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https://marketbeat.com/articles/fed-chair-powell-says-will-provide-nearly-unlimited-lending-2020-03-26/Jerome Powell says the Federal Reserve would provide essentially unlimited lending to support the economy as long as it is damaged by the viral outbreak.
The economic rescue bill approved by the Senate early Thursday includes $425 billion that the Treasury could use to backstop the Fed. That would allow the Fed to boost its lending programs to an astronomical $4.25 trillion.
“Wherever ... credit is not flowing, we have the ability in these unique circumstances to temporarily step in and provide those loans and we will keep doing that, aggressively and forthrightly," Powell said.
When asked if the Fed would run out of ammunition to support the economy, Powell said no.
https://cnbc.com/2020/03/25/negative-rates-come-to-the-us-1-month-and-3-month-treasury-bill-yields-are-now-negative.htmlThe one-month and three-month Treasury bill yields turned negative Wednesday.
“This is part and parcel of the whole flight to quality thing,” said Kim Rupert, managing director of global fixed income at Action Economics.
“Everyone is expecting the Fed to be lower for longer, and I mean longer. The whole bias is for yields to go lower. I would not rule out the front end of the curve going negative.”
Long-Term Treasuries have both returned more in four weeks than they normally would in an entire year.
https://washingtonpost.com/opinions/2020/03/24/one-institution-washington-is-working-fed/Powell’s message is that the Fed’s support for U.S. business is unlimited, “in the amounts needed to support smooth market functioning,” as a Fed statement Monday put it. His basic rationale is simple: Nobody caused this crisis, and nobody is to blame. The government-ordered lockdown affects every company and worker, and the government should protect people until the crisis eases. Any other concern is secondary.
https://fidelity.com/learning-center/trading-investing/markets-sectors/stock-market-drops-2020Key takeaways
The big questions are when will the growth rate of new COVID-19 cases peak and will the fiscal and monetary policy response be enough?
The significant drop in the stock market has been made significantly worse by the oil price war between Saudi Arabia and Russia, as well as forced deleveraging and a soaring dollar.
Earnings estimates for the next few quarters tumbled last week, and will likely fall further in the coming weeks.
While further US stock market declines are quite possible or even likely, my technical work suggests that the momentum of this decline may diminish in the weeks ahead.
https://washingtonpost.com/business/2020/03/21/economy-change-lifestyle-coronavirus/“It’s amazing how slowly habits change, where people get stuck in the ruts of doing things, and then you have a shock like this that can change everything,” said Erik Brynjolfsson, director of the MIT Initiative on the Digital Economy. “It forces people to overcome the switching costs, figure out something new and say, ‘Hey, this is way better.’ ”
“This is an inflection point, and we’re going to look back and realize this is where it all changed,” Jared Spataro, a Microsoft executive, said in an online news briefing. “We’re never going to go back to working the way that we did.”
On the other hand.....
Carnegie Mellon economics professor Lee Branstetter said his first attempts at teaching students online convinced him that although there is some opportunity for efficiencies, the old-fashioned classroom experience offers much more. He expects other forays into living and working online will convince many to return to routine human contact once they can.
“What I’m appreciating is just how much we lose when we go online,” Branstetter said.
Once the crisis is over, he added, “People are going to be so sick and tired of takeout.”
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