I expected to provide my next update on last Monday morning, touching on bold moves by the Fed and a huge stimulus package passed by congress. Apparently investment markets did as well--and with two votes failing in the Senate on Sunday & Monday, markets accelerated their downward trajectory.
As news came of a likely agreement on Tuesday, markets staged a rally not seen since the 1930s. While I expect market volatility to continue, the stimulus is an important step toward providing much-needed stability to the economy going forward.
Important items to note:
- Unlimited QE -- Quantitative Easing is when the Fed states they will buy a set amount of fixed income securities, and then they go out and do it. Having already announced some QE in response the crisis, Monday's statement basically "uncaps" the amount of buying they can/plan to do--meaning the Fed will purchase as much as it deems necessary to provide added liquidity to the market.
- The article provides a good summary of some of the other programs the Fed is launching, but importantly concludes that they are "pulling all the levers" to help the system
- The $2 trillion economic relief deal was reached overnight by White House and Senate negotiators, prompting expectations for final Senate vote passage later today.
- While details remain sketchy, the bill likely includes $1,200 payments to Americans making $75,000 or less (plus $500/child), over $100B to hospitals, $350B in forgivable loans to small businesses, and $500B for major industry corporations.
- The deal likely includes $25 billion for passenger airlines, $4 billion for cargo companies, and $17 billion for companies deemed important to national security.
- Look for deeper commentary here around the stimulus package in the coming days.
History Lesson -- BlackRock
- Our sub-advisor partners continue to share perspective--which is sometimes hard to keep when rollercoaster markets ramp up.
- This chart looks at longer term market movement after difficult periods on the market: