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Heads of biggest banks stress need for more stimulus to power economic recovery and avoid deeper recession – NBC News

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This week’s bank earnings say more than just how the giants of the financial services industry are faring seven months into the coronavirus pandemic. The presentations and comments made in response to investor questions provide a glimpse into what banking executives expect a “new normal” to look like and how the American economy will reshape itself around Covid-19 in the future.

At a recent trade group conference, JPMorgan Chase CEO Jamie Dimon laid out how life is likely to look for many workers: An increased reliance on remote work and as many as 40 percent of Chase’s own workforce working from home on a rotating basis. But Dimon also repeated a viewpoint he had previously expressed about an urgency to resume some semblance of pre-pandemic normalcy in the workplace, with “rational, thoughtful return to the office” a growing priority if the substantial service-sector economy is to recover.

Aug. 11, 202022:36

In an investor conference call Wednesday, Bank of America CEO Brian Moynihan and CFO Paul Donofrio noted that while credit card spending improved in the last quarter, it was still below pre-pandemic levels as a result of people not spending on travel and other services.

Heading into earnings season, a big question for analysts was how much banks were setting aside in anticipation of future defaults from credit cardholders, homeowners, business owners and commercial real estate operators. The answer was largely a relief: After setting aside huge amounts of cash in anticipation of a deluge of bad debt, banks reported that they were dialing back on those reserves, either adding significantly less to them or, in some cases, outright trimming them back.

“We’ve certainly hit bottom in terms of loan loss reserves,” said Ken Leon, director of equity research at research firm CFRA.

Bank executives noted that unemployment, loans in deferral, consumer spending and borrowing activity have all recovered off lows earlier in the year. The expected wave of default never materialized, analysts say, because enhanced unemployment insurance payments, the Paycheck Protection Program and other emergency funding streams allowed millions of Americans and small business owners to continue repaying loans.

“Keeping bank earnings afloat is the fiscal stimulus that helped bridge the gap for many people and businesses.”

“The main thing that is keeping bank earnings afloat is the fiscal stimulus that helped bridge the gap for many people and businesses,” said Luke Lloyd, investment strategist at Strategic Wealth Partners.

Where banks still struggled was with their ability to turn a profit lending money. With a near-zero Fed funds rate and a commitment from Federal Reserve Chairman Jerome Powell to hold that rate there for an extended period, banks are limited in their ability to earn income from borrower interest.

“This is anywhere from 50 to 60 percent of total net revenue for these banks,” Leon said.

Banks did report growth in asset and wealth management, and in their trading divisions.

The cautious optimism expressed by big bank executives, though, hinges on some assumptions about the outcome of the election less than three weeks away, and on the ability of lawmakers to deliver additional support to Main Street.

“Right now the polls are indicating a Democratic sweep,” said Marc Chaikin, founder of Chaikin Analytics. Markets are baking in that assumption, he said, as well as the presupposition that a ‘blue wave’ will herald a sea change in fiscal policymaking. “I think the market is basically looking beyond the fourth quarter and assuming there’s going to be a big stimulus bill, plus infrastructure spending,” he said.

If these spending programs are not forthcoming, the dynamic could change rapidly. Chaikin noted that both Chase’s Dimon and Citigroup CEO Michael Corbat expressed a note of caution about the fourth quarter. “They want to see a fiscal stimulus bill passed in Washington,” he said.

Fed Vice Chairman Richard Clarida also touched on the topic in remarks delivered virtually to the Institute of International Finance on Wednesday. “The Covid-19 recession threw the economy into a very deep hole, and it will take some time, perhaps another year, for the level of GDP to fully recover,” he said. “It will take some time to return to the levels of economic activity and employment that prevailed at the business cycle peak in February, and additional support from monetary — and likely fiscal — policy will be needed.”

“I think it is likely that Q4 would look worse without additional stimulus measures,” said Jeff Mills, chief investment officer at Bryn Mawr Trust, who noted that there already is evidence that more Americans are tapping their savings to stay afloat.

“Given still-high levels of unemployment and the likelihood that income levels will continue to be challenged, spending will ultimately come down if additional stimulus is not added,” Mills said.

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Economy

Construction wraps on indoor supervised site for people who inhale drugs in Vancouver

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VANCOUVER – Supervised injection sites are saving the lives of drug users everyday, but the same support is not being offered to people who inhale illicit drugs, the head of the BC Centre for Excellence in HIV/AIDS says.

Dr. Julio Montaner said the construction of Vancouver’s first indoor supervised site for people who inhale drugs comes as the percentage of people who die from smoking drugs continues to climb.

The location in the Downtown Eastside at the Hope to Health Research and Innovation Centre was unveiled Wednesday after construction was complete, and Montaner said people could start using the specialized rooms in a matter of weeks after final approvals from the city and federal government.

“If we don’t create mechanisms for these individuals to be able to use safely and engage with the medical system, and generate points of entry into the medical system, we will never be able to solve the problem,” he said.

“Now, I’m not here to tell you that we will fix it tomorrow, but denying it or ignoring it, or throw it under the bus, or under the carpet is no way to fix it, so we need to take proactive action.”

Nearly two-thirds of overdose deaths in British Columbia in 2023 came after smoking illicit drugs, yet only 40 per cent of supervised consumption sites in the province offer a safe place to smoke, often outdoors, in a tent.

The centre has been running a supervised injection site for years which sees more than a thousand people monthly and last month resuscitated five people who were overdosing.

The new facilities offer indoor, individual, negative-pressure rooms that allow fresh air to circulate and can clear out smoke in 30 to 60 seconds while users are monitored by trained nurses.

