Focused Almost Exclusively on Mitigating the Health and Economic Impact of the Coronavirus

HR 6074, HR 6201, HR 4998, S 3548Coronavirus Preparedness and Response Supplemental Appropriations Act, 2020 (HR 6074) – Introduced by Rep. Nita Lowey (D-NY), this was the first bill passed to authorize funding in response to the COVID-19 outbreak. It was introduced on March 4 and signed into law on March 6. The legislation provides $8.3 billion in emergency funding for federal agencies to respond to the coronavirus outbreak. It includes appropriations for the Department of Health and Human Services, the State Department and the Small Business Administration for the development, manufacture and procurement of vaccines and other medical supplies; grants for state, local and tribal public health agencies and organizations; loans for affected small businesses; evacuations and emergency preparedness activities at U.S. embassies and other State Department facilities; and humanitarian assistance and support for health systems in affected countries.

Families First Coronavirus Response Act (HR 6201) – Introduced by Rep. Nita Lowey (D-NY) on March 11, this bill authorizes funding and support for Americans suffering from the consequences of the COVID-19 outbreak. Specifically, the legislation includes allocations for: 1.) $500 million to provide access to nutritious foods for low-income pregnant women or mothers with young children who lose their jobs or are laid off due to the COVID-19 emergency; 2.) $400 million to assist local food banks to meet increased demand for low-income Americans during the emergency; 3.) approve state plans to provide emergency food assistance to households with children who would otherwise receive free or reduced-price meals at school; 4.) $100 million for nutrition assistance grants to Puerto Rico, American Samoa and the Commonwealth of the Northern Mariana Islands; 5.) $82 million to cover the costs of COVID-19 diagnostic testing for beneficiaries receiving care through the Defense Health Program; 6.) $15 million for the IRS to implement tax credits for paid sick and paid family and medical leave; 7.) $64 million for the Indian Health Service to cover the costs of COVID-19 diagnostic testing; 8.) $250 million for the Senior Nutrition program to provide additional home-delivered and pre-packaged meals to low-income seniors; 9.) $1 billion to reimburse the costs of COVID-19 diagnostic testing and services provided to individuals without health insurance; 10.) $60 million to cover the costs of COVID-19 diagnostic testing for veterans. The Act also includes provisions to enhance unemployment insurance and increase federal Medicaid funding. This legislation passed in both the House and Senate and was signed by the president on March 18.

Secure and Trusted Communications Networks Act of 2019 (HR 4998) – This legislation prohibits the federal government from obtaining communications equipment or services from a company that poses a national security risk, such as from the Chinese company Huawei Technologies. The bill also establishes a reimbursement program to supply small communications providers with funds to replace this type of prohibited equipment or services from their networks with more secure options. The Act was introduced on Nov. 8, 2019, by Rep. Frank Pallone Jr (D-NJ) and signed into law by the president on March 12.

Coronavirus Aid, Relief, and Economic Security (CARES) Act (S 3548) – Senate Majority Leader Mitch McConnell (R-KY) introduced this legislation on March 19. The bill is designed to address the economic impact of the coronavirus by providing direct cash payments to Americans, loan guarantees for impacted businesses and more resources for testing and development of vaccines. The current version of the bill includes: 1.) a substantial boost in unemployment insurance benefits (expanded eligibility and an additional $600 a week for four months); 2.) $367 billion loan program for small businesses; 3,) $150 billion for state and local stimulus funds; 4.) $130 billion for hospitals; 5.) $500 billion lending fund for large employers – subject to independent oversight with exclusions for members of Congress and the executive branch. The bill is expected to pass in both houses and be signed by the president.

New to Remote Working? Here are Some Tips for Staying Productive

Remote Working, Work From Home, RDP WorkThe COVID-19 pandemic has seen a rise in remote working. Even organizations that have always been against it have their employees working from home. With some areas experiencing complete lockdowns, this means you find yourself in an unfamiliar work environment.

Remote working means that you have to work outside a traditional office environment. Although some people already have experience working remotely, there are a good number of workers who might have a hard time getting anything done from home. This is particularly true for those  with a family that includes young children.

But with the current epidemic, many don’t have much choice other than to agree with the concept that work doesn’t have to be done in a specific place to be performed successfully. Your employer may have already set a work-at-home policy, but how do you ensure you are productive? Here are a few tips to help you retain your employment.

Create a Workspace

If you don’t already have a home office, then it’s time to be resourceful and create a workspace. Unfortunately, since this is unplanned, you might not have an ergonomically friendly work area. This means you could hurt yourself while working; for example, sitting too long in an uncomfortable position. But think outside the box and utilize what you have, such as using pillows to create a comfortable posture. Also, ensure you take frequent breaks.

Don’t forget to choose a space with minimal distractions.

