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Feds to seek equity or cash from companies applying for new COVID-19 loan program – CityNews

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Large companies that receive bridge financing through a new federal loan program will have to give the government the option to take an ownership stake, or provide a cash equivalent.

Finance Minister Bill Morneau says the terms will be the same for any company asking for help through the Large Employer Emergency Financing Facility (LEEFF) program that opens for applications today.

He says the terms are designed to make sure companies using the program receive bridge loans, not bailouts, to get through COVID-19’s economic disruptions.

The Liberals have said the loans would be on commercial terms, and require companies to have already gone to banks or the market and been unable to meet their financial needs.

Recipients would also have to agree to limits on executive compensation, dividend payments and share buy-backs, as well as show they are contributing to the Liberals’ goal of reducing greenhouse-gas emissions.

Morneau says the loan program for Canada’s largest corporations is so they can stay open and keep employees on their payrolls and to avoid bankruptcies of otherwise viable firms, wherever possible.

The federal government is also expected to announce later in the day rent relief for small- and mid-sized businesses.

Today’s focus follows last week’s extension of the 75 per cent wage subsidy for three months, to the end of August, and Tuesday’s announcement that the government is expanding the eligibility criteria for its small business loan program.

The latter program provides interest-free loans of $40,000 for eligible small businesses to cover costs like rent and utilities, with the possibility of forgiving one-quarter of the amount if it is paid off by the end of 2022.

Tuesday’s fix extended the program to companies that don’t have traditional payrolls, such as family-run businesses that pay themselves in dividends and companies that employ only contractors.

“This is about getting people back to work and giving businesses the confidence to reopen, rehire and even grow because the way our economy will recover and the way our country will remain resilient and successful is by getting Canadians back to work,” Prime Minister Justin Trudeau said Tuesday.

Today’s focus on rent relief and the large corporation loans program is aimed at conveying the same message.

The LEEFF program was announced last week, aimed at providing short-term bridge financing to companies with $300-million or more in annual revenues looking for loans worth at least $60 million but unable to secure them from banks or other private lenders.

Trudeau has also said applicants whose financial records show signs of “aggressive tax avoidance” will be prohibited, as will companies convicted of tax evasion in the past.

While the LEEFF program was generally well received last week, many companies said they had to wait for the details before knowing whether it would be of use to them.

The government had hoped it would be used by airlines to stay afloat during the pandemic, which has brought air travel to a virtual standstill. But late last week Air Canada announced plans to lay off about 20,000 employees.

Under the commercial rent relief program, landlords are to apply for a 50 per cent subsidy paid for by federal and provincial governments, with tenants paying another 25 per cent. But critics have said many landlords, who would have to accept a 25 per cent reduction in the rent they receive, have refused to participate.

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TSX Composite ends strong week on a down note – BNN

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TORONTO — Canada’s main stock index wrapped up a solid week on a down note while U.S. markets were closed for the Independence Day holiday.

Crude oil and gold prices were down a little bit but not enough to “really spook” the market so the Toronto Stock Exchange followed the path set in Europe where investors took some profits after recent gains, said Philip Petursson, chief investment strategist at Manulife Investment Management.

“It’s kind of one of those wishy-washy days where when you don’t have the leader, which is the U.S. equity markets, 1/8so 3/8 the market is searching for direction,” he said in an interview.

Petursson said the market is hitting that third phase of exhaustion after the prior two of a bear market and a sharp rebound.

“In this phase what we’re doing is we’re waiting for the results and it’s not necessarily just the economic results, more importantly its the earnings results or anything that leads to a positive earnings outlook in Q4 or into 2021 to really drive the market to that next leg higher.”

Second-quarter earnings, which start mid-month are expected to be very bad, said Petursson.

“No matter what the earnings look like the market is just going to shrug it off,” he said.

Rather than recent performance, investors are going to be looking for signs in company guidance that “baby steps” are being taken back to normal despite the increase in COVID-19 infections in the United States.

The S&P/TSX composite index closed down 25.65 points at 15,596.75. It ended the week up 2.7 per cent on a rise in oil and gold prices.

The Canadian dollar also appreciated with oil surpassing US$40 a barrel. It traded for 73.72 cents US compared with 73.61 cents US on Thursday.

Petursson expects the loonie will reach 75 to 77 cents as crude rises to US$45 per barrel, gaining to hit about US$60 over some 18 months.

On Friday, the August crude contract was down 33 cents at US$40.32 per barrel and the August natural gas contract was up 1.6 cents at US$1.75 per mmBTU.

Husky Energy Inc. was the weakest performer as its shares dropped 2.6 per cent, followed by Vermilion Energy Inc. at 2.1 per cent and Cenovus Energy Inc. off two per cent.