Advocates calling for more supervised inhalation sites have previously said the rules for setting up sites are overly complicated at a time when the province is facing an overdose crisis.

More than 15,000 people have died of overdoses since the public health emergency was declared in B.C. in April 2016.

Kate Salters, a senior researcher at the centre, said they worked with mechanical and chemical engineers to make sure the site is up to code and abidies by the highest standard of occupational health and safety.

“This is just another tool in our tool box to make sure that we’re offering life-saving services to those who are using drugs,” she said.

Montaner acknowledged the process to get the site up and running took “an inordinate amount of time,” but said the centre worked hard to follow all regulations.

“We feel that doing this right, with appropriate scientific background, in a medically supervised environment, etc, etc, allows us to derive the data that ultimately will be sufficiently convincing for not just our leaders, but also the leaders across the country and across the world, to embrace the strategies that we are trying to develop.” he said.

Montaner said building the facility was possible thanks to a single $4-million donation from a longtime supporter.

Construction finished with less than a week before the launch of the next provincial election campaign and within a year of the next federal election.

Montaner said he is concerned about “some of the things that have been said publicly by some of the political leaders in the province and in the country.”

“We want to bring awareness to the people that this is a serious undertaking. This is a very massive investment, and we need to protect it for the benefit of people who are unfortunately drug dependent.” he said.

This report by The Canadian Press was first published Sept. 18, 2024.

The Canadian Press. All rights reserved.

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N.B. election: Parties’ answers on treaty rights, taxes, Indigenous participation

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FREDERICTON – The six chiefs of the Wolastoqey Nation in New Brunswick distributed a survey on Indigenous issues to political parties ahead of the provincial election, which is scheduled to kick off Thursday. Here are some of the answers from the Progressive Conservative, Liberal and Green parties.

Q: How does your party plan to demonstrate a renewed commitment to recognizing our joint treaty responsibilities and acknowledging that the lands and waters of this territory remain unceded?

Progressive Conservative: The party respectfully disagrees with the assertion that land title has been unceded. This is a legal question that has not been determined by the courts.

Liberal: When we form government, the first conversations the premier-designate will have is with First Nations leaders. We will publicly and explicitly acknowledge your treaty rights, and our joint responsibility as treaty people.

Green: The Green Party acknowledges that New Brunswick is situated on the unceded and unsurrendered territories of the Wolastoqiyik, Mi’kmaq and Peskotomuhkati peoples, covered by the Treaties of Peace and Friendship. Our party is committed to establishing true nation-to-nation relationships with First Nations, grounded in mutual respect and co-operation as the treaties intended.

Q: How does your party propose to approach the issue of provincial tax agreements with First Nations?

Progressive Conservative: The government of New Brunswick operates in a balanced and fair manner with all organizations, institutions and local governments that represent the citizens of this province, including First Nations. Therefore, we cannot offer tax agreements that do not demonstrate a benefit to all citizens.

Liberal: Recent discussions with First Nations chiefs shed light on the gaps that existed in the previous provincial tax agreements with First Nations. Our party is committed to negotiating and establishing new tax agreements with First Nations that address the local needs and priorities and ensure all parties have a fair deal.

Green: The Green Party is committed to fostering a respectful relationship with First Nations in New Brunswick and strongly opposes Premier Blaine Higgs’s decision to end tax-sharing agreements. We believe reinstating these agreements is crucial for supporting the economic development and job creation in First Nation communities.

Q: How will your party ensure more meaningful participation of Indigenous communities in provincial land use and resource management decision-making?

Progressive Conservative: The government of New Brunswick has invested significant resources in developing a robust duty to consult and engagement process. We are interested in fully involving First Nations in the development of natural resources, including natural gas development. We believe that the development of natural gas is better for the environment — because it allows for the shutdown of coal-fired power plants all over the globe — and it allows for a meaningful step along the path to reconciliation.

Liberal: Our party is focused on building strong relations with First Nations and their representatives based on mutual respect and a nation-to-nation relationship, with a shared understanding of treaty obligations and a recognition of your rights. This includes having First Nations at the table and engaged on all files, including land-use and resource management.

Green: We will develop a new Crown lands management framework with First Nations, focusing on shared management that respects the Peace and Friendship Treaties. We will enhance consultation by developing parameters for meaningful consultation with First Nations that will include a dispute resolution mechanism, so the courts become the last resort, not the default in the face of disagreements.

This report by The Canadian Press was first published Sept. 18, 2024.

The Canadian Press. All rights reserved.

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Economy

Canadian Coast Guard crew member lost at sea off Newfoundland

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ST. JOHN’S, N.L. – A crew member of a Canadian Coast Guard ship has been lost at sea off southern Newfoundland.

The agency said in a release Wednesday that an extensive search and rescue effort for the man was ended Tuesday evening.

He was reported missing on Monday morning when the CCGS Vincent Massey arrived in St. John’s, N.L.

The coast guard says there was an “immediate” search on the vessel for the crew member and when he wasn’t located the sea and air search began.

Wednesday’s announcement said the agency was “devastated to confirm” the crew member had been lost at sea, adding that decisions to end searches are “never taken lightly.”

The coast guard says the employee was last seen on board Sunday evening as the vessel sailed along the northeast coast of Newfoundland.

Spokeswoman Kariane Charron says no other details are being provided at this time and that the RCMP will be investigating the matter as a missing person case.

This report by The Canadian Press was first published Sept. 18, 2024.

The Canadian Press. All rights reserved.

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