Donald Trump addressed the nation from the Oval Office on Wednesday evening, more than 48 hours after he promised to deliver a “major” economic package to counter America’s burgeoning public health crisis.
For the last two days, lawmakers have debated the merits of various proposals including a payroll tax cut, which is the centerpiece of the administration’s “plan”, if that’s the right word.
It’s not clear that is the right word, though, because even as the president did offer some concrete initiatives, futures crashed shortly after he finished speaking.
Although the price action has been the very definition of “manic” lately (and could thus reverse overnight) one thing is for sure: Markets did not like the president’s decision to suspend all travel from Europe for the next 30 days. That won’t apply to the UK, apparently.
Trump effectively blamed the Europeans for not adopting stringent enough measures to curb the infection as it spread outward from China. “The European Union failed to take the same precautions [as the US]”, he said.
Dow futures and Nasdaq futures were limit-down.
As for the economic relief package, the White House is instructing the Small Business Administration to lend to hard-hit areas, and Trump said he’s asking Congress to increase SBA funding by $50 billion.
The Treasury has been instructed to defer tax payments for “certain individuals and businesses”, a move the president claims will result in $200 billion in additional liquidity for the economy.
He then called on lawmakers to agree to immediate payroll tax relief, something politicians on both sides of the aisle remain reticent about.
“Our main issue with this proposal is that it benefits higher-income households and doesn’t directly impact those most vulnerable – the elderly and those out of work who are not on payrolls”, ING wrote, in an e-mailed note. “The combination of precautionary measures and fear are driving the outlook for the economy and that won’t change until the prognosis for the virus changes”.
And that was about it from Trump. He told the elderly to be careful, reminded everyone that the big banks are well capitalized, bragged briefly about the economy and delivered this pseudo-warning to an unthinking pathogen:
The virus will not have a chance against us.
As one member of the Twitterati quipped: “COVID-19 hates us cuz of our freedom”.
“Trump’s measures are so light-weight compared to what we’ve seen in countries like the U.K. — we need Trump to be a general here, and markets needed to see something bi-partisan”, Pepperstone Group’s Chris Weston remarked, shortly after Trump finished speaking.
“They want measures that will go through Congress and get done within days, not after the November election”, he added, before warning that “investors will not hesitate to show what they think to the Fed and governments over the next few sessions”.
That’s pretty ominous. Especially considering how bad Monday’s session was and the fact that Wednesday found US equities sinking into a bear market (bottom pane) in what was yet another horrendous day on Wall Street (the red line in the top pane marks the beginning of the end, so to speak, for the bull market).
Remember, this comes after a session that found multiple companies (including Boeing) drawing down credit lines. That’s a bad sign. These half-hearted measures aren’t enough.
Boeing’s slide was so dramatic Wednesday that its market cap fell below Tesla’s.
“Travel restrictions equal slower global economic activity, so if you need any more coaxing to ‘sell, sell, sell’ after a massively negative signal from overnight trading in US markets it just fell in your lap”, AxiCorp’s Stephen Innes said.
In the minutes after Trump’s address, the NBA announced it will cancel games until further notice due to the virus. Tom Hanks said he’s infected.
Trump, meanwhile, canceled upcoming events in Colorado and Nevada “out of an abundance of caution”, White House spokeswoman Stephanie Grisham said.
Tiny hands, tiny package.
Major puke a-coming.
Several people I know in markets and the organisations for whom they work have, until recently, traded on the view that the markets will stay frothy until election time because Trump would simply refuse to let them deflate. I’m not sure they all fully appreciated the implied assumption of this logic; namely that Trump held some sort of power over the markets that all of his predecessors lacked. If Trump truly was able to levitate the markets through sheer force of will, then he probably deserves reelection. Fortunately for us long-suffering liberals, it would appear that he can’t.
Meanwhile, after wasting a perfectly good C Matt Gaetz, hero of the people does an interview from sleeping in his car off I-85, afraid to sleep in a hotel.
Sorry – posted before completed – after tasing a perfectly good C19 test kit.
With such brave leadership, we will overcome.
They have until monday morning to prevent a global financial crisis….with something concrete…
Unbelievable!
I guess now we know how Trump handles a real global crisis (instead of self-created trade wars).
It was always clear that the human cost of his ineptitude would likely be high when it came to handling major calamities. But it appears that he cannot even act decisively to stem the stock market rout: his very own, self-defined, performance metric.
I’d wait unitl the morning to pronounce the bull dead. Fed actions will be coming. You have to have some serious guts to be opening a short right now. The really easy money has been made.
Then you assume “a” bottom is here or nearby with the “easy money comment”?
What Fed action are you expecting in the morning? Another emergency cut or an outright announcement of a full resumption of QE?
Trump had to step up tonight, show a sense of urgency and an unshakable commitment to work together with healthcare experts, Congress, and state and local governments to combat the developing pandemic. Aside from concrete measures to combat the spread of the virus (that is already in country) he could have also announced immediate fiscal stimulus measures instead of a nebulous payroll tax cut that may or may not be approved by Congress. He speech failed miserably on all counts.
A fat good it does to suspend payroll taxes for people who work in travel, entertainment, restaurant, etc. But it’s a perfect leadup to squeezing SS and Medicare.
If saving the shale players that deserve to go belly up at this point in time are part of this SBA plan. The republicans will be toast and have the “socialist republicans” moniker hung around there necks.
No matter what Trump did or said tonight he would be criticized …The fact is there has been a leadership void for three decades and along with it dysfunctional and misdirected policy…
A true Boomer response from someone looking for Daddy to tell him what to do. Life is a series of waves, surf with it.
OK, I’ll tell you old farts what to do: The best time to start anything is when there is chaos around you. F dRump, he’s a high-functioning autistic; and all the other old white guys who will tell you they have the answers.
Me? I’m putting money to work in pharmaceutical-grade mushroom mental health agriculture. Robotic shipping container-sized farming, with no profit drag by seasonal production.
The future’s so bright I gotta wear shades. Especially with the new Intraocular lenses to fix my cataracts I just got in Czechia last week. JFK to PRG was really cheap and not crowded.