March 10, 2020
Importantly, yesterday’s events moved global policymakers into action on fiscal stimulus and aid.
The White House is meeting with Congress today on a package that will include aid for those individuals and companies impacted directly by the virus, AND, as I suspected, there is talk of aid for the shale companies, which became very vulnerable after yesterdays oil price crash.
That has stocks recovering more than half of the losses from yesterday.
Remember, as we’ve discussed over the past couple of weeks, the turning point for markets and confidence during the global financial crisis was the G20 meeting in April of 2009, when the G20 pledged to work together to resolve “a global crisis with a global solution.”
The good news: We now have global central banks and global governments in firing stimulus bullets. The problem: On the monetary policy side, it’s coordinated. On the government side, the response is there, but it’s fractured. I suspect the global confidence boost could be dramatically improved by signals that all governments are working together to contain the virus and to support the economy. Given the move from Russia yesterday, that may not be possible.
For stocks, after a 19.4% decline in the S&P 500 over just 14 days, we get a bullish reversal signal today (an outside day)!
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