As the response to the coronavirus crisis begins, investment markets continue their violent see-saw, waiting on information. More information on community spread, recovery rates, & mortality will give us all emotional grounding, while also beginning to provide the framework for a timeline for a return to economic normalcy. We will leave our homes again. Shops & restaurants will re-open. Travel will resume. The question of when is what matters--and it's all dependent on information.
What is necessary is a Fiscal response from the government, & there appears to be one on the way. Here's what I'm reading:
Fed steps into commercial paper market to stabilize corporate short-term lending.
Congress and the President’s administration are working on fiscal stimulus package.
- A decisive and coordinated policy response should prevent the coronavirus shock from sparking a 2008-style crisis.
- Government bonds have served their role as portfolio ballast in the risk asset selloff, but this role looks increasingly challenged by low yields.
- Monetary and fiscal actions to cushion the blow have begun, including the Fed cutting rates to near zero and announcing bond purchases.
- A three-month reprieve for the payment of taxes normally due April 15th. The deferral of the tax payment is interest and penalty free for 90 days — up to $1 million for an individual and $10 million for a corporation.
- The announcement does not change the April 15th due date of the return. Only payment of tax is delayed.
- In California, individuals will have until June 15 to both file and pay their state taxes.