President Donald Trump ended talks with Democratic leaders on a new stimulus package, hours after Federal Reserve Chair Jerome Powell’s strongest call yet for greater spending to avoid damaging the economic recovery.
“I have instructed my representatives to stop negotiating until after the election when, immediately after I win, we will pass a major Stimulus Bill that focuses on hardworking Americans and Small Business,” Trump said Tuesday in a tweet.
Stocks tumbled after Trump’s posting called an end to months of hard-fought negotiations between the administration and Congress. Democrats had most recently pushed a US$2.2 trillion package that failed to garner Republican support in the House, while the White House had endorsed US$1.6 trillion.
The S&P 500 Index closed down about 1.4 per cent, after having risen earlier in the day in the wake of Powell’s mounting pressure on policy makers to act.
House Speaker Nancy Pelosi continued to insist on US$2 trillion or more in stimulus, according to a Republican familiar with the negotiations, while the GOP lacked votes for such a large package.
The legislation that the House passed last week with only Democratic support also had measures opposed by Republicans, including government-funded health coverage for abortions and stimulus checks for undocumented immigrants.
Pelosi repeatedly invoked the Fed chair in her calls for Republicans to move toward the Democrats’ more comprehensive bill. Some recent economic data, along with a resurgence in coronavirus counts in some states, also suggested to many analysts that government assistance was becoming more pressing.
“Even if policy actions ultimately prove to be greater than needed, they will not go to waste,” Powell told a virtual conference hosted by the National Association for Business Economics Tuesday morning. “Too little support would lead to a weak recovery, creating unnecessary hardship for households and businesses.”
Pelosi said in a statement, “Clearly, the White House is in complete disarray.” The speaker said, “Walking away from coronavirus talks demonstrates that President Trump is unwilling to crush the virus, as is required by the Heroes Act.”
The speaker and Treasury Secretary Steven Mnuchin, who had sat down in person for negotiations last week for the first time since August, spoke at 3:30 p.m. Tuesday and the secretary confirmed that the talks had been halted, according to Drew Hammill, Pelosi’s spokesman.
Nancy Pelosi is asking for US$2.4 Trillion Dollars to bailout poorly run, high crime, Democrat States, money that is in no way related to COVID-19. We made a very generous offer of US$1.6 Trillion Dollars and, as usual, she is not negotiating in good faith. I am rejecting their…
— Donald J. Trump (@realDonaldTrump) October 6, 2020
Pelosi remarked to Democratic lawmakers on a call that Trump’s thinking might be affected by steroids he’s taken to treat his coronavirus infection.
A day after returning to the White House from Walter Reed National Military Medical Center, Trump conferred by telephone with Senate Majority Leader Mitch McConnell and House Republican leader Kevin McCarthy, along with Mnuchin, before his tweets put an end to talks for now.
Pelosi earlier told her Democratic colleagues that she and Mnuchin disagreed on assistance to state and local authorities, spending to address the coronavirus and getting aid to ordinary Americans remain, according to a House official.
Trump has disparaged Democrats’ push for almost US$1 trillion in assistance to state and local authorities as a hand-out to poorly run, mainly Democratic states. The Democrats cut that amount in half in their latest offer.
But on Saturday he said that the country “wants and needs” another round of relief. “Work together and get it done,” he tweeted from Walter Reed.
Even so, the Fed chief in his remarks Tuesday highlighted that analysis after the Great Recession a decade ago showed that tight budgets at the state and local level had held back the economic recovery.
“Nancy Pelosi is asking for US$2.4 Trillion Dollars to bailout poorly run, high crime, Democrat States, money that is in no way related to COVID-19,” Trump said in his tweets Tuesday. “We made a very generous offer of US$1.6 Trillion Dollars and, as usual, she is not negotiating in good faith.”
McConnell has been clear publicly that Senate Republicans weren’t interested in a bill with a US$2.2 trillion price tag, and also opposed a bailout for state and local governments. His caucus favored a bill offering US$650 billion in aid last month that was blocked by Democrats as insufficient.
