Democrats call for green energy relief in next stimulus package, the mighty U.S. dollar is having a wobble, and more

Stocks continue to climb even amidst civil unrest around the United States, on the theory that the economy is going to bounce back strongly from the coronavirus pandemic. You probably don’t get it. MM certainly doesn’t. And as our Zachary Warmbrodt and Victoria Guida report, one big piece of the Federal Reserve’s effort to boost struggling businesses is running into major trouble before it even gets started.

And this is certainly not going to be helpful to the recovery: “A $600 billion Fed … loan program designed to offer a lifeline to tens of thousands of struggling U.S. companies is heading for trouble before it even gets under way.

The Federal Reserve said it would again broaden the number of local governments eligible for a new lending program as Illinois announced it would be the first borrower to access the facility.

The central bank said Wednesday it would allow all 50 states to designate two cities or counties to sell debts directly to the central bank’s program, creating an option for states with less populous municipalities to participate. Many state and local governments are facing cash crises as the coronavirus pandemic has crushed both their tax intake and driven an increase in their spending.

Nearly 60 Democrats are calling on leaders to include help for the renewable energy industry in the next stimulus package. 

“As Congress works to help the American economy recover, we must ensure robust investments are made to spur growth in renewable energy, energy storage, energy efficiency, clean vehicles, clean and efficient infrastructure, clean fuels, and workforce development,” lawmakers wrote in a letter spearheaded by Rep. Paul Tonko (D-N.Y.) and Sen. Martin Heinrich (D-N.M.).

“These investments should both spur national growth and include funding opportunities for community-level adoption. Smart investments in these areas can help America decarbonize, put people back to work, and help our national, state, and local economies recover," they wrote.

As protests over racial injustice sweep the United States and a virus-driven global downturn threatens to hike inequality, spending to restart economies must focus on creating a “greener, smarter and fairer world”, top public figures urged Wednesday.

About 170 nations will see their economies shrink this year, bringing more debt, deficits and “a very high risk” of greater poverty and economic disparity, said Kristalina Georgieva, managing director of the International Monetary Fund (IMF).

“We know that this pandemic, if left to its own devices, is going to deepen inequality,” she told an online event organised by the World Economic Forum (WEF).

The nation’s biggest oil and gas companies could end up even bigger by the end of the coronavirus pandemic.

Analysts expect a coming wave of bankruptcies should the price of oil remain low. That could allow the largest petroleum industry players to scoop up more wells on the cheap – and leave them with more reserves after all the market tumult.

“The rich are going to get richer,” said John Kilduff, a partner with Again Capital, an oil-trading hedge fund. “The Exxons and Chevrons will pick up more assets.”

The rally now under way in global stock markets isn’t just the most hated in history, as I suggested earlier this week. It is also the biggest 50-day rally on record. The March low for the S&P 500 is now exactly 50 trading days ago, and the total percentage gain since then is the best 50-day stretch in the history of the index.

Before 1952, the market also traded over weekends, so comparisons are difficult before then. But there’s a fair chance this is the strongest rally ever. The two previous strongest 50-day rallies, in 2009 and 1982, both came after major lows, and were followed by long bull markets. The last four months — encompassing the market’s pre-Covid peak and its monthlong nose dive — have been unlike anything seen before.

The mighty U.S. Dollar is having a wobble, falling to its lowest level on a trade-weighted basis since March. It’s a sign that the economic effects of the crisis are waning around the world. Perhaps it’s time for the U.S. to rein in the unlimited economic stimulus, or at least keep some in reserve to fight specific fires rather than just ensuring market liquidity.

The Federal Reserve has saved the financial world with its unrelenting monetary packages, pumping in $3 trillion in the past three months. It has met the soaring global demand for dollars, the haven currency in a crisis, and propped up the U.S. economy and a large swath of the developing world exposed to dollar borrowing. With oil prices regaining their footing, the immediate danger of an emerging markets collapse has passed.