(New York)

So who is going to benefit most in the inevitable reopening of the economy? It is a tricky question to sort out. The most obvious companies are already seeing very stretched valuations, so those probably aren’t a good buy. Accordingly, here are some interesting names to look at in a category Goldman Sachs is calling “quality-at-a-reasonable-price”: Texas Instruments, Facebook, Mastercard, Alphabet, Home Depot, Ross Stores, Colgate-Palmolive.

FINSUM: Nice range of names. On the tech side, we love Facebook and Google. They are going to make more and more money as this lockdown accelerates the shift to ecommerce. On the retail side, discount stores like Ross seem like a good bet.

(New York)

One of the most famous hedge fund managers on Wall Street made a bold warning yesterday. Jeffrey Gundlach of DoubleLine Capital, adored by the media, said yesterday that he thinks stocks will retest their previous lows. “People don’t understand the magnitude of... the social unease... that’s going to happen … We’ve lost every single job that we created since the bottom in 2009”.

FINSUM: One thing that seems certain right now is that consumer spending is not going to bounce back to where it was for some time. It is going to take years for all these people to re-enter the workforce and loosen the purse strings. A recession for the rest of the year appears inevitable.

(Chicago)

Small cap prices usually expand and contract more quickly than large caps do. This happens both in downturns and upswings. However, in this coronavirus rally, that has not held up, as small caps are faltering while their larger peers soar. For instance, the Russell 2000 is trailing the Russell 1000 so far this year. “This latest rally is very much a capitalization story — the big players were the ones that held their own”, says SEI investments. Another portfolio manager added “The secular growth force that comes from mega-cap tech stocks doesn’t appear to be replicable in the rest of the market”.

FINSUM: Small caps tend to lack the scale that would allow them to thrive even as the economy falls, which means there haven’t been as many winners as there were in large caps.

As of 10:30 AM Eastern this morning, the PPP Program re-opened for applications from this “bucket” of $310 Billion, as the first bucket of $349 Billion rapidly was depleted.

PLEASE HELP SMALL BUSINESS OWNERS BY FILLING OUT THE SURVEY

Has demand waned? On the contrary:

Not even 10 minutes after a government relief loan program for small businesses relaunched on Monday, lenders reported that the U.S. Small Business Administration system was overwhelmed and inaccessible with a flood of applications.
Lenders from across the country were saying they couldn’t get into the SBA’s system when the Paycheck Protection Program relaunched at 10:30 a.m. New York Time, said Paul Merski of the Independent Community Bankers of America. The system was down as early as 10:34 a.m. in New York, according to a person familiar with the matter.

Which is why we even put out a press release this morning demanding an additional $400 Billion rapidly be allocated to the program so the overall funding exceeds $1 Trillion.

The Federal government seems to imply that the $310B number was sufficient because that’s about how many applications were stranded that couldn’t get funded in the first round – about 1 million.

Here’s the thing, however, that’s not the true number. Based on our survey data and our estimation, over 4 million applications were not completed based on a variety of factors – including glitches on the SBA’s site, problems with the lenders, etc.

Which means even this next $310 Billion won’t be enough and why we called for at least an additional $400 Billion – with rules for disbursement that will make sure TRULY small businesses benefit, and not just large companies masquerading as small ones. Read more here, and if you haven’t yet, be sure to submit an application.

COVID Loan Tracker was started by small business owners Duncan and Rita MacDonald-Korth to help their fellow small business owners understand where PPP and EIDL money is flowing. We are empowering the business community and journalists with the data they need to keep the government accountable.

APPLY FOR PPP WITH COVID LOAN TRACKER

So much of the focus of the media covering the Paycheck Protection program has been about the awful pace and communication about application processes and approvals. However, what has been less covered is just how difficult the application process itself is. At COVID Loan Tracker, we have gotten a rare insight into the difficulties everyday small business owners are having with the application process because of the thousands of emails we are getting from CLT community members.

PLEASE HELP SMALL BUSINESS OWNERS BY FILLING OUT THE SURVEY

Those general struggles are a story for a separate article, but today we want to focus on the challenges the application process poses for immigrants and those for whom English is a second language. IRS forms in particular, which are a crucial and obligatory part of the application for every lender, are made for professional accountants, not genuine small business owners. Terms and terminology are difficult even if you are a native English speaker. If you are not one, they are nearly impossible.

The IRS does offer forms in a few languages, but not all lenders are equipped to process such forms with an expediency, which means the default language is inevitably English. Amplifying this issue is the fact that immigrants become entrepreneurs and small business owners at almost 4x the rate of native born Americans*. This means that per capita, immigrants are much more likely to deal with PPP applications issues than native-born Americans. Furthermore, the types of business that immigrants own**—gas stations, drycleaners, nail salons, hotels & motels, and specialty food stores—have been particularly hard hit by the shutdown. Therefore, in many ways the Paycheck Program excludes immigrants almost by design, and resultantly, the COVID-19 lockdown poses a much larger threat to the livelihood of immigrants than it does to native-born Americans.

COVID Loan Tracker was started by small business owners Duncan and Rita MacDonald-Korth to help their fellow small business owners understand where PPP and EIDL money is flowing. We are empowering the business community and journalists with the data they need to keep the government accountable.

Apply for PPP with COVID Loan Tracker

*https://immigrationforum.org/article/immigrants-as-economic-contributors-immigrant-entrepreneurs/
** https://immigrationforum.org/article/immigrants-as-economic-contributors-immigrant-entrepreneurs/