The consequences of the withdrawal of federal fiscal support are tangible and immediate. American Airlines Group Inc. and United Airlines Holdings Inc. said they would start laying off 32,000 workers, blaming expiring government aid. Walt Disney Co. is slashing 28,000 jobs while Allstate Corp., the fourth-largest U.S. car insurer, is cutting 3,800, roughly 8 per cent of its workforce.
Americans’ incomes fell by 2.7 per cent in August as supplemental insurance benefits from the first round of stimulus expired, threatening to sap consumer spending.
“The economy has been moving more or less sideways since mid-summer,” Mark Zandi, chief economist for Moody’s Analytics, said in a recent note to clients. With prospects fading for more federal relief, “odds that the recovery will come undone are rising.”
Ant Group set to surpass Aramco as biggest-ever IPO – Aljazeera.com
Jack Ma’s fintech giant Ant Group is set to raise $34.5bn through initial public offerings in Shanghai and Hong Kong – a listing that will rank as the largest ever.
Jack Ma’s Ant Group Co is set to raise about $34.5 billion through initial public offerings in Shanghai and Hong Kong, a blockbuster listing that will rank as the biggest IPO ever and make it one of the most valuable finance firms on the planet.
The fintech giant will have a market value of $315 billion even before exercising its greenshoe option, based on filings Monday. That’s about the same valuation as JPMorgan Chase & Co. and four times larger than Goldman Sachs Group Inc.
The IPO is attracting interest from some of the world’s biggest money managers, and sparking a frenzy among individual investors in China clamoring for a piece of the sale. In the preliminary price consultation of its Shanghai IPO, institutional investors subscribed for over 76 billion shares, or over 284 times of the initial offline offering tranche, according to Ant’s Shanghai offering announcement.
“This was the first time such a big listing, the largest in human history, was priced outside New York City,” billionaire founder Ma told the Bund Summit in Shanghai Saturday. “We wouldn’t have dared to think about it five years, or even three years ago.”
Such demand puts the much-anticipated IPO on track to surpass Saudi Aramco’s $29 billion sale last year. Ant priced its Shanghai stock at 68.8 yuan ($10.27) apiece and its Hong Kong shares at HK$80 ($10.32) each. The company may raise another $5.17 billion if it exercises its greenshoe options.
This is “a homecoming for capital markets in Shanghai and Hong Kong,” said existing investor John Ho, founder of Janchor Partners. Ho, who invested $400 million in Ant two years ago, added that he’s trying to secure a bigger allocation of the Hong Kong shares and that being able to invest in Ant “is priceless.”
T. Rowe Price Group Inc., UBS Asset Management and FMR LLC, the parent of Fidelity Investments, are among the money managers angling for a piece of the deal, a person familiar with the matter has said. Hong Kong stockbrokers are so confident Ant IPO will go smoothly that they’re offering to let mom-and-pop investors buy the stock with as much as 20 times leverage.
“The investment thesis of Ant is a systemic valuation transfer from mainstream Chinese financial institutions such as banks to a platform that’s data-driven, with a huge network effect, and enjoying almost zero marginal costs of cross-selling,” said Nick Xiao, CEO of Hywin International, the Hong Kong arm of Hywin Wealth which is helping rich individuals buy shares of Ant. “Every bank and securities house and fund manager will have to plug into it, while every consumer, corporate or individual, cannot live without it.”
The fintech giant that runs the Alipay platform is charging ahead with its landmark offering just days ahead of the U.S. election. The Hong Kong listing day will be on Nov. 5., only two days after the U.S. vote, an event that could spark market volatility if the vote is disputed or counting delayed.
Ant has picked China International Capital Corp. and CSC Financial Co. to lead its Shanghai leg of the IPO. CICC, Citigroup Inc., JPMorgan. and Morgan Stanley are heading the Hong Kong offering. Existing Ant shareholders won’t be able to sell shares for six months, according to the filings.
The company will issue no more than 1.67 billion shares in China, equivalent to 5.5% of the total outstanding before the greenshoe, according to its prospectus on the Shanghai stock exchange. It will issue the same amount for the Hong Kong offering, or about 3.3 billion shares in total.
