The markets saw a short-lived surge during futures trading after the Fed said it would purchase Treasurys and mortgage-backed securities “in the amounts needed to support smooth market functioning," showing the central bank is willing to go far beyond the $700 billion in new purchases announced last week.
But those gains were quickly wiped away. Investors are increasingly concerned about the enormous stimulus bill the Senate is attempting to push through on Monday. On Sunday evening, Senate Democrats said the legislation did not offer enough help for individuals. Senators from both parties, as well as White House officials, said they would continue negotiations, overnight if necessary, to respond to the flood of layoffs affecting millions of Americans and the economic pillage felt by businesses in nearly every sector.
“Today’s sell-off is a combination of uncertainty in both the health side of the virus and the financial system,” said Sarat Sethi of Douglas C. Lane & Associates. “Markets hate uncertainty. The uncertainty created by Congress not being able to provide a stimulus, and by investors continuing to look for a glimmer of hope on slowing the virus, are causing additional pressure on stocks like we have seen the last couple of weeks.”
The bill would steer payments of $1,200 to most adults and include $500 for each child. It would also allocate $350 billion to small businesses to address layoffs and send billions more to hospitals and the unemployment insurance system. The measure also would create a $500 billion program for businesses, states, and localities.
“We’ve known that the magnitude of help needed has been massive and growing for days now," wrote Mark Hamrick, senior economic analyst for Bankrate. "The Federal Reserve continues to do all it can to keep markets operating. Now, the spotlight is on elected leaders to do their jobs as well.”
On Friday, the Dow capped an especially turbulent week by shaving off more than 900 points, erasing all Trump-era gains. All three indexes are well into a bear-market — which marks at least a 20 percent reversal from their highs. Oil prices have plummeted as demand has evaporated and governments around the world urge people to stay in their homes to contain the spread of coronavirus.
Ed Yardeni, president of Yardeni Research, said in his morning note that the U.S. must slow the spread of the virus immediately, outlining three possible economic scenarios: “the Good, the Bad and the Ugly.”
Any “good” prospect — a growth recession with a stock market correction — was wishful thinking, Yardeni wrote.
“That leaves only the Bad and the Ugly for now,” he wrote. “The former is underway, with the global economy falling into a severe recession, the stock market in a bear market … and the Fed having lowered the federal funds rate to zero and restarted credit easing programs. The only question now is how bad will Bad be.”
Global markets entered the week on equally shaky footing. Stocks flashed red across Europe, with Britain’s FTSE 100 down 2.75 percent. Germany’s DAX shed roughly 2 percent, and the pan-European Stoxx 3 percent. In Asia, Hong Kong’s Hang Seng plunged 4.86 percent, and the Shanghai composite dropped 3.1 percent.
Japan’s Nikkei 225 popped slightly and was 2 percent in the green after SoftBank — which is headquartered in Tokyo and controls a $100 billion tech investment fund — announced it would sell $41 billion in assets and buy its own dropping shares. Stocks of tech companies, many of which employ low-wage gig workers, have fallen precipitously as the pandemic forces consumers to travel and commute less.
March 23, 2020 at 11:00 AM EDT
Coronavirus hurting economy, but it’s creating demand in some places
The race to beat the coronavirus is reaching into every corner of American business.
Baltimore-based Marlin Steel, which makes specialized metal containers for big names like General Electric, Pratt & Whitney and Rolls-Royce, got the call on Friday.
“We got a huge emergency order at 6:15 Friday night for test tube racks to test for Covid-19, racks we never made before,” said Drew Greenblatt, 53, president and majority owner of Marlin. The buyer is a giant health provider based in the Midwest. “We asked for volunteers who worked all week long to stay late and work Saturday and Sunday so we can ship ASAP to save lives,” he said.
“My team is amazing and we finished before 1:45 p.m. Sunday. We then put on truck after the plane was canceled to ship 1,100 miles to get to our client’s facility at 8 a.m. Monday.”
Privately held Marlin has 40 employees and roughly $6 million in revenue. It has been very busy and has all its employees going full-time, Greenblatt said. Its specialty containers are used on assembly lines at Pfizer, Ford Motor Co. and hundreds of other clients in 39 countries.
