S&P futures hit the limit-up band on Friday morning, presaging another wild day on Wall Street, befitting of the kind of week it’s been.
It was the second time this week futures traded limit-up. Of course, they’ve been limit-down a couple of times, too.
The surge came amid fresh headlines out of Germany around the possibility of fiscal stimulus from Berlin, but really, endeavoring to ascribe causation to what’s going on at any given minute is asinine under the circumstances.
German Finance Minister Olaf Scholz – who has been angling to temporarily suspend the debt brake amid the acute global panic – says the country will spend “billions” to cushion the economy.
There will be “no limit” on the credit programs put in place to help companies. Tax relief (including deferrals) are planned.
It’s possible, he said, that Germany will need to take on additional debt. And what a shame that would be! After all, borrowing costs are so “punitive” for the world’s fourth-largest economy.
Other headlines included Scholz saying he can’t rule out the possibility that Germany takes stakes in companies and that a variety of “timely and targeted” measures are on the table.
This came hours after DPA said Scholz and Economy Minister Peter Altmaier were discussing billions in liquidity measures to assist businesses.
Der Spiegel said Friday that Altmaier is now floating nationalization as an option when it comes to protecting strategically important firms whose prospects are imperiled by the coronavirus epidemic.
And yet, this sounds like it stops short of an all-out fiscal stimulus package. In fact, Scholz said Berlin “may say later this year that [Germany] needs a stimulus package”. To be clear, Germany needed a stimulus package last year. At this point, putting it off further risks a deep recession.
In any event, the headlines will be greeted with some combination of joy and skepticism by markets given Germany’s almost pathological obsession with fiscal rectitude.
“We will use all means at our disposal”, Scholz insisted, during the joint press conference with Altmaier on Friday. “We won’t do things by half-measures”.
The DAX, which plunged a horrific 12% during Thursday’s bloodbath, was up some 8% on the last trading day of the week.
Perhaps the more important quote making the rounds on Friday (although it’s technically from Thursday), comes from Bundesbank President Jens Weidmann.
“It’s really not the right time to be dogmatic about Black Zero”, Weidmann remarked, in an interview with Frankfurter Allgemeine Zeitung newspaper. “Due to budget discipline exercised in past years Germany has enough leeway within current European and national rules” to deal with the epidemic.
Oh, and another headline grabbing some attention is this: EU READY TO TRIGGER CRISIS CLAUSE ALLOWING FISCAL STIMULUS
Read more: ‘A Tragic But Important Lesson’: In Germany, Fear Of Deficit Demon Collides With Recession Reality
Whheeee!!!!
I am getting a sense of what it must feel like to be manic depressive.
How rapidly will these shuttered businesses go into default? Weeks? Months? That ‘echo’ is a credit event that could cause a recession
Looks like Trump cutting off the Europeans have ignited the German fervor. They have woken up.
It would be more correct to say that the lack of concrete actions by the Trump administration focused German minds on the need for a significant intervention to stop the bleeding. Going forward the key will be actual follow through.