Economy and our Industry, plus Advice from Bankers on Weathering the - - PowerPoint PPT Presentation

COVID-19: How It's Impacting the Economy and our Industry, plus Advice from Bankers on Weathering the Storm

Presenters: David Nelson-Study Groups Johnny Milazzo-Lard Oil , Don Stephenson-Cary Oil , Steve Ward-US Bank, Mike Phelps-Citizens Bank

Working Remotely ………….

New Coronavirus Cases Announced in the U.S. Each Day

Where C-19 Cases Have Been Reported U.S. Cases Through March 26th: 85,724 Deaths: 1,275

Social Distancing and Beyond

More Extreme Measures

• 19 States with Stay at Home

Orders involving approximately Half the U.S. Population

• Nonessential Businesses
• rdered shut involving millions
• f workers

No Handshakes Please

Percent of U.S. Population Infected by Covid- 19 by May 20 with no control measures

Percent of U.S. Population Infected by Covid- 19 by May 20 with some control measures

Percent of U.S. Population Infected by Covid- 19 by May 20 with extreme control measures

Pondering the Trade-Off Between Control of Covid-19 and the Economic Costs of Control

• “We cannot let the cost of the cure

be worse than the problem itself” –Donald Trump

• “I’d like the U.S. to be open for

business by Easter (April 12)”DT

• “The virus control effectiveness

sets the timetable, not the calendar” Andrew Fauci

• Estimated cost of the Crisis to the

U.S. 5 million jobs and $1.5 Trillion in Output

• U.S. Deaths from no action range

wildly from 20k to over 2 million

Initial Claims for Unemployment Hit 3.3 million for the March 15-21, 2020 week

Initial Job Claims as a Share of Labor Force for week of March 15-21, 2020

The Leisure and Hospitality Industry has the highest fraction of hourly workers and the fewest who are able to work from home

Resident Trips as a Percent of Normal Have Declined Sharply on a Global Basis

Consumer Confidence has dropped Sharply

Likely impact of Covid-19 on Various Sectors

The Federal Reserve’s Balance Sheet is Projected to Balloon by Several Trillion Dollars

Fed Policy Actions Include:

• 1. Open-ended Quantitative Easing

by Treasuries and MBS

• 2. Credit Facilities to buy

investment grade corporates and exchange-traded funds

• 3. TALF to issue asset-backed

securities (autos, credit cards)

• 4. Funding expanded for

Commercial Paper

• 5. Main Street Lending Program to

support lending to small and mid-size businesses

The interest rate spread between 10 year Treasuries and 30 year mortgages has widened and now narrowed a bit

Recent Fiscal Policy From Billions to Trillions

Phase One Bill Passed

• $6.5 B to Dept of Health and

Human Services

• $7 Billion disaster loan provision

for SBA

• $1.25 B for State Dept for

international work

Phase Two Bill Passed

• Businesses with fewer than 500

employees have to give employees two weeks of paid sick leave for themselves or to support family

• Tax credits provided to business

to offset these costs (with limits)

• Paid Family Leave

Phase Three – A 2.2 Trillion Dollar Stimulus

Major Provisions of the Stimulus Package:

The Impact of the 3 Fiscal Policy Measures Passed by Congress is Equal to 10.7% of GDP

Stocks are now up more than 20% from their low constituting a new Bull Market (or a big dead cat bounce?)

Thoughts from Our Industry Panelists

C-Store/Petroleum Marketer Insights

• Don Stephenson, Cary Oil Co.,

Cary North Carolina

• Johnny Milazzo, Lard Oil Co.,

Denham Springs, Louisiana

Banking and Credit Insights

• Mike Phelps, Citizens Bank
• Stephen Ward, US Bank