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Tariff Threats Spook Markets

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Tariff threats spook markets

US markets marked a turbulent start to the month and fell on Friday after President Donald Trump revived a threat of new tariffs against China in response to the COVID-19 pandemic. The Dow Jones Industrial Average dropped 622.03 points, or 2.55 percent, to 23,723.69, with the S&P 500 losing 81.72 points, or 2.81 percent, to 2,830.71. The Nasdaq Composite plunged 284.60 points, or 3.2 percent, to end the session at 8,604.95.

Most European and the Maltese markets remained closed during 1st May as nations celebrated their Labour Day public holidays however the UK’s FTSE 100 slumped 2.3 percent as the mining and travel sectors were hit by the worries over reduced business activity from the coronavirus pandemic and the prospect of renewed US threats of trade sanctions on China.

Roche gets approval for antibody test

Swiss drugmaker Roche has won emergency approval from the U.S. Food and Drug Administration for an antibody test to determine whether people have ever been infected with the coronavirus, the Basel-based company announced on Sunday. Governments, businesses and individuals are seeking such blood tests to learn who may have had the disease, who may have some immunity and to potentially craft strategies to help end national lockdowns.

Thomas Schinecker, Roche’s head of diagnostics, said the company aims to more than double production of tests from about 50 million a month to significantly more than 100 million a month by the end of the year. Similar antibody tests have also been developed by companies including U.S.-based Abbott Laboratories Becton Dickinson and Italy’s DiaSorin.

Eurozone manufacturing output falls

German factory output shrank at the fastest rate on record in April and firms in the export-oriented sector cut jobs at the fastest pace in almost 11 years, a survey showed on Monday, as the new coronavirus crushed demand. Companies in Germany have been closing facilities and switching workers to shorter hours under a government scheme aimed at avoiding mass layoffs.

French manufacturing output has also fallen to record lows as the country has been under lockdown orders banning non-essential activities since mid-March. The prospect of a gradual unwinding from May 11 is offering little relief to firms expecting a long slog back to work.

(c) 2020 Standard Publications Ltd. All rights reserved. Provided by SyndiGate Media Inc. (Syndigate.info).

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President Trump’s Executive Orders A ‘Real Game-Changer’ For The Country

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President Trump’s Executive Orders A ‘Real Game-Changer’ For The Country

President Trump was busy over the weekend, signing four executive orders to provide the financial stimulus that America needs. Trump said the Democrats, including House Speaker Nancy Pelosi and Senate Minority Leader Chuck Schumer, held the “vital assistance hostage” as negotiations stalled.

“We’re doing that without the Democrats,” Trump said. “We should have been able to do it very easily with them, but they want all these additional things that have nothing to do with helping people.”

“Through these four actions, my administration will provide immediate relief to Americans struggling in this difficult time,” he said. “The beautiful thing about this difficult time is we’re coming back and setting records.”

Stephen Moore is a member of President Trump’s economic recovery task force. He said the orders were “a real game-changer” for the president.

“All of a sudden Trump has flipped the table on Nancy Pelosi. Those negotiations were going nowhere.” said Moore, an economist at FreedomWorks, during an interview yesterday on “Fox & Friends Weekend.”

The Goals of Trump’s Executive Orders

The executive orders by the President aim to help directly address the damage the coronavirus pandemic. It also aims to ensure that millions of Americans have the resources they need.

Among the executive orders signed by Trump were $400 per week in unemployment benefits. This will replace the $600 per week that expired at the end of July.

Moore said during his “Fox and Friends Weekend” interview that he isn’t a fan of extending the benefits, and believes “we should go back to the old unemployment insurance system.”

He did acknowledge, however, that “$400 is a lot better than $600.”

“We have a situation right now where about two out of three workers who are unemployed are getting paid more money than the people who are working,” Moore said on Sunday, following his article for Fox Business where has said he believes the extra unemployment benefits are “a disincentive to work, but provides an immediate safety net for the 25 million Americans who are still unemployed.”

In addition to the unemployment insurance benefits, Trump also signed measures to halt evictions. He also approved measures to eliminate the payroll tax through the end of the year and defer student loan payments.

The Potential of the Actions

“Through these four actions, my administration will provide immediate relief to Americans struggling in this difficult time,” he said. “The beautiful thing about this difficult time is we’re coming back and setting records.”

By eliminating the payroll tax, Moore says “every single worker in America,” including “the real heroes of this economy,” like the first responders and truckers, will get “a much deserved 7.5% pay raise starting immediately.”

“That is a very, very positive thing,” Moore then added.

White House economic adviser Larry Kudlow said the average person would save about $1,200 over four months beginning in September.

“With respect to the payroll tax, basically we’re giving 140-some-odd million people who worked through this pandemic, they’re heroes, we’re giving them about a $1,200 wage increase after tax,” Kudlow said.

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Get In On The Hottest Investment Trend Today: SPACs

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Get In On The Hottest Investment Trend Today: SPACs

The hottest new investment trend right now are SPACs, or special purpose acquisition company. It’s how Nikola Motor Company, which plans on making both electric and hydrogen-powered trucks, went public virtually overnight.

With the IPO market cooling, it has become an appealing alternative for private companies looking for a quicker and easier path to being publicly traded.

Now billionaires are tripping over themselves to create SPACs as quickly as possible. They need to do so if they want to get in on the gold rush.

What are SPACs?

SPACs are commonly referred to as a “blank check” company and with good reason: they are created to go around gathering a bunch of money from investors with the only goal to buy an existing business within a specific time frame, usually 18 to 24 months.

The management team essentially has a blank check to go out and buy any business it sees fit. Some are created with a specific acquisition in mind. Others are created simply to have the money in place and ready to go when the opportunity arises.

