Shares
 
FAQs

Visit our FAQ page to find the answers to the most commonly asked questions, including how to create an account, explaining ETFs, and providing useful links, forms, and tables.

FAQs
Shares

Start investing in South African shares the smart way. Discover ThinkTrader today.

Start Investing
Learn To Trade
 
Indicators & Chart Patterns

Deepen your knowledge of technical analysis indicators and hone your skills as a trader.

Find your detailed guides here
Trading Glossary

From beginners to experts, all traders need to know a wide range of technical terms. Let us be your guide.

Learn More
Trading Glossary

From beginners to experts, all traders need to know a wide range of technical terms. Let us be your guide.

Learn more
Knowledge Base

No matter your experience level, download our free trading guides and develop your skills.

Learn more
Learn To Trade

Trade smarter: boost your skills with our training resources.

Create a live account
Market Analysis
 
Market News

All the latest market news, with regular insights and analysis from our in-house experts

Learn more
Economic Calendar

Make sure you are ahead of every market move with our constantly updated economic calendar.

Learn more
Technical Analysis

Harness past market data to forecast price direction and anticipate market moves.

Learn more
Live Webinars

Boost your knowledge with our live, interactive webinars delivered by industry experts.

Register now
Special Reports

Engaging, in-depth macroeconomic analysis and expert educational content from our in-house analysts

Learn more
Market Analysis

Harness the market intelligence you need to build your trading strategies.

Create a live account
About ThinkMarkets
 
Liverpool FC

ThinkMarkets is the Official Global Trading Partner of Liverpool FC

Learn more
About Us

Find out more about ThinkMarkets, an established, multi-award winning global broker you can trust.

Learn more
Careers

Discover a range of rewarding career possibilities across the globe

Apply now
Security of Funds

Security of your funds is our number one priority. We safeguard our Client funds in top tier banks.

Learn more
ThinkMarkets News

Keep up to date with our latest company news and announcements.

Learn more
Trading Infrastructure

When it comes to the speed we execute your trades, no expense is spared. Find out more.

Learn more
Contact Us

Our multilingual support team is here for you 24/7.

Learn more
About ThinkMarkets

Global presence, local expertise - find out what sets us apart.

Create a live account
Create account

US COVID Relief Package II: Impact and Analysis

Carl Capolingua Carl Capolingua 23/12/2020
US COVID Relief Package II: Impact and Analysis US COVID Relief Package II: Impact and Analysis
US COVID Relief Package II: Impact and Analysis Carl Capolingua
No more, "We're getting close" from main combatants US Treasury Secretary Mnuchin and Speaker of the House Nancy Pelosi, and no more mentions of an "imminent" deal in the media…because whilst it has been many months in the making, all 5600 pages of the new US fiscal stimulus bill has finally arrived!

We're still to get a clever acronym for the new deal struck by US lawmakers on Monday, but it has been commonly referred to as the "Coronavirus Relief Package", and may end up being referred to as CARES II. "CARES" of course, stands for the Coronavirus Aid, Relief, and Economic Security Act which was passed by Congress with overwhelming bipartisan support in March.

This update takes a very quick look at the new package, and what it may mean for markets (all figures are in US dollars).
 
Size
CARES II is approximately US$892b, or about 4% of US GDP. This is about half of the $2.2t spent on CARES I.

CARES II is part of a broader spending package passed Monday aimed at funding the US government until September 20, 2021. This "other bit" is worth about $1.4t, and will fund the day-to-day workings of the entire US Federal Government for this period. Whilst this sounds big, it consists primarily of extensions to current policies, and should not have a meaningful macroeconomic impact.
 
Key Features
  • $600 per person payment to individuals (including children) earning up to $75,000 and up to $150,000 for couples (cost $166b). This means the typical family of four will receive $2,400. According to Mr Mnuchin, the checks could start hitting bank accounts "as early as next week".
  • Small-business aid, including forgivable loans as part of the Paycheck Protection Program. This allows businesses with fewer than 500 employees and with substantial revenue loss, to cover their payroll, rent, and utilities (cost $284b). Note, to date, the US Government has issued around $525b in forgivable PPP loans.
  • Revival of the supplemental unemployment benefit for millions of unemployed Americans at $300 a week through to March 14, 2021 (cost $120b).
  • Extension of the expanded eligibility (PUA) criteria for unemployment benefits, and the continued extension of the duration of benefits (PEUC). These measures enable a wider range of unemployed and under employed Americans claim benefits, and also extends the maximum period they can claim them 50 weeks, from 39 weeks (cost $120b).
  • Education-related grants paid to the states (cost $82b).
  • Substantially increased funding for Coronavirus testing and tracing. Also, increased spending on research and for vaccine production and distribution (cost $69b).
  • Support for transportation industries including $15b for airlines, $14b for public transport, and $10b for state highways (total cost $39b).
  • Rental assistance and the extension of the eviction moratorium through to January 31, 2021 (cost $25b).
  • Broadband improvement and deployment (cost $7b). (Note: Apart from the investment in broadband and transport systems, there were no major infrastructure spending initiatives in this bill.)
  • Hospital grants (cost $3b, notably lower than the $35b provided in CARES I).
  • Other additions to the spending bill include legislation relating to "surprise medical billing" and extensions of several expiring or expired tax provisions (i.e., the so-called “tax extenders”).
 