Nine of the 11 major sectors on the TSX were lower amid low trading because of the U.S. holiday.

Health care, real estate and materials decreased.

The August gold contract was down US$2.70 at US$1,787.30 an ounce and the September copper contract was down 2.75 cents at US$2.72 a pound.

Consumer staples and telecommunications were slightly higher.

The market choppiness should continue, rising one day and then dipping as investors take some profits, Petursson said.

“This is what I expect to happen until the fall where I think we will have a better picture on what the start of 2021 is going to look like, not only with respect to COVID, more importantly to earnings.

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Oil Prices Fall As Demand Outlook Worsens In U.S. – OilPrice.com

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Oil Prices Fall As Demand Outlook Worsens In U.S. | OilPrice.com

Tsvetana Paraskova

Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews. 

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    Oil prices fell early on Friday amid surging new coronavirus infections in the United States, which had market participants worried about the U.S. oil demand recovery trend.

    As of 9:20 a.m. EDT on Friday, WTI Crude was down 1.28 percent at $40.13, and Brent Crude traded down 1.23 percent at $42.61. Prices recovered somewhat later in the afternoon but were still trading about 1% off.

    Oil prices were still headed for a weekly gain this week as low supply from OPEC, encouraging economic data from the U.S. and China, and a drop in U.S. commercial inventories had supported prices earlier this week.

    However, the U.S. reported on Thursday its highest level of new daily coronavirus cases so far—at more than 55,000, raising fears that a surge in infections will dent the gradual oil demand recovery in America, which consumers 20 percent of the world’s daily oil supply.

    Nearly half of the U.S. states have either paused or rolled back the easing of the restrictions, Texas governor Greg Abbot mandated statewide face-covering in public spaces, while Florida reported more than 10,000 coronavirus cases in a new grim record. Related: U.S. Shale Needs To Rethink Its Strategy To Survive

    Earlier this week, oil prices rallied after the EIA reported a draw of 7.2 million barrels in crude oil inventories in the United States in the week to June 26, down from an all-time high level of inventories reached the previous week.  

    A Bloomberg survey of OPEC’s crude oil production in June showed that the cartel’s output fell to a three-decade low of 22.69 million barrels per day (bpd), as Saudi Arabia fulfilled its promise to cut an additional 1 million bpd on top of its quota in the OPEC+ pact.

    Apart from tightening supply, oil prices were supported this week by optimistic economic news from the U.S. and China. In the United States, the economy regained 4.8 million jobs last month, data showed on Thursday, which sent equity and oil markets rallying. In China, the manufacturing sector conditions continued to improve in June, the Caixin China General Manufacturing PMI showed, while the Caixin China General Services survey showed on Friday that China’s services sector activity expanded at its fastest pace in a decade and business confidence improved to a three-year high.  

    By Tsvetana Paraskova for Oilprice.com

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      Canada's biggest banks join boycott of Facebook platforms – Reuters

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      FILE PHOTO: The Facebook logo is displayed on a mobile phone in this picture illustration taken December 2, 2019. REUTERS/Johanna Geron/Illustration/File Photo

      TORONTO (Reuters) – Canada’s biggest lenders confirmed on Friday they had joined a widespread boycott of Facebook Inc (FB.O) begun by U.S. civil rights groups seeking to pressure the world’s largest social media platform to take concrete steps to block hate speech.

      More than 400 brands have pulled advertising on Facebook in response to the “Stop Hate for Profit” campaign, begun after the death of George Floyd, a Black man who died in police custody in Minneapolis on May 25.

      Canadian lenders Royal Bank of Canada (RY.TO), Toronto-Dominion Bank (TD.TO), Bank of Nova Scotia (BNS.TO), Bank of Montreal (BMO.TO), National Bank of Canada (NA.TO) and Canadian Imperial Bank of Commerce (CM.TO) all said they will pause advertising on Facebook platforms in July.

      Desjardins Group, Canada’s largest federation of credit unions, also said on its website on Thursday it will pause advertising on Facebook and Instagram for the month “barring any exceptional situations where we need to communicate with our members or clients.”

      Most cited their commitments to inclusion and diversity.

      Facebook has opened itself up to a civil rights audit and has banned 250 white supremacist organizations from Facebook and Instagram, a spokesman said by email. Its investments in artificial intelligence mean it finds nearly 90% of hate speech it takes action on before users report it, he added.

      BMO said it is continuing its “ongoing dialogue with Facebook on changes they can make to their platforms to reduce the spread of hate speech.”

      RBC said one way to help clients and communities is to stand against “misinformation and hate speech, which only make systemic racism more pervasive.”

      Reporting by Nichola Saminather in Toronto; Editing by Matthew Lewis and Marguerita Choy

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