Alibaba Group Holding Ltd., which was co-founded by Ma and currently owns about a third of Ant, has agreed to subscribe for 730 million of the Shanghai shares, which will be listed in Shanghai under the ticker “688688,” according to the prospectus. Alibaba will hold about 32% of Ant shares after the IPO.
(Updates with quotes and details throughout.)
© 2020 Bloomberg L.P.
Stock markets sell off on renewed uncertainty over COVID-19 and U.S. election – CBC.ca
Stock markets around the world sold off on Monday as surging coronavirus infections prompted a new wave of fear and uncertainty, barely a week before a U.S. election that could reshape global geopolitics.
The Dow Jones Industrial Average finished the day at 27,685, down 689 points or 2.3 per cent. At the lowest point, the benchmark group of 30 large U.S. companies was off by more than 900 points.
The broader S&P 500 and technology-focused Nasdaq fared slightly better, but both closed down by almost two per cent.
The reason for the selling was a new wave of fear washing over markets as COVID-19 infections are rising to record levels in many places.
Spain’s government declared a national state of emergency on Sunday that includes an overnight curfew, while Italy ordered restaurants and bars to close each day by 6 p.m. and shut down gyms, pools and movie theatres.
Numerous Latin American nations also set their own daily case records over the weekend.
After two record days of more than 80,000 new cases over the weekend, the seven-day average of new cases in the U.S. is now at 68,767, according to data compiled by Johns Hopkins University.
“And nobody is quite sure about what the response is going to be,” said Colin Ciezinsky, chief market strategist with SIA Wealth Management. “Are we going to see widespread lockdowns or more targeted rollbacks? Markets are like a deer caught in headlights.”
TSX down, too
Canadian stocks got swept up in the gloom, although on the whole they held up comparatively better.
The TSX’s main index lost 257 points, down 1.6 per cent on the day.
Travel-related companies were hit hardest, with shares in Air Canada losing more than $1 to close at $15.91. Those same shares were valued at more than $50 apiece in January, but that was before COVID-19 wiped out demand for air travel.
Energy companies were battered too, as the price of oil lost more than three per cent with a barrel of the North American benchmark known as WTI closing at $38.52 US.
Oil’s sell off was mainly due to COVID-19, said Judith Dwarkin, chief economist at Enverus. “COVID’s second wave or third wave has enveloped Europe and prompted a new raft of travel restrictions,” she said. “It’s not surprising there’s heightened volatility in the market.”
Shares in three of the biggest oil companies in Canada — Cenovus, CNR Limited, and Suncor — all fell. Cenovus plunged by eight per cent to $4.47 despite news the company was planning to take over smaller rival Husky in a $23 billion deal.
U.S. election impact
Renewed coronavirus fears were the main thing roiling markets, but the U.S. election was also a contributing factor, Ciezinsky said.
“People are starting to take money off the table,” he said. “They aren’t sure what the result might be or if it is disputed [so] this is about fear and uncertainty. People don’t know what’s going to happen.”
Hopes are also fading that Democrats and Republicans will come together on another stimulus package, but Esty Dwek, head of global market strategy at Natixis Investment Managers, said some sort of deal is likely once the uncertainty of the election can be settled.
“It’s going to be a little bit volatile in the next week depending on the results, but we’re not expecting weeks of uncertainty,” she said.
Bombardier will get $275M for sale of aerostructures business to Spirit, less than originally agreed to – CBC.ca
Bombardier Inc. says it will receive less cash than it originally had agreed to in the sale of its aerostructures business to Spirit AeroSystems Holding Inc.
The company says it will receive US$275 million in cash in the amended deal, down from the US$500 million in cash that was first announced last year.
Spirit will also assume liabilities, including government refundable advances and pension obligations, valued at US$824 million.
The sale includes operations in Belfast, U.K., and Casablanca, Morocco, as well as a maintenance, repair and overhaul facility in Dallas.
Concerns about the future of the deal were raised last month after Spirit said some closing conditions were unmet, injecting a degree of uncertainty into the deal.
Bombardier said Monday the closing conditions have been met and the transaction is expected to close on Friday.
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Longtime Oilers locker room attendant Joey Moss dies at 57 – Sportsnet.ca
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