Dow dropped 289, decliners over advancers better than 2-1& NAZ fell 14. The MLP index sank 5+ to the 84s & the REIT index tumbled 7 to 259. Junk bond funds traded lower & Treasuries were heavily purchased. Oil crawled higher in the 22s & gold shot up 47 to 1532 on expectations of massive stimulus packages that are coming.
AMJ (Alerian MLP Index tracking fund)
Equities slid lower after the Federal Reserve announced "extensive new measures" to support the US economy. The central bank said it would purchase Treasury securities & agency mortgage-backed securities in the "amounts needed to support smooth market functioning and effective transmission of monetary policy to broader financial conditions and the economy." In addition, the Fed launched 33 new lending facilities which will provide up to $300B in new financing to support the flow of credit to employers, consumers & businesses. The Dow fell as much as 665 (3.5%), in opening trades & the S&P 500 & NAZ also dropped. The losses come after the Senate failed to advance a $1,4T COVID-19 stimulus package last evening, saying the bill went too far in helping big corps & didn't go far enough in aiding individuals & health care providers. Another vote is expected later today. In Europe, markets were lower with Britain's FTSE pacing the decline, down 1.4%, after the UK gov warned of a possible lockdown to prevent the spread of COVID-19. Elsewhere in the region, Germany's DAX & France's CAC also drifted lower. Asian market finished mixed with Japan's Nikkei gaining 2% while China’s Shanghai Composite & Hong Kong's Hang Seng tumbled 3% & 4%, respectively.
Treasury Secretary Steve Mnuchin says the Trump administration is determined to support American businesses & workers. “We want all small businesses to keep employees so that they can reopen those businesses quickly when its medically sufficient,” Mnuchin said. He reiterated that any small business with fewer than 500 employees is eligible for a loan amounting to 2 months of payroll & some overhead and that it will be forgiven if the company keeps its workers or rehires them. Meanwhile, Mnuchin also discussed the administration & Congress' efforts to keep airlines afloat as the economy weighs on the industry. “There are no bailouts," Mnuchin added. "This is not about bailing anybody out. There is a special provision that we are in the process of negotiating for airlines. Airlines do provide significant resources and national security issues. We want the airlines to continue to be able to operate domestic air travel.”
The Fedral Reserve took a slew of new actions designed to support the financial markets, including purchasing an unlimited number of Treasuries & mortgage-backed securities. The latest move by the central bank includes buying assets “in the amounts needed to support smooth market functioning and effective transmission of monetary policy to broader financial conditions and the economy." The Fed also said it will purchase agency commercial mortgage-backed securities as part of an expansion of its asset purchases, known as "quantitative easing." The move represents an essentially open-ended commitment to the QE program. This marks one of its most aggressive steps yet to insulate markets from the coronavirus pandemic. “The coronavirus pandemic is causing tremendous hardship across the United States and around the world. Our nation’s first priority is to care for those afflicted and to limit the further spread of the virus,” the Fed said. “While great uncertainty remains, it has become clear that our economy will face severe disruptions. Aggressive efforts must be taken across the public and private sectors to limit the losses to jobs and incomes and to promote a swift recovery once the disruptions abate," it added. The Fed also said it would launch 3 new lending facilities, including the Term Asset-Backed Securities Lending Facility, a program first created during the 2008 financial crisis. There will be a $300B program to support the flow of credit to employers, consumers & businesses. It unveiled plans for 2 other lending facilities to support corp credit markets: The Primary Market Corporate Credit Facility for new bond & loan issuance & the Secondary Market Corporate Credit Facility to provide liquidity for outstanding corp bonds. Fed policymakers also said they expect to announce the "establishment of a 'Main Street business Lending Program' to support lending to eligible small businesses" in the near future.
Germany is about to unveil new measures to mitigate the economic impact of the coronavirus, in what has been described as a “game changer” for a country that's the leader of fiscal prudency. The fiscal stimulus comes at a time when Italy is tightening its lockdown after the death toll from the coronavirus surpassed 5K & Spain decided to extend its emergency state until Apr 11. Europe has been the epicenter of the coronavirus since mid-Mar, with more new confirmed cases than anywhere else in the world. Germany is planning to increase borrowing by as much as €150B ($160B) this year as well as to pass a €156B ($167B) supplementary budget. The gov led by Chancellor Angela Merkel is also setting up a €500B bailout fund to take stakes in critical industries, according to various reports. At a gov meeting, Berlin is expected to halt its debt brake rule – a law that basically prohibits Germany from presenting structural deficits. Currently, Germany had 25K confirmed cases of coronavirus & 94 deaths, according to data from Johns Hopkins University. Merkel, who has been in power since 2005, is in quarantine since the weekend after being in contact with her doctor who was later diagnosed with coronavirus.
Germany to unveil major stimulus as virus death toll rises throughout Europe
The stimulus package is coming & stocks are being hit with limited selling in the meantime. This is #3 & it will be a whopper. However, the economic problems are so serious, a lot more work is needed to first get coronavirus under control & then repair & rebuild global economies. The economic harm is gargantuan, a simple fact lost on many. When the stimulus package is announced, the Dow will probably pop 1-2K. However a seeming-less supply of unending problems will continue. The Dow chart for the last month below with a 11K drop must be the ugliest in history.
