powerful, it’s more dangerous than we expected.”

    cases and deaths

  • President Trump warned Americans of a “very, very painful two weeks.” Trump said there could be between 100,000 and 240,000 deaths even if Americans followed the strict social distancing guidelines that the White House has recommended remain in place until the end of April. “We lose more here potentially than you lose in world wars,” Trump said at his daily White House briefing. There were about 116,000 U.S. deaths in the first world war and 405,000 in the second.

    How do these projections compare to previous pandemics? The most recent example is so-called Spanish Flu outbreak of 1918. According to the Centers for Disease Control and Prevention, the U.S. suffered an estimated 675,000 deaths in the 1918 flu pandemic.


  • Fauci and Birx comment. Dr. Anthony Fauci, the head of the U.S. National Institute of Allergy and Infectious Diseases who serves on the coronavirus task force, and Dr. Deborah Birx, also on the task force, both said they hoped that the total number of deaths would be lower, noting that the models were based on data from the hardest-hit states such as New York and New Jersey and how the disease spread in Italy. “We really believe and hope every day that we can do a lot better than that,” Birx said about the 100,000 to 240,000 projected range.

    Fauci said the forecast was the best estimate based on scientific models even if the U.S. continues lockdown policies that prevent large gatherings and impose social distancing. He said it was possible that the projections could change based on future data, and that the result was not “inevitable” but stressed the need for Americans to heed the guidelines for 30 days. “Now is the time when you’re having an effect not to take your foot off the accelerator,” Fauci said.

  • Russian President Vladimir Putin offered President Trump medical aid and equipment during a phone call Monday, according to the official Russian news agency TASS. A plane carrying the products was “expected to fly [to the U.S.] before the end of this day,” the agency quoted Kremlin spokesman Dmitry Peskov as saying. The Kremlin leader offered the help on the assumption that U.S. medical suppliers could, if necessary, return the favor once they reach production capacity, TASS cited Peskov as saying.
  • U.S. public-health authorities are reviewing recommendations for wearing face masks and a several European governments have ordered citizens to use them outside the home, signaling a shift. CDC Director Dr. Robert Redfield said his agency was reviewing its mask recommendations, especially on growing evidence that people experiencing no symptoms can spread the disease more widely than previously thought.
  • France is pushing for a common EU fund to help Europe through the coronavirus crisis but is proposing that it be limited to five or 10 years and focused on economic recovery to head off German and Dutch objections to mutualizing debt obligations. “We are thinking about a fund which would be limited in time with an indebtedness possibility for the long-term response to the crisis,” French finance minister Bruno Le Maire told the Financial Times.

Other items of note:

  • Trump to suspend some tariffs for 90 days, but not on high-profile China imports. President Trump is poised to announce a 90-day suspension of tariff payments on certain imports, including some apparel and light trucks, as he seeks to blunt the economic damage from the coronavirus pandemic, the Financial Times reported. The Trump administration in recent weeks allowed some tariff exemptions for medical supplies U.S. officials had sought to bolster domestic stockpiles of protective equipment and other goods used to combat the outbreak. The suspension would not include some of the most high-profile tariffs imposed by Trump during the trade wars, including punitive levies on $360 billion of Chinese imports, and levies on imported metals imposed on national security grounds. Speaking to reporters on Tuesday, Trump said he still had to give a final green light to the tariff deferral. "That might be but I'm going to have to approve the plan," he said.
  • USTR released its annual report on foreign trade barriers and fact sheets on foreign barriers to U.S. agricultural and digital trade exports. Link
  • Calls mount to investigate potential meat market manipulation. Senate Finance Chairman Chuck Grassley (R-Iowa) is asking the Justice Department to launch its own antitrust probe of potential beef price-fixing amid the coronavirus crisis. USDA Secretary Sonny Perdue said in March that his department’s monthslong price-fixing probe is ongoing, and he even called for Congress to give him additional “tools” to address the issue. Senators last month also sent a letter to Attorney General William Barr asking him to investigate.
  • The Dairy Farmers of America (DFA) cooperative won its bid to acquire swaths of Dean Foods’ dairy operations, after the largest U.S. milk processor filed for bankruptcy in November and auctioned off its assets this week (will acquire 44 of Dean Foods’ fluid and frozen assets for $433 million). As part of the court-supervised sale, Dean also designated significant assets to Prairie Farms Dairy, including eight facilities and two distribution branches, along with other agreements. However, some sources signal the bondholders are going to say that their bid shouldn’t be accepted. Any objections to DFA’s bid must be submitted to the bankruptcy court in Houston by noon today, and U.S. Bankruptcy Judge David R. Jones will hold a hearing on the potential sale on Friday. If the deal is approved, the transactions are expected to close at the end of the month.
  • DOE mulling leasing out open SPR capacity. The Department of Energy is looking to lease open space in the Strategic Petroleum Reserve (SPR) as a way to address the oil market situation since Congress did not appropriate funds for the purchase of U.S. crude to go into the strategic stockpile, according to Reuters. The action could be announced as soon as today, but it is not clear how it would work as DOE has never taken such a step previously.
  • The American Petroleum Institute announced Tuesday it would consolidate its state-level advocacy work into regional offices in eight states and close offices in 15 state capitals. The new regional teams will be based in Denver; Springfield, Ill; St. Paul, Minn.; Columbus, Ohio; Harrisburg, Pa.; Boston; Raleigh, N.C.; and Tallahassee, Fla., and are on track to be fully operational by late fall.
  • Australia to subsidize flights for transport of ag goods to certain markets. Australia to spend A$110 million ($67.40 million) on subsidies for air freight to export ag products in the wake of the severe cutbacks in passenger flights. Around 90% of Australian air freight travels via passenger planes and the new effort will subsidize flights to China, Japan, Hong Kong, Singapore and the United Arab Emirates which are markets that often pay a premium for Australian products. "By getting flights off the ground, full of Australian produce, we're supporting our farmers and fishers who have been hit hard by this crisis," Australia's Minister for Trade Simon Birmingham said. The effort will be paid for out of the first stimulus package approved by Australia.
  • CCC loan interest rates slashed. The actions by the Fed have resulted in reduced borrowing costs for those getting Marketing Assistance Loans (MALs) from the Farm Service Agency (FSA). The interest rate on commodity loans disbursed in April will be 1.625 percent, down from 2.5% in March. Rates on Farm Storage Facility Loans (FSFLs) also declined markedly for April, falling to 0.750% to 1.25%, depending on the length of the loan, after those were at 1.375% to 1.625% in March.
  • Groups press European Commission on suspension of biofuel blending targets. Biofuels interests in Europe are pressing the European Commission to address what they say are suspension or planned suspensions of biofuel blending obligations by some European Union (EU) member countries, actions that are linked to the Covid-19 situation. Both the European Biofuels Value Chain and the Sustainable Biofuels Alliance have called attention to the situation, labeling it “daft” that there would be a ban on biofuels in some EU member states. They noted the decline in overall fuel demand will already lower demand for biofuel without any additional actions, calling that a “problem” for European economies.

Markets. The Dow on Tuesday fell 410.32 points, 1.84%, at 21,917.16. The Nasdaq was down 74,05 points, 0.95%, at 7,700.10. The S&P 500 declined 42.06 points, 1.60%, at 2,584.59.

     U.S. stocks closed out their worst quarter since the depths of the financial crisis. The S&P 500 posted a 20% loss for the quarter — its biggest quarterly decline since 2008. The Dow lost 23% for the quarter, its worst showing since 1987. The Nasdaq Composite finished the quarter down 14%.

     Quarterly equities

     Manufacturing activity in the two largest economies of the euro zone slumped in March as Covid-19 forced plant closures. German manufacturers saw their sharpest drop in output since 2009, with its IHS markit’s purchasing managers’ Index figure down to 45.4, from 48 in February (any number under 50 suggests a contraction). France’s PMI fell to 43.2, down from 49.8 in February.



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