Establish a Routine and Stick to It

The fact that you no longer have to wake up early to get to the office might tempt you to sleep more. It is important to have a work mindset. To achieve a sense of normalcy that you were used to in the office, you need to plan a schedule for your work hours and stick to it. Failure to create a work routine may find you wasting work hours.

Remember, if you live with family or friends, let them know your work hours and have them respect that.

Be Flexible

It’s important that you be flexible, especially if you have kids in the house. This makes it hard to work a 9 to 5 job. A lockdown means you probably do not have someone to come over and help with chores or childcare. The way out is to experiment with different plans. Try working late at night, early in the morning or when your children take a nap.

Use Time Management Apps

Your employer already set goals and roles for you. But achieving them while working at home is challenging. Use time management apps to track the amount spent working on tasks. Such apps, whether web or mobile-based, can help minimize distractions.

Avoid Social Media

There is so much information on the coronavirus pandemic and there is a need to stay updated. But this can turn out to be a distraction that causes you to miss out on work time. Set a time to check such updates and stick to it.

Informal Communication Groups

Apart from official online meetings or discussions, it’s good to keep in touch with colleagues. If your company did not set up such meetings, then you should. There are many communication tools available today that you can use. Keep in mind, isolation can lead to depression, especially if you live alone and are used to an active social life.

Work-Life Balance

Don’t spend all of your day working. Set daily tasks and stick with them. Set a time to exercise; it’s good for productivity and helps you avoid getting sore, which will generally affect your health. Log off from your work and do a different activity.

Use Secure Connections

Cybercriminals are now more likely to target remote workers. There are already reported cases of coronavirus ransomware and malware. This not only affects your work but can put your company at risk. Ensure that you use a secure wifi and virtual private network (VPN). Most importantly, don’t ignore your company’s security policies just because you are working from home.

Final Thoughts

There is a lot of debate surrounding remote working. Employers may see the benefit of remote working and adopt it more. Whether this will be the case, only time will tell. But we should brace for unexpected changes in the workplace when things finally get back to normal.

The most important thing right now is to keep in mind that your productivity will depend on your self-discipline, time-management skills, technology skills (to use new apps) and adaptability. 

6 Financial Tips for an Emergency

6 Financial Tips for an EmergencyThe effect of the coronavirus on our lives is unprecedented. While we’re all sheltering in place while trying to manage our daily tasks, it’s undoubtedly taking a toll on us mentally, physically and financially. Here are some tips to help you weather this storm of economic uncertainty.

Get Started on Being Liquid

Experts suggest having three to six months of savings on hand. However, this might not be realistic for some. Don’t despair: start saving now. If your employer pays you via direct deposit, ask if they’ll deposit a percentage into your savings. If that’s not an option, have your bank withdraw a portion and deposit into your savings on payday. This way, putting aside money for a crisis will be part of your routine. Further, a good rule of thumb is to budget 50 percent of your income to essentials like housing and utilities, 30 percent toward non-essentials and 20 percent toward financial goals like savings and paying down debt. You can do this!

Analyze Your Expenses

Perhaps setting aside a small amount of money just won’t work for you. Mariel Beasley, co-founder of the Common Cents Lab at Duke University, an organization that aims to improve the financial well-being of low- to moderate-income Americans, suggests taking a hard look at your expenses.

  1. See if you can downgrade. For instance, consider getting a cheaper phone, cable or internet plan.
  2. Set up a restrictive budget. When it comes to discretionary spending, think about using a pre-paid card. You can reload this weekly. If seeing the green stuff actually leave your wallet helps you cut back, then a cash-only system might be a good solution.
  3. Try to find extra work. While this situation is causing furloughs in some industries, it might create jobs in others. For instance, Amazon is said to have hired 100,000 new employees. Research other companies that specialize in deliveries. Since everyone is homebound, this could pan out well — if you like this kind of work. If you do, remember your hand sanitizer, gloves and mask. If you don’t, scour the job boards in your area. You might be surprised at what you find.

Solutions for People Over 59

There is an upside to aging: you can make withdrawals from your IRA or 401(k) if things get really rough. However, Beasley suggests that you withdraw funds in small amounts. If you’re under 59 and really have no other alternative, you can withdraw from your retirement. But know that there will be penalties and taxes. However, in times like this, sometimes you’ve got to do what you’ve got to do.

Avoid High-Cost Credit Cards

While these modern conveniences can be lifesavers, the downside is high-interest rates. Apply for cards with lower rates; or even better, find those that offer balance transfers at zero percent for a limited time.

Disregard the Goal

Many financial experts say: keep your eyes on the prize – build your nest egg. But if you’re just getting started, it might feel overwhelming. Or, if you’re in the midst of a world crisis like we are now, it can feel doubly overwhelming. Instead, focus on saving a little at a time. Baby steps. Even having a small amount of money set aside can help in times of need, like buying groceries during a quarantine.