Missing
Notably, as expected, CARES II lacks state and local fiscal aid and liability protections. This item was a major sticking point in getting the deal done. The Democrats still want it, and will try to get it done under a Biden administration. Given the Republicans are still likely to control the US Senate after the January 5 runoffs for the two remaining senate seats, these measures are probably a long way off.
 
Impact & Outlook
The US economy will undoubtedly need more support if it is to bounce back, and to bounce back strongly from this crisis. There are still over 20 million Americans who are underemployed at the moment. Both politicians and the Federal Reserve desperately want to address this situation. The risk of not doing so, is a generation of displaced and disenfranchised citizens, just as the country could claim it had finally recovered from the GFC.

This package is a welcome development and it goes part of the way to addressing the major dislocations the pandemic has inflicted on the US economy and its people. Its release is timely, as the resurgence of the virus across the nation has clearly undermined recent economic data. This data strongly suggests that the US is heading for at least a double dip recession. However, the size of the package is at the lower end of most expectations, and, with Congress likely to be split along party lines (the Democrats have control of the House of Representatives and the Republicans control of the Senate), one has to assume based upon the recent track record, that further stimulus will also be a drawn out affair. 

It is probably an overstatement to say that the US economy is currently on life-support, and that this package simply keeps the power going to the respirator. But clearly there remains a huge task in reviving the patient fully. Whilst we're on the medical analogy here, it is worth stating the importance of the smooth rollout of vaccines in 2021, and perhaps also, the importance of their widespread acceptance. At the end of the day, COVID caused this crisis, and defeating it is probably going to have a greater impact on resolving the crisis than anything Capitol Hill or the Fed can provide.
Any opinions, news, research, analyses, prices or other information contained on this website is provided as general market commentary and does not constitute investment advice. ThinkMarkets will not accept liability for any loss or damage including, without limitation, to any loss of profit which may arise directly or indirectly from use of or reliance on such information.

Related articles:

South African Equities Earnings Review: 12 - ...

By Lesego Mthombothi

21/09/2022

SA Market News - 16 September 2022

By Lesego Mthombothi

16/09/2022

South African Equities Earnings Review: 5- 9 ...

By Lesego Mthombothi

12/09/2022

Week Ahead Preview 12th of September

By Mahmoud Alkudsi

12/09/2022

South African Equities Earnings Review: 29 Au...

By Lesego Mthombothi

06/09/2022

Meet our contributors
Carl Capolingua
×
Carl Capolingua
Market Analyst, Melbourne

Carl has over 20 years' experience in financial markets and has held senior analyst roles at a number of financial institutions. Specialising in Australian and US stock markets in particular, Carl uses a top-down approach to assess the global macro picture before using both technical and fundamental techniques to select stocks. He regularly appears as an expert commentator on a number of media outlets throughout the Asia-Pacific region.
 
 
 

Lesego
×
Lesego Mthombothi
Market Research Analyst, South Africa

Lesego Mthombothi is an experienced market research analyst and investment professional who proudly holds an honours degree in investment management and completed her CFA level 1.
 
 
 

Mahmoud Alkudsi
×
Mahmoud Alkudsi
Chief Markets Analyst, MENA

Mahmoud is a market analyst, with over a decade of experience in financial markets. He follows main market movers and tracks their effect on the price chart. Mahmoud mixes technical and fundamental tools with a deeper focus on the technical side, and with his wide experience in providing educational and guidance materials to all levels of traders, he helps them in making informed trading decisions. Before joining ThinkMarkets, Mahmoud was head of market research departments in different reputed financial companies, where he provided market analysis for a variety of asset classes, including FX, equities, indices, and commodity futures. As an experienced market commentator, he was hosted by too many print and broadcast media, including not limited to Sky News Arabia, France 24, Alarabyia, Alsharq-Bloomberg, and CNBC Alarabyia to discuss key risk events their clear impact on the price action. Mahmoud holds a Master of Business Administration (MBA) from Cardiff Metropolitan University of Wales, UK, and speaks Arabic, English, and Spanish.

Shawn
×
Shawn Lee
Market Analyst, Malaysia

Shawn Lee has over eight years of experience in the financial market as a market analyst. Shawn provides market key insights and trade ideas through the market and technical analysis. He also held trader roles and guided traders in maximising one’s trading success.

Carl Capolingua
Carl Capolingua
Carl has over 20 years' experience in financial markets and has held senior analyst roles at a number of financial institutions.
Lesego
Lesego Mthombothi
Lesego Mthombothi is an experienced market research analyst and investment professional who proudly holds an honours degree in investment management and completed her CFA level 1.
Mahmoud Alkudsi
Mahmoud Alkudsi
Mahmoud is a market analyst with over a decade of experience in financial markets. Mahmoud mixes technical and fundamental tools with a deeper focus on the technical side, and has experience in providing guidance to all levels of traders.
Shawn
Shawn Lee
Shawn Lee has over eight years of experience in the financial market as a market analyst. Shawn provides market key insights and trade ideas through the market and technical analysis. He also held trader roles and guided traders in maximising one’s trading success.
Any opinions, news, research, analyses, prices or other information contained on this website is provided as general market commentary and does not constitute investment advice. ThinkMarkets will not accept liability for any loss or damage including, without limitation, to any loss of profit which may arise directly or indirectly from use of or reliance on such information.
Back to top