By Thomas Heath
March 23, 2020 at 10:33 AM EDT
Fed announces unlimited bond purchases in unprecedented move to help U.S. economy
The Federal Reserve announced Monday an unlimited expansion of bond purchasing programs to backstop the U.S. economy, as millions of American households and businesses are getting crushed by the near total shutdown of daily life to fight the coronavirus.
The central bank is taking swift and unprecedented action to ensure businesses, individuals and local governments can get loans to tide them over until the economy bounces back. As part of these efforts, the Fed said Monday it would purchase Treasurys and mortgage-backed securities “in the amounts needed to support smooth market functioning” — effectively putting no limits on how many assets the Fed is willing to buy. This extraordinary move goes beyond the 2008-09 financial crisis playbook.
Economists have dubbed this the “do whatever it takes” moment for the Fed. Some analysts on Twitter compared it to when talk show host Oprah gave everyone in the audience a car.
By Heather Long
March 23, 2020 at 10:11 AM EDT
Japan’s Nikkei the outlier as global markets crater
Monday was shaping up to be a rainy day for global markets amid continuing fears about the novel coronavirus and its logjam on the economy. Then Prime Minister Shinzo Abe told Japan’s parliament that canceling the coming Summer Olympic was “not an option,” and that the Games would be postponed, if necessary.
If the International Olympic Committee’s decision makes it impossible to hold the Olympics in a “complete form” then it may be neces to postpone them, Abe said, according to the Nikkei Asian Review. That sent Tokyo’s Nikkei index soaring 2 percent.
European and Asian markets were otherwise red across the board, though they temporarily beat back some losses after the Federal Reserve announced new steps to shore up the U.S. economy. By midday, Britain’s FTSE 100 was tanking 3.5 percent and the benchmark Stoxx was down more than 3 percent.
Hong Kong’s Hang Seng shed more than 1,100 points, or nearly 4.9 percent. That was led by losses in the energy, IT and real estate sectors. The past 30 days, the index has plunged 4,000 points, or nearly 15 percent. But India’s BSE Sensex took the worst beating, tumbling more than 13.1 percent.
By Jacob Bogage
March 23, 2020 at 8:59 AM EDT
Perspective: A smarter way to save jobs during outbreak
The late senator Paul Tsongas of Massachusetts used to remind fellow Democrats that you can’t be pro-jobs and pro-worker without being pro-business and pro-employer. It’s an admonition that Congress should keep in mind as it considers how to use public resources in the most effective and efficient manner to get the economy through a month or two of virtual shutdown.
When done right, pro-business subsidies can not only be pro worker, but can help avoid triggering the vicious economic cycle of unemployment, defaults, bankruptcies and business failures known as a recession.
The key to “doing it right” is forbearance.
Forbearance is giving businesses that have suddenly lost all or most of their sales a reprieve on paying their landlord and their lenders. Instead, the money owed now — over the next three months, let’s say — would be paid back once business has returned to normal.
So how could the government give lenders and landlords the incentive and the liquidity to offer widespread forbearance? The quickest and most efficient way is by offering them tax credits, sending them enough money to make them whole if they are willing to do the socially responsible thing.
By Steven Pearlstein
March 23, 2020 at 8:42 AM EDT
Justice Dept. brings its first fraud case tied to coronavirus outbreak
The Justice Department this weekend brought its first fraud allegation tied to the coronavirus crisis, persuading a federal judge in Texas to issue a restraining order to block a website that claimed to be distributing vaccines.
In court documents, the department alleged the operator of the site, coronavirusmedicalkit.com, was facilitating a wire-fraud scheme, “intentionally making false statements” about the vaccines, which do not exist.
“The website falsely claims that the World Health Organization is giving away free vaccine kits and that individuals who visit the website can order such a kit by paying $4.95 for shipping,” the Justice Department wrote. The WHO is not offering such kits for covid-19, the agency said, nor is there a vaccine known to be effective against the disease caused by the coronavirus.
U.S. District Judge Robert Pitman granted the temporary restraining order against the site and the entity that registered it on Sunday.
By Matt Zapotosky
2020-03-23 15:48:00Z
https://www.washingtonpost.com/business/2020/03/23/live-updates-stocks-markets-economy/
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