Ask for Help

If you’re really feeling the pinch, reach out to your landlord, mortgage lender, utility provider, credit card companies or anyone else you owe. In Seattle, the public utility companies are promising they won’t shut off services during this pandemic. The same might be true for your community. But the point here is this: make the call. Send the email. Propose a payment plan. It’s reasonable to assume that most people have a heart and don’t enjoy adding financial stress to the already difficult situation we’re in.

If you can’t apply any of these tips your present circumstances, don’t worry. Be well and stay safe. Perhaps when this passes, you might look back at these ideas and see which works best for you. Remember, we’re all in this together.

Sources

https://abc13.com/finance/financial-tips-to-help-you-through-a-pandemic-or-other-crisis/6021876/

The Economic Impact of Coronavirus

The Economic Impact of CoronavirusIn the days ahead, the COVID-19 pandemic will likely be described in economic terms as a Black Swan. This phrase is used to describe an event that: 1) was unpredictable; 2) causes severe and widespread consequences; and 3) in hindsight was determined to be wholly predictable.

What will be interesting going forward is how much the virus, and its impact on the economy and financial markets, ultimately affects individual portfolios. It’s worth noting that many economists spent the whole of 2019 cautioning that a recession and market correction was imminent. To what extent investors took heed and repositioned their portfolios is yet to be seen.

As predicted, the Federal Reserve might have already exhausted the tools it had available to prevent a further watershed in the markets. Initially, the central bank dropped the federal funds rate to zero and funneled money into the economy. In more recent weeks, its monetary policies have included aggressive purchasing of Treasury bonds and mortgage-backed securities, extending swap lines to foreign central banks, and propping up short-term corporate borrowing and money market mutual funds to help support lending to state and local governments. At first, these efforts appeared to do little to diminish the stock market slide, but the end of March saw a three-day rally with the Dow Jones Industrial Average seeing its biggest three-day jump since 1931.

On the fiscal policy side, Congress is rushing to pass monetary aid as well as stimulus and recovery funds for both individuals and businesses. However, these actions can do little to stop an airborne virus that continues to shutter jobs and businesses and threaten the viability of the country’s health care system and everyday life as we know it.

Portfolio Considerations

When it comes to your own financial risk, let’s look at first things first. For many investors, an initial reaction might be to panic sell holdings before portfolios drop any further. Unless your timeline for needing funds has accelerated, selling now is not generally advisable. What is important to bear in mind is that markets tend to recover quickly after the most significant market declines, so if you’re not invested during the recovery, any paper losses you’re experiencing now will be permanent.

It is worth taking a good look at your holdings to get an idea of what to expect. For example, companies that rely on global supply chains and offshore manufacturing will likely experience the most detrimental short-term impact from the pandemic. This means disruptions in technology, retail, auto manufacturing, travel and tourism, global delivery and oil prices.

On the other hand, the health care industry will likely see tons more investment and demand while the so-called FAANG stocks (Facebook, Apple, Amazon, Netflix and Google) are poised for rampant growth – given the degree to which people are stuck at home using online and delivery services.

Bear in mind that if you make any changes to your portfolio in reaction to market volatility, take into consideration your long-term goals and financial security. The following are a few strategies to consider that could position your portfolio for subsequent growth – assuming you maintain a long-term perspective.

  • Use either spare cash, asset allocation rebalancing opportunities or automatic investment contributions to bargain shop for stocks with a strong track record that are likely to recover but are well-priced right now.
  • Now might be a good time to convert (tax-deferred) retirement account assets into a Roth IRA. By doing so now, when prices are at their lows, you’ll owe less tax at the time of the conversion – which you won’t have to pay until next year’s tax season. By that time, the market may have recovered, positioning your Roth for greater potential for tax-free growth and tax-free income during retirement.
  • Consider using a portion of your assets to pay a lump sum premium for an annuity contract in order to transfer market risk from your portfolio to an insurance company. An annuity is designed to provide insurer-guaranteed income during your retirement, so you can feel a bit better about maintaining an equity allocation during this volatile time until the rest of your portfolio recovers.

The spread of the COVID-19 coronavirus is likely to continue to drive investor uncertainty over the short term. The long term, however, is another matter. Just like the saying, “What goes up, must come down,” history has shown that when it comes to the stock market, what goes down inevitably goes back up. The question is just how long that will take. For now, this is one of those times when it’s handy to have a three-to six-month emergency cash fund available to cover expenses.

Understanding the Oil War between Russia and Saudi Arabia

Understanding the Oil War between Russia and Saudi Arabia, Oil WarOver the past six years, domestic crude oil has experienced a volatile ride. 2014 saw the emergence of American shale as producers were attracted to the $114 price levels. However, in 2016 the price for a barrel eventually fell to $27 as a global supply glut developed. 2016 also saw Russia and Saudi Arabia form an oil pact that drew together Russia and OPEC, leading to the so-called OPEC+ to navigate the global oil market. This agreement would eventually culminate into the current crude oil tensions that exist between Saudi Arabia and Russia.

