‘Lockdown, Shutdown And Limit Down’: Traders Come Into New Week Pondering Depression Redux
Markets were not amused coming off a weekend that featured a truly disconcerting rise in COVID-19 deaths in Italy and Spain and a proliferation of shelter-in-place orders in the US, where 1 in 4 Americans are now effectively living under quarantine.
Gridlock in D.C. most assuredly didn't help. Republicans and Democrats are resigned to the necessity of spending between $1 trillion and $2 trillion to shield the US economy, but were unable to seal the deal on a hotly-anticipated third aid package
My wife who is a great stock picker but not economics savvy asked me “where is all this money that the Fed is injecting coming from?…is anybody concerned about hyperinflation if we come out of this….PS I was quoted on CNBC.com tonight saying the obvious…it’s going to get worse before it gets better
you should point her to the Kelton Op-Ed
Worrying about hyperinflation right now is like worrying about post-op complications while your heart is stopped. Yeah, it COULD be A problem. It isn’t THE problem at the moment.
Mr. Market really cannot do much of anything except wait for Aunt Nancy to give $5 and a lipstick kiss on the cheek of her favorite nephew who is definitely not him.
Mr. Market would prefer price discovery to republican financial decadence, I can assure you!
I have patience with lawmakers on the bailout. I may be naive about lawmaking but to be honest I would prefer that they put some thought into it. We will have to live with it. Who can make laws that quickly and expect them to work. The markets can fall in the meantime too much VaR in the bailout to frankenstien the package.
Since it was mentioned above it is rare when I point anyone to a financial op-ed, but Kelton was sent out to family and in-laws this morning.
$500BN off payroll tax relief means 1/2 of this package will be spent on people who still have jobs. That is called missing the point.
Yup, law makers will definitely get this wrong at least for the next 2 weeks.
It will take more pain in the market to get the Republicans to realize increasing bank balance sheets and corporate bailouts won’t solve the problem this time.
It will take the S&P 500 hitting 1500 before they wake up. In the mean time, initial claims will likely be inline with all the events of the past 3 weeks, meaning the number will be unfathomable. 2 million is likely a conservative number, I expect much closer to an 8 figure number. I expect unemployment to peak at 40%.
The good news is, if we get the $4+ trillion package that puts money in the hands of people who will spend it (aka temporary UBI) the economic destruction will be transitory.