The structure is very similar to private equity deals or leveraged buyouts. Also, private equity firms, hedge funds, and other “smart money” investors sponsored the creation of many SPACs.

Many of these SPACs are publicly traded. So, if the idea of having “smart money” go around hunting for the best deals on your behalf sounds appealing, you can typically invest in them through your normal brokerage account.

Here’s a short list of SPACs that you can either buy today or can buy very shortly once they go public. Be aware, many of these SPACs are just a few weeks old. So, there isn’t much history to judge their performance by.

Pershing Square Tontine Holdings (PSTH.U)

Fresh off a billion-dollar payday in March, Pershing Square Capital Management’s Bill Ackman just launched a $4 billion SPAC, the largest in history after overwhelming interest from investors.

Ackman has the right to put in another billion, giving the company access to a total of $5 billion to hunt for what Ackman calls a “unicorn” with “significant long-term growth potential that will be likely candidates for inclusion in the S&P 500 index.”

“Our thesis is by having a $5 billion cash pile in a public company; it’s our own version of a unicorn. It’s a one-of-a-kind entity,” Ackman said during an interview with Yahoo Finance. “So, we’re looking to marry a unicorn. So we’re prettying ourselves up for the most attractive possible partner.”

Churchill Capital IV (CCIV.U)

While not publicly traded yet, this will be founder Michael Klein’s fourth SPAC. Two of them have acquired companies and one has yet to find an acquisition target. To highlight investor demand for SPACs, Klein raised $1.8 billion for his fourth SPAC. This figure stands at 80% more than what he originally planned.

With his latest SPAC, Klein is looking for a company with excellent long-term growth prospects, a strong competitive advantage, recurring revenue, attractive free cash flow. He is also looking for a company that is in an industry where consolidation opportunities exist.

Dragoneer Growth Opportunities (DGNR.U)

Like Churchill Capital, this SPAC is not yet publicly traded. The company is lead by CEO Marc Stad, who appeared multiple times on Fortune magazines “40 Under 40” list. Also, other directors include David Ossip, CEO of Ceridian HCM Holding, and Sarah Frier, CEO of neighborhood social network Nextdoor.

Stad has a strong pedigree, having backed a number of very successful companies in the past, including Spotify and Uber Technologies. Dragoneer will focus on six areas: software, internet, media, consumer/retail, healthcare IT, and financial services/fintech.

East Resources Acquisition (ERESU)

Current Buffalo Bills and Buffalo Sabres owner Terry Pegula started East Resources targeting the energy industry in North America.

It makes sense given Pegula’s history, having sold his company, East Resources, to Royal Dutch Shell for $4.7 billion in 2010.

Now Pegula is back, looking for operational control of a company that has long-lived assets with low fixed costs, that is producing oil and gas and generating free cash flow, but is operating below full capabilities.

With Pegula’s extensive knowledge of the oil and gas industry, he could find multiple opportunities in a short period of time.

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Trump Signs PPP Loan Extension, Labor Sec. Says ‘No’ To More Unemployment Benefits

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Trump Signs PPP Loan Extension, Labor Sec. Says ‘No’ To More Unemployment Benefits

Small business owners now have until August 8 to apply for a loan through the Paycheck Protection Program (PPP). This is thanks to a bill signed by President Trump on Saturday.

The deadline to apply was June 30. However, more than $134 billion in funding still available according to the Small Business Administration. With this, President Trump extended the deadline so more businesses could benefit from the program.

The bill signed by President Trump also separated the authorized limits for loan commitments from other lending programs offered by the Small Business Administration.

PPP Statistics

According to the SBA, the PPP had awarded more than 4.7 million forgivable loans for more than $518 billion as of June 27.

Officials in the Trump administration said on Thursday that they will begin releasing information on the companies that have received more than $150,000 from the program. This is in an effort to address complaints about large, well-funded companies. These large companies receive PPP loans while many small or independently-owned businesses struggled to receive funding.

According to the US Treasury, approximately 5,300 borrowers have received almost 2.5 million loans worth $228 billion. That is roughly 44 percent of total PPP spending.

The SBA made an effort to address another complaint by small businesses. It has lowered the percentage of the loan balance that must be used to keep employees on the payroll. Previously, if more than 25% of the loan balance was used for purposes other than keeping employees on the payroll, the loan would have to be repaid. That threshold has been reduced to 60% of the loan balance used on employee salaries to make the loan forgivable.

The Program’s Significance

President Trump credits the Paycheck Protection Program with keeping an estimated 50 million Americans employed when they would otherwise have lost their jobs, preventing the unemployment rate from worsening as the country faced an economic shutdown.

The extension of the Paycheck Protection Program had unanimous bipartisan support. However, the July 31 deadline to extend the enhanced unemployment benefits will be hotly contested.

The latest high-ranking cabinet member to come out against extending the benefits is Labor Secretary Eugene Scalia.

During an interview on Fox News Sunday, Scalia said PPP loans serve as an “essential” part of the recovery. However, he doesn’t believe that $600-a-week enhanced unemployment benefits are needed beyond their July 31.

“It was a really important thing to do as we were shutting our economy down. Americans across the country were basically being told, and we needed to take measures, but they were basically being told, you can’t go to work right now and so we needed that substantial unemployment benefit. There are some states where you can get on an annual basis $75,000 a year right now on unemployment. As we reopen the economy, I don’t think we need a benefit like that.” he said.

Scalia added, “During the so-called Great Recession 10, 12 years ago when we had a downturn, The added federal unemployment benefit was $25 a week. What we did in the CARES Act was $600 a week.”

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