Through the early 2000s – up until the financial crisis of 2008 – increasing global demand accounted for the rising price per barrel of oil. After reaching a high of $147.27 the week of July 7, 2008, the financial crisis’ effects brought the price of West Texas Intermediate Crude down to a low of $32.98 in December of 2008, according to the U.S. Energy Information Administration. However, with the economy recovering through 2009, the price of WTI crude oil rose to the high $70s and low $80s.

After the world emerged from the financial crisis, world oil markets were rocked by geopolitical tensions from the political revolution in Egypt during January 2011, spiking the price of crude oil to $100 a barrel. Prices stayed in the $90 to $100 per barrel range, until the end of 2014. With increased production in North America, reduced demand from emerging economies and increased storage of crude worldwide, the price per barrel of crude oil in 2016 traded in the low $30s per barrel. The price of oil fell because Saudi Arabia attempted to flood the world market with excess oil to lower the per-barrel price to bankrupt the emerging U.S. frackers.   

In reaction to the low oil prices, OPEC and its non-OPEC oil-producing countries agreed to reduce their total output by 1.8 million barrels in December 2016, taking effect in January 2017. After OPEC reversed itself and increased output in June 2018, it again cut output for 2019. The price of WTI rose to the mid-$70s by October 2018, which can also be attributed to a drop in Venezuela’s oil production, and the re-introduction and increase in severity of sanctions against Iran.

A November 2018 report by the U.S. Energy Information Administration (EIA) relayed that the U.S. produced 11.3 million barrels in August 2018. With the report’s news, additional Russian oil production and even some OPEC countries producing more, it brought WTI down to $51 per barrel. Fast forward to March 2020, with the coronavirus sending shockwaves and diminishing demand, oil prices fell.

This led to a meeting in Vienna on March 5 for OPEC and its (+) or other major oil-producing companies throughout the world to discuss production cuts in hopes of increasing the price of oil. During this meeting, OPEC and its (+) members discussed whether to reduce production by 1.5 million barrels a day through the end of June 2020. OPEC asked Russia and those (+) members to cooperate with the production cuts. However, on March 6, Russia did not agree to reduce oil production. This immediately dropped the price of oil by 10 percent.

With the coronavirus pandemic beginning at the end of 2019, manufacturing and transportation decreased, reducing the global thirst for oil. Based on these events, the International Energy Association (IEA) announced in the middle of February that global consumption would fall to 825,000 barrels per day.

Russia said that reducing production was premature because it was and still is uncertain of how the coronavirus will affect global oil prices. Additionally, they cited political instability in Libya, where approximately one million barrels per day were expected to be offline from production.

In light of the unknown extent of the coronavirus pandemic’s impact on oil demand, Russia and its oil producers reportedly offered to maintain the existing 1.7 million barrels per day cut for the next three months that OPEC+ already had in place. However, OPEC didn’t agree to this offer.

Beginning on March 8, Saudi Arabia gave crude oil buyers discounts of between $6 and $8 per barrel to European, Asian and American buyers. This set a downward cascade of the price of oil, lowering Brent Crude by 30 percent and West Texas Intermediate by 20 percent.

Starting March 9, the drop in oil prices coupled with the global coronavirus pandemic exerted a major impact on world markets. Russia’s ruble dropped by 7 percent shortly thereafter. While the price of oil recovered a little after the impact, it set off a production war between Russia and Saudi Arabia. Beginning March 10, Russia began pumping an additional 300,000 barrels per day, and Saudi Arabia ramped up its production to 12.3 million barrels per day, up from 9.7 million.

Impact on Markets

These two factors led the Dow Jones Industrial Average to drop more than 1,300 points in pre-market trading on March 9, with the DOW ultimately falling 2,000 points during intraday trading. Along with NASDAQ falling by nearly 7 percent and the S&P 500 dropping more than 7 percent, global markets fared worse. This was evidenced by the Italian FTSE MIB Index losing more than 11 percent. 

Producer Implications

When it comes to how the crude oil war is impacting shale producers in North America, it’s important to note that prices of $40 per barrel must be sustained to keep producers afloat, according to consultant Enverus. However, production cuts are imminent at the bottom of the $30 a barrel price point, and there’s certainly no expectations of new oilfield development.

Based upon forecasts from the U.S. Energy Information Administration, May 2020 U.S. production of crude oil is expected to drop from 13.2 million barrels per day to 12.8 million barrels per day by December, finally leveling off to 12.7 million barrels per day in 2021.   

Much like the volatility going on with the coronavirus pandemic, global markets are also expecting further volatility for the world’s energy market.