Dow Jones Industrials
AMJ (Alerian MLP Index tracking fund)
| CL=F | Crude Oil | 22.78 | +0.15 | +0.7% |
| GC=F | Gold | 1,532.90 | +48.30 | +3.3% |
Equities slid lower after the Federal Reserve announced "extensive new measures" to support the US economy. The central bank said it would purchase Treasury securities & agency mortgage-backed securities in the "amounts needed to support smooth market functioning and effective transmission of monetary policy to broader financial conditions and the economy." In addition, the Fed launched 33 new lending facilities which will provide up to $300B in new financing to support the flow of credit to employers, consumers & businesses. The Dow fell as much as 665 (3.5%), in opening trades & the S&P 500 & NAZ also dropped. The losses come after the Senate failed to advance a $1,4T COVID-19 stimulus package last evening, saying the bill went too far in helping big corps & didn't go far enough in aiding individuals & health care providers. Another vote is expected later today. In Europe, markets were lower with Britain's FTSE pacing the decline, down 1.4%, after the UK gov warned of a possible lockdown to prevent the spread of COVID-19. Elsewhere in the region, Germany's DAX & France's CAC also drifted lower. Asian market finished mixed with Japan's Nikkei gaining 2% while China’s Shanghai Composite & Hong Kong's Hang Seng tumbled 3% & 4%, respectively.
Dow below 19K despite Fed's bold action
Treasury Secretary Steve Mnuchin says the Trump administration is determined to support American businesses & workers. “We want all small businesses to keep employees so that they can reopen those businesses quickly when its medically sufficient,” Mnuchin said. He reiterated that any small business with fewer than 500 employees is eligible for a loan amounting to 2 months of payroll & some overhead and that it will be forgiven if the company keeps its workers or rehires them. Meanwhile, Mnuchin also discussed the administration & Congress' efforts to keep airlines afloat as the economy weighs on the industry. “There are no bailouts," Mnuchin added. "This is not about bailing anybody out. There is a special provision that we are in the process of negotiating for airlines. Airlines do provide significant resources and national security issues. We want the airlines to continue to be able to operate domestic air travel.”
Mnuchin: Trump admin determined to support US airlines, workers
The Fedral Reserve took a slew of new actions designed to support the financial markets, including purchasing an unlimited number of Treasuries & mortgage-backed securities. The latest move by the central bank includes buying assets “in the amounts needed to support smooth market functioning and effective transmission of monetary policy to broader financial conditions and the economy." The Fed also said it will purchase agency commercial mortgage-backed securities as part of an expansion of its asset purchases, known as "quantitative easing." The move represents an essentially open-ended commitment to the QE program. This marks one of its most aggressive steps yet to insulate markets from the coronavirus pandemic. “The coronavirus pandemic is causing tremendous hardship across the United States and around the world. Our nation’s first priority is to care for those afflicted and to limit the further spread of the virus,” the Fed said. “While great uncertainty remains, it has become clear that our economy will face severe disruptions. Aggressive efforts must be taken across the public and private sectors to limit the losses to jobs and incomes and to promote a swift recovery once the disruptions abate," it added. The Fed also said it would launch 3 new lending facilities, including the Term Asset-Backed Securities Lending Facility, a program first created during the 2008 financial crisis. There will be a $300B program to support the flow of credit to employers, consumers & businesses. It unveiled plans for 2 other lending facilities to support corp credit markets: The Primary Market Corporate Credit Facility for new bond & loan issuance & the Secondary Market Corporate Credit Facility to provide liquidity for outstanding corp bonds. Fed policymakers also said they expect to announce the "establishment of a 'Main Street business Lending Program' to support lending to eligible small businesses" in the near future.
Fed buying unlimited amount of Treasurys
Germany is about to unveil new measures to mitigate the economic impact of the coronavirus, in what has been described as a “game changer” for a country that's the leader of fiscal prudency. The fiscal stimulus comes at a time when Italy is tightening its lockdown after the death toll from the coronavirus surpassed 5K & Spain decided to extend its emergency state until Apr 11. Europe has been the epicenter of the coronavirus since mid-Mar, with more new confirmed cases than anywhere else in the world. Germany is planning to increase borrowing by as much as €150B ($160B) this year as well as to pass a €156B ($167B) supplementary budget. The gov led by Chancellor Angela Merkel is also setting up a €500B bailout fund to take stakes in critical industries, according to various reports. At a gov meeting, Berlin is expected to halt its debt brake rule – a law that basically prohibits Germany from presenting structural deficits. Currently, Germany had 25K confirmed cases of coronavirus & 94 deaths, according to data from Johns Hopkins University. Merkel, who has been in power since 2005, is in quarantine since the weekend after being in contact with her doctor who was later diagnosed with coronavirus.
Germany to unveil major stimulus as virus death toll rises throughout Europe
The stimulus package is coming & stocks are being hit with limited selling in the meantime. This is #3 & it will be a whopper. However, the economic problems are so serious, a lot more work is needed to first get coronavirus under control & then repair & rebuild global economies. The economic harm is gargantuan, a simple fact lost on many. When the stimulus package is announced, the Dow will probably pop 1-2K. However a seeming-less supply of unending problems will continue. The Dow chart for the last month below with a 11K drop must be the ugliest in history.
Dow Jones Industrials
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