The Fed is Acting Precisely on the Forecasts of Socrates

www.armstrongeconomics.com

The Federal Reserve called a third emergency meeting to combat the economic impact of the unprecedented hyped coronavirus. A lot of emails have come in noting that Socrates had forecast the first interest rate cut by the Fed and its next target was March 23rd as we published back on March 3rd. Many have asked if they are all just now following Socrates since the elite dumped their stocks and bonds on the ECM and the Fed responds when Socrates predicts they will. I do not know who is following. They can subscribe under a name provided they have a real credit card. I can say that so many millions of people were trying to get in that they were taking down the gateway and we can handle a lot of traffic.

Here on Monday 23rd of March, 2020, the Fed unveiled a number of new and “extensive” measures intended to expand their efforts to calm corporate debt markets. The Fed also said a direct lending program to Main Street businesses will be announced soon. The Fed has expanded the scope of its asset purchases under its quantitative easing program and announced four new measures which are a return to the original design with respect to commercial paper and corporate bonds. They are also including ETF markets.

The Fed also committed to the “establishment of a Main Street Business Lending Program to support lending to eligible small-and-medium sized businesses.” The Fed estimates the impact of its measures to provide about $300 billion in new financing available to businesses.

“While great uncertainty remains, it has become clear that our economy will face severe disruptions,” The Fed said in a statement Monday morning. “Aggressive efforts must be taken across the public and private sectors to limit the losses to jobs and incomes and to promote a swift recovery once the disruptions abate.”

However, the Fed has also announced that it was suspending its previous guidance on quantitative easing, which sought to buy “at least” $500 billion in U.S. Treasuries and $200 billion in agency-backed mortgage-backed securities “over coming months.” The Fed now says it will purchase securities “in the amounts needed,” and will also expand the scope of those purchases to include agency commercial mortgage-backed securities. In addition, they announced their Primary Market Corporate Credit Facility (PMCCF) that would directly purchase eligible corporate bonds from investment-grade issuers. Additionally, they will add a Secondary Market Corporate Credit Facility (SMCCF) that would buy corporate bonds in the secondary market, which could include some eligible investment-grade corporate bond exchange-traded funds. Both of these programs will last until September 30, 2020.

A Senate bill proposed by the Republican leadership includes $350 billion in loans for small businesses to cover payroll, rent and some other expenses for the next four months, and includes loan forgiveness for the portion covering wages. The sheer scale of help needed because of this insane shut down is far more massive than many realize. There are nearly 10 million firms that would be eligible under the Senate bill, which applies to companies with up to 500 workers. They employ more than 100 million people and burn through $100 billion in weekly wages.

It makes sense that businesses that are ordered to be closed should have all business loans suspended without interest and all rents suspended while the state governments should void all property taxes during the people they shut down their economies. The states MUST bear responsibility for their draconian actions. This should NOT just impoverish just the people and businesses. The States must also feel the impact of their orders.

The volatility will remain high into the week of April 6th, 2020.

信報財經新聞

聯儲局加大力度拯救經濟，但市場依然關注疫情對經濟的破壞，美股依然下挫逾500點。
截至本港時間晚上約11時13分，道指報18668點，跌505點或2.64%；標普500指數報2246點，跌58點或2.52%；納指報6797點，跌81點或1.19%。

聯儲局暗示無限量的量化寬鬆，聯邦公開市場委員會在聲明表示，正邁向「按所需要規模買入美國國債和機構抵押貸款支持證券(MBS)，以支持市場順暢運作」，旨在確保信貸流向企業、州和地方政府。

聯邦公開市場委員會稱，將指示操作部門把機構商業抵押貸款支持證券(CMBS)納入到機構MBS購買操作中。

根據聲明，聯儲局將購買「必要規模的」國債和機構抵押貸款支持證券，以支持市場平穩運行及貨幣政策向更廣泛的金融狀況和經濟的有效傳導，還將購買機構商業抵押貸款支持證券。聯儲局一周前曾表示，將購買至少5000億美元的美國國債和2000億美元的機構MBS。

另外，聯儲局官員在電話會議上表示，兩項旨在使信貸繼續流向大公司的新機制，將限制那些獲准延遲償付貸款利息和本金的公司進行股票回購和派發股息的能力。

一級市場公司信貸融資安排和二級市場公司信貸融資安排將於周一啟動，是聯儲局為保護美國經濟免受疫情影響而採取的史無前例的計劃一部分。

美國財長努欽則表示，美國將發行大量30年期債券。他今早將前往參議院，尋求通過大型刺激法案，並稱在國會通過一籃子計劃後，將有更多工具和流動性用於應對冠狀病毒大流行的經濟影響。

歐股方面，英國富時100指數報5006點，跌183點或3.54%；德國DAX指數報8736點，跌192點或2.16%；法國CAC 40指數報3935點，跌113點或2.81%；意大利富時MIB指數報15605點，跌126點或0.8%。