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Interesting that S&P futures have fallen 3% as of 5:00pm in Asia. Are markets interpreting this less as the Fed signaling it will do whatever it takes and more

Interesting that S&P futures have fallen 3% as of 5:00pm in Asia. Are markets interpreting this less as the Fed signaling it will do whatever it takes and more as the Fed is panicked and the financial system is under a huge amount of pressure behind the scenes? Edit: S&P futures limit down at 5:15.

vsareto 7y ago
The only alternative reason is that the Fed is simply giving in to Trump's demand.
dcftoapv 7y ago
The problem is that fed action isn't enough. We need policy changes to keep SMEs above water. The White House and Congress have not taken appropriate action. Trump acted like he was going to take action on Friday, the markets ripped higher, and everything he announced was worthless, but that wasn't clear until markets closed.
blihp 7y ago
A significant fraction of the economies of the world are being shut down, which is what needs to happen short term.[1] Interest rate cuts and liquidity injections won't do much of anything about the fact that, other than mostly small ticket essentials, no one is buying, no one is selling and no one is producing much right now. At the very least, this quarter is shot and markets are just trying to price in what stalling out the economy is going to mean. The problem is, no one knows how long this will take or how quickly activity will (hopefully) recover when it's all over. [1] If you disagree, picture this scenario: everyone went about their business as usual, vastly larger numbers of cases are reported with corresponding deaths, healthcare providers are hopelessly overwhelmed, the public starts to panic... and economies are still shutting down but due to fear.
pdovy 7y ago
IMO the severity of the situation and the economic fallout has become more clear over the weekend as more states have issued broad orders regarding school/restaurant/bar closures and limits on public gatherings. Ultimately the Fed can give a lot of help here, but can't fix the underlying problem. Easing credit for businesses will help get some through to the other side but it won't replace lost revenue. Things are going to be very volatile for the foreseeable future. Non-Farm Payroll data released in a few weeks time would have had the househould sample conducted last week, so we may not know the full impact on unemployment until May, realistically.

vsareto 7y ago

The only alternative reason is that the Fed is simply giving in to Trump's demand.

dcftoapv 7y ago

The problem is that fed action isn't enough. We need policy changes to keep SMEs above water. The White House and Congress have not taken appropriate action. Trump acted like he was going to take action on Friday, the markets ripped higher, and everything he announced was worthless, but that wasn't clear until markets closed.

blihp 7y ago

A significant fraction of the economies of the world are being shut down, which is what needs to happen short term.[1] Interest rate cuts and liquidity injections won't do much of anything about the fact that, other than mostly small ticket essentials, no one is buying, no one is selling and no one is producing much right now. At the very least, this quarter is shot and markets are just trying to price in what stalling out the economy is going to mean. The problem is, no one knows how long this will take or how quickly activity will (hopefully) recover when it's all over. [1] If you disagree, picture this scenario: everyone went about their business as usual, vastly larger numbers of cases are reported with corresponding deaths, healthcare providers are hopelessly overwhelmed, the public starts to panic... and economies are still shutting down but due to fear.

pdovy 7y ago

IMO the severity of the situation and the economic fallout has become more clear over the weekend as more states have issued broad orders regarding school/restaurant/bar closures and limits on public gatherings. Ultimately the Fed can give a lot of help here, but can't fix the underlying problem. Easing credit for businesses will help get some through to the other side but it won't replace lost revenue. Things are going to be very volatile for the foreseeable future. Non-Farm Payroll data released in a few weeks time would have had the househould sample conducted last week, so we may not know the full impact on unemployment until May, realistically.