The Fed’s Coronavirus Cure 💊

The Fed’s Coronavirus Cure

“When the global economy goes south,” says market watcher Tony Farren, “the Fed steps in!” The world expects Chairman Jerome Powell to stimulate business the moment stock prices start tipping backwards, making loans cheaper and essentially opening a big monetary parachute so that investors don’t have to fear their portfolios going splat!

However, only last Thursday, JayPow went before Congress to say rates were already too low to lower. Without a bigger parachute courtesy of government tax cuts, we’d be trying to slow up to a 29,398 ft free-fall using the drag of a large paper bag!

For this reason, the Federal Reserve has been on a quiet mission to raise interest rates. However, Trump’s trade waring, and now a quarantined world economy, risk undoing its progress.

Festering in the alleys of a Chinese food market in December, it’s probably unlucky that Covid-2019’s first victims spread their symptoms before visiting local doctors. Alas, they kicked off a chain of unofficial cases, and the coronavirus now looks like it could do serious harm to around 1% of everything.

The fear of what’s next for the second-largest economy on Earth has led President Xi to order aggressive stimulus in his country. The third-largest economy on Earth (Japan) just contracted a whopping 6.3% before the virus impact, and the fourth-largest economy on Earth (Germany) printed gross domestic product (GDP) growth of only 0.4% last quarter.

The hot money is flowing into the only “safe haven” it knows it can, disruptors in ‘Murica!

As US growth stocks hit all-time highs, traders around the world are darting for the Fed Funds futures market to place bets on rates falling, not rising. To make things even more interesting, there’s a flux of gold buying and US treasury bond-buying as well. 

It’s frantic out there, but that’s the state of play. It sure sucks how not all market variables are precise and controllable!

Share:
More Posts
OPEC’s Decision 🛢

OPEC leaders just hosted an important late-November meeting that may signal a change in strategy.

Get your daily Invstr Crunch

Get the market news and updates you need, delivered to your inbox or available on our daily podcast.

Risk Disclosure:

Invstr is not a bank and banking services are provided by Vast Bank, N.A.

Brokerage and Banking services are currently only available to U.S. residents.

Invstr app and web services are provided by Invstr Ltd. Advisory services are provided by Invstr Financial LLC, an investment adviser registered with the Securities Exchange Commission (SEC) details of which can be obtained here. Securities brokerage and custody services are provided by Apex Clearing, a broker dealer registered with the SEC and a member of FINRA and SIPC. There is no bank guarantee on securities and securities may lose value.

Investing involves risk and can lead to losses. Past performance does not guarantee future results.

Invstr app and web services are provided by Invstr Ltd. Invstr+ advisory services are provided by Invstr Financial LLC, an investment adviser registered with the Securities Exchange Commission (SEC). Securities brokerage and custody services are provided by Apex Clearing, a broker dealer registered with the SEC and a member of FINRA and SIPC. There is no bank guarantee on securities and securities may lose value. Vast Bank N.A. a nationally chartered bank and member of the FDIC, provides the banking products, including the products and services related to digital asset accounts. As with any asset, the value of Digital assets can go up or down and there can be a substantial risk that you lose money buying or holding digital assets. You should carefully consider whether trading or holding Digital assets is suitable for you in light of your financial condition. Your digital account does not support wallet to wallet transferring of your digital assets (i.e. cryptocurrencies) outside the platform. Any Digital Assets in your digital asset account are not insured by any government entities, including but not limited to FDIC or SIPC. The Invstr Visa® Debit Card is issued by Vast Bank, N.A. pursuant to a license from Visa U.S.A Inc and may be used everywhere Visa debit cards are accepted. Invstr Ltd, Invstr Financial LLC and Invstr Securities Ltd are subsidiaries of Marketspringpad Holdings (collectively “Invstr”) and Invstr is solely responsible for the application services and website content.

Watchlists provided when users first access the service are not a recommendation to invest. Instead they are provided to help users better navigate the service. Users are free to edit and create their own watchlists. From time to time, Invstr will suggest instruments solely based on an individual’s interest and the interest levels of the Invstr community. The statistical and portfolio builder models generated by Invstr do not reflect actual investment results and are not guarantees of future results. Comments provided by Invstr leaders, influencers or members of the Invstr Community are not recommendations and should not be construed as such. Invstr does not endorse the content or the positions posted by them. Their investment approach, and that of the models provided by Invstr, may be different from yours and may not be appropriate for you.