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Yesterday's headlines were of the same sh*t, different day variety. Biz news journo's were busy re-purposing Monday's articles with different titles. Why? Well, because oil markets continued their historic collapse and the government did what it does best: print money and fight about how to spend it...
Let’s make it official
First, the "good" news. The Senate approved the $484B coronavirus bill for small business and hospital relief yesterday evening. Representatives from Potbelly and Ruth's Chris have already begun prepping applications.
Let’s have a peek under the hood, shall we?
- $310B goes to the Paycheck Protection Program, $60B of which is set aside for smaller institutions (read: not you, Harvard)
- $60B for Economic Emergency Disaster Loans
- $75B for hospitals
- $25B for COVID-19 testing, $11B of which goes to states
- $2.1B to SBA administrative expenses
The bill now heads to the House of Representatives where it could be passed as early as Thursday and sent to POTUS for final sign off. Or, of course, it could face the same uphill battle that Bailout v1.0 did...
There will (still) be blood
Remember that time (yesterday) when we reported that June oil futures contracts were faring much better than the May variety? So, that was a f*cking lie.
While futures contracts of West Texas Intermediate for May moved back into positive territory on Tuesday (still very, very bad), June dated contracts dropped 43.37% settling at $11.57.
Plus popular oil trading ETF, USO, was briefly halted yesterday during intraday trading as it plunged 25%.
The continued drop of oil dragged down stock markets again with all three major indices dropping at least 2.6%. Woof.
The bottom line...
Ok, so at least things can’t get much worse, right?.... RIGHT?!
If POTUS has his way, hopefully not.
President Trump announced yesterday that he has spoken with his cabinet about organizing a bailout for the oil industry. Of course, he made the announcement via Twitter.
Oil companies are already eligible for $200M to $250M as part of the CARES act, but something tells me that’s not going to be enough. Energy Secretary Dan Brouillette is working with Secretary Mnuchin to at least double that amount. Considering the Oil & Gas industry is estimated to owe $200B in O&G backed reserves, let’s hope they can work out that deal.
Senate strikes deal on $484 billion relief package for small business, hospitals, testing